Document:

exhibit10-2.htm

    Exhibit
      10.2

    

    TEXTRON
      INC. SHORT-TERM INCENTIVE PLAN

     

    (As
      amended and restated effective July 25, 2007)

     

    

    SECTION
      1. ESTABLISHMENT AND PURPOSE

    

    1.1   Establishment
      of the Plan.   Textron Inc., a Delaware company (the “Company”),
      hereby establishes a short-term incentive compensation plan to be known as
      the
      Textron Inc. Short-Term Incentive Plan (the “Plan”). The Plan permits the
      awarding of cash bonuses to Employees (as defined below), based on the
      achievement of performance goals that are pre-established by the Board of
      Directors of the Company (the “Board”) or by the Committee (as defined
      below).

    

    The
      Plan,
      as adopted by the Board and approved by the shareholders of the Company at
      the
      2007 annual general meeting of shareholders, is effective as of January 1,
      2007
      and shall continue until December 31, 2016, unless terminated earlier as set
      forth in Section 10.  The Plan is amended and restated as follows,
      effective July 25, 2007, to incorporate those terms necessary or advisable
      to
      ensure that awards under the Plan are exempt from or comply with Section 409A
      of
      the Internal Revenue Code.

    

    1.2   Purpose.   The
      purposes of the Plan are to (i) provide greater motivation for certain employees
      of the Company and its Subsidiaries (as defined below) to attain and maintain
      the highest standards of performance, (ii) attract and retain employees of
      outstanding competence, and (iii) direct the energies of employees towards
      the
      achievement of specific business goals established for the Company and its
      Subsidiaries.

    

    The
      purposes of the Plan shall be carried out by the payment to Participants (as
      defined below) of short-term incentive cash awards, subject to the terms and
      conditions of the Plan. All compensation payable under this Plan to Participants
      who are Executive Officers (as defined below) is intended to be deductible
      by
      the Company under Section 162(m) of the Code (as defined below).

    

    SECTION
      2. DEFINITIONS

    

    As
      used
      in the Plan, the following terms shall have the meanings set forth below (unless
      otherwise expressly provided).

    

    “Award
      Opportunity” means the various levels of incentive awards which a Participant
      may earn under the Plan, as established by the Committee pursuant to Section
      5.1.  For an individual, the Award Opportunity is typically expressed
      as a minimum and maximum
      percentage of the individual’s Target Incentive Award (as defined below) that
      define a range within which the actual incentive award will fall.

    

     

    “Base
      Salary” shall mean the regular annualized base salary (determined as of January
      1 of each Plan Year with respect to Executive Officers) earned by a Participant
      during a Plan Year prior to any salary reduction contributions made to any
      deferred compensation plans sponsored or maintained by the Company or by any
      Subsidiary; provided, however, that Base Salary shall not include awards under
      this Plan, any bonuses, equity awards, the matching contribution under any
      plan
      of the Company or any of its Subsidiaries (as applicable) providing such,
      overtime, relocation allowances, severance payments or any other special awards
      as determined by the Committee.

    

    “Beneficial
      Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General
      Rules and Regulations under the Exchange Act.

    

    “Board”
      has the meaning set forth in Section 1.1.

    

    “Code”
      means the Internal Revenue Code of 1986, as amended, and the regulations
      promulgated thereunder.

    

    “Committee”
      means the Organization and Compensation Committee of the Board, provided that
      the Committee shall consist of three or more individuals, appointed by the
      Board
      to administer the Plan, pursuant to Section 3, who are “outside directors” to
      the extent required by and within the meaning of Section 162(m) of the Code,
      as
      amended from time to time.

    

    “Company”
      has the meaning set forth in Section 1.1.

    

    “Effective
      Date” means the date the Plan becomes effective, as set forth in Section 1.1
      herein.

    

    “Employee”
      means an employee of the Company or a Subsidiary.

    

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended from time to
      time.

    

    “Executive
      Officer” means a “covered employee” within the meaning of Section 162(m)(3) of
      the Code or any other executive designated by the Committee for purposes of
      exempting compensation payable under the Plan from the deduction limitations
      of
      Section 162(m) of the Code.

    

    “Final
      Award” means the actual award earned during a Plan Year by a Participant, as
      determined by the Committee at the end of such Plan Year.

     

    “Participant”
      means an Employee who is participating in the Plan pursuant to Section
      4.

     

    “Plan”
      means this Textron Inc. Short-Term Incentive Plan.

     

    
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“Plan
      Year” means the calendar year, commencing on January 1st and ending on December
      31st, or any other period that the Committee designates as the performance
      period for a particular performance goal pursuant to Section 5.1.

    

    “Subsidiary”
      means any company or corporation in which the Company beneficially owns,
      directly or indirectly, 50% or more of the securities entitled to vote in the
      election of the directors of the corporation.

    

    “Target
      Incentive Award” means the target award to be paid to a Participant when
      performance measures are achieved, as established by the Committee. For an
      individual, the Target Incentive Award is typically expressed as a percentage
      of
      the individual’s Base Salary (as defined above).

    

    SECTION
      3. ADMINISTRATION

    

    The
      Plan
      shall be administered by the Committee. Subject to the limitations set forth
      in
      the Plan, the Committee shall: (i) select from the Employees of the Company
      and
      its Subsidiaries, those who shall participate in the Plan, (ii) establish Award
      Opportunities in such forms and amounts as it shall determine, (iii) impose
      such
      limitations, restrictions, and conditions upon such Award Opportunities as
      it
      shall deem appropriate, (iv) interpret the Plan and adopt, amend, and rescind
      administrative guidelines and other rules and regulations relating to the Plan,
      (v) make any and all factual and legal determinations in connection with the
      administration and interpretation of the Plan, (vi) correct any defect or
      omission or reconcile any inconsistency in this Plan or in any Award Opportunity
      granted hereunder, and (vii) make all other necessary determinations and take
      all other actions necessary or advisable for the implementation and
      administration of the Plan. The Committee's determinations on matters within
      its
      authority shall be conclusive and binding upon all parties.

    

    Except
      with respect to the matters that under Section 162(m) of the Code and Treasury
      Regulation Section 1.162-27(e) are required to be determined or established
      by
      the Committee to qualify awards to Executive Officers under the Plan as
      qualified performance-based compensation, the Committee shall have the power
      to
      delegate to any officer or employee of the Company the authority to administer
      and interpret the procedural aspects of the Plan, subject to the Plan's terms,
      including adopting and enforcing rules to decide procedural and administrative
      issues. To the extent of any such delegation, references to the “Committee”
herein shall be deemed to refer to the relevant delegate.

    
Subject
      to applicable laws, rules and regulations:  (i) no member of the
      Committee (or its delegates) shall be liable for any good faith action or
      determination made in connection with the operation, administration or
      interpretation of the Plan and (ii) the members of the Committee (and its
      delegates) shall be entitled to indemnification and reimbursement 

     

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    in
      the
      manner provided in the Company’s Certificate of Incorporation as it may be
      amended from time to time. In the performance of its responsibilities with
      respect to the Plan, the Committee shall be entitled to rely upon information
      and/or advice
      furnished by the Company’s officers or employees, the Company’s accountants, the
      Company’s counsel and any other party the Committee deems necessary, and no
      member of the Committee shall be liable for any action taken or not taken in
      reliance upon any such information and/or advice.

    

    SECTION
      4. ELIGIBILITY AND PARTICIPATION

    

    4.1   Eligibility.   Each
      Employee who is included in the Plan by the Committee, shall be eligible to
      participate in the Plan for such Plan Year and all subsequent Plan Years,
      subject to the limitations of Section 7 herein.

    

    4.2   Participation.   Participation
      in the Plan shall be determined annually by the Committee based upon the
      criteria set forth in the Plan. Participation in the Plan during the applicable
      Plan Year shall be limited to those Employees (“Participants”) who are selected
      by the Committee. Employees who are eligible to participate in the Plan shall
      be
      notified of the performance goals and related Award Opportunities for the
      relevant Plan Year.

    

    4.3   Right
      to Reduce or End Eligibility.   The Committee may elect to reduce
      the Award Opportunity (as described in Section 5.2 herein) or end it altogether
      for any single Participant or group of Participants at any time.

    

    SECTION
      5. AWARD DETERMINATION

    

    5.1   Performance
      Goals.   Prior to the beginning of each Plan Year, or as soon as
      practicable thereafter, the Committee shall approve or establish in writing
      the
      performance goals for that Plan Year. Performance goals may include financial
      and/or non-financial goals.

    

    Performance
      goals and their relative weight may vary by job. After the performance goals
      are
      established, the Committee will align the achievement of the performance goals
      with the Award Opportunities (as described in Section 5.2 herein), such that
      the
      level of achievement at the end of the Plan Year as compared to the
      pre-established performance goals set at the beginning of the Plan Year will
      determine the amount of the Final Award. The Committee also shall have the
      authority to exercise subjective discretion in the determination of Final Awards
      to reduce or increase a calculated award based on the Committee's qualitative
      assessment of performance.

     

    The
      performance period with respect to which awards may be payable under the Plan
      shall generally be the Plan Year; provided, however, that the Committee shall
      have the authority and discretion to designate different performance periods
      under the Plan, in

     

    
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     which
      case references to Plan Year shall be deemed to refer to such other performance
      period.

    

    5.2   Award
      Opportunities.   Prior to the beginning of each Plan Year, or as
      soon as practicable thereafter, the Committee shall establish an Award
      Opportunity for each Participant. In the event a Participant changes job levels
      during a Plan Year, the Participant's Award Opportunity may be adjusted to
      reflect the amount of time at each job level during the Plan Year. In addition,
      if a Participant changes jobs during the year, the Participant’s goals may
      change as of the effective date of the job change to reflect the different
      performance goals. Each job’s performance goals will continue to be assessed on
      a full-year basis to determine payouts, with the proportion of time in each
      job
      applied to determine the final payout amount.  In the case of an Award
      Opportunity that the Committee has designated as “performance-based
      compensation” for purposes of Section 162(m) or Section 409A of the Code, the
      Committee shall have the right to adjust the Award Opportunity as described
      in
      this Section 5.2 only to the extent that the adjustment would not cause the
      Award Opportunity to fail to qualify as “performance-based compensation” for
      purposes of Section 162(m) or Section 409A, as applicable.

    

    5.3   Adjustment
      of Performance Goals.   The Committee shall have the right to
      adjust the performance goals and the Award Opportunities (either up or down)
      during a Plan Year if it determines that the occurrence of external changes
      or
      other unanticipated business conditions have materially affected the fairness
      of
      the goals and have unduly influenced the Company's ability to meet them,
      including without limitation, events such as material acquisitions, changes
      in
      the capital structure of the Company, and extraordinary accounting changes.
      In
      addition, performance goals and Award Opportunities will be calculated without
      regard to any changes in accounting standards that may be required by the
      Financial Accounting Standards Board after such performance goals or Award
      Opportunities are established. Further, in the event of a Plan Year of less
      than
      twelve months, the Committee shall have the right to adjust the performance
      goals and the Award Opportunities accordingly, at its sole
      discretion.  In the case of an Award Opportunity that the Committee
      has designated as “performance-based compensation” for purposes of Section
      162(m) or Section 409A of the Code, the Committee shall have the right to adjust
      the performance goals or Award Opportunity as described in this Section 5.3
      only
      to the extent that the adjustment would not cause the Award Opportunity to
      fail
      to qualify as “performance-based compensation” for purposes of Section 162(m) or
      Section 409A, as applicable.

    

    5.4   Final
      Award Determinations.   At the end of each Plan Year, Final
      Awards shall be computed for each Participant as determined by the Committee.
      Each Final Award shall be based upon the (i) Participant’s Target Incentive
      Award percentage, multiplied by his Base
      Salary and (ii) percent satisfaction of performance goals (as set by the
      Committee). Final Award amounts may vary above or below the Target Incentive
      Award, based on the level of achievement of the pre-established performance
      goals.

    

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    5.5   Limitations.   The
      amount payable to a Participant for any Plan Year shall not exceed U.S.
      $4,000,000.

    

    5.6   Award
      Opportunities under Section 409A.  The Committee may, in its
      discretion, establish Award Opportunities that will qualify as
“performance-based compensation” under Section 409A of the Code.  An
      Award Opportunity intended to qualify as “performance-based compensation” under
      Section 409A of the Code shall meet the following requirements:

    

    
      	
              (a)  

            	
              For
                any Participant who is eligible to participate in the Plan on the
                first
                day of the performance period, the performance period shall include
                at
                least 12 consecutive months;

            

    

     

    
      	
              (b)  

            	
              Performance
                goals shall be established no later than 90 days after the beginning
                of
                the performance period, and at a time when it is not substantially
                certain
                that the performance goals will be met.  Performance goals may
                not be adjusted after the first 90 days of the performance period,
                except
                that the Committee may, consistent with Section 409A, make adjustments
                it
                deems necessary to reflect corporate events, such as recapitalizations
                or
                mergers, that would otherwise affect the performance goals;
                and

            

    

     

    
      	
              (c)  

            	
              No
                Final Award shall be paid unless the pre-established performance
                goals are
                satisfied.

            

    

     

    SECTION
      6. PAYMENT OF FINAL AWARDS

    

    6.1   Form
      and Timing of Payment.   As soon as practicable after the end of
      each Plan Year, the Committee shall determine the extent to which the Company
      and each Participant has achieved the performance goals for such Plan Year,
      including the specific target objective(s) and the satisfaction of any other
      material terms of the awards, and the Committee shall approve the amount of
      each
      Participant's Final Award for the relevant period. Final Award payments shall
      be
      payable to the Participant, or to his estate in the case of death, in a single
      lump-sum cash payment, as soon as practicable after the end of each Plan Year,
      after the Committee, in its sole discretion, has certified in writing the extent
      to which the specified performance goals were achieved, but in no event later
      than March 15th of the year following the calendar year in which the applicable
      performance period ends.

     

    6.2   Payment
      of Partial Awards.   In the event a Participant no longer meets
      the eligibility criteria as set forth in the Plan during the course of a
      particular Plan Year, the Committee may, in its sole discretion, compute and
      pay
      a partial award in a lump sum on the scheduled date in Section 6.1 for the
      portion of the Plan Year that an Employee was a Participant. Unless such payment
      is specifically approved by the Committee, no such 

     

    
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    payments
      will be made, and continued service through the end of the Plan Year shall
      be
      required to earn an award. Unless the Committee determines otherwise, a
      Participant who has earned a Final Award with respect to a completed Plan Year
      who subsequently terminates employment or otherwise ceases eligibility before
      the date that the Final Award is to be paid shall be paid such Final Award
      on
      the scheduled date.

    

    6.3   Unsecured
      Interest.   No Participant or any other party claiming an
      interest in amounts earned under the Plan shall have any interest whatsoever
      in
      any specific asset of the Company or of any Subsidiary. To the extent that
      any
      party acquires a right to receive payments under the Plan, such right shall
      be
      equivalent to that of an unsecured general creditor of the Company.

    

    SECTION
      7. TERMINATION OF ELIGIBILITY OR EMPLOYMENT

    

    7.1   Termination
      of Eligibility.   In the event a Participant ceases to be
      eligible to participate in the Plan during a Plan Year but remains employed
      by
      the Company or a Subsidiary through the end of such Plan Year, the Final Award
      determined in accordance with Section 5.4 herein shall be reduced to reflect
      participation prior to such cessation of eligibility only. The reduced award
      shall be based upon the proportionate amount of Base Salary earned during the
      Plan Year prior to cessation of eligibility.

    The
      Final
      Award thus determined shall be payable in a lump sum as soon as practicable
      following certification of the relevant performance goals by the Committee
      for
      the Plan Year in which such termination occurs, or sooner (except with respect
      to Executive Officers), as determined by the Committee in its sole
      discretion.  A participant’s Final Award shall be paid no later than
      March 15 of the year following the calendar year in which the applicable
      performance period ends.

    

    7.2   Termination
      of Employment.   In the event a Participant's employment is
      terminated for any reason, all of the Participant's rights to a Final Award
      for
      the Plan Year then in progress shall be forfeited. However, the Committee,
      in
      its sole discretion, may pay a partial award for the portion of that Plan Year
      that the Participant was employed by the Company, computed as determined by
      the
      Committee and paid in a lump sum no later than March 15 of the year following
      the calendar year in which the applicable performance period ends.

     

    SECTION
      8. RIGHTS OF PARTICIPANTS

    

    8.1   Employment.   Nothing
      in the Plan shall interfere with or limit in any way the right of the Company
      to
      terminate any Participant's employment at any time, nor confer upon any
      Participant any right to continue in the employ of the Company.

    

    8.2   Nontransferability.   No
      right or interest of any Participant in the Plan shall be assignable or
      transferable, or subject to any lien, directly, by operation of law, or

     

    
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    otherwise,
      including, but not limited to, execution, levy, garnishment, attachment, pledge,
      and bankruptcy.

    

    SECTION
      9. EXECUTIVE OFFICERS

    

    9.1   Applicability.   The
      provisions of this Section 9 shall apply only to Executive Officers and are
      intended to apply additional terms, conditions and limitations required for
      amounts payable hereunder to Executive Officers to qualify as performance-based
      compensation exempt from Section 162(m) of the Code. In the event of any
      inconsistencies between this Section 9 and the other Plan provisions, the
      provisions of this Section 9 shall control with respect to Executive
      Officers.

    

    9.2   Performance
      Goals and Award Opportunities.   With respect to Executive
      Officers, objective written performance goals and Award Opportunities for a
      Plan
      Year shall be established by the Committee (and the Committee only, with no
      delegation) (i) while the attainment of the performance goals for the Plan
      Year
      is substantially uncertain and (ii) no more than 90 days after the commencement
      of the Plan Year (or a number of days equal to 25% of the Plan Year, if less).
      The performance goals applicable to the Executive Officers shall be limited
      to
      the performance goals listed below. The Committee may select one or more of
      the
      performance goals specified for each Plan Year which need not be the same for
      each Executive Officer in a given year. Performance goals will consist of
      specified levels of one or more of the following performance criteria as the
      Committee deems appropriate: operating cash flows from continuing operations,
      operating working capital, free cash flow, revenues, segment profit, corporate
      expenses, special charges, gain (loss) on sale of business, income from
      continuing operations, net income, EBITDA—earnings before interest, taxes,
      depreciation and amortization, EBIT—earnings before interest and taxes,
      EPS—earnings per share, as adjusted EPS, ROA—return on assets, ROS—return on
      sales, ROE—return on equity, ROIC—return on invested capital, WACC—weighted
      average cost of capital, total shareholder return, stock price appreciation,
      growth in managed assets, organic growth, cost performance, net cost reductions,
      inventory turns, selling and administrative expense as a percentage of sales,
      days sales outstanding, ratio of income to fixed charges, segment profit
      margins, total profit margin, EVA—economic value added, intrinsic value and
      effective income tax rate. In each case, performance goals shall be determined
      in accordance with generally accepted accounting principles (subject to
      modifications approved by the Committee) and shall be consistently applied
      on a
business
      unit, divisional, subsidiary or consolidated basis or any combination thereof.
      Performance goals may be described in terms of objectives that are related
      to
      the individual Participant or objectives that are Company-wide or related to
      a
      Subsidiary, division, department, region, function or business unit and may
      be
      measured on an absolute or cumulative basis or on the basis of percentage of
      improvement over time, and may be measured in terms of Company performance
      (or
      performance of the applicable Subsidiary, division, department, region, function
      or business unit) or measured relative to selected peer companies or a market
      index. In addition, for awards 

     

    
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    not
      intended to qualify as “performance-based compensation” under Section 162(m) of
      the Code, the Committee may establish performance goals based on other criteria
      as it deems appropriate. Notwithstanding the above, for any award or portion
      of
      an award designated to be “performance-based compensation” under Section 162(m)
      of the Code, the Committee does not retain any right to increase any amount
      otherwise determined under the provisions of the Plan.

    

    9.3   Certification
      of Achievement of Performance Goals.   At the end of the Plan
      Year and prior to payment, the Committee shall certify in writing the extent
      to
      which the performance goals and any other material terms were satisfied. Final
      Awards shall be computed for each Executive Officer based on (i) the
      Participant's Target Incentive Award percentage, multiplied by his Base Salary
      and (ii) percent satisfaction of performance goals (as certified by the
      Committee). Final Award amounts may vary above or below the Target Incentive
      Award based on the level of achievement of the pre-established performance
      goals.

    

    9.4   Non-adjustment
      of Performance Goals.   Once established, performance goals shall
      not be changed during the Plan Year except as permitted consistent with the
      qualified performance-based compensation exception under Section 162(m) of
      the
      Code.

    

    9.5   Discretionary
      Adjustments.   The Committee retains the discretion to eliminate
      or decrease the amount of the Final Award otherwise payable to a Participant.
      For any Final Award or portion of a Final Award designated to be
“performance-based compensation” under Section 162(m) of the Code, the Committee
      shall not retain any right to increase any amount otherwise determined under
      the
      provisions of the Plan.

    
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    SECTION
      10. AMENDMENT AND MODIFICATION

    

    The
      Committee, in its sole discretion, without notice, at any time and from time
      to
      time, may modify or amend, in whole or in part, any or all of the provisions
      of
      the Plan, or suspend or terminate it entirely; provided, however, that no such
      modification, amendment, suspension, or termination may, without the consent
      of
      a Participant (or his or her beneficiary in the case of the death of the
      Participant), reduce the right of a Participant (or his or her beneficiary,
      as
      the case may be) to a payment or distribution hereunder which he or she has
      already earned and is otherwise entitled, except where such modification,
      amendment, suspension or termination is necessary to comply with applicable
      law,
      including without limitation, any modifications or amendments made pursuant
      to
      Section 409A of the Code and any regulations, rulings and other regulatory
      guidance issued thereunder. Notwithstanding the foregoing, the Committee shall
      not amend Plan provisions to the extent that such amendment would cause an
      outstanding award or portion of an award designated to be “performance-based
      compensation” under Section 162(m) or Section 409A of the Code to fail to meet
      performance-based compensation exception of Section 162(m) or Section 409A,
      as
      applicable.

    

    SECTION
      11. MISCELLANEOUS

    

    11.1   Jurisdiction,
      Venue and Governing Law.   Except as to matters of federal law,
      the Plan, and all agreements hereunder, shall be governed by and construed
      in
      accordance with the laws of Rhode Island. Any dispute, controversy or claim
      arising out of or relating to the Plan or any award under the Plan shall be
      brought only in a court of competent jurisdiction in the State of Rhode Island,
      and no other court, agency or tribunal shall have jurisdiction to resolve any
      such dispute, controversy or claim.

    

    11.2   Withholding
      Taxes.   The Company and its Subsidiaries shall have the right to
      deduct from all payments under the Plan any federal, state, local and/or foreign
      income, employment or other applicable payroll taxes required by law to be
      withheld with respect to such payments.

    

    11.3   Gender
      and Number.   Except where otherwise indicated by the context,
      any masculine term used herein also shall include the feminine, the plural
      shall
      include the singular, and the singular shall include the plural.

    

    11.4   Severability.   In
      the event any provision of the Plan shall be held illegal or invalid for any
      reason, the illegality or invalidity shall not affect the remaining parts of
      the
      Plan, and the Plan shall be construed and enforced as if the illegal or invalid
      provision had not been included.

    

    11.5   Costs
      of the Plan.   All costs of implementing and administering the
      Plan shall be borne by the Company.

     

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    11.6   Successors.   All
      obligations of the Company and its Subsidiaries under the Plan shall be binding
      upon and inure to the benefit of any successor to the Company, whether the
      existence of such successor is the result of a direct or indirect purchase,
      merger, amalgamation, consolidation, or otherwise, of all or substantially
      all
      of the business and/or assets of the Company.

    

    11.7  Compliance
      With Code Section 409A.  The Plan is
      intended, and shall be interpreted, to provide compensation that is exempt
      from
      Code Section 409A under the short-term deferral rule (unless a Participant
      makes
      a valid deferral election under a separate plan).  The Company does
      not warrant that the Plan will comply with Code Section 409A with respect to
      any
      Participant or with respect to any payment, however.  In no event
      shall the Company; any affiliate of the Company; any director, officer, or
      employee of the Company or an affiliate; or any member of the Committee be
      liable for any additional tax, interest, or penalty incurred by a Participant
      as
      a result of the Plan’s failure to satisfy the requirements of Code Section 409A,
      or as a result of the Plan’s failure to satisfy any other requirements of
      applicable tax laws.

     

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      -exhibit10-3.htm

    Exhibit
      10.3

     

    Textron
      Inc.

     

    1999
      LONG-TERM INCENTIVE PLAN FOR TEXTRON EMPLOYEES

    (Amended
      and Restated Effective July 25, 2007)

     

    The
      1999
      Long-Term Incentive Plan for Textron Employees (the “1999 LTIP” or the “Plan”)
      was adopted by the Board of Directors on February 24, 1999 for the purpose
      of
      attracting, retaining, and motivating selected employees.  The Plan
      was approved by Textron shareholders on April 28, 1999.  The Plan has
      been amended several times since that date with the approval of Textron
      shareholders.

     

    Effective
      April 25, 2007, this 1999 LTIP has been replaced by the 2007 Long-Term Incentive
      Plan for Textron Employees (“2007 LTIP”).  The terms of this 1999 LTIP
      will continue to govern any awards made under the 1999 LTIP; any awards made
      on
      or after April 25, 2007, will be governed by the 2007 LTIP.

     

    The
      1999
      LTIP is hereby amended and restated, effective July 25, 2007, to incorporate
      those terms necessary or advisable to ensure that existing awards under the
      1999
      LTIP are exempt from or comply with Section 409A of the Code.

     

    The
      text
      of the Plan is hereby amended, restated and integrated to read in its entirety
      as follows:

     

    Article
      I  - General

     

    1.1  Purpose.  This
      Plan authorizes the grant of stock options (“Options”) and restricted stock
      (“Restricted Stock”) to officers and other selected employees of Textron Inc.
      (“Textron”) and its related companies to induce them to continue as Textron
      employees and to reward them for improvement in Textron’s long-term
      performance.

     

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

     

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

    

    (1)  to
      determine from time to time which eligible persons shall be granted Options
      under the Plan, which Options shall be “Incentive Options” and which shall be
“Non-Qualified Options,” as each is hereafter defined, the term of each Option
      within which all or portions of the Option may be exercised and the number
      of
      shares covered by each Option;

     

    (2)  to
      determine from time to time which eligible persons shall be granted shares
      of
      Restricted Stock under the Plan, to fix the number of shares of Restricted
      Stock
      covered by each grant and the conditions of the grant;

     

    (3)  to
      construe and interpret the Plan and to establish, amend and revoke rules and
      regulations for its administration.  The Committee, in exercise of
      this power, shall generally determine all questions of policy and expediency
      that may arise and may correct any defect, omission or inconsistency in the
      Plan
      or in any agreement evidencing an award hereunder in a manner and to the extent
      it shall deem necessary or expedient to make the Plan fully
      effective;

     

    (4)  to
      prescribe the terms and provisions of any award under an Option or share of
      Restricted Stock granted pursuant to this Plan;

     

    (5)  generally,
      to exercise such powers and to perform such acts in connection with the Plan
      as
      are deemed necessary or expedient to promote the best interests of
      Textron.

     

    (c)           The
      Board at any time may designate one or more officers or committees of Textron
      to
      act in place of the Committee in making any determination or taking any action
      under the Plan.  The Benefits Committee of Textron shall have the
      authority to adopt one or more sub-plans of the Plan applicable to employees
      located in countries other than the United States for the purpose of complying
      with applicable laws and regulations of such
      countries.  Notwithstanding the above, all decisions concerning the
      Plan relate to persons who are Directors or Corporate Officers of Textron shall
      be made by the Committee.

    

    (d)           The
      Board at any time may revest administration of the Plan, including all powers
      and duties of the Committee, in the Board, provided that in any matter relating
      to administration of the Plan, a majority of the Board and a majority of the
      directors acting on such matter shall not be eligible, and shall not have been
      eligible at any time within one year prior thereto, for a grant under the Plan
      or under any other employee benefit plan of Textron or any related
      company.  In such all references herein to the Committee shall be
      deemed to refer to the Board.

    

    (e)           All
      actions of the Board, the Committee or any designate under Section 1.2 in
      connection with the Plan shall be final, conclusive and binding.  No
      member of the Board, the Committee or any designated committee, nor any
      designated officer, shall be liable for any action taken or decision made in
      good faith relating to the Plan or any grant or award hereunder.

    

    1.3  Eligibility.  The
      Committee may grant options or shares of Restricted Stock under the Plan to
      any
      full-time employee of Textron or any related company (determined at the date
      of
      grant) who is a corporate, division, segment or subsidiary officer,
      administrative or professional employee, or other selected employee capable
      of
      making a substantial contribution to the success of Textron.  Options
      and shares of Restricted Stock may be granted to full-time employees who are
      also members of the Board.  Stock option awards may be granted to
      non-employee directors.  In making grants and determining their form
      and amount, the Committee shall consider functions and responsibilities of
      the
      employee, the employee’s potential contributions to profitability and sound
      growth of Textron and such other factors, as the Committee deems
      relevant.

     

    1.4  Grants.  Grants
      under the Plan may be comprised of any of the following:

     

    
      	
              (a)  

            	
              Options
                as described in Article II; and

            

    

     

    
      	
              (b)  

            	
              Restricted
                Stock as described in Article III.

            

    

     

    
      -
        2 -

    

     

    1.5  Effective
      Date of Plan.  The Plan shall be submitted to Textron
      shareholders for approval at the annual meeting on April 28, 1999, or at any
      adjournment of such meeting, and shall become effective immediately following
      its approval by the affirmative vote of the holders of a majority of the shares
      present and entitled to vote at such meeting.

     

    1.6  Aggregate
      Limitation on Grants.  (a) Shares of Common Stock, which
      may be issued pursuant to grants under the Plan may be either authorized and
      unissued shares of Common Stock or authorized and issued shares of Common Stock
      purchased or acquired Textron for this or any other purpose.  Subject
      to Section 6.9(a) (relating to adjustments upon changes in stock), the maximum
      number of shares of Common Stock which may be subject to Options under the
      Plan
      shall be 17,500,000 and the maximum number of shares of Restricted Stock which
      may be granted under the Plan shall be 2,000,000.

     

    (b)           In
      the event that (1) any Option granted under the Plan expires unexercised or
      is
      terminated or cancelled for any reason without having been exercised in full
      or
      (2) any grant of Restricted Stock under the Plan are terminated or does not
      vest
      for any reason, the number of shares of Common Stock therefore subject to such
      Option, or grant of Restricted Stock, or the unexercised, terminated or
      cancelled or unearnable portion thereof, shall be added to the remaining number
      of shares of Common Stock or Restricted Stock, respectively, available for
      grant
      under the Plan.

    

    1.7  Additional
      Definitions.  For purposes of this Plan, the following
      terms shall have the meaning specified in this Section 1.7:

     

            (a)  “Award
      Period” shall mean the period during which Performance Targets or Performance
      Measures are to be accomplished.

     

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

     

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

     

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

     

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

     

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

     

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

     

    (h)  “Fair
      Market Value” shall mean (except as may be required by Section 422 or any other
      applicable law) the simple average of the high and low prices of 

     

     

    
      - 3
        -

    

     

    the
      Common Stock on the New York Stock Exchange Composite Transactions Listing
      on a
      particular date.

     

            (i)  “Incentive
      Options” shall mean Options, which are incentive stock options under section 422
      of the Code.

     

            (j)  “Non-Qualified
      Options” shall mean Options which are not Incentive Options.

     

            (k)  “Options”
      shall mean options to purchase shares of Common Stock, which are granted
      pursuant to this Plan.

     

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

     

            (m)   “Performance
      Targets” shall mean the performance standards described in Article V of this
      Plan.

     

    (n)  “Period
      of Restriction” shall mean the period during which the transfer of shares of
      Restricted Stock (RS) is limited in some way (based upon the passage of time,
      the achievement of performance goals, or upon the occurrence of other events
      as
      determined by the Board, at its discretion), and during which the shares of
      Restricted Stock are subject to a substantial risk forfeiture, as provided
      in
      Article III herein.  Restricted Stock Awards (RSA) without any other
      performance-based qualification criteria other than the passage of time must
      have a minimum period of restriction of three (3) years.

     

            (o)  “Plan”
      shall mean the 1999 Long-Term Incentive Plan for Textron Employees.

     

            (p)  “Restricted
      Stock” shall mean an award of Common Stock granted under Article III of the
      Plan.

     

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

     

    Article
      II - Options

     

    2.1  Grant
      of Options.  The Committee may from time to time,
      subject to the provisions of the Plan and such other terms and conditions as
      it
      may prescribe, grant to eligible employees one or more Options to purchase
      shares of Common Stock under the Plan.  A maximum of 150,000 Options
      can be granted to any eligible employee during any calendar year, in each case
      subject to adjustments
      provided in Section 6.9 of this Plan.  Options granted hereunder may
      be Incentive Options under Section 422 of the Code (Section
      422).  Options granted hereunder which are not Incentive Options are
      referred to as “Non-Qualified Options.”

     

    2.2  Option
      Agreements.  The grant of an Option shall be evidenced
      by a written Option Agreement, executed by Textron and the optionee, stating
      the
      number of shares of Common 

     

    
      -
        4 -

    

     

    Stock
      subject to the Option, designating whether and to what extent the Option is
      an
      Incentive Option and containing such investment representations and other terms
      and conditions as the Committee may from time to time determine, or as may
      be
      required by Section 422 or any other applicable law.

     

    2.3  Option
      Price.  The purchase price for the Common Stock covered
      by any Option granted under the Plan shall in no case be less than 100% of
      the
      Fair Market Value of such Common Stock at the time the Option is
      granted.  The purchase price of the shares as to which an Option shall
      be exercised shall be paid in full at the time of exercise at the election
      of
      the optionee (1) in cash, (2) by tendering to Textron Shares of Common Stock
      then owned by the optionee having a Fair Market Value equal to such purchase
      price, or (3) partly cash and partly in shares of Common Stock valued at Fair
      Market Value.  The Committee may also allow cashless exercise as
      permitted under the Federal Reserve Board’s Regulation T, subject to applicable
      securities law restrictions, or by any other means which the Committee
      determines to be consistent with the Plan’s purpose and applicable
      law.

     

    2.4  Term
      of Option.  The term of each Option granted under the
      Plan shall be for such period, as the Committee shall determine but no more
      than
      10 years from the date of grant thereof, for both Incentive Options and
      Non-Qualified Options.  Each Option shall be subject to earlier
      termination as provided in Section 2.6 or 2.7, if applicable.

     

    2.5  Exercise
      of Option.  Each Option granted under the Plan shall be
      exercisable on such date or dates during the term thereof and for such number
      of
      shares of Common Stock as may be provided in the Option Agreement evidencing
      its
      grant provided that an Option shall not be exercisable for less than 50 shares
      (or the remaining number of shares subject to the Option if that number is
      less
      than 50).  No option shall be exercisable for at least six months
      after the date of its issuance, except as otherwise provided in this
      Plan.  To exercise an Option as to all or part of the shares covered
      thereby, an optionee shall furnish to the Secretary of Textron at Textron’s
      principal office written notice of such exercise together with the purchase
      price for the shares.  The notice shall specify the number of shares
      then being purchased.  In the discretion of the Committee, the Option
      Agreement may provide that shares may be issued in the name of the optionee
      and
      another person jointly with rights of survivorship.  During the life
      of an optionee, an Option shall be exercisable only by the optionee or by the
      optionee’s guardian or legal representative.

     

    2.6  Termination
      of Employment.  (a) If an optionee’s employment with
      Textron or a related company shall terminate for Cause, as determined by the
      Committee, all Options held by the optionee shall expire
      immediately.

     

    (b)           If
      the employment with Textron and its related companies of an optionee who is
      not
      described in Section 2.6(a) shall end after the optionee has become eligible
      for
      Early Retirement, the
      optionee shall have the right to exercise each Option granted to the optionee
      within 36 months after the end of the optionee’s employment (or within such
      shorter period as may be specified in the related Option Agreement) to the
      extent the Option is exercisable at the time of exercise.

     

    
      -
        5
        -

    (c)           If
      an optionee’s employment with Textron and its related companies shall end as a
      result of the optionee’s Total Disability, the optionee shall have the right to
      exercise each Option granted to the optionee as to all unexercised shares until
      the expiration of its term.

    

    (d)           If
      an optionee shall die while employed by Textron or a related company or while
      any option granted to the optionee is still exercisable under section 2.6(b),
      (c) or (e), any such Option may be exercised as to all unexercised shares within
      a period of one year from the date of the optionee’s death by the executor or
      administrator of the optionee’s estate or by the person or persons whom the
      optionee shall have transferred such right by will or by the laws of descent
      or
      distribution.

    

    (e)           If
      an optionee’s employment with Textron and its related companies shall end for
      any reason not specified in Sections 2.6(a), (b) or (d), the optionee shall
      have
      the right to exercise each Option granted to the optionee within three months
      after his or her termination of employment (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.

    

    (f)           Notwithstanding
      anything in the contrary in this Section 2.6, in no event shall an Option be
      exercisable after the expiration of its term.

    

    2.7  Incentive
      Options.  (a) Incentive Options shall be subject to the
      additional terms and conditions of this Section 2.7.

     

    (b)           No
      Incentive Option shall be issued hereunder to any individual who, at the time
      the Incentive Option is granted, owns stock processing more than ten percent
      of
      the total combined voting power of all classes of stock of Textron or any
      related company.

    

    (c)           To
      the extent that the aggregate Fair Market Value (determined as of the time
      the
      Incentive Option is granted) of the Common Stock with respect to which any
      Incentive Stock Options granted are exercisable for the first time by an
      optionee during any calendar year (under all employee benefit plans of Textron
      and its related companies) exceeds $100,000 (or such larger maximum as may
      be
      permitted under the Code for Incentive Stock Options granted to an individual
      employee at the time the Incentive Option is granted), such options shall be
      treated as Non-Qualified Options.

    

    (d)           Any
      optionee who disposes of shares of Common Stock acquired by or pursuant to
      exercise of an Incentive Option by sale, exchange, gift or other disposition
      described in Section 424 (c) of the Code, either (1) within two years after
      the date of the grant of the Incentive Option under which the shares were
      acquired, or (2) within one year of the acquisition of such shares, shall notify
      the Secretary of Textron at Textron’s principal office of such disposition, the
      amount realized,
      the exercise price and the date of exercise of such shares.  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 the sums in lieu of, an
      amount sufficient to satisfy any federal, state and local withholding tax
      requirements to such a disposition.

     

    
      -
        6
        -

    

    
 

    (e)           The
      Option Agreement with respect to Incentive Options shall contain such other
      provisions as may be required by Section 422 or any other applicable
      law.

    

    Article
      III - Restricted
      Stock

     

    3.1  Grant
      of Restricted Stock.  Subject to the terms and
      provisions of the Plan, the Committee, at any time and from time to time, may
      grant Shares of Restricted Stock to eligible employees in such amounts, as
      the
      Board shall determine.  A maximum of 200,000 shares of Restricted
      Stock may be granted to any eligible employee in any one calendar year, in
      each
      case subject to adjustment as provided in Section 6.9 of this Plan.

     

    3.2  Restricted
      Stock Agreement.  Each Restricted Stock grant shall be
      evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
      of Restriction, the number of Shares Restricted Stock granted, and such other
      provisions as the Committee shall determine.

     

    3.3  Transferability.  Except
      as provided in this Article III, the Shares of Restricted Stock granted herein
      may not be sold, transferred, pledged, assigned, or otherwise alienated or
      hypothecated until the end of the applicable Period of Restriction established
      by the Committee in its sole discretion and set forth in the Restricted Stock
      Award Agreement.  All rights with respect to the Restricted Stock
      granted to an eligible employee under the Plan shall be available during his
      or
      her lifetime only to such eligible employee.

     

    3.4  Other
      Restrictions.  The Committee shall impose such other
      conditions and/or restrictions on any Shares of Restricted Stock granted
      pursuant to the Plan as it may deem advisable including, without limitation,
      continued employment with Textron, a requirement that eligible employees pay
      a
      stipulated purchase price for each Share of Restricted Stock, restrictions
      based
      upon the achievement of specific performance goals (company-wide, divisional,
      and/or individual), time-based restrictions on vesting following the attainment
      of performance goals, and/or restrictions under applicable federal or state
      securities laws.  With respect to awards of Restricted Stock based on
      Performance Targets, the Committee will establish Performance Targets in
      accordance with the standards set forth in Article IV of this Plan.

     

    Textron
      may retain the certificates representing Shares of Restricted Stock in its
      possession until such time as all conditions and/or restrictions applicable
      to
      such Shares have been satisfied.

     

    Except
      as
      otherwise provided in this Article III or pursuant to Section 6.2 of the Plan,
      or as restricted by applicable law, Shares of Restricted Stock covered by each
      Restricted Stock grant made under the Plan shall become freely transferable
      by
      the eligible employee after the last day of the applicable Period of
      Restriction.

     

    3.5  Voting
      Rights.  Eligible employees holding Shares of Restricted
      Stock granted hereunder may be granted the right to exercise full voting rights
      with respect to those Shares during the Period of Restriction.

     

    3.6  Dividends
      and Other Distributions.  During the Period of
      Restriction, eligible employees holding Shares of Restricted Stock granted
      hereunder may be credited with regular cash dividends paid with respect to
      the
      underlying Shares while they are so held.  The Committee may

     

    
      -
        7
        -

    

     

    apply
      any
      restrictions to the dividends that the Committee deems
      appropriate.  Without limiting the generality of the preceding
      sentence, if the grant or vesting of Restricted Shares granted to an eligible
      employee is designated to comply with requirements of the Performance-Based
      Exception, the Committee may apply any restrictions it deems appropriate to
      the
      payment of dividends declared with respect to such Restricted Shares, such
      that
      the dividends and/or the Restricted Shares maintain eligibility for the
      Performance-Based Exception.  No Restricted Stock Awards that were
      granted under the 1999 LTIP, and that remained outstanding and unvested on
      or
      after January 1, 2005, included the right to be credited with dividends during
      the Period of Restriction as permitted under this Section 3.6.

     

    3.7  Termination
      of Employment/Directorship.  Each Restricted Stock Award
      Agreement shall set forth the extent to which the eligible employee shall have
      the right to receive unvested Restricted Stock following termination of the
      eligible employee’s employment or directorship with Textron.  Such
      provisions shall be determined in the sole discretion of the Committee, shall
      be
      included in the Award Agreement entered into with each eligible employee, need
      not be uniform among all Shares of Restricted Stock issued pursuant to the
      Plan,
      and may reflect distinctions based on the reasons for termination; provided,
      however that, except in the cases of terminations connected with a Change in
      Control and terminations by reason or death or Total Disability, and certain
      terminations without Cause, the vesting of shares of Restricted Stock which
      qualify for the Performance-Based Exception and which are held by eligible
      employees shall occur at the time they otherwise would have, but for the
      termination.

     

    3.8  Exchange
      of Restricted Stock Units.  In 2003, the Board granted
      restricted stock units which are payable only in cash to Textron’s executive and
      certain other officers.  Authorization has been given for the exchange
      of those previously granted restricted stock units for shares of Restricted
      Stock.

     

    Article
      IV - Performance-Based
      Exception

     

    Unless
      and until the Committee proposes for shareholders to vote and shareholders
      approve a change in the general Performance Targets set forth in this Article
      IV, the attainment of which may determine the degree of payout and/or vesting
      with respect to awards to eligible employees which are designed to qualify
      for
      the Performance-Based Exception (such as Restricted Stock under Article III
      of
      this Plan if the Committee so determines), the Performance Targets to be used
      for purposes of such grants shall be chosen from among:

     

                (a)  Textron’s
      earnings per share;

                

                (b)  Net
      operating profit;

     

                (c)  After-tax
      profit;

                

               (d)  Return
      on
      equity;

     

                (e)  Return
      on
      invested capital;

     

                (f)  Economic
      profit;

     

    
      -
        8
        -

    

                

                (g)  Margins;

                

                (h)  Cash
      flow; and

     

                (i)  Shareholder
      value.

     

    The
      Committee shall have the discretion to adjust the determinations of the degree
      of attainment of the pre-established Performance Targets; provided, however,
      that awards which are designed to qualify for the Performance-Based Exception,
      and which are held by eligible employees, may not be adjusted upward (the
      Committee shall retain the discretion to adjust such awards
      downward).

     

    In
      the
      event that applicable tax and/or securities laws change to permit Committee
      discretion to alter the governing Performance Targets without obtaining
      shareholder approval of such changes, the Committee shall have sole discretion
      to make such changes without obtaining shareholder approval.  In
      addition, in the event that the Committee determines that it is advisable to
      grant awards, which shall not qualify for the Performance-Based Exception,
      the
      Committee may make such grants without satisfying the requirements of Code
      Section 162(m).

     

    Article
      V - Beneficiaries

     

    5.1  A
      Participant may designate one or more Beneficiaries to receive Plan benefits
      payable on the Participant’s account after his or her death.  A
      Beneficiary may designate one or more Beneficiaries to receive any unpaid Plan
      benefits to the extent this designation does not contravene any designation
      filed by the deceased Participant through whom the Beneficiary himself or
      herself claims under this Plan.  Beneficiaries shall be designated
      only upon forms made available by or satisfactory to the Benefits Committee
      or
      its designee, and filed by the Participant or Beneficiary with that committee
      or
      designee.

     

    5.2  At
      any
      time prior to his or her death, a Participant or Beneficiary may change his
      own
      designation of Beneficiary by filing a substitute designation of Beneficiary
      with the Benefits Committee or its designee.

     

    5.3  In
      the
      absence of an effective designation of Beneficiary, or if all persons so
      designated shall have predeceased the Participant or shall have died before
      the
      complete distribution of Plan benefits, the balance of Plan benefits shall
      be
      paid to the Participant’s surviving spouse or, if none, to the Participant’s
      issue per stirpes or, if no issue, to the executor or administrator of the
      Participant’s or Beneficiary’s estate, or as otherwise determined by the
      Benefits Committee in its sole discretion.

     

    5.4  If
      a
      Participant’s Compensation or a Plan benefit is community property, any
      designation of Beneficiary shall be valid or effective only as permitted under
      applicable law.

     

    5.5  If
      a Plan
      benefit is payable to a minor or person declared incompetent or to a person
      incapable of handling the disposition of his property, the Benefits Committee
      may direct Textron to pay such Plan benefit to the guardian, legal
      representative or person having the care and custody of such minor, incompetent
      or person.  The Benefits Committee may require proof of incompetency,
      minority, incapacity or guardianship as it deems appropriate prior to
      distribution 

     

    
      -
        9 -

    

     

    of
      the
      Plan benefit.  Such distribution shall completely discharge the
      Benefits Committee and any Textron Company from all liability with respect
      to
      such benefit.

     

    Article
      VI -  Miscellaneous

     

    6.1  General
      Restriction.  Each grant or award under the Plan shall
      be subject to the requirement that, if at any time the Committee shall determine
      that any listing or registration of the shares of Common Stock or any consent
      or
      approval of any governmental body, or any other agreement or consent, is
      necessary or desirable as a condition of a grant, an award or issuance of Common
      Stock or cash in satisfaction thereof, such grant or award may not be
      consummated unless each such requirement is satisfied in a manner acceptable
      to
      the Committee.

     

    6.2  Restrictions
      on Share Transferability.  The Committee may impose such
      restrictions on any shares of Common Stock acquired pursuant to this Plan as
      it
      may seem advisable, including, without limitation, restrictions under federal
      securities laws, under the requirements of any stock exchange or market upon
      which such shares are then listed or traded, and under any blue sky or state
      securities laws applicable to such shares.

     

    6.3  Non-Assignability.  No
      award under the Plan shall be assignable or transferable by the recipient
      thereof, except by will or by laws of descent and distribution.

     

    6.4  Withholding
      Taxes.  Whenever Textron proposes to or is required to
      issue or transfer shares of Common Stock under the Plan, Textron shall have
      the
      right to withhold or to require the participant to remit to Textron an amount
      sufficient to satisfy any federal, state and local withholding tax
      requirements.  A participant may elect to use company shares to
      satisfy tax withholding obligations on the exercise of non-qualified options
      and
      the vesting of restricted stock to meet the minimum statutory tax withholding
      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.

     

    6.5  No
      Right to Employment. Nothing in the Plan or in any agreement
      entered into pursuant to it shall confer upon any participant the right to
      continue in the employment of Textron or a related company or affect any right
      which Textron or a related company may have to terminate the employment of
      such
      participant.

     

    6.6  Non-Uniform
      Determination.  The determinations under the Plan of the
      Committee or of any designate (including without limitation its determinations
      of the persons to receive grants or awards, the form, amount, timing and payment
      of such grants or awards, the terms and provisions of such grants or awards,
      and
      the establishment of Performance Measures or Performance Targets) need not
      be
      uniform and may be made by it selectively among persons who receive, or are
      eligible to receive, awards under the Plan, whether or not such persons are
      similarly situated.

     

    6.7  No
      Rights as Shareholders.  Recipients of grants or awards
      under the Plan shall have no rights as shareholders of Textron unless and until
      certificates for shares of Common Stock are issued to them, except for such
      voting rights and dividend rights as may be provided for in a Restricted Stock
      Award Agreement.

     

    
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    6.8  Related
      Company.  As used in the Plan, “related company” means
      any corporation in which Textron at the time in question owns, directly or
      indirectly, stock possessing 50 percent or more of the total combined voting
      power of all classes of stock and any corporation which at the time in question
      owns, directly or indirectly, a similar interest in Textron.

     

    6.9  Adjustments
      for Certain Changes.  (a) The aggregate number of shares
      of Common Stock and of Restricted Stock available for grant under the Plan,
      the
      number of shares of Common Stock covered by each outstanding Option or award
      of
      Restricted Stock and the price per share thereof, and the maximum number of
      Options or shares of Restricted Stock that can be awarded to any eligible
      employee shall all be proportionately adjusted for an increase or decrease
      in
      the number of issued shares of Common Stock resulting from a stock split, stock
      dividend or any other increase or decrease in such shares effective without
      receipt of consideration by Textron.

     

    (b)           The
      Committee may, in its discretion and for purposes of determining whether
      Performance Measures or Performance Targets have been met, equitably restate
      Textron’s earnings per share, net operating profit, return on equity or any
      other standard utilized in establishing the Performance Measures or Performance
      Targets in order to take into account the effect, if any, of (1) acquisitions
      or
      dispositions of businesses by Textron, (2) extraordinary and non-recurring
      events, (3) a change in capitalization described in Section 6.9 (a), or (4)
      any
      change in accounting practices, tax laws or other laws or regulations that,
      in
      the opinion of the Committee, significantly affects the financial performance
      of
      Textron.

    

    6.10  Change
      in Control.  (a) Not withstanding any other provision of
      this Plan, in the event of a change in control as defined in Section
      6.10(b):

     

    (1)  each
      unexpired Option shall be exercisable, beginning immediately, as to all
      remaining shares subject to the Option and

     

    (2)  each
      share of Restricted Stock subject to an outstanding grant shall become
      immediately vested and all restrictions on transferability (except those as
      shall be imposed by applicable law) shall be removed.

     

    (b)           For
      purposes of this Plan, a “Change in Control” shall occur if (i) any “person” or
“group” (within the meaning of Sections 13 (d) and 14 (d)(2) of the Securities
      Exchange Act of 1934, as amended (the “Act”)) other than Textron, any “person”
who on April 27, 1994 was a director or officer of Textron, any trustee or
      other
      fiduciary holding Common Stock under an employee benefit plan of Textron, or
      related company, or any corporation which is owned, directly or indirectly,
      by
      the stockholders of Textron in substantially the same proportions as their
      ownership of Common Stock, is or becomes the “beneficial owner” (as defined in
      Rule 13d-3 under the Act) of more than thirty percent (30%) of the then
      outstanding voting stock of Textron, or (ii) during any period of two
      consecutive years, individuals who at the beginning of such
      period constitute the Board (and any new director whose election by the Board
      or
      whose nomination for election by Textron’s stockholders was approved by a vote
      of at least two-thirds of the directors then still in office who either were
      directors at the beginning of the two-year period or whose election or
      nomination for election was previously so approved) cease for any reason to
      constitute a majority thereof, or (iii) the shareholders of Textron approve
      a
      merger or 

    
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    consolidation
      of Textron with any other corporation, other than a merger or consolidation
      which would result in the voting securities of Textron outstanding immediately
      prior thereto continuing to represent (either by remaining outstanding or by
      being converted into voting securities of the surviving entity) more than fifty
      percent (50%) of the combined voting power of the voting securities of Textron
      or such surviving entity outstanding immediately after such merger or
      consolidation, or (iv) the shareholders of Textron approve a plan of complete
      liquidation of Textron or an agreement for the sale or disposition by Textron
      of
      all or substantially all of Textron’s assets.

    

    6.11  Amendment
      or Termination of the Plan.  The Board, without further
      approval of the shareholders, may at any time terminate the Plan or any part
      thereof and may from time to time amend the Plan as it may deem advisable
      including with respect to Incentive Options any changes deemed necessary or
      desirable to comply with Section 422 and any regulations thereunder; provided,
      however, that without shareholder approval, the Board may not (a) increase
      the
      aggregate number of shares of Common Stock which may be issued under the Plan
      (other than increases permitted under Section 6.9(a)) or (b) extend the period
      during which an Incentive Option may be exercised beyond ten
      years.  Termination or amendment of the Plan shall not, without the
      consent of the individual, affect any right of such individual (including
      without limitation any right under Section 6.10) under an award previously
      granted.

     

    6.12  Compliance
      with Code Section 162(m).  At all times when Code
      Section 162(m) is applicable, all awards under this Plan shall comply with
      the
      requirements of Code Section 162(m); provided, however, that in the event the
      Committee determines that such compliance is not desired with respect to any
      award or grant under the Plan, then compliance with Code Section 162(m) shall
      not be required.  In addition, in the event that changes are made to
      Section 162(m) to permit greater flexibility with respect to awards or grants
      available under the Plan, the Committee may, subject to this Article VI, make
      adjustments it deems appropriate.

     

    6.13  Compliance
      with Code Section 409A.  The Plan is intended, and shall
      be interpreted, to provide compensation that is exempt from Code Section 409A
      under the short-term deferral rule (unless a participant makes a valid deferral
      election under a separate plan).  Textron does not warrant that the
      Plan will comply with Code Section 409A with respect to any participant or
      with
      respect to any payment, however.  In no event shall Textron; any
      related company; any director, officer, or employee of Textron or a related
      company; or any member of the Committee be liable for any additional tax,
      interest, or penalty incurred by a participant as a result of the Plan’s failure
      to satisfy the requirements of Code Section 409A, or as a result of the Plan’s
      failure to satisfy any other requirements of applicable tax laws.

     

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