Exhibit 10.1


 


Goldman,
Sachs & Co.


One
New York Plaza


New
York, NY 10004


 


April 29,
2009


 


To: Textron Inc.


40
Westminster Street


Providence,
RI 02903


Attention:
Chief Financial Officer


Telephone No.:     (401) 421-2800


Facsimile
No.:       (401) 457-3533


 


Re:                                         Convertible
Bond Hedge Transaction


A/C:                                   028320281


Ref. No.:              SDB1630442183


 


The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the
Transaction entered into between Goldman, Sachs & Co. (“Bank”) and Textron Inc. (“Counterparty”)
on the Trade Date specified below (the “Transaction”).
This letter agreement constitutes a “Confirmation”
as referred to in the ISDA Master Agreement specified below. This Confirmation
shall replace any previous agreements and serve as the final documentation for
the Transaction.


 


The definitions and provisions contained in
the 1996 ISDA Equity Derivatives Definitions (the “Equity
Definitions”), as
published by the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the
event of any inconsistency between the Equity Definitions and this
Confirmation, this Confirmation shall govern. Certain defined terms used herein
have the meanings assigned to them in the Prospectus dated July 28, 2008,
as supplemented by the Prospectus Supplement dated April 29, 2009 (as so
supplemented, the “Prospectus”),
relating to the USD 540,000,000 principal amount of 4.50% Convertible Senior
Notes due 2013, (the “Convertible Notes”
and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty pursuant to an
Indenture dated as of September 10, 1999, as supplemented by the
Supplemental Indenture (the “Supplemental Indenture”)
thereto to be dated May 5, 2009, between Counterparty and The Bank of New
York Mellon Trust Company, N.A., as trustee (as so supplemented, the “Indenture”). In the event of any inconsistency between the
terms defined in the Prospectus, the Indenture and this Confirmation, this
Confirmation shall govern. The parties acknowledge that this Confirmation is
entered into on the date hereof with the understanding that (i) definitions
set forth in the Indenture which are also defined herein by reference to the
Indenture and (ii) sections of the Indenture that are referred to herein
will conform to the descriptions thereof in the Prospectus. If any such
definitions in the Indenture or any such sections of the Indenture differ from
the descriptions thereof in the Prospectus, the descriptions thereof in the
Prospectus will govern for purposes of this Confirmation. The parties further
acknowledge that the Supplemental Indenture section numbers used herein are
based on the draft of the Supplemental Indenture last reviewed by Bank as of
the date of this Confirmation, and if any such section numbers are changed in
the Supplemental Indenture as executed, the parties will amend this
Confirmation in good faith to preserve the intent of the parties. For the
avoidance of doubt, references to the Indenture herein are references to the
Indenture as in effect on the date of its execution and if the Indenture is
amended following its execution, any such amendment will be disregarded for
purposes of this Confirmation unless the parties agree otherwise in writing.


 


Each party is hereby advised, and each such
party acknowledges, that the other party has engaged in, or refrained from
engaging in, substantial financial transactions and has taken other material
actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below.


 


1.               This
Confirmation evidences a complete and binding agreement between Bank and
Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and 


 

















 


be
subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Bank and Counterparty had
executed an agreement in such form (but without any Schedule) on the Trade
Date. In the event of any inconsistency between provisions of that Agreement
and this Confirmation, this Confirmation will prevail for the purpose of the
Transaction to which this Confirmation relates. The parties hereby agree that
no Transaction other than the Transaction to which this Confirmation relates
shall be governed by the Agreement.


 


2.               The terms of
the particular Transaction to which this Confirmation relates are as follows:


 


	
  General
  Terms:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trade
  Date:

  	
   

  	
  April 29, 2009

  
	
   

  	
   

  	
   

  
	
  Option
  Style:

  	
   

  	
  “Modified American”, as set
  forth under “Exercise and Valuation” below

  
	
   

  	
   

  	
   

  
	
  Option
  Type:

  	
   

  	
  Call

  
	
   

  	
   

  	
   

  
	
  Buyer:

  	
   

  	
  Counterparty

  
	
   

  	
   

  	
   

  
	
  Seller:

  	
   

  	
  Bank

  
	
   

  	
   

  	
   

  
	
  Shares:

  	
   

  	
  The common stock of Counterparty, par value USD
  0.125 per Share (Exchange symbol “TXT”)

  
	
   

  	
   

  	
   

  
	
  Number
  of Options:

  	
   

  	
  The number of Convertible
  Notes in denominations of USD 1,000 principal amount issued by
  Counterparty on the closing date for the initial issuance of the Convertible
  Notes. For the avoidance of doubt, the Number of Options shall not be
  increased as a result of the exercise by the Underwriters (as defined below)
  of their option pursuant to the Underwriting Agreement (as defined below) to
  purchase some or all of the “Option Securities” (as defined in the
  Underwriting Agreement). For the further avoidance of doubt, the Number of
  Options outstanding shall be reduced by each exercise of Options hereunder.
  In no event will the Number of Options be less than zero.

  
	
   

  	
   

  	
   

  
	
  Option
  Entitlement:

  	
   

  	
  As of any date, a number
  of Shares per Option equal to the Conversion Rate (as defined in the
  Supplemental Indenture, but without regard to any adjustments to the
  Conversion Rate pursuant to Section 9.03 or to
  Section 9.04(g) or (h) of the Supplemental Indenture), for
  each Convertible Note.

  
	
   

  	
   

  	
   

  
	
  Strike
  Price:

  	
   

  	
  As of any date, an amount
  in USD, rounded to the nearest cent (with 0.5 cents being rounded upwards),
  equal to USD 1,000 divided by
  the Option Entitlement.

  
	
   

  	
   

  	
   

  
	
  Applicable
  Percentage:

  	
   

  	
  50%

  
	
   

  	
   

  	
   

  
	
  Number
  of Shares:

  	
   

  	
  The product of the Number
  of Options and the Option Entitlement and the Applicable Percentage.

  
	
   

  	
   

  	
   

  
	
  Premium:

  	
   

  	
  USD 62,586,000

  



 


2

















 


	
  Premium
  Payment Date:

  	
   

  	
  May 5, 2009

  
	
   

  	
   

  	
   

  
	
  Exchange:

  	
   

  	
  The New York Stock
  Exchange

  
	
   

  	
   

  	
   

  
	
  Related
  Exchange(s):

  	
   

  	
  The principal
  exchange(s) for options contracts or futures contracts, if any, with
  respect to the Shares

  
	
   

  	
   

  	
   

  
	
  Exercise
  and Valuation:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise
  Date:

  	
   

  	
  Each Conversion Date.

  
	
   

  	
   

  	
   

  
	
  Conversion
  Date:

  	
   

  	
  Each “Conversion Date” (as
  defined in the Supplemental Indenture) for Convertible Notes.

  
	
   

  	
   

  	
   

  
	
  Relevant
  Convertible Notes:

  	
   

  	
  For any Conversion Date, a
  number of Convertible Notes equal to the lesser of (i) the number of
  Convertible Notes in denominations of USD 1,000 principal amount
  submitted for conversion on such Conversion Date in accordance with the terms
  of the Indenture and (ii) the Number of Options as of such Conversion
  Date determined without giving effect to the exercise of any Options on such
  Conversion Date.

  
	
   

  	
   

  	
   

  
	
  Required
  Exercise on Conversion Dates:

  	
   

  	
  On each Conversion Date
  for Convertible Notes, a number of Options (the “Exercisable
  Options”) equal to the number of Relevant Convertible Notes for
  such Conversion Date shall be automatically exercised, subject to Notice of
  Exercise and Notice of Settlement Method below.

  
	
   

  	
   

  	
   

  
	
  Exercise
  Period:

  	
   

  	
  The period from and
  excluding the Trade Date to and including the Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  The earlier of
  (x) the last day on which any Convertible Notes remain outstanding and
  (y) the maturity date of the Convertible Notes (the “Convertible Maturity Date”).

  
	
   

  	
   

  	
   

  
	
  Scheduled
  Trading Day:

  	
   

  	
  As such term is defined in
  Section 1.02 of the Supplemental Indenture.

  
	
   

  	
   

  	
   

  
	
  Notice
  of Exercise:

  	
   

  	
  Notwithstanding anything
  to the contrary in the Equity Definitions, in order to exercise any Options,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)  if Physical
  Settlement applies, Counterparty must notify Bank in writing before
  5:00 p.m. (New York City time) on the second Scheduled Trading Day
  immediately following the Conversion Date for the Relevant Convertible Notes,
  which notice shall specify (i) the number of Exercisable Options and
  (ii) the Conversion Date; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)  if Low Cash
  Combination Settlement, High Cash Combination Settlement or Cash Settlement
  applies, Counterparty must notify Bank in writing before 5:00 p.m. (New
  York City time) on the Scheduled Trading Day immediately preceding the
  scheduled first day of the Settlement Period (as defined in the Supplemental
  Indenture) 

  



 


3

















 


	
   

  	
   

  	
  for the Relevant
  Convertible Notes, which notice shall specify (i) the number of
  Exercisable Options, (ii) the scheduled first day of the Settlement
  Period, and (iii) if Low Cash Combination Settlement or High Cash
  Combination Settlement applies, the fixed dollar amount per USD 1,000 of the
  principal amount of the Notes specified by Counterparty pursuant to
  Section 9.02(b)(3)(A) of the Supplemental Indenture (the “Specified Cash Amount”);

   

  provided that with
  respect to Options relating to Relevant Convertible Notes with a Conversion
  Date on or following the fiftieth (50th) Scheduled Trading Day prior to the
  Convertible Maturity Date (the “Final Conversion Period”),
  such Notice of Exercise need only specify the number of Options being
  exercised and the Specified Cash Amount, if applicable.

  
	
   

  	
   

  	
   

  
	
  Settlement
  Terms:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Physical
  Settlement:

  	
   

  	
  Notwithstanding anything
  to the contrary in the Equity Definitions, means that Counterparty has
  elected to deliver only Shares to satisfy the Conversion Obligation (as
  defined in the Supplemental Indenture) in connection with the conversion of
  the Relevant Convertible Notes.

  
	
   

  	
   

  	
   

  
	
  Low
  Cash Combination Settlement:

  	
   

  	
  Means that
  (i) Counterparty has elected to deliver a combination of Shares and cash
  to satisfy the Conversion Obligation in connection with the conversion of the
  Relevant Convertible Notes and (ii) the Specified Cash Amount with
  respect to such conversion is equal to or less than USD 1,000.

  
	
   

  	
   

  	
   

  
	
  High
  Cash Combination Settlement:

  	
   

  	
  Means that
  (i) Counterparty has elected to deliver a combination of Shares and cash
  to satisfy the Conversion Obligation in connection with the conversion of the
  Relevant Convertible Notes and (ii) the Specified Cash Amount with
  respect to such conversion is greater than USD 1,000.

  
	
   

  	
   

  	
   

  
	
  Cash
  Settlement:

  	
   

  	
  Notwithstanding anything
  to the contrary in the Equity Definitions, means that Counterparty has
  elected to deliver only cash to satisfy the Conversion Obligation in
  connection with the conversion of the Relevant Convertible Notes.

  
	
   

  	
   

  	
   

  
	
  Notice
  of Settlement Method:

  	
   

  	
  Counterparty initially
  elects Low Cash Combination Settlement to settle its Conversion Obligation
  (as defined in the Supplemental Indenture). If Counterparty chooses to elect
  a different method of settlement, Counterparty must notify Bank of the newly
  chosen settlement method no later than the earlier of (i) 5:00 p.m.
  (New York City time) on the second Scheduled Trading Day immediately
  following the Conversion Date for the Relevant Convertible Notes to which the
  newly chosen settlement method is going to apply and (ii) 5:00 p.m.
  (New York City time) on the Scheduled Trading Day immediately preceding the
  Final Conversion Period; provided that
  it shall be a condition to Counterparty’s election of any such newly chosen
  settlement method that at the time of such election each of Counterparty and
  its affiliates is not, and Counterparty 

  



 


4

















 


	
   

  	
   

  	
  hereby represents and
  covenants that at such time neither of them will be, in possession of any
  material non-public information with respect to Counterparty or the Shares.

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
  Subject to the delivery of
  a Notice of Exercise and, to the extent applicable, a Notice of Settlement
  Method, to Bank, the date Shares and/or cash are required to be delivered
  with respect to the Relevant Convertible Notes under the terms of the
  Indenture.

  
	
   

  	
   

  	
   

  
	
  Delivery
  Obligation:

  	
   

  	
  In lieu of the obligations
  set forth in Sections 5.1 and 6.1 of the Equity Definitions, and subject to
  Notice of Exercise and Notice of Settlement Method above, in respect of an
  Exercise Date, Bank will deliver to Counterparty, on the related Settlement
  Date,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)  if Physical
  Settlement or Low Cash Combination Settlement applies, a number of Shares
  equal to the product of the Applicable Percentage and the aggregate number of
  Shares (and cash in lieu of fractional Shares, if any, resulting from
  rounding of such aggregate number of Shares based on the VWAP (as defined in
  the Supplemental Indenture) on the Conversion Date) that Counterparty would
  have been obligated to deliver to the holder(s) of the Relevant
  Convertible Notes had Counterparty elected to deliver a combination of Shares
  and cash to satisfy the Conversion Obligation pursuant to
  Section 9.02(b) of the Supplemental Indenture and with a Specified
  Cash Amount of USD 1,000, as determined by the Calculation Agent; provided that, in the case of Physical Settlement, the
  number of Shares delivered by Bank to Counterparty on the related Settlement
  Date shall not be greater than the product of (i) the Applicable
  Percentage and (ii) the excess of (x) the aggregate number of
  Shares that Counterparty is obligated to deliver to the holder(s) of the
  Relevant Convertible Notes pursuant to Section 9.02(b)(1) of the
  Supplemental Indenture over (y) the number of Shares equal to
  (a) the aggregate principal amount of the Relevant Convertible Notes divided by (b) the Last Reported Sale Price (as
  defined in the Supplemental Indenture) on the final Settlement Period Trading
  Day (as defined in the Supplemental Indenture) of the applicable Settlement
  Period as if Counterparty elected Low Cash Combination Settlement;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)  if High Cash
  Combination Settlement applies, (i) a number of Shares equal to the
  product of the Applicable Percentage and the aggregate number of Shares that
  Counterparty is obligated to deliver to the holder(s) of the Relevant
  Convertible Notes pursuant to Section 9.02(b)(3) of the
  Supplemental Indenture and (ii) an amount of cash equal to the product
  of the Applicable Percentage and the excess, if any, of (A) the amount
  of cash (including cash in lieu of fractional Shares, if any, resulting from
  rounding of such aggregate number of Shares based on the VWAP (as defined in
  the Supplemental Indenture and subject to the third immediately following
  paragraph) on the last day of the relevant Settlement 

  



 


5

















 


	
   

  	
   

  	
  Period) that Counterparty
  is obligated to deliver to the holder(s) of the Relevant Convertible
  Notes pursuant to Section 9.02(b)(3) of the Supplemental Indenture
  over (B) the principal amount of the Relevant Convertible Notes being
  converted on such Conversion Date; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)  if Cash
  Settlement Applies, an amount equal to the product of the Applicable
  Percentage and the excess, if any, of (i) the cash that Counterparty is
  obligated to deliver to the holder(s) of the Relevant Convertible Notes
  pursuant to Section 9.02(b)(2) of the Supplemental Indenture over
  (ii) the principal amount of the Relevant Convertible Notes being
  converted on such Conversion Date (in each case, such Shares and/or cash
  collectively, the “Convertible Obligation”);

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  provided that, in all
  cases, the Delivery Obligation shall be determined excluding any Shares or
  cash (including cash in lieu of fractional Shares) that Counterparty is
  obligated to deliver to holder(s) of the Relevant Convertible Notes as a
  direct or indirect result of any adjustments to the Conversion Rate pursuant
  to Section 9.03 or Section 9.04(g) or (h) of the
  Supplemental Indenture and any interest payment that Counterparty is
  obligated to deliver to holder(s) of the Relevant Convertible Notes. For
  the avoidance of doubt, in connection with each Exercise Date, if the Daily
  Conversion Value (as defined in the Supplemental Indenture) for each of the
  Settlement Period Trading Days (as defined in the Supplemental Indenture)
  occurring in the relevant Settlement Period that would be applicable if cash
  settlement applied, is less than or equal to 1/45th of USD 1,000, Bank will
  have no delivery obligation hereunder in respect of such Exercise Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Counterparty agrees that
  if, with respect to any Settlement Period Trading Day during any relevant
  Settlement Period, the per share volume-weighted average price as displayed
  under the heading “Bloomberg VWAP” on Bloomberg page TXT.N
  <equity> AQR is unavailable, Counterparty and the nationally recognized
  independent investment banking firm retained by Counterparty pursuant to the
  definition of VWAP in the Indenture shall consult with the Calculation Agent
  to determine the VWAP on such Settlement Period Trading Day.

  
	
   

  	
   

  	
   

  
	
  Notice
  of Delivery Obligation:

  	
   

  	
  As applicable and no later
  than the later of (a) the relevant Exercise Date and (b) the
  Exchange Business Day immediately following the last day of the Settlement
  Period, Counterparty shall give Bank notice of the final number of Shares
  and/or the amount of cash comprising the relevant Convertible Obligation; provided that, with respect to any Exercise Date occurring
  during the Final Conversion Period, Counterparty may provide Bank with a
  single notice of the aggregate number of Shares and/or the amount of cash
  comprising the Convertible Obligations for all such Exercise Dates (it being
  understood, for the avoidance of doubt, that the requirement of Counterparty
  to deliver such notice shall not limit Counterparty’s obligations with
  respect to Notice of Exercise, 

  



 


6

















 


	
   

  	
   

  	
  as set forth above, in any
  way).

  
	
   

  	
   

  	
   

  
	
  Settlement
  Currency:

  	
   

  	
  USD

  
	
   

  	
   

  	
   

  
	
  Other
  Applicable Provisions:

  	
   

  	
  The provisions of Sections
  6.6, 6.7, 6.8, 6.9 and 6.10 of the Equity Definitions will be applicable,
  except that all references in such provisions to “Physically-Settled” shall
  be read as references to “Low Cash Combination Settled” or “High Cash
  Combination Settled” to the extent Low Cash Combination Settlement or High
  Cash Combination Settlement is applicable. “Low Cash Combination Settled” or
  “High Cash Combination Settled” in relation to any Option means that Low Cash
  Combination Settlement or High Cash Combination Settlement is applicable to that
  Option.

  
	
   

  	
   

  	
   

  
	
  Failure
  to Deliver:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  3.     Additional
  Terms applicable to the Transaction:

  
	
   

  
	
  Adjustments
  applicable to the Transaction:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Potential
  Adjustment Events:

  	
   

  	
  Notwithstanding
  Section 9.1(e) of the Equity Definitions, a “Potential
  Adjustment Event” means any occurrence of any event or condition,
  as set forth in Section 9.04 of the Supplemental Indenture that would
  result in an adjustment to the Conversion Rate of the Convertible Notes; provided that in no event shall there be any adjustment
  hereunder as a result of an adjustment to the Conversion Rate pursuant to
  Section 9.03 or Section 9.04(g) or (h) of the
  Supplemental Indenture.

  
	
   

  	
   

  	
   

  
	
  Method
  of Adjustment:

  	
   

  	
  Calculation Agent
  Adjustment, and means that, notwithstanding Section 9.1(c) of the
  Equity Definitions, upon any adjustment to the Conversion Rate of the
  Convertible Notes pursuant to the Indenture (other than Section 9.03 and
  Sections 9.04(g) and (h) of the Supplemental Indenture), the
  Calculation Agent will make a corresponding adjustment to any one or more of
  the Strike Price, Number of Options, the Option Entitlement and any other
  variable relevant to the exercise, settlement or payment for the Transaction.

  
	
   

  	
   

  	
   

  
	
  Extraordinary
  Events applicable to the Transaction:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Merger
  Events:

  	
   

  	
  Notwithstanding
  Section 9.2(a) of the Equity Definitions, a “Merger
  Event” means the occurrence of any event or condition set forth in
  Section 9.05 of the Supplemental Indenture.

  
	
   

  	
   

  	
   

  
	
  Consequence
  of Merger Events:

  	
   

  	
  Notwithstanding
  Section 9.3 of the Equity Definitions, upon the occurrence of a Merger
  Event, the Calculation Agent shall make a corresponding adjustment in respect
  of any adjustment under the Indenture to any one or more of the nature of the
  Shares, Strike Price, Number of Options, the Option Entitlement and any other
  variable relevant to the exercise, 

  



 


7

















 


	
   

  	
   

  	
  settlement or payment for
  the Transaction; provided however
  that such adjustment shall be made without regard to any adjustment to the
  Conversion Rate for the issuance of additional shares as set forth in
  Section 9.03 of the Supplemental Indenture.

  
	
   

  	
   

  	
   

  
	
  Nationalization
  and Insolvency:

  	
   

  	
  Cancellation and Payment

  
	
   

  	
   

  	
   

  
	
  4.     Calculation Agent:

  	
   

  	
  Bank; provided
  that all determinations made by the Calculation Agent shall be made in good
  faith and in a commercially reasonable manner. Following any calculation by
  the Calculation Agent hereunder and a prior written request by Counterparty,
  the Calculation Agent will provide to Counterparty by e-mail to the e-mail
  address provided by Counterparty in such prior written request a report (in a
  commonly used file format for the storage and manipulation of financial data)
  displaying in reasonable detail the basis for such calculation. For the
  avoidance of doubt, nothing in this provision will require Bank to provide
  its proprietary models to Counterparty.

  



 


5.               Account Details


 


(a)                                  Account for
payments to Counterparty:


 


JPMorgan
Chase


New
York, NY


Fed
Wire:  021000021


Swift
/ BIC:  CHASUS33


CHIP
No:  0002


CHIP
UID:  280099


Account
name:  Textron Inc.


Account
No:  9101013655


 


Account for delivery of
Shares to Counterparty:


 


To be provided by
Counterparty


 


(b)                                 Account for
payments to Bank:


 


Chase Manhattan Bank New York


For A/C Goldman, Sachs & Co.


A/C #930-1-011483


ABA:  021-000021


 


Account for delivery of
Shares from Bank:


 


To be provided by Bank


 


6.               Offices:


 


The Office of Counterparty for the
Transaction is:  Inapplicable,
Counterparty is not a Multibranch Party.


 


8

















 


The Office of Bank for the
Transaction is:  New York


 


Goldman, Sachs & Co.


One
New York Plaza


New
York, New York 10004


 


7.               Notices:  For purposes of this Confirmation:


 


(a)                                  Address for
notices or communications to Counterparty:


 


Textron Inc.


40
Westminster Street


Providence,
RI 02903


Attention:
Chief Financial Officer


Telephone No.:     (401) 421-2800


Facsimile No.:       (401) 457-3533


 


(b)                                 Address for
notices or communications to Bank:


 


	
  To:

  	
  Goldman,
  Sachs & Co.

  
	
   

  	
  One New York Plaza

  
	
   

  	
  New York, NY 10004

  
	
  Attn:

  	
  Serge Marquié,

  
	
   

  	
  Equity Capital Markets

  
	
  Telephone:

  	
  (212) 902-9779

  
	
  Facsimile:

  	
  (917) 977-4253

  
	
  Email:

  	
  marqse@am.ibd.gs.com

  
	
   

  	
   

  
	
  With a copy to:

  	
   

  
	
   

  	
   

  
	
  Attn:

  	
  Vijay Culas

  
	
   

  	
  Equity Capital Markets

  
	
  Telephone:

  	
  (212) 902-6247

  
	
  Facsimile:

  	
  (212) 428-1898

  
	
  Email:

  	
  vijay.culas@gs.com

  



 


And email notification to the following address:


Eq-derivs-notifications@am.ibd.gs.com


 


8.               Representations
and Warranties of Counterparty


 


The representations and warranties of
Counterparty set forth in Article VII of the Textron Inc. Underwriting
Agreement Standard Provisions (Debt), dated as of April 29, 2009, and
incorporated by reference into the Underwriting Agreement (the “Underwriting Agreement”), dated as of April 29, 2009,
between Counterparty and J.P. Morgan Securities Inc. and Goldman, Sachs &
Co., as representatives of the underwriters party thereto (the “Underwriters”), are true and correct and are hereby deemed
to be repeated to Bank as if set forth herein. Counterparty hereby further
represents and warrants to Bank that:


 


(a)                                  Counterparty
has all necessary corporate power and authority to execute, deliver and perform
its obligations in respect of the Transaction; such execution, delivery and
performance have been duly authorized by all necessary corporate action on
Counterparty’s part; and this Confirmation has been duly and validly executed
and delivered by Counterparty and 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 


 


9

















 


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 Confirmation nor the incurrence or performance
of obligations of Counterparty hereunder 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, delivery or performance by Counterparty of this
Confirmation, except such as have been obtained or made and such as may be
required under the Securities Act of 1933, as amended (the “Securities Act”) 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)                                 Counterparty
represents that it is not subject to the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”),
and the assets used in the Transaction (1) are not assets of any “plan”
(as such term is defined in Section 4975 of the Internal Revenue Code (the
“Code”)) subject to Section 4975
of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) subject to Title I of ERISA, and (2) do not constitute “plan assets”
within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.


 


(h)                                 There is no
law, rule, regulation or regulatory order (collectively, “Adverse Laws”) that, as a result of the
ownership or control (whether direct, beneficial, constructive or otherwise) of
Shares by  The Goldman Sachs Group, Inc.
(“Bank Parent”) or any person
controlled directly or indirectly by Bank Parent, would give rise to reporting
or registration obligations or a requirement to obtain prior approval from any
person or entity on  Bank Parent or any
such controlled person or would result in a not insignificant adverse effect on
Bank Parent or any such controlled person, other than any Adverse Law that
applies to the ownership of equity positions generally without regard to the
nature of the issuer’s business (such as Sections 13 and 16 of the Exchange
Act) or any Adverse Law that applies solely as a result of the business,
identity, place of business or jurisdiction of organization of the holder of
the common stock (such as the Bank Holding Company Act of 1956, as amended).


 


(i)                                     Other than
Textron Business Credit, Inc., which is a “Rhode Island financial institution,”
and Textron Financial Corporation, which is a “Rhode Island bank holding
company” but is not a bank holding company under the Bank Holding Company Act
of 1956, as amended, Counterparty is not and does not control, directly or
indirectly, a bank or bank holding company or other financial institution
regulated under federal or state banking law.


 


10
















 


(j)                                     It has
received, read and understands the OTC Options Risk Disclosure Statement and a
copy of the most recent disclosure pamphlet prepared by The Options Clearing
Corporation entitled “Characteristics and Risks of Standardized Options”.  Each party acknowledges and agrees to be
bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc.
applicable to transactions in options, and further agrees not to violate the
position and exercise limits set forth therein.


 


9.               Other
Provisions:


 


(a)                                  Opinions. Counterparty
shall deliver to Bank an opinion of counsel (including an in-house lawyer of
Counterparty), dated as of the Trade Date, with respect to the matters set
forth in Sections 8(a) through (c) of this Confirmation.


 


(b)                                 No
Reliance, etc. Each party represents that (i) it is entering
into the Transaction evidenced hereby as principal (and not as agent or in any
other capacity); (ii) neither the other party nor any of its agents are
acting as a fiduciary for it; (iii) it is not relying upon any
representations except those expressly set forth in the Agreement or this
Confirmation; (iv) 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 upon any view expressed by the other party or any of its agents;
and (v) it is entering into the Transaction with a full understanding of
the terms, conditions and risks thereof and it is capable of and willing to
assume those risks.


 


(c)                                  Repurchase
Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give Bank a written
notice of such repurchase (a “Repurchase
Notice”) on such day if following such repurchase, the quotient of (i) the
sum of (A) the Number of Shares for the Transaction and (B) the
aggregate number of Shares underlying any other convertible bond hedge
transactions between Bank and Counterparty, if any, divided by (ii) the number of Counterparty’s
outstanding Shares (such quotient expressed as a percentage, the “Option Equity Percentage”) would be (x) greater
than 9.0% or (y) 0.5% greater than the Option Equity Percentage included
in the immediately preceding Repurchase Notice. Counterparty agrees to
indemnify and hold harmless Bank and its affiliates and their respective
officers, directors, employees, affiliates, advisors, agents and controlling
persons (each, an “Indemnified Person”)
from and against any and all losses (including losses relating to Bank’s
hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16
“insider”, including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in connection
therewith with respect to the Transaction), claims, damages, judgments,
liabilities and expenses (including reasonable attorney’s fees), joint or
several, which an Indemnified Person may become subject to, as a result of
Counterparty’s failure to provide Bank with a Repurchase Notice on the day and
in the manner specified in this paragraph, and to reimburse, within 30 days,
upon written request, each of such Indemnified Persons for any reasonable legal
or other expenses incurred in connection with investigating, preparing for,
providing testimony or other evidence in connection with or defending any of
the foregoing. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
the Indemnified Person as a result of Counterparty’s failure to provide Bank
with a Repurchase Notice in accordance with this paragraph, such Indemnified
Person shall promptly notify Counterparty in writing, and Counterparty, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others
Counterparty may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. Counterparty shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Counterparty shall not, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in
respect of 


 


11

















 


which
any Indemnified Person is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all liability
on claims that are the subject matter of such proceeding on terms reasonably
satisfactory to such Indemnified Person. If the indemnification provided for in
this paragraph is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
Counterparty under such paragraph, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities.
The remedies provided for in this paragraph are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity. The indemnity and contribution
agreements contained in this paragraph shall remain operative and in full force
and effect regardless of the termination of the Transaction.


 


(d)                                 Regulation
M. Counterparty is not on the Trade Date engaged in a distribution, as
such term is used in Regulation M under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), of
any securities of Counterparty, other than the concurrent distributions of the
Convertible Notes and Shares being made on the date hereof. Counterparty shall
not, until the second Exchange Business Day immediately following the Trade
Date, engage in any distribution other than those described in this paragraph.


 


(e)                                  No
Manipulation. Counterparty is not entering into the Transaction
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).


 


(f)                                    Number
of Repurchased Shares. Counterparty represents that it could have
purchased Shares, in an amount equal to the product of the Number of Options
and the Option Entitlement, on the Exchange or otherwise, in compliance with
applicable law, its organizational documents and any orders, decrees and
contractual agreements binding upon Counterparty, on the Trade Date and the
Premium Payment Date.


 


(g)                                 Board
Authorization. Each of the Transaction and the issuance of the
Convertible Notes was approved by its board of directors and publicly
announced, solely for the purposes stated in such board resolution and public
disclosure and, prior to any exercise of Options hereunder, Counterparty’s
board of directors will have duly authorized any repurchase of Shares pursuant
to the Transaction. Counterparty further represents that there is no internal
policy, whether written or oral, of Counterparty that would prohibit
Counterparty from entering into any aspect of the Transaction, including, but
not limited to, the purchases of Shares to be made pursuant hereto.


 


(h)                                 Transfer
or Assignment. (i) Counterparty shall have the right to
transfer or assign its rights and obligations hereunder with respect to all,
but not less than all, of the Options hereunder (such Options, the “Transfer Options”); provided that such transfer or assignment
shall be subject to reasonable conditions that Bank may impose, including but
not limited, to the following conditions:


 


(A)          With respect to any Transfer
Options, Counterparty shall not be released from its notice and indemnification
obligations pursuant to Section 9(c) or any obligations under Section 9(r) or
9(v) of this Confirmation;


 


(B)           Any Transfer Options shall
only be transferred or assigned to a third party that is a U.S. person (as
defined in the Internal Revenue Code of 1986, as amended);


 


(C)           Such transfer or assignment
shall be effected on terms, including any reasonable undertakings by such third
party (including, but not limited to, an undertaking with respect to compliance
with applicable securities laws in a manner that, in 


 


12

















 


the
reasonable judgment of Bank, will not expose Bank to material risks under
applicable securities laws) and execution of any documentation and delivery of
legal opinions with respect to securities laws and other matters by such third
party and Counterparty, as are requested and reasonably satisfactory to Bank;


 


(D)          Bank will not, as a result
of such transfer and assignment, be required to pay the transferee on any payment
date an amount under Section 2(d)(i)(4) of the Agreement greater than
an amount that Bank would have been required to pay to Counterparty in the
absence of such transfer and assignment;


 


(E)           An Event of Default,
Potential Event of Default or Termination Event will not occur as a result of
such transfer and assignment;


 


(F)           Without limiting the
generality of clause (B), Counterparty shall cause the transferee to make such
Payee Tax Representations and to provide such tax documentation as may be
reasonably requested by Bank to permit Bank to determine that results described
in clauses (D) and (E) will not occur upon or after such transfer and
assignment; and


 


(G)           Counterparty shall be
responsible for all reasonable costs and expenses, including reasonable counsel
fees, incurred by Bank in connection with such transfer or assignment.


 


(ii)           Bank may transfer or assign
without any consent of Counterparty its rights and obligations hereunder, in
whole or in part, to any of its affiliates whose obligations hereunder would be
guaranteed by The Goldman Sachs Group, Inc.; provided
further that Bank may transfer or assign all or any portion of its
rights or obligations under the Transaction without consent of Counterparty to
any third party with a rating for its long term, unsecured and unsubordinated
indebtedness equal to or better than the lesser of (1) the credit rating
of Bank at the time of the transfer and (2) A- by Standard and Poor’s
Rating Group, Inc. or its successor (“S&P”),
or A3 by Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases to rate such
debt, at least an equivalent rating or better by a substitute agency rating
mutually agreed by Counterparty and Bank. If after Bank’s commercially
reasonable efforts, Bank is unable to effect a transfer or assignment on
pricing terms reasonably acceptable to Bank and within a time period reasonably
acceptable to Bank of a sufficient number of Options to reduce (1) Bank
Group’s “beneficial ownership” (within the meaning of Section 13 or Section 16
of the Exchange Act and rules promulgated thereunder) to 7.5% of
Counterparty’s outstanding Shares or less, (2) the Option Equity
Percentage to 14.5% or less, and (3) the Share Amount to the
Post-Effective Limit (if any applies) or less, Bank may designate any Exchange
Business Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction,
such that (1) Bank Group’s “beneficial ownership” following such partial
termination will be equal to or less than 7.5%, (2) the Option Equity
Percentage following such partial termination will be equal to or less than
14.5%, and (3) the Share Amount following such partial termination will be
equal to or less than such Post-Effective Limit. In the event that Bank so
designates an Early Termination Date with respect to a portion of the
Transaction, a payment shall be made pursuant to Section 6 of the
Agreement as if (1) an Early Termination Date had been designated in
respect of a Transaction having terms identical to the Transaction and a Number
of Options equal to the Terminated Portion, (2) Counterparty shall be the
sole Affected Party with respect to such partial termination and (3) such
Transaction shall be the only Terminated Transaction (and, for the avoidance of
doubt, the provisions of paragraph 9(o) shall apply to any amount that is
payable by Bank to Counterparty pursuant to this sentence).  “Bank Group”
means Bank and each business unit of its affiliates subject to aggregation with
Bank under Section 13 or Section 16 of the 


 


13

















 


Exchange
Act and rules promulgated thereunder. 
The “Share Amount” as of
any day is the number of Shares that Bank and any person whose ownership
position would be aggregated with that of Bank (Bank or any such person, a “Bank
Person”) under any law, rule, regulation or regulatory order that for any
reason becomes applicable to ownership of Shares after the Trade Date (“Applicable
Laws”), owns, beneficially owns, constructively owns, controls, holds the
power to vote or otherwise meets a relevant definition of ownership of under
the Applicable Laws, as determined by Bank in its reasonable discretion. The “Post-Effective Limit” means (x) the
minimum number of Shares that would give rise to reporting or registration
obligations or other requirements (including obtaining prior approval from any
person or entity) of a Bank Person, or would result in an adverse effect on a
Bank Person, under the Applicable Laws, as determined by Bank in its reasonable
discretion, minus (y) 1% of
the number of Shares outstanding.  If at
any time Bank determines, in its reasonable opinion based upon advice of
counsel, that as a result of Counterparty’s direct or indirect interest in, or
direct or indirect control of, either Textron Business Credit, Inc. or
Textron Financial Corporation, any state or federal laws are or have become
applicable to Bank’s ownership of Shares, then the Post-Effective Limit and the
Share Amount shall be determined as set forth above in the definitions of those
terms, irrespective of whether or not such laws have been applicable to
ownership of Shares on or prior to the Trade Date.


 


(i)                                     Staggered
Settlement. If upon advice of counsel with respect to
applicable legal and regulatory requirements, including any requirements
relating to Bank’s hedging activities hereunder, or due to inability to borrow
Shares to deliver to Counterparty at a rate of borrowing less than 35 basis
points, Bank reasonably determines that it would not be practicable or advisable
to deliver, or to acquire Shares to deliver, any or all of the Shares to be
delivered by Bank on the Settlement Date for the Transaction, Bank may, by
notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver
the Shares on two or more dates (each, a “Staggered
Settlement Date”) as follows:


 


(a)                                  in such notice,
Bank will specify to Counterparty the related Staggered Settlement Dates, which
Bank shall choose in a commercially reasonable manner, (the first of which will
be such Nominal Settlement Date and the last of which will be no later than the
twentieth (20th) Exchange Business Day following such Nominal Settlement Date)
and the number of Shares that it will deliver on each Staggered Settlement Date
on a payment versus delivery basis;


 


(b)                                 the aggregate
number of Shares that Bank will deliver to Counterparty hereunder on all such
Staggered Settlement Dates will equal the number of Shares that Bank would
otherwise be required to deliver on such Nominal Settlement Date; and


 


(c)                                  if the Physical
Settlement terms, the Low Cash Combination Settlement terms or the High Cash
Combination Settlement terms set forth above were to apply on the Nominal
Settlement Date, then the Physical Settlement terms, the Low Cash Combination
Settlement terms or the High Cash Combination Settlement terms, as the case may
be, will apply on each Staggered Settlement Date, except that the Shares will
be allocated among such Staggered Settlement Dates as specified by Bank in the
notice referred to in clause (a) above.


 


(j)                                     Damages. Neither party
shall be liable under Section 6.10 of the Equity Definitions for special,
indirect or consequential damages, even if informed of the possibility thereof,
except as specifically set forth otherwise herein.


 


(k)                                  Early
Unwind. In the event the sale of Convertible Notes is not
consummated with the Underwriters for any reason or Counterparty fails to
deliver to Bank opinions of counsel to Counterparty as required pursuant to Section 9(a) by
the close of business in New York on May 5, 


 


14

















 


2009
or such later date as agreed upon by the parties (May 5, 2009 or such
later date the “Early Unwind Date”),
the Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the
Transaction and all of the respective rights and obligations of Bank and
Counterparty under the Transaction shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and agrees not
to make any claim against the other party with respect to any obligations or
liabilities of the other party arising out of and to be performed in connection
with the Transaction either prior to or after the Early Unwind Date; provided that, other than to the extent
the Early Unwind Date occurred as a result of the breach of the Underwriting
Agreement by the Underwriters, Counterparty shall reimburse Bank, in cash or
Shares, for any costs or expenses (including market losses) relating to the
unwinding of its or its affiliate’s hedging activities in connection with the
Transaction (including any loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related
trading position). Bank shall notify Counterparty of such amount and
Counterparty shall pay such amount in immediately available funds or deliver
Shares on the Early Unwind Date. Bank and Counterparty represent and
acknowledge to the other that, subject to the proviso included in this
paragraph, upon an Early Unwind, all obligations with respect to the
Transaction shall be deemed fully and finally discharged.


 


(l)                                     Reserved.


 


(m)                               Additional
Provisions.


 


(i)            Section 9.6(a)(ii) of
the Equity Definitions is hereby amended by (1) deleting from the third
line thereof the word “or” after the word “official” and inserting a comma
therefor, and (2) deleting the period at the end of subsection (ii) thereof
and inserting the following words therefor “ or (C) at Bank’s option, the
occurrence of any of the events specified in Section 5(a)(vii) (1) through
(9) of the Agreement with respect to that Issuer.”


 


(ii)           Notwithstanding Section 9.7
of the Equity Definitions, everything in the first paragraph of Section 9.7(b) of
the Equity Definitions after the words “Calculation Agent” in the third line
through the remainder of such Section 9.7 shall be deleted and replaced
with the following:


 


“based
on an amount representing the Calculation Agent’s determination of the fair
value to Counterparty of an option with terms that would preserve for
Counterparty the economic equivalent of any payment or delivery (assuming
satisfaction of each applicable condition precedent) by the parties in respect
of the relevant Transaction that would have been required after that date but
for the occurrence of the Option Value Event.”


 


(iii)          Notwithstanding anything to
the contrary in this Confirmation, if any of the following events occurs, (1) Bank
shall have the right to designate such an event an Additional Termination Event
and designate an Early Termination Date pursuant to Section 6(b) of
the Agreement, and (2) Counterparty shall be deemed the sole Affected
Party and the Transaction shall be deemed the sole Affected Transaction:


 


(a)                                  At any time
during the period from and including the Trade Date, to and including the
Expiration Date, the Shares cease to be listed or quoted on the Exchange for
any reason (other than a Merger Event as a result of which the shares of common
stock underlying the Options are listed or quoted on the New York Stock
Exchange, the NASDAQ Global Market or the NASDAQ Global Select Market (or their
respective successors) (each, a “Successor
Exchange”)) and are not immediately re-listed or quoted as of the
date of such de-listing on a Successor Exchange.


 


15

















 


(b)                                 Counterparty
amends, modifies, supplements or waives any term of the Indenture or the
Convertible Notes governing the principal amount, coupon, maturity, repurchase
obligation of Counterparty, redemption right of Counterparty, any term relating
to conversion of the Convertible Notes (including changes to the conversion
price, conversion settlement dates or conversion conditions), or any term that
would require consent of the holders of not less than 100% of the principal
amount of the Convertible Notes to amend, in each case without the prior
consent of Bank.


 


(c)                                  On or after the
Trade Date, a Change in Law (as defined in the 2002 Equity Derivatives
Definitions as published by ISDA (the “2002
Definitions”), with any reference in such definition to “Shares”
being replaced with references to “Hedge Position(s)” and without regard to
clause (Y) of such definition) shall have occurred.


 


(iv)                              Notwithstanding
anything to the contrary in this Confirmation, the giving of any Notice of
Exercise shall constitute an Additional Termination Event hereunder with
respect to the number, if any, of Exercisable Options specified in such Notice
of Exercise as corresponding to a conversion of Relevant Convertible Notes in
compliance with Section 9.03 of the Supplemental Indenture. Upon receipt
of any such notice, Bank shall designate an Exchange Business Day as an Early
Termination Date (such day to occur as close as practicable, in Bank’s
commercially reasonable judgment, to the settlement date of the Relevant
Convertible Notes), with respect to the portion of the Transaction
corresponding to number of such Exercisable Options so specified. In lieu of
the provisions of “Delivery Obligation”, any payment and/or delivery hereunder
with respect to such conversion shall be calculated pursuant to Section 6
of the Agreement; where, for the purposes of such calculation, (A) Counterparty
shall be the sole Affected Party with respect to such Additional Termination
Event, (B) Bank shall be the party entitled to designate an Early
Termination Date pursuant to Section 6(b) of the Agreement; and (C) for
the avoidance of doubt, in determining the amount payable pursuant to Section 6
of the Agreement, the Calculation Agent (i) shall take into account the
time value of the Transaction with respect to the Expiration Date and (ii) shall
not take into account any adjustments to the Option Entitlement that result
from corresponding adjustments to the Conversion Rate pursuant to Section 9.03
of the Supplemental Indenture; provided
further that (A) in case of a partial termination, an Early Termination
Date shall be designated in respect of a Transaction having terms identical to
the Transaction and a Number of Options equal to the terminated portion and
such Transaction shall be the only Terminated Transaction; (B) any amount
payable by Bank to Counterparty shall be satisfied solely by delivery by Bank
to Counterparty of a number of Shares and cash in lieu of a fractional share
equal to such amount calculated pursuant to Section 6 divided by
a price per Share determined by the Calculation Agent; and (C) the number
of Shares deliverable in respect of such early termination by Bank to
Counterparty shall not be greater than the product of (x) the Applicable
Percentage and (y) the excess of (a) the total number of Shares
underlying the corresponding Relevant Convertible Notes (including the number
of Additional Shares (as defined in the Supplemental Indenture) resulting from
any adjustment set forth in Section 9.03 of the Supplemental Indenture)
over (b) the number of Shares equal in value to the aggregate principal
amount of the corresponding Relevant Convertible Notes, as determined by the
Calculation Agent in its sole reasonable discretion.


 


(vi)                              For the avoidance of doubt,
in determining the Close-out Amount pursuant to Section 6(e) of the
Agreement, the Determining Party shall act in good faith and a commercially
reasonable manner, and, upon request, the Determining Party shall provide to
the other party a statement showing in reasonable detail, such calculations
(including any quotations, market data or information from internal sources
used in making such 


 


16

















 


calculation);
provided that the Determining Party
shall not be obligated to disclose any proprietary model used for such
calculation.


 


(n)                                 No
Collateral or Setoff. 
Notwithstanding any provision of the Agreement or any other agreement
between the parties to the contrary, the obligations of the Counterparty
hereunder are not secured by any collateral. Each party waives any and all
rights it may have to set-off delivery or payment obligations it owes to the
other party under the Transaction against any delivery or payment obligations
owed to it by the other party, whether arising under the Agreement, under any
other agreement between parties hereto, by operation of law or otherwise.
Notwithstanding anything to the contrary in the Equity Definitions,
Counterparty shall have no obligation to make any delivery or payment to Bank (i) pursuant
to Section 9.7 of the Equity Definitions or (ii) pursuant to Section 6(d)(ii) of
the Agreement.


 


(o)                                 Alternative
Calculations and Payment on Early Termination and on Certain Extraordinary
Events. If in respect of the Transaction, an amount is
payable by Bank to Counterparty (i) pursuant to Section 9.7 of the
Equity Definitions or (ii) pursuant to Sections 6(d) and 6(e) of
the Agreement (a “Payment Obligation”),
Counterparty may request Bank to satisfy any such Payment Obligation by the
Share Termination Alternative (as defined below) (except that Counterparty
shall not make such an election in a Merger Event, in which the consideration
to be paid to holders of Shares consists solely of cash, or an Event of Default
in which Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party, other than an Event of Default of the type
described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of
the Agreement or a Termination Event of the type described in Section 5(b) of
the Agreement in each case that resulted from an event or events outside
Counterparty’s control) and shall give irrevocable telephonic notice to Bank,
confirmed in writing within one Currency Business Day, no later than 12:00 p.m.
New York local time on the Merger Date or the Early Termination Date, as
applicable; provided that if
Counterparty does not validly request Bank to satisfy its Payment Obligation by
the Share Termination Alternative, Bank shall have the right, in its sole
discretion, to satisfy its Payment Obligation by the Share Termination
Alternative, notwithstanding Counterparty’s election to the contrary.


 


	
  Share Termination
  Alternative:

  	
   

  	
  Applicable and means that
  Bank shall deliver to Counterparty the Share Termination Delivery Property on
  the date when the Payment Obligation would otherwise be due pursuant to
  Section 9.7 of the Equity Definitions or Section 6(d)(ii) and
  6(e) of the Agreement, as applicable (the “Share
  Termination Payment Date”), in satisfaction of the Payment
  Obligation in the manner reasonably requested by Counterparty free of
  payment.

  
	
   

  	
   

  	
   

  
	
  Share Termination Delivery
  Property:

  	
   

  	
  A number of Share
  Termination Delivery Units, as calculated by the Calculation Agent, equal to
  the Payment Obligation divided by
  the Share Termination Unit Price. The Calculation Agent shall adjust the
  Share Termination Delivery Property by replacing any fractional portion of a
  security therein with an amount of cash equal to the value of such fractional
  security based on the values used to calculate the Share Termination Unit
  Price.

  
	
   

  	
   

  	
   

  
	
  Share Termination Unit
  Price:

  	
   

  	
  The value to Bank of
  property contained in one Share Termination Delivery Unit on the date such
  Share Termination Delivery Units are to be delivered as Share Termination
  Delivery Property, as determined by the Calculation Agent in its discretion
  by commercially reasonable means and notified by the Calculation Agent to
  Bank at the time of notification of 

  



 


17

















 


	
   

  	
   

  	
  the Payment Obligation. For the avoidance of doubt, the parties agree
  that in determining the Share Termination Delivery Unit Price the Calculation
  Agent may consider the purchase price paid in connection with the purchase of
  Share Termination Delivery Property.

  
	
   

  	
   

  	
   

  
	
  Share Termination Delivery
  Unit:

  	
   

  	
  One Share or, if a Merger
  Event has occurred and a corresponding adjustment to the Transaction has been
  made, a unit consisting of the number or amount of each type of property
  received by a holder of one Share (without consideration of any requirement
  to pay cash or other consideration in lieu of fractional amounts of any
  securities) in such Merger Event, as determined by the Calculation Agent.

  
	
   

  	
   

  	
   

  
	
  Failure to Deliver:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Other applicable
  provisions:

  	
   

  	
  If Share Termination
  Alternative is applicable, the provisions of Sections 6.6, 6.7, 6.8, 6.9 and
  6.10 (as modified above) of the Equity Definitions will be applicable, except
  that all references in such provisions to “Physically-Settled” shall be read
  as references to “Share Termination Settled” and all references to “Shares”
  shall be read as references to “Share Termination Delivery Units”. “Share
  Termination Settled” in relation to the Transaction means that Share
  Termination Alternative is applicable to the Transaction.

  



 


(p)                                 Governing
Law; Exclusive Jurisdiction. For the Agreement and this
Confirmation, New York law (without reference to choice of law doctrine to the
extent inconsistent with choice of New York law).  Section 13(b) of the Agreement is
hereby amended by (i) deleting the words “non-exclusive” in Section 13(b)(i)(2) and
replacing them with the word “exclusive”, and (ii)  inserting after the
word “law” in Section 13(b)(iii) the words “and subject to Section 13(b)(i)(2)”.


 


(q)                                 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 the Transaction. 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 the Transaction, as
applicable, by, among other things, the mutual waivers and certifications
provided herein.


 


(r)                                    Registration. Counterparty
hereby agrees that if, in the good faith reasonable judgment of Bank, the
Shares (“Hedge Shares”) acquired
by Bank for the purpose of hedging its obligations pursuant to the Transaction
cannot be sold in the public market by Bank without registration under the
Securities Act, Counterparty shall, at its election, either (i) in order
to allow Bank to sell the Hedge Shares in a registered offering, make available
to Bank an effective registration statement under the Securities Act and enter
into an agreement, in form and substance satisfactory to Bank, substantially in
the form of an underwriting agreement for a registered secondary offering; provided however, that if Bank, in its
sole reasonable discretion, is not satisfied with access to due diligence
materials, the results of its due diligence investigation, or the procedures
and documentation for the registered offering referred to above, then clause (ii) or
clause (iii) of this paragraph shall apply at the election of
Counterparty, (ii) in order to allow Bank to sell the Hedge Shares in a
private placement, enter into a private placement agreement substantially
similar to private placement purchase agreements customary for private
placements of equity securities of similar size, in form and substance
satisfactory to Bank (in which case, the Calculation Agent shall make any
adjustments to the terms of the Transaction which are necessary, in its
reasonable 


 


18

















 


judgment,
to compensate Bank for any discount from the public market price of the Shares
incurred on the sale of Hedge Shares in a private placement), or (iii) purchase
the Hedge Shares from Bank at the Last Reported Sale Price on such Trading
Days, and in the amounts, requested by Bank.


 


(s)                                  Tax
Disclosure. Effective from the date of commencement of
discussions concerning the Transaction, 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 the Transaction
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.


 


(t)                                    Status
of Claims in Bankruptcy. Bank acknowledges and
agrees that this Confirmation is not intended to convey to Bank rights with
respect to the Transaction that are senior to the claims of common stockholders
of Counterparty in any U.S. bankruptcy proceedings of Counterparty; provided that nothing herein shall limit
or shall be deemed to limit Bank’s right to pursue remedies in the event of a
breach by Counterparty of its obligations and agreements with respect to the
Transaction; provided, further,
that nothing herein shall limit or shall be deemed to limit Bank’s rights in
respect of any transactions other than the Transaction.


 


(u)                                 Securities
Contract; Swap Agreement. The parties hereto intend
for:  (a) the Transaction to be a “securities
contract” and a “swap agreement” and the Agreement to be a “master netting
agreement”, in each case as defined in the Bankruptcy Code (Title 11 of the
United States Code) (the “Bankruptcy Code”),
and the parties hereto to be entitled to the protections afforded by, among
other Sections, Sections 362(b)(6), 362(b)(7), 362(b)(27), 362(o), 546(e),
546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code; (b) a
party’s right to liquidate the Transaction and to exercise any other remedies
upon the occurrence of any Event of Default or Termination Event under the
Agreement with respect to the other party or any Extraordinary Event that
results in the termination or cancellation of any Transaction to constitute a “contractual
right” as described in the Bankruptcy Code; and (c) each payment and
delivery of cash, securities or other property hereunder to constitute a “margin
payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy
Code.


 


(v)                                 Additional
Provisions. Counterparty covenants and agrees that, as
promptly as practicable following the public announcement of any consolidation,
merger and binding share exchange to which Counterparty is a party, or any sale
of all or substantially all of Counterparty’s assets, in each case pursuant to
which the Shares will be converted into cash, securities or other property,
Counterparty shall notify Bank in writing of the types and amounts of
consideration that holders of Shares have elected to receive upon consummation
of such transaction or event (the date of such notification, the “Consideration Notification Date”); provided that in no event shall the
Consideration Notification Date be later than the date on which such
transaction or event is consummated.


 


(w)                               Private
Placement Procedures. If, in the reasonable opinion of Bank based
upon advice of counsel, following any delivery of Shares to Bank pursuant to Section 9(k) “
Early Unwind”, such Shares would be in the hands of Bank subject to any
applicable restrictions with respect to any registration or qualification
requirement or prospectus delivery requirement for such Shares pursuant to any
applicable federal or state securities law (including, without limitation, any
such requirement arising under Section 5 of the Securities Act as a result
of such Shares being “restricted securities”, as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such Shares or Share
Termination Delivery Property being subject to paragraph (c) of Rule 145
under the Securities Act) (such Shares, “Restricted
Shares”), then delivery of such Restricted Shares shall be effected
pursuant to clause (i) below.


 


(i)                                     Delivery of
Restricted Shares by Counterparty shall be effected in customary private
placement procedures with respect to such Restricted Shares of similar size in
form and 


 


19

















 


substance
reasonably acceptable to Bank (a “Private
Placement Settlement”). The Private Placement Settlement of such
Restricted Shares shall include customary representations, covenants, blue sky
and other governmental filings and/or registrations, indemnities to Bank, due
diligence rights (for Bank or any designated buyer of the Restricted Shares by
Bank), opinions and certificates, and such other documentation as is customary
for private placement agreements, all reasonably acceptable to Bank. Bank shall
determine the appropriate discount applicable to such Restricted Shares in a
commercially reasonable manner and appropriately adjust the amount of such
Restricted Shares to be delivered to Bank hereunder; provided
that in no event such number shall be greater than 0.9 times the Number of
Shares (the “Maximum Amount”).
Notwithstanding the Agreement or this Confirmation, the date of delivery of
such Restricted Shares shall be the Exchange Business Day following notice by
Bank to Counterparty, of such applicable discount and the number of Restricted
Shares to be delivered pursuant to this clause (i).


 


(ii)                                  In the event
Counterparty shall not have delivered the full number of Restricted Shares
otherwise applicable as a result of the proviso above relating to the Maximum
Amount (such deficit, the “Deficit Restricted
Shares”), Counterparty shall be continually obligated to deliver,
from time to time until the full number of Deficit Restricted Shares have been
delivered pursuant to this paragraph, Restricted Shares when, and to the
extent, that (i) Shares are repurchased, acquired or otherwise received by
Counterparty or any of its subsidiaries after the Trade Date (whether or not in
exchange for cash, fair value or any other consideration), (ii) authorized
and unissued Shares reserved for issuance in respect of other transactions
prior to the Trade Date which prior to such date become no longer so reserved
and (iii) Counterparty additionally authorizes any unissued Shares that
are not reserved for other transactions. Counterparty shall immediately notify
Bank of the occurrence of any of the foregoing events (including the number of
Shares subject to clause (i), (ii) or (iii) and the corresponding
number of Restricted Shares to be delivered) and promptly deliver the
Applicable Percentage of the aggregate number of such Restricted Shares thereafter.


 


(iii)                               Without
limiting the generality of the foregoing, Counterparty agrees that any
Restricted Shares delivered to Bank, as purchaser of such Restricted Shares, (i) may
be transferred by and among Bank and its affiliates and Counterparty shall effect
such transfer without any further action by Bank and (ii) after the period
of 6 months from the Trade Date (or 1 year from the Trade Date if, at such
time, informational requirements of Rule 144(c) are not satisfied
with respect to Counterparty) has elapsed after any Settlement Date for such
Restricted Shares, Counterparty shall promptly remove, or cause the transfer
agent for such Restricted Shares to remove, any legends referring to any such
restrictions or requirements from such Restricted Shares upon request by Bank
(or such affiliate of Bank) to Counterparty or such transfer agent, without any
requirement for the delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax stamps or payment of any
other amount or any other action by Bank (or such affiliate of Bank).


 


If Counterparty shall fail to effectuate the
Private Placement Settlement as set forth in clause (i), then such failure
shall constitute an Event of Default with respect to which Counterparty shall
be the Defaulting Party.


 


(x)                                   Right
to Extend.  Bank may
postpone any Exercise Date or Settlement Date or any other date of valuation or
delivery by Bank, with respect to some or all of the relevant Options (in which
event the Calculation Agent shall make appropriate adjustments to the Delivery
Obligation), if Bank determines, in its reasonable discretion based on advice
of counsel, that such extension is reasonably necessary to preserve Bank’s
hedging or hedge unwind activity hereunder in light of existing liquidity
conditions or to enable Bank to effect purchases of Shares or Share Termination



 


20

















 


Delivery Units in connection
with its hedging, hedge unwind or settlement activity hereunder in a manner
that would, if Bank were Counterparty or an affiliated purchaser of
Counterparty, be in compliance with applicable legal, regulatory or
self-regulatory requirements.


 


(y)                                 Dividends.  If at any time during the period from and
including the Trade Date, to but excluding the Expiration Date, (i) an
ex-dividend date for a regular quarterly cash dividend occurs with respect to
the Shares (an “Ex-Dividend Date”),
and that dividend is less than the Regular Dividend on a per Share basis or (ii) if
no Ex-Dividend date for a regular quarterly cash dividend occurs with respect
to the Shares in any quarterly dividend period of Counterparty, then the
Calculation Agent will make a corresponding adjustment to any one or more of
the Strike Price, Number of Options, Option Entitlement and/or any other
variable relevant to the exercise, settlement or payment for the Transaction to
preserve the fair value of the Options to Bank after taking into account such
dividend or lack thereof.  “Regular Dividend” shall mean USD 0.02 per
Share per quarter.


 


21

















 


Counterparty hereby agrees (a) to check this
Confirmation carefully and immediately upon receipt so that errors or
discrepancies can be promptly identified and rectified and (b) to confirm
that the foregoing (in the exact form provided by Bank) correctly sets forth
the terms of the agreement between Bank and Counterparty with respect to the
Transaction, by manually signing this Confirmation or this page hereof as
evidence of agreement to such terms and providing the other information
requested herein and immediately returning an executed copy to Equity
Derivatives Documentation Department, Facsimile No. (212) 428-1980/83.


 


 


	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GOLDMAN,
  SACHS & CO.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel W. Kopper

  
	
   

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
  Name:

  	
   

  
					



 


 


Accepted
and confirmed


as of the Trade Date:


 


 


TEXTRON INC.


 


 


	
  By:

  	
  /s/ Mary F. Lovejoy

  	
   

  
	
  Authorized Signatory

  	
   

  
	
  Name: Mary F. Lovejoy