Exhibit 10.3

 

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NOTICE OF AWARD OF PERFORMANCE SHARE

UNITS AND PERFORMANCE SHARE UNIT

AGREEMENT

 

 

 

 

Pursuant to the 2007 Long-Term Incentive Plan (the “Plan”), you (the
“executive”) have been awarded Performance Share Units (“PSUs”), which
constitute the right to receive, if earned pursuant to the terms, the cash
equivalent of a specified number of shares of Common Stock of Textron Inc.
determined by a formula and valued as provided in the current Performance Share
Unit Terms and Conditions (the “Terms and Conditions”) attached hereto. This
award is governed by the Terms and Conditions and the Plan (available on the
Administrator’s website), and is subject to the current Performance Share Unit
Non-Competition Agreement (the “Non-Competition Agreement”) attached hereto.

 

The Performance Period is the three (3) year period beginning on the first day
of the fiscal year in which the PSUs are awarded. Separate performance measures
will be established for each fiscal year within the Performance Period, and the
performance measures for each fiscal year will apply to one third of the PSUs
awarded for the Performance Period. The Committee has discretion to reduce the
number of units earned relative to each fiscal year or for all three fiscal
years in the Performance Period.

 

Performance measures for each fiscal year in the Performance Period will be
established and communicated to you separately from this notice.

 

Except as otherwise provided in the Terms and Conditions, the cash value of all
PSUs will be paid (to the extent earned) during the month of March following the
end of the Performance Period. All PSUs, including PSUs earned based on annual
performance in the first or second fiscal year of the Performance Period, remain
subject to forfeiture until the end of the Performance Period as provided in the
Terms and Conditions.

 

 

 

 

 

You must log into your account on the Administrator’s website to view the number
of units awarded, as well as to accept your award. If you do not accept your
award prior to the end of the Performance Period (or prior to the date your
employment terminates for any reason, if earlier), your award will be forfeited.
Although Textron has completed the steps necessary to grant you this award, you
cannot receive any payment under the award unless you accept the award before
the deadline.

 

By your acceptance of this award, you agree that this award is governed by the
current Terms and Conditions attached hereto and the Plan, which is available on
the Administrator’s website. In addition, you agree that this award is subject
to the Non-Competition Agreement, attached hereto, the terms of which are fully
incorporated herein. You acknowledge that you have read and understand these
documents as they apply to your awards.

 

Please be sure to log into your account and accept your award as soon as
possible to avoid the risk that your award will be forfeited for non-acceptance.

 

TEXTRON INC.

 

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TEXTRON INC.

TEXTRON 2007 LONG-TERM INCENTIVE PLAN

PERFORMANCE SHARE UNIT

TERMS AND CONDITIONS

(3/2014)

 

 

 

 

 

1.                                    Award of Performance Share Units. Pursuant
to the 2007 Long-Term Incentive Plan (the “Plan”), Textron has awarded to the
executive Performance Share Units, subject to the Terms and Conditions set forth
herein. The number of Performance Share Units payable under this award will be
determined by Textron based on achievement of predefined performance measures or
targets over each fiscal year in the Performance Period.

 

2.                                    Settlement. Each Performance Share Unit
earned by the executive constitutes the right to receive cash equal to the fair
market value of one share (a “Share”) of Common Stock of Textron Inc. Except as
otherwise provided in Sections 3 (Termination of Employment) or 4 (Change of
Control):

 

(a)                               The fair market value of a Share equals the
average of the per-share closing prices of Textron’s Common Stock, as reported
on the New York Stock Exchange, on the first ten trading days immediately
following the end of the Performance Period; and

 

(b)                              Textron will pay the executive (or the
executive’s estate in the event of the executive’s death prior to payment) the
cash amount for the Performance Share Units earned by the executive during the
month of March following the end of the Performance Period.

 

3.                                    Termination of Employment. If the
executive’s employment with Textron and its Subsidiaries ends for any reason
before the end of the Performance Period, the executive shall forfeit all
outstanding Performance Share Units (including, but not limited to, Performance
Share Units that have already been earned based on performance during a prior
fiscal year), subject to the following:

 

(a)                               If the executive’s employment with Textron
terminates for “Cause,” the executive shall forfeit all Performance Share Units
(including, but not limited to, Performance Share Units that have already been
earned based on annual performance during a fiscal year in the Performance
Period).

 

(b)                              If the executive’s employment terminates (other
than for Cause) after the executive has become eligible for Retirement, the
executive will remain eligible to earn Performance Share Units (and receive
payment for such Performance Share Units) as if the executive’s employment had
not terminated (but subject to forfeiture in accordance with the Non-Competition
Agreement); provided, however, that if the executive’s employment terminates
within two years after a Change of Control, the payment schedule set forth in
subsection (d), below, shall apply.

 

(c)                               If the executive becomes Disabled or dies
before the end of the Performance Period (and while executive is eligible to
earn Performance Share Units), Textron will make a cash payment to the executive
(or, in the case of death, to the executive’s estate) within 30 days after the
executive’s Disability or death or as soon as administratively feasible (i.e.,
after Textron is notified of

 

 

Performance Share Unit

Terms and Conditions

 

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the Disability or death). Such cash payment shall equal the closing price for a
Share, as reported on the New York Stock Exchange, on the first business day
after the executive’s Disability or death, times the sum of (1) the Performance
Share Units (if any) actually earned for any fiscal year that is completed
before the executive’s Disability or death, and (2) a Pro-Rata Portion of the
Performance Share Units that the executive would have earned for target
performance for the fiscal year of the executive’s Disability or death (unless
the Disability or death occurs on the last day of the fiscal year, in which case
the number of Performance Share Units awarded would be the number actually
earned). The amount payable shall not be adjusted for any delay caused by time
needed to validate the executive’s status as Disabled or dead, or to
authenticate a beneficiary.

 

(d)                             If, within two years after a Change of Control,
the executive’s employment ends due to involuntary termination without Cause or
resignation for Good Reason, the applicable Performance Period for the
Performance Share Units shall end immediately. In such instance, Textron shall
make a cash payment to the executive (or, in the case of death, to the
executive’s estate) on the Six-Month Pay Date. Such cash payment shall equal the
fair market value of the maximum number of Performance Share Units that can be
earned based on actual performance for any fiscal year in the Performance Period
that has ended and target performance for the rest of the Performance Period.
For this purpose, fair market value of a Performance Share Unit shall equal the
per-share closing price of Textron’s Common Stock (or the successor thereto) on
the last business day of the last calendar month that ends before the Six-Month
Pay Date; provided, however, that if it is not feasible to calculate the closing
price as of the last business day of such month, the amount of cash shall be
determined based on the last price available.

 

Note: Sale of a business unit usually does not constitute a Change of Control as
defined in the Plan.

 

4.                                    Change of Control. If a Change of Control
occurs, a successor to Textron shall either assume Textron’s obligations with
respect to the Performance Share Units or replace this Performance Share Unit
award with a cash or equity-based award that materially preserves the
Performance Share Unit award’s value and incentive opportunity, and has vesting
and payment schedules (including acceleration events) that are no less favorable
to the executive than the schedules in effect immediately before the Change of
Control. If this Performance Share Unit award is not assumed or replaced in
accordance with the immediately preceding sentence, the Performance Share Units
shall be fully vested, non-forfeitable, and payable at the level prescribed by
Section 3(d), above (i.e., based on actual performance for any fiscal year that
has ended and actual performance for the rest of the Performance Period), based
on the Share value as of the Change of Control; provided that payment shall not
be accelerated if accelerating payment would violate a requirement of
Section 409A of the Internal Revenue Code.

 

5.                                    Corporate Changes. The number of
Performance Share Units awarded to the executive hereunder shall be equitably
adjusted in the event of a stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, or any other
corporate event affecting the Common Stock, as provided in the Plan, in order to
preserve the benefits or potential benefits intended to be made available to the
executive.

 

6.                                    No Right to Employment. Nothing in these
Terms and Conditions shall confer upon the executive the right to continue in
the employment of Textron or any Subsidiary or affect any right that Textron or
any Subsidiary may have to terminate the employment of the executive.

 

 

Performance Share Unit

Terms and Conditions

 

 

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7.                                    Non-Assignability of Performance Share
Units. The Performance Share Units shall not be assignable or transferable by
the executive, except to the extent expressly permitted by the Plan. Tax
withholding with respect to any Performance Share Unit that is transferred or
assigned shall be determined by Textron in accordance with applicable law (which
may require the executive to pay taxes with respect to a transferred Performance
Share Units).

 

8.                                    Voting and Dividends. The executive shall
not have voting rights or the right to any dividends with respect to the
Performance Share Units.

 

9.                                    Administration. In accordance with the
Plan, the Board at any time may designate one or more officers or committees of
Textron to act in place of the Committee in making certain determinations under
the Plan.

 

10.                            Withholding Taxes: All payments with respect to
Performance Share Units shall be subject to tax withholding. Textron shall have
the right to withhold cash from any payment to the extent that Textron
determines is necessary to satisfy any Federal, state and local withholding tax
requirements.

 

11.                            Section 409A. The terms and conditions of the
Performance Share Units shall be interpreted in a manner consistent with the
intent to be exempt from or comply with the requirements of Section 409A of the
Internal Revenue Code. For example, the phrase “as soon as practicable” and
similar phrases with respect to payment dates shall be interpreted and
administered consistent with the intent that, subject to the executive (or
beneficiary) providing all required information, payment shall not be delayed
beyond the latest date permitted by Section 409A. For purposes of Section 409A,
each installment in any series of installment payments shall be treated as a
separate payment.

 

12.                            Performance Share Units Subject to Plan. The
Performance Share Units shall be subject to the terms and conditions of the Plan
in all respects. In the case of Performance Share Units awarded under a
long-term incentive plan other than the 2007 Long-Term Incentive Plan, the term
“Plan” as used in these Terms and Conditions shall refer to the plan under which
the Performance Share Units were awarded. Each term that is used but not defined
herein shall have the meaning set forth in the Plan.

 

 

Performance Share Unit

Terms and Conditions

 

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DEFINITIONS

 

“Cause”

 

“Cause” shall mean: (i) an act or acts of willful misrepresentation, fraud or
willful dishonesty (other than good faith expense account disputes) by the
executive which in any case is intended to result in his or another person or
entity’s substantial personal enrichment at the expense of Textron; (ii) any
willful misconduct by the executive with regard to Textron, its business, assets
or employees that has, or was intended to have, a material adverse impact
(economic or otherwise) on Textron; (iii) any material, willful and knowing
violation by the executive of (x) Textron’s Business Conduct Guidelines, or
(y) any of his or her fiduciary duties to Textron which in either case has, or
was intended to have, a material adverse impact (economic or otherwise) on
Textron; (iv) the willful or reckless behavior of the executive with regard to a
matter of a material nature which has a material adverse impact (economic or
otherwise) on Textron; (v) the executive’s willful failure to attempt to perform
his or her duties or his or her willful failure to attempt to follow the legal
written direction of the Board, which in either case is not remedied within ten
(10) days after receipt by the executive of a written notice from Textron
specifying the details thereof; or (vi) the executive’s conviction of, or
pleading nolo contendere or guilty to, a felony (other than (x) a traffic
infraction or (y) vicarious liability solely as a result of his position
provided the executive did not have actual knowledge of the actions or in
actions creating the violation of the law or the executive relied in good faith
on the advice of counsel with regard to the legality of such action or inaction
(or the advice of other specifically qualified professionals as to the
appropriate or proper action or inaction to take with regard to matters which
are not matters of legal interpretation)). No action or inaction should be
deemed willful if not demonstrably willful and if taken or not taken by the
executive in good faith as not being adverse to the best interests of Textron.
Reference in this paragraph to Textron shall also include direct and indirect
subsidiaries of Textron, and materiality and material adverse impact shall be
measured based on the action or inaction and the impact upon, and not the size
of, Textron taken as a whole, provided that after a Change of Control, the size
of Textron, taken as a whole, shall be a relevant factor in determining
materiality and material adverse impact.

 

“Performance Period”

 

For the purposes of this award, the Performance Period means the period of three
fiscal years identified in the Notice of Award.

 

“Retirement”

 

The executive is eligible for “Retirement” if the executive has attained age 55
and has 10 years of service, as recorded in Textron’s Human Resources
Information System of record.

 

“Disability”

 

“Disability” shall mean the inability of the executive to engage in any
substantial gainful activity due to injury, illness, disease, or bodily or
mental infirmity which can be expected to result in death or is expected to be
permanent, and which results in the executive’s being “disabled” within the
meaning of Section 409A(a)(2)(C) of the Internal Revenue Code. An individual
shall not be considered disabled unless executive furnishes proof of the
existence thereof. Textron may require the existence or non-existence of a
disability to be determined by a physician whose selection is mutually agreed
upon by the executive (or his or her representatives) and Textron.

 

 

Performance Share Unit

Terms and Conditions

 

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“Pro-Rata Portion”

 

“Pro-Rata Portion” shall mean the number of complete or partial months of the
executive’s active service to Textron during the fiscal year divided by 12.

 

“Good Reason”

 

“Good Reason” shall mean the existence of one of the following conditions:

 

(a)       a material diminution in the executive’s base salary;

 

(b)      a material diminution in the executive’s authority, duties,
responsibilities, or status (including offices, titles, and reporting
requirements);

 

(c)       a material diminution in the authority, duties, responsibilities, or
status of the supervisor to whom the executive is required to report, including
a requirement that the executive report to a corporate officer or employee
instead of reporting directly to the Board;

 

(d)     a material diminution in the budget over which the executive has
authority;

 

(e)       a material change in the geographic location at which the executive
must perform services;

 

(f)        a material change in the aggregate level of participation in any of
Textron’s short and/or long-term incentive compensation plans, or employee
benefit or retirement plans, policies, practices, or arrangements;

 

(g)      failure, after a Change of Control, of a successor company to satisfy
its obligations under Section 4 (Change of Control);

 

(h)       failure, after a Change of Control, of a successor company to assume
the employer’s obligations under any agreement or letter pursuant to which the
executive provides services (the “Employment Agreement”); or

 

(i)         any other action or inaction that constitutes a material breach by
Textron (including its successor) or the executive’s employer of the executive’s
Employment Agreement.

 

A resignation for Good Reason shall occur only if (x) the executive provides
notice of the existence of a condition described in the preceding sentence
within 90 days after the initial existence of the condition, (y) after receipt
of the notice, Textron (or its successor) has a period of 30 days during which
it may remedy the condition, and (z) the executive’s resignation is effective as
soon as practicable after the end of the cure period described in the preceding
clause (and no later than two years after the Change of Control).

 

“Six-Month Pay Date”

 

The Six-Month Pay Date is the earlier of (i) the first business day of the
seventh month that starts after the executive’s termination of employment or
(ii) a date determined by Textron that is within

 

 

Performance Share Unit

Terms and Conditions

 

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90 days after the executive’s death or as soon as administratively feasible
(i.e., after Textron is notified of the death).

 

“Termination of Employment”

 

“Termination of employment” shall mean “separation from service” within the
meaning of Section 409A of the Internal Revenue Code.

 

 

Performance Share Unit

Terms and Conditions

 

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TEXTRON INC.

PERFORMANCE SHARE UNIT NON-COMPETITION AGREEMENT

(3/2011)

 

 

You have been awarded Performance Share Units (“PSUs”) pursuant to the Textron
2007 Long-Term Incentive Plan (the “Plan”). Textron awards Performance Share
Units to attract, retain and reward employees, to increase identification with
Textron’s interests and the interests of Textron’s shareholders, and to provide
incentive for remaining with and enhancing the value of Textron over the
long-term. In consideration for awarding Performance Share Units to you, please
acknowledge that you have read and agree to this Performance Share Unit
Non-Competition Agreement.

 

Agreement regarding Your Performance Share Units

 

1.            Forfeiture of PSUs and required repayment if you engage in certain
competitive activities

If at any time during the Performance Period (as defined in the Notice of Award
of Performance Share Unit and Performance Share Unit Agreement) while you are a
Company employee, or within two years after the termination of your employment,
you do any of the following activities:

 

(a)             engage in any business which competes with the Company’s
business (as defined in Paragraph 2) within the Restricted Territory (as defined
in Paragraph 3); or

 

(b)             solicit customers, business or orders or sell any products and
services (i) in competition with the Company’s business within the Restricted
Territory or (ii) for any business, wherever located, that competes with the
Company’s business within the Restricted Territory; or

 

(c)              divert, entice or otherwise take away customers, business or
orders of the Company within the Restricted Territory, or attempt to do so; or

 

(d)            promote or assist, financially or otherwise, any firm,
corporation or other entity engaged in any business which competes with the
Company’s business within the Restricted Territory;

 

then your right to receive any payment in respect of Performance Share Units
shall be forfeited effective the date you enter into such activity, and you will
be required to repay Textron an amount equal to the value of any PSU paid to you
from and after the date beginning 180 days prior to the earlier of (a) your
termination of employment or (b) the date you engage in such activity, or at any
time after such date. You will be in violation of Paragraph 1 if you engage in
any or all of the activities discussed in this Paragraph directly as an
individual or indirectly as an employee, representative, consultant or in any
other capacity on behalf of any firm, corporation or other entity.

 

 

Performance Share Unit

Non-Competition Agreement

 

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2.            Company’s business – For the purpose of this Agreement:

 

(a)       the Company shall include Textron and all subsidiary, affiliated or
related companies or operations of Textron, and

 

(b)     the Company’s business shall include the products manufactured, marketed
and sold and/or the services provided by any operation of the Company for which
you have worked or to which you were assigned or had responsibility (either
direct or supervisory), at the time of the termination of your employment and
any time during the two-year period prior to such termination.

 

3.            Restricted Territory – For the purpose of this Agreement, the
Restricted Territory shall be defined as and limited to:

 

(a)               the geographic area(s) within a one hundred (100) mile radius
of any and all Company location(s) in or for which you have worked or to which
you were assigned or had responsibility (either direct or supervisory), at the
time of the termination of your employment and at any time during the two-year
period prior to such termination; and

 

(b)              all of the specific customer accounts, whether within or
outside of the geographic area described in (a) above, with which you have had
any contact or for which you have had any responsibility (either direct or
supervisory), at the time of termination of your employment and at any time
during the two-year period prior to such termination.

 

4.            Forfeiture of PSUs and required repayment if you engage in certain
solicitation activities

If you directly or indirectly solicit or induce or attempt to solicit or induce
any employee(s), sales representative(s), agent(s) or consultant(s) of the
Company to terminate their employment, representation or other association with
the Company, then your right to receive any payment in respect of PSUs shall be
forfeited effective the date you enter into such activity and you will be
required to repay Textron an amount equal to the value of any PSU paid to you
from and after the date beginning 180 days prior to the earlier of (a) your
termination of employment or (b) the date you engage in such activity, or at any
time after such date.

 

5.            Forfeiture of PSUs and required repayment if you disclose
confidential information

You specifically acknowledge that any trade secrets or confidential business and
technical information of the Company or its suppliers or customers, whether
reduced to writing, maintained on any form of electronic media, or maintained in
your mind or memory and whether compiled by you or the Company, derives
independent economic value from not being readily known to or ascertainable by
proper means by others who can obtain economic value from its disclosure or use;
that reasonable efforts have been made by the Company to maintain the secrecy of
such information; that such information is the sole property of the Company or
its suppliers or customers and that any retention, use or disclosure of such
information by you during your employment (except in the course of performing
your duties and obligations of employment with the Company) or after termination
thereof, shall constitute a misappropriation of the trade secrets of the Company
or its suppliers or customers. If you directly or indirectly misappropriate any
such trade secrets, then your right to receive any payment in respect of PSUs
shall be forfeited effective the date you enter into such

 

 

Performance Share Unit

Non-Competition Agreement

 

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activity and you will be required to repay Textron an amount equal to the value
of any PSU paid to you from and after the date beginning 180 days prior to the
earlier of (a) your termination of employment or (b) the date you engage in such
activity, or at any time after such date.

 

6.            Organization and Compensation Committee Discretion

You may be released from your obligations under Paragraph 1, 4 and 5 above only
if the Organization and Compensation Committee of the Board of Directors (or its
delegate) determines in its sole discretion that such action is in the best
interests of Textron.

 

7.            Severability

The parties agree that each provision contained in this Agreement shall be
treated as a separate and independent clause, and the unenforceability of any
one clause shall in no way impair the enforceability of any of the other clauses
herein. Moreover, if one or more of the provisions contained in this Agreement
shall for any reason be held to be excessively broad as to scope, activity or
subject, then such provisions shall be construed by the appropriate judicial
body by limiting and reducing it or them, so as to be enforceable to the extent
compatible with the applicable law.

 

 

Performance Share Unit

Non-Competition Agreement

 

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