Exhibit 10.4
Textron Inc.

PERFORMANCE SHARE UNIT PLAN FOR TEXTRON EMPLOYEES
(July 25, 2007)

The 1999 Long-Term Incentive Plan for Textron Employees (“1999 LTIP”), when it
was approved by shareholders in 1999, contained provisions relating to
Performance Share Units (“PSUs”).  In 2004, shareholders approved a proposal
that removed PSUs from the 1999 LTIP since PSUs are cash-based rather than
share-based compensation.  As a result of the proposal, the terms that had
governed PSUs did not change; rather, these terms were merely separated from the
terms that remained a part of the 1999 LTIP.  The Performance Share Unit Plan
for Textron Employees (“PSU Plan” or the “Plan”) formalizes this separation of
terms and provisions.

Effective April 25, 2007, the PSU Plan has been replaced by the 2007 Long-Term
Incentive Plan for Textron Employees (“2007 LTIP”).  The terms of the PSU Plan
will continue to govern PSUs awarded under the PSU Plan.  However, any awards
made on or after April 25, 2007, will be governed by the 2007 LTIP.

The Plan is amended and restated as follows, effective July 25, 2007, to
incorporate those terms necessary or advisable to ensure that existing PSUs
under the Plan are exempt from or comply with Section 409A of the Code:

Article I – General

1.1 Purpose.  This plan authorizes the grant of Performance Share Units to
officers and other selected employees of Textron Inc. (“Textron”) and its
related companies to induce them to continue as Textron employees and to reward
them for improvement in Textron’s long-term performance.

1.2 Administration.  (a) The Board of Directors of Textron (the “Board”) shall
appoint from among its members a committee (the “Committee”) consisting of no
fewer than three directors, none of whom shall be eligible, and none of whom
shall have been eligible at any time within one year prior to or after
exercising discretion in administering the Plan, for any award under the Plan or
under any other employee benefit plan of Textron or any related company, and all
of whom shall certify that they are “outside directors” as defined by the
Code.  Unless otherwise specified by the Board, the Committee, for purpose
hereof, shall mean the Organization and Compensation Committee of the Board.

(b)  
The Committee shall have the power subject to and within the limits of the Plan:

(1) to determine from time to time which eligible persons shall be granted
Performance Share Units under the Plan, to fix the number of Performance Share
Units covered by each grant and conditions of each grant;
 
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 (2) to construe and interpret the Plan and to establish, amend and revoke rules
and regulations for its administration.  The Committee, in exercise of this
power, shall generally determine all questions of policy and expediency that may
arise and may correct any defect, omission or inconsistency in the Plan or in
any agreement evidencing an award hereunder in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective;

(3) to prescribe the terms and provisions of any Performance Share Units granted
under the Plan;
 
(4) generally, to exercise such powers and to perform such acts in connection
with the Plan as are deemed necessary or expedient to promote the best interests
of Textron.
 
(c) The Board at any time may designate one or more officers or committees of
Textron to act in place of the Committee in making any determination or taking
any action under the Plan.  The Employee Benefits Committee of Textron shall
have the authority to adopt one or more sub-plans of the Plan applicable to
employees located in countries other than the United States for the purpose of
complying with applicable laws and regulations of such
countries.  Notwithstanding the above, all decisions concerning the Plan relate
to persons who are Directors or Corporate Officers of Textron shall be made by
the Committee.
 
(d) The Board at any time may revest administration of the Plan, including all
powers and duties of the Committee, in the Board, provided that in any matter
relating to administration of the Plan, a majority of the Board and a majority
of the directors acting on such matter shall not be eligible, and shall not have
been eligible at any time within one year prior thereto, for a grant under the
Plan or under any other employee benefit plan of Textron or any related
company.  In such all references herein to the Committee shall be deemed to
refer to the Board.
 
(e) All actions of the Board, the Committee or any designate under Section 1.2
in con-nection with the plan shall be final, conclusive and binding.  No member
of the Board, the Committee or any designated committee, nor any designated
officer, shall be liable for any action taken or decision made in good faith
relating to the Plan or any grant or award hereunder.
 
1.3 Eligibility.  The Committee may grant Performance Share Units under the Plan
to any full-time employee of Textron or any related company (determined at the
date of grant) who is a corporate, division, segment or subsidiary officer,
administrative or professional employee, or other selected employee capable of
making a substantial contribution to the success of Textron.  Performance Share
Units may be granted to full-time employees who are also members of the
Board.  In making grants and determining their form and amount, the Committee
shall consider functions and responsibilities of the employee, the employee’s
potential contributions to profitability and sound growth of Textron and such
other factors, as the Committee deems relevant.
 
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1.4 Grants.  Grants under the Plan may be comprised of Performance Share Units
as described in Article II.
 
1.5 Additional Definitions.  For purposes of this Plan, the following terms
shall have the meaning specified in this Section 1.5:
 
(a)  
“Award Period” shall mean the period during which Performance Targets or
Performance Measures are to be accomplished.

 
(b)  
“Cause” shall mean a degree of less than acceptable performance as is determined
by the Committee.

 
(c)  
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 
(d)  
“Common Stock” shall mean shares of Textron common stock.

 
(e)  
“Current Value” of a share of Common Stock on any date shall mean the average of
the composite closing prices for Textron common stock, as reported in The Wall
Street Journal, for ten trading days next following that date.

 
(f)  
“Corporate Officer” shall mean corporate officers of Textron who are not
assistant corporate officers.

 
(g)  
“Director” shall mean a member of the Board of Directors of Textron.

 
(h)  
“Early Retirement” shall mean the attainment of any of the following
requirements: age 55 with 10 years of Vesting Service, age 60, or 20 years of
Vesting Service.  For the purposes of this Plan, “Vesting Service” shall have
the meaning ascribed to it in Addendum A of the Textron Master Retirement Plan
(January 1, 1998 Restatement).

 
(i)  
“Performance-Based Exception” shall mean the performance-based exception from
the tax deductibility limitations of Code section 162(m).

 
(j)  
“Performance Measures” shall mean the performance standards described in Section
2.4 of this Plan.

 
(k)  
“Performance Share Units” shall mean fictional shares of Common Stock
accumulated and accounted for under this Plan for the sole purpose of
determining the cash amount of any distribution on account of awards earned
pursuant to Article III of this Plan.

 
(l)  
“Performance Targets” shall mean the performance standards described in Article
III of this Plan

 
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(m)  
“Plan” shall mean the Performance Share Unit Plan for Textron Employees.

 
(n)  
“Total Disability” shall mean a permanent mental or physical disability as
determined by the Committee.

 
Article II – Performance Share Units
 
2.1 Award of Performance Share Units. (a) The Committee may, from time to time,
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant to eligible employees one or more Performance
Share Units.  Such grants shall be evidenced in writing.
 
(b) The existence of the Performance Share Units is for record keeping purposes
only and does not require any segregation of assets.
 
2.2 Conditions of Grant. When a grant of Performance Share Units is made, the
Committee shall determine: (1) the number of Performance Share Units included in
this grant; (2) the Performance Targets or Performance Measures as described
further in Section 2.4; and (3) the Award Period during which the Performance
Targets or Performance Measurements are to be accomplished.
 
2.3 Payment for Performance Share Units.  Payment in respect of earned
Performance Share Units shall be due not more than 90 days after the Award
Period for such Performance Share Units has ended.  Such payment shall be in the
amount determined under Section 2.6, or in a greater amount pursuant to the last
two sentences of Section 2.4, and shall be made in a lump sum subject to such
terms and conditions as the Committee shall specify.  Payments for Performance
Share Units shall be made in cash no later than March 15 of the year following
the year in which the Award Period ends.
 
2.4 Performance Measures and Performance Targets.  Upon making a grant of
Performance Share Units, the Committee shall establish the applicable
Performance Measures or Performance Targets to be attained for the Award Period
as a Condition of the related Performance Shares being earned in whole or
part.  Performance Targets shall be established only in terms of the standards
set forth in Article V of this Plan.  Attainment of a primary Performance Target
in an Award Period shall result in the earning of all of the Performance Share
Units related to that Performance Target.  For Corporate Officers only, Awards
may not exceed 100% of the value of Performance Share Units related to the
applicable Performance Targets.  Failure to attain a minimum Performance Target
in an Award Period shall result in the failure to earn any of the Performance
Share Units related to that Performance Target.  Attainment between a primary
and minimum Performance target in an Award Period shall result in the earning of
a portion of the Performance Share Units related to those Performance Targets,
determined by a pre-established mathematical formula which shall be determined
by the Committee.  The Committee may determine an award less than that
determined by the formula, but may not, however, determine an award more than
that derived by the formula.  Performance Measures may be expressed in terms of
any standard, financial or
 
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otherwise, as the Committee may determine.  Performance Share Units related to
one or more Performance Measures shall be earned only as determined by the
Committee and may not exceed 100% of the value of such Performance Share Units.
 
In addition to the above targets, stretch targets related to return on invested
capital will be established.  Such targets will provide the participants with
the opportunity to earn up to an additional 30% of the value of the performance
share units.  Performance share units related to one or more performance
measures shall be earned only as determined by the committee and may not exceed
more than 130% of the value of such units.
 
2.5 Termination of Employment. (a) If a grantee’s employment with Textron or
related company shall terminate for Cause, as determined by the Committee, all
of the grantee’s outstanding Performance Share Units will be cancelled
immediately.
 
(b) If the employment with Textron and its related companies of the grantee who
is not described in Section 2.5(a) shall end during an Award Period but more
than one year after its beginning:
 
(1) due to death or Total Disability, or after the guarantee has become eligible
for Early Retirement, the grantee or the grantee’s successor in interest shall
be entitled to payment on account of the Performance Share Units earned during
that Award Period, if any, on a pro rata basis, or
 
(2) otherwise than as described in Section 2.5(b)(1), the grantee or the
grantee’s successor in interest shall be entitled to payment on account of the
Performance Share Units earned during that Award Period on a pro rata basis only
as determined by the Committee.
 
(c) If a grantee’s employment with Textron and its related companies shall end
during an Award Period but one year or less after its beginning, all of the
grantee’s Performance Share Units relating to that Award Period shall be
cancelled.
 
2.6 Amount of Payment for Share Units. Any payment with respect to earned
Perform-ance Share Units shall be made in cash and shall be in an amount equal
to the product of (1) the Current Value of Textron Common Stock on the date on
which they are deemed earned, times (2) the number of whole and fractional
Performance Share Units which have been earned.  For purposes of this Plan,
earned Performance Share Units shall be deemed earned as of the last day of the
applicable Award Period unless the Committee determines otherwise.
 
Article III – Performance-Based Exception
 
Unless and until the Committee proposes for shareholders to vote and
shareholders approve a change in the general Performance Targets set forth in
this Article III, the attainment of which may determine the degree of payout
and/or vesting with respect to awards to eligible employees which are designed
to qualify for the Performance-Based Exception of the Performance Share Units
under Article II of this Plan, and, if the Performance Targets to be used for
purposes of such grants shall be chosen from among:
 
 
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(a)  
Textron’s earnings per share;

 
(b)  
Net operating profit;

 
(c)  
After-tax profit;

 
(d)  
Return on equity;

 
(e)  
Return on invested capital;

 
(f)  
Economic profit;

 
(g)  
Margins;

 
(h)  
Cash flow; and

 
(i)  
Shareholder value.

 
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the pre-established Performance Targets; provided,
however, that awards which are designed to qualify for the Performance-Based
Exception, and which are held by eligible employees, may not be adjusted upward
(the Committee shall retain the discretion to adjust such awards downward).
 
In the event that applicable tax and/or securities laws change to permit
Committee dis-cretion to alter the governing Performance Targets without
obtaining shareholder approv-al of such changes, the Committee shall have sole
discretion to make such changes with-out obtaining shareholder approval.  In
addition, in the event that the Committee deter-mines that it is advisable to
grant awards, which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
section 162(m).
 
Article IV – Beneficiaries
 
4.1 A Participant may designate one or more Beneficiaries to receive Plan
benefits payable on the Participant’s account after his or her 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 or
herself claims under this Plan.  Beneficiaries shall be designated only upon
forms made available by or satisfactory to the Employee Benefits Committee or
its designee, and filed by the Participant or Beneficiary with that committee or
designee.
 
4.2 At any time prior to his or her death, a Participant or Beneficiary may
change his own designation of Beneficiary by filing a substitute designation of
Beneficiary with the Employee Benefits Committee or its designee.
 
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4.3 In the absence of an effective designation of Beneficiary, or if all persons
so designated shall have predeceased the Participant or shall have died before
the complete distribution of Plan benefits, the balance of Plan benefits shall
be paid to the Participant’s surviving spouse or, if none, to the Participant’s
issue per stirpes or, if no issue, to the executor or administrator of the
Participant’s or Beneficiary’s estate, or as otherwise determined by the
Employee Benefits Committee in its sole discretion.
 
4.4 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.
 
4.5 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, the Employee
Benefits Committee may direct Textron to pay such Plan benefit to the guardian,
legal representative or person having the care and custody of such minor,
incompetent or person.  The Employee Benefits Committee 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 the Employee Benefits Committee and any Textron Company from all
liability with respect to such benefit.
 
Article V – Miscellaneous
 
5.1 General Restriction.  Each grant or award under the Plan shall be subject to
the re-quirement that, if at any time the Committee shall determine that any
listing or registrat-ion of the shares of Common Stock or any consent or
approval of any governmental body, or any other agreement or consent, is
necessary or desirable as a condition of a grant, an award or issuance of Common
Stock or cash in satisfaction thereof, such grant or award may not be
consummated unless each such requirement is satisfied in a manner acceptable to
the Committee.
 
5.2 Restrictions on Share Transferability.  The Committee may impose such
restrictions on any shares of Common Stock acquired pursuant to this Plan as it
may seem advisable, including, without limitation, restrictions under federal
securities laws, under the require-ments of any stock exchange or market upon
which such shares are then listed or traded, and under any blue sky or state
securities laws applicable to such shares.
 
5.3 Non-Assignability.  No award under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by laws of descent and
distribution.
 
5.4 Withholding Taxes.  Whenever payments by Textron are to be made in cash,
such payments shall be net of an amount sufficient to satisfy any federal, state
and local withholding tax requirements.
 
5.5 No Right to Employment.  Nothing in the Plan or in any agreement entered
into pursuant to it shall confer upon any participant the right to continue in
the employment of Textron or a related company or affect any right which Textron
or a related company may have to terminate the employment of such participant.
 
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5.6 Non-Uniform Determination.  The determinations under the Plan of the
Committee or of any designate (including without limitation its determinations
of the persons to receive grants or awards, the form, amount, timing and payment
of such grants or awards, the terms and provisions of such grants or awards, and
the establishment of Performance Measures or Performance Targets) need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, whether or not such persons are
similarly situated.
 
5.7 Related Company.  As used in the Plan, “related company” means any
corporation in which Textron at the time in question owns, directly or
indirectly, stock possessing 50 percent or more of the total combined voting
power of all classes of stock and any corp-oration which at the time in question
owns, directly or indirectly, a similar interest in Textron.
 
5.8 Adjustments for Certain Changes.  (a) The aggregate number of Performance
Share Units granted under this Plan shall all be proportionately adjusted for an
increase or decrease resulting from a stock split.
 
(b) The Committee may, in its discretion and for purposes of determining whether
Per-formance Measures or Performance Targets have been met, equitably restate
Textron’s earnings per share, net operating profit, return on equity or any
other standard utilized in establishing the Performance Measures or Performance
Targets in order to take into ac-count the effect, if any, of (1) acquisitions
or dispositions of businesses by Textron, (2) extraordinary and non-recurring
events, (3) a change in capitalization described in Section 5.9 (a), or (4) any
change in accounting practices, tax laws or other laws or regulations that, in
the opinion of the Committee, significantly affects the financial performance of
Textron.
 
5.9 Change in Control.  (a) Not withstanding any other provision of this Plan,
in the event of a change in control as defined in Section 5.9(b):
 
(1) the Award Period for each outstanding Performance Share Unit shall end, and
each such unit shall be deemed to have been earned, as of the end of the Award
Period and shall be payable immediately and in full; and
 
(b) 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
“person” who on April 27, 1994 was a director or officer of Textron, any trustee
or other fiduciary holding Common Stock under an employee benefit plan of
Textron, or 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 Common Stock, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Act) of more than thirty percent (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
 
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office who either were directors at the beginning of the two-year period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority thereof, or (iii) the shareholders 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 fifty percent (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 shareholders 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.
 
5.10 Amendment or Termination of the Plan.  The Board, without further approval
of the shareholders, may at any time terminate the Plan or any part thereof and
may from time to time amend the Plan as it may deem advisable.
 
5.11 Compliance with Code section 162(m).  At all times when Code section 162(m)
is applicable, all awards under this Plan shall comply with the requirements of
Code section 162(m); provided, however, that in the event the Committee
determines that such compliance is not desired with respect to any award or
grant under the Plan, then compliance with Code section 162(m) shall not be
required.  In addition, in the event that changes are made to section 162(m) to
permit greater flexibility with respect to awards or grants available under the
plan, the Committee may, subject to this Article V, make adjustments it deems
appropriate.
 
5.12 Compliance with Code section 409A.  The Plan is intended, and shall be
interpreted, to provide compensation that is exempt from Code section 409A under
the short-term deferral rule (unless a participant makes a valid deferral
election under a separate plan).  Textron does not warrant that the Plan will
comply with Code section 409A with respect to any participant or with respect to
any payment, however.  In no event shall Textron; any related company; any
director, officer, or employee of Textron or a related company; or any member of
the Committee be liable for any additional tax, interest, or penalty incurred by
a participant as a result of the Plan’s failure to satisfy the requirements of
Code section 409A, or as a result of the Plan’s failure to satisfy any other
requirements of applicable tax laws.