Exhibit 10.3

Notice of Grant of Stock Options
and Option Agreement

Incentive Stock Options
 
 
 
«Fname» «Lname»
 
Option No.:
 
«ISO_No»
«Addr1»
Plan:
2007
«Addr2»
ID:
«EMPID»
«City», «State»  «Zip»
Location:
«Location»
«Country»
   

 

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Effective (“Date of Grant”), pursuant to the 2007 Long-Term Incentive Plan (the
“Plan”) you have been granted an Incentive Stock Option to buy
«ISO_Shares» shares of Textron Inc. (the “Company”) stock at <price> per
share.  The total option price of the shares granted is «ISO_Value».  This grant
is subject to the Incentive Stock Option Terms and Conditions (5/2007 version)
and the Plan which are available on the Textron Enterprise Intranet and the
Stock Option Non-Competition Agreement (5/2007 version) attached hereto.

This Option will become exercisable with respect to the Shares, and will expire
on the dates, shown below, subject to earlier expiration or termination as
provided in the Terms and Conditions:

Shares
Date Exercisable
Expiration Date
«ISO_Shares_V1»
«ISO_Shares_V2»
«ISO_Shares_V3»
«ISO_Shares»
   

 
By your signature and the Company’s signature below, you and the Company agree
that these options are governed by Textron’s Incentive Stock Option Terms and
Conditions (5/2007 version) and the Plan which are available on the Textron
Enterprise Intranet.  In addition, you agree that this grant is subject to the
Stock Option Non-Competition Agreement (5/2007 version), which is attached
hereto, the terms of which are fully incorporated herein.

TEXTRON INC.

 

     

By:
 /s/Frederick K. Butler  
 <date>
 
«Fname» «Lname»
 
Date

Agreed by:
       
«Fname» «Lname»
 
Date

Please retain a copy of this signed agreement and return the original to
your Human Resources Department within 60 days of receipt of this grant.

TEXTRON INC.
TEXTRON 2007 LONG-TERM INCENTIVE PLAN
 
INCENTIVE STOCK OPTION TERMS AND CONDITIONS
 
(5/2007)
  

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1.    Grant of Options.  Pursuant to instructions of the Organization and
Compensation Committee (the "Committee") of the Board and pursuant to the 2007
Long-Term Incentive Plan (the “Plan”), Textron has granted to Optionee the right
and option (the "Option") to purchase all or any part of the number of shares of
Common Stock (the "Option Shares") set forth on the applicable Notice of Grant
signed by Textron and Optionee (the “Notice of Grant”) on the terms and
conditions herein set forth.
 
2.    Purchase Price.  The purchase price of the Option Shares shall be the
price set forth on the Notice of Grant, which is the fair market value of a
share of Common Stock on the Date of Grant.
 
3.    Term of Option and Period of Exercise.  The Option shall expire on the
date set forth on the Notice of Grant (ten years from the Date of Grant),
subject to earlier expiration or termination as hereinafter provided.  Except as
provided in Section 6(c) or (d) or Section 9 hereof, the Option may not be
exercised for one year from the Date of Grant; after one year from the Date of
Grant, the Option may be exercised for up to one-third of the Option Shares;
after two years from the Date of Grant, the Option may be exercised for up to
two-thirds of the Option Shares; and after three years from the Date of Grant,
the Option may be exercised as to all remaining Option Shares.  The Option shall
not be exercisable for less than 50 Option Shares (or the remaining number of
Option Shares if that number is less than 50) or after it shall have expired or
terminated.
 
4.    Exercise of Option.  
 
(a)    Subject to these terms and conditions and the Stock Option
Non-Competition Agreement entered into in consideration of this Option, the
Option may be exercised by written notice to Textron, at its principal office,
at 40 Westminster Street, Providence, Rhode Island 02903, Attention:  Stock Plan
Lead, Executive Rewards.  Such notice shall state the election to exercise the
Option and the number of Option Shares in respect of which it is being
exercised, and shall be signed by the person or persons so exercising the
Option.  Such notice shall be accompanied by payment of the full purchase price
of said Option Shares, upon the receipt of which Textron shall issue and deliver
as soon as practicable a certificate or certificates representing said Option
Shares. The certificate or certificates for said Option Shares shall be
registered in the name of the person or persons so exercising the Option (or, if
the Option shall be exercised by Optionee and if Optionee shall so request in
the notice exercising the Option, shall be registered in the name of Optionee
and another person jointly, with right of survivorship) and shall be delivered
as aforesaid to or upon the written order of the person or persons exercising
the Option.  During the life of the optionee, an option shall be exercisable
only by the optionee or by the optionee’s guardian or legal representative.  In
the event the Option is being exercised pursuant to Section 6(d) by any person
or persons other than Optionee, the notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option.  All Option
Shares issued as provided herein will be fully paid and nonassessable.  Textron
shall pay all original issue taxes, if any, with respect to the issuance
thereof.
 
(b)    The purchase price of the Option Shares shall be paid in full at the time
of exercise at the election of Optionee (1) in cash, (2) by tendering to Textron
shares of Common Stock then owned by Optionee having a fair market value equal
to such purchase price on the date of exercise or (3) partly in cash and partly
in shares of Common Stock valued at fair market value on the date of
exercise.  To the extent that payment is made in shares of Common Stock, the
number of shares shall be determined by dividing the amount of such payment by
the fair market value of a share of Common Stock on the date of payment.  Except
as provided in Section 6, the Option may not be exercised unless Optionee was
an  employee of either Textron or a Subsidiary at all times from the Date of
Grant through the date of exercise. Optionee shall have no rights as a
shareholder of Textron unless and until a certificate for shares of Common Stock
shall have been issued to Optionee.
 
5.    Non-Assignability of Option.  The Option shall not be assignable or
transferable by Optionee except by will or the laws of descent and
distribution.  
 
6.    Termination of Employment.  
 
(a)    If Optionee's employment with Textron or a Subsidiary shall terminate for
cause, all Option(s) held by the optionee shall expire immediately.
 
(b)    If Optionee's employment with Textron or a Subsidiary shall terminate
after Optionee has become eligible for normal or early retirement, and if
Section 6(a) does not apply, Optionee shall have the right to exercise the
Option within 36 months after termination to the extent the Option is
exercisable at the time of exercise.  Early Retirement with Textron is defined
as attainment of age 60, the completion of 20 years of vesting service, or the
attainment of age 55 with the completion of 10 years of vesting service.  Normal
Retirement with Textron is age 65.

(c)    If Optionee's employment with Textron or a Subsidiary shall terminate as
a result of Optionee's total disability, Optionee shall have the right to
exercise the Option as to all unexercised Option Shares (whether or not the
Option was fully exercisable at the time of termination of employment) until the
expiration of its term.  For purposes of the foregoing sentence, "total
disability" shall mean the inability of the executive to engage in any
substantial gainful activity due to injury, illness, disease, bodily or mental
infirmity which is expected to be permanent.  An individual shall not be
considered disabled unless Optionee furnishes proof of the existence
thereof.  Textron may required 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.

(d)    If Optionee shall die while employed by Textron or a Subsidiary or while
the Option is still exercisable under Sections 6(b), (c) or (e), the Option may
be exercised as to all unexercised Option Shares (whether or not the Option was
fully exercisable at the time of termination of employment) within a period of
one year from the date of Optionee's death by the executor or administrator of
Optionee's estate or by the person or persons to whom Optionee shall have
transferred such right by will or by the laws of descent and distribution.

(e)    If Optionee's employment with Textron and its related companies shall
terminate for any reason not specified in Sections 6(a), (b), (c) or (d),
Optionee shall have the right to exercise each Option granted to the optionee
within three months after Optionee's termination (or within such later time, up
to 36 months after his or her termination of employment, as the Committee may
determine) but, unless otherwise determined by the Committee, only to the extent
the Option is exercisable at the time of such termination of employment.  In no
event, however, shall an option be exercisable under this Section 6(e) for six
months from the Date of Grant.

(f)    Notwithstanding anything to the contrary in this Section 6, in no event
shall the Option be exercisable after the expiration of its term.

(g)    Notwithstanding any longer period provided above for exercise of the
Option, to be eligible for treatment as an "incentive stock option" under
Section 422A of the Internal Revenue Code of 1986, as it may be amended (the
"Code"), the Option must be exercised within three months of Optionee's
termination of em­ployment (other than by death or as a result of disability)
with Textron or a Subsidiary, and in the case of Optionee's disability (within
the meaning of Section 422A(c)(9) of the Code) within one year of such
termination.  Exercise of the Option after the applicable period specified in
the foregoing sentence may result in less favorable tax treatment.

7.    No Right to Employment.  Nothing in this document shall confer upon
Optionee the right to continue in the employment of Textron or a Subsidiary or
affect any right which Textron or a Subsidiary may have to terminate the
employment of Optionee.

8.    Corporate Changes.  The number of Option Shares and the purchase price
thereof shall both 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 Optionee.
 
9.    Change in Control.  In the event of a change in control as defined in
Section 2(a) of the Plan, and except as otherwise determined by the Committee
prior to the change in control, each unexpired Option shall be exercisable,
beginning immediately, as to all remaining Option Shares subject to the Option.

10.    Definition of Certain Terms.  Terms used herein but not defined shall
have the meanings set forth in the Plan.

11.    Option Subject to Plan.  The Option is in all respects subject to the
terms and conditions of the Plan as in effect from time to time; provided,
however, that termination or amendment of the Plan (except amendments as
required by technical corrections of the Code) shall not, without the consent of
Optionee, adversely affect Optionee's rights under the Option.

12.    Incentive Stock Option.  

(a)    The Option is intended to be an "incentive stock option" under Section
422A of the Code, to the extent provided thereunder.

(b)    If Optionee  disposes of any Option Shares by sale, exchange, gift or
other disposition and described in Section 424(c) of the Code, either (1) within
two years after the date of the grant of the Option or (2) within one year of
the acquisition of such Option Shares, the Optionee shall notify the Stock Plan
Lead, Executive Rewards at Textron's principal office, at 40 Westminster Street,
Providence, Rhode Island 02903, of such disposition, the amount realized, the
exercise price and the date of exercise of such Option Shares.  Sale or exchange
of Option Shares within the periods specified in the foregoing sentence may
result in less favorable tax treatment.  Textron shall have the right to
withhold from other sums which it may owe to the Optionee, or to accept
remittance by the Optionee of sums in lieu of, an amount sufficient to satisfy
any Federal, state and local withholding tax requirements relating to such a
disposition.

(c)    Optionee represents that Optionee does not own stock possessing more than
10 percent of the total combined voting power of all classes of stock of Textron
or any Subsidiary.

13.    Administration.  Pursuant to Section 3(d) of 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.

  14.    Withholding Taxes.  Whenever Textron proposes or is required to issue
or transfer Option Shares, Textron shall have the right to withhold or to
require the Optionee to remit to Textron an amount sufficient to satisfy
any  Federal, state and local withholding tax requirements.  Whenever under the
plan 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
.
          15.    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 in 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 in Control, the size of Textron,
taken as a whole, shall be a relevant factor in determining materiality and
material adverse impact.

 TEXTRON INC.
 
 STOCK OPTION NON-COMPETITION AGREEMENT
 
(5/2007)
 
You have been granted a stock option (“Option”) pursuant to the Textron 2007
Long-Term Incentive Plan (“the Plan”).  Textron grants stock options to attract,
retain and reward employees, to increase stock ownership and identification with
Textron’s interests, and to provide incentive for remaining with and enhancing
the value of Textron over the long-term.  In consideration for granting this
Option to you, please acknowledge that you have read and agree to this Stock
Option Non-Competition Agreement by signing the attached Notice of Grant of
Stock Options and Option Agreement.
Agreement regarding Your Stock Option Grant

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

 
If at any time during the term of this Option 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  (i) this Option shall terminate effective the date you enter into such
activity, unless terminated sooner by operation of another term or condition of
this Option or the Plan and (ii) provided this Option has been held by you for
less than 5 years at the time of exercise, you are required to repay Textron an
amount equal to any gains realized in any option exercise which occurs on the
date beginning 180 days prior to the earlier of (a) your termination of
employment or (b) the termination of this Option, or at any time after such
date.  For purposes of this Agreement, the gain realized shall be equal to the
difference between the fair market value of the stock on the date of the
exercise and the Option strike price. 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.
 
2.        Company’s business – defined
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 -- defined
For the purpose of Paragraph 1, 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 unexercised options and required repayment if you engage in
certain solicitation activities

If either during or any time after your employment with the Company, 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  (i) this Option shall terminate effective the date you enter into
such activity, unless terminated sooner by operation of another term or
condition of this Option or the Plan and (ii) provided this Option has been held
by you for less than 5 years at the time of exercise, you are required to repay
Textron an amount equal to any gains realized in any Option exercise which
occurs on the date beginning 180 days prior to the earlier of (a) your
termination of employment or (b) the termination of this Option, or at any time
after such date.  For purposes of this Agreement, the gain realized shall be
equal to the difference between the fair market value of the stock on the date
of the exercise and the Option exercise price.
 
5.
Forfeiture of unexercised options 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, either during or any time after your
employment with the Company, you directly or indirectly misappropriate any such
trade secrets, then  (i) this Option shall terminate effective the date you
enter into such activity, unless terminated sooner by operation of another term
or condition of this Option or the Plan and (ii) provided this Option has been
held by you for less than 5 years at the time of exercise, you are required to
repay Textron an amount equal to any gains realized in any Option exercise which
occurs on the date beginning 180 days prior to the earlier of (a) your
termination of employment or (b) the termination of this Option, or at any time
after such date.  For purposes of this Agreement, the gain realized shall be
equal to the difference between the fair market value of the stock on the date
of the exercise and the Option exercise price.
 
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
duly appointed agent) 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.