<SEC-DOCUMENT>0000217346-01-500011.txt : 20011107
<SEC-HEADER>0000217346-01-500011.hdr.sgml : 20011107
ACCESSION NUMBER:		0000217346-01-500011
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20010929
FILED AS OF DATE:		20011102

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TEXTRON INC
		CENTRAL INDEX KEY:			0000217346
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT & PARTS [3720]
		IRS NUMBER:				050315468
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-05480
		FILM NUMBER:		1773930

	BUSINESS ADDRESS:	
		STREET 1:		40 WESTMINSTER ST
		CITY:			PROVIDENCE
		STATE:			RI
		ZIP:			02903
		BUSINESS PHONE:		4014212800

	MAIL ADDRESS:	
		STREET 1:		40 WESTMINSTER ST
		CITY:			PROVIDENCE
		STATE:			RI
		ZIP:			02903

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AMERICAN TEXTRON INC
		DATE OF NAME CHANGE:	19710510
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>tenq.htm
<DESCRIPTION>THIRD QUARTER 10-Q
<TEXT>
<html>

<head>
<title>SECURITIES AND EXCHANGE COMMISSION</title>
</head>

<body>

<hr>
<p ALIGN="JUSTIFY">&nbsp;</p>
<b>
<p ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</p>
</b>
<p ALIGN="CENTER">Washington, DC 20549</p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">_______________</p>
<p ALIGN="CENTER">&nbsp;</p>
<b><font SIZE="5">
<p ALIGN="CENTER">FORM 10&#45;Q</p>
</font></b>
<p ALIGN="CENTER">&nbsp;</p>
<table CELLSPACING="0" WIDTH="660">
  <tr>
    <td WIDTH="6%" VALIGN="TOP"><font SIZE="3">
      <p>[X]</font></td>
    <td WIDTH="94%" VALIGN="TOP"><font SIZE="3">
      <p>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934<br>
      For the fiscal quarter ended September 29, 2001</font></td>
  </tr>
  <tr>
    <td WIDTH="6%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="94%" VALIGN="TOP"><font SIZE="3">
      <p>OR</font></td>
  </tr>
  <tr>
    <td WIDTH="6%" VALIGN="TOP"><font SIZE="3">
      <p>[&#160;&#160;]</font></td>
    <td WIDTH="94%" VALIGN="TOP"><font SIZE="3">
      <p>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934</font></td>
  </tr>
</table>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">Commission file number 1&#45;5480</p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">_______________</p>
<p ALIGN="CENTER">&nbsp;</p>
<b><font SIZE="5">
<p ALIGN="CENTER">TEXTRON INC.</p>
</font></b>
<p ALIGN="CENTER">&nbsp;</p>
<i>
<p ALIGN="CENTER">(Exact name of registrant as specified in its charter)</p>
</i>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">_______________</p>
<p ALIGN="CENTER">&nbsp;</p>
<table CELLSPACING="0" WIDTH="683">
  <tr>
    <td WIDTH="46%" VALIGN="TOP" HEIGHT="54">
      <p ALIGN="CENTER">Delaware<br>
      (State or other jurisdiction of<br>
      incorporation or organization)</td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="54">
      <p></p>
    </td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="54">
      <p>05&#45;0315468<br>
      (I.R.S. Employer Identification No.)</td>
  </tr>
</table>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">40 Westminster Street, Providence, RI 02903<br>
401&#45;421&#45;2800<br>
<i>(Address and telephone number of principal executive offices)</p>
</i>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">_______________</p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="JUSTIFY">Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days.</p>
<p ALIGN="JUSTIFY">&nbsp;</p>
<p ALIGN="JUSTIFY">&nbsp;</p>
<p ALIGN="RIGHT">&nbsp;
<table CELLSPACING="0" CELLPADDING="1" WIDTH="643">
  <tr>
    <td VALIGN="TOP">
      <p ALIGN="RIGHT">Yes <u>&#160;X&#160;</u> No<u>&#160;&#160;&#160;</u></td>
  </tr>
</table>
<p ALIGN="JUSTIFY">&nbsp;</p>
<p ALIGN="JUSTIFY">&nbsp;</p>
<p ALIGN="CENTER">Common stock outstanding at October 27, 2001 &#45;
141,253,000 shares</p>
<hr>
<p ALIGN="RIGHT">2.</p>
<b><font SIZE="2">
<p ALIGN="CENTER">PART I. FINANCIAL INFORMATION</p>
</font></b><font SIZE="2">
<p>Item 1. <u>FINANCIAL STATEMENTS</p>
</u><b>
<p ALIGN="CENTER">
<br>
TEXTRON INC.<br>
<a NAME="_Hlk528633917">Condensed Consolidated Statements of Operations</a>
(unaudited)</b><br>
(Dollars in millions, except per share amounts)</p>
</font>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="704">
  <tr>
    <td WIDTH="46%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="26%" VALIGN="TOP" COLSPAN="5"><font SIZE="2">
      <p ALIGN="CENTER">Three Months Ended</font></td>
    <td WIDTH="26%" VALIGN="TOP" COLSPAN="5"><font SIZE="2">
      <p ALIGN="CENTER">Nine Months Ended</font></td>
    <td WIDTH="1%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">September 29,<br>
      2001</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">September 30,<br>
      2000</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="3" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">September 29,<br>
      2001</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">September 30,<br>
      2000</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><b><font SIZE="2">
      <p>Revenues</font></b></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Manufacturing revenues</font></td>
    <td WIDTH="3%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">2,632</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">3,024</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">8,625</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">9,272</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Finance revenues</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">178</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">184</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">513</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">506</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Total revenues</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">2,810</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">3,208</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">9,138</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">9,778</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><b><font SIZE="2">
      <p>Costs and expenses</font></b></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Cost of sales</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">2,385</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">2,450</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">7,222</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">7,519</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Selling and administrative</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">355</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">358</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1,124</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1,065</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Interest, net</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">108</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">132</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">340</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">364</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Provision for losses on collection of finance receivables</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">20</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">11</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">43</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">26</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Special charges, net</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">338</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">&#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">415</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">&#45;</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Gain on sale of division</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(3)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">&#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(3)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">&#45;</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Total costs and
      expenses</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">3,203</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">2,951</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">9,141</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">8,974</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Income (loss) from operations before income taxes<br>
      &#160;&#160;&#160;&#160;&#160;and distributions on
      preferred securities of<br>
      &#160;&#160;&#160;&#160;&#160;subsidiary trusts</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      <br>
      (393)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      <br>
      257</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      <br>
      (3)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      <br>
      804</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Benefit (provision) for income taxes</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">69</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(93)</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(69)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(290)</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>Distribution on preferred securities of<br>
      &#160;&#160;&#160;&#160;&#160;subsidiary trusts, net
      of income taxes</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (6)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (6)</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (19)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (19)</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Income (loss) from operations before cumulative effect<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; of&#160;change in accounting
      principle</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (330)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      158</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (91)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      495</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Cumulative effect of change in accounting principle,<br>
      &#160;&#160;&#160;&#160;&#160;net of income taxes</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (59)</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid"><b><font SIZE="2">
      <p>Net income (loss)</font></b></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">(330)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 10">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">158</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 10">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">(91)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 10">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">436</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Per common share:</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Basic:</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Income
      (loss) from operations</font></td>
    <td WIDTH="3%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(2.34)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.10</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(.65)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">3.42</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Cumulative
      effect of change in accounting<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      principle,&#160;net
      of income taxes</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (.41)</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p>Net income (loss)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">(2.34)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.10</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">(.65)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">3.01</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Diluted:</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Income
      (loss) from operations</font></td>
    <td WIDTH="3%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(2.34)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 10">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.08</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 10">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">(.65)</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 10">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">3.37</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Cumulative
      effect of change in accounting<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      principle,&#160;net
      of income taxes</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;<br>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10"><br>
      </p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;<br>
      </p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      &#45;</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;<br>
      </p>
      </td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10"><br>
      (.40)</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p>Net income (loss)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">(2.34)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.08</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">(.65)</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid" align="right"><font SIZE="2">
      <p style="margin-right: 10">2.97</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Average shares outstanding:</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Basic</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p style="margin-right: 10" align="right">141,196,000</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" align="right"><font SIZE="2">
      <p style="margin-right: 10">143,185,000</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="3" align="right"><font SIZE="2">
      <p style="margin-right: 10">140,985,000</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" align="right"><font SIZE="2">
      <p style="margin-right: 10">144,568,000</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Diluted</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p style="margin-right: 10" align="right">141,196,000</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">145,325,000</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="3" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">140,985,000</font></td>
    <td WIDTH="13%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">146,911,000</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>Dividends per share:</font></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="10%" VALIGN="TOP" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;$2.08 Preferred
      stock, Series A</font></td>
    <td WIDTH="3%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">.52</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">.52</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.56</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.56</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;$1.40 Preferred
      stock, Series B</font></td>
    <td WIDTH="3%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">.35</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">.35</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.05</font></td>
    <td WIDTH="3%" VALIGN="TOP" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" align="right"><font SIZE="2">
      <p style="margin-right: 10">1.05</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Common stock</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">.325</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">.325</font></td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">.975</font></td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p ALIGN="RIGHT">$</font></td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1" align="right"><font SIZE="2">
      <p style="margin-right: 10">.975</font></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1" align="right">
      <p style="margin-right: 10">&nbsp;</p>
      </td>
  </tr>
</table>
<i><font SIZE="2">
<p>See notes to the condensed consolidated financial statements.</p>
</font></i>
<p ALIGN="right" style="margin-right: 15"><font size="2">3.</font></p>
<font SIZE="2">
<p><a NAME="bs"></a>Item 1.&#160;&#160;&#160;&#160;&#160;<u>FINANCIAL
STATEMENTS</u> (Continued)&#160;&#160;&#160;&#160;&#160;</p>
<b>
<p ALIGN="CENTER">TEXTRON INC.<br>
<a NAME="_Hlk528633953">Condensed Consolidated Balance Sheets</a> (unaudited)</b><br>
(Dollars in millions)</p>
</font>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="655">
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">September 29,<br>
      2001</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">December 30,<br>
      2000</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Assets</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Textron Manufacturing</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Cash and cash equivalents</font></td>
    <td WIDTH="5%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">261</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="5%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">282</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Commercial and U.S. government receivables, less allowance for<br>
      &#160;&#160;&#160;&#160;&#160;doubtful accounts of $62
      and $58</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      1,500</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      1,318</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Inventories</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">2,018</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,871</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Other current assets</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">443</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">443</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      current assets</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">4,222</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">3,914</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Property, plant, and equipment, less accumulated<br>
      &#160;&#160;&#160;&#160;&#160;depreciation of $2,309
      and $2,264</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      2,560</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      2,568</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Intangibles, net</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">2,183</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">2,340</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Other (including net deferred income taxes)</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,548</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,417</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      Textron Manufacturing assets</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">10,513</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">10,239</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Textron Finance</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Cash</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">38</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">7</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Finance receivables, less allowance for doubtful accounts of $136<br>
      &#160;&#160;&#160;&#160;&#160;and $116</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      5,780</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      5,473</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Other assets (including net intangibles of $208 and $217)</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">807</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">651</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      Textron Finance assets</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">6,625</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">6,131</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-bottom-style: solid"><font SIZE="2">
      <p><a NAME="_Hlk515095305">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      assets</a></font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP" style="border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">17,138</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP" style="border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">16,370</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Liabilities and shareholders&#39; equity</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Liabilities</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Textron Manufacturing</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Current portion of long&#45;term debt and short&#45;term debt</font></td>
    <td WIDTH="5%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,353</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="5%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">615</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Accounts payable</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,117</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,200</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Income taxes payable</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">65</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">77</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Other accrued liabilities</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,401</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,371</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      current liabilities</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">3,936</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">3,263</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Accrued postretirement benefits other than pensions</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">695</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">715</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Other liabilities</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,181</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,224</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Long&#45;term debt</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,475</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,469</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      Textron Manufacturing liabilities</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">7,287</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">6,671</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Textron Finance</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Other liabilities</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">391</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">211</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Deferred income taxes</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">331</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">315</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Debt</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">4,886</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">4,667</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      Textron Finance liabilities</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">5,608</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">5,193</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      liabilities</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">12,895</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">11,864</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Textron Finance &#45; mandatorily redeemable preferred securities
      of<br>
      &#160;&#160;&#160;&#160;&#160;Finance subsidiary
      holding debentures</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      28</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      28</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><b><font SIZE="2">
      <p>Textron &#45; obligated mandatorily redeemable<br>
      &#160;&#160;&#160;&#160;&#160;preferred securities of
      subsidiary trust holding<br>
      &#160;&#160;&#160;&#160;&#160;solely Textron junior
      subordinated debt securities</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      <br>
      485</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15"><br>
      <br>
      484</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><b><font SIZE="2">
      <p>Shareholders&#39; equity</font></b></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Capital stock:</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Preferred stock</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">11</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">12</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Common stock</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">25</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">24</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Capital surplus</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,059</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">1,026</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>Retained earnings</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">5,618</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">5,848</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>Accumulated other comprehensive loss</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">(214)</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">(172)</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">6,499</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">6,738</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Less cost of treasury
      shares</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">2,769</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">2,744</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" HEIGHT="16" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Total
      shareholders&#39; equity</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" HEIGHT="16" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">3,730</font></td>
    <td WIDTH="5%" VALIGN="TOP" HEIGHT="16" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
    </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" HEIGHT="16" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">3,994</font></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="16" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Total liabilities and
      shareholders&#39; equity</font></td>
    <td WIDTH="5%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">17,138</font></td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="5%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">16,370</font></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p>Common shares outstanding</font></td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">141,227,000</font></td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid">
      <p ALIGN="right" style="margin-right: 15">&nbsp;</p>
      </td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-bottom-style: solid"><font SIZE="2">
      <p ALIGN="right" style="margin-right: 15">140,933,000</font></td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-bottom-style: solid">&nbsp;</td>
  </tr>
</table>
<i><font SIZE="2">
<p>See notes to condensed consolidated financial statements.</p>
</font></i><font SIZE="2">
<p ALIGN="RIGHT">4.</p>
<p><a NAME="ccf"></a>Item 1.&#160;&#160;&#160;&#160;&#160;<u>FINANCIAL
STATEMENTS</u> (Continued)</p>
<b>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">TEXTRON INC.<br>
<a NAME="_Hlk528633985">Condensed Consolidated Statements of Cash Flows</a>
(unaudited)<br>
</b>(In millions)</p>
</font>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="676">
  <tr>
    <td WIDTH="62%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="35%" VALIGN="TOP" COLSPAN="5"><font SIZE="2">
      <p ALIGN="CENTER">Nine Months Ended</font></td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">September 29,<br>
      2001</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p ALIGN="CENTER">September 30,<br>
      2000</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><b><font SIZE="2">
      <p>Cash flows from operating activities:</font></b></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Income (loss) from operations</font></td>
    <td WIDTH="4%" VALIGN="TOP"><font SIZE="2">
      <p align="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(91)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP"><font SIZE="2">
      <p align="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">495</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Adjustments to reconcile income (loss) from operations to<br>
      &#160;&#160;&#160;&#160;&#160;net cash (used) provided
      by operating activities:</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Depreciation</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">300</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">286</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Amortization</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">91</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">84</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Special
      charges, net</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">415</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">&#45;</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Provision
      for losses on receivables</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">46</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">27</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Deferred
      income taxes</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(35)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">9</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Gain
      on sale of division</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(3)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">&#45;</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Changes
      in assets and liabilities excluding those related to<br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;acquisitions
      and divestitures:</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Increase
      in commercial and U.S. government receivables</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(186)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(90)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Increase
      in inventories</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(149)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(160)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Increase
      in other assets</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(144)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(41)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Decrease
      in accounts payable</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(75)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(130)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Decrease
      increase in accrued liabilities</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(47)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(82)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Other,
      net</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(13)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(17)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Net cash provided by
      operating activities</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p align="right" style="margin-right: 10">109</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p align="right" style="margin-right: 10">381</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><b><font SIZE="2">
      <p>Cash flows from investing activities:</font></b></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Finance receivables:</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Originated or
      purchased</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(5,677)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(5,153)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Repaid</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">4,345</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">3,883</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Proceeds from receivable sales, including securitizations</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">1,230</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">1,081</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Cash used in acquisitions</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(596)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(84)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Capital expenditures</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(399)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(358)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Net proceeds from disposition</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">41</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">&#45;</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Cash proceeds from sale of investments</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">6</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">&#45;</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Cash used to purchase investment securities</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">&#45;</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(134)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Other investing activities, net</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">6</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">21</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Net cash used by
      investing activities</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p align="right" style="margin-right: 10">(1,044)</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p align="right" style="margin-right: 10">(744)</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><b><font SIZE="2">
      <p>Cash flows from financing activities:</font></b></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Increase (decrease) in short&#45;term debt</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">778</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(190)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Proceeds from issuance of long&#45;term debt</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">1,082</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">1,891</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Principal payments and retirements on long&#45;term debt</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(757)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(987)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Proceeds from exercise of stock options</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">24</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">11</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Purchases of Textron common stock</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(44)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(284)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Dividends paid</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(138)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(143)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p>&#160;&#160;&#160;&#160;&#160;Net cash provided by
      financing activities</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p align="right" style="margin-right: 10">945</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">
      <p align="right" style="margin-right: 10">298</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><b><font SIZE="2">
      <p>Net increase (decrease) in cash and cash equivalents</font></b></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">10</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">(65)</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP"><font SIZE="2">
      <p>Cash and cash equivalents at beginning of period</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">289</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="13%" VALIGN="TOP"><font SIZE="2">
      <p align="right" style="margin-right: 10">209</font></td>
    <td WIDTH="4%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid"><font SIZE="2">
      <p>Cash and cash equivalents at end of period</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid"><font SIZE="2">
      <p align="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="12%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid"><font SIZE="2">
      <p align="right" style="margin-right: 10">299</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid"><font SIZE="2">
      <p align="RIGHT" style="margin-right: 0">$</font></td>
    <td WIDTH="13%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid"><font SIZE="2">
      <p align="right" style="margin-right: 10">144</font></td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 10" align="right">&nbsp;</p>
      </td>
  </tr>
</table>
<font SIZE="2">
<i>
<p style="margin-top: 6">See notes to condensed consolidated financial statements.</p>
</i></font>
      <p ALIGN="right" style="margin-right: 15">5.</p>
      <b>
<p ALIGN="CENTER"><a NAME="notes"></a>TEXTRON INC.</p>
</b>
<p ALIGN="CENTER"><a NAME="_Hlk528634175">Notes to Condensed Consolidated
Financial Statements</a> (unaudited)</p>
<b>
<p ALIGN="JUSTIFY">Note
1:&#160;&#160;&#160;&#160;&#160;&nbsp; Basis of Presentation</p>
<blockquote>
      </b>
<blockquote>
      <p ALIGN="JUSTIFY">The financial statements should be read in conjunction
      with the financial statements included in Textron&#39;s Annual Report
      on Form 10&#45;K for the year ended December&#160;30, 2000. The
      financial statements reflect all adjustments (consisting only of normal
      recurring adjustments) which are, in the opinion of management, necessary
      for a fair presentation of Textron&#39;s consolidated financial
      position at September 29, 2001, and its consolidated results of operations
      and cash flows for each of the respective three and nine month periods
      ended September&#160;29, 2001 and September&#160;30, 2000. Certain
      prior year balances have been reclassified to conform to the current year
      presentation. The results of operations for the interim periods are not
      necessarily indicative of the results to be expected for the full year.
      Business segment data has been reclassified to reflect the transfer of
      management responsibility of one division previously reported in the
      Fastening System segment to the Industrial Products segment.</p>
</blockquote>
</blockquote>
<b>
<p ALIGN="JUSTIFY">Note
2:&#160;&#160;&#160;&#160;&#160;&nbsp; Disposition</p>
<blockquote>
  <blockquote>
      </b>
      <p ALIGN="JUSTIFY">On August&#160;7, 2001, Textron entered into an
      agreement to sell the Automotive Trim business to Collins & Aikman
      Products Company (C&A), a subsidiary of Collins & Aikman
      Corporation, subject to financing. Market conditions subsequent to the
      September 11 terrorist attacks have required C&A to explore
      alternative financing arrangements. The Company is currently in
      negotiations with C&A in an effort to close the transaction in the
      fourth quarter 2001.</p>
</blockquote>
</blockquote>
<b>
<p ALIGN="JUSTIFY">Note
3:&#160;&#160;&#160;&#160;&#160;&nbsp; Earnings per Share</p>
<blockquote>
  <blockquote>
      </b>
      <p ALIGN="JUSTIFY">The diluted share base excludes potentially dilutive
      convertible preferred shares and stock options of 2,070,000 for the three
      months ended September 29, 2001 and 2,108,000 for the nine months ended
      September 29, 2001. These shares were excluded due to their antidilutive
      effect resulting from the loss from operations. The dilutive effect of
      convertible preferred shares and stock options was 2,140,000 and 2,343,000
      for the three and nine months ended September&#160;30, 2000,
      respectively. Income available to common shareholders used to calculate
      both basic and diluted earnings per share approximated net income for both
      periods.</p>
  </blockquote>
</blockquote>
<p align="right">6.</p>
<p align="left">&nbsp;</p>
      <b>
<p>Note 4:&#160;&#160;&#160;&#160;&#160;Inventories</p>
</b>
<table CELLSPACING="1" WIDTH="663">
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="CENTER">September 29,<br>
      2001</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="CENTER">December 30,<br>
      2000</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="35%" VALIGN="TOP" COLSPAN="5" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">(In millions)</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP">
      <p>Finished goods</td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="11%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">871</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">727</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP">
      <p>Work in process</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="11%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">952</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">930</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>Raw materials</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">424</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">454</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="11%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">2,247</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="12%" VALIGN="TOP">
      <p style="margin-right: 10" align="right">2,111</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>Less progress payments and customer deposits</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">229</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">240</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="14%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="47%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="11%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 10" align="right">2,018</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="12%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 10" align="right">1,871</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
</table>
<table CELLSPACING="0" CELLPADDING="1" WIDTH="672">
  <tr>
    <td WIDTH="77" VALIGN="TOP"><b>
      <p>Note 5:</b></td>
    <td WIDTH="587" VALIGN="TOP"><b>
      <p>Textron Finance&#45;Obligated Mandatorily Redeemable Preferred
      Securities of Finance Subsidiary Holding Solely Junior Subordinated
      Debentures</b></td>
  </tr>
</table>
<blockquote>
  <blockquote>
        <p ALIGN="JUSTIFY">Litchfield Financial Corporation (Litchfield, a
        subsidiary of Textron Financial Corporation) was acquired by Textron
        Financial Corporation during 1999. Prior to the acquisition, a trust
        sponsored and wholly&#45;owned by Litchfield issued Series A
        Preferred Securities to the public (for $26 million), the proceeds of
        which were invested by the trust in $26 million aggregate principal
        amount of Litchfield&#39;s newly issued 10% Series A Junior
        Subordinated Debentures (Series A Debentures), due 2029. The debentures
        are the sole asset of the trust. The preferred securities were recorded
        by Textron Financial Corporation at fair value of $29 million as of the
        acquisition date. The amounts due to the trust under the subordinated
        debentures and the related statement of operations amounts have been
        eliminated in Textron&#39;s consolidated financial statements.</p>
        <p ALIGN="JUSTIFY">The preferred securities accrue and pay cash
        distributions quarterly at a rate of 10% per annum. The trust&#39;s
        obligation under the Series A Preferred Securities are fully and
        unconditionally guaranteed by Litchfield. The trust will redeem all of
        the outstanding Series A Preferred Securities when the Series A
        Debentures are paid at maturity on June&#160;30, 2029, or otherwise
        become due. Litchfield will have the right to redeem 100% of the
        principal plus accrued and unpaid interest on or after June&#160;30,
        2004. As a result of its acquisition of Litchfield, Textron Financial
        Corporation has agreed to make payments to the holders of the Preferred
        Securities, when due, to the extent not paid by or on behalf of the
        trust or subsidiary.</p>
  </blockquote>
</blockquote>
<table CELLSPACING="0" CELLPADDING="1" WIDTH="649">
  <tr>
    <td WIDTH="74" VALIGN="TOP"><b>
      <p>Note 6:</b></td>
    <td WIDTH="567" VALIGN="TOP"><b>
      <p>Textron&#45;Obligated Mandatorily Redeemable Preferred Securities
      of Subsidiary Trust Holding Solely Textron Junior Subordinated Debt
      Securities</b></td>
  </tr>
</table>
<blockquote>
  <blockquote>
        <p ALIGN="JUSTIFY">In 1996, a trust sponsored and wholly&#45;owned
        by Textron issued preferred securities to the public (for $500 million)
        and shares of its common securities to Textron (for $15.5 million), the
        proceeds of which were invested by the trust in $515.5 million aggregate
        principal amount of Textron&#39;s newly issued 7.92% Junior
        Subordinated Deferrable Interest Debentures, due 2045. The debentures
        are the sole asset of the trust. The proceeds from the issuance of the
        debentures&nbsp;</p>
        <p ALIGN="right" style="margin-right: 10">7.</p>
        <p ALIGN="JUSTIFY"> were used by Textron for the repayment of long&#45;term
        borrowings and for general corporate purposes. The amounts due to the
        trust under the debentures and the related statement of operations
        amounts have been eliminated in Textron&#39;s consolidated financial
        statements.</p>
        <p ALIGN="JUSTIFY">The preferred securities accrue and pay cash
        distributions quarterly at a rate of 7.92% per annum. Textron has
        guaranteed, on a subordinated basis, distributions and other payments
        due on the preferred securities. The guarantee, when taken together with
        Textron&#39;s obligations under the debentures and in the indenture
        pursuant to which the debentures were issued and Textron&#39;s
        obligations under the Amended and Restated Declaration of Trust
        governing the trust, provides a full and unconditional guarantee of
        amounts due on the preferred securities. The preferred securities are
        mandatorily redeemable upon the maturity of the debentures on March 31,
        2045, or earlier to the extent of any redemption by Textron of any
        debentures. The redemption price in either such case will be $25 per
        share plus accrued and unpaid distributions to the date fixed for
        redemption.</p>
  </blockquote>
</blockquote>
<b>
<p>Note 7:&#160;&#160;&#160;&#160;&#160;&nbsp; Contingencies</p>
<blockquote>
  <blockquote>
      </b>
      <p ALIGN="JUSTIFY">Textron is subject to legal proceedings arising out of
      the conduct of the Company&#39;s business. These proceedings include
      claims arising from private transactions, government contracts, product
      liability, and environmental, safety and health matters. Some of these
      legal proceedings seek damages, fines or penalties in substantial amounts
      or remediation of environmental contamination. Under federal government
      procurement regulations, certain claims brought by the U.S. Government
      could result in Textron&#39;s suspension or debarment from U.S.
      Government contracting for a period of time. On the basis of information
      presently available, Textron believes that these suits and proceedings
      will not have a material effect on the Company&#39;s results of
      operations or financial position.</p>
      <p ALIGN="JUSTIFY">Cessna is a defendant in an action filed in June 1991
      in the Circuit Court in and for Escambia County, Florida, brought by James
      M. Cassoutt, Cindy I. Cassoutt and Judy L. Kealey, for injuries incurred
      in a 1989 crash of a Cessna 185 aircraft. Plaintiffs claim that the crash
      was the result of a defective seat rail system. In mid&#45;August, a
      jury returned verdicts against Cessna for $80 million in compensatory
      damages and $400 million in punitive damages. Cessna has filed a combined
      motion with the trial court for a directed verdict in favor of Cessna or,
      in the alternative, for a new trial or an order drastically reducing the
      amounts awarded by the jury. While the ultimate outcome of litigation
      cannot be assured, Textron&#39;s management believes it is probable
      that the verdict will be reversed or substantially reduced and that its
      reserves are adequate to cover any remaining award that is not covered by
      insurance.</p>
    <blockquote>
      <blockquote>
      <p align="right">&nbsp; 8.</p>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
      <b>
<p>Note 8:&#160;&#160;&#160;&#160;&#160;&nbsp; Accumulated Other
Comprehensive Loss and Comprehensive Income (Loss)</p>
      </b>
<blockquote>
  <blockquote>
      <p ALIGN="JUSTIFY">The components of accumulated other comprehensive loss
      are as follows:</p>
</blockquote>
</blockquote>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="673">
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="316" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="16" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="248" VALIGN="TOP" COLSPAN="4" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Nine Months Ended</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p><br>
      (In millions)</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p ALIGN="CENTER">September 29,<br>
      2001</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p ALIGN="CENTER">September 30,<br>
      2000</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="316" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>Beginning of period</td>
    <td WIDTH="16" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="103" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">(172)</td>
    <td WIDTH="16" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="102" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">(98)</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p>Currency translation adjustment, net of<br>
      &#160;&#160;&#160;&#160;&#160;taxes</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (21)</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (77)</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p>Transition adjustment due to change in<br>
      &#160;&#160;&#160;&#160;&#160;accounting for
      derivative instruments<br>
      &#160;&#160;&#160;&#160;&#160;and hedging activities,
      net of taxes</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      <br>
      (15)</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      <br>
      &#45;</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p>Net deferred loss on hedge contracts, net<br>
      &#160;&#160;&#160;&#160;&#160;of taxes</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (16)</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      &#45;</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p>Amortization of deferred loss on terminated<br>
      &#160;&#160;&#160;&#160;&#160;hedge contracts, net of
      taxes</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      2</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      &#45;</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p>Net deferred gain on interest&#45;only securities,<br>
      &#160;&#160;&#160;&#160;&#160;net of taxes</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      8</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      &#45;</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p>Reclassification adjustment for realized<br>
      &#160;&#160;&#160;&#160;&#160;losses in net income</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      6</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      &#45;</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="314" VALIGN="TOP">
      <p>Net unrealized losses on securities, net<br>
      &#160;&#160;&#160;&#160;&#160;of taxes</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="101" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (6)</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="100" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (37)</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="316" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>Other comprehensive loss</td>
    <td WIDTH="16" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="103" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">(42)</td>
    <td WIDTH="16" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="102" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">(114)</td>
  </tr>
  <tr>
    <td WIDTH="73" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="316" VALIGN="TOP" style="border-bottom-style: solid">
      <p>End of period</td>
    <td WIDTH="16" VALIGN="TOP" style="border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="103" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right">(214)</td>
    <td WIDTH="16" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="15" VALIGN="TOP" style="border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="102" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right">(212)</td>
  </tr>
</table>
<blockquote>
  <blockquote>
        <p ALIGN="JUSTIFY">Comprehensive income (loss) is summarized below:</p>
  </blockquote>
</blockquote>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="667">
  <tr>
    <td WIDTH="71" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="197" VALIGN="TOP">
      <p ALIGN="JUSTIFY"><br>
    </td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="172" VALIGN="TOP" COLSPAN="3">
      <p ALIGN="CENTER"><br>
      Three Months Ended</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="162" VALIGN="TOP" COLSPAN="3">
      <p ALIGN="CENTER"><br>
      Nine Months Ended</td>
  </tr>
  <tr>
    <td WIDTH="71" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="197" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="JUSTIFY"><br>
      (In millions)</td>
    <td WIDTH="14" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="73" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Sept. 29,<br>
      2001</td>
    <td WIDTH="14" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="73" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Sept. 30,<br>
      2000</td>
    <td WIDTH="13" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="65" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Sept. 29,<br>
      2001</td>
    <td WIDTH="13" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="72" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Sept. 30,<br>
      2000</td>
  </tr>
  <tr>
    <td WIDTH="71" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="197" VALIGN="TOP">
      <p ALIGN="JUSTIFY">Net income (loss)</td>
    <td WIDTH="14" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="73" VALIGN="TOP">
      <p style="margin-right: 20" align="right">(330)</td>
    <td WIDTH="14" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="73" VALIGN="TOP">
      <p style="margin-right: 20" align="right">158</td>
    <td WIDTH="13" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="65" VALIGN="TOP">
      <p style="margin-right: 20" align="right">(91)</td>
    <td WIDTH="13" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="72" VALIGN="TOP">
      <p align="right" style="margin-right: 20">436</td>
  </tr>
  <tr>
    <td WIDTH="71" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="197" VALIGN="TOP">
      <p>Other comprehensive<br>
      &#160;&#160;&#160;&#160;&#160;income (loss)</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="73" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      22</td>
    <td WIDTH="14" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="73" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (49)</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="65" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (42)</td>
    <td WIDTH="13" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="72" VALIGN="TOP">
      <p align="right" style="margin-right: 20"><br>
      (114)</td>
  </tr>
  <tr>
    <td WIDTH="71" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="197" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p>Comprehensive income<br>
      &#160;&#160;&#160;&#160;&#160;(loss)</td>
    <td WIDTH="14" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      $</td>
    <td WIDTH="73" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 20" align="right"><br>
      (308)</td>
    <td WIDTH="14" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      $</td>
    <td WIDTH="73" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 20" align="right"><br>
      109</td>
    <td WIDTH="13" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      $</td>
    <td WIDTH="65" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 20" align="right"><br>
      (133)</td>
    <td WIDTH="13" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      $</td>
    <td WIDTH="72" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p align="right" style="margin-right: 20"><br>
      322</td>
  </tr>
</table>
<p ALIGN="right" style="margin-right: 30">9.</p>
<b>
<p ALIGN="JUSTIFY">Note
9:&#160;&#160;&#160;&#160;&#160;&nbsp; Special Charges, Net</p>
      </b>
<blockquote>
  <blockquote>
    <u>
      <p ALIGN="JUSTIFY">Goodwill and Intangible Assets<br>
      </u>During the third quarter of 2001, certain
      long&#45;lived asset impairment indicators were identified for
      OmniQuip which caused the Company to perform an impairment review. Key
      impairment indicators included OmniQuip&#39;s operating performance
      against plan even after execution of restructuring efforts to improve
      operating efficiencies and streamline operations. Additionally, the
      strategic review process completed in August 2001 confirmed that the
      economic and market conditions combined with the saturation of light
      construction equipment handlers in the market have negatively impacted the
      projected results for the foreseeable future. The undiscounted cash flow
      projections performed were less than the carrying amount of
      OmniQuip&#39;s long&#45;lived assets indicating that there was an
      impairment. The Company then used a discounted pre&#45;tax cash flow
      calculation in determining the fair value of the long&#45;lived assets
      utilizing the multi&#45;year forecast to project future cash flows and
      a risk&#45;based rate of 11%. The calculation resulted in a third
      quarter impairment charge in the Industrial Products segment of $317
      million, including goodwill of $306 million and other intangible assets of
      $11 million. The cash flow projections used in performing the review of
      OmniQuip were based on management&#39;s best estimate of future
      results. Actual results could differ materially from those estimates.</p>
      <p ALIGN="JUSTIFY">Textron continues to address and execute strategic
      initiatives to enhance the overall profitability of OmniQuip. Through
      September 29, 2001, OmniQuip&#39;s workforce has been reduced by over
      650 employees, along with the closure of two administrative offices, one
      plant and a warehouse. Under a pre&#45;announced project, OmniQuip is
      also in the process of closing an additional plant. As of September 29,
      2001, remaining OmniQuip long&#45;lived assets of $107 million are
      deemed recoverable.</p>
      <u>
      <p ALIGN="JUSTIFY">Restructuring<br>
      </u>During the fourth quarter of 2000, the Company approved
      and committed to a restructuring program based upon targeted cost
      reductions primarily in the Automotive, Fastening Systems and Industrial
      Products segments. The program includes corporate and segment workforce
      reductions, consolidation of facilities, rationalization of certain
      product lines, outsourcing of non&#45;core production activity, and
      streamlining of sales and administrative overhead. Facility consolidations
      are occurring primarily in the United States and Europe.</p>
      <p ALIGN="JUSTIFY">In the third quarter of 2001, Textron recorded
      restructuring costs of $11 million in special charges, net. These
      restructuring costs included $10 million of accrued severance and related
      benefits ($6 million for the Industrial Products segment, $3 million for
      the Fastening Systems segment and $1 million for the Finance segment) and
      $4 million for fixed asset impairment charges, primarily in the Fastening
      Systems segment.</p>
      <p ALIGN="JUSTIFY">The Company will incur additional restructuring charges
      as it completes and commits to expanded activities primarily within
      Automotive, Fastening Systems&nbsp;</p>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
      <p ALIGN="JUSTIFY">10.</p>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
      <p ALIGN="JUSTIFY"> and Industrial Products segments, including
      a further workforce reduction of approximately 2,500 which should be
      substantially completed by the end of 2002. The Company expects to fund
      the cash requirements of its restructuring activities with cash flow from
      operations and borrowings.</p>
      <p ALIGN="JUSTIFY">Under the current restructuring program, Textron has
      reduced its workforce by 4,400 employees through September&#160;29,
      2001 which, by segment, was 2,000 in Industrial Products, and 1,400 in
      Fastening Systems, 600 in Automotive, 200 in Aircraft, and 200 in the
      Finance segment and Corporate. The Company expects a total reduction of
      7,300 employees, excluding Textron Automotive Trim, representing
      approximately 12% of Textron&#39;s global workforce since the
      restructuring was first announced in October 2000.</p>
      <p ALIGN="JUSTIFY">Accruable restructuring costs recorded in earnings have
      been included in special charges, net on the consolidated statement of
      operations. An analysis of Textron&#39;s special charges for
      restructuring and related reserve accounts is summarized below:</p>
</blockquote>
</blockquote>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="660">
  <tr>
    <td WIDTH="74" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="211" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="JUSTIFY"><br>
      (In millions)</td>
    <td WIDTH="95" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Asset<br>
      Impairments</td>
    <td WIDTH="81" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Severance<br>
      Costs</td>
    <td WIDTH="73" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Facilities<br>
      & Other</td>
    <td WIDTH="66" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER"><br>
      Total</td>
    <td WIDTH="28" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="74" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="209" VALIGN="TOP">
      <p ALIGN="JUSTIFY">Balance, December 30, 2000</td>
    <td WIDTH="30" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="57" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="37" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="36" VALIGN="TOP">
      <p align="right" style="margin-right: 15">14</td>
    <td WIDTH="30" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="35" VALIGN="TOP">
      <p align="right" style="margin-right: 15">1</td>
    <td WIDTH="19" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="39" VALIGN="TOP">
      <p align="right" style="margin-right: 15">15</td>
    <td WIDTH="26" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="74" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="209" VALIGN="TOP">
      <p ALIGN="JUSTIFY">Additions</td>
    <td WIDTH="93" VALIGN="TOP" COLSPAN="2">
      <p style="margin-right: 15" align="right">24</td>
    <td WIDTH="79" VALIGN="TOP" COLSPAN="2">
      <p align="right" style="margin-right: 15">56</td>
    <td WIDTH="71" VALIGN="TOP" COLSPAN="2">
      <p align="right" style="margin-right: 15">7</td>
    <td WIDTH="64" VALIGN="TOP" COLSPAN="2">
      <p align="right" style="margin-right: 15">87</td>
    <td WIDTH="26" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="74" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="209" VALIGN="TOP">
      <p ALIGN="JUSTIFY">Utilized</td>
    <td WIDTH="93" VALIGN="TOP" COLSPAN="2">
      <p style="margin-right: 15" align="right">(24)</td>
    <td WIDTH="79" VALIGN="TOP" COLSPAN="2">
      <p align="right" style="margin-right: 15">(42)</td>
    <td WIDTH="71" VALIGN="TOP" COLSPAN="2">
      <p align="right" style="margin-right: 15">(2)</td>
    <td WIDTH="64" VALIGN="TOP" COLSPAN="2">
      <p align="right" style="margin-right: 15">(68)</td>
    <td WIDTH="26" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="74" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="209" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="JUSTIFY">Balance, September 29, 2001</td>
    <td WIDTH="30" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="57" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="37" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="36" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p align="right" style="margin-right: 15">28</td>
    <td WIDTH="30" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="35" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p align="right" style="margin-right: 15">6</td>
    <td WIDTH="19" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="39" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p align="right" style="margin-right: 15">34</td>
    <td WIDTH="26" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
  </tr>
</table>
<blockquote>
  <blockquote>
        <p ALIGN="JUSTIFY">The specific restructuring measures and associated
        estimated costs are based on the Company&#39;s best judgment under
        prevailing circumstances. The Company believes that the restructuring
        reserve balance of $34 million is adequate to carry out the
        restructuring activities formally identified and committed to as of
        September&#160;29, 2001 and anticipates that all actions related to
        these liabilities will be completed within a twelve&#45;month
        period.</p>
        <p ALIGN="JUSTIFY">The Company also incurred and recognized costs of $14
        million and $27 million for the three and nine month periods ended
        September&#160;29, 2001, respectively, associated with the
        restructuring that were not accruable when the restructuring projects
        were initiated. These expenses consist of costs for outsourcing certain
        operations in the aircraft segment, plant rearrangement, machinery and
        equipment relocation, employee replacement and relocation costs, and are
        included in segment profit.</p>
        <u>
        <p ALIGN="left">E&#45;business Investment</p>
        </u>
        <p ALIGN="left">During the third quarter of 2001, the Company wrote
        down its investment in e&#45;business securities by $6 million.
        E&#45;business security write&#45;downs totaled $9 million for
        the nine months ended September&#160;29, 2001, and were included in
        special charges, net on the consolidated statement of operations.</p>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
        <p ALIGN="JUSTIFY">11.</p>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
        <b>
  <p ALIGN="JUSTIFY">Note
  10:&#160;&#160;&#160;&#160;&#160;Derivative Instruments
  and Hedging Activities</p>
        </b>
  <blockquote>
    <blockquote>
        <p ALIGN="JUSTIFY">Effective December 31, 2000, Textron adopted
        Statement of Financial Accounting Standards (SFAS) No.&#160;133.
        &quot;Accounting for Derivative Instruments and Hedging
        Activities,&quot; as amended, which requires that all derivative
        instruments be reported on the balance sheet at fair value and
        establishes criteria for designation and effectiveness of hedging
        relationships. In accordance with the transition provisions of SFAS&#160;133,
        the Company recorded a cumulative transition adjustment to decrease
        other comprehensive income by approximately $15 million, net of tax, to
        recognize the fair value of cash flow hedges as of the date of adoption.
        The cumulative effect of adoption was not material to the
        Company&#39;s consolidated statement of operations. Textron is
        exposed to market risk, primarily from changes in interest rates,
        currency exchange rates and securities pricing. To manage the volatility
        relating to these exposures, Textron nets the exposures on a
        consolidated basis to take advantage of natural offsets. For the
        residual portion, Textron enters into various derivative transactions
        pursuant to the Company&#39;s policies in areas such as counterparty
        exposure and hedging practices. Designation is performed on a specific
        exposure basis to support hedge accounting. The changes in fair value of
        these hedging instruments are offset in part or in whole by
        corresponding changes in the fair value or cash flows of the underlying
        exposures being hedged. Textron does not hold or issue derivative
        financial instruments for trading or speculative purposes.</p>
        <u>
        <p ALIGN="JUSTIFY"><a NAME="_Hlk512848143">Interest Rate Hedging<br>
        </a></u>Textron Manufacturing&#39;s policy is to manage
        interest cost using a mix of fixed and variable rate debt. To manage
        this mix in a cost efficient manner, from time to time, Textron
        Manufacturing will enter into interest rate exchange agreements (swaps),
        to agree to exchange, at specified intervals, the difference between
        fixed and variable interest amounts calculated by reference to an
        agreed&#45;upon notional principal amount. At December&#160;31,
        2000, Textron Manufacturing had swaps with a fair value of $8 million
        designated as fair value hedges of underlying fixed rate debt
        obligations which was recorded as a reduction of debt. The
        mark&#45;to&#45;market values of both the fair value hedge
        instruments and underlying debt obligations are recorded as equal and
        offsetting unrealized gains and losses in the interest expense component
        of the statement of operations. All existing fair value hedges are 100%
        effective. As a result, there is no current impact to earnings due to
        hedge ineffectiveness. Non&#45;qualifying instruments are also
        recorded on the balance sheet at fair value, but the impact was not
        material to the statement of operations. In March 2001, Textron
        Manufacturing terminated all outstanding interest rate swaps and
        received a payment of $15 million which is being amortized into income
        over the remaining life of the original hedged debt.</p>
        <p ALIGN="JUSTIFY">Textron Finance&#39;s strategy is to match
        interest&#45;sensitive assets with interest&#45;sensitive
        liabilities to limit exposure to changes in interest rates. As part of
        managing this matching strategy, Textron Finance has entered into
        interest rate exchange agreements, including basis swaps, to lock in
        desired spreads between certain interest&#45;earning assets and
        certain interest&#45;bearing liabilities. Textron Finance has both
        cash flow and fair value hedges. For cash flow hedges, during&nbsp;</p>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
                                  <blockquote>
        <p ALIGN="JUSTIFY">12.</p>
                                  </blockquote>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
        <p ALIGN="JUSTIFY"> the first
        nine months of 2001, Textron Finance recorded a charge of $8 million,
        net of taxes, to accumulated other comprehensive loss with no impact to
        the statement of operations. For fair value hedges at
        September&#160;29, 2001, Textron Finance had interest exchange
        agreements with a fair value liability of $10 million designated as fair
        value hedges of a fixed rate receivable portfolio and debt. The fair
        value hedges are highly effective and therefore, there was an immaterial
        net impact to earnings due to hedge ineffectiveness.</p>
        <u>
        <p ALIGN="JUSTIFY">Currency Rate Hedging<br>
        </u>
        Textron manufactures and sells its products in a
        number of countries throughout the world and, as a result, is exposed to
        movements in foreign currency exchange rates. The primary purpose of
        Textron&#39;s foreign currency hedging activities is to manage the
        volatility associated with foreign currency purchases of materials,
        foreign currency sales of its products and other assets and liabilities
        created in the normal course of business. The Company primarily utilizes
        forward exchange contracts and purchased options with maturities of less
        than eighteen months. Textron also enters into certain foreign currency
        derivative instruments that do not meet hedge accounting criteria, and
        are primarily intended to protect against exposure related to
        intercompany financing transactions and income from international
        operations. The fair value of these instruments at
        September&#160;29, 2001 was $1 million and the net impact of the
        related gains and losses on selling and administrative expense was not
        material for the three and nine months ended September 29, 2001. In
        addition, Textron utilizes purchased foreign currency options and
        forward exchange contracts which qualify as cash flow hedges. These are
        intended to offset the effect of exchange rate fluctuations on
        forecasted sales, inventory purchases and overhead expenses. The fair
        value of these instruments at September&#160;29, 2001 was a $6
        million liability. Gains and losses on these instruments are deferred in
        accumulated other comprehensive loss until the underlying transactions
        are recognized in earnings. The earnings impact is reported in net
        sales, cost of sales, or selling and administrative expenses, to match
        the underlying transaction being hedged. At September 29, 2001, $5
        million of after&#45;tax loss was reported in accumulated other
        comprehensive loss from qualifying cash flow hedges. This lossis
        expected to be reclassified to earnings in the next twelve months.</p>
        <u>
        <p ALIGN="JUSTIFY">Net Investment Hedging<br>
        </u>Textron generally hedges its net investment position
        in major currencies and generates foreign currency interest payments,
        which offset other transactional exposures in these currencies. To
        accomplish this, the Company borrows directly in foreign currency and
        designates a portion of foreign currency debt as a hedge of net
        investments. In addition, certain currency forwards are designated as
        hedges of the Textron&#39;s related foreign net investments.
        Currency effects of these hedges which are reflected in the currency
        translation section of other comprehensive loss, produced a $5 million
        after&#45;tax loss during 2001, leaving an accumulated net balance
        of $22 million related to gains and losses on hedging transactions.</p>
      <blockquote>
        <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
        <p ALIGN="JUSTIFY">13.</p>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
        <u>
      </blockquote>
    </blockquote>
        <p ALIGN="JUSTIFY">Stock&#45;based Compensation Hedging<br>
        </u>
        Textron manages the expense related to
        stock&#45;based compensation awards using cash settlement forward
        contracts on its common stock. The use of these forward contracts
        modifies the Company&#39;s compensation expense exposure to changes
        in the stock price with the intent to reduce potential variability. The
        fair value of these instruments at September&#160;29, 2001 was a $30
        million liability. Gains and losses on these instruments are recorded as
        an adjustment to compensation expense when the award is charged to
        expense. At September&#160;29, 2001, a $6 million after&#45;tax
        loss is deferred in accumulated other comprehensive loss.</p>
  </blockquote>
</blockquote>
<b>
<p ALIGN="JUSTIFY">Note 11:&#160;&#160;&#160;&#160;&#160;New
Accounting Pronouncements</p>
<blockquote>
  <blockquote>
      </b>
      <p ALIGN="JUSTIFY">In September 2000, the Financial Accounting Standards
      Board (FASB) issued SFAS 140 &quot;Accounting for Transfers and Servicing
      of Financial Assets and Extinguishments of Liabilities &#45; a
      Replacement of FASB Statement No. 125&quot;. SFAS 140 revises criteria for
      accounting for securitizations, other financial&#45;asset and
      collateral transfers and extinguishments of liabilities. The Statement
      also introduced new disclosure requirements related to securitizations,
      collateral and retained interests in securitized financial assets. Textron
      adopted these new disclosure requirements in the fourth quarter of 2000,
      as required by the Statement. Textron also adopted the provisions of SFAS
      140 related to the transfers and servicing of financial assets and
      extinguishments of liabilities effective April&#160;1, 2001. The
      adoption of this statement did not have a material effect on the
      Company&#39;s results of operations or financial position.</p>
      <p ALIGN="JUSTIFY">In July 2001, the FASB issued SFAS No. 141, Business
      Combinations<i>,</i> and SFAS No. 142, Goodwill and Other Intangible
      Assets<i>. </i>SFAS 141 requires that the purchase method of accounting be
      used for all business combinations initiated after June 30, 2001 and
      prohibits the use of the pooling&#45;of&#45;interests method. SFAS
      142 changes the accounting for goodwill from an amortization method to an
      impairment&#45;only approach. The amortization of goodwill from past
      business combinations will cease upon adoption of this Statement on
      December&#160;30, 2001. Goodwill and intangible assets acquired in
      business combinations completed after June&#160;30, 2001 must comply
      with the provisions of this Statement. Also under this Statement,
      companies will be required to evaluate all existing goodwill for
      impairment within six months of adoption by comparing the fair value of
      each reporting unit to its carrying value at the date of adoption. Any
      transitional impairment losses will be recognized in the first interim
      period in the year of adoption and will be recognized as the effect of a
      change in accounting principle. Textron is evaluating the potential impact
      of adopting these pronouncements on the results of operations and
      financial position of the Company.</p>
      <p ALIGN="JUSTIFY">In August 2001, the FASB issued SFAS No. 144,
      &quot;Accounting for the Impairment or Disposal of Long&#45;Lived
      Assets&quot;. SFAS 144 requires that one accounting model be used for
      long&#45;lived assets to be disposed of by sale. Discontinued
      operations will be measured similar to other long&#45;lived assets
      classified as held for sale at the lower of its carrying amount or fair
      value less cost to sell. Future operating losses will no longer be
      recognized before they occur. SFAS 144 also&nbsp;</p>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
      <p ALIGN="JUSTIFY">14.</p>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
      <p ALIGN="JUSTIFY"> broadens the presentation of
      discontinued operations to include a component of an entity when
      operations and cash flows can be clearly distinguished, and establishes
      criteria to determine when a long&#45;lived asset is held for sale.
      The provisions of this Statement are effective for financial statements
      issued for fiscal years beginning after December 15, 2001. The adoption of
      this Statement will not have a material effect on the Company&#39;s
      results of operations or financial position.</p>
</blockquote>
</blockquote>
<b>
<p ALIGN="JUSTIFY">Note
12:&#160;&#160;&#160;&#160;&#160;Financial Information by
Borrowing Group</p>
<blockquote>
  <blockquote>
      </b>
      <p ALIGN="JUSTIFY">Textron&#39;s financings are conducted through two
      borrowing groups, Textron Finance and Textron Manufacturing. This
      framework is designed to enhance the Company&#39;s borrowing power by
      separating the Finance segment, which is a borrowing unit of a specialized
      business nature. Textron Finance consists of Textron Financial Corporation
      consolidated with its subsidiaries, which are the entities through which
      Textron operates its Finance segment. Textron Finance&#39;s operations
      are financed by borrowing from its own group of external creditors.
      Textron Manufacturing is Textron Inc., the parent company, consolidated
      with the entities, which operate in the Aircraft, Automotive, Fastening
      Systems and Industrial Products business segments.</p>
</blockquote>
</blockquote>
<p ALIGN="RIGHT" style="margin-right: 15">15.</p>
<p>Item 1. <u>FINANCIAL STATEMENTS</u> (Continued)</p>
<b>
<p>Note 12: Financial Information by Borrowing Group (continued)</p>
<p><a NAME="concash"></a><a NAME="_Hlk528634213"></a>Textron Manufacturing<br>
</b>(unaudited) (In millions)</p>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="668">
  <tr>
    <td WIDTH="61%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="36%" VALIGN="TOP" COLSPAN="5">
      <p ALIGN="CENTER">Nine Months Ended</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><b>
      <p><br>
      Condensed Statements of Cash Flows</b></td>
    <td WIDTH="16%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">September 29,<br>
      2001</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="17%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">September 30,<br>
      2000</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP"><b>
      <p>Cash flows from operating activities:</b></td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="12%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="13%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Income (loss) from operations</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(91)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">495</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Adjustments to reconcile income (loss)
      from&#160;&#160;&#160;&#160;&#160;operations to net<br>
      &#160;&#160;&#160;&#160;&#160;cash (used) provided by
      operating activities:</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Earnings of Textron
      Finance greater than distributions<br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;to
      Textron Manufacturing</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right"><br>
      (42)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right"><br>
      (30)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Depreciation</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">286</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">274</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Amortization</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">75</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">73</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Special charges, net</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">415</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Deferred income taxes</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(57)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">26</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Gain on sale of
      division</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(3)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Changes in assets and
      liabilities excluding those<br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;related
      to acquisitions and divestitures:</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Increase
      in commercial and U.S. government<br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;receivables</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right"><br>
      (186)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right"><br>
      (90)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Increase
      in inventories</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(149)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(160)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Increase
      in other assets</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(147)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(42)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Decrease
      in accounts payable and accrued<br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;liabilities</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right"><br>
      (162)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right"><br>
      (209)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>&#160;&#160;&#160;&#160;&#160;Other, net</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">49</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(5)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Net
      cash (used) provided by operating activities</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">(12)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">332</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18"><b>
      <p>Cash flows from investing activities:</b></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Capital expenditures</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(388)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(350)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Cash used in acquisitions</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(209)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(80)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Net proceeds from dispositions</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">41</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Cash proceeds from sale of investments</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">6</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Investment in joint ventures</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">&#45;</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(4)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Cash used to purchase investments</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">&#45;</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(134)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Other investing activities, net</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">10</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">27</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="17" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Net
      cash used by investing activities</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="17" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="17" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">(540)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="17" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="17" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="17" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">(541)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="17" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18"><b>
      <p>Cash flows from financing activities:</b></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right"></p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Increase in short&#45;term debt</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">787</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">145</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Proceeds from issuance of long&#45;term debt</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">1</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">515</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Principal payments and retirements on long&#45;term debt</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(52)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(91)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Proceeds from exercise of stock options</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">24</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">11</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Purchases of Textron common stock</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(44)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(284)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Dividends paid</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(138)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(143)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Contributions paid to Textron Finance</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(47)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(2)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Net
      cash provided by financing activities</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 10" align="right">531</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">151</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18"><b>
      <p>Net decrease in cash and cash equivalents</b></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">(21)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">(58)</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="18">
      <p>Cash and cash equivalents at beginning of period</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 10" align="right">282</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="18">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="18">
      <p style="margin-right: 15" align="right">192</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="18">
      <p></p>
    </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p>Cash and cash equivalents at end of period</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 10" align="right">261</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p>&nbsp;&nbsp;</p>
    </td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right">134</td>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p></p>
    </td>
  </tr>
</table>
<p ALIGN="RIGHT">16.</p>
<table CELLSPACING="0" CELLPADDING="1" WIDTH="769">
  <tr>
    <td WIDTH="9%" VALIGN="TOP"><b>
      <p><a NAME="reven"></a>Item 2.</b></td>
    <td WIDTH="89%" VALIGN="TOP"><b><u>
      <p>MANAGEMENT&#39;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS</u></b></td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
</table>
<b>
<p ALIGN="CENTER">TEXTRON INC.<br>
<a NAME="_Hlk528634266">Revenues and Income (Loss) by Business Segment</a><br>
</b>(In millions)</p>
<table CELLSPACING="1" CELLPADDING="1" WIDTH="764">
  <tr>
    <td WIDTH="36%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="31%" VALIGN="TOP" COLSPAN="6">
      <p ALIGN="CENTER">Three Months Ended</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="30%" VALIGN="TOP" COLSPAN="6">
      <p ALIGN="CENTER">Nine Months Ended</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="14%" VALIGN="TOP" COLSPAN="3" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">September 29,<br>
      2001</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="14%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">September 30,<br>
      2000</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" VALIGN="TOP" COLSPAN="3" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">September 29,<br>
      2001</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="14%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">September 30,<br>
      2000</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP"><b>
      <p>REVENUES</b></td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>MANUFACTURING:</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Aircraft</td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1,064</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1,171</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">3,273</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">3,143</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Automotive</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">579</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">654</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1,972</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">2,253</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Fastening Systems</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">389</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">469</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1,306</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1,546</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;Industrial Products</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">600</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">730</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">2,074</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">2,330</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">2,632</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">3,024</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">8,625</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">9,272</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>FINANCE</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">178</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">184</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">513</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">506</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p>Total revenues</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right">2,810</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right">3,208</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right">9,138</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right">9,778</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP"><b>
      <p>SEGMENT OPERATING PROFIT*</b></td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>MANUFACTURING:</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&nbsp;</p>
    </td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Aircraft</td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(31)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">127</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">179</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">312</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Automotive</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">14</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">40</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">135</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">190</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Fastening Systems</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">46</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">69</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">138</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;Industrial Products</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">(16)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">71</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">131</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">267</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(32)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">284</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">514</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">907</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>FINANCE</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">48</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">49</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">134</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">134</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>Segment profit</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">16</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">333</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">648</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1,041</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>Special charges, net</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">(338)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">(415)</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>Segment operating income (loss)</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(322)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">333</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">233</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">1,041</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>Gain on sale of division</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">3</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">3</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">&#45;</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>Corporate expenses and other, net</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(33)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(34)</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(114)</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(121)</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP">
      <p>Interest expense, net</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(41)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(42)</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(125)</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="9%" VALIGN="TOP">
      <p style="margin-right: 15" align="right">(116)</td>
    <td WIDTH="2%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p>Income (loss) from operations before<br>
      &#160;&#160;&#160;&#160;&#160;income taxes and
      distributions on<br>
      &#160;&#160;&#160;&#160;&#160;preferred securities of
      subsidiary<br>
      &#160;&#160;&#160;&#160;&#160;trusts</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      <br>
      <br>
      $</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right"><br>
      <br>
      <br>
      (393)</td>
    <td WIDTH="3%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="4%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      <br>
      <br>
      $</td>
    <td WIDTH="10%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right"><br>
      <br>
      <br>
      257</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      <br>
      <br>
      $</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right"><br>
      <br>
      <br>
      (3)</td>
    <td WIDTH="2%" VALIGN="TOP" COLSPAN="2" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="5%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      <br>
      <br>
      $</td>
    <td WIDTH="9%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">
      <p style="margin-right: 15" align="right"><br>
      <br>
      <br>
      804</td>
    <td WIDTH="2%" VALIGN="TOP" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid">&nbsp;</td>
  </tr>
</table>
<table CELLSPACING="0" CELLPADDING="1" WIDTH="751">
  <tr>
    <td WIDTH="2%" VALIGN="TOP">
      <p>*</td>
    <td WIDTH="98%" VALIGN="TOP">
      <p ALIGN="JUSTIFY">Segment profit represents the measurement used by
      Textron to evaluate performance for decision making purposes. Segment
      profit for manufacturing segments does not include interest, certain
      corporate expenses, special charges and gains and losses from the
      disposition of significant business units. The measurement for the Finance
      segment includes interest income, interest expense and distributions on
      preferred securities of Finance subsidiary trust.</td>
  </tr>
</table>
<b>
<p ALIGN="JUSTIFY"><a NAME="mda"></a>Results of operations &#45; Three
months ended September 29, 2001 vs. Three months ended September 30, 2000</p>
</b>
<p ALIGN="JUSTIFY">Revenues decreased to $2.8 billion in the third quarter 2001
from $3.2 billion in the third quarter 2000, primarily due to softening sales in
most short&#45;cycle businesses, pricing pressures and delayed deliveries in
the Aircraft segment as a result of flight restrictions related to the September
11 terrorist attacks. Textron reported a net loss of $330 million, reflecting
special charges and restructuring&#45;related expenses, including a
write&#45;down of goodwill and intangibles related to its OmniQuip business,
compared to net income of $158 million in 2000. Operating results were
negatively impacted by lower sales volumes, pricing pressures and the economic
disruptions resulting from the terrorist actions, as well as reduced
profitability expectations or losses on certain military contracts and
commercial helicopter programs at Bell Helicopter, manufacturing inefficiencies
resulting from the shut&#45;down of certain facilities at Golf and Turf in
an effort to reduce inventory levels, and a write&#45;down of used
inventories at Cessna and Golf and Turf to reflect lower prices prevailing in
their current markets. These negative factors were partially offset by the
benefit of restructuring and other cost reduction activities. Diluted earnings
per share in the third quarter 2001 was a loss of $2.34 per share compared to
income of $1.08 per share in the third quarter 2000.</p>
<p ALIGN="JUSTIFY">Textron reorganized management responsibility for one of its
divisions previously reported in the Fastening Systems segment to the Industrial
Products segment. Prior periods have been restated to reflect this change.</p>
<p ALIGN="JUSTIFY">The<b> Aircraft segment&#39;s</b> revenues decreased $107
million, while recording a loss (after $1 million of
restructuring&#45;related expenses) of $31 million, a decrease in profit of
$158 million compared to the third quarter 2000.</p>
<ul>
  <li>
    <p ALIGN="justify" style="margin-bottom: 12">Cessna&#39;s revenues decreased $78 million due to
  lower sales of single engine piston aircraft driven by the slower economy, and
  delayed deliveries of business jets and Caravans following the September 11
  tragedy. Specifically, shipments and flight tests were suspended while there
  was a complete prohibition on flying. A continued prohibition for most
  internationally&#45;registered general aviation aircraft also prevented
  production flight test activities and delivery to non&#45;U.S. customers.
  Profit decreased as a result of the lower sales, a write&#45;down of used
  aircraft inventory to reflect lower prices in the current market slowdown, and
  higher engineering expense for planned program spending related to the
  Sovereign business jet, partially offset by improved operating performance.</li>
  <li>
    <p ALIGN="justify" style="margin-bottom: 12">Bell Helicopter&#39;s revenues decreased $29 million
  due to lower sales of commercial helicopters and spares and lower foreign
  military sales, partially offset by higher revenue on the V&#45;22
  tiltrotor aircraft production contract. Bell&#39;s profit decreased
  primarily due to reduced profitability expectations or losses on certain
  development and production contracts including the V&#45;22 contract, the
  H&#45;1 upgrade contracts and the Model 412 and Model 427 commercial
  helicopters. The reduced profitability expectations and contract losses were
  based on third quarter 2001 program reviews, and reflect the classification of
  several matters including extended development schedules and planned design
  changes on a number of programs. Profit also decreased due to lower income
  related to retirement plans and lower income from a joint venture partner
  related to the BA609 program.</li>
</ul>
<blockquote>
  <p ALIGN="JUSTIFY">The Department of Defense has approved continued low rate
  production for the V&#45;22 to allow time for incorporation of the
  Independent Review Panel&#39;s recommendations to make specific changes to&nbsp;</p>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
                                  <blockquote>
  <p ALIGN="JUSTIFY">18.</p>
                                  </blockquote>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
  <p ALIGN="JUSTIFY">
  the software and hydraulic systems. While the exact rate of production has not
  yet been determined, it is expected that the quantity of aircraft in the Lot V
  production contract will be decreased from 16 to 11. A firm contract is
  expected by December 2001.</p>
</blockquote>
<p ALIGN="JUSTIFY">The<b> Automotive segment&#39;s</b> revenues decreased
$75 million, while profit (after $2 million of restructuring&#45;related
expenses) decreased $26 million.</p>
<ul>
  <li>
    <p ALIGN="justify" style="margin-bottom: 12">Trim revenues decreased $59 million primarily due to North
  American automotive OEM production decreases, customer price reductions and
  the unfavorable impact of foreign exchange. Profit decreased primarily due to
  the lower sales volume and customer price reductions, partially offset by the
  benefit of restructuring and other cost containment activities.</li>
  <li>
    <p ALIGN="JUSTIFY">Fuel Systems and Functional Components revenues decreased
  $16 million primarily as a result of the divestiture of non&#45;core
  product lines in the fourth quarter of 2000 and the first half of 2001,
  customer price reductions and lower volume. Profit decreased primarily due to
  customer price reductions, the lower volume and lower income related to
  retirement plans, partially offset by the benefit of cost reduction
  activities.</li>
</ul>
<p ALIGN="JUSTIFY">The<b> Fastening Systems segment&#39;s</b> revenues
decreased $80 million, while profit (after $3 million of
restructuring&#45;related expenses) decreased $45 million. The revenue and
profit decreases were primarily due to lower volume in most businesses, customer
price reductions and the unfavorable impact of foreign exchange in its European
operations. The unfavorable profit impact from the lower sales, operating
inefficiencies, customer price reductions and a loss on the divestiture of a
non&#45;core product line was partially offset by the benefit of
restructuring and other cost reduction activities.</p>
<p ALIGN="JUSTIFY">The <b>Industrial Products</b> segment&#39;s revenues
decreased $130 million, while recording a loss (after $5 million of
restructuring&#45;related expenses) of $16 million, for a decrease in profit
of $87 million compared to the third quarter 2000. Revenues decreased primarily
due to lower sales in most of the segment&#39;s businesses due to softening
demand from the depressed economy, with the largest decrease in Golf and Turf,
along with reduced sales due to the divestiture of a division, partially offset
by the contribution from acquisitions. Profit decreased primarily due to the
decline in sales volume in most of the businesses, a decrease in profit at Golf
and Turf and lower income related to retirement plans, partially offset by the
benefit of segment restructuring activities. The decrease in Golf and Turf
profit was primarily due to manufacturing inefficiencies resulting from the
shut&#45;down of certain facilities in an effort to reduce inventory levels,
the impact of higher rebates to stimulate retail sales and a write&#45;down
of used golf car and other inventories.</p>
<p ALIGN="JUSTIFY">The <b>Finance segment&#39;s</b> revenues and profit
decreased $6 million and $1 million, respectively. Revenues decreased due to a
lower average yield reflecting the lower interest rate environment. Interest
margin increased reflecting higher fee income and higher average finance
receivables. While the higher interest margin more than offset the impact of the
decrease in revenue, profit decreased primarily due to a higher provision for
loan losses as a result of higher charge&#45;offs.</p>
<b>
<p ALIGN="JUSTIFY">Special charges, net, and other restructuring&#45;related
expense</b> for the third quarter 2001 included goodwill and intangible asset
impairment write&#45;downs of $318 million, primarily related to OmniQuip,
and accruable restructuring expense of $10 million associated a) with reducing
overhead and closing, consolidating and downsizing manufacturing facilities and
b) reducing segment personnel. These expenses were incurred at Industrial
Products ($6 million), Fastening Systems ($3 million) and Finance&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
<p ALIGN="JUSTIFY">19.</p>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p ALIGN="JUSTIFY"> ($1 million).
In conjunction with the restructuring efforts, Textron recorded
write&#45;downs for fixed asset impairment of $4 million primarily in
Fastening Systems. During the third quarter, Textron recorded e&#45;business
investment write&#45;downs of $6 million which were included in special
charges, net. The Company also incurred costs associated with the restructuring
of $11 million during the quarter. These costs were not accruable when the
restructuring projects were initiated and have been included in segment profit.</p>
<b>
<p ALIGN="JUSTIFY">Interest expense, net</b> &#45; decreased $1 million as a
higher level of average debt primarily as a result of lower cash flow from
operations and acquisitions, was more than offset by the benefit of a lower
interest rate environment.</p>
<b>
<p ALIGN="JUSTIFY">Income Taxes &#45; </b>The effective tax rate was 17.6%
for the third quarter 2001 compared to 36.2% in the third quarter 2000. This
decrease is primarily due to the impact of the non&#45;tax deductibility of
goodwill written off during the third quarter 2001. Excluding the impact of the
goodwill write&#45;off, the tax rate was 35.2% compared to the 36.2% in the
third quarter 2000. This reduction is due to the benefit of tax planning
initiatives being realized in 2001.</p>
<b>
<p ALIGN="JUSTIFY">Results of operations &#45; Nine months ended September
29, 2001 vs. Nine months ended September&#160;30, 2000</p>
</b>
<p ALIGN="JUSTIFY">Revenues decreased to $9.1 billion in the first nine months
of 2001 from $9.8 billion in the first nine months of 2000, primarily due to
softening sales in most short&#45;cycle businesses, pricing pressures and
delayed deliveries in the Aircraft segment as a result of flight restrictions
related to the September 11 terrorist attacks. Textron reported a net loss of
$91 million in the first nine months of 2001, reflecting special charges and
restructuring&#45;related expenses, including a write&#45;down of
goodwill and intangibles related to its OmniQuip business, compared to net
income of $436 million in the first nine months of 2000. Net income for the
first nine months of 2000 included the cumulative effect of a change in
accounting principle of $59 million (net of tax) for the adoption of EITF
consensus on Issue 99&#45;5 &quot;Accounting for Pre&#45;Production
Costs Related to Long Term Supply Arrangements&quot;. Diluted earnings per share
for the first nine months of 2001 was a loss of $0.65 per share compared to
income of $2.97 per share for the first nine months of 2000, which included the
cumulative effect of the change in accounting principle of $0.40 per share (net
of tax).</p>
<p ALIGN="JUSTIFY">Operating results were negatively impacted by lower sales
volumes, pricing pressures, and the economic disruptions resulting from the
terrorist actions, as well as reduced profitability expectations or losses on
certain military contracts and commercial helicopter programs at Bell
Helicopter, decreases in profit at OmniQuip and Golf and Turf which were
primarily due to manufacturing inefficiencies resulting from the
shut&#45;down of certain facilities in an effort to reduce inventory levels,
and a write&#45;down of used inventories at Cessna and Golf and Turf to
reflect lower prices prevailing in their current markets. These negative factors
were partially offset by the benefit of restructuring and other cost reduction
activities.</p>
<p ALIGN="JUSTIFY">The<b> Aircraft segment&#39;s</b> revenues increased $130
million, while profit (after $9 million of restructuring&#45;related
expenses) decreased $133 million.</p>
<ul>
  <li>
    <p ALIGN="JUSTIFY">Cessna&#39;s revenues increased $95 million due to
  higher sales of business jets, primarily the Citation Encore, the Citation CJ2
  and the Citation Excel, despite the impact in the third quarter of the flight
  prohibitions imposed following the September 11 terrorist attacks. Shipments
  and flight tests in the&nbsp;</li>
</ul>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
  <p ALIGN="JUSTIFY">20.</p>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
  <p ALIGN="JUSTIFY"> third quarter were suspended while there was a
  complete prohibition on flying. A continued prohibition for most
  internationally&#45;registered general aviation aircraft also prevented
  production flight test activities and delivery to non&#45;U.S. customers.
  Profit increased as the benefit of the higher sales and improved operating
  performance was partially offset by higher engineering expense for planned
  program spending related to the Sovereign business jet, and a
  write&#45;down of used aircraft inventory to reflect lower prices in the
  current market slowdown.</p>
</blockquote>
<ul>
  <li>
    <p ALIGN="JUSTIFY">Bell Helicopter&#39;s revenues increased $35 million
  due to higher revenue on the V&#45;22 tiltrotor aircraft production
  contract, higher sales of commercial helicopters and spares and higher sales
  of kits used to modernize older model Huey helicopters, partially offset by
  lower foreign military sales and lower revenues on the H&#45;1 upgrade
  contracts. Bell&#39;s profit decreased primarily due to reduced
  profitability expectations or losses on certain development and production
  contracts including the V&#45;22 contract, the H&#45;1 upgrade
  contracts and the Model 412 and the Model 427 commercial helicopters. The
  reduced profitability expectations and losses were based on third quarter 2001
  program reviews, and reflect the clarification of several matters including
  extended development schedules and planned design changes on a number of
  programs. Profit also decreased due to restructuring&#45;related expenses
  and lower income from a joint venture partner related to the BA609 program.</li>
</ul>
<p ALIGN="JUSTIFY">The<b> Automotive segment&#39;s</b> revenues decreased
$281 million, while profit (after $4 million of restructuring&#45;related
expenses) decreased $55 million.</p>
<ul>
  <li>
    <p ALIGN="justify" style="margin-bottom: 12">Trim revenues decreased $245 million primarily due to North
  American automotive OEM production decreases, customer price reductions and
  the unfavorable impact of foreign exchange, partially offset by the
  contribution from acquisitions. Profit decreased primarily due to the lower
  sales volume and customer price reductions, partially offset by the benefit of
  restructuring and other cost containment activities, and the settlement of
  outstanding customer claims in the first quarter.</li>
  <li>
    <p ALIGN="JUSTIFY">Fuel Systems and Functional Components revenues decreased
  $36 million primarily as a result of the divestiture of non&#45;core
  product lines in the fourth quarter of 2000 and the first half of 2001, the
  unfavorable impact of foreign exchange and customer price reductions,
  partially offset by higher sales volume. Strong European sales mitigated the
  negative impact from reduced North American volumes. Profit increased
  primarily due to the benefit of cost reduction and restructuring activities
  and a $7 million gain on the sale of a small product line, partially offset by
  customer price reductions, the divestiture of the non&#45;core product
  lines and the unfavorable impact of foreign exchange.</li>
</ul>
<p ALIGN="JUSTIFY">The<b> Fastening Systems segment&#39;s</b> revenues
decreased $240 million, while profit (after $5 million of
restructuring&#45;related expenses) decreased $69 million. The revenue and
profit decreases were primarily due to lower volume in most businesses, the
unfavorable impact of foreign exchange in its European operations and customer
price reductions, partially offset by the contribution from acquisitions. The
unfavorable profit impact from the lower sales, customer price reductions, a
customer warranty issue and a loss on the divestiture of a non&#45;core
product line was partially offset by the benefit of restructuring and other cost
reduction activities.</p>
<p ALIGN="JUSTIFY">The<b> Industrial Products segment&#39;s</b> revenues
decreased $256 million, while profit (after $9 million of
restructuring&#45;related expenses) decreased $136 million. Revenues
decreased primarily due to lower sales in most of the segment&#39;s
businesses due to softening demand from the depressed economy, along with
reduced sales due to the divestiture of a division, partially offset by the
contribution from&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
                                  <blockquote>
<p ALIGN="JUSTIFY">21.</p>
                                  </blockquote>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p ALIGN="JUSTIFY"> acquisitions. Profit decreased primarily due to the decline in
sales volume in most of the businesses and decreases in profit at OmniQuip and
Golf and Turf, partially offset by the benefit of restructuring activities, a $5
million gain on the divestiture of a small product line, higher income related
to retirement plans and the benefit from acquisitions. The decreases in profit
at OmniQuip and Golf and Turf were primarily due to manufacturing inefficiencies
resulting from the shut&#45;down of certain facilities in an effort to
reduce inventory levels, the impact of higher rebates at Golf and Turf to
stimulate retail sales and a write&#45;down of used golf car and other
inventories.</p>
<p ALIGN="JUSTIFY">The<b> Finance segment&#39;s</b> revenues increased $7
million while profit was unchanged from a year ago. Revenues increased primarily
due to higher net syndication and securitization income, partially offset by a
decline in average yields, reflecting the lower interest rate environment.
Interest margin increased reflecting higher fee income. Despite the higher
interest margin, profit was unchanged due to a higher provision for loan losses
as a result of higher charge&#45;offs.</p>
<b>
<p ALIGN="JUSTIFY">Special charges, net, and other restructuring&#45;related
expense</b> for the first nine months of 2001 included goodwill and intangible
asset impairment write&#45;downs of $319 million, primarily related to
OmniQuip, and accruable restructuring expense of $63 million associated with a)
reducing overhead and closing, consolidating and downsizing manufacturing
facilities, b) reducing corporate and segment personnel, and c) consolidating
operations and exiting non&#45;core product lines in the Finance segment.
These expenses were incurred in Industrial Products ($24 million), Fastening
Systems ($22 million), Automotive ($12 million), Finance ($3 million) and at
Corporate ($2 million). In conjunction with the restructuring efforts, Textron
recorded write&#45;downs for fixed asset impairment of $24 million in
Fastening Systems ($18 million), Industrial Products ($4 million) and Automotive
($2 million). During the first nine months of 2001, Textron recorded
e&#45;business investment write&#45;downs of $9 million which were
included in special charges, net. The Company also incurred costs associated
with the restructuring of $27 million in the first nine months of 2001. These
costs were not accruable when the restructuring projects were initiated and have
been included in segment profit.</p>
<p ALIGN="JUSTIFY">Under the restructuring program, Textron&#39;s workforce
has been reduced by approximately 4,400 employees through September&#160;29,
2001 which, by segment, was 2,000 in Industrial Products, 1,400 in Fastening
Systems, 600 in Automotive, 200 in Aircraft and 200 in Finance and Corporate.
Through the consolidations, Textron is closing 54 facilities, including 29
manufacturing plants representing over 2.3 million square feet of manufacturing
floor space.</p>
<p ALIGN="JUSTIFY">Textron has expanded its restructuring program and expects to
incur additional special charges and restructuring&#45;related expenses,
excluding goodwill write&#45;downs, of $125 million in addition to the
previously announced $200 million. The expanded program, which includes a
further workforce reduction of approximately 2,500, should be substantially
completed by the end of 2002. Excluding restructuring projects at Textron
Automotive Trim, which is scheduled to be sold to Collins & Aikman under a
previously announced definitive agreement, restructuring savings are expected to
be $120 million in 2001, $200 million in 2002 and $225 million in 2003. Also
excluding Textron Automotive Trim, the company expects a total reduction of
7,300 employees, representing approximately 12% of Textron&#39;s global
workforce since the restructuring was first announced in October 2000.</p>
<b>
<p ALIGN="JUSTIFY">Corporate expenses and other, net</b> decreased $7 million,
due primarily to the impact of organizational changes made in 2000.</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
                                  <blockquote>
<p ALIGN="JUSTIFY">22.</p>
                                  </blockquote>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<b>
<p ALIGN="JUSTIFY">Interest expense, net</b> &#45; increased $9 million due
to a higher level of average debt primarily as a result of lower cash flow from
operations and acquisitions, partially offset by the benefit of a lower interest
rate environment.</p>
<b>
<p ALIGN="JUSTIFY">Income taxes &#45; </b>The effective tax rate was
impacted by the non&#45;tax deductibility goodwill written off in the third
quarter of 2001. Excluding the tax impact of this write&#45;off, the
effective tax rate for the first nine months of 2001 was 35.2% compared to 36.1%
in the first nine months of 2000. This reduction is due to the benefit of tax
planning initiatives being realized in 2001.</p>
<b>
<p ALIGN="JUSTIFY">Outlook</b> &#45; As a result of the continued economic
weakness affecting most of Textron&#39;s short&#45; cycle businesses,
the Company expects its earnings before special charges and
restructuring&#45;related expenses to be significantly lower than last
year&#39;s levels on a comparable basis for both the fourth quarter and the
full year.</p>
<b>
<p ALIGN="JUSTIFY">Liquidity and Capital Resources</p>
</b>
<p ALIGN="JUSTIFY">The Statements of Cash Flows for Textron Inc. and Textron
Manufacturing detailing the changes in cash balances are on pages 4 and 15,
respectively. Textron Manufacturing&#39;s operating cash flow includes
dividends received from Textron Finance of $41 million and $53 million during
the first nine months of 2001 and 2000, respectively. Dividend payments to
shareholders for the first nine months of 2001 amounted to $138 million, a
decrease of $5 million over the first nine months of 2000.</p>
<p ALIGN="JUSTIFY">Textron Manufacturing&#39;s debt (net of cash) to total
capital ratio was 38% at September&#160;29, 2001 up from 29% at year end.
The increase is a result of negative free cash flows from operations, cash used
for acquisitions and restructuring activities, and non&#45;cash special
charges. The ratio is expected to trend back to the mid&#45;30% range,
consistent with Textron&#39;s financial target ratio, by year end. Textron
Manufacturing&#39;s leverage is expected to further improve upon the sale of
the Automotive Trim business.</p>
<p ALIGN="JUSTIFY">For liquidity purposes, Textron Manufacturing and Textron
Finance have a policy of maintaining sufficient unused lines of credit to
support their outstanding commercial paper. During the first nine months of
2001, Textron Manufacturing increased its primary committed credit facilities by
$300 million to $1.3 billion. These primary facilities remain undrawn. Of
Textron Manufacturing&#39;s $1.6 billion total lines of credit, those not
reserved as support for commercial paper were $440 million at September 29,
2001, compared to $767 million at December 30, 2000. Textron Finance has bank
line of credit agreements of $1.5 billion, of which $500 million will expire in
2002 and $1 billion will expire in 2006. None of Textron Finance&#39;s lines
of credit were used at September 29, 2001 or at December 30, 2000. Unused lines
of credit not reserved as support for commercial paper were $603 million at
September&#160;29, 2001, compared to $444 million at December&#160;30,
2000.</p>
<p ALIGN="JUSTIFY">At September 29, 2001, Textron Manufacturing had $1.5 billion
available under its existing shelf registration statement filed with the SEC.
During the first quarter of 2001, Textron Manufacturing&#39;s Euro
Medium&#45;Term Note facility expired. It is anticipated that this facility
will be reactivated by year end.</p>
<p ALIGN="JUSTIFY">Under an existing shelf registration statement filed with the
SEC, Textron Finance may issue public debt securities in one or more offerings
up to a total maximum offering of $3 billion and has established a
medium&#45;term note program of $1.125 billion within the facility. In the
first nine months of 2001, Textron Finance issued $300 million of fixed rate
notes and $550 million of floating rate notes under this facility maturing in
2004 and 2003, respectively. The proceeds from the issuances were used to&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
                                  <blockquote>
<p ALIGN="JUSTIFY">23.</p>
                                  </blockquote>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p ALIGN="JUSTIFY">
refinance maturing commercial paper and prepay $100 million of fixed rate debt
at par. At September&#160;29, 2001, Textron Finance had $400 million
available under this facility.</p>
<p ALIGN="JUSTIFY">During the first nine months of 2001, Textron Finance
securitized $545 million of floorplan finance receivables (on a revolving
basis), $325 million of aircraft finance receivables, $159 million of captive
golf and turf finance receivables, $99 million of franchise finance receivables
and $26 million of land finance receivables. Securitization gains for the first
nine months of 2001 were $32 million including $12 million related to revolving
floorplan securitizations. These securitizations provided Textron Finance with
an alternate source of financing while maintaining desired
debt&#45;to&#45;capital ratios. Textron Finance used the proceeds from
the securitizations to retire commercial paper. Textron Finance anticipates that
it will enter into additional securitization transactions during the remainder
of 2001.</p>
<p ALIGN="JUSTIFY">Under Textron&#39;s February&#160;23, 2000 share
repurchase program, 475,000 shares of common stock were repurchased by the
Company during the first nine months of 2001 at an aggregate cost of $23
million. On August&#160;7, 2001, Textron announced that its Board of
Directors had authorized a new 12 million share repurchase program. This program
supersedes the 3.2 million shares that remained under the previous
authorization. Under this new program, 50,000 shares of common stock were
purchased during September 2001 at an aggregate cost of $2 million.</p>
<p ALIGN="JUSTIFY">During the first nine months of 2001, Textron Manufacturing
acquired four companies at a total cost of $209 million. In June 2001, Textron
Finance acquired the small business lending portfolio of STI Credit Corporation
at a cost of $387 million. Textron Manufacturing contributed $40 million to
Textron Finance for this acquisition. During the third quarter of 2001, Turbine
Engine Components Textron was sold for $41 million in cash proceeds.</p>
<p ALIGN="JUSTIFY">In September 2001, S&P affirmed its ratings on Textron
Manufacturing (A/A&#45;1) and Textron Finance (A&#45;/A&#45;2) and
revised its outlook from stable to negative. Fitch also affirmed its ratings on
Textron Manufacturing (A/F&#45;1) and Textron Finance (A/F&#45;1) and
revised its outlook from stable to negative. Also in September, Moody&#39;s
placed Textron Manufacturing (A&#45;2/Prime&#45;1) and Textron Finance
(A&#45;2/Prime&#45;1) under review for possible downgrade. Management
believes that Textron Manufacturing and Textron Finance will continue to have
adequate access to credit markets and that their credit facilities and cash
flows from operations will continue to be more than sufficient to meet their
operating needs and to finance growth.</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <blockquote>
                <blockquote>
                  <blockquote>
                    <blockquote>
                      <blockquote>
                        <blockquote>
                          <blockquote>
                            <blockquote>
                              <blockquote>
                                <blockquote>
<p ALIGN="JUSTIFY">24.</p>
                                </blockquote>
                              </blockquote>
                            </blockquote>
                          </blockquote>
                        </blockquote>
                      </blockquote>
                    </blockquote>
                  </blockquote>
                </blockquote>
              </blockquote>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<i>
<p ALIGN="JUSTIFY">Forward&#45;looking Information: Certain statements in
this release and other oral and written statements made by Textron from time to
time, are forward&#45;looking statements, including those that discuss
strategies, goals, outlook or other non&#45;historical matters; or project
revenues, income, returns or other financial measures. These
forward&#45;looking statements are subject to risks and uncertainties that
may cause actual results to differ materially from those contained in the
statements, including the following: (a) the extent to which Textron is able to
achieve savings from its restructuring plans (b) the extent to which Textron is
able to successfully integrate acquisitions, (c) changes in worldwide economic
and political conditions that impact interest and foreign exchange rates, (d)
the occurrence of work stoppages and strikes at key facilities of Textron or
Textron&#39;s customers or suppliers, (e) government funding and program
approvals affecting products being developed or sold under government programs,
(f) cost and delivery performance under various program and development
contracts, (g) successful implementation of supply chain and
e&#45;procurement strategies, (h) the timing of certifications of new
aircraft products, (i) the occurrence of further downturns in customer markets
to which Textron products are sold or supplied, (j) Textron&#39;s ability to
offset, through cost reductions, raw material price increases and pricing
pressure brought by OEM customers, (k) Textron Financial&#39;s ability to
maintain credit quality and control costs and (l) the completion of the
previously&#45;announced sale of Textron&#39;s Automotive Trim unit.</i></p>
<table CELLSPACING="0" CELLPADDING="1" WIDTH="679">
  <tr>
    <td WIDTH="10%" VALIGN="TOP"><b>
      <p>Item 3.</b></td>
    <td WIDTH="88%" VALIGN="TOP"><b><u>
      <p>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</u></b></td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
</table>
<p ALIGN="JUSTIFY">There has been no significant change in the Company&#39;s
exposure to market risk during the first nine months of 2001. For discussion of
the Company&#39;s exposure to market risk, refer to Item 7A, Quantitative
and Qualitative Disclosures about Market Risk, contained in the
Company&#39;s Annual Report incorporated by reference in Form 10&#45;K
for the calendar year 2000.</p>
<p ALIGN="JUSTIFY">&nbsp;</p>
<p ALIGN="RIGHT">25.</p>
<b>
<p ALIGN="CENTER"><a NAME="other"></a>PART II. OTHER INFORMATION</p>
</b>
<table CELLSPACING="0" CELLPADDING="1" WIDTH="685">
  <tr>
    <td WIDTH="79" VALIGN="TOP"><b>
      <p ALIGN="JUSTIFY"><a NAME="legal"></a><a NAME="_Hlk528634554"></a>Item 1.</b></td>
    <td WIDTH="598" VALIGN="TOP" COLSPAN="3"><u>
      <p ALIGN="JUSTIFY">LEGAL PROCEEDINGS</u></td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP"><b>
      <p ALIGN="JUSTIFY" style="margin-top: 12"></b></td>
    <td WIDTH="598" VALIGN="TOP" COLSPAN="3">
      <p ALIGN="JUSTIFY" style="margin-top: 12">Cessna is a defendant in an action filed in June 1991
      in the Circuit Court in and for Escambia County, Florida, brought by James
      M. Cassoutt, Cindy I. Cassoutt and Judy L. Kealey, for injuries incurred
      in a 1989 crash of a Cessna 185 aircraft. Plaintiffs claim that the crash
      was the result of a defective seat rail system. In mid&#45;August, a
      jury returned verdicts against Cessna for $80 million in compensatory
      damages and $400 million in punitive damages. Cessna has filed a combined
      motion with the trial court for a directed verdict in favor of Cessna or,
      in the alternative, for a new trial or an order drastically reducing the
      amounts awarded by the jury. While the ultimate outcome of litigation
      cannot be assured, Textron&#39;s management believes it is probable
      that the verdict will be reversed or substantially reduced and that its
      reserves are adequate to cover any remaining award that is not covered by
      insurance.</td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP"><b>
      <p ALIGN="JUSTIFY" style="margin-top: 12">Item 6.</b></td>
    <td WIDTH="598" VALIGN="TOP" COLSPAN="3"><u>
      <p ALIGN="JUSTIFY" style="margin-top: 12"><a NAME="exhrep"></a><a NAME="_Hlk528634737"></a>EXHIBITS
      AND REPORTS ON FORM 8&#45;K</u></td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p ALIGN="JUSTIFY" style="margin-top: 12">(a)</td>
    <td WIDTH="550" VALIGN="TOP" COLSPAN="2"><u>
      <p ALIGN="JUSTIFY" style="margin-top: 12">Exhibits</u></td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="54" VALIGN="TOP">
      <p style="margin-top: 12">2.1</td>
    <td WIDTH="492" VALIGN="TOP">
      <p style="margin-top: 12">Purchase Agreement dated as of August 7, 2001 by and among Textron
      Inc., Collins & Aikman Corporation and Collins & Aikman Products
      Co., including Exhibit 1 (Certificate of Designation of the 15% Series A
      Redeemable Preferred Stock, the 16% Series B Redeemable Preferred Stock
      and the 16% Series C Redeemable Preferred Stock) and Exhibit 7 (Asset
      Purchase Agreement dated as of August 7 by and between Textron Automotive
      Exteriors Inc. and JPS Automotive, Inc.).</td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p style="margin-top: 12">
    </td>
    <td WIDTH="54" VALIGN="TOP">
      <p style="margin-top: 12">NOTE:</td>
    <td WIDTH="492" VALIGN="TOP">
      <p style="margin-top: 12">The Table of Contents of the Purchase Agreement listed as Exhibit 2.1
      contains a list briefly identifying the contents of all omitted schedules
      and exhibits. Textron will supplementally furnish a copy of any omitted
      schedule or exhibit to the Commission upon request.</td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="54" VALIGN="TOP">
      <p style="margin-top: 12">4.1</td>
    <td WIDTH="492" VALIGN="TOP">
      <p style="margin-top: 12">Indenture dated as of December 9, 1999, between Textron Financial
      Corporation and SunTrust Bank (formerly known as Sun Trust Bank, Atlanta)
      (including form of debt securities). Incorporated by reference to Exhibit
      4.1 to Amendment No. 2 to Textron Financial Corporation&#39;s
      Registration Statement on Form S&#45;3 (No. 333&#45;88509).</td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="54" VALIGN="TOP">
      <p style="margin-top: 12">4.2</td>
    <td WIDTH="492" VALIGN="TOP">
      <p style="margin-top: 12">Support Agreement dated as of May 25, 1994, between Textron Inc. and
      Textron Financial Corporation. Incorporated by reference to Exhibit 10.1
      to Textron Financial Corporation&#39;s Registration Statement on Form
      10 (No.&#160;0&#45;27559).</td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="54" VALIGN="TOP">
      <p style="margin-top: 12">12.1</td>
    <td WIDTH="492" VALIGN="TOP">
      <p style="margin-top: 12">Computation of ratio of income to combined fixed charges and preferred
      securities dividends of Textron Manufacturing.</td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="54" VALIGN="TOP">
      <p style="margin-top: 12">12.2</td>
    <td WIDTH="492" VALIGN="TOP">
      <p style="margin-top: 12">Computation of ratio of income to combined fixed charges and preferred
      securities dividends of Textron Inc. including all majority&#45;owned
      subsidiaries.</td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p ALIGN="JUSTIFY" style="margin-top: 12">(b)</td>
    <td WIDTH="550" VALIGN="TOP" COLSPAN="2"><u>
      <p ALIGN="JUSTIFY" style="margin-top: 12">Reports on Form 8&#45;K</u></td>
  </tr>
  <tr>
    <td WIDTH="79" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="44" VALIGN="TOP">
      <p style="margin-top: 12">&nbsp;</p>
    </td>
    <td WIDTH="550" VALIGN="TOP" COLSPAN="2">
      <p ALIGN="JUSTIFY" style="margin-top: 12">No reports on Form 8&#45;K were filed during the
      third quarter ended September&#160;29, 2001.</td>
  </tr>
</table>
<p ALIGN="RIGHT">26.</p>
<u>
<p ALIGN="CENTER"><a NAME="_Hlk528634796">SIGNATURES</a></p>
</u>
<p ALIGN="JUSTIFY">&#160;&#160;&#160;&#160;&#160;Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.</p>
<p>&nbsp;</p>
<table CELLSPACING="1" WIDTH="633">
  <tr>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="30%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="15%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="45%" VALIGN="TOP">
      <p>TEXTRON INC.</td>
  </tr>
  <tr>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="30%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="15%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="45%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="9%" VALIGN="TOP">
      <p>Date:</td>
    <td WIDTH="30%" VALIGN="TOP">
      <p style="border-bottom-style: solid; border-bottom-width: 1">&#160;November 2, 2001</td>
    <td WIDTH="15%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="45%" VALIGN="TOP">
      <p style="border-bottom-style: solid; border-bottom-width: 1">s/R. L. Yates</td>
  </tr>
  <tr>
    <td WIDTH="9%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="30%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="15%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="45%" VALIGN="TOP">
      <p>R. L. Yates<br>
      Vice President and Controller<br>
      (principal accounting officer)</td>
  </tr>
</table>
<b>
<p ALIGN="CENTER" style="margin-top: 1">&nbsp;</p>
<p ALIGN="CENTER" style="margin-top: 1"><a NAME="list"></a><a NAME="_Hlk528634837"></a>LIST OF
EXHIBITS</p>
</b>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="JUSTIFY">The following exhibits are filed as part of this report on
Form 10&#45;Q:</p>
<u>
<p ALIGN="CENTER">Name of Exhibit</p>
</u>
<table CELLSPACING="0" CELLPADDING="1" WIDTH="691">
  <tr>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-top: 12">2.1</td>
    <td WIDTH="87%" VALIGN="TOP">
      <p style="margin-top: 12">Purchase Agreement dated as of August 7, 2001 by and among Textron
      Inc., Collins & Aikman Corporation and Collins & Aikman Products
      Co., including Exhibit 1 (Certificate of Designation of the 15% Series A
      Redeemable Preferred Stock, the 16% Series B Redeemable Preferred Stock
      and the 16% Series C Redeemable Preferred Stock) and Exhibit 7 (Asset
      Purchase Agreement dated as of August 7 by and between Textron Automotive
      Exteriors Inc. and JPS Automotive, Inc.).</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-top: 12">NOTE:</td>
    <td WIDTH="87%" VALIGN="TOP">
      <p style="margin-top: 12">The Table of Contents of the Purchase Agreement listed as Exhibit 2.1
      contains a list briefly identifying the contents of all omitted schedules
      and exhibits. Textron will supplementally furnish a copy of any omitted
      schedule or exhibit to the Commission upon request.</td>
    <td WIDTH="3%" VALIGN="TOP">
      <p style="margin-top: 12"></td>
  </tr>
  <tr>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-top: 12">4.1</td>
    <td WIDTH="87%" VALIGN="TOP">
      <p style="margin-top: 12">Indenture dated as of December 9, 1999, between Textron Financial
      Corporation and SunTrust Bank (formerly known as Sun Trust Bank, Atlanta)
      (including form of debt securities). Incorporated by reference to Exhibit
      4.1 to Amendment No. 2 to Textron Financial Corporation&#39;s
      Registration Statement on Form S&#45;3 (No. 333&#45;88509).</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-top: 12">4.2</td>
    <td WIDTH="87%" VALIGN="TOP">
      <p style="margin-top: 12">Support Agreement dated as of May 25, 1994, between Textron Inc. and
      Textron Financial Corporation. Incorporated by reference to Exhibit 10.1
      to Textron Financial Corporation&#39;s Registration Statement on Form
      10 (No. 0&#45;27559).</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-top: 12">12.1</td>
    <td WIDTH="87%" VALIGN="TOP">
      <p style="margin-top: 12">Computation of ratio of income to combined fixed charges and preferred
      securities dividends of Textron Manufacturing</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" VALIGN="TOP">
      <p style="margin-top: 12">12.2</td>
    <td WIDTH="87%" VALIGN="TOP">
      <p style="margin-top: 12">Computation of ratio of income to combined fixed charges and preferred
      securities dividends of Textron Inc. including all majority&#45;owned
      subsidiaries</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>

</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>twoone.htm
<DESCRIPTION>PURCHASE & SALE AGREEMENT
<TEXT>
<html>

<head>
<title>PURCHASE AGREEMENT</title>
</head>

<body>

<b><u></u>
<p ALIGN="right">Exhibit 2.1</p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">PURCHASE AGREEMENT</p>
<p ALIGN="CENTER">by and among</p>
<p ALIGN="CENTER">TEXTRON INC.</p>
<p ALIGN="CENTER">COLLINS & AIKMAN CORPORATION</p>
<p ALIGN="CENTER">and</p>
<p ALIGN="CENTER">COLLINS & AIKMAN PRODUCTS CO.</p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">August 7, 2001</p>
</b>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">TABLE OF CONTENTS</p>
<p ALIGN="CENTER">&nbsp;</p>
<blockquote>
  <p ALIGN="CENTER">ARTICLE I
</blockquote>
<p ALIGN="CENTER">DEFINITIONS</p>
<blockquote>
  <p ALIGN="RIGHT">&nbsp;
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>1.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Definitions.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT">1</td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE II</p>
  <p ALIGN="CENTER">PURCHASE AND SALE OF SHARES</p>
  <p ALIGN="RIGHT">&nbsp;
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>2.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Purchase and Sale of Shares</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492880">12</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>2.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Purchase and Sale of Assets</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492881">13</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>2.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Restructuring</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492882">13</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>2.4</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Purchase Price Adjustment</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492883">13</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>2.5</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Allocation of Consideration; Tax Filings</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492884">16</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>2.6</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Closing</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492885">18</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>2.7</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Closing Obligations</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492886">18</a></td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE III</p>
  <p ALIGN="CENTER">REPRESENTATIONS AND WARRANTIES OF PARENT</p>
  <p ALIGN="RIGHT">&nbsp;
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Corporate Organization, Qualification, Power and Authority</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492888">20</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Stock of Subsidiaries</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492889">21</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Consents and Approvals; No Violations</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492890">21</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.4</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Financial Statements</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492891">22</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.5</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Absence of Certain Changes or Events</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492892">23</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.6</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>No Undisclosed Liabilities</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492893">24</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.7</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Litigation</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492894">24</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.8</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Taxes</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492895">25</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.9</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Employee Benefit Plans and Agreements</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492896">25</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.10</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Labor Matters</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492897">28</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.11</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Environmental Laws and Regulations</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492898">29</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.12</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Compliance with Laws</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492899">29</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.13</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Properties</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492900">29</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.14</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Material Contracts</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492901">29</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.15</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Intellectual Property</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492902">30</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.16</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Product Warranties; Recalls</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492903">31</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.17</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Brokers and Finders</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492904">32</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.18</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Customers and Suppliers</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492905">32</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.19</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Additional Representations and Warranties by Parent</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492906">32</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.20</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Indebtedness</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492907">33</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>3.21</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>R&D People.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492908">33</a></td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE IV</p>
  <p ALIGN="CENTER">REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND C&A
  PRODUCTS</p>
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Corporate Organization, Qualification, Power and Authority.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492910">33</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Capitalization of Holdings and C&A Products</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492911">35</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Stock of Subsidiaries</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492912">37</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.4</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Valid Issuance of Stock</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492913">37</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.5</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Consents and Approvals; No Violations</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492914">37</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.6</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>SEC Filings; Financial Statements</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492915">38</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.7</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Absence of Certain Changes or Events</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492916">38</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.8</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>No Undisclosed Liabilities</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492917">38</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.9</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Litigation</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492918">39</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.10</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Financing</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492919">39</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.11</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Certain Agreements</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492920">40</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>4.12</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Brokers and Finders</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492921">40</a></td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE V</p>
  <p ALIGN="CENTER">COVENANTS RELATING TO CONDUCT OF BUSINESS AND OTHER
  AGREEMENTS</p>
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Conduct of the Business</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492923">40</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Access to Information</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492924">43</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Competition Filings</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492925">43</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.4</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Consents and Reasonable Efforts</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492926">44</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.5</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Further Assurances</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492927">45</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.6</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Publicity.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492928">46</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.7</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Employee Matters.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492929">47</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.8</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Tax Matters</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492930">43</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.9</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Bison Financial Statements</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492931">62</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.10</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Observer Rights</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492932">63</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.11</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Non&#45;Competition</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492933">64</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.12</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Intercompany Transactions</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492934">65</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.13</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Additional Covenant of C&A and Holdings.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492935">65</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.14</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Certain Pre&#45;Closing Restrictions</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492936">65</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.15</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Closing Date Indebtedness</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492937">66</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.16</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Tax Reporting</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492938">66</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.17</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>R&D Employees.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492939">67</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>5.18</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>IRB</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492940">67</a></td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE VI</p>
  <p ALIGN="CENTER">CONDITIONS TO CONSUMMATION OF THE TRANSACTION</p>
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>6.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Conditions to Each Party&#39;s Obligations to Complete the Transactions.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492942">67</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>6.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Additional Conditions to the Obligation of Holdings and C&A
        Products</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492943">68</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>6.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Additional Conditions to the Obligation of Parent.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492944">69</a></td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE VII</p>
  <p ALIGN="CENTER">TERMINATION</p>
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>7.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Termination by Mutual Consent.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492946">71</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>7.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Termination by Any Party.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492947">71</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>7.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Termination by Parent</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492948">71</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>7.4</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Effect of Termination.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492949">71</a></td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE VIII</p>
  <p ALIGN="CENTER">OBLIGATIONS AFTER CLOSING</p>
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>8.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Survival of Representations, Warranties and Covenants;
        Indemnification.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492951">72</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>8.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Environmental Indemnification</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492952">77</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>8.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Quota Purchase Agreement Indemnification</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492953">84</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>8.4</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Name Changes</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492954">84</a></td>
    </tr>
  </table>
  <p ALIGN="CENTER">&nbsp;</p>
  <p ALIGN="CENTER">ARTICLE IX</p>
  <p ALIGN="CENTER">MISCELLANEOUS AND GENERAL</p>
  <table CELLSPACING="0" CELLPADDING="1" WIDTH="600">
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.1</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Interpretation.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492956">84</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.2</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Principle of Construction</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492957">85</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.3</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Payment of Expenses and Other Payments</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492958">85</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.4</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Amendment</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492959">85</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.5</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Waiver and Extension</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492960">85</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.6</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Counterparts</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492961">86</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.7</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Governing Law</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492962">86</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.8</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Notices</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492963">85</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.9</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Entire Agreement; Assignment.</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492964">88</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.10</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Parties in Interest</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492965">88</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.11</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Validity</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492966">88</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.12</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Captions</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492967">88</a></td>
    </tr>
    <tr>
      <td WIDTH="11%" VALIGN="TOP">
        <p>9.13</td>
      <td WIDTH="81%" VALIGN="TOP">
        <p>Transfer, Sales and Stamp Taxes</td>
      <td WIDTH="8%" VALIGN="TOP">
        <p ALIGN="RIGHT"><a HREF="#_Toc521492968">88</a></td>
    </tr>
  </table>
  <p>&nbsp;</p>
  <p>SCHEDULE A &#45; Directly Purchased Subsidiaries<br>
  SCHEDULE B &#45; Subsidiaries of the Directly Purchased Subsidiaries<br>
  SCHEDULE C &#45; Restructuring<br>
  SCHEDULE D &#45; Allocation of Purchase Price<br>
  SCHEDULE E &#45; Subsidiaries of Holdings<br>
  SCHEDULE F &#45; Acquiring Entities<br>
  </p>
  <p>EXHIBIT 1 &#45; Certificate of Designation<br>
  EXHIBIT 2 &#45; Assignment and Assumption Agreement<br>
  EXHIBIT 3A &#45; Intellimold License Agreement<br>
  EXHIBIT 3B &#45; Retained IP &#45; License Agreement<br>
  EXHIBIT 3C &#45; Licensed IP &#45; License Agreement<br>
  EXHIBIT 4 &#45; Transition Agreement<br>
  EXHIBIT 5 &#45; Preferred Stock Registration Rights Agreement<br>
  EXHIBIT 6 &#45; Common Stock Registration Rights Agreement<br>
  EXHIBIT 7 &#45; Asset Purchase Agreement<br>
  </p>
</blockquote>
<b>
<p ALIGN="CENTER">PURCHASE AGREEMENT</p>
</b>
<p>&nbsp;</p>
<p>PURCHASE AGREEMENT, dated as of August 7, 2001 (the &quot;Agreement&quot;) by
and between Textron Inc., a Delaware corporation (&quot;Parent&quot;), Collins
& Aikman Corporation, a Delaware corporation (&quot;Holdings&quot;), and
Collins & Aikman Products Co., a Delaware corporation (&quot;C&A
Products&quot;) and a wholly owned subsidiary of Holdings.</p>
<p>WHEREAS, Parent desires to sell and C&A Products and certain of its
Subsidiaries desire to purchase the exterior and interior automotive trim
operations currently managed as a unit of Textron Automotive Company Inc.;</p>
<p>NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Parent, Holdings and C&A Products, intending to be legally
bound, agree as follows:</p>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE I<a NAME="_Toc503343057"></a><a NAME="_Toc503343302"></a></font><br>
<br>
<a NAME="_Toc503342956"></a><a NAME="_Toc503343906"></a><a NAME="_Toc503667888"></a><a NAME="_Toc503684819"></a><a NAME="_Toc504459510"></a><a NAME="_Toc505070773"></a><a NAME="_Toc505137369"></a><a NAME="_Toc505767615"></a><a NAME="_Toc506346185"></a><a NAME="_Toc506628502"></a><a NAME="_Toc506775312"></a><a NAME="_Toc507592178"></a><a NAME="_Toc508437251"></a><a NAME="_Toc508709199"></a><a NAME="_Toc514731985"></a><a NAME="_Toc514732723"></a><a NAME="_Toc516384233"></a><a NAME="_Toc516456555"></a><a NAME="_Toc516460915"></a><a NAME="_Toc516463331"></a><a NAME="_Toc516560516"></a><a NAME="_Toc518363211"></a><a NAME="_Toc518466791"></a><a NAME="_Toc518732994"></a><a NAME="_Toc518733438"></a><a NAME="_Toc519520808"></a><a NAME="_Toc519700982"></a><a NAME="_Toc520104829"></a><a NAME="_Toc520108683"></a><a NAME="_Toc520261491"></a><a NAME="_Toc520609420"></a><a NAME="_Toc521132917"></a><a NAME="_Toc521304939"></a><a NAME="_Toc521330716"></a><a NAME="_Toc521426428"></a><a NAME="_Toc521468827"></a><a NAME="_Toc521492877"></a><u>DEFINITIONS</p>
</u><font COLOR="#ff0000">
<p>1.1 <a NAME="_Toc503342957"></a><a NAME="_Toc503343058"></a><a NAME="_Toc503343303"></a></font><a NAME="_Toc521492878"><u>Definitions</u>.</a></p>
<p>For purposes of this Agreement, except as otherwise expressly provided or
unless the context clearly requires otherwise:</p>
<p>&quot;Actuary Firm&quot; shall have the meaning ascribed to it in Section
5.7(c)(vii).</p>
<p>&quot;Adjustment Schedule&quot; shall have the meaning ascribed to it in
Section 2.5(a).</p>
<p>&quot;Affiliate&quot; of any Person shall mean any other Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first Person.</p>
<p>&quot;After&#45;Acquired Business&quot; shall have the meaning ascribed to it in
Section 5.11(b).</p>
<p>&quot;After Tax Amount&quot; shall have the meaning ascribed to it in Section
5.8(g).</p>
<p>&quot;Agreement&quot; shall have the meaning ascribed to it in the preamble.</p>
<p>&quot;Allocation Dispute Notice&quot; shall have the meaning ascribed to it
in Section 2.5(b).</p>
<p>&quot;Antitrust Division&quot; shall have the meaning ascribed to it in
Section 5.3(a).</p>
<p>&quot;Balance Sheet Indebtedness&quot; shall mean Indebtedness of the type
referenced in clauses (a), (b) and (c) of the definition thereof plus accrued
interest on said Indebtedness in each case determined in accordance with GAAP.</p>
<p>&quot;Bank&quot; shall have the meaning ascribed to it in
Section&nbsp;4.10(a).</p>
<p>&quot;Bison Plan&quot; shall have the meaning ascribed to it in Section
3.9(a).</p>
<p>&quot;Bison Properties&quot; shall mean all parcels of and interests in real
property owned in fee or leased by Parent or its Subsidiaries and used in the
Business as of the date hereof or the Closing Date.</p>
<p>&quot;Bison Subsidiaries&quot; shall have the meaning ascribed to it in
Section 2.3.</p>
<p>&quot;Brazilian Entities&quot; shall have the meaning ascribed to it in
Section 5.8(a)(i).</p>
<p>&quot;Business&quot; shall mean the Textron exterior and interior automotive
trim operations currently managed as a unit of Textron Automotive Company Inc.</p>
<p>&quot;C&A Products&quot; shall have the meaning ascribed to it in the
preamble.</p>
<p>&quot;C&A Products&#39; Hourly Pension Plan&quot; shall have the meaning
ascribed to it in Section&nbsp;5.7(c)(iii).</p>
<p>&quot;C&A Products&#39; Salaried Pension Plan&quot; shall have the meaning
ascribed to it in Section&nbsp;5.7(c)(ii).</p>
<p>&quot;C&A Products&#39; Savings Plan&quot; shall have the meaning ascribed to
it in Section 5.7(d).</p>
<p>&quot;C&A Products&#39; Trustee&quot; shall have the meaning ascribed to it
in Section&nbsp;5.7(c)(iv).</p>
<p>&quot;Certificate of Designation&quot; shall have the meaning ascribed to it
in Section 2.1(b).</p>
<p>&quot;Claim&quot; shall have the meaning ascribed to it in Section 8.1(e).</p>
<p>&quot;Closing&quot; shall have the meaning ascribed to it in Section 2.6.</p>
<p>&quot;Closing Cash&quot; shall mean cash as shown on the Closing Financial
Statement; <u>provided</u>, <u>however</u>, that with respect to Plascar
Participacoes Industriais S.A. and TATB, only 56.6% of the foregoing items shall
constitute Closing Cash. Closing Cash includes cash in any account in which cash
has been withheld or otherwise set aside for the benefit of an applicable Taxing
Authority to satisfy Taxes, provided that Holdings or C&A Products has
directly or indirectly received control over such account. (For avoidance of
doubt, outstanding checks and negative cash attributable to negative cash
balances will be taken into account when computing Closing Cash unless the item
is included in Balance Sheet Indebtedness or the computation of Working
Capital.)</p>
<p>&quot;Closing Date&quot; shall have the meaning ascribed to it in Section
2.6.</p>
<p>&quot;Closing Financial Statement&quot; shall have the meaning ascribed to it
in Section 2.4(a).</p>
<p>&quot;Code&quot; shall mean the Internal Revenue Code of 1986, as amended.</p>
<p>&quot;Commitment Letters&quot; shall have the meaning ascribed to it in
Section&nbsp;4.10(a).</p>
<p>&quot;Confidentiality Agreement&quot; shall mean the agreement dated as of
February 23, 2001 by and between Parent and Heartland Industrial Partners, L.P.</p>
<p>&quot;Consent&quot; shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by, or filing with or
notification to, a Person pursuant to any Contract, Law, Order or Permit.</p>
<p>&quot;Contract&quot; shall mean any agreement, arrangement, commitment,
contract, indenture, instrument, lease or other obligation of any kind or
character that is binding on any Person or its capital stock, properties or
business.</p>
<p>&quot;Debt Commitment Letter&quot; shall have the meaning ascribed to it in
Section&nbsp;4.10(a).</p>
<p>&quot;December 30, 2000 Statement of Net Assets to be Sold&quot; shall have
the meaning ascribed to it in Section 3.4.</p>
<p>&quot;Default&quot; shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit or (iii) any
occurrence of any event that with the passage of time or the giving of notice or
both would give rise to any right of termination, cancellation or acceleration
under any Contract, Order or Permit.</p>
<p>&quot;Direct Claim&quot; shall have the meaning ascribed to it in Section
8.1(e).</p>
<p>&quot;Directly Purchased Subsidiary&quot; shall mean the Subsidiaries of
Parent listed on Schedule A hereto.</p>
<p>&quot;Disclosure Schedule&quot; shall mean the Disclosure Schedule prepared
by Parent and delivered to Holdings and C&A Products concurrently with the
execution of this Agreement.</p>
<p>&quot;Dispute Notice&quot; shall have the meaning ascribed to it in Section
2.4(e).</p>
<p>&quot;E&Y&quot; shall mean Ernst & Young LLP, independent accountants
of Parent and the Bison Subsidiaries.</p>
<p>&quot;Employee Agreement&quot; shall have the meaning ascribed to it in
Section 5.7(f)(iii).</p>
<p>&quot;Employees&quot; shall mean employees employed by a Bison Subsidiary on
the Closing Date.</p>
<p>&quot;Environmental Laws&quot; means the common law and all domestic and
foreign, federal, state and local Laws, relating to pollution or protection of
the environment, including employee health and safety and natural resource
damages, and including Laws relating to releases or threatened releases of
Hazardous Substances into the environment (including ambient air, indoor air,
surface water, groundwater, land, surface and subsurface strata).</p>
<p>&quot;Environmental Losses&quot; shall have the meaning ascribed to it in
Section 8.2(e).</p>
<p>&quot;Equity Commitment Letters&quot; shall have the meaning ascribed to it
in Section&nbsp;4.10(a).</p>
<p>&quot;Equity Consideration&quot; shall have the meaning ascribed to it in
Section&nbsp;3.19(a).</p>
<p>&quot;Equity Sources&quot; shall have the meaning ascribed to it in
Section&nbsp;4.10(a).</p>
<p>&quot;ERISA&quot; shall have the meaning ascribed to it in Section 3.9(a).</p>
<p>&quot;ERISA Affiliate&quot; shall have the meaning ascribed to it in Section
3.9(a).</p>
<p>&quot;FAS 87&quot; shall have the meaning ascribed to it in Section
5.7(c)(v).</p>
<p>&quot;Final Allocation Schedule&quot; shall have the meaning ascribed to it
in Section 2.5(c).</p>
<p>&quot;Financial Statements&quot; shall have the meaning ascribed to it in
Section 3.4.</p>
<p align="center">4</p>
<p>&quot;Financing Agreements&quot; shall have the meaning ascribed to it in
Section&nbsp;5.5(b).</p>
<p>&quot;Foreign Competition Laws&quot; shall mean foreign statutes, ordinances,
rules, regulations, orders, decrees, administrative and judicial directives, and
other foreign laws, that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization, lessening of
competition or restraint of trade or creating or strengthening a dominant
position.</p>
<p>&quot;Foreign Plan&quot; shall have the meaning ascribed to it in
Section&nbsp;3.9(l).</p>
<p>&quot;Former Employee&quot; shall mean any (a) person whose employment by a
Bison Subsidiary, or by Textron Automotive Company Inc. if such person&#39;s entire
salary was directly charged to the Business, was terminated on or before the
Closing Date (whether by retirement or otherwise), excluding persons who were
employed by Parent, a Non&#45;Bison Subsidiary or any of their other Affiliates, as
of the Closing Date and (b) employee who is on short&#45;term medical disability as
of the Closing Date and who thereafter becomes eligible for long&#45;term medical
disability.</p>
<p>&quot;FTC&quot; shall have the meaning ascribed to it in Section 5.3(a).</p>
<p>&quot;GAAP&quot; shall mean United States generally accepted accounting
principles.</p>
<p>&quot;Governmental Authority&quot; shall mean any domestic or foreign agency,
authority, board, judicial body, commission, legislature, instrumentality or
office of any federal, state, county, district, municipal, city or other
government unit.</p>
<p>&quot;Guarantees&quot; shall have the meaning ascribed to it in Section
5.4(b).</p>
<p>&quot;Hazardous Substances&quot; shall mean any chemical, material or
substance defined as or included in the definition of &quot;hazardous
substances&quot;, &quot;hazardous wastes&quot;, &quot;hazardous materials&quot;,
&quot;hazardous constituents&quot;, &quot;restricted hazardous materials&quot;,
&quot;extremely hazardous substances&quot;, &quot;toxic substances&quot;,
&quot;contaminants&quot;, &quot;pollutants&quot;, &quot;toxic pollutants&quot;,
or words of similar meaning and regulatory effect under any applicable
Environmental Law, including petroleum and asbestos.</p>
<p>&quot;Heartland&quot; means Heartland Industrial Partners, L.P. and its
Affiliates.</p>
<p>&quot;Holdings&quot; shall have the meaning ascribed to it in the preamble.</p>
<p>&quot;Holdings Common Stock&quot; shall have the meaning ascribed to it in
Section 2.1(b).</p>
<p>&quot;Holdings Indemnified Parties&quot; shall have the meaning ascribed to
it in Section 8.1(b).</p>
<p align="center">5</p>
<p>&quot;Holdings Material Adverse Effect&quot; shall mean any adverse change in
the business, properties, financial condition or results of operations of
Holdings or any of its Subsidiaries, which, individually or together with any
other such adverse change, is material to C&A and its Subsidiaries, taken as
a whole, other than any such effect attributable to or resulting from (i) the
public announcement of the transactions contemplated hereby or (ii) any adverse
change in general economic conditions or in conditions affecting the automotive
supplier industry generally.</p>
<p>&quot;Holdings SEC Reports&quot; shall have the meaning ascribed to it in
Section&nbsp;4.7(a).</p>
<p>&quot;HSR Act&quot; shall have the meaning ascribed to it in Section 3.3(a).</p>
<p>&quot;Indemnified Party&quot; shall have the meaning ascribed to it in
Section 8.1(d)(ii).</p>
<p>&quot;Indemnifying Party&quot; shall have the meaning ascribed to it in
Section 8.1(d)(ii).</p>
<p>&quot;Indebtedness&quot; of any Person shall mean without duplication, (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business), (b) any other indebtedness of such Person
which is evidenced by a note, bond, debenture or similar instrument, (c) all
capital lease obligations of such Person, (d) all obligations of such Person in
respect of bankers&#39; acceptances or letters of credit issued or created for the
account of such Person, (e) all obligations of others secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on any property owned or acquired by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof, (f) all obligations of such Person in respect of interest rate and
currency swap or hedge agreements and (g) all guarantees by such Person of
Indebtedness of others. The Indebtedness of any Person shall include the
Indebtedness of any partnership in which such Person is a general partner; <u>provided</u>
that, if the sole asset of such Person is its general partnership interest in
such partnership, the amount of such Indebtedness shall be deemed equal to the
value of such general partnership interest and the amount of any Indebtedness in
respect of any guarantee of such partnership Indebtedness shall be limited to
the same extent as such guarantee may be limited.</p>
<p>&quot;Independent Accounting Firm&quot; shall have the meaning ascribed to it
in Section 2.4(e).</p>
<p align="center">6</p>
<p>&quot;Intellectual Property&quot; means (a)&nbsp;all inventions and
discoveries (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications and
patent disclosures, together with all re&#45;issuances, continuations,
continuations&#45;in&#45;part, revisions, extensions and reexaminations thereof,
(b)&nbsp;all trademarks and service marks, including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c)&nbsp;all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith,
(d)&nbsp;&nbsp;all know&#45;how, trade secrets, technical information and
confidential business information (whether patentable or unpatentable and
whether or not reduced to practice), including, ideas, research and development,
formulas, compositions, manufacturing and production processes, techniques and
methods, technical data, designs, drawings, blue prints, patterns,
specifications, assembly procedures, test procedures, instruction manuals,
operation manuals, maintenance manuals, reliability data, quality control data,
customer and supplier lists, parts lists, pricing and cost information and
business and marketing plans and proposals, (e)&nbsp;all computer software
(excluding generally commercially available software licensed on standard terms)
used solely in the conduct of the Business (including data and related
documentation), (f)&nbsp;all other proprietary rights and (g)&nbsp;all copies
and tangible embodiments thereof (in whatever form or medium), in each case
necessary for the conduct of the Business as currently conducted.</p>
<p>&quot;Interest Rate&quot; shall mean 6.5% per year calculated on the basis of
a 365 day year and charged for the actual number of days elapsed.</p>
<p>&quot;Law&quot; shall mean any domestic or foreign federal, state or local
law, statute, ordinance, rule, regulation, and any other executive or
legislative proclamation.</p>
<p>&quot;Lien&quot; shall mean any mortgage, pledge, security interest,
attachment, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing) or right of others of any similar nature; <u>provided</u>,
<u>however</u>, that the term &quot;Lien&quot; shall not include (i) statutory
liens for Taxes, which are not yet due and payable or are being contested in
good faith by appropriate proceedings, (ii) statutory or common law liens to
secure landlords, lessors or renters under leases or rental agreements confined
to the premises rented, (iii) deposits or pledges made in connection with, or to
secure payment of, worker&#39;s compensation, unemployment insurance, old age
pension or other social security programs mandated under applicable Laws, (iv)
statutory or common law liens in favor of carriers, warehousemen, mechanics and
materialmen to secure claims for labor, materials or supplies and other like
liens and (v) restrictions on transfer of securities imposed by applicable state
and federal securities Laws.</p>
<p>&quot;Litigation&quot; shall mean any suit, action, arbitration, cause of
action, claim, complaint, criminal prosecution, investigation, demand letter,
governmental or other administrative proceeding, whether at law or at equity,
before or by any domestic or foreign federal, state or local court, tribunal, or
agency or before any arbitrator.</p>
<p>&quot;Losses&quot; shall mean any and all actual losses, liabilities, costs
and expenses (including reasonable attorneys&#39; fees and costs of investigation),
after giving effect to any related Tax Benefit and Tax Detriment and net of any
reserves and amounts recovered from third parties, including amounts recovered
under insurance policies purchased by Parent or a Subsidiary of Parent prior to
the Closing Date, with respect to such Losses; <u>provided</u>, that Losses
shall not include any costs or expenses of any Indemnified Party related to the
time spent on any indemnified matter by employees or management of the
Indemnified Party.</p>
<p align="center">7</p>
<p>&quot;Material Adverse Effect&quot; shall mean any adverse change in the
business, properties, financial condition or results of operations of any of the
Bison Subsidiaries (after giving effect to the Restructuring), which,
individually or together with any other such adverse change, is material to the
Business, taken as a whole, other than any such effect attributable to or
resulting from (i) the public announcement of the transactions contemplated
hereby, (ii) any act or omission of Parent or any Bison Subsidiary taken with
the prior written consent of Holdings, (iii) actions taken by Parent or any
Bison Subsidiary at the specific written request of Holdings or (iv) any adverse
change in general economic conditions or in conditions affecting the tier one
automotive supplier industry generally.</p>
<p>&quot;Material Contract&quot; shall have the meaning ascribed to it in
Section 3.14(b).</p>
<p>&quot;Non&#45;Bison Subsidiary&quot; shall have the meaning ascribed to it in
Section 2.4(g).</p>
<p>&quot;Off&#45;Site Location&quot; shall have the meaning ascribed to it in
Section 8.2(e).</p>
<p>&quot;Order&quot; shall mean any decision or award, decree, injunction,
judgment, order, quasi&#45;judicial decision or award, ruling, or writ of any
domestic or foreign federal, state or local or other court, arbitrator (with
binding effect), tribunal, administrative agency or authority.</p>
<p>&quot;Ownership Percentage&quot; shall have the meaning ascribed to it in
Section 5.8(c)(iii).</p>
<p>&quot;Parent&quot; shall have the meaning ascribed to it in the preamble.</p>
<p>&quot;Parent Entity&quot; shall mean (i) Parent and its Subsidiaries (other
than the Bison Subsidiaries), so long as such subsidiary remains an Affiliate of
Parent, and (ii) any Person who directly or indirectly acquires more than 50% of
the voting control of Parent as a result of a nonacquisitive reorganization such
as a merger pursuant to Section 251(g) of the Delaware General Corporation Law
and any Subsidiaries of such Person.</p>
<p>&quot;Parent Indemnified Parties&quot; shall have the meaning ascribed to it
in Section 8.1(c).</p>
<p>&quot;Parent Names&quot; shall have the meaning ascribed to it in Section
8.4.</p>
<p>&quot;Parent&#39;s Hourly Master Pension Benefit&quot; shall have the meaning
ascribed to it in Section 5.7(c)(iii).</p>
<p align="center">8</p>
<p>&quot;Parent&#39;s Salaried Pension Benefit&quot; shall have the meaning ascribed
to it in Section 5.7(c)(ii).</p>
<p>&quot;Parent&#39;s Trustee&quot; shall have the meaning ascribed to it in Section
5.7(c)(iv).</p>
<p>&quot;Permali&quot; shall have the meaning ascribed to it in Section
5.8(a)(i).</p>
<p>&quot;Permit&quot; shall mean, with respect to any Person, any domestic or
foreign federal, state or local governmental approval, authorization,
certificate, declaration, easement, filing, franchise, license, notice, permit,
variance, clearance, exemption or right to which such Person is a party or that
is or may be binding upon or inure to the benefit of such Person or its
securities, properties or business.</p>
<p>&quot;Person&quot; shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, association, organization or
other entity.</p>
<p>&quot;Preferred Stock&quot; shall have the meaning ascribed to it in
Section&nbsp;2.1(b).</p>
<p>&quot;Plascar&quot; shall have the meaning assigned to it in Section 3.8(a).</p>
<p>&quot;Remediation&quot; shall have the meaning ascribed to it in Section
8.2(e).</p>
<p>&quot;Remediation Standard&quot; shall have the meaning ascribed to it in
Section 8.2(e).</p>
<p>&quot;Representatives&quot; shall have the meaning ascribed to it in Section
5.2(a).</p>
<p>&quot;Requesting Party&quot; shall have the meaning ascribed to it in Section
5.16(b).</p>
<p>&quot;Required Amount&quot; shall have the meaning ascribed to it in
Section&nbsp;4.10(a).</p>
<p>&quot;Required Financial Statements&quot; shall have the meaning ascribed to
it in Section&nbsp;5.9(b).</p>
<p>&quot;Requisite Regulatory Approvals&quot; shall have the meaning ascribed to
it in Section 3.3(a).</p>
<p>&quot;Restricted Field&quot; shall have the meaning ascribed to it in Section
5.11(a).</p>
<p>&quot;Restricted Portion&quot; shall have the meaning ascribed to it in
Section 5.11(b).</p>
<p>&quot;Restriction&quot; shall have the meaning ascribed to it in Section
8.2(b)(i).</p>
<p align="center">9</p>
<p>&quot;Restructuring&quot; shall have the meaning ascribed to it in Section
2.3.</p>
<p>&quot;Retention Payment&quot; shall have the meaning ascribed to it in
Section 5.7(f)(iv).</p>
<p>&quot;Rosario&quot; shall have the meaning ascribed to it in Section
5.8(a)(i).</p>
<p>&quot;SEC&quot; shall have the meaning ascribed to it in Section&nbsp;4.6(a).</p>
<p>&quot;Securities Act&quot; shall mean the Securities Act of 1933, as amended.</p>
<p>&quot;Series A Preferred Stock&quot; shall have the meaning ascribed to it in
Section&nbsp;2.1(b).</p>
<p>&quot;Series B Preferred Stock&quot; shall have the meaning ascribed to it in
Section&nbsp;2.1(b).</p>
<p>&quot;Series C Preferred Stock&quot; shall have the meaning ascribed to it in
Section 2.1(b).</p>
<p>&quot;Severance Payment&quot; shall have the meaning ascribed to it in
Section 5.7(f)(iii).</p>
<p>&quot;Shares&quot; shall have the meaning ascribed to it in Section 2.1(a).</p>
<p>&quot;Stand&#45;Alone Pension Plans&quot; shall have the meaning ascribed to it
in Section 5.7(c)(i).</p>
<p>&quot;Straddle Period&quot; shall mean a taxable year or period beginning on
or before, and ending after, the Closing Date.</p>
<p>&quot;Subsidiary&quot; shall mean any corporation, partnership, limited
liability company, joint venture or other legal entity of which a Person, either
alone or together with any other Subsidiary, owns, directly or indirectly, more
than 50% of the stock or other equity interests of such corporation or other
legal entity.</p>
<p>&quot;TATB&quot; shall have the meaning ascribed to it in Section 3.8(a).</p>
<p>&quot;Tax&quot; or &quot;Taxes&quot; shall mean all United States federal,
state, provincial, local, territorial and foreign income, profits, franchise,
license, capital, transfer, ad valorem, wage, severance, occupation, import,
custom, gross receipts, payroll, sales, employment, use, property, real estate,
excise, value added, estimated, stamp, alternative or add&#45;on minimum,
environmental, withholding and any other taxes, duties, assessments or
governmental charges of any kind whatsoever.</p>
<p align="center">10</p>
<p>&quot;Tax Authority&quot; shall mean any domestic or foreign federal,
national, state, provincial, county or municipal or other local government, any
subdivision, agency, commission or authority thereof, or any quasi&#45;governmental
body exercising any taxing authority or any other authority exercising Tax
regulatory authority.</p>
<p>&quot;Tax Benefit&quot; shall mean the amount of any refund, credit or
reduction in otherwise required Tax payments, including any interest payable
thereon, actually realized, <u>provided</u>, that, for these purposes, Tax items
shall be taken into account in accordance with the ordering principles of the
Code or other applicable Law.</p>
<p>&quot;Tax Detriment&quot; shall mean the amount of any increase in otherwise
required Tax payments, including any interest payable thereon, actually
realized, <u>provided</u>, that, for these purposes, Tax items shall be taken
into account in accordance with the ordering principles of the Code or other
applicable Law.</p>
<p>&quot;Tax Indemnitee&quot; shall have the meaning ascribed to it in Section
5.8(k)(i).</p>
<p>&quot;Tax Indemnitor&quot; shall have the meaning ascribed to it in Section
5.8(k)(i).</p>
<p>&quot;Tax Return&quot; shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including any information return, claim for refund, amended return or
declaration of estimated Tax.</p>
<p>&quot;Third Party&quot; shall have the meaning ascribed to it in Section
8.1(g)(i).</p>
<p>&quot;Third Party Claim&quot; shall have the meaning ascribed to it in
Section 8.1(e).</p>
<p>&quot;Transactions&quot; shall mean the actions set forth in Sections 2.1 and
2.2.</p>
<p>&quot;Transaction Agreements&quot; shall mean this Agreement, the Transition
Agreement attached hereto as Exhibit 4, the Assignment and Assumption Agreement
attached hereto as Exhibit 2, the License Agreements attached hereto as Exhibits
3A, 3B and 3C and the Registration Rights Agreements attached hereto as Exhibits
5 and 6, the Asset Purchase Agreement attached hereto as Exhibit 7 and the other
agreements and certificates contemplated to be delivered hereby and thereby.</p>
<p>&quot;Transition Agreement&quot; shall mean the Transition Agreement, the
form of which is attached hereto as Exhibit 4.</p>
<p>&quot;Transferred Employee&quot; shall have the meaning ascribed to it in
Section 5.7(a).</p>
<p align="center">11</p>
<p>&quot;Two&#45;Month Cash Amount&quot; shall have the meaning ascribed to it in
Section 2.4(c)(i).</p>
<p>&quot;U.S. Bison Subsidiary&quot; shall mean a Bison Subsidiary organized
under the laws of a state of the United States of America.</p>
<p>&quot;WARN Act&quot; shall have the meaning ascribed to it in Section
3.10(b).</p>
<p>&quot;Working Capital&quot; shall mean (a) the sum of net accounts
receivable, inventory and other current assets, excluding cash and cash
equivalents and income Tax assets, minus (b) the sum of net accounts payable and
other current liabilities, excluding the current portion of Balance Sheet
Indebtedness of the Bison Subsidiaries, accrued interest and any liability for
income Taxes. Working Capital shall be computed without regard to any changes in
GAAP since December 30, 2000 using the same accounting principles used in
computing the working capital set forth in Section 2.4(c) of the Disclosure
Schedule.</p>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE II<a NAME="_Toc503343059"></a><a NAME="_Toc503343304"></a></font><br>
<br>
<a NAME="_Toc503342958"></a><a NAME="_Toc503343908"></a><a NAME="_Toc503667890"></a><a NAME="_Toc503684821"></a><a NAME="_Toc504459512"></a><a NAME="_Toc505070775"></a><a NAME="_Toc505137371"></a><a NAME="_Toc505767617"></a><a NAME="_Toc506346187"></a><a NAME="_Toc506628504"></a><a NAME="_Toc506775314"></a><a NAME="_Toc507592180"></a><a NAME="_Toc508437253"></a><a NAME="_Toc508709201"></a><a NAME="_Toc514731987"></a><a NAME="_Toc514732725"></a><a NAME="_Toc516384235"></a><a NAME="_Toc516456557"></a><a NAME="_Toc516460917"></a><a NAME="_Toc516463333"></a><a NAME="_Toc516560518"></a><a NAME="_Toc518363213"></a><a NAME="_Toc518466793"></a><a NAME="_Toc518732996"></a><a NAME="_Toc518733440"></a><a NAME="_Toc519520810"></a><a NAME="_Toc519700984"></a><a NAME="_Toc520104831"></a><a NAME="_Toc520108685"></a><a NAME="_Toc520261493"></a><a NAME="_Toc520609422"></a><a NAME="_Toc521132919"></a><a NAME="_Toc521304941"></a><a NAME="_Toc521330718"></a><a NAME="_Toc521426430"></a><a NAME="_Toc521468829"></a><a NAME="_Toc521492879">PURCHASE
AND SALE OF SHARES</a></p>
<p ALIGN="CENTER">&nbsp;</p>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p>2.1 <a NAME="_Toc503342959"></a><a NAME="_Toc503343060"></a><a NAME="_Toc503343305"></a></font><u><a NAME="_Toc521492880">Purchase
and Sale of Shares</a></u>.</p>
<p>(a) Subject to the terms and conditions of this Agreement, at the Closing,
Parent shall sell, transfer, convey, assign and deliver, or shall cause its
applicable Subsidiaries to sell, transfer, convey, assign and deliver, to the
entities specified on Schedule F hereto, and said entities shall purchase,
acquire and accept or cause its wholly owned Subsidiaries to purchase, acquire
and accept, from Parent or its applicable Subsidiaries, all of the issued and
outstanding shares of capital stock of the Directly Purchased Subsidiaries
(excluding directors&#39; qualifying shares) (the &quot;Shares&quot;), free and
clear of all Liens (without regard to subsections (i) through (iv) of the
provision in the definition of &quot;Liens&quot;) for an amount of cash equal to
nine hundred forty&#45;three million dollars ($943,000,000) minus the amount of
Balance Sheet Indebtedness of the Bison Subsidiaries existing on the Closing
Date.</p>
<p>(b) Subject to the terms and conditions of this Agreement, at the Closing,
Parent shall cause its applicable Subsidiary to contribute all of the issued and
outstanding shares of capital stock of Textron Automotive Exteriors Inc., a
Delaware corporation and a wholly owned indirect Subsidiary of Parent, free and
clear of all Liens (without regard to subsections (i) through (iv) of the
provision in the definition of Liens) to C&A Products in exchange for (i)
130,000 shares of Series A1 Redeemable Preferred Stock, liquidation preference
$1,000 per share, of C&A Products (the &quot;Series A Preferred
Stock&quot;), (ii) 95,000 shares of Series B1 Redeemable Preferred Stock,
liquidation preference $1,000 per </p>
<p align="center">12</p>
<p>share, of C&A Products (the &quot;Series B Preferred Stock&quot;), (iii)<b>
</b>20,000 shares of Series C1 Redeemable Preferred Stock, liquidation
preference $1,000 per share, of C&A Products (the &quot;Series C Preferred
Stock&quot;), (iv) eighteen million (18,000,000) shares of common stock, par
value $.01 per share, of Holdings (the &quot;Holdings Common Stock&quot;), and
(v) cash equal to forty&#45;two million dollars ($42,000,000). The relative rights,
preferences and limitations of the Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock (collectively, the &quot;Preferred
Stock&quot;) will be as set forth in the Certificate of Designation of C&A
Products attached hereto as Exhibit 1 (the &quot;Certificate of
Designation&quot;). Parent, Holdings and C&A Products hereby agree that the
fair market value of the Preferred Stock is equal to six hundred fifty dollars
($650) per share.</p>
<font COLOR="#ff0000">
<p>2.2 </font><u><a NAME="_Toc521492881">Purchase and Sale of Assets</a></u>.</p>
<p>(a) Parent shall cause one of its Subsidiaries to sell, transfer, convey,
assign and deliver to the entity specified on Schedule F all Intellectual
Property identified in Section C&#45;2 of the Disclosure Schedule which is, as of
the date hereof, owned and in the name of Textron Automotive Company Inc., a
Delaware corporation, for a purchase price of fifteen million dollars
($15,000,000) payable in cash. (A list of the Intellectual Property being sold
pursuant to this section together with appropriate documents of transfer will be
provided to C&A Products or its designated Subsidiary at the Closing.)</p>
<p>(b) On the day prior to the Closing Date, certain assets currently owned by
Textron Automotive Exteriors Inc. shall be sold to JPS Automotive, Inc., a
Subsidiary of C&A Products, pursuant to an Asset Purchase Agreement
substantially in the form attached hereto as Exhibit 7. The parties agree that
the fair market value of the assets sold pursuant to said agreement is one
hundred twenty&#45;five million dollars ($125,000,000).</p>
<font COLOR="#ff0000">
<p>2.3 <a NAME="_Toc503342960"></a><a NAME="_Toc503343061"></a><a NAME="_Toc503343306"></a></font><u><a NAME="_Toc521492882">Restructuring</a></u>.</p>
<p>Prior to the Closing Date, Parent shall take such actions as may be necessary
or appropriate to (a) cause the Subsidiaries of the Directly Purchased
Subsidiaries to be those listed on Schedule B hereto and (b) effect the
transfers of the Subsidiaries, assets, liabilities, businesses and employees
listed on Schedule C hereto (such actions are collectively referred to as the
&quot;Restructuring&quot;). The Directly Purchased Subsidiaries together with
their Subsidiaries listed on Schedule B and Textron Automotive Exteriors Inc.
are collectively referred to herein as the &quot;Bison Subsidiaries.&quot;</p>
<font COLOR="#ff0000">
<p>2.4 <a NAME="_Toc503342962"></a><a NAME="_Toc503343063"></a><a NAME="_Toc503343308"></a></font><u><a NAME="_Toc521492883">Purchase
Price Adjustment</a></u>.</p>
<p>(a) As soon as practicable, but in any event not more than 60 days after the
Closing Date, unless otherwise extended by the mutual agreement of Parent and
Holdings, Parent shall deliver to Holdings a statement of net assets to be sold
as of the Closing Date, including information necessary to determine the Working
Capital and Closing Cash at such date (but without giving effect to the Closing
or the transactions covered by the Asset Purchase Agreement specified in Section
2.2(b)) (the &quot;Closing Financial Statement&quot;), together with a report of
E&Y thereon to the effect that such statement fairly presents in all
material respects the financial position of the Bison Subsidiaries as of said
date, and that such statement has been prepared in </p>
<p align="center">13</p>
<p>accordance with GAAP applied on a basis consistent with the December 30, 2000
Statement of Net Assets to be Sold (including the elimination of the corporate
overhead items identified in Part B of Section 3.4 of the Disclosure Schedule
but except that M&C Advanced Processes is included in the Closing Financial
Statements), except (i) for any accounting changes mandated by accounting
regulators and (ii) as set forth in Part A of Section 3.4 of the Disclosure
Schedule. All costs and expenses incurred by Parent in connection with the
preparation and delivery of the Closing Financial Statement shall be borne
equally by Parent and Holdings.</p>
<p>(b) Subject to Section 2.4(e), if Working Capital on the Closing Date is less
than negative thirty two million dollars ($&#45;32,000,000), the difference between
Working Capital and negative $32,000,000 shall be paid by Parent to C&A
Products. Subject to Section 2.4(e), if Working Capital on the Closing Date is
more than negative thirty two million dollars ($&#45;32,000,000), the difference
between Working Capital and negative $32,000,000 shall be paid by C&A
Products to Parent.</p>
<font COLOR="#ff0000">
<blockquote>
  <p>(c)</font> (i) Subject to Section 2.4(e), if the Closing Cash on the
  Closing Date is greater than zero, the difference between zero and the Closing
  Cash shall be paid by C&A Products to Parent. Subject to Section 2.4(e),
  if the Closing Cash on the Closing Date is less than zero, the difference
  between zero and the Closing Cash shall be paid by Parent to C&A Products.
  If the Closing Cash on the Closing Date of any Bison Subsidiary incorporated
  in a jurisdiction other than a state of the United States of America is
  greater than the sum of payments to employees and suppliers during the last
  two fiscal months ended prior to the Closing Date (the &quot;Two&#45;Month Cash
  Amount&quot;), then the amount payable to Parent pursuant to the first
  sentence of Section 2.4(c) shall be reduced by the amount of the Closing Cash
  on the Closing Date of the applicable Subsidiary which is in excess of the Two&#45;Month Cash Amount multiplied by the withholding Tax rate applicable to
  dividends paid by the applicable Bison Subsidiary; <u>provided</u> that during
  such two&#45;month period payments to employees and suppliers shall be made
  consistent with past practice.</p>
<p>(ii) Subject to Section 2.4(e), if the Closing has not occurred prior to the
Capital Expenditure Date, C&A Products will pay Parent any amount by which
capital expenditures for assets not recorded on the financial statements prior
to the Capital Expenditure Date during the period beginning on the Capital
Expenditure Date and ending on the Closing Date exceed depreciation attributable
to the Business during that period. No later than the delivery of the Closing
Financial Statement, Parent shall deliver a certificate of its Chief Financial
Officer certifying to the amount payable, if any, pursuant to this section. The
term &quot;Capital Expenditure Date&quot; shall mean October 1, 2001; <u>provided</u>,
<u>however</u>, that if the financial statements required to be delivered to
C&A Products pursuant to Section 5.9(a), are not delivered by August 31,
2001, the Capital Expenditure Date shall be extended by the number of days by
which the deadline is not met.</p>
</blockquote>
<p align="center">14</p>
<p>(d) Subject to Section 2.4(e), payments required pursuant to Section 2.4
shall be made within 60 days after the date of receipt by Holdings of the
Closing Financial Statement by wire transfer of immediately available funds to
one or more accounts specified at least two business days prior to such date by
the party who shall receive the funds. Any such payment shall be made together
with interest thereon at the Interest Rate, payable for the period commencing on
the Closing Date and ending on the day immediately prior to the date such
payment is made.</p>
<p>(e) Holdings may dispute any amounts used in the calculation of the purchase
price adjustment pursuant to Sections 2.4(b) or 2.4(c)(i) as reflected on the
Closing Financial Statement or the purchase price adjustment pursuant to Section
2.4(c)(ii) that involves a proposed adjustment with respect to any single item
of more than $50,000 but only to the extent that proposed adjustments exceeding
$50,000 exceed, in the aggregate, $500,000; <u>provided</u>, <u>however</u>,
that Holdings shall notify Parent in writing (the &quot;Dispute Notice&quot;) of
each disputed item, specifying the amount thereof in dispute and setting forth,
in reasonable detail, the basis for such dispute, within 45 days of Holdings&#39;
receipt of the Closing Financial Statement; <u>provided</u> <u>further</u>, <u>however</u>,
that if an account or item is recorded or treated in a manner consistent with
past practice and, if applicable, with the December 30, 2000 Statement of Net
Assets to be Sold, then, provided that such recording or treatment does not
prevent the Closing Financial Statement from being in accordance with GAAP,<b> </b>it
must be accepted as correct by Holdings for purposes of this Section 2.4.
Holdings shall submit only one Dispute Notice containing all disputed items. In
the event of such a dispute, Holdings and Parent shall attempt to reconcile
their difference, and any resolution by them as to any disputed amounts shall be
final, binding and conclusive. If Holdings and Parent are unable to reach a
resolution with such effect within 30 days of the receipt by Parent of the
Dispute Notice, Holdings and Parent shall submit the items remaining in dispute
for resolution to the Independent Accounting Firm which shall, within 30 days
after submission, determine and report to the parties upon such remaining
disputed items, and such report shall be final, binding and conclusive on the
parties hereto. All costs and expenses of the Independent Accounting Firm
relating to the disputed items shall be allocated between Parent and Holdings in
the same proportion that the aggregate dollar amount of the items unsuccessfully
disputed by each party bears to the total dollar amount of the items disputed
under such notice. The term &quot;Independent Accounting Firm&quot; shall mean
Deloitte & Touche LLP or such other firm as Holdings and Parent shall agree.</p>
<p>(f) Notwithstanding any dispute pursuant to Section 2.4(e) of any amounts
payable pursuant to this Section 2.4, the applicable party shall at the time
specified in Section 2.4 pay that portion of the amounts payable by it pursuant
to this Section 2.4 that are not subject at the time of such payment to any
dispute. Any amount payable following resolution of a matter specified in a
Dispute Notice shall be paid within five (5) business days following the
resolution thereof.</p>
<p align="center">15</p>
<p>(g) During the periods in which (i) the Closing Financial Statement is being
prepared or (ii) any dispute is raised as contemplated by Section 2.4(e), Parent
and Holdings shall provide each other, including their Representatives, with
reasonable access, during normal business hours and without disruption to their
day&#45;to&#45;day business, to their respective books, records and facilities
pertaining to the Bison Subsidiaries and the Transactions to the extent
affecting the Bison Subsidiaries, including any consolidated or combined
returns, schedules, consolidated or combined work papers and other related
documents; <u>provided</u>, however, that with respect to consolidated,
combined, unitary or similar Tax Returns which include Parent (or any Subsidiary
of Parent, other than a Bison Subsidiary (a &quot;Non&#45;Bison Subsidiary&quot;))
on the one hand and any of the Bison Subsidiaries on the other hand, Holdings
shall only have access to portions of such Tax Returns relev<a NAME="_Toc503342963"></a><a NAME="_Toc503343064"></a><a NAME="_Toc503343309">ant
to the Bison Subsidiaries.</p>
<p>2.5 </a><a NAME="_Toc521492884"><u>Allocation of Consideration; Tax Filings</u>.</a></p>
<p>(a) The consideration attributable to the purchase of the Directly Purchased
Subsidiaries shall be allocated among the Shares as set forth in Schedule D
hereto. Within 30 days after the determination of the adjustments pursuant to
Section 2.4, Parent shall deliver to Holdings a schedule (the &quot;Adjustment
Schedule&quot;) allocating said adjustments among the Shares, and also
accounting for any difference between the Balance Sheet Indebtedness of the
Bison Subsidiaries existing on the Closing Date and $80,000,000, in a manner
consistent with the allocation methodology used in determining the allocation
set forth in Schedule D.</p>
<p>(b) Holdings may dispute any allocation set forth on the Adjustment Schedule;
provided, however, that (i) Holdings shall not dispute any of the original
allocations set forth in Schedule D and (ii) Holdings shall notify Parent in
writing (the &quot;Allocation Dispute Notice&quot;) of each disputed item,
specifying the allocation in dispute and setting forth, in reasonable detail,
the basis for such dispute within 30 days of Holdings&#39; receipt of the schedule.
Holdings shall submit only one Allocation Dispute Notice containing all disputed
allocations. In the event of such a dispute, Holdings and Parent shall attempt
to reconcile their differences and any resolution by them as to any disputed
allocations shall be final, binding and conclusive. If Holdings and Parent are
unable to reach a resolution with such effect within 30 days of the receipt by
Parent of the Allocation Dispute Notice, Holdings and Parent shall submit the
items remaining in dispute for resolution to the Independent Accounting Firm
which shall, within 30 days after submission, determine and report to the
parties upon such remaining disputed allocations, and such report shall be
final, binding and conclusive on the parties hereto. All costs and expenses of
the Independent Accounting Firm relating to the disputed allocations shall be
borne equally by Parent and Holdings; provided, however, that if the Independent
Accounting Firm determines that the position asserted by one of the parties in
such dispute is substantially in error, then all such costs and expenses shall
be borne by the party so determined to be in error.</p>
<p>(c) Upon agreement of the parties with respect to the Adjustment Schedule, or
the completion of a report prepared by the Independent Accounting Firm pursuant
to Section 2.5(b), a schedule (the &quot;Final Allocation Schedule&quot;)
setting forth the allocation among the Shares as specified in Section 2.5(a) and
modified pursuant to Section 2.5(b) shall be prepared by the parties. Each of
Holdings and Parent shall (i) timely file with each relevant Tax Authority all
forms and Tax Returns required to be filed in connection with the allocation set
forth in the Final Allocation Schedule, (ii) be bound by such allocation for
purposes of determining Taxes, (iii) prepare and file, and cause their
respective Affiliates to prepare and file, their Tax Returns on a basis
consistent with such allocation, and (iv) not take any position, or cause their
respective Affiliates to take any position, inconsistent with such allocation on
any Tax Return, in any audit or proceeding before any Tax Authority or in any
report made for Tax purposes; provided, however, that, notwithstanding anything
in this Section 2.5 to the contrary, (i) the parties shall be permitted to take
a position inconsistent with that set forth in this Section 2.5 if required to
do so by a final and unappealable decision, judgment, decree or other order by
any court of competent jurisdiction, and (ii) with respect to any of the
transactions contemplated by this Agreement, Parent, Holdings or C&A
Products may pursue a pre&#45;filing agreement in accordance with Revenue Procedure
2001&#45;22 (or any successor pronouncement), and upon the request of the party
pursuing a pre&#45;filing agreement the other parties shall (and shall cause their
respective Affiliates to) provide their reasonable cooperation and assistance in
obtaining any such pre&#45;filing agreement.</p>
<font COLOR="#ff0000">
<blockquote>
  <p>(d)</font> (i) Parent, Holdings and C&A Products hereby agree to treat
  the transactions pursuant to Section 2.1(a) for Tax purposes as taxable sales
  of the Shares in exchange for the consideration set forth in Section 2.1(a)
  subject to the recognition of gains or losses, as the case may be, pursuant to
  Section 1001(c) of the Code.</p>
<p>(ii) Parent, Holdings and C&A Products hereby agree to treat the
transaction pursuant to Section 2.1(b) for Tax purposes as a transaction
described in Section 351 of the Code.</p>
<p>(iii) Parent, Holdings and C&A Products hereby agree to treat the
transaction pursuant to Section 2.2(a) for Tax purposes as a taxable sale of the
Intellectual Property in exchange for the consideration set forth in Section
2.2(a) subject to the recognition of gain or loss, as the case may be, pursuant
to Section 1001(c) of the Code.</p>
<p>(iv) Parent, Holdings and C&A Products hereby agree to treat the
transaction pursuant to Section 2.2(b) for Tax purposes as a taxable sale of the
assets described in the Asset Purchase Agreement in exchange for the
consideration set forth in the Asset Purchase Agreement subject to the
recognition of gain or loss, as the case may be, pursuant to Section 1001(c) of
the Code.</p>
</blockquote>
<font COLOR="#ff0000">
<p>2.6 </font><u><a NAME="_Toc521492885">Closing</a></u>.</p>
<p>Parent shall as promptly as possible notify Holdings, and Holdings shall as
promptly as possible notify Parent, when the conditions set forth in Article VI
to such party&#39;s obligations to complete the Transactions have been satisfied or
waived. The closing of the Transactions (the &quot;Closing&quot;) shall take
place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times
Square, New York, New York at 10:00 a.m. New York time on the second business
day following the satisfaction or waiver of the conditions set forth in Article
VI, or at such other time, date and place as Parent and Holdings may agree; <u>provided</u>,
<u>however</u>, that the Closing Date shall not be earlier than 45 days after
the delivery of the financial statements required by Sections 5.9(a)(i) and
(ii),</p>
<p align="center">17</p>
<p>and <u>provided</u> further that, with respect to the purchase and sale of
the issued and outstanding shares of capital stock of any Directly Purchased
Subsidiary which is organized in a foreign jurisdiction, at the request of
Parent, Holdings shall agree to have the closing with respect to the purchase
and sale of such shares of capital stock take place in the jurisdiction in which
the Directly Purchased Subsidiary is organized. The date on which the Closing
occurs is referred to herein as the &quot;Closing Date.&quot;</p>
<p>2.7 <a NAME="_Toc503342964"></a><a NAME="_Toc503343065"></a><a NAME="_Toc503343310"></a><a NAME="_Toc521492886"><u>Closing
Obligations</u></a></p>
<p>(a) At the Closing, Parent shall deliver to Holdings or C&A Products:</p>
<blockquote>
  <p>(i) certificates representing the Shares and all of the issued and
  outstanding shares of capital stock of Textron Automotive Exteriors Inc. duly
  endorsed (or accompanied by duly executed stock powers) for transfer to
  C&A Products or a designated Subsidiary or Subsidiaries of C&A
  Products;</p>
  <p>(ii) the Officer&#39;s Certificate described in Section 6.2(c);</p>
  <p>(iii) the resignation of any officer or director of any Bison Subsidiary
  who is an employee or director of Parent or a Non&#45;Bison Subsidiary;</p>
  <p>(iv) a certificate under Section 1445(b)(2) of the Code providing that
  Parent is not a foreign person, in form and substance reasonably satisfactory
  to Holdings;</p>
  <p>(v) a duly executed Assignment and Assumption Agreement and Transition
  Agreement substantially in the forms attached hereto as Exhibits 2 and 4
  respectively;</p>
  <p>(vi) duly executed License Agreements substantially in the forms attached
  hereto as Exhibits 3A, 3B and 3C;</p>
  <p>(vii) duly executed Registration Rights Agreements substantially in the
  forms attached hereto as Exhibits 5 and 6; and</p>
  <p>(viii) duly executed documents to effect the sale and transfer of
  Intellectual Property required by Section 2.2(a).</p>
</blockquote>
<p>(b) At the Closing, Holdings and C&A Products shall deliver to Parent or
a designated Subsidiary of Parent:</p>
<p align="center">18</p>
<blockquote>
  <p>(i) one or more certificates representing the number of shares of Holdings
  Common Stock specified in Section 2.1(b);</p>
  <p>(ii) certificates representing the Preferred Stock;</p>
  <p>(iii) the Officer&#39;s Certificate described in Section 6.3(c);</p>
  <p>(iv) a duly executed Assignment and Assumption Agreement and Transition
  Agreement substantially in the forms attached hereto as Exhibits 2 and 4
  respectively;</p>
  <p>(v) duly executed License Agreements substantially in the forms attached
  hereto as Exhibits 3A, 3B and 3C;</p>
  <p>(vi) duly executed Registration Rights Agreements substantially in the
  forms attached hereto as Exhibits 5 and 6; and</p>
  <p>(vii) the cash amounts set forth in Sections 2.1 and 2.2 by wire transfer
  of immediately available funds to accounts designated by Parent in writing at
  least two business days prior to the Closing Date.</p>
</blockquote>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE III<a NAME="_Toc503343066"></a><a NAME="_Toc503343311"></a></font><br>
<br>
<a NAME="_Toc503342965"></a><a NAME="_Toc503343915"></a><a NAME="_Toc503667897"></a><a NAME="_Toc503684828"></a><a NAME="_Toc504459519"></a><a NAME="_Toc505070782"></a><a NAME="_Toc505137378"></a><a NAME="_Toc505767624"></a><a NAME="_Toc506346195"></a><a NAME="_Toc506628512"></a><a NAME="_Toc506775322"></a><a NAME="_Toc507592188"></a><a NAME="_Toc508437261"></a><a NAME="_Toc508709209"></a><a NAME="_Toc514731995"></a><a NAME="_Toc514732733"></a><a NAME="_Toc516456565"></a><a NAME="_Toc516460925"></a><a NAME="_Toc516463341"></a><a NAME="_Toc516560526"></a><a NAME="_Toc518363221"></a><a NAME="_Toc518466801"></a><a NAME="_Toc518733004"></a><a NAME="_Toc518733448"></a><a NAME="_Toc519520818"></a><a NAME="_Toc519700992"></a><a NAME="_Toc520104839"></a><a NAME="_Toc520108693"></a><a NAME="_Toc520261501"></a><a NAME="_Toc520609430"></a><a NAME="_Toc521132927"></a><a NAME="_Toc521304949"></a><a NAME="_Toc521330726"></a><a NAME="_Toc521426438"></a><a NAME="_Toc521468837"></a><a NAME="_Toc521492887">REPRESENTATIONS
AND WARRANTIES<br>
OF PARENT</a></p>
<p>&nbsp;</p>
<p>Parent represents and warrants to Holdings and C&A Products, subject to
the exceptions set forth in the Disclosure Schedule (which exceptions shall
specifically identify a Section to which such exception relates, it being
understood and agreed that each such exception shall be deemed to be disclosed
both under such Section and any other Section to which such disclosure on its
face relates), that:</p>
<font COLOR="#ff0000">
<p>3.1 <a NAME="_Toc503342966"></a><a NAME="_Toc503343067"></a><a NAME="_Toc503343312"></a></font><a NAME="_Toc521492888"><u>Corporate
Organization, Qualification, Power and Authority</u>.</a></p>
<p>(a) Parent and each of the Bison Subsidiaries is a corporation duly
organized, validly existing and in good standing (where applicable) under the
Laws of its jurisdiction of incorporation. Each of the Bison Subsidiaries is
qualified and in good standing (where applicable) as a foreign corporation in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it requires such qualification, except where any failure
to be so qualified or be in good standing would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect. Each of the
Bison Subsidiaries has all requisite corporate power and corporate authority and
all necessary Permits to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where any failure to have such
power and authority or Permits would not, individually or in the aggregate, be
reasonably likely to </p>
<p align="center">19</p>
<p>have a Material Adverse Effect. Parent has or will have made available to
Holdings prior to the Closing complete and correct copies of the articles of
organization or articles of or certificates of incorporation, as the case may
be, and by&#45;laws or other equivalent organizational documents of it and each
Bison Subsidiary as in effect as of the date hereof.</p>
<p>(b) Parent and its Subsidiaries have the requisite corporate power and
corporate authority to execute and deliver the Transaction Agreements (to the
extent each is a party thereto) and to consummate the transactions contemplated
thereby. The Transaction Agreements and the consummation by Parent and said
Subsidiaries of the transactions contemplated thereby have been duly and validly
authorized by the Boards of Directors of Parent and Textron Automotive Company
Inc., and the general partner of Textron Innovations L.P. (to the extent each is
a party thereto), and no other corporate proceeding on the part of Parent or its
Subsidiaries is necessary to authorize the Transaction Agreements or to
consummate the transactions contemplated thereby. This Agreement has been duly
and validly executed and delivered by Parent and, assuming this Agreement
constitutes the valid and binding agreement of Holdings and C&A Products,
constitutes the valid and binding agreement of Parent, enforceable against
Parent in accordance with its terms, except as such enforcement may be limited
by (a) applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar Laws now or hereinafter in effect relating to or
affecting creditors&#39; rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). When executed and delivered to Holdings and C&A Products at the
Closing, the Transaction Agreements (other than this Agreement) will be duly and
validly executed and delivered by Parent and its Subsidiaries (to the extent
each is a party thereto) and, assuming such agreements constitute the valid and
binding agreements of the other parties thereto, constitute the valid and
binding agreements of Parent and its Subsidiaries (to the extent each is a party
thereto), enforceable against Parent and said Subsidiaries, in accordance with
their terms, except as such enforcement may be limited by (a) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar Laws now or hereinafter in effect relating to or affecting creditors&#39;
rights generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).</p>
<font COLOR="#ff0000">
<p>3.2 <a NAME="_Toc503342967"></a><a NAME="_Toc503343068"></a><a NAME="_Toc503343313"></a></font><u><a NAME="_Toc521492889">Stock
of Subsidiaries</a></u>.</p>
<p>(a) Schedule B to this Agreement identifies each entity that will be a
Subsidiary of the Directly Purchased Subsidiaries on the Closing Date. As of the
Closing Date, the Directly Purchased Subsidiaries will not own, directly or
indirectly, any equity interests in any other Person.</p>
<p>(b) All of the shares of capital stock of the Directly Purchased
Subsidiaries, except for any directors&#39; qualifying shares, are owned by Parent,
or one or more of its Subsidiaries free and clear of all Liens (without regard
to subsections (i) through (iv) of the proviso in the definition of
&quot;Liens&quot;), and have been duly authorized, validly issued and are fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights. Except for any director&#39;s qualifying shares and except as</p>
<p align="center">20</p>
<p>otherwise set forth on Schedule B, all of the shares of capital stock of the
Subsidiaries listed on Schedule B will, as of the Closing Date, be owned by one
or more of the other Bison Subsidiaries as set forth on Schedule B, free and
clear of all Liens (without regard to subsections (i) through (iv) of the
proviso in the definition of &quot;Liens&quot;), and said shares, together with
the outstanding common stock of Textron Automotive Exteriors Inc., have been
duly authorized, validly issued and are fully paid and nonassessable and were
not issued in violation of any preemptive or similar rights, except for any
Liens or where any failure to be duly authorized, validly issued and fully paid
or nonassessable would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.</p>
<p>(c) There are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments relating to the capital stock of, or
other equity interest in, any Bison Subsidiary obligating Parent or any Bison
Subsidiary to issue, sell, transfer, vote or otherwise dispose of or sell any
shares of capital stock of, or other equity interest in, any Bison Subsidiary or
obligating Parent or any Bison Subsidiary to grant, extend or enter into any
such option, warrant, convertible security or other right, agreement,
arrangement or commitment. There are no voting trusts, proxies or other voting
agreements or understandings to which Parent or any of its Subsidiaries is a
party or by which it or they are bound with respect to the shares of capital
stock of any of the Bison Subsidiaries.</p>
<font COLOR="#ff0000">
<p>3.3 <a NAME="_Toc503342968"></a><a NAME="_Toc503343069"></a><a NAME="_Toc503343314"></a></font><u><a NAME="_Toc521492890">Consents
and Approvals; No Violations</a></u>.</p>
<p>(a) Except for (i) the filing of notification and report forms with the
United States Federal Trade Commission and the United States Department of
Justice under the Hart&#45;Scott&#45;Rodino Antitrust Improvements Act of 1976 (the
&quot;HSR Act&quot;) and the expiration or termination of any applicable waiting
period thereunder, (ii) the filing of the applications and notices, as
applicable, listed in Section 3.3(a)(ii) of the Disclosure Schedule with foreign
Governmental Authorities under the Foreign Competition Laws, the issuance of
consents, authorizations or approvals of such applications by such authorities,
if required, and the expiration or termination of any applicable waiting periods
thereunder, (iii) compliance with any applicable environmental transfer statutes
and (iv) the notices to or consultations with any works council, personnel
committee or similar employee council or committee listed in Schedule 3.3(a)(iv)
of the Disclosure Schedule, no material applications, notices to, consultations
with, Consents of, or filings with, any Government Authority, self&#45;regulatory
authority or third party are necessary in connection with the execution and
delivery by Parent and its Subsidiaries of the Transaction Agreements (to the
extent each is a party thereto) and the consummation by Parent and its
Subsidiaries of the transactions contemplated thereby. The notices,
notifications, filings, consents, authorizations, approvals, and expirations or
terminations of waiting periods referred in clauses 3.3(a)(i) and 3.3(a)(ii) are
hereinafter referred to as the &quot;Requisite Regulatory Approvals.&quot;</p>
<p>(b) Neither the execution, delivery or performance of the Transaction
Agreements by Parent and its Subsidiaries nor the consummation by Parent and its
Subsidiaries of the transactions contemplated thereby does or will (i) conflict
with </p>
<p align="center">21</p>
<p>or result in any breach of any provisions of the certificate of incorporation
or by&#45;laws of Parent or the certificate of incorporation or by&#45;laws or other
equivalent organizational documents of any of its Subsidiaries; (ii) conflict
with, result in or constitute a Default under, any of the terms, conditions or
provisions of (A) any Contract to which Parent is a party or by which it or any
of its properties or assets may be bound and (B) any Contract relating to the
Business to which any of Parent&#39;s Subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound; (iii)
conflict with, result in or constitute a Default under, any of the terms,
conditions or provisions of any Permit relating to the Business of Parent or any
of its Subsidiaries; or (iv) subject to giving the notices, the occurrence of
the required consultations, compliance with applicable environmental transfer
statutes and obtaining the Requisite Regulatory Approvals referred to in clauses
(i) through (iv) in paragraph (a) above, conflict with or violate any Order or
Law applicable to (A) Parent or any of its properties or assets or (B) any of
Parent&#39;s Subsidiaries engaged in the conduct of the Business or any of their
properties or assets to the extent used in the conduct of the Business, except,
in the case of clauses (ii), (iii) or (iv) of this paragraph (b) for conflicts
or Defaults which would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.</p>
<font COLOR="#ff0000">
<p>3.4 <a NAME="_Toc503342969"></a><a NAME="_Toc503343070"></a><a NAME="_Toc503343315"></a></font><u><a NAME="_Toc521492891">Financial
Statements</a></u>.</p>
<p>Parent has delivered to Holdings the following financial statements for the
Bison Subsidiaries (as adjusted to give effect to the Restructuring)
(collectively, the &quot;Financial Statements&quot;): a statement of net assets
to be sold as at December 30, 2000 and January 1, 2000 and statements of
earnings for each of the 12 months then ended. The December 30, 2000 statement
of net assets to be sold (the &quot;December 30, 2000 Statement of Net Assets to
be Sold&quot;) has been audited and was delivered together with a report of
E&Y thereon. Except as set forth in the notes to the Financial Statements or
Section 3.4 of the Disclosure Schedule, the Financial Statements have been
prepared in conformity with GAAP and present fairly in all material respects the
financial position of the Bison Subsidiaries (as adjusted to give effect to the
Restructuring) and their results of operations for the periods covered therein.</p>
<font COLOR="#ff0000">
<p>3.5 <a NAME="_Toc503342970"></a><a NAME="_Toc503343071"></a><a NAME="_Toc503343316"></a></font><u><a NAME="_Toc521492892">Absence
of Certain Changes or Events</a></u>.</p>
<p>Except as a consequence of, or as expressly contemplated by, this Agreement,
since December 30, 2000 through and including the date hereof:</p>
<p>(a) the Business has been conducted in the ordinary course of business
consistent with past practice;</p>
<p>(b) the Business has not experienced any events, developments or changes
which, individually or in the aggregate, would be reasonably likely to have, or
have had, a Material Adverse Effect;</p>
<p>(c) except for the Restructuring and except in the ordinary course of
business consistent with past practice, neither Parent nor any of its
Subsidiaries has sold, transferred, conveyed, assigned or otherwise disposed of
any material assets or properties related to the Business;</p>
<p align="center">22</p>
<p>(d) neither Parent nor any of its Subsidiaries has waived, released or
canceled any material claims against third parties or debts owing to it, or any
material rights which have any value and which relate to the Business, other
than in the ordinary course of business consistent with past practice pursuant
to Contracts which are not Material Contracts with Persons that are not
Affiliates of Parent;</p>
<p>(e) neither Parent nor any of its Subsidiaries has made any changes in their
accounting systems, policies, principles or practices related to the Business;</p>
<p>(f) none of the Bison Subsidiaries has authorized for issuance, issued, sold,
delivered or agreed or committed to issue, sell or deliver (whether through the
issuance or granting of options, warrants, convertible or exchangeable
securities, commitments, subscriptions, rights to purchase or otherwise) any
Shares or any of its other securities, or amended any of the terms of any shares
of its capital stock or such other securities;</p>
<p>(g) the Bison Subsidiaries have not made any loans, advances or capital
contributions to, or investments in, any Person other than a Subsidiary of
Parent;</p>
<p>(h) as of Closing, there will be no loans or advances outstanding between
Parent and the Non&#45;Bison Subsidiaries on the one hand, and the Bison
Subsidiaries on the other hand, and the Bison Subsidiaries will not have any
accounts payable to, or investments in, Parent or the Non&#45;Bison Subsidiaries,
other than accounts payable in connection with commercial transactions in the
ordinary course of business consistent with past practice;</p>
<p>(i) except in the ordinary course of business consistent with past practice
and except as set forth in Section 3.9(e) of the Disclosure Schedule, neither
Parent nor any of its Subsidiaries has increased in any manner the compensation
or fringe benefits of any employee of the Business or entered into any contract,
agreement, commitment or arrangement to do any of the foregoing;</p>
<p>(j) except in the ordinary course of business consistent with past practice,
neither Parent nor any of its Subsidiaries has, except in connection with the
Restructuring, acquired or leased any assets relating to the Business, or made
any material amount of property of the Business, subject to any Lien whatsoever;</p>
<p>(k) as of Closing, no assets or property owned or leased by the Bison
Subsidiaries or used in the Business will be subject to any Lien securing
Balance Sheet Indebtedness;</p>
<p>(l) there have been no capital expenditures with respect to the Business
which, in the aggregate, are in excess of one hundred fifteen million dollars
($115,000,000), except for capital expenditures not exceeding fifty&#45;five million
dollars ($55,000,000) in support of sales to Fiat by Textron Automotive Company
Italia s.r.l.;</p>
<p align="center">23</p>
<p>(m) neither Parent nor any of its Subsidiaries has made any material Tax
election or settled or compromised any material domestic or foreign federal,
national, state, provincial, county, municipal or local Tax liability, or waived
or extended the statute of limitations in respect of any such Taxes in each case
with respect to the Business; and</p>
<p>(n) neither Parent nor any of its Subsidiaries has paid any amount, performed
any obligation or agreed to pay any amount or perform any obligation, in
settlement or compromise of any suits or claims of liability with respect to the
Business or any of the officers, members, managers, employees or agents of the
Bison Subsidiaries in excess of $5,000,000.</p>
<font COLOR="#ff0000">
<p>3.6 <a NAME="_Toc503342971"></a><a NAME="_Toc503343072"></a><a NAME="_Toc503343317"></a></font><u><a NAME="_Toc521492893">No
Undisclosed Liabilities</a></u>.</p>
<p>As of the date hereof, except to the extent of the amounts specifically
reflected or reserved in the December 30, 2000 Statement of Net Assets to be
Sold and except for liabilities and obligations incurred in the ordinary course
of business, since December 30, 2000, (a) none of the Bison Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be recognized or disclosed on a statement of
net assets to be sold of the Bison Subsidiaries, as adjusted to give effect to
the Restructuring, or in the notes thereto, except for liabilities or
obligations which would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect and (b) to the knowledge of the persons
identified in Section 3.6 of the Disclosure Schedule, none of the Bison
Subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) except for liabilities or obligations which
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.</p>
<font COLOR="#ff0000">
<p>3.7 <a NAME="_Toc503342972"></a><a NAME="_Toc503343073"></a><a NAME="_Toc503343318"></a></font><u><a NAME="_Toc521492894">Litigation</a></u>.</p>
<p>As of the date hereof, there are no Litigations pending, or to Parent&#39;s
knowledge, threatened against Parent or any of its Subsidiaries with respect to
the Business, the outcomes of which, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect.</p>
<font COLOR="#ff0000">
<p>3.8 <a NAME="_Toc503342973"></a><a NAME="_Toc503343074"></a><a NAME="_Toc503343319"></a></font><u><a NAME="_Toc521492895">Taxes</a></u>.</p>
<p>(a) <u>Tax Returns Filed and Taxes Paid</u>. Each of the Bison Subsidiaries
has filed or had filed on its behalf all material Tax Returns that it was
required to file or have filed on its behalf on or before the date of this
Agreement, and all such Tax Returns were correct and complete in all material
respects. Each of the Bison Subsidiaries has paid all material Taxes due or
owing. Each of Plascar Participacoes Industriais S.A. (&quot;Plascar&quot;) and
Textron Automotive Trim Brasil Ltda. (&quot;TATB&quot;) has made adequate
provision for the payment of all material Taxes not yet due.</p>
<p>(b) <u>Tax Positions</u>. No position has been asserted in writing by any Tax
Authority with respect to Taxes of any of the Bison Subsidiaries which, if
asserted by such Tax Authority in a Tax period ending after the Closing Date,
would be reasonably likely to have a Material Adverse Effect.</p>
<p align="center">24</p>
<p>(c) <u>No Affiliated Group Liability</u>. No liability has been asserted
against any of the Bison Subsidiaries with respect to Taxes of any affiliated
group within the meaning of Section 1504(a) of the Code of which any of the
Bison Subsidiaries has been a member and of which Parent was not the common
parent corporation.</p>
<p>(d) <u>No Tax Indemnities</u>. No liability has been asserted against any of
the Bison Subsidiaries with respect to Taxes of any other Person pursuant to any
Tax allocation or sharing agreement with any such Person, or any agreement to
indemnify any such Person with respect to Taxes.</p>
<font COLOR="#ff0000">
<p>3.9 </font><u><a NAME="_Toc521492896">Employee Benefit Plans and Agreements</a></u>.</p>
<p>(a) A &quot;Bison Plan&quot; shall mean any (i) &quot;welfare&quot; plan,
fund or program (within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended (&quot;ERISA&quot;)) and any comparable
foreign plan; (ii) &quot;pension&quot; plan, fund or program (within the meaning
of Section 3(2) of ERISA) and any comparable foreign plan; (iii) deferred
compensation plan or incentive compensation plan; (iv) employment, termination
or severance agreement with any officer of a Directly Purchased Subsidiary whose
principal office is located in the United States other than officers who are
employed by a Non&#45;Bison Subsidiary; (v) stock bonus, stock option, restricted
stock, stock appreciation right, stock purchase, bonus, severance or vacation
plans; and (vi) any other material employee benefit plans, funds or programs, in
each case, that are sponsored or maintained by or contributed to or required to
be contributed to by a Bison Subsidiary or by any trade or business, whether or
not incorporated (an &quot;ERISA Affiliate&quot;), that together with a Bison
Subsidiary would be deemed a &quot;single employer&quot; within the meaning of
Section 4001(b) of ERISA or to which a Bison Subsidiary or an ERISA Affiliate is
party, for the benefit of any employee or former employee of a Bison Subsidiary
(or of Textron Automotive Company Inc. if such person&#39;s entire salary was
directly charged to the Business), or with respect to which a Bison Subsidiary
could incur liability and any comparable foreign plan. Section 3.9 of the
Disclosure Schedule lists each material Bison Plan applicable to any Bison
Subsidiary having its jurisdiction of organization within the United States and
all foreign pension plans. A copy of each material Bison Plan (and, if
applicable, related amendments, trust agreements, current summary plan
descriptions, most recent Form 5500, most recent Internal Revenue Service
determination letter and most recent actuarial report) applicable solely to any
Bison Subsidiary having its jurisdiction of organization within the United
States has been made available to Holdings, and a copy of each material Bison
Plan from which assets will be transferred from Parent to C&A Products
pursuant to Section 5.7 will be made available to Holdings prior to Closing.</p>
<p>(b) No liability under Title IV or Section 302 of ERISA has been incurred by
any Bison Subsidiary or any ERISA Affiliate that has not been satisfied in full,
and, to Parent&#39;s knowledge, no condition exists that presents a material risk to
a Bison Subsidiary of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation (which premiums have been
paid when due).</p>
<p align="center">25</p>
<p>(c) Each Bison Plan (other than a Foreign Plan) has been operated and
administered in accordance with its terms and with the requirements (including
funding requirements) of applicable Law, including ERISA and the Code, except
where any failure to be so operated and administered would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect. All
material contributions required to be made under the terms of any Bison Plan
(other than a Foreign Plan) as of the Closing Date have been made or will be
timely made on or prior to the Closing Date. With respect to any Bison Plan
subject to Section&nbsp;412 of the Code or Section&nbsp;302 of ERISA, there has
been no application for or waiver of the minimum funding standards imposed by
Section&nbsp;412 of the Code, and no such plan has incurred an &quot;accumulated
funding deficiency&quot; within the meaning of Section&nbsp;412(a) of the Code
as of the end of the most recently completed plan year.</p>
<p>(d) Each Bison Plan intended to be &quot;qualified&quot; within the meaning
of Section 401(a) of the Code has received a determination letter from the
Internal Revenue Service stating that it is so qualified, and no event has
occurred since the date of such determination that would adversely affect such
determination or result in the imposition of any material liability, penalty or
tax under ERISA or the Code.</p>
<p>(e) The consummation of the Transactions will not (i) entitle any employee of
any Bison Subsidiary to severance pay payable by a Bison Subsidiary, (ii)
accelerate the time of payment or vesting or trigger any payment of compensation
or benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Bison Plans, (iii) result in any material
Default under, any of the Bison Plans or (iv) result in or satisfy a condition
to the payment of compensation that would, in combination with any other
payment, result in an &quot;excess parachute payment&quot; with respect to any
Employee within the meaning of Section 280G(b) of the Code.</p>
<p>(f) With respect to any Bison Plan subject to Title IV of ERISA, there is not
any amount of &quot;unfunded benefit liabilities&quot; (as defined in Section
4001(a)(18) of ERISA) under such plan, and the Parent is not aware of any facts
or circumstances that would materially change the funded status of any such
plan.</p>
<p>(g) No Bison Subsidiary or any ERISA Affiliate has liability (including any
contingent liability under Section 4204 of ERISA) with respect to any
multiemployer plan, within the meaning of Section 3(37) of ERISA.</p>
<p>(h) There are (i) to Parent&#39;s knowledge, no investigations pending by any
governmental entity (including the Pension Benefit Guaranty Corporation)
involving Bison Plans, and (ii) no pending or, to Parent&#39;s knowledge, threatened
claims (other than routine claims for benefits), suits or proceedings against
any Bison Plans, or against any fiduciary of any Bison Plan which would,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.</p>
<p align="center">26</p>
<p>(i) None of the Bison Subsidiaries or any employee of the foregoing, nor any
trustee or administrator with respect to the Bison Plans, has engaged in a
&quot;prohibited transaction&quot; (as such term is defined in Section 4975 of
the Code or Section 406 of ERISA) that could result in a tax or penalty under
Section 4975 of the Code or Section 502(i) of ERISA which would, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect.</p>
<p>(j) Since January 1, 2000, the Bison Subsidiaries, and any ERISA Affiliates
which maintain a &quot;group health plan&quot; within the meaning of Section
5000(b)(1) of the Code have complied in all material respects with the
&quot;COBRA&quot; notice and continuation requirements.</p>
<p>(k) Except as would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect, each Bison Plan subject to ERISA that
is an employee pension benefit plan and is not qualified under Section 401(a) of
the Code is exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded plan
that is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, pursuant to
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.</p>
<p>(l) Each Foreign Plan has been operated and administered in accordance with
its terms and with the requirements of applicable Law, except where any failure
to be so operated and administered would not, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect. All material
contributions required to be made under the terms of any Foreign Plan as of the
Closing Date have been made or will be timely made on or prior to the Closing
Date, and no Bison Subsidiary has incurred any unpaid obligation in connection
with the termination or withdrawal from any Foreign Plan. With respect to any
unfunded retirement plan which is a Foreign Plan for which GAAP or applicable
Law requires that reserves be recorded on a statement of financial position,
reserves have been recorded on the December 30, 2000 Statement of Net Assets to
be Sold in a manner which is consistent with GAAP and applicable Law. With
respect to funded retirement plans which are Foreign Plans, the plans have been
funded in accordance with applicable Law. Copies of the most recent actuarial
valuation reports or FAS 87 reports for Foreign Plans, to the extent that they
exist, have been made available to Holdings. There are no actions, suits or
claims (other than routine claims for benefits) pending or threatened with
respect to any Foreign Plan that would, individually, or in the aggregate, be
reasonably likely to result in a Material Adverse Effect. For purposes hereof,
the term &quot;Foreign Plan&quot; shall mean any Bison Plan maintained or
contributed to primarily for the benefit of any employee or former employee of a
Bison Subsidiary employed outside the United States.</p>
<p>(m) Notwithstanding any other provision of this Agreement, Section 3.4 and
this Section 3.9 set forth the sole representations and warranties in Article
III of this Agreement with respect to the compliance by Parent and any Bison
Subsidiary with ERISA, sections of the Code and any other Law applicable to the
operation or administration of any Bison Plan.</p>
<p align="center">27</p>
<p align="left"><font COLOR="#ff0000">3.10 <a NAME="_Toc503342975"></a><a NAME="_Toc503343076"></a><a NAME="_Toc503343321"></a></font><u><a NAME="_Toc521492897">Labor
Matters</a></u>.</p>
<p>(a) Since January 1, 1999, except as will not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect, (i) none of
the Bison Subsidiaries has or is now engaged in any unfair labor practice, nor
is any complaint against any Bison Subsidiary pending or, to Parent&#39;s knowledge,
threatened before the National Labor Relations Board; (ii) there is no labor
strike, dispute, slowdown or stoppage pending or, to Parent&#39;s knowledge,
threatened with respect to any employees of any Bison Subsidiary; and (iii) no
grievance is pending arising out of any collective bargaining agreement or in
accordance with any Bison Subsidiaries&#39; established procedures for handling
grievances.</p>
<p>(b) The Bison Subsidiaries are in compliance in all material respects with
their obligations pursuant to the Worker Adjustment and Retraining Notification
Act of 1988 (the &quot;WARN Act&quot;). Since January 1, 1999 through and
including the date hereof, none of the Bison Subsidiaries has effectuated (i) a
&quot;mass layoff&quot; (as defined in the WARN Act) in the United States
affecting any site of employment or facility or operating unit within any site
of employment or facility of any Bison Subsidiary or (ii) a &quot;plant
closing&quot; (as defined in the WARN Act) in the United States affecting any
Bison Subsidiary site of employment or facility. Since January 1, 1999 through
and including the date hereof, no Bison Subsidiary has been affected by any
transaction or engaged in lay&#45;offs or employment terminations sufficient in
number to trigger the application of any Law similar to the WARN Act.</p>
<p>(c) Section 3.10(c) of the Disclosure Schedule lists each collective
bargaining agreement involving a Bison Subsidiary facility located in the United
States or Canada.</p>
<p><a NAME="_Toc503342976"></a><a NAME="_Toc503343077"></a><a NAME="_Toc503343322"></p>
<font COLOR="#ff0000">
<p>3.11 </font></a><a NAME="_Toc521492898"><u>Environmental Laws and Regulations</u></a>.</p>
<p>To the knowledge of the individuals identified in Section 3.11 of the
Disclosure Schedule and except as would not, individually or in the aggregate,
be reasonably likely to have, and have not had, a Material Adverse Effect:</p>
<p>(a) As of the date hereof, each of Parent and its Subsidiaries with respect
to the Business is in compliance with all applicable Environmental Laws,
including possessing all Permits required for the operation of the Business
under applicable Environmental Laws. Notwithstanding any other provision of this
Agreement, this Section 3.11(a) sets forth the sole representation and warranty
in Article III of this Agreement with respect to the compliance by Parent and
its Subsidiaries with any Environmental Law applicable to the Business.</p>
<p>(b) As of the date hereof, there is no pending or threatened Litigation
against Parent or any of its Subsidiaries with respect to the Business, and no
events have occurred or matters exist that might reasonably be expected to
result in Litigation, under or pursuant to any Environmental Law; <u>provided</u>,
<u>however</u>, that the </p>
<p align="center">28</p>
<p>representation made in this Section 3.11(b) with respect to pending
Litigation and Orders are made without reference to knowledge. As of the date
hereof, neither Parent nor any of its Subsidiaries is subject to any Order with
respect to the Business in connection with any Environmental Law. This Section
3.11(b) sets forth the sole representation and warranty in Article III of this
Agreement with respect to Litigation under or pursuant to any Environmental Law.</p>
<p><a NAME="_Toc503342977"></a><a NAME="_Toc503343078"></a><a NAME="_Toc503343323"></p>
<font COLOR="#ff0000">
<p>3.12 </font></a><a NAME="_Toc521492899"><u>Compliance with Laws</u></a>.</p>
<p>Each of Parent and its Subsidiaries is in compliance with all applicable
Laws, Orders and Permits with respect to the Business, except for instances of
noncompliance which, individually or in the aggregate, would not be reasonably
likely to have, and have not had, a Material Adverse Effect.</p>
<font COLOR="#ff0000">
<p>3.13 </font><u><a NAME="_Toc521492900">Properties</a></u>.</p>
<p>Except as would not be reasonably likely to have a Material Adverse Effect,
Parent or its Subsidiaries, collectively, have good and marketable title, free
and clear of all Liens, to all of the real property and personal property used
in the conduct of the Business other than (i) Intellectual Property (which is
covered in Section 3.15), (ii) assets not used within the Business and (iii)
assets which are leased or licensed, with respect to which the Parent or its
Subsidiaries, collectively, have valid and enforceable Contracts under which
there exists no Default by Parent or its Subsidiaries.</p>
<p><a NAME="_Toc503342978"></a><a NAME="_Toc503343079"></a><a NAME="_Toc503343324"></p>
<font COLOR="#ff0000">
<p>3.14 </font></a><a NAME="_Toc521492901"><u>Material Contracts</u></a>.</p>
<p>(a) Each Contract applicable to the Business is (i) in full force and effect
and is a valid and binding obligation of Parent or its Subsidiaries and (ii)
enforceable in accordance with its terms (except that the enforcement thereof
may be limited by (A) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors&#39; rights generally and (B) general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law), except, in each case, as would not be reasonably likely to have a
Material Adverse Effect. The execution and delivery by Parent of the Transaction
Agreements and the consummation by Parent of the transactions contemplated
thereby will not, and no condition exists or event has occurred which would,
constitute a Default by Parent or its Subsidiaries of any Contract applicable to
the Business, except for such Defaults as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.</p>
<p>(b) Section 3.14(b) of the Disclosure Schedule lists all Material Contracts
involving the licensing of any Intellectual Property, including any Intellectual
Property which is the subject of any of the License Agreements attached hereto
as Exhibits 3A, 3B and 3C, from any third party and any Material Contract
involving the licensing of any such Intellectual Property by Parent or its
Subsidiaries to any third party, other than Contracts entered into in the
ordinary course of business consistent with past practice. A &quot;Material
Contract&quot; shall mean any contract which is material to the Business.</p>
<p align="center">29</p>
<p>(c) Neither Parent nor any of its Subsidiaries is a party to or bound by any
non&#45;competition agreement or similar agreement or obligation which purports to
limit in any material respect the manner in which, or the localities in which,
all or any material portion of the Business is conducted.</p>
<p>(d) Section 3.14(d) of the Disclosure Schedule identifies each Contract to
which a Bison Subsidiary is a party relating to indebtedness for borrowed money
or capital leases, in each case, involving an obligation which exceeds $250,000.
Copies of any written Contract relating to said indebtedness will be provided to
Holdings prior to Closing.</p>
<font COLOR="#ff0000">
<p>3.15 <a NAME="_Toc503342979"></a><a NAME="_Toc503343080"></a><a NAME="_Toc503343325"></a></font><u><a NAME="_Toc521492902">Intellectual
Property</a></u>.</p>
<p>(a) Except as would not be reasonably likely to have a Material Adverse
Effect:</p>
<blockquote>
  <p>(i) Parent and its Subsidiaries, collectively, own, or are licensed or
  otherwise possess legally enforceable rights to use the Intellectual Property.</p>
  <p>(ii) Neither Parent nor any of its Subsidiaries is, nor will, as a result
  of the execution and delivery of the Transaction Agreements or the performance
  by Parent of any of its obligations thereunder, be in breach of any license,
  sublicense or other agreement relating to the Intellectual Property.</p>
  <p>(iii) (A) Each patent, trademark, service mark and copyright owned by
  either Parent or its Subsidiaries which is used in the Business as currently
  conducted is subsisting and, to Parent&#39;s knowledge, valid and enforceable; (B)
  neither Parent nor its Subsidiaries, as of the date hereof, is a party to any
  currently pending Litigation which involves a claim of infringement of any
  patent, trademark, service mark or copyright or violation of any trade secret
  or other proprietary right of any third party, or has received written notice
  of any such threatened claim; (C) to Parent&#39;s knowledge, the manufacturing,
  marketing, licensing or sale of any products of the Business, taken as a
  whole, in the manner currently manufactured, marketed, sold or licensed by the
  Business, does not infringe any patent, trademark, service mark, copyright,
  trade secret or other proprietary right of any third party.</p>
</blockquote>
<p>(b) After the Closing Date, the Bison Subsidiaries will have the right to use
all Intellectual Property material to the Business (i) which is used in the
Business as of the date hereof or (ii) which the Bison Subsidiaries have the
right to use in the Business as of the date hereof, in each case to the extent
that such Intellectual Property is held by the Bison Subsidiaries from Parent or
the Non&#45;Bison Subsidiaries and in each case solely to the extent of the Bison
Subsidiaries&#39; rights of use in such Intellectual Property as of the date hereof;
<u>provided</u>, <u>however</u>, that the foregoing representation and warranty
shall not apply with respect to the Retained IP (at that term is defined in the
Retained IP Agreement), the rights to which are exclusively as set forth in the
Retained IP Agreement.</p>
<p align="center">30</p>
<font COLOR="#ff0000">
<p>3.16 </font><u><a NAME="_Toc521492903">Product Warranties; Recalls</a></u>.</p>
<p>(a) Since January 1, 1999 through and including the date hereof, there have
been no warranty claims with respect to products sold by the Business, except
for such warranty claims which would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect, nor, as of the date hereof,
are there any pending warranty claims with respect to products sold by the
Business, except for such warranty claims which would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect.</p>
<p>(b) Since January 1, 1999 through and including the date hereof, there have
been no product recalls, retrofits, field campaigns or service campaigns by a
Governmental Authority with respect to the products manufactured, distributed or
sold by the Business; and no such recalls, retrofits, field campaigns or service
campaigns are pending or, to Parent&#39;s knowledge, threatened by any Governmental
Authority.</p>
<font COLOR="#ff0000">
<p>3.17 <a NAME="_Toc503342980"></a><a NAME="_Toc503343081"></a><a NAME="_Toc503343326"></a></font><u><a NAME="_Toc521492904">Brokers
and Finders</a></u>.</p>
<p>Parent has not employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder&#39;s,
financial advisory or similar fee or commission from any Bison Subsidiary in
connection with this Agreement or the transactions contemplated hereby.</p>
<font COLOR="#ff0000">
<p>3.18 </font><u><a NAME="_Toc521492905">Customers and Suppliers</a></u>.</p>
<p>Since January 1, 2001 through and including the date hereof, none of the top
five customers of or top ten suppliers to the Business, measured by dollar
volume for the twelve months ended as of December 31, 2000, has (i) notified any
senior executive of Textron Automotive Company Inc. that it intends to
discontinue its relationship with the Bison Subsidiaries or the Business or (ii)
materially changed the terms on which it is prepared to purchase from, trade
with or supply the Bison Subsidiaries or the Business.</p>
<font COLOR="#ff0000">
<p>3.19 </font><u><a NAME="_Toc521492906">Additional Representations and
Warranties by Parent</a></u>.</p>
<p>(a) Parent hereby acknowledges that Holdings intends to offer and issue the
Holdings Common Stock and C&A Products intends to offer and issue the
Preferred Stock (collectively, the &quot;Equity Consideration&quot;)
representing a portion of the purchase price relating to parts of the
Transactions to Parent in a transaction which is exempt from registration under
the Securities Act and applicable state securities laws.</p>
<p>(b) Parent hereby represents and warrants that: (i) it is an &quot;accredited
investor&quot; within the meaning of Regulation D under the Securities Act; (ii)
it shall acquire the Equity Consideration for its own account and not with a
view to or for sale in connection with any &quot;sale&quot;, &quot;offer for
sale&quot;, &quot;offer to sell&quot;, &quot;offer&quot; or
&quot;distribution&quot; thereof within the meaning of the Securities </p>
<p align="center">31</p>
<p>Act; (iii) it has sufficient knowledge and experience in financial, tax, and
business matters to enable it to evaluate the merits and risks of investment in
the Equity Consideration; and (iv) it has been provided with access to, and the
opportunity to ask questions of, management of Holdings and C&A Products,
and to obtain additional information concerning Holdings and C&A Products.</p>
<p>(c) Parent hereby acknowledges that: (i) the Equity Consideration is not,
and, subject to the Registration Rights Agreements attached as Exhibits 5 and 6
hereof, will not be, registered under the Securities Act or any state securities
laws and cannot be resold without registration thereunder or exemption therefrom;
and (ii) the certificates representing the unregistered Equity Consideration to
be delivered at the Closing shall bear substantially the following legend:</p>
<blockquote>
  <blockquote>
    <p>&quot;The shares represented by this certificate have not been registered
    under the Securities Act of 1933, as amended, and may not be sold,
    transferred or otherwise disposed of in the absence of an effective
    registration statement under such Act or an opinion of counsel satisfactory
    to the company to the effect that such registration is not required.&quot;</p>
  </blockquote>
</blockquote>
<font COLOR="#ff0000">
<p>3.20 </font><u><a NAME="_Toc521492907">Indebtedness</a></u>.</p>
<p>Section 3.20 of the Disclosure Schedule lists total Indebtedness of the Bison
Subsidiaries (after giving effect to the Restructuring and excluding
intercompany accounts that will be settled prior to Closing), separated into the
categories &quot;a&quot; through &quot;g&quot; contained in the definition of
Indebtedness, as of June 29, 2001.</p>
<font COLOR="#ff0000">
<p>3.21 </font><a NAME="_Toc521492908"><u>R&D People.</u></a></p>
<p>To the best knowledge of the persons identified in Section 3.21 of the
Disclosure Schedule, without inquiry, no material amount of people whose
activities as of March 31, 2001 related primarily to research and development
and product development related to the Business have been, as of the date of
this Agreement, transferred to a Non&#45;Bison Subsidiary.</p>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE IV<a NAME="_Toc503343082"></a><a NAME="_Toc503343327"></a></font><br>
<br>
<a NAME="_Toc503342981"></a><a NAME="_Toc503343931"></a><a NAME="_Toc503667914"></a><a NAME="_Toc503684845"></a><a NAME="_Toc504459536"></a><a NAME="_Toc505070799"></a><a NAME="_Toc505137395"></a><a NAME="_Toc505767641"></a><a NAME="_Toc506346212"></a><a NAME="_Toc506628530"></a><a NAME="_Toc506775340"></a><a NAME="_Toc507592206"></a><a NAME="_Toc508437279"></a><a NAME="_Toc508709227"></a><a NAME="_Toc514732013"></a><a NAME="_Toc514732751"></a><a NAME="_Toc516456583"></a><a NAME="_Toc516460943"></a><a NAME="_Toc516463359"></a><a NAME="_Toc516560544"></a><a NAME="_Toc518363241"></a><a NAME="_Toc518466822"></a><a NAME="_Toc518733025"></a><a NAME="_Toc518733469"></a><a NAME="_Toc519520839"></a><a NAME="_Toc519701013"></a><a NAME="_Toc520104860"></a><a NAME="_Toc520108714"></a><a NAME="_Toc520261522"></a><a NAME="_Toc520609451"></a><a NAME="_Toc521132948"></a><a NAME="_Toc521304970"></a><a NAME="_Toc521330747"></a><a NAME="_Toc521426459"></a><a NAME="_Toc521468858"></a><a NAME="_Toc521492909">REPRESENTATIONS
AND WARRANTIES OF HOLDINGS</a> AND C&A PRODUCTS</p>
<p ALIGN="CENTER">&nbsp;</p>
<p>Holdings and C&A Products jointly and severally represent and warrant to
Parent, subject to the exceptions set forth in the Holdings Disclosure Schedule
(which exceptions shall specifically identify a Section to which such exception
relates, it being understood and agreed that each such exception shall be deemed
to be disclosed both under such Section and any other Section to which such
disclosure on its face relates), that:</p>
<p>4.1 <a NAME="_Toc503342982"></a><a NAME="_Toc503343083"></a><a NAME="_Toc503343328"></a><a NAME="_Toc521492910"><u>Corporate
Organization, Qualification, Power and Authority</u>.</a></p>
<p>(a) Holdings is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Holdings is qualified and in
good standing as a foreign corporation in each jurisdiction where the properties
owned, </p>
<p align="center">32</p>
<p>leased or operated, or the business conducted, by it requires such
qualification, except where any failure to be so qualified or be in good
standing would not, individually or in the aggregate, be reasonably likely to
have a Holdings Material Adverse Effect. Holdings has all requisite corporate
power and corporate authority and all necessary Permits to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where any failure to have such power and authority or Permits
would not, individually or in the aggregate, be reasonably likely to have a
Holdings Material Adverse Effect. Holdings has or will have made available to
Parent prior to the Closing complete and correct copies of its certificate of
incorporation and by&#45;laws as in effect as of the date hereof.</p>
<p>(b) C&A Products is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware. C&A Products is
qualified and in good standing as a foreign corporation in each jurisdiction
where the properties owned, leased or operated, or the business conducted, by it
requires such qualification, except where any failure to be so qualified or be
in good standing would not, individually or in the aggregate, be reasonably
likely to have a Holdings Material Adverse Effect. C&A Products has all
requisite corporate power and corporate authority and all necessary Permits to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except where any failure to have such power and authority or
Permits would not, individually or in the aggregate, be reasonably likely to
have a Holdings Material Adverse Effect. C&A Products has or will have made
available to Parent prior to the Closing complete and correct copies of its
certificate of incorporation and by&#45;laws as in effect as of the date hereof.</p>
<p>(c) Holdings has the requisite corporate power and corporate authority to
execute and deliver the Transaction Agreements (to the extent it is party
thereto) and to consummate the transactions contemplated thereby. Such
Transaction Agreements and the consummation by Holdings of the transactions
contemplated thereby have been duly and validly authorized by the Board of
Directors of Holdings, and no other corporate proceedings on the part of
Holdings are necessary to authorize such Transaction Agreements or to consummate
the transactions contemplated thereby, except for such proceedings relating to
approval of the definitive Financing Agreements, which such proceedings will be
completed prior to Closing. This Agreement has been duly and validly executed
and delivered by Holdings and, assuming this Agreement constitutes the valid and
binding agreement of Parent, constitutes the valid and binding agreement of
Holdings, enforceable against Holdings in accordance with its terms, except as
such enforcement may be limited by (a) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to or affecting creditors&#39; rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law). When executed and delivered to Parent at
the Closing, the Transaction Agreements (other than this Agreement) (to the
extent it is party thereto) will be duly and validly executed and delivered by
Holdings and, assuming such agreements constitute the valid and binding
agreements of the other parties thereto, constitute the valid and binding
agreements of Holdings, enforceable against it in accordance with their terms,
except that the </p>
<p align="center">33</p>
<p>enforcement thereof may be limited by (a) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to or affecting creditors&#39; rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).</p>
<p>(d) C&A Products has the requisite corporate power and corporate
authority to execute and deliver the Transaction Agreements (to the extent it is
a party thereto) and to consummate the transactions contemplated thereby. Such
Transaction Agreements and the consummation by C&A Products of the
transactions contemplated thereby have been duly and validly authorized by the
Board of Directors of C&A Products, and no other corporate proceedings on
the part of C&A Products are necessary to authorize such Transaction
Agreements or to consummate the transactions contemplated thereby, except for
such proceedings relating to approval of the definitive Financing Agreements,
which such proceedings will be completed prior to Closing. This Agreement has
been duly and validly executed and delivered by C&A Products and, assuming
this Agreement constitutes the valid and binding agreement of Parent,
constitutes the valid and binding agreement of C&A Products, enforceable
against C&A Products in accordance with its terms, except such enforcement
may be limited by (a) applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to or affecting creditors&#39; rights generally and (b) general principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). When executed and delivered to Parent at the Closing, the
Transaction Agreements (other than this Agreement) to the extent it is a party
thereto will be duly and validly executed and delivered by C&A Products and,
assuming such agreements will constitute the valid and binding agreements of the
other parties thereto, constitute the valid and binding agreements of C&A
Products, enforceable against it in accordance with their terms, except that the
enforcement thereof may be limited by (a) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to or affecting creditors&#39; rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).</p>
<font COLOR="#ff0000">
<p>4.2 </font><u><a NAME="_Toc521492911">Capitalization of Holdings and C&A
Products</a></u>.</p>
<p>(a) The authorized capital stock of Holdings consists of (i) 300,000,000
shares of Holdings Common Stock of which, as of July 31, 2001, 105,122,130
shares were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights and (ii) 16,000,000 shares of preferred stock, par
value $.01 per share, none of which are issued and outstanding. Except as
reflected in the Holdings SEC Reports (including for pending acquisitions) and
for employee, officer and director compensation arrangements in the ordinary
course of business, there are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments relating to the capital
stock of, or other equity interest in, Holdings obligating Holdings to issue,
sell, transfer, vote or otherwise dispose of or sell any shares of capital stock
of, or other equity interest in, Holdings or its Subsidiaries or obligating
Holdings or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, convertible security or </p>
<p align="center">34</p>
<p>other right, agreement, arrangement or commitment that would, in any such
case, materially affect the ability of C&A Products to perform its
obligations and agreements relating to the Preferred Stock. As of the date
hereof, except as reflected in the Holdings SEC Reports (including for pending
acquisitions) and for employee, officer and director compensation arrangements
in the ordinary course of business, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments relating to
the capital stock of, or other equity interest in, Holdings obligating Holdings
to issue, sell, transfer, vote or otherwise dispose of or sell any shares of
capital stock of, or other equity interest in, Holdings or its Subsidiaries or
obligating Holdings or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, convertible security or other right, agreement,
arrangement or commitment. There are no voting trusts, proxies or other voting
agreements or understandings to which Holdings is a party or by which it is
bound with respect to the shares of capital stock of Holdings.</p>
<p>(b) The authorized capital stock of C&A Products consists of (i) 2000<b> </b>shares
of common stock, without par value, of which 1,000 shares are issued and
outstanding as of July 31, 2001, all of which are duly authorized, validly
issued, fully paid, nonassessable and were not issued in violation of any
preemptive or similar rights and are owned by Holdings, and (ii) 1000 shares of
preferred stock, without par value, none of which are issued. Prior to the
Closing, Holdings and C&A Products will take such actions necessary to cause
there to be sufficient capital stock authorized to meet the requirements of the
Transaction Agreements and immediately prior to the Closing, 130,000 (plus such
number of shares as is necessary to meet C&A Products&#39; obligations to issue
additional shares of Series A1 Redeemable Preferred Stock) shares will have been
designated as Series A1 Redeemable Preferred Stock, none of which are issued and
outstanding, 130,000 (plus such number of shares as is necessary to meet C&A
Products&#39; obligations to issue additional shares of Series A2 Redeemable
Preferred Stock) shares will have been designated as Series A2 Redeemable
Preferred Stock, none of which are issued and outstanding, 95,000 (plus such
number of shares as is necessary to meet C&A Products&#39; obligations to issue
additional shares of Series B1 Redeemable Preferred Stock) shares will have been
designated as Series B1 Redeemable Preferred Stock, none of which are issued and
outstanding, 95,000 (plus such number of shares as is necessary to meet C&A
Products&#39; obligations to issue additional shares of Series B2 Redeemable
Preferred Stock) shares will have been designated as Series B2 Redeemable
Preferred Stock, none of which are issued and outstanding, 20,000 (plus such
number of shares as is necessary to meet C&A Products&#39; obligations to issue
additional shares of Series C1 Redeemable Preferred Stock) shares will have been
designated as Series C1 Redeemable Preferred Stock, none of which are issued and
outstanding and 20,000 (plus such number of shares as is necessary to meet
C&A Products&#39; obligations to issue additional shares of Series C2 Redeemable
Preferred Stock) shares of Series C2 Redeemable Preferred Stock, none of which
are issued and outstanding. On the Closing Date, the relative rights,
preferences, and limitations of the Preferred Stock will be substantially as set
forth in the Certificate of Designation of C&A Products attached hereto as
Exhibit 1. There are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the capital stock
of, or other equity interest in, C&A Products obligating C&A Products to
issue, sell, transfer, vote or otherwise dispose of or sell any shares of
capital stock of, or other equity interest in, C&A Products or its
Subsidiaries or obligating C&A </p>
<p align="center">35</p>
<p>Products or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, convertible security or other right, agreement, arrangement or
commitment that would in any such case materially affect the ability of C&A
Products to perform its obligations and agreements relating to the Preferred
Stock. As of the date hereof, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments relating to
the capital stock of, or other equity interest in, C&A Products obligating
C&A Products to issue, sell, transfer, vote or otherwise dispose of or sell
any shares of capital stock of, or other equity interest in, C&A Products or
its Subsidiaries or obligating C&A Products or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, convertible security or
other right, agreement, arrangement or commitment. There are no voting trusts,
proxies or other voting agreements or understandings to which C&A Products
is a party or by which it is bound with respect to the shares of capital stock
of any of its Subsidiaries.</p>
<font COLOR="#ff0000">
<p>4.3 </font><u><a NAME="_Toc521492912">Stock of Subsidiaries</a></u>.</p>
<p>Schedule E to this Agreement identifies each entity that is a Subsidiary of
Holdings as of the date hereof. All of the shares of capital stock of the
Subsidiaries listed on Schedule E are owned as of the date hereof by Holdings or
one of its Subsidiaries, free and clear of all Liens (without regard to
subsections (i) through (iv) of the provision in the definition of
&quot;Liens&quot; and other than Liens to secure Indebtedness of Holdings or one
of its Subsidiaries), and have been duly authorized, validly issued and are
fully paid and nonassessable and were not issued in violation of any preemptive
or similar rights, except for any such Liens or where any failure to be duly
authorized, validly issued and fully paid or nonassessable would not,
individually or in the aggregate, be reasonably likely to have a Holdings
Material Adverse Effect.</p>
<font COLOR="#ff0000">
<p>4.4 </font><u><a NAME="_Toc521492913">Valid Issuance of Stock</a></u>.</p>
<p>(a) The shares of Holdings Common Stock, when issued, sold and delivered
pursuant to this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable, will not be subject to any preemptive rights or Liens and,
assuming the accuracy of Parent&#39;s representations in Section 3.19, will be
issued in compliance with applicable federal and state securities laws.</p>
<p>(b) The shares of Series A Preferred Stock and Series B Preferred Stock, when
issued, sold and delivered pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable, will not be subject to any
preemptive rights or Liens and, assuming the accuracy of Parent&#39;s
representations in Section 3.19, will be issued in compliance with applicable
federal and state securities laws.</p>
<font COLOR="#ff0000">
<p>4.5 <a NAME="_Toc503342984"></a><a NAME="_Toc503343085"></a><a NAME="_Toc503343330"></a></font><u><a NAME="_Toc521492914">Consents
and Approvals; No Violations</a></u>.</p>
<p>The issuance of the debt and equity securities contemplated by the Commitment
Letter, the execution, delivery or performance of the Transaction Agreements by
Holdings and C&A Products (to the extent each is a party thereto), and the
consummation by Holdings and C&A Products of the transactions contemplated
thereby do not or will not (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by&#45;laws of Holdings and C&A
</p>
<p align="center">36</p>
<p>Products; (ii) conflict with, result in or constitute a Default under, any of
the terms, conditions or provisions of any Contract to which any of C&A
Products or Holdings is a party or by which any of them or any of their
respective properties or assets may be bound; (iii) conflict with, result in or
constitute a Default under, any of the terms, conditions or provisions of any
Permit applicable to Holdings or C&A Products; or (iv) except as set forth
in Section 4.5 of the Holdings Disclosure Schedule and subject to giving the
notices, the occurrence of the required consultations, compliance with
applicable environmental transfer statutes and obtaining the Requisite
Regulatory Approvals referred to in clauses (i) through (iv) in Section 3.3(a),
conflict with or violate any Order or Law applicable to C&A Products or
Holdings or any of their respective properties or assets, except, in the case of
clauses (ii), (iii) or (iv) of this Section 4.5 for conflicts or Defaults which
would not, individually or in the aggregate, be reasonably likely to have a
Holdings Material Adverse Effect or a material adverse effect on Holdings&#39; and
C&A Products&#39; ability to consummate the Transactions. The terms of the
Preferred Stock as set forth in the Certificate of Designation attached hereto
as Exhibit 1 do not breach, conflict with, violate or otherwise constitute a
Default under any Contract to which Holdings or C&A Products or any of their
Subsidiaries is a party, including any Contract relating to Indebtedness or any
Contract relating to any equity security of Holdings and C&A Products.</p>
<font COLOR="#ff0000">
<p>4.6 </font><u><a NAME="_Toc521492915">SEC Filings; Financial Statements</a></u>.</p>
<p>(a) Holdings has timely filed all forms, reports, schedules, statements and
other documents required to be filed by Holdings with the Securities and
Exchange Commission (the &quot;SEC&quot;) since December 31, 1998 (collectively,
the &quot;Holdings SEC Reports&quot;) and such Holdings SEC Reports are publicly
available. The Holdings SEC Reports, at the time filed, did not contain as of
their respective dates (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such additional filing), or if filed
after the date hereof, will not contain, any untrue statement of a material fact
or omit to state a material fact required to be stated in such Holdings SEC
Reports or necessary in order to make the statements in such Holdings SEC
Reports, in light of the circumstances under which they were made, not
misleading.</p>
<p>(b) Each of the consolidated financial statements, including any related
notes thereto, contained in the Holdings SEC Reports, complied, as of its
respective date, in all material respects with all applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, was prepared in accordance with GAAP applied on a consistent basis with
prior periods (except as otherwise noted therein) and fairly present the
consolidated financial position of Holdings and its Subsidiaries as at the dates
indicated therein and the consolidated results of its operations and cash flows
for the periods indicated therein, subject to, in the case of unaudited interim
financial statements, normal and recurring year&#45;end adjustments which were not
likely to be material in amount.</p>
<font COLOR="#ff0000">
<p>4.7 <a NAME="_Toc516373699"></a></font><u><a NAME="_Toc521492916">Absence of
Certain Changes or Events</a></u>.</p>
<p>Except as a consequence of, or as expressly contemplated by, this Agreement
and except as disclosed in the Holdings SEC Reports filed and publicly available
prior to the date of this Agreement, since </p>
<p align="center">37</p>
<p>December 31, 2000, Holdings and its Subsidiaries have not experienced any
event, development or change which would, individually or in the aggregate, be
reasonably likely to have a Holdings Material Adverse Effect.</p>
<font COLOR="#ff0000">
<p>4.8 <a NAME="_Toc516373700"></a></font><u><a NAME="_Toc521492917">No
Undisclosed Liabilities</a></u>.</p>
<p>Except as disclosed in the Holdings SEC Reports filed and publicly available
prior to the date of this Agreement and except for liabilities and obligations
incurred in the ordinary course of business, since December 31, 2000, (a)
neither Holdings nor any of its Subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) required by
GAAP to be recognized or disclosed in their financial statements, or in the
notes thereto, except for liabilities or obligations which would not,
individually or in the aggregate, be reasonably likely to have a Holdings
Material Adverse Effect and (b) to the knowledge of the persons identified in
Section 4.8 of the Holdings Disclosure Schedule, Holdings does not have any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) except for liabilities or obligations which would not, individually
or in the aggregate, be reasonably likely to have a Holdings Material Adverse
Effect.</p>
<font COLOR="#ff0000">
<p>4.9 <a NAME="_Toc516373701"></a></font><u><a NAME="_Toc521492918">Litigation</a></u>.</p>
<p>Except as disclosed in the Holdings SEC Reports filed and publicly available
prior to the date hereof, there are no Litigations pending, or to Holdings&#39;
knowledge, threatened against Holdings or any of its Subsidiaries, the outcomes
of which, individually or in the aggregate, are reasonably likely to have a
Holdings Material Adverse Effect.</p>
<font COLOR="#ff0000">
<p>4.10 <a NAME="_Toc503342985"></a><a NAME="_Toc503343086"></a><a NAME="_Toc503343331"></a></font><u><a NAME="_Toc521492919">Financing</a></u>.</p>
<p>(a) Holdings and C&A Products have received and furnished copies to
Parent of (i) a commitment letter to provide debt and receivables financing to
C&A Products and its Subsidiaries (including the Summaries of Terms and
Conditions annexed thereto, the &quot;Debt Commitment Letter&quot;) with The
Chase Manhattan Bank, J.P. Morgan Securities Inc., Credit Suisse First Boston,
Deutsche Banc Alex. Brown Inc., Bankers Trust Company, Merrill Lynch Capital
Corporation and Credit Suisse First Boston, Cayman Islands Branch (collectively
the &quot;Bank&quot;) dated as of August 7, 2001, and (ii) equity commitment
letters (the &quot;Equity Commitment Letters&quot; and, together with the Debt
Commitment Letter, the &quot;Commitment Letters&quot;) to provide equity
financing to Holdings from the persons named therein in the amount contemplated
by the Debt Commitment Letter (the &quot;Equity Sources&quot;). The funds which
the Bank and the Equity Sources have agreed to provide, subject to the terms and
conditions of the Commitment Letters, will be sufficient, when taken together
with other funds available to Holdings and C&A Products, to consummate the
Transactions and the other transactions contemplated by the Commitment Letters
and to pay and all related fees and expenses of Holdings and C&A Products
relating to the Transactions and the other transactions contemplated by the
Commitment Letters (collectively, the &quot;Required Amount&quot;).</p>
<p align="center">38</p>
<p>(b) As of the date hereof (i) the Commitment Letters have not been withdrawn
and are in full force and effect and (ii) neither Holdings nor C&A Products
has any reason to believe that any of the conditions set forth in the Commitment
Letters will not be satisfied at or prior to the Closing Date.</p>
<font COLOR="#ff0000">
<p>4.11 </font><u><a NAME="_Toc521492920">Certain Agreements</a></u>.</p>
<p>Section 4.11 of the Holdings Disclosure Schedule lists each Contract to which
Holdings or C&A Products is a party relating directly or indirectly to
indebtedness for borrowed money in excess of ten million dollars ($10,000,000)
or the registration, voting or transfer of, or preemptive rights with respect
to, any equity security of Holdings or C&A Products.</p>
<font COLOR="#ff0000">
<p>4.12 <a NAME="_Toc503342986"></a><a NAME="_Toc503343087"></a><a NAME="_Toc503343332"></a></font><u><a NAME="_Toc521492921">Brokers
and Finders</a></u>.</p>
<p>No investment banker, broker, finder, or intermediary or other Person is or
will be entitled to any investment banking, brokerage, finder&#39;s, financial
advisory or similar fee or commission from Parent or any Non&#45;Bison Subsidiary in
connection with this Agreement or the transactions contemplated hereby as a
result of any arrangement made by Holdings.</p>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE V<a NAME="_Toc503343089"></a><a NAME="_Toc503343334"></a></font><br>
<br>
<a NAME="_Toc503342988"></a><a NAME="_Toc503343938"></a><a NAME="_Toc503667920"></a><a NAME="_Toc503684851"></a><a NAME="_Toc504459542"></a><a NAME="_Toc505070805"></a><a NAME="_Toc505137401"></a><a NAME="_Toc505767647"></a><a NAME="_Toc506346218"></a><a NAME="_Toc506628536"></a><a NAME="_Toc506775346"></a><a NAME="_Toc507592212"></a><a NAME="_Toc508437285"></a><a NAME="_Toc508709233"></a><a NAME="_Toc514732019"></a><a NAME="_Toc514732757"></a><a NAME="_Toc516456602"></a><a NAME="_Toc516460962"></a><a NAME="_Toc516463378"></a><a NAME="_Toc516560563"></a><a NAME="_Toc518363256"></a><a NAME="_Toc518466837"></a><a NAME="_Toc518733040"></a><a NAME="_Toc518733390"></a><a NAME="_Toc518733484"></a><a NAME="_Toc519520853"></a><a NAME="_Toc519701027"></a><a NAME="_Toc520104873"></a><a NAME="_Toc520108727"></a><a NAME="_Toc520261535"></a><a NAME="_Toc520609464"></a><a NAME="_Toc521132961"></a><a NAME="_Toc521304983"></a><a NAME="_Toc521330760"></a><a NAME="_Toc521426472"></a><a NAME="_Toc521468871"></a><a NAME="_Toc521492922">COVENANTS
RELATING TO CONDUCT OF<br>
BUSINESS AND OTHER AGREEMENTS</a></p>
<p><a NAME="_Toc503342989"></a><a NAME="_Toc503343090"></a><a NAME="_Toc503343335"></p>
<font COLOR="#ff0000">
<p>5.1 </font></a><a NAME="_Toc521492923"><u>Conduct of the Business</u></a>.</p>
<p>Except as otherwise set forth in Section 5.1 of the Disclosure Schedule,
during the period from the date of this Agreement to the Closing Date, unless
Holdings shall otherwise consent in writing (which shall include electronic
mail), which consent shall not be unreasonably withheld, conditioned or delayed,
and except as otherwise expressly contemplated by this Agreement, the Transition
Agreement or the Assignment and Assumption Agreement, or as is reasonably
necessary to effect the Restructuring, Parent will conduct, and will cause its
Subsidiaries to conduct, the Business in the ordinary course of business and
shall use their commercially reasonable efforts to keep available the services
of their current officers and employees, maintain their Permits and Contracts
and preserve their relationships with customers, suppliers, creditors, agents
and others having business dealings with the Business. Without limiting the
generality of the foregoing, and except as consented to in writing by Holdings,
which consent shall not be unreasonably withheld, conditioned or delayed, or as
otherwise contemplated by this Agreement, the Transition Agreement or the
Assignment or Assumption Agreement or as is reasonably necessary to effect the
Restructuring, Parent agrees as to itself and its Subsidiaries (unless otherwise
stated) that:</p>
<p>(a) <u>Capital Stock and Other Securities</u>. The Bison Subsidiaries shall
not issue, sell, grant, dispose of, pledge or otherwise encumber or transfer, or
cause, authorize or propose the issuance, sale, grant, disposition or pledge or
other encumbrance or transfer of (i) any additional shares of capital stock of
any class of any Bison Subsidiary, or any securities or rights </p>
<p align="center">39</p>
<p>convertible into, exchangeable for, or evidencing the right to subscribe for
any such shares of capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
such shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any such shares of
capital stock or (ii) any other securities in respect of, in lieu of, or in
substitution for, shares of any Bison Subsidiary outstanding on the date hereof.
No Bison Subsidiary shall split, combine, subdivide or reclassify any shares of
its capital stock.</p>
<p>(b) <u>Reorganization</u>. Neither Parent nor any of the Bison Subsidiaries
shall adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of any
Bison Subsidiary.</p>
<p>(c) <u>Capital Expenditures</u>. Except for capital expenditures in 2001 not
exceeding fifty&#45;five million dollars ($55,000,000) in support of sales to Fiat
by Textron Automotive Company Italia s.r.l., the Bison Subsidiaries will not
make or commit to make any capital expenditures relating to a single project in
excess of fifteen million dollars ($15,000,000) or in the aggregate, in 2001, in
excess of one hundred fifteen million dollars ($115,000,000). Except for capital
expenditures in 2001 not exceeding fifty&#45;five million dollars ($55,000,000) in
support of sale to Fiat by Textron Automotive Company Italia s.r.l., Parent or a
Subsidiary of Parent shall consult with C&A Products with respect to any
proposed commitment to make a capital expenditure relating to a single project
in excess of five million dollars ($5,000,000).</p>
<p>(d) <u>No Dispositions</u>. Except for sales of inventory in the ordinary
course of business consistent with past practice, neither Parent nor any of its
Subsidiaries shall sell, lease, license to third parties or otherwise encumber,
subject to a Lien or dispose of any material assets of the Business.</p>
<p>(e) <u>No Acquisitions</u>. No Bison Subsidiary shall acquire or agree to
acquire (i) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, limited liability company, partnership, joint venture, association
or other entity or division thereof or, (ii) except in the ordinary course of
business consistent with past practice, any assets that, individually or in the
aggregate, except as otherwise permitted by Section 5.1(c), have a purchase
price exceeding one million dollars ($1,000,000), nor shall Parent or any of its
Subsidiaries take any such action relating to the Business set forth in clause
(ii).</p>
<p>(f) <u>Governing Documents</u>. No Bison Subsidiary shall adopt any amendment
to its articles of organization or articles or certificate of incorporation, as
the case may be, or its by&#45;laws or other equivalent organizational documents, or
alter through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any Bison Subsidiary.</p>
<p>(g) <u>Contracts</u>. Except in the ordinary course of business consistent
with past practice, neither Parent nor any of its Subsidiaries shall enter into
any Material Contract with a term extending beyond the Closing Date, and neither
Parent nor any of its Subsidiaries shall modify or amend in any material respect
or transfer or terminate any Material Contract to which Parent or any of its
Subsidiaries is a party or waive, release or assign any material rights or
claims thereunder.</p>
<p align="center">40</p>
<p>(h) <u>Employee Matters</u>. Except as required by Law or an existing
Contract, neither Parent nor any of its Subsidiaries shall (i) except in the
ordinary course of business consistent with past practice, increase the
compensation or fringe benefits of any employee of the Business, (ii) enter into
any Contract with an officer or director of a U.S. Bison Subsidiary regarding
his or her employment, compensation or benefits or (iii) except pursuant to
collective bargaining, adopt or amend any material Bison Plan to the extent such
adoption or amendment would create or increase in any material respect any
liability or obligation on the part of any Bison Subsidiary.</p>
<p>(i) <u>Accounting Policies and Procedures</u>. Neither Parent nor any of its
Subsidiaries shall make any material change to its accounting methods,
principles or practices with respect to the Business, except as may be required
by GAAP or accounting standards applicable to foreign Bison Subsidiaries.</p>
<p>(j) <u>Liens</u>. Parent shall not, and shall not permit any of its
Subsidiaries to, create, incur, suffer to exist or assume (i) any Lien to secure
Balance Sheet Indebtedness of a Bison Subsidiary or (ii) any other Lien on any
of the material assets of the Business.</p>
<p>(k) <u>Claims</u>. Neither Parent nor any of its Subsidiaries shall settle
any material Litigation relating to the Business or waive, assign or release any
material rights or claims with respect to the Business, except in either case
(i) in the ordinary course of business or (ii) if the settlement of any such
Litigation would not impose material restrictions on the conduct of the
Business.</p>
<p>(l) <u>Taxes</u>. Neither Parent nor any of its Subsidiaries shall make any
Tax election or settle or compromise any Tax liability relating to the Business,
except in the ordinary course of business; <u>provided</u>, <u>however</u>, that
the foregoing restrictions shall not apply to any Tax election or Tax matter
involving a Tax Return which includes (i) a Bison Subsidiary as part of any
combined, unitary, consolidated or similar group which includes Parent or any
Non&#45;Bison Subsidiary and such Tax election or Tax matter would not individually
result in additional post&#45;Closing Taxes in excess of seventy five thousand
dollars ($75,000) being owed by any Bison Subsidiary or (ii) Textron Canada
Limited and such Tax election is solely with respect to, or such Tax matter
solely involves adjustments with respect to, one or more of the Subsidiaries or
businesses listed in Item 1. of Schedule C hereto.</p>
<p>(m) <u>Investments</u>. Except as permitted by Section 5.1(e), no Bison
Subsidiary shall lend any money or make a capital contribution to, or other
investment in any Person other than a Bison Subsidiary.</p>
<p align="center">41</p>
<p>(n) <u>Affiliate Contracts</u>. Except for Contracts and relationships
contemplated by the Transition Agreement, no Bison Subsidiary shall enter into
any Contract with Parent or any of its Subsidiaries other than (i) Contracts
containing commercially reasonable terms for Contracts between unrelated parties
or (ii) Contracts which do not contain obligations to receive or deliver
products or services after February 1, 2002. Neither Parent nor any of its
Subsidiaries shall modify any Contract existing on the date hereof between a
Bison Subsidiary and Parent or one of the Non&#45;Bison Subsidiaries in a manner
which would involve the addition of terms or conditions which would not be
commercially reasonable for Contracts between unrelated parties.</p>
<p>(o) <u>No Agreements</u>. Neither Parent nor any of its Subsidiaries shall
authorize or announce an intention to do any of the foregoing, or agree or enter
into any Contract to do any of the foregoing.</p>
<font COLOR="#ff0000">
<p>5.2 <a NAME="_Toc503342990"></a><a NAME="_Toc503343091"></a><a NAME="_Toc503343336"></a></font><u><a NAME="_Toc521492924">Access
to Information</a></u>.</p>
<p>(a) In order to evaluate the transactions contemplated by this Agreement,
upon reasonable advance notice, Parent shall (and shall cause each of the Bison
Subsidiaries to) provide Holdings and its Subsidiaries and Heartland Industrial
Partners, L.P., and their respective agents and representatives
(&quot;Representatives&quot;), with reasonable access, during normal business
hours and without disruption to their day&#45;to&#45;day business, from the date of this
Agreement to the earlier of the Closing Date or termination of this Agreement,
to the books and records pertaining to the Bison Subsidiaries and, during such
period, it shall (and shall cause each of the Bison Subsidiaries to) furnish
promptly to such Representatives all financial, operating and other data and
other information concerning its business, properties and personnel as may
reasonably be requested. Upon reasonable request and for reasonable periods of
time, Parent will make senior executives of Bison Subsidiaries available to
provide information to Persons who have executed Commitment Letters and their
Representatives for the purpose of providing information responsive to
reasonable due diligence inquiries relating to the financing contemplated by the
Commitment Letters.</p>
<p>(b) Holdings agrees that it will, and will cause its Representatives to, use
any information obtained pursuant to this Section 5.2 only in connection with
the evaluation of the transactions contemplated by this Agreement.</p>
<p>(c) The Confidentiality Agreement shall apply with respect to Information, as
defined therein, furnished pursuant to this Section 5.2.</p>
<p><a NAME="_Toc503342992"></a><a NAME="_Toc503343093"></a><a NAME="_Toc503343338"></p>
<font COLOR="#ff0000">
<p>5.3 </font></a><a NAME="_Toc521492925"><u>Competition Filing</u></a><u>s</u>.</p>
<p>(a) Parent and Holdings shall, as promptly as practicable but in any event
not more than 10 business days after the date hereof, file, or cause to be filed
all required notification and report forms under the HSR Act with the Federal
Trade Commission (the &quot;FTC&quot;) and the Antitrust Division of the United
States Department of Justice (the &quot;Antitrust Division&quot;) and will use
their respective commercially reasonable efforts to respond as promptly as
practicable to all inquiries received from the FTC and the Antitrust Division
for additional information or documentation and to cause the waiting periods
under the HSR Act to terminate or expire at the earliest possible date.</p>
<p align="center">42</p>
<p>(b) Parent and Holdings shall, as promptly as practicable but in any event
not more than 15 business days after the date hereof, file, or cause to be filed
(i) all required forms and letters under the EC Commission Regulation 4064/89
with the European Commission, (ii) all required forms and letters under the
Canadian Competition Act with the Canadian Competition Bureau and (iii) all
required notices to and applications with Governmental Authorities in connection
with the transactions contemplated hereby, and, in each case, will use their
respective commercially reasonable efforts to respond as promptly as practicable
to all inquiries received from the European Commission, the Canadian Competition
Bureau or any other Governmental Authority for additional information or
documentation, and to cause the waiting period under the Canadian Competition
Act or any Foreign Competition Laws to terminate or expire at the earliest
possible date, or consents, approvals or authorizations to be adopted at the
earliest possible date under the EC Commission Regulation 4064/89 or any Foreign
Competition Laws, as may apply.</p>
<p>(c) Parent and Holdings will each furnish to the other such information and
assistance as the other may reasonably request in connection with its
preparation of any filings necessary under the provisions of the HSR Act, EC
Commission Regulation 4064/89, the Canadian Competition Act and any applicable
Foreign Competition Laws.</p>
<p>(d) The parties shall promptly furnish to each other copies of all filings
and correspondence relating to the Transactions with any Governmental Authority
specified in this Section 5.3.</p>
<p><a NAME="_Toc503342993"></a><a NAME="_Toc503343094"></a><a NAME="_Toc503343339"></p>
<font COLOR="#ff0000">
<p>5.4 </font></a><a NAME="_Toc521492926"><u>Consents and Reasonable Efforts</u></a>.</p>
<p>(a) Parent, Holdings and C&A Products shall, as promptly as practical,
use all commercially reasonable efforts (unless otherwise stated herein) to
satisfy the conditions to Closing set forth in Article VI and consummate the
transactions contemplated by this Agreement, including obtaining any required
Consents. Parent, Holdings and C&A Products shall furnish to each other such
information and assistance as the other may reasonably request in connection
with required filings, applications and Consents, and they shall keep each other
advised of the progress of making all such filings, applications and Consents.</p>
<p>(b) Parent, Holdings and C&A Products shall use all commercially
reasonable efforts to terminate the guarantees by Parent or any Non&#45;Bison
Subsidiary of obligations of Bison Subsidiaries identified in Section 5.4(b) of
the Disclosure Schedule (the &quot;Guarantees&quot;) and arrange for C&A
Products to assume the obligations of Parent under the Guarantees as soon as
possible after the Closing Date. If the obligations under any Guarantee relating
to Balance Sheet Indebtedness of a Bison Subsidiary has not been assumed by
C&A Products or a Subsidiary of C&A Products as of the date thirty days
after </p>
<p align="center">43</p>
<p>the Closing Date, Holdings and C&A Products shall, within sixty days
after the Closing Date, pay or cause to be paid all such indebtedness covered by
the Guarantee in a manner which will permit Parent to promptly thereafter
terminate the Guarantee. If any Guarantee shall be in effect after Closing,
Holdings and C&A Products shall pay or cause to be paid all debt covered by
the Guarantee as the same shall become due and payable, and shall indemnify and
hold Parent and any Non&#45;Bison Subsidiary harmless with respect to any payments
made by Parent or any Non&#45;Bison Subsidiary pursuant to any Guarantee, <u>provided</u>,
that such payments have been made in good faith.</p>
<p>(c) Parent, Holdings and C&A Products shall use all commercially
reasonable efforts to cause the Contracts identified in Section 5.4(c) of the
Disclosure Schedule to be assigned to, and assumed by, C&A Products or one
or more of its Subsidiaries (including the Bison Subsidiaries), and to cause
Parent and the Non&#45;Bison Subsidiaries to be released from any further
obligations thereunder, on or before the Closing Date. In the event that Parent
or a Non&#45;Bison Subsidiary is required to guarantee, or otherwise remain liable
for, the performance by C&A Products or any of its Subsidiaries (including
the Bison Subsidiaries) of any such Contract following the assignment to, and
assumption by, C&A Products or its Subsidiaries of such Contract, (i) on or
before the Closing Date, Parent shall deliver to C&A Products a list of such
Contracts and any corresponding guarantee and (ii) C&A Products or a
Subsidiary of C&A Products shall indemnify Parent and the Non&#45;Bison
Subsidiaries from and against and in respect of any and all Losses incurred by
Parent or a Non&#45;Bison Subsidiary to the extent relating to or arising out of any
such guarantee.</p>
<p>(d) Prior to the Closing, Parent shall, and shall cause its Subsidiaries and
their respective Representatives to, provide reasonably requested support to
Holdings and C&A Products in connection with the marketing efforts related
to obtaining the financing contemplated by the Debt Commitment Letters. In
addition, Parent shall request that E&Y provide a comfort letter of the type
customarily required by underwriters in connection with the financing
contemplated by the Debt Commitment Letters.</p>
<p><a NAME="_Toc503342994"></a><a NAME="_Toc503343095"></a><a NAME="_Toc503343340"></p>
<font COLOR="#ff0000">
<p>5.5 </font></a><a NAME="_Toc521492927"><u>Further Assurances</u></a>.</p>
<p>(a) On and after the Closing Date, Parent, Holdings and C&A Products
shall use all commercially reasonable efforts to take or cause to be taken all
necessary or appropriate actions and do, or cause to be done, all things
necessary or appropriate to consummate and make effective the transactions
contemplated hereby and by the other Transaction Agreements, including the
execution of any additional documents or instruments of any kind (not containing
additional representations and warranties) which may be reasonably necessary or
appropriate to carry out any of the provisions hereof. Parent, Holdings and
C&A Products shall cause the License Agreements attached hereto as Exhibits
3A, 3B and 3C, the Assignment and Assumption Agreement attached hereto as
Exhibit 2 and the Registration Rights Agreements attached hereto as Exhibits 5
and 6 to be executed on or prior to Closing.</p>
<p align="center">44</p>
<p>(b) Holdings and C&A Products shall use their respective reasonable best
efforts to obtain financing in an amount at least equal to the Required Amount,
including by executing definitive agreements for the financing contemplated by
the Commitment Letters on or prior to the Closing Date. Holdings and C&A
Products shall not engage in any transaction outside of the ordinary course of
business that is reasonably likely to jeopardize obtaining funding in an amount
at least equal to the Required Amount. The definitive agreements for such
financing (along with any other document pursuant to which Holdings, C&A
Products or any of their Subsidiaries intend to obtain financing of all or a
portion of the Required Amount) are referred to herein collectively as the
&quot;Financing Agreements.&quot;</p>
<p>(c) Without limiting the generality of the foregoing, in the event that at
any time it may be reasonably likely that funds will not be made available under
the Commitment Letters or Financing Agreements so as to enable Holdings and
C&A Products to proceed with the Transactions in a timely manner, Holdings
and C&A Products shall (i) immediately notify Parent, (ii) use their
respective reasonable best efforts to obtain alternative funding in an amount at
least equal to the amount committed pursuant to the Debt Commitment Letters on
terms and conditions comparable to those provided in the applicable Financing
Agreements or on terms that are not materially more onerous in the aggregate to
Holdings and C&A Products than those in the applicable Debt Commitment
Letter and on other reasonable and customary terms and (iii) shall continue to
use their respective reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and regulations to consummate the Transactions; <u>provided</u>
that the foregoing shall not require that Holdings or C&A Products secure
equity financing in excess of the amounts contemplated by the Debt Commitment
Letter. Holdings and C&A Products shall promptly notify Parent of all
communications between Holdings and C&A Products and the parties to the
Commitment Letters which are reasonably likely to (A) affect Parent&#39;s rights or
obligations thereunder or hereunder, (B) impact the terms of the Preferred Stock
or (C) delay the Closing. Holdings and C&A Products shall promptly deliver a
copy of any such communication to Parent.</p>
<p>(d) Beginning as soon as practical after the date of this Agreement, Parent
and C&A Products will work together in good faith to identify and resolve
issues relating to the transition from Parent ownership and operation of the
Business to C&A Products ownership and operation of the Business.</p>
<font COLOR="#ff0000">
<p>5.6 <a NAME="_Toc503342995"></a><a NAME="_Toc503343096"></a><a NAME="_Toc503343341"></a></font><a NAME="_Toc521492928"><u>Publicity</u>.</a></p>
<p>Parent and Holdings will consult with each other and will mutually agree upon
any press release or public announcement pertaining to the Transactions and
shall not issue any such press release or public announcement prior to such
consultation and agreement, except as may be required by applicable Law or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or
public announcement shall use its reasonable efforts to consult in good faith
with the other party before issuing any such press release or public
announcement.<a NAME="_Toc503342996"></a><a NAME="_Toc503343097"></a></p>
<p align="center">45<a NAME="_Toc503343342"></p>
<font COLOR="#ff0000">
<p>5.7 </font></a><a NAME="_Toc521492929"><u>Employee Matters</u>.</a></p>
<p>(a) <u>Employment Status</u>. C&A Products or one of its Subsidiaries
shall continue to employ all of the Employees who are actively employed by a
Bison Subsidiary on the Closing Date (each such employee being hereafter
referred to as a &quot;Transferred Employee&quot;), it being agreed that persons
who are on lay&#45;off or leave and who have a right to return to work at a Bison
Subsidiary or who are on short&#45;term (not more than six months) medical
disability (including pregnancy leave) who do not thereafter become eligible for
long&#45;term medical disability, or other authorized leave (such as military,
family or other leaves where return to work is subject to statutory
requirements) are to be considered Employees who are actively employed but that
persons on long&#45;term medical disability or whose short&#45;term medical disability
thereafter becomes a long&#45;term medical disability and persons whose employment
has terminated or will terminate prior to the Closing Date without any right to
return to work are not to be considered Employees who are actively employed; <u>provided</u>,
<u>however</u>, that the provisions of this Section 5.7(a) shall not be
construed to limit the ability of C&A Products to terminate any such
Employee at any time for any reason. For the purposes of this Agreement the
terms &quot;layoff&quot;, &quot;right to return to work&quot;, &quot;short&#45;term
disability&quot;, &quot;long&#45;term disability&quot; and &quot;pregnancy
leave&quot; shall be construed in accordance with the personnel policies of the
Bison Subsidiaries and the collective bargaining agreements covering Employees
as of the Closing Date, if applicable.</p>
<p>(b) <u>Benefits and Compensation</u>.</p>
<blockquote>
  <p>(i) C&A Products shall establish, effective as of the Closing Date,
  employee compensation and benefit plans, programs, policies and arrangements
  (including fringe benefits and severance pay) that will provide benefits and
  compensation to the Transferred Employees that are for a period of at least
  one year after the Closing Date (or such longer period as may be required by
  applicable Law) substantially comparable in the aggregate to those provided by
  Bison Subsidiaries to the Transferred Employees immediately prior to the
  Closing Date. Notwithstanding anything to the contrary contained in this
  Agreement, C&A Products shall not terminate any Stand&#45;Alone Pension Plan
  assumed pursuant to Section 5.7(c)(i) or any pension plan into which Parent
  has caused assets to be transferred pursuant to Section 5.7(c) for a period of
  at least 12 months after the Closing Date.</p>
  <p>(ii) C&A Products shall assume responsibility for providing all Former
  Employees (including all Former Employees or Employees who are on long&#45;term
  disability as of the Closing Date) with all medical (including Medicare Part
  B), dental and life insurance benefits being provided by Parent or any
  Affiliate of Parent for Former Employees as of the date hereof for a period of
  at least 12 months.</p>
</blockquote>
<p align="center">46</p>
<blockquote>
  <p>(iii) Following the Closing Date, with respect to each employee benefit
  plan in which any Transferred Employee participates, for purposes of
  determining eligibility to participate, vesting and entitlement to benefits,
  including severance benefits and vacation entitlement (but not accrual of
  pension benefits), service with the Bison Subsidiaries (or predecessor
  employers to the extent the Bison Subsidiaries provided past service credit)
  shall be treated as service with C&A Products; <u>provided</u>, <u>however</u>,
  that such service shall not be recognized to the extent that such recognition
  would result in a duplication of benefits. Such service shall also apply for
  purposes of satisfying any waiting periods, evidence of insurability
  requirements or the application of any pre&#45;existing condition limitations.
  Each such plan shall waive pre&#45;existing condition limitations to the same
  extent waived under the applicable plan of the Bison Subsidiary. Transferred
  Employees shall be given credit under the applicable plan of Holdings or any
  Affiliate thereof for amounts paid under a corresponding benefit plan during
  the same period for purposes of applying deductibles, co&#45;payments and
  out&#45;of&#45;pocket maximums as though such amounts had been paid in accordance with
  the terms and conditions of the successor or replacement plan.</p>
</blockquote>
<p>(c) <u>Pension Plans</u>.</p>
<blockquote>
  <p>(i) As of the Closing Date, C&A Products shall assume the stand&#45;alone
  pension plans listed in Section 5.7(c)(i) of the Disclosure Schedule (the
  &quot;Stand&#45;Alone Pension Plans&quot;) and all liabilities, and shall receive
  all assets held, thereunder as of the Closing Date.</p>
  <p>(ii) C&A Products shall establish, or shall amend one of its existing
  pension plans, as of the Closing Date, or as soon as practicable after the
  Closing Date, to include, a tax&#45;qualified defined benefit plan (&quot;C&A
  Products&#39; Salaried Pension Plan&quot;) for salaried Employees and Former
  Employees participating in the Textron Master Retirement Plan Addendum A
  (&quot;Parent&#39;s Salaried Pension Benefit&quot;). Subject to the transfer of
  assets described in Section 5.7(c)(iv), C&A Products&#39; Salaried Pension
  Plan shall assume the liabilities as of the Closing Date for the benefits of
  all Employees and Former Employees participating in Parent&#39;s Salaried Pension
  Benefit.</p>
  <p>(iii) C&A Products shall establish, or shall amend one of its existing
  pension plans as of the Closing Date, or as soon as practicable after the
  Closing Date, to include a tax&#45;qualified defined benefit plan (&quot;C&A
  Products&#39; Hourly Pension Plan&quot;) for hourly Employees and Former Employees
  participating in the Textron Master Retirement Plan Addenda B, H, L and O
  (&quot;Parent&#39;s Hourly Master Pension Benefit&quot;). Subject to the transfer
  of assets described in Section 5.7(c)(iv), C&A Products&#39; Hourly Pension
  Plan shall assume the liabilities as of the Closing Date for the benefits of
  all Employees and Former Employees participating in Parent&#39;s Hourly Master
  Pension Benefit.</p>
</blockquote>
<p align="center">47</p>
<blockquote>
  <p>(iv) On a day which is within 60 days after the later of (i) the date upon
  which C&A Products delivers to the Parent notice that C&A Products&#39;
  actuaries, pursuant to Section 5.7(c)(vii) of this Agreement, have reviewed
  the calculations of Parent&#39;s actuaries and are satisfied that such
  calculations are in accordance with this Agreement, or (ii) the day upon which
  C&A Products delivers to Parent a favorable Internal Revenue Service
  determination letter or an opinion, reasonably satisfactory to Parent&#39;s
  counsel, of C&A Products&#39; counsel to the effect that the terms of C&A
  Products&#39; Salaried Pension Plan and C&A Products&#39; Hourly Pension Plan and
  their related trusts qualify, as to form, under Section 401(a) and Section
  501(a) of the Code, Parent shall cause the trustee under the Parent&#39;s Salaried
  Pension Benefit and Parent&#39;s Hourly Master Pension Benefit (&quot;Parent&#39;s
  Trustee&quot;) to transfer to the trustee of C&A Products&#39; Salaried
  Pension Plan and C&A Products&#39; Hourly Pension Plan (&quot;C&A
  Products&#39; Trustee&quot;) cash assets in an amount equal to the amount computed
  pursuant to the following paragraph, but not less than the amount necessary to
  satisfy the applicable requirements of Section 414(1) and 401(a)(12) of the
  Code.</p>
  <p>(v) The assets to be transferred from Parent&#39;s Trustee to C&A
  Products&#39;
  Trustee shall be cash only and shall equal 120% of the projected benefit
  obligation as of the Closing Date of the Employees and Former Employees under
  Parent&#39;s Salaried Pension Benefit and Parent&#39;s Hourly Master Pension Benefit.
  The calculation of 120% of the projected benefit obligation will be calculated
  using the actual census information as of the Closing Date and by applying (i)
  a discount rate calculated pursuant to the methodologies utilized in Parent&#39;s
  December 31, 2000 audit disclosure prepared for purpose of Statement of
  Financial Accounting Standards Number 87 published by the FASB (&quot;FAS
  87&quot;) and (ii) other actuarial assumptions, methods and methodologies
  utilized in Parent&#39;s FAS 87 audit disclosure, each as set forth in Section
  5.7(c)(vii) of the Disclosure Schedule.</p>
  <p>(vi) The amount transferred pursuant to Section 5.7(c)(iv) shall be
  adjusted for investment earnings or losses of the trust in which Textron
  Master Retirement Plan assets are held for the period between the Closing Date
  and the actual date of transfer and reduced by the amount of any benefit
  payments from such plan to Employees and Former Employees during such period
  and a proportionate share of administrative expenses for such period if such
  administrative expenses are properly chargeable (and are actually charged) to
  the Parent&#39;s Salaried Pension Benefit or Parent&#39;s Hourly Master Pension
  Benefit. Parent shall estimate such earnings as of the actual date of transfer
  and then within 90 days of the actual date of transfer, Parent shall cause
  Parent&#39;s trust to remit to C&A Products&#39; trust or C&A Products shall
  cause C&A Products&#39; trust to remit to Parent&#39;s trust, as appropriate, an
  amount equal to the difference between the actual rate of earnings for such
  period and the </p>
</blockquote>
<p align="center">48</p>
<blockquote>
  <p>estimated amount transferred as of the actual date of transfer (such
  difference to be adjusted for investment earnings at the State Street Bank
  short&#45;term rate for the period between the actual date of transfer and the
  date such difference is paid to Parent or C&A Products). Notwithstanding
  anything in this Section 5.7(c) to the contrary, following the Closing Date
  and until the date of the respective transfers of assets to trusts under
  C&A Products&#39; pension plans, Parent shall cause the trusts under the
  pension plans of Parent or an Affiliate covered by this Section 5.7(c) to
  continue to provide benefits to plan participants in accordance with the terms
  of the applicable pension plan to the extent that such benefits have accrued
  on or before the Closing Date. To the extent that benefits have accrued after
  the Closing Date, following the transfer of assets pursuant to Section
  5.7(c)(iv), C&A Products shall pay such benefits to plan participants
  (retroactively, if applicable) in accordance with the terms of the applicable
  pension plan.</p>
  <p>(vii) The assets caused to be transferred pursuant to Section 5.7(c) shall
  be calculated by Parent&#39;s actuary, and shall be subject to review by C&A
  Products&#39; actuary for the purpose of confirming that the calculation was made
  in accordance with (i) the actuarial assumptions and methods set forth in this
  Section 5.7(c) and in Section 5.7(c)(vii) of the Disclosure Schedule and (ii)
  generally accepted actuarial practice. As soon as practicable after the
  Closing Date, Parent shall provide C&A Products with a detailed summary of
  the calculations described in this Section 5.7(c) and any back&#45;up data
  reasonably requested by C&A Products. If C&A Products or C&A
  Products&#39; actuary does not notify Parent to the contrary within 60 days after
  the delivery to C&A Products of such detailed summary and data, the
  calculations of Parent&#39;s actuary pursuant to this Section 5.7(c) shall be
  deemed to be final, conclusive and binding on the parties. If, however,
  C&A Products notifies Parent in writing within such period that it and its
  actuaries believe that the calculations were not prepared in accordance with
  the requirements of this Section 5.7(c) and such notice specifies (i) the
  precise items of the calculations challenged, (ii) the basis of the challenge
  and (iii) the amount of the adjustment they propose with respect to each such
  item, the parties will then attempt to resolve their differences with respect
  thereto. C&A Products shall only be entitled to dispute any individual
  item that involves a proposed adjustment of more than $25,000 or items
  collectively aggregating $100,000 or more. If the parties are unable to
  resolve their dispute within 30 days after the date C&A Products notifies
  Parent of the disputed items, the disputed items shall be referred to an
  international benefits consulting firm (the &quot;Actuary Firm&quot;) mutually
  acceptable to C&A Products and Parent. The Actuary Firm shall be asked to
  resolve such disputes and report to Parent and C&A Products upon such
  remaining disputed items within 45 days after such referral. The decision of
  the Actuary Firm shall be final, conclusive and binding on the parties hereto.
  The fees and expenses of the Actuary Firm in conducting this assignment shall
  be borne equally by Parent and C&A Products.</p>
</blockquote>
<p align="center">49</p>
<p>(d) <u>Defined Contribution Plan</u>. As soon as practical after the Closing
Date and following delivery by C&A Products to Parent of a favorable
Internal Revenue Service determination letter regarding a defined contribution
plan of C&A Products (&quot;C&A Products&#39; Savings Plan&quot;) or an
opinion, reasonably satisfactory to Parent, of C&A Products&#39; counsel to the
effect that the terms of the C&A Products&#39; Savings Plan and its related
trust qualify, as to form, under Section 401(a) and Section 501(a) of the Code,
Parent shall cause the trustee of the Parent Savings Plan to transfer all of the
assets and liabilities thereof attributable to Employees and Former Employees of
Bison Subsidiaries to the C&A Products&#39; Savings Plan. Unless otherwise
agreed by Parent and C&A Products, the assets to be transferred shall be
cash, promissory notes for loans made to Employees and Former Employees of the
Bison Subsidiaries under the terms of the Parent Savings Plan, and, if requested
by C&A Products, Parent stock held in accounts of the Employees and Former
Employees of the Bison Subsidiaries.</p>
<p>(e) <u>Collective Bargaining Agreements</u>. Effective as of the Closing
Date, C&A Products or a Subsidiary of C&A Products shall assume the
collective bargaining agreements listed in Section 5.7(e) of the Disclosure
Schedule. C&A Products acknowledges that at Closing, C&A Products or
such Subsidiary of C&A Products will become a successor employer under such
collective bargaining agreements and agree to assume all obligations of any
Bison Subsidiary under such agreements.</p>
<p>(f) <u>Severance and Other Liability</u>.</p>
<blockquote>
  <p>(i) Except as otherwise set forth in this Section 5.7(f), C&A Products
  or a Subsidiary of C&A Products shall assume, discharge, pay and be solely
  liable for and shall indemnify and hold Parent harmless from and against all
  Losses relating to any Claim or liability arising out of the employment of the
  Employees and Former Employees which is payable after the Closing, including
  Claims or liability under any Bison Plan; <u>provided</u>, <u>however</u>,
  that C&A Products and its Subsidiaries shall not be liable for any Claim
  arising from an event occurring prior to Closing to the extent that it is
  covered by insurance carried by Parent or a Subsidiary of Parent.</p>
  <p>(ii) Parent shall retain any and all liability for Losses relating to
  severance costs incurred by Parent or its Subsidiaries (including the Bison
  Subsidiaries) on or prior to the Closing that relate to employees of any
  Subsidiary of Parent, whether or not any such employee is transferred to a
  Bison Subsidiary on or prior to the Closing Date, except for Losses relating
  to the termination of employees at the written request of Holdings or C&A
  Products.</p>
</blockquote>
<p align="center">50</p>
<blockquote>
  <p>(iii) C&A Products shall pay 50%, and Parent shall pay the other 50%,
  of any Severance Payment payable to persons identified in Section 5.7(f)(A) of
  the Disclosure Schedule if such amount is payable as a result of such person&#39;s
  termination of his or her employment after the Closing Date and during the
  term of said agreement for &quot;good reason&quot;, as defined in the
  agreement relating to such person listed in Section 5.7(f)(A) of the
  Disclosure Schedule; <u>provided</u>, <u>however</u>, that C&A Products
  and its Subsidiaries shall not be responsible for Severance Payments to such
  persons in excess of 50% of the amount set forth for each such person in
  Section 5.7(f)(B) of the Disclosure Schedule, and any remaining amount shall
  be paid by Parent. Except as set forth in the preceding sentence, C&A
  Products shall pay 100% of any Severance Payment if such amount is payable as
  a result of a Qualifying Termination, as defined in the agreement relating to
  such person listed in Section 5.7(f)(A) of the Disclosure Schedule (each an
  &quot;Employee Agreement&quot;), which occurs after the Closing Date; <u>provided</u>,
  that Parent shall reimburse C&A for the cost of any such payment above the
  amount set forth in Section 5.7(f)(B) of the Disclosure Schedule.
  &quot;Severance Payment&quot; shall mean the severance benefits payable
  pursuant to the Employment Agreements.</p>
  <p>(iv) C&A Products shall pay the portion of any Retention Payment
  payable to persons identified in Sections 5.7(f)(A) of the Disclosure Schedule
  equal to a fraction (the &quot;Fraction&quot;) whose numerator is 365 minus
  the number of days elapsed from and including January 1, 2001, through the
  Closing Date, and whose denominator is 365, up to a maximum amount for each
  person equal to the amount set forth in Section 5.7(f)(B) of the Disclosure
  Schedule multiplied by the Fraction. Parent shall pay the balance of the
  Retention Payments. The term &quot;Retention Payment&quot; shall mean the
  retention awards and any special operating incentive and divestiture incentive
  awards payable pursuant to the Employment Agreements.</p>
  <p>(v) Except for payments by C&A Products described in Sections
  5.7(f)(iii) and 5.7(f)(iv), C&A Products shall not be liable for any
  severance or retention payments payable under any written agreement signed by
  an Employee and existing prior to Closing, excluding agreements entered into
  in the ordinary course of business with Employees of a Bison Subsidiary
  organized under the laws of a jurisdiction other than the United States and
  excluding collective bargaining agreements (it being understood and agreed
  that company policies generally applicable to all or a class of employees
  shall not be deemed to be an agreement for the purposes of this subsection).</p>
  <p>(vi) Except as set forth in Section 5.1(h) of the Disclosure Schedule,
  neither Parent nor its Subsidiaries shall amend, or cause to be amended, any
  term or provision in any agreement listed in Section 5.7(f)(A) of the
  Disclosure Schedule without the prior written consent of Holdings.</p>
</blockquote>
<p align="center">51</p>
<blockquote>
  <p>(vii) Payments which are the responsibility of Parent under Sections
  5.7(f)(ii), (iii), (iv) and (v) shall be paid to the person by C&A
  Products within five days after receipt from Parent of funds equal to the
  amount of said payments.</p>
</blockquote>
<p>(g) <u>Worker&#39;s Compensation Claims</u>. C&A Products shall assume
liability for all suits, claims, proceedings and actions pending as of or
commenced after the Closing Date resulting from actual or alleged harm or injury
to Employees or Former Employees regardless of when the incident or accident
giving rise to such liability occurred or occurs. Holdings will make all
necessary arrangements to assume all worker&#39;s compensation claim files, whether
open or closed, as of the Closing Date, and will make the necessary arrangements
for assuming the continued management of such liabilities.</p>
<p>(h) <u>Foreign Plans</u>. To the extent that Employees and Former Employees
are located in a jurisdiction outside of the United States and are covered by
defined benefit plans or similar plans which also cover persons employed by
Parent, any Non&#45;Bison Subsidiary or their Affiliates, Holdings will cause
similar plans to be established for such Employees in accordance with applicable
Law, labor agreements and customary practice, and Parent will cause assets to be
transferred to the applicable trusts of such successor plans established by
C&A Products, it being agreed that the amount of assets to be transferred to
such trusts will be the minimum amount required by applicable Law.</p>
<font COLOR="#ff0000">
<p>5.8 <a NAME="_Toc503342997"></a><a NAME="_Toc503343098"></a><a NAME="_Toc503343343"></a></font><u><a NAME="_Toc521492930">Tax
Matters</a></p>
</u>
<p>(a) <u>Tax Returns</u>. Except as provided in Section 9.13,</p>
<blockquote>
  <p>(i) Parent shall file or cause to be filed when due all Tax Returns that
  are required to be filed by or with respect to each of the Bison Subsidiaries
  (other than Permali do Brasil Industria e Comercio Ltda. (&quot;Permali&quot;),
  Rosario Project S.A. (&quot;Rosario&quot;), Plascar, and TATB, collectively,
  the &quot;Brazilian Entities&quot;) for taxable years or periods ending on or
  before the Closing Date, and Parent shall remit (or cause to be remitted) any
  Taxes due in respect of such Tax Returns.</p>
  <p>(ii) Parent shall file or cause to be filed when due all Tax Returns that
  are required to be filed by or with respect to each of the Brazilian Entities
  that are due on or before the Closing Date, and Parent shall remit (or cause
  to be remitted) any Taxes due in respect of such Tax Returns.</p>
</blockquote>
<p align="center">52</p>
<blockquote>
  <p>(iii) Holdings shall file or cause to be filed when due all Tax Returns
  that are required to be filed by or with respect to each of the Brazilian
  Entities that are due after the Closing Date with respect to taxable years or
  periods ending on or before the Closing Date or Straddle Periods, and Holdings
  shall remit (or cause to be remitted) any Taxes due in respect of such Tax
  Returns.</p>
  <p>(iv) Holdings shall file or cause to be filed when due all Tax Returns that
  are required to be filed by or with respect to each of the Bison Subsidiaries
  (other than the Brazilian Entities) for taxable years or periods ending after
  the Closing Date, and Holdings shall remit (or cause to be remitted) any Taxes
  due in respect of such Tax Returns.</p>
  <p>(v) Any Tax Return required to be filed by Holdings relating to any
  Straddle Period shall be submitted (with copies of any relevant schedules,
  work papers and other documentation then available) to Parent for Parent&#39;s
  approval not less than 45 days prior to the due date (including extensions)
  for the filing of such Tax Return, which approval shall not be unreasonably
  withheld, conditioned or delayed. Parent shall have the option of providing to
  Holdings, at any time at least 30 days prior to the due date, written
  instructions as to how Parent wants any, or all, of the items for which it may
  be liable reflected on such Tax Return. Holdings shall, in preparing such
  return, cause the items for which Parent is liable hereunder to be reflected
  in accordance with Parent&#39;s instructions (unless, in the opinion of nationally
  recognized tax advisor to Holdings, complying with Parent&#39;s instructions would
  likely subject Holdings to any criminal penalty or to one or more civil
  penalties under Sections 6662 through 6664 of the Code or similar provisions
  of applicable state, local or foreign laws) and, in the absence of having
  received such instructions, in accordance with past practice, if any, to the
  extent permissible under applicable Law.</p>
  <p>(vi) Upon the written request of Holdings setting forth in detail the
  computation of the amount owed, Parent shall pay to Holdings, no later than 2
  days prior to the due date for the applicable Tax Return, the Taxes for which
  Parent is liable pursuant to Section 5.8(b) but which are payable with any Tax
  Return to be filed by Holdings with respect to any Straddle Period.</p>
  <p>(vii) Within 120 days after the Closing Date, Holdings shall cause each of
  the Bison Subsidiaries to prepare and provide to Parent a package of Tax
  information materials, including schedules and work papers required by Parent
  to enable Parent to prepare and file all Tax Returns required to be prepared
  and filed by it pursuant to Section 5.8(a)(i). Holdings shall prepare such
  package in good faith in a manner substantially consistent with Parent&#39;s past
  practice.</p>
  <p>(viii) Parent may amend any Tax Return filed or required to be filed by or
  with respect to each of the Bison Subsidiaries (other than the Brazilian
  Entities) for any taxable years or periods ending on or before the Closing
  Date; <u>provided</u>, that no such amendment shall be permitted if it would
  result in any Tax Detriment to any Bison Subsidiary after the Closing.</p>
</blockquote>
<p align="center">53</p>
<p>(b) <u>Computation of Tax Liabilities</u>.</p>
<blockquote>
  <p>(i) To the extent permitted or required by law or administrative practice,
  (A)&nbsp;the taxable year of each Bison Subsidiary which includes the Closing
  Date shall be treated as closing on (and including) the Closing Date and,
  notwithstanding the foregoing, (B)&nbsp;all transactions not in the ordinary
  course of business occurring after the Closing Date shall be reported on
  Holdings&#39; consolidated United States federal income Tax Return to the extent
  permitted by Treasury Regulation Section 1.1502&#45;76(b)(1)(ii)(B) and shall be
  similarly reported on other Tax Returns of Holdings or its Affiliates to the
  extent permitted by applicable Law. For purposes of Sections 5.8, where it is
  necessary to apportion between Parent and Holdings the Tax liability of an
  entity for a Straddle Period (which is not treated under the immediately
  preceding sentence as closing on the Closing Date), such liability shall be
  apportioned between the period deemed to end at the close of the Closing Date,
  and the period deemed to begin at the beginning of the day following the
  Closing Date on the basis of an interim closing of the books, except that
  Taxes (such as real property Taxes) imposed on a periodic basis shall be
  allocated on a daily basis.</p>
  <p>(ii) In determining Parent&#39;s liability for Taxes pursuant to this
  Agreement, Parent shall be credited with the amount of estimated Taxes paid by
  or on behalf of any of the Bison Subsidiaries prior to the Closing. To the
  extent that Parent&#39;s liability for Taxes for a taxable year or period is less
  than the amount of estimated income Taxes previously paid by or on behalf of
  any of the Bison Subsidiaries with respect to all or a portion of such taxable
  year or period, Holdings shall pay Parent the difference within two days of
  filing the Tax Return relating to such income Taxes.</p>
</blockquote>
<p>(c) <u>Refunds</u>.</p>
<blockquote>
  <p>(i) Any Tax refund (including any interest in respect thereof) received by
  Holdings, C&A Products or any of the Bison Subsidiaries (other than the
  Brazilian Entities), and any amounts credited against Tax to which Holdings,
  C&A Products or any of the Bison Subsidiaries (other than the Brazilian
  Entities) becomes entitled (including by way of any amended Tax Returns or any
  carryback filing), that relate to any taxable period, or portion thereof,
  ending on or before the Closing Date shall be for the account of Parent, and
  Holdings shall pay over to Parent any such refund or the amount of any such
  credit within 15 days after receipt of such credit or entitlement thereto.</p>
</blockquote>
<p align="center">54</p>
<blockquote>
  <p>(ii) Any Tax refund (including any interest in respect thereof) received by
  Permali or Rosario, and any amounts credited against Tax to which Permali or
  Rosario becomes entitled (including by way of any amended Tax Returns or any
  carryback filing), that relate to any taxable period, or portion thereof,
  ending on or before the Closing Date shall be for the account of Parent, and
  Holdings shall pay over to Parent any such refund or the amount of any such
  credit within 15 days after receipt of such credit or entitlement thereto.</p>
  <p>(iii) The percentage (the &quot;Ownership Percentage&quot;), equal to the
  lesser of (A) 56.6% or (B) the percentage of issued and outstanding stock of
  Plascar held by Permali, of any Tax refund (including any interest in respect
  thereof) received by Plascar or TATB or any amounts credited against Tax to
  which Plascar or TATB becomes entitled (including by way of any amended Tax
  Returns or any carryback filing), that relate to any taxable period, or
  portion thereof, ending on or before the Closing Date shall be for the account
  of Parent, and Holdings shall pay over to Parent the Ownership Percentage of
  any such refund or credit within 15 days after receipt of such credit or
  entitlement thereto.</p>
  <p>(iv) Holdings shall pay Parent interest at the rate prescribed under
  Section 6621(a)(1) of the Code, compounded daily, on any amount not paid when
  due under this Section 5.8(c). For purposes of this Section 5.8(c), where it
  is necessary to apportion a refund or credit between Holdings and Parent for a
  Straddle Period, such refund or credit shall be apportioned between the period
  deemed to end at the close of the Closing Date and the period deemed to begin
  at the beginning of the day following the Closing Date on the basis of an
  interim closing of the books of each of the Bison Subsidiaries, except that
  refunds or credits of Taxes imposed on a periodic basis (e.g., real property
  Taxes) shall be allocated on a daily basis.</p>
  <p>(v) Holdings shall cooperate, and cause C&A Products and each of the
  Bison Subsidiaries to cooperate, in obtaining, at Parent&#39;s expense, any Tax
  refund (other than a refund based on a carryback from a taxable year or period
  beginning after the Closing Date) that Parent reasonably believes is available
  based on substantial authority, including through filing appropriate forms
  with the applicable Tax Authority; <u>provided</u>, that if the refund would
  result in any Tax Detriment to any Bison Subsidiary after the Closing, Parent
  shall reimburse Holdings the amount of such Tax Detriment.</p>
  <blockquote>
    <p align="center">56</p>
  </blockquote>
</blockquote>
<p>(d) <u>Certain Post&#45;Closing Settlement Payments</u>.</p>
<blockquote>
  <p>(i) If the examination of any federal, state, local or other Tax Return of
  Parent for any taxable period ending on or before the Closing Date shall
  result (by settlement or otherwise) in any adjustment which permits Holdings,
  C&A Products or any of the Bison Subsidiaries to increase deductions,
  losses or tax credits or decrease the income, gains or recapture of tax
  credits which would otherwise (but for such adjustments) have been reported or
  taken into account (including by way of any increase in basis) by Holdings,
  C&A Products or any of the Bison Subsidiaries for one or more periods
  ending within ten years after the Closing Date, Parent shall notify Holdings
  and provide it with adequate information so that Holdings can reflect on its,
  C&A Products&#39; or the applicable Bison Subsidiary&#39;s Tax Returns such
  increases in deductions, losses or tax credits or decreases in income, gains
  or recapture of tax credits. Holdings shall pay to Parent, within 30 days of
  the realization of any resulting Tax Benefits, the amount of any resulting Tax
  Benefits.</p>
  <p>(ii) If the examination of any federal, state, local or other Tax Return of
  Holdings, C&A Products or any of the Bison Subsidiaries for any taxable
  period ending after the Closing Date shall result (by settlement or otherwise)
  in any adjustment which permits Parent to increase deductions, losses or tax
  credits or decrease the income, gains or recapture of tax credits which would
  otherwise (but for such adjustments) have been reported or taken into account
  (including by way of any increase in basis) by Parent for one or more periods
  ending on or before the Closing Date, Holdings shall notify Parent and provide
  it with adequate information so that Parent can reflect on its Tax Returns
  such increases in deductions, losses or tax credits or decreases in income,
  gains or recapture of tax credits. Parent shall pay to Holdings, within 30
  days of the receipt of such information, the amount of any resulting Tax
  Benefits.</p>
</blockquote>
<p>(e) <u>Post&#45;Closing Actions which Affect Parent&#39;s Liability for Taxes</u>.</p>
<blockquote>
  <p>(i) Holdings shall not take, or cause or permit C&A Products or any of
  the Bison Subsidiaries (or any of their Affiliates) to take, any action, with
  respect to the taxable year or period of Holdings, C&A Products, such
  Bison Subsidiary, or Affiliate, as applicable, which includes the Closing
  Date, which would be reasonably likely to increase Parent&#39;s or any Non&#45;Bison
  Subsidiaries (or any of their Affiliates) liability for Taxes (including any
  liability of Parent to indemnify Holdings for Taxes pursuant to this
  Agreement) including, for example, any action which would be reasonably likely
  to, result in, or change the character of, any income or gain (including any
  Subpart F income) that Parent or any Non&#45;Bison Subsidiary (or any of their
  Affiliates) must report on any Tax Return.</p>
  <p align="center">56</p>
  <p>(ii) None of Holdings or any Affiliate of Holdings (including C&A
  Products) shall (or shall cause or permit any of the Bison Subsidiaries to)
  amend, refile or otherwise modify any Tax Return relating in whole or in part
  to any of the Bison Subsidiaries with respect to any taxable year or period
  ending on or before the Closing Date (or with respect to any Straddle Period)
  without the prior written consent of Parent, which consent may be withheld in
  the sole discretion of Parent.</p>
  <p>(iii) Except to the extent otherwise required by Law, none of Holdings or
  any Affiliate of Holdings (including C&A Products) shall (or shall cause
  or permit any of the Bison Subsidiaries to) carryback for federal, state,
  local or foreign tax purposes to any taxable period, or portion thereof, of
  any of the Bison Subsidiaries or Parent or any Affiliate of Parent ending
  before, or which includes, the Closing Date any operating losses, net
  operating losses, capital losses, tax credits or similar items arising in,
  resulting from, or generated in connection with a taxable year of Holdings or
  any Affiliate of Holdings (including C&A Products), or portion thereof,
  ending on or after the Closing Date.</p>
</blockquote>
<p>(f) <u>Assistance and Cooperation</u>. After the Closing Date, each of Parent
and Holdings shall, (and shall cause their respective Affiliates to), provide
information to the other party regarding any of the Bison Subsidiaries or the
Business in connection with (i) the other party preparing any Tax Returns which
such other party is responsible for preparing and filing, and (ii) the other
party preparing for any audits of, or disputes with any Tax Authority regarding,
any Tax Returns of any of the Bison Subsidiaries. In connection therewith,
Holdings, C&A Products and Parent shall not dispose of any Tax work papers,
books or records relating to any of the Bison Subsidiaries during the six&#45;year
period following the Closing Date, and thereafter shall give the other parties
reasonable written notice before disposing of such items.</p>
<p>(g) <u>Section 338(g) Elections</u>. Holdings shall ensure that C&A
Products does not make any election under Section 338(g) of the Code (or any
analogous provision of state, local, or foreign law) with respect to the
purchase of the stock of any foreign Bison Subsidiary without the prior written
consent of Parent, which consent may be withheld in the sole discretion of
Parent. If Parent does so consent, Holdings shall be liable for, and shall pay,
any Tax attributable to, or resulting from, the making of such election and will
indemnify Parent from and against any Tax liability or other adverse
consequences attributable to, or resulting directly or indirectly from, the
making of such election. Any indemnification obligation of Holdings pursuant to
this Section 5.8(g) shall be increased by the relevant After Tax Amount. For
purposes of this Section 5.8(g), &quot;After Tax Amount&quot; means any
additional amount necessary to reflect the tax consequences of the receipt or
accrual of such reimbursement payment (including the payment of an additional
amount or amounts hereunder) determined by using the actual marginal federal,
state, foreign or local rates for the relevant taxable period.</p>
<p align="center">57</p>
<p>(h) <u>Stock Options</u>. Holdings and its Affiliates (including C&A
Products and the Bison Subsidiaries) shall not claim any Tax deduction arising
by reason of any exercise of an employee stock option to acquire Parent stock
held by employees of any Bison Subsidiary. If, however, all or any part of a Tax
deduction claimed by Parent with respect to the exercise of an option to acquire
Parent stock held by employees of any Bison Subsidiary is disallowed to Parent,
then, to the extent permitted by law, Holdings, C&A Products or a Bison
Subsidiary (or their appropriate Affiliate) shall claim such Tax deduction. If
Holdings, C&A Products or a Bison Subsidiary (or any of their Affiliates)
receives any Tax Benefit in any taxable period as a result of any Tax deduction
claimed by Holdings, C&A Products or a Bison Subsidiary (or any of their
Affiliates) pursuant to this Section 5.8(h), Holdings shall promptly pay to
Parent the amount of such Tax Benefit.</p>
<p>(i) <u>Indemnification by Parent</u>. Notwithstanding any other provision of
this Agreement, Parent shall indemnify Holdings from and against and in respect
of any and all Losses incurred by Holdings, which may be imposed on, sustained,
incurred or suffered by or assessed against Holdings, directly or indirectly, to
the extent relating to or arising out of:</p>
<blockquote>
  <p>(i) any liability for income Taxes imposed on any of the Bison Subsidiaries
  (other than the Brazilian Entities) as members of the &quot;affiliated
  group&quot; (within the meaning of Section 1504(a) of the Code) of which
  Parent (or any predecessor or successor) is the common parent that arises
  under Treasury Regulation Section 1.1502&#45;6(a) or comparable provisions of
  foreign, state or local Law;</p>
  <p>(ii) any liability for Taxes (including Taxes resulting from the
  Restructuring), imposed on any of the Bison Subsidiaries (other than the
  Brazilian Entities) for any taxable year or period that ends on or before the
  Closing Date and, with respect to any Straddle Period, the portion of such
  Straddle Period deemed to end on and include the Closing Date;</p>
  <p>(iii) any liability for Taxes (including Taxes resulting from the
  Restructuring), imposed on Permali or Rosario for any taxable year or period
  that ends on or before the Closing Date and, with respect to any Straddle
  Period, the portion of such Straddle Period deemed to end on and include the
  Closing Date, but only to the extent such Taxes exceed the accrual or reserve
  for Taxes (excluding any reserve for deferred Taxes established to reflect
  timing differences between book and Tax income) recorded in the December 30,
  2000 Statement of Net Assets to be Sold, as adjusted to take into account the
  extent to which (A) Parent&#39;s indemnification for a liability for Taxes
  pursuant to any clause of this Section 5.8(i) has previously been reduced or
  eliminated as a result of the application of such accrual or reserve for Taxes
  and (B) Holdings&#39; indemnification for a liability for Taxes pursuant to any
  clause of Section 5.8(j) has previously been paid as a result of the
  application of such accrual or reserve for Taxes; and</p>
  <p align="center">58</p>
  <p>(iv) the Ownership Percentage of any liability for Taxes (including Taxes
  resulting from the Restructuring), imposed on Plascar or TATB for any taxable
  year or period that ends on or before the Closing Date and, with respect to
  any Straddle Period, the portion of such Straddle Period deemed to end on and
  include the Closing Date, but only to the extent such liability exceeds the
  Ownership Percentage of the accrual or reserve for Taxes (excluding any
  reserve for deferred Taxes established to reflect timing differences between
  book and Tax income) recorded in the December 30, 2000 Statement of Net Assets
  to be Sold, as adjusted to take into account the extent to which (A) Parent&#39;s
  indemnification for a liability for Taxes pursuant to any clause of this
  Section 5.8(i) has previously been reduced or eliminated as a result of the
  application of such accrual or reserve for Taxes and (B) Holdings&#39;
  indemnification for a liability for Taxes pursuant to any clause of Section
  5.8(j) has previously been paid as a result of the application of such accrual
  or reserve for Taxes.</p>
  <p>(v) indemnification pursuant to this Section 5.8(i) shall be the sole and
  exclusive remedy of Holdings and C&A Products against Parent with respect
  to any and all Losses arising under or related to any liability for Taxes.</p>
</blockquote>
<p>(j) <u>Indemnification by Holdings</u>. Notwithstanding any other provision
of this Agreement, Holdings shall indemnify Parent from and against and in
respect of any and all Losses incurred by Parent, which may be imposed on,
sustained, incurred or suffered by or assessed against Parent, directly or
indirectly, to the extent relating to or arising out of:</p>
<blockquote>
  <p>(i) any liability for Taxes imposed on any of the Bison Subsidiaries for
  any taxable year or period that begins after the Closing Date and, with
  respect to any Straddle Period, the portion of such Straddle Period beginning
  the day after the Closing Date;</p>
  <p>(ii) any liability for Taxes imposed on Permali or Rosario for any taxable
  year or period that ends on or before the Closing Date and, with respect to
  any Straddle Period, the portion of such Straddle Period deemed to end on and
  include the Closing Date, but only to the extent of the accrual or reserve for
  Taxes (excluding any reserve for deferred Taxes established to reflect timing
  differences between book and Tax income) recorded in December 30, 2000
  Statement of Net Assets to be Sold, as adjusted to take into account the
  extent to which (A) Parent&#39;s indemnification for a liability for Taxes
  pursuant to any clause of Section 5.8(i) has previously been reduced or
  eliminated as a result of the application of such accrual or reserve for Taxes
  and (B) Holdings&#39; indemnification for a liability for Taxes pursuant to any
  clause of this Section 5.8(j) has previously been paid as a result of the
  application of such accrual or reserve for Taxes;</p>
  <p align="center">59</p>
  <p>(iii) the Ownership Percentage of any liability for Taxes imposed on
  Plascar or TATB for any taxable year or period that ends on or before the
  Closing Date and, with respect to any Straddle Period, the portion of such
  Straddle Period deemed to end on and include the Closing Date, but only to the
  extent of the Ownership Percentage of the accrual or reserve for Taxes
  (excluding any reserve for deferred Taxes established to reflect timing
  differences between book and Tax income) recorded in December 30, 2000
  Statement of Net Assets to be Sold, as adjusted to take into account the
  extent to which (A) Parent&#39;s indemnification for a liability for Taxes
  pursuant to any clause of Section 5.8(i) has previously been reduced or
  eliminated as a result of the application of such accrual or reserve for Taxes
  and (B) Holdings&#39; indemnification for a liability for Taxes pursuant to any
  clause of this Section 5.8(j) has previously been paid as a result of the
  application of such accrual or reserve for Taxes;</p>
  <p>(iv) any liability, or increase in a liability, for Taxes imposed on Parent
  or any of its Affiliates as a result of any failure by Holdings to perform or
  comply with its obligations under Section 5.8(e)(i) of this Agreement;</p>
  <p>(v) indemnification pursuant to this Section 5.8(j) shall be the sole and
  exclusive remedy of Parent against Holdings and C&A Products with respect
  to any and all Losses arising under or related to any liability for Taxes.</p>
</blockquote>
<p>(k) <u>Contests</u>.</p>
<blockquote>
  <p>(i) <u>Notice</u>. After the Closing Date, Holdings and Parent each shall
  notify the other party in writing within 15 days of the commencement of any
  Tax audit or administrative or judicial proceeding affecting the Taxes of any
  of the Bison Subsidiaries, which, if determined adversely to the taxpayer
  (&quot;Tax Indemnitee&quot;) or after the lapse of time would be grounds for
  indemnification under this Section 5.8 by the other party (&quot;Tax
  Indemnitor&quot;). Such notice shall contain factual information describing
  any asserted Tax liability in reasonable detail and shall include copies of
  any notice or other document received from any Tax Authority in respect of any
  such asserted Tax liability. If either Holdings or Parent fails to give the
  other party prompt notice of an asserted Tax liability as required under this
  Agreement, then (A) if the Tax Indemnitor is precluded by the failure to give
  prompt notice from contesting the asserted Tax liability in any judicial
  forum, then such party shall not have any obligation to indemnify the other
  party for any Losses arising out of such asserted Tax </p>
  <p align="center">60</p>
  <p>liability and (B) if the Tax Indemnitor is not so precluded from
  contesting, if such failure to give prompt notice results in a detriment to
  the Tax Indemnitor, then any amount which the Tax Indemnitor is otherwise
  required to pay pursuant to this Section 5.8 with respect to such liability
  shall be reduced by the amount of such detriment.</p>
  <p>(ii) <u>Control of Contests Involving Pre&#45;Closing Periods or Straddle
  Periods</u>. In the case of an audit or administrative or judicial proceeding
  involving any asserted liability for Taxes relating to any taxable years or
  periods ending on or before the Closing Date or any Straddle Period of any
  Bison Subsidiaries, Parent shall have the right, at its expense, to control
  the conduct of such audit or proceeding; <u>provided</u>, <u>however</u>, that
  (i) Parent shall keep Holdings reasonably informed with respect to the status
  of such audit or proceeding and provide Holdings with copies of all written
  correspondence with respect to such audit or proceeding in a timely manner and
  (ii) if such audit or proceeding would be reasonably expected to result in a
  material increase in Tax liability of any Bison Subsidiaries for which
  Holdings would be liable under this Section 5.8, (A) Holdings may participate
  in the conduct of such audit or proceeding at its own expense and (B) Parent
  shall not settle any such audit or proceeding without the consent of Holdings,
  which consent shall not be unreasonably withheld.</p>
  <p>(iii) <u>Control of Contests Involving Post&#45;Closing Periods</u>. In the
  case of an audit or administrative or judicial proceeding involving any
  asserted liability for Taxes relating to any taxable years or periods
  beginning after the Closing Date, Holdings shall have the right, at its
  expense, to control the conduct of such audit or proceeding; <u>provided</u>, <u>however</u>,
  that if such audit or proceeding would be reasonably expected to result in a
  material increase in Tax liability of any Bison Subsidiaries for which Parent
  would be liable under this Section 5.8, (A) Parent may participate in the
  conduct of such audit or proceeding at its own expense and (B) Holdings shall
  not settle any such audit or proceeding without the consent of Parent, which
  consent shall not be unreasonably withheld.</p>
</blockquote>
<p>(l) As of the Closing Date, Parent shall cause all Tax sharing, Tax
allocation, or Tax indemnity agreements between Parent or any Non&#45;Bison
Subsidiary on the one hand, and any Bison Subsidiary on the other hand, to be
terminated.</p>
<font COLOR="#ff0000">
<p>5.9 </font><u><a NAME="_Toc521492931">Bison Financial Statements</a></u>.</p>
<p>(a) Parent shall deliver to C&A Products and Holdings, at Parent&#39;s
expense:</p>
<blockquote>
  <p>(i) statements of financial position with respect to the Business as at
  December 30, 2000 and January 1, 2000, and statements of income, cash flows
  and changes in net worth for each of the fiscal years ended December 30, 2000,
  January 1, 2000 and January 2, 1999, together with an audit report of E&Y
  thereon prepared in accordance with the accounting requirements and the
  published rules and regulations of the SEC applicable to a registration
  statement relating to an offering of debt securities, which report for the
  fiscal year 2000 will be substantially to the effect of E&Y&#39;s report
  relating to the Statement of Net Assets to be Sold at December 30, 2000 dated
  February 28, 2001, adapted as appropriate for inclusion of a statement of
  income and cash flows and as otherwise appropriate for its purpose; and</p>
  <p>(ii) an unaudited statement of financial position for the interim period
  ended June 30, 2001 and unaudited statements of income and cash flows for the
  interim period ended June 30, 2001 and the corresponding period in 2000, in
  each case prepared in accordance with GAAP consistently applied for the
  periods presented and with the accounting requirements and the published rules
  and regulations of the SEC applicable to a registration statement relating to
  an offering of debt securities, <u>provided</u>, <u>however</u>, that if the
  Closing occurs on or after November 15, 2001, Parent shall deliver to C&A
  Products and Holdings not later than November 15, 2001 comparable financial
  statements for the interim period ended September 30, 2001 and the
  corresponding period in 2000.</p>
</blockquote>
<p>(b) Parent shall deliver to C&A Products and Holdings a summary of
financial information in the form set forth in Section 5.9(b) of the Disclosure
Schedule for each fiscal month beginning immediately after the last quarterly
statement provided pursuant to Section 5.9(a) and ending with the fiscal month
which ends at least thirty days prior to the Closing Date, and the summary shall
be delivered within 28 days after the end of said month.</p>
<p>The financial statements required by this Section 5.9 are referred to herein
as the &quot;Required Financial Statements&quot;.</p>
<p>(c) E&Y and Parent shall provide to Holdings and C&A and its auditors
reasonable cooperation in the preparation of such pro forma financial
information as may be required for the financing of the Transactions on the
basis contemplated hereby.</p>
<font COLOR="#ff0000">
<p>5.10 </font><u><a NAME="_Toc521492932">Observer Rights</a></u>.</p>
<p>For so long as Parent or its Affiliates hold at least 50% of the Holdings
Common Stock issued pursuant to this Agreement, Parent shall have the right to
designate two representatives to serve as observers on the Board of Directors of
Holdings. Such observers shall have the right to receive all notices and meeting
materials provided to members of the Board of Directors of Holdings and
committees of the Board of Directors of Holdings and to attend and participate
in all meetings of the Board of Directors of Holdings and meetings of committees
of the Board of Directors of Holdings. For so long as Parent or its Affiliates
hold at least 50% of the Preferred Stock issued pursuant to this Agreement,
Parent shall have the right to </p>
<p align="center">62</p>
<p>designate two representatives to serve as observers on the Board of Directors
of C&A Products. Such observers shall have the right to receive all notices
and meeting materials provided to members of the Board of Directors of C&A
Products and committees of the Board of Directors of C&A Products and to
attend and participate in all meetings of the Board of Directors of C&A
Products and meetings of committees of the Board of Directors of C&A
Products.</p>
<font COLOR="#ff0000">
<p>5.11 </font><u><a NAME="_Toc521492933">Non&#45;Competition</a></u>.</p>
<p>(a) Prior to the third anniversary of the Closing Date, the Parent Entities
shall not engage in the business of (i) manufacturing or selling overhead
systems, headliners, interior instrument panels, interior quarter panel/sidewall
trim, interior trim consoles, lift&#45;gate trim panels, painted or unpainted fascia
and bumpers, claddings/exterior trim moldings, exterior grilles, structural
composite bumpers, or signal, taillight and other lighting or (ii) assembling or
selling cockpit systems or front&#45;end modules, in each case as currently
manufactured, assembled or sold by the Bison Subsidiaries and in each case for
use in automotive passenger cars and light and heavy trucks (the
&quot;Restricted Field&quot;). For the avoidance of doubt, the continued
operation of the existing businesses of Parent and the Non&#45;Bison Subsidiaries
shall not be a violation of this Section 5.11(a).</p>
<p>(b) Notwithstanding the foregoing, the Parent Entities may acquire, directly
or indirectly, all or substantially all of the capital stock or assets of any
Person (an &quot;After&#45;Acquired Business&quot;) which derives 33% or less of its
gross sales revenues from the Restricted Field, if Parent or such Parent Entity
promptly grants to Holdings an option to acquire the portion of the After&#45;Acquired Business which engages in the Restricted Field (the
&quot;Restricted Portion&quot;) upon the terms and conditions set forth in this
Section 5.11(b) and promptly gives notice to Holdings of such option (but in no
event later than the date the After&#45;Acquired Business was acquired). The
purchase price for the Restricted Portion shall be an amount equal to the
aggregate purchase price, including any liabilities assumed by a Parent Entity,
paid by a Parent Entity for the After&#45;Acquired Business, multiplied by a
fraction, the numerator of which shall be the net operating profit or other
mutually acceptable measure of value of the Restricted Portion during the most
recently completed fiscal year prior to the date such Parent Entity acquired the
After&#45;Acquired Business and the denominator of which shall be the net operating
profit or other mutually acceptable measure of value of the After&#45;Acquired
Business during the same period.</p>
<blockquote>
  <p>(i) The purchase of the Restricted Portion by Holdings will be subject to
  the execution by the Parent Entity and Holdings of a mutually satisfactory
  definitive agreement for such purchase and the obtaining of all necessary
  regulatory approvals from any Governmental Authority and material third party
  Consents (in each case at no out&#45;of&#45;pocket cost or expense to the Parent
  Entity) and the expiration or termination of any applicable waiting period
  under the HSR Act and any applicable Foreign Competition Laws. The Parent
  Entity&#39;s representations and warranties in the definitive purchase agreement
  for the Restricted Portion shall be limited to reasonable </p>
  <p align="center">63</p>
  <p>assurances that the applicable Parent Entity had caused the Restricted
  Portion to be operated in the ordinary course of business during the period of
  such Parent Entity&#39;s ownership, and the Parent Entity shall use all
  commercially reasonable efforts to cause its rights under the purchase
  agreement by which it acquired the After&#45;Acquired Business to the extent
  relating to the Restricted Portion to be assigned or otherwise made available
  to Holdings. The definitive purchase agreement shall provide that such
  agreement may be terminated at the option of either a Parent Entity (or the
  applicable Non&#45;Bison Subsidiary) or Holdings if such transaction is not
  consummated by the six month anniversary of the date the After&#45;Acquired
  Business was acquired by a Parent Entity.</p>
  <p>(ii) If Holdings fails to give Parent notice of its intent to exercise this
  option on or before the one month anniversary of the date the After&#45;Acquired
  Business was acquired or the sale of the Restricted Portion to Holdings is not
  consummated, other than because of a default by a Parent Entity, the Parent
  Entity may retain ownership of the After&#45;Acquired Business, including the
  Restricted Portion.</p>
</blockquote>
<font COLOR="#ff0000">
<p>5.12 <a NAME="_Toc503342998"></a><a NAME="_Toc503343099"></a><a NAME="_Toc503343344"></a></font><u><a NAME="_Toc521492934">Intercompany
Transactions</a></u>.</p>
<p>Intercompany transactions shall be treated in accordance with the Transition
Agreement.</p>
<font COLOR="#ff0000">
<p>5.13 </font><a NAME="_Toc521492935"><u>Additional Covenant of C&A and
Holdings</u>.</a><a NAME="_Toc518733054"></a></p>
<p>Neither Holdings nor C&A Products shall amend or cause to be amended any
of the Commitment Letters (except to add new lenders) without the prior written
consent of Parent, which consent shall not be unreasonably withheld, conditioned
or delayed.</p>
<font COLOR="#ff0000">
<p>5.14 </font><u><a NAME="_Toc521492936">Certain Pre&#45;Closing Restrictions</a></u>.</p>
<p>Prior to the Closing, Products will comply with the following provisions of
the Certificate of Designation as though in effect on the date hereof:</p>
<p>(a) Section 7(c), provided that the term &quot;Issuance Date of the Series A1
Redeemable Preferred Stock, the Series B1 Redeemable Preferred Stock and the
Series C1 Redeemable Preferred Stock&quot; shall be deemed to refer to the date
of this Purchase Agreement;</p>
<p>(b) Section 7(f), provided that the consent of Textron and its Subsidiaries
shall be required to the extent stated therein notwithstanding the Preferred
Stock has not been issued and in no event shall such provisions prevent any of
the Transactions and related matters, including but not limited to any payments
pursuant to the Advisory Agreement (as defined in the Certificate of
Designation) as amended through the date of the Closing;</p>
<p>(c) Section 7(h); and</p>
<p align="center">64</p>
<p>(d) Section 7(b), provided that (i) the term &quot;Restricted Payments&quot;
shall only include Restricted Payments of a type described in clauses (i) and
(ii), (ii) clause (b) of the first paragraph thereof shall be that ratio
referred to in the footnote to Section 7(a), (iii) the exceptions in the second
paragraph of Section 7(b) shall be construed to include those exceptions in
C&A Products&#39; existing 11&#45;1/2% Senior Subordinated Notes due 2006 in any
case in which there is a blank or bracketed amount and (iv) insofar as
Restricted Payments of the type referred to in clause (iii) of the term
&quot;Restricted Payments&quot; is concerned, C&A Products will abide by the
provisions applicable to such types of Restricted Payments in its existing 11&#45;1/2% Senior Subordinated Notes due 2006.</p>
<font COLOR="#ff0000">
<p>5.15 </font><u><a NAME="_Toc521492937">Closing Date Indebtedness</a></u>.</p>
<p>On or prior to the Closing Date, Parent shall provide to Holdings and C&A
Products a schedule listing total Indebtedness of the Bison Subsidiaries (after
giving effect to the Restructuring and excluding intercompany accounts that have
been settled prior to Closing), separated into the categories &quot;a&quot;
through &quot;g&quot; contained in the definition of Indebtedness, as of the
Closing Date.</p>
<font COLOR="#ff0000">
<p>5.16 </font><u><a NAME="_Toc521492938">Tax Reporting</a></u>.</p>
<p>(a) Holdings, C&A Products and Parent shall classify the Preferred Stock
as equity for tax purposes and shall not take any position inconsistent with
such classification.</p>
<p>(b) Parent, Holdings and C&A Products shall take the position that there
will not be any constructive distributions (or series of constructive
distributions) with respect to the Preferred Stock under Section 305 of the Code
or the Treasury Department regulations promulgated thereunder (&quot;Tax
Law&quot;). None of Parent, Holdings or C&A Products shall take any position
inconsistent with such position; <u>provided</u>, <u>however</u>, that if
Parent, Holdings or C&A Products determines that under then applicable Tax
Law the parties may be required to take a position inconsistent with that set
forth in this Section 5.16(b), the party making such determination (the
&quot;Requesting Party&quot;) shall notify the other parties of such
determination and, if the other parties do not agree that the parties will be
required under then applicable Tax Law to take a position inconsistent with the
position set forth in this Section 5.16(b), Parent, Holdings and C&A
Products shall retain a mutually agreed upon nationally recognized tax counsel
to advise the parties as to whether they will be required under then applicable
Tax Law to take a position inconsistent with the position set forth in this
Section 5.16(b). In the event that the parties agree, or the mutually agreed
upon nationally recognized tax counsel determines, that the parties will be
required under then applicable Tax Law to take a position inconsistent with the
position set forth in this Section 5.16(b), then the parties shall take the
position so agreed upon or determined. All costs and expenses of the mutually
agreed upon nationally recognized tax counsel relating to such advice shall be
borne equally by Parent and Holdings; <u>provided</u>, <u>however</u>, that if
the mutually agreed upon nationally recognized tax counsel determines that the
parties will not be required under then applicable Tax Law to take a position
inconsistent with the position set forth in this Section 5.16(b), then all such
costs and expenses shall be borne by the Requesting Party.</p>
<p align="center">65</p>
<font COLOR="#ff0000">
<p>5.17 </font><a NAME="_Toc521492939"><u>R&D Employees</u>.</a></p>
<p>Persons whose activities prior to the date hereof related primarily to
research and development and product development related to the Business shall
not be continuously employed by Parent or a Subsidiary of Parent after the
Closing. For a period of two years from the date of this Agreement, Parent and
its Affiliates shall not, without the written consent of C&A Products,
solicit for employment any Transferred Employee whose activities prior to the
date hereof related primarily to research and development or product
development. This non&#45;solicitation covenant shall not apply to general
advertisements for available employment positions.</p>
<font COLOR="#ff0000">
<p>5.18 </font><u><a NAME="_Toc521492940">IRB</a></u>.</p>
<p>On or prior to the Closing, Holdings shall either (i) cause the Indebtedness
under the Loan Agreement dated as of August 1, 1991 between C&A Products
(formerly Collins & Aikman Corporation) and the Michigan Strategic Fund (the
&quot;Loan Agreement&quot;) to be completely paid and retired and terminate all
obligations under the Loan Agreement and the Reimbursement Agreement dated as of
August 1, 1991 between C&A Products (formerly Collins & Aikman
Corporation and NBD Bank, N.A.) (the &quot;Reimbursement Agreement&quot;) or
(ii) obtain amendments to or waivers of any terms of the Reimbursement
Agreement, the Loan Agreement and any other Contract relating thereto such that
the Reimbursement Agreement, the Loan Agreement and the related Contracts will
not in any manner adversely affect the ability of C&A Products to pay
dividends on or redeem (other than redemptions solely at the option of C&A
Products) the Preferred Stock or adversely affect the ability of Holdings or
C&A Products to complete the transactions contemplated by the Transaction
Agreements or the Commitment Letters.<i></p>
</i>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE VI<a NAME="_Toc503343100"></a><a NAME="_Toc503343345"></a></font><br>
<br>
<a NAME="_Toc503342999"></a><a NAME="_Toc503343949"></a><a NAME="_Toc503667930"></a><a NAME="_Toc503684861"></a><a NAME="_Toc504459553"></a><a NAME="_Toc505070816"></a><a NAME="_Toc505137412"></a><a NAME="_Toc505767659"></a><a NAME="_Toc506346230"></a><a NAME="_Toc506628548"></a><a NAME="_Toc506775358"></a><a NAME="_Toc507592226"></a><a NAME="_Toc508437303"></a><a NAME="_Toc508709248"></a><a NAME="_Toc514732034"></a><a NAME="_Toc514732772"></a><a NAME="_Toc516456615"></a><a NAME="_Toc516460975"></a><a NAME="_Toc516463391"></a><a NAME="_Toc516560576"></a><a NAME="_Toc518363269"></a><a NAME="_Toc518466850"></a><a NAME="_Toc518733404"></a><a NAME="_Toc518733498"></a><a NAME="_Toc519520867"></a><a NAME="_Toc519701043"></a><a NAME="_Toc520104890"></a><a NAME="_Toc520108744"></a><a NAME="_Toc520261552"></a><a NAME="_Toc520609481"></a><a NAME="_Toc521132978"></a><a NAME="_Toc521305001"></a><a NAME="_Toc521330778"></a><a NAME="_Toc521426491"></a><a NAME="_Toc521468890"></a><a NAME="_Toc521492941">CONDITIONS
TO CONSUMMATION OF THE TRANSACTION</a></p>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p>6.1 <a NAME="_Toc503343000"></a><a NAME="_Toc503343101"></a><a NAME="_Toc503343346"></a><a NAME="_Toc508437304"></a></font><a NAME="_Toc521492942"><u>Conditions
to Each Party&#39;s Obligations to Complete the Transactions</u>.</a></p>
<p>The respective obligations of each party to complete the Transactions are
subject to the satisfaction at or prior to the Closing Date of the following
conditions:</p>
<p>(a) <u>Injunction</u>. There shall not be in effect any Law or Order of any
Governmental Authority of competent jurisdiction directing that the Transactions
not be consummated as provided herein.</p>
<p>(b) <u>Governmental Filings and Consents</u>. The regulatory approvals listed
in Section 6.1(b) of the Disclosure Schedule shall have been obtained and be in
effect as of the Closing Date, and the waiting period under HSR Act shall have
expired or early termination thereof shall have been granted.</p>
<p>(c) <u>Works Councils</u>. All required notices to any works council,
personnel committee or similar employee council or committee shall have been
made, and any required consultation with any works council, personnel committee
or similar employee council or committee shall have occurred.</p>
<p>(d) <u>Restructuring</u>. Parent shall have completed the Restructuring in
all material respects.</p>
<p align="center">66</p>
<font COLOR="#ff0000">
<p>6.2 <a NAME="_Toc503343001"></a><a NAME="_Toc503343102"></a><a NAME="_Toc503343347"></a><a NAME="_Toc508437305"></a></font><u><a NAME="_Toc521492943">Additional
Conditions to the Obligation of Holdings and C&A Products</a></p>
</u>
<p>. The obligation of Holdings and C&A Products to complete the
Transactions is subject to the satisfaction at or prior to the Closing Date of
the following conditions, any and all of which may be waived in whole or in part
by Holdings to the extent permitted by applicable Law:</p>
<p>(a) <u>Representations and Warranties</u>. The representations and warranties
of Parent contained in this Agreement shall be true and correct on the date of
this Agreement and on the Closing Date as though made on and as of the Closing
Date (except to the extent that a representation or warranty expressly speaks as
of a specified date or period of time); <u>provided</u>, <u>however</u>, that
for purposes of this Section 6.2(a), such representations and warranties shall
be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, without regard to any
materiality or Material Adverse Effect qualifiers contained therein,
individually or in the aggregate, results or would reasonably be likely to
result in a Material Adverse Effect.</p>
<p>(b) <u>Performance</u>. Parent shall have performed in all material respects
all of its covenants and agreements under this Agreement to be performed or
complied with on or prior to the Closing Date; <u>provided</u> that Parent shall
be provided the opportunity to cure any failure to so perform or comply, if a
cure is possible, within a reasonable time after receiving written notice of
such failure from Holdings.</p>
<p>(c) <u>Officer&#39;s Certificate</u>. Holdings shall have received on the Closing
Date a certificate dated the Closing Date and executed by the Chief Operating
Officer or the Chief Financial Officer of Parent certifying to the fulfillment
of the conditions specified in Sections 6.1(d), 6.2(a) and 6.2(b).</p>
<p>(d) <u>Bison Financial Statements</u>. Parent shall have delivered the
Required Financial Statements pursuant to Section 5.9.</p>
<p>(e) <u>Agreements</u>. Parent and its Subsidiaries (to the extent each is a
party thereto) shall have executed the License Agreements attached hereto as
Exhibits 3A, 3B and 3C, the Assignment and Assumption Agreement attached hereto
as Exhibit 2, the Registration Rights Agreements attached hereto as Exhibits 5
and 6 and the Transition Agreement attached hereto as Exhibit 4.</p>
<p>(f) <u>Financing</u>. The financing contemplated by the Debt Commitment
Letter shall have been completed on substantially the terms and conditions
identified in such Debt Commitment Letter or on such other terms and conditions
or involving such other financing sources, as are not materially more onerous in
the aggregate to Holdings and C&A Products than those in the applicable Debt
Commitment Letter and on other reasonable and customary terms (but not requiring
more equity financing than is contemplated by the Debt Commitment Letter); <u>provided</u>,
that this condition shall be deemed satisfied if the failure of this condition
is due to a breach by Holdings, C&A Products, Heartland or any of their
respective Affiliates of any covenant contained in any Financing Agreement,
except if any such breach would not occur but for a breach by Parent or any of
its Affiliates of any of its covenants, representations or warranties contained
herein or a failure of Parent or any of its Affiliates to comply with a
reasonable request of Holdings in respect of the financing contemplated by the
Debt Commitment Letter or an adverse change in the business, operations, assets,
financial condition, contingent liabilities or material agreements of the
Business or the Bison Subsidiaries.</p>
<p align="center">67</p>
<font COLOR="#ff0000">
<p>6.3 <a NAME="_Toc503343002"></a><a NAME="_Toc503343103"></a><a NAME="_Toc503343348"></a><a NAME="_Toc508437306"></a></font><a NAME="_Toc521492944"><u>Additional
Conditions to the Obligation of Parent</u>.</a></p>
<p>The obligation of Parent to complete the Transactions is subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
and all of which may be waived in whole or in part by Parent to the extent
permitted by applicable Law:</p>
<p>(a) <u>Representations and Warranties</u>. The representations and warranties
of Holdings and C&A Products contained in this Agreement shall be true and
correct on the date of this Agreement and on the Closing Date as though made on
and as of the Closing Date (except to the extent that a representation or
warranty expressly speaks as of a specified date or period of time); <u>provided</u>,
<u>however</u>, that for purposes of this Section 6.3(a), such representations
and warranties shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and correct,
without regard to any materiality or Holdings Material Adverse Effect qualifiers
contained therein, individually or in the aggregate, results or would reasonably
be likely to result in a Material Adverse Effect.</p>
<p>(b) <u>Performance</u>. Holdings shall have performed in all material
respects its covenants and agreements under this Agreement to be performed or
complied with on or prior to the Closing Date; <u>provided</u> that Holdings
shall be provided the opportunity to cure any failure to so perform or comply,
if a cure is possible, within a reasonable time after receiving written notice
of such failure from Parent.</p>
<p>(c) <u>Officer&#39;s Certificate</u>. Parent shall have received on the Closing
Date a certificate dated the Closing Date and executed by the Chief Operating
Officer or the Chief Financial Officer of Holdings certifying to the fulfillment
of the conditions specified in Sections 6.3(a) and (b) hereof.</p>
<p>(d) <u>Agreements</u>. Holdings and C&A Products shall have executed the
License Agreements attached hereto as Exhibits 3A, 3B and 3C, the Assignment and
Assumption Agreement attached hereto as Exhibit 2, the Registration Rights
Agreements attached hereto as Exhibits 5 and 6 and the Transition Agreement
attached hereto as Exhibit 4.</p>
<p>(e) <u>Certificate of Designation</u>. The Certificate of Designation shall
have been duly filed with the Secretary of State of the State of Delaware, shall
be in full force and effect and shall not have been amended or modified.</p>
<p align="center">68</p>
<font FACE="Courier New"></font><font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE VII<a NAME="_Toc503343104"></a><a NAME="_Toc503343349"></a></font><br>
<br>
<a NAME="_Toc503343003"></a><a NAME="_Toc503343953"></a><a NAME="_Toc503667934"></a><a NAME="_Toc503684865"></a><a NAME="_Toc504459557"></a><a NAME="_Toc505070820"></a><a NAME="_Toc505137416"></a><a NAME="_Toc505767663"></a><a NAME="_Toc506346234"></a><a NAME="_Toc506628552"></a><a NAME="_Toc506775362"></a><a NAME="_Toc507592230"></a><a NAME="_Toc508437307"></a><a NAME="_Toc508709253"></a><a NAME="_Toc514732039"></a><a NAME="_Toc514732777"></a><a NAME="_Toc516456620"></a><a NAME="_Toc516460980"></a><a NAME="_Toc516463396"></a><a NAME="_Toc516560581"></a><a NAME="_Toc518363274"></a><a NAME="_Toc518466855"></a><a NAME="_Toc518733409"></a><a NAME="_Toc518733503"></a><a NAME="_Toc519520871"></a><a NAME="_Toc519701047"></a><a NAME="_Toc520104894"></a><a NAME="_Toc520108748"></a><a NAME="_Toc520261556"></a><a NAME="_Toc520609485"></a><a NAME="_Toc521132982"></a><a NAME="_Toc521305005"></a><a NAME="_Toc521330782"></a><a NAME="_Toc521426495"></a><a NAME="_Toc521468894"></a><a NAME="_Toc521492945">TERMINATION</a></p>
<p ALIGN="CENTER">&nbsp;</p>
<p>&nbsp;</p>
<font COLOR="#ff0000">
<p>7.1 <a NAME="_Toc503343004"></a><a NAME="_Toc503343105"></a><a NAME="_Toc503343350"></a></font><a NAME="_Toc521492946"><u>Termination
by Mutual Consent</u>.</a></p>
<p>This Agreement may be terminated and the Transactions may be abandoned at any
time prior to the Closing Date, by the mutual written consent of Parent and
Holdings.</p>
<font COLOR="#ff0000">
<p>7.2 <a NAME="_Toc503343005"></a><a NAME="_Toc503343106"></a><a NAME="_Toc503343351"></a></font><a NAME="_Toc521492947"><u>Termination
by Any Party</u>.</a></p>
<p>This Agreement may be terminated and the Transactions may be abandoned by any
party hereto by prompt written notice to the others if (a) any court of
competent jurisdiction or other Governmental Authority shall have issued an
Order permanently restraining, enjoining or otherwise prohibiting the
Transactions, and such Order shall have become final and nonappealable; <u>provided</u>,
<u>however</u>, that the party seeking to terminate this Agreement pursuant to
this clause (a) shall have used all commercially reasonable efforts to have such
Order vacated, or (b) the Closing shall not have occurred by December 31, 2001; <u>provided</u>,
<u>however</u>, that the right to terminate this Agreement pursuant to this
Section 7.2(b) shall not be available to any party whose failure to fulfill any
of its material obligations under this Agreement results in the failure of the
Closing to occur on or prior to such date.</p>
<font COLOR="#ff0000">
<p>7.3 <a NAME="_Toc503343006"></a><a NAME="_Toc503343107"></a><a NAME="_Toc503343352"></a></font><u><a NAME="_Toc521492948">Termination
by Parent</a>.</p>
</u>
<p>(a) This Agreement may be terminated by Parent at any time if (a) any
condition contained in any Commitment Letter shall fail to be satisfied and such
failure is not cured within 30 days of Holdings&#39; or C&A Products&#39; notice of
such failure or (b) one or more of the Commitment Letters is withdrawn,
terminated or revoked; <u>provided</u>, <u>however</u>, that in the event an
Equity Commitment Letter is withdrawn, terminated or revoked, Holdings and
C&A Products shall have 30 days to cause such Equity Commitment Letter to be
reinstated or the commitment covered by said Equity Commitment Letter replaced
by another investor pursuant to a commitment letter containing the same terms,
except for the identity of the parties; <u>provided</u>, <u>further</u>, however
that Parent&#39;s right to terminate this Agreement pursuant to this Section 7.3
will not be available if Parent fails to fulfill any of its obligations under
this Agreement and such failure results in the failure of the applicable
condition to Closing.</p>
<font COLOR="#ff0000">
<p>7.4 </font><a NAME="_Toc521492949"><u>Effect of Termination</u>.</a></p>
<p>In the event this Agreement is terminated pursuant to this Article VII, the
transactions contemplated hereby shall be abandoned, without further action by
any of the parties hereto, and this Agreement shall become void and have no
further force and effect, except that (i) the obligations of Heartland
Industrial Partners, C&A, Holdings and C&A Products set forth in the
Confidentiality Agreement shall remain in effect, (ii) neither party shall be
relieved from any liabilities or damages arising out of a willful breach of any
provision of this Agreement and (iii) the respective obligations of the parties
set forth in Section 9.3 shall remain in effect.</p>
<p align="center">69</p>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE VIII<a NAME="_Toc503343108"></a><a NAME="_Toc503343353"></a></font><br>
<br>
<a NAME="_Toc503343007"></a><a NAME="_Toc503343957"></a><a NAME="_Toc503667938"></a><a NAME="_Toc503684869"></a><a NAME="_Toc504459561"></a><a NAME="_Toc505070824"></a><a NAME="_Toc505137420"></a><a NAME="_Toc505767667"></a><a NAME="_Toc506346238"></a><a NAME="_Toc506628556"></a><a NAME="_Toc506775366"></a><a NAME="_Toc507592234"></a><a NAME="_Toc508437311"></a><a NAME="_Toc508709257"></a><a NAME="_Toc514732043"></a><a NAME="_Toc514732781"></a><a NAME="_Toc516456624"></a><a NAME="_Toc516460984"></a><a NAME="_Toc516463400"></a><a NAME="_Toc516560585"></a><a NAME="_Toc518363278"></a><a NAME="_Toc518466859"></a><a NAME="_Toc518733508"></a><a NAME="_Toc519520876"></a><a NAME="_Toc519701052"></a><a NAME="_Toc520104899"></a><a NAME="_Toc520108753"></a><a NAME="_Toc520261561"></a><a NAME="_Toc520609490"></a><a NAME="_Toc521132987"></a><a NAME="_Toc521305010"></a><a NAME="_Toc521330787"></a><a NAME="_Toc521426500"></a><a NAME="_Toc521468899"></a><a NAME="_Toc521492950">OBLIGATIONS
AFTER CLOSING</a></p>
<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="CENTER">&nbsp;</p>
<font COLOR="#ff0000">
<p>8.1 <a NAME="_Toc503343008"></a><a NAME="_Toc503343109"></a><a NAME="_Toc503343354"></a><a NAME="_Toc508437312"></a></font><a NAME="_Toc521492951"><u>Survival
of Representations, Warranties and Covenants; Indemnification</u></a>.</p>
<p>(a) <u>Survival</u>. All representations and warranties contained in this
Agreement shall survive until the first anniversary of the Closing Date, except
(i) the representations and warranties contained in Sections 3.2(b) and (c) and
Section 4.4(a) and (b) of this Agreement, which shall survive the Closing and
(ii) the representations and warranties contained in Section 3.8 and Section
3.11, which shall not survive the Closing. This Section 8.1(a) shall not limit
any covenant or agreement of the parties hereto which by its express terms
contemplates performance after the Closing, including Parent&#39;s indemnification
obligations for certain environmental matters and Taxes set forth in Sections
8.2 and 5.8(i).</p>
<p>(b) <u>Indemnification by Parent</u>. Subject to the other provisions of this
Section 8.1, Parent shall indemnify Holdings, its Subsidiaries and their present
and former directors, officers, employees and agents (collectively, the
&quot;Holdings Indemnified Parties&quot;) from and against and in respect of any
and all Losses incurred by a Holdings Indemnified Party, which may be imposed
on, sustained, incurred or suffered by or assessed against a Holdings
Indemnified Party, directly or indirectly, to the extent relating to or arising
out of:</p>
<blockquote>
  <p>(i) the failure of any of the representations or warranties of Parent
  contained in Article III (excluding the representations and warranties
  contained in Section 3.8 and Section 3.11) to be true and correct on the date
  of this Agreement and on the Closing Date as though made on and as of the
  Closing Date (except to the extent that a representation or warranty expressly
  speaks as of a specified date or period of time and except as modified
  hereafter in this Section 8.1(b)(i)); <u>provided</u>, that solely for the
  purpose of this Section 8.1(b)(i), the representations and warranties in
  Sections 3.6(a) and 3.7 shall be read without regard to the words &quot;as of
  the date hereof&quot; and the representations and warranties in Sections
  3.16(a) and (b) shall be read without regard to the words &quot;through and
  including the date hereof&quot;; <u>provided</u>, <u>further</u>, that solely
  for the purpose of Section 8.1(b)(i), the representations and warranties in
  Sections 3.3(b), 3.6(a) and (b), 3.7, 3.12 and 3.16 shall be read without
  regard to any materiality or Material Adverse Effect qualifiers contained
  therein;</p>
  <p>(ii) any failure by Parent to perform or comply with its covenants and
  agreements contained in this Agreement (excluding any covenant contained in
  Section 5.8 for which the exclusive remedy of Holdings shall be
  indemnification pursuant to Section 5.8), the Transition Agreement and the
  Assignment and Assumption Agreement; and</p>
  <p align="center">70</p>
  <p>(iii) except as set forth in Section 5.8, Section 8.1(g), Section 8.2 and
  Section 8.3, the businesses, operations and assets of Parent or any Non&#45;Bison
  Subsidiary (giving effect to the Restructuring and Closing), other than Losses
  relating to or arising out of the operation and conduct of the Business,
  commercial transactions with the Bison Subsidiaries in the ordinary course of
  business pre&#45;Closing and commercial transactions with the Bison Subsidiaries
  post&#45;Closing.</p>
</blockquote>
<p>(c) <u>Indemnification by Holdings and C&A Products</u>. Subject to the
other provisions of this Section 8.1, Holdings and C&A Products shall
indemnify Parent, its Subsidiaries and their present and former directors,
officers, employees and agents (collectively, the &quot;Parent Indemnified
Parties&quot;) from and against and in respect of any and all Losses incurred by
a Parent Indemnified Party, which may be imposed on, sustained, incurred or
suffered by or assessed against a Parent Indemnified Party, directly or
indirectly, to the extent relating to or arising out of:</p>
<blockquote>
  <p>(i) the failure of any of the representations or warranties of Holdings or
  C&A Products contained in Article IV to be true and correct on the date of
  this Agreement and on the Closing Date as though made on and as of the Closing
  Date (except to the extent that a representation or warranty expressly speaks
  as of a specified date or period of time); <u>provided</u>, <u>however</u>,
  that for purposes of this Section 8.1(c)(i), such representations and
  warranties that are qualified by reference to materiality or Holdings Material
  Adverse Effect shall be true and correct and such representations and
  warranties that are not so qualified shall be true and correct in all material
  respects;</p>
  <p>(ii) any failure by Holdings or C&A Products to perform or comply with
  their respective covenants and agreements contained in this Agreement
  (excluding any covenant contained in Section 5.8 for which the exclusive
  remedy of Parent shall be indemnification pursuant to Section 5.8), the
  Transition Agreement and the Assignment and Assumption Agreement;</p>
  <p>(iii) the use of any Parent Name from and after the Closing Date; and</p>
  <p>(iv) except as set forth in Section 5.8, Section 8.1(g), Section 8.2 and
  Section 8.3, the businesses, operations and assets of any Bison Subsidiary
  (giving effect to the Restructuring and Closing), other than Losses relating
  to or arising out of the operation and conduct of the businesses conducted by
  Parent and the Non&#45;Bison Subsidiaries (other than the Business), and
  commercial transactions with the Non&#45;Bison Subsidiaries in the ordinary course
  of business pre&#45;Closing and commercial transactions with the Bison
  Subsidiaries post&#45;Closing.</p>
  <p align="center">71</p>
</blockquote>
<p>(d) <u>Limitation of Liability</u>. The obligations and liabilities of
Parent, Holdings and C&A Products under Sections 8.1(b)(i) and (c)(i),
respectively, shall be subject to the following additional limitations:</p>
<blockquote>
  <p>(i) Parent shall not have any liability with respect to the payment of any
  indemnification amounts which Holdings Indemnified Parties would be entitled
  pursuant to Section 8.1(b)(i), whether or not asserted pursuant to Section
  8.1(b)(i), until such time as the aggregate amount of Losses incurred by
  Holdings Indemnified Parties for which Holdings Indemnified Parties would
  otherwise be entitled to indemnification pursuant to Section 8.1(b)(i) exceeds
  ten million dollars ($10,000,000) and thereafter, only to the extent of such
  Losses in excess of ten million dollars ($10,000,000); <u>provided</u>, <u>however</u>,
  that (A) with respect to Losses relating to or arising out of the breach of
  any representation or warranty in Sections 3.3(b), 3.6, 3.7, 3.12 and 3.16, a
  Holdings Indemnified Party shall not make any claim against Parent which
  individually does not exceed five hundred thousand dollars ($500,000), and
  such claims not meeting this threshold shall not be applied in calculating the
  ten million dollar ($10,000,000) minimum specified above, (B) with respect to
  any Losses for which Holdings Indemnified Parties would be entitled pursuant
  to Section 8.1(b)(i) other than those referred to in Section 8.1(d)(i)(A), a
  Holdings Indemnified Party shall not make any Claim against Parent which
  individually does not exceed fifty thousand dollars ($50,000) and such Claims
  not meeting this threshold shall not be applied in calculating the ten million
  dollar ($10,000,000) minimum specified above, and (C) Parent&#39;s maximum
  aggregate indemnification liability for which Holdings Indemnified Parties
  would be entitled pursuant to Section 8.1(b)(i) and Section 8.2(a) (excluding
  liability for any and all Environmental Losses related to, or arising out of,
  (A) the Dover Municipal Landfill located in Dover, New Hampshire and (B) the
  Cardinal Landfill located in Farmington, New Hampshire, which such
  Environmental Losses shall not be subject to any maximum aggregate
  indemnification liability cap) shall be one hundred million dollars
  ($100,000,000); and <u>provided</u>, <u>further</u>, that Parent&#39;s
  indemnification obligation for breach of any representation or warranty
  contained in Section 3.2(b) or (c) and pursuant to Sections 8.1(b)(ii) and
  (iii) shall not be subject to the provisions of this Section 8.1(d)(i); and</p>
  <p>(ii) No party shall be liable for any Losses pursuant to Sections 8.1(b) or
  (c) unless the party seeking such indemnification (the &quot;Indemnified
  Party&quot;) has (x) delivered the notice of Claim in respect of such Loss
  required by Section 8.1(e) below and (y) such notice of Claim is received by
  the party from which indemnification is sought (the &quot;Indemnifying
  Party&quot;) within 30 days after the first anniversary of the Closing Date,
  except that (A) </p>
  <p align="center">72</p>
  <p>for any Losses relating to or arising out of breaches of any
  representations or warranties contained in Sections 3.2(b) and (c) and Section
  4.4(a) and (b), such notice of Claim may be delivered at any time, (B) for
  breach of any covenant or agreement, such notice of Claim may be delivered at
  any time prior to the expiration of the applicable statute of limitation and
  (C) for Environmental Losses such notice of Claim may be delivered on or prior
  to the period specified in Section 8.2. Indemnification under Section
  8.1(b)(i) and (ii) and Section 8.1(c)(i) and (ii) shall be the exclusive
  remedy of Holdings, C&A Products and Parent, as applicable, for breach of
  any representation, warranty, covenant or agreement (excluding breach of any
  covenant contained in Section 5.8 for which the exclusive remedy of Holdings,
  C&A Products and Parent, as applicable, shall be indemnification pursuant
  to Section 5.8) contained in this Agreement, the Transition Agreement and the
  Assignment and Assumption Agreement.</p>
</blockquote>
<p>(e) <u>Notice of Claim</u>. If the Indemnified Party shall become aware of
any claim, proceeding or other matter (a &quot;Claim&quot;) which may give rise
to a Loss or Environmental Loss that will be taken into account for purposes of
calculating whether the Indemnifying Party&#39;s indemnification obligation arises
pursuant to Section 8.1(b) or Section 8.1(c) above or Section 8.2(a) or Section
8.3 below, the Indemnified Party shall promptly give notice thereof to the
Indemnifying Party. Such notice shall specify whether the Claim arises as a
result of a Claim by a Person against the Indemnified Party (a &quot;Third Party
Claim&quot;) or whether the Claim does not so arise (a &quot;Direct
Claim&quot;), and shall also specify with reasonable particularity (to the
extent that the information is available) the factual basis for the Claim and
the amount of the Claim, if known. If the Indemnified Party does not promptly
give notice of any Claim as specified above, such failure shall not be deemed a
waiver of the Indemnified Party&#39;s right to indemnification or application to the
applicable deductible set forth in Section 8.1(d), Section 8.2(a)(iii) or
Section 8.2 (a)(iv) hereunder for Losses or Environmental Losses in connection
with such Claim, but the amount of reimbursement to which the Indemnified Party
is entitled or application to the applicable deductible shall be reduced by the
amount, if any, by which the Indemnified Party&#39;s Losses or Environmental Losses
would have been reduced had such notice been promptly delivered.</p>
<p>(f) <u>Direct Claims</u>. With respect to any Direct Claim, following receipt
of notice from the Indemnified Party of the Claim, the Indemnifying Party shall
have 90 days to make such investigation of the Claim as is considered necessary
or desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 90&#45;day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, they
shall agree to apply it to the applicable deductible, or if the applicable
deductible has been satisfied, the Indemnifying Party shall immediately pay to
the Indemnified Party the full agreed upon amount of the Claim, failing which
the matter shall be referred to binding arbitration in such manner as the
parties may agree or shall be determined by a court of competent jurisdiction in
the State of Delaware.</p>
<p align="center">73</p>
<p>(g) <u>Third Party Claims</u>.</p>
<blockquote>
  <p>(i) With respect to any Third Party Claims, the Indemnifying Party shall
  have the right, at its expense and at its election, to assume control of the
  negotiation, settlement and defense of the Claim through counsel of its choice
  reasonably acceptable to the other party; <u>provided</u>, that it irrevocably
  agrees that the Claim is covered by Section 8.1(b) or (c), as the case may be.
  In such event, the Indemnifying Party shall reimburse the Indemnified Party
  for all the Indemnified Party&#39;s reasonable out&#45;of&#45;pocket expenses as a result
  of such assumption. The election of the Indemnifying Party to assume such
  control shall be made within the latter of 90 days of receipt of notice of the
  Third Party Claim or thirty days after the indemnification obligation arises,
  failing which the Indemnifying Party shall be deemed to have elected not to
  assume such control. If the Indemnifying Party elects to assume such control,
  the Indemnified Party shall have the right to be informed and consulted with
  respect to the negotiation, settlement or defenses of such Third Party Claim
  and to retain counsel to act on its behalf, but the fees and disbursements of
  such counsel shall be paid by the Indemnified Party unless the Indemnifying
  Party consents to the retention of such counsel or unless the named parties to
  any action or proceeding include both the Indemnifying Party and the
  Indemnified Party and a representation of both the Indemnifying Party and the
  Indemnified Party by the same counsel would be inappropriate due to the actual
  or potential differing interests between them (such as the availability of
  different defenses). If the Indemnifying Party, having elected to assume such
  control, thereafter fails to defend the Third Party Claim within a reasonable
  period of time, the Indemnified Party shall be entitled to assume such
  control, and the Indemnifying Party shall be bound by the results obtained by
  the Indemnified Party with respect to the Third Party Claim. If any Third
  Party Claim is of a nature such that the Indemnified Party is required by
  applicable Law to make a payment to any Person (a &quot;Third Party&quot;)
  with respect to the Third Party Claim before the completion of settlement
  negotiations or related legal proceedings, the Indemnified Party may make such
  payment and the Indemnifying Party shall, subject to the provisions of Section
  8.1, Section 8.2 and Section 8.3, after demand by the Indemnified Party,
  reimburse the Indemnified Party for such payment. If the amount of any
  liability of the Indemnified Party under the Third Party Claim in respect of
  which such payment was made, as finally determined, is less than the amount
  which was paid by the Indemnifying Party to the Indemnified Party, the
  Indemnified Party shall, promptly after receipt of the difference from the
  Third Party, pay the amount of such difference to the Indemnifying Party.</p>
  <blockquote>
    <p align="center">74</p>
  </blockquote>
  <p>(ii) If the Indemnifying Party fails to assume control of the defense of,
  or having assumed such control fails to defend, any Third Party Claim, the
  Indemnified Party shall have the exclusive right to consent, settle or pay the
  amount claimed, in which case the Indemnifying Party shall be responsible for
  paying any such Claim or, if paid by the Indemnified Party, reimbursing the
  Indemnified Party. Whether or not the Indemnifying Party assumes control of
  the negotiation, settlement or defense of any Third Party Claim, the
  Indemnifying Party shall not settle any Third Party Claim without the written
  consent of the Indemnified Party, which consent shall not be unreasonably
  withheld, conditioned or delayed, unless such settlement provides solely for
  monetary damages or other monetary payments.</p>
  <p>(iii) The Indemnified Party and the Indemnifying Party shall cooperate
  fully with each other with respect to Third Party Claims and, regardless of
  which party has control thereof as provided for herein, shall keep each other
  reasonably advised with respect thereto.</p>
</blockquote>
<p>(h) Notwithstanding anything in Section 8.1, Section 8.2 or Section 8.3 to
the contrary, the Indemnifying Party shall not be liable for any Losses or
Environmental Losses arising out of any matter to the extent that the Losses or
Environmental Losses with respect to such matter have been mitigated as a result
of having been reflected as a liability or the subject matter of a specific
result in the Closing Financial Statement.</p>
<font COLOR="#ff0000">
<p>8.2 <a NAME="_Toc508437313"></a></font><u><a NAME="_Toc521492952">Environmental
Indemnification</a></u>.</p>
<p>(a) (i) Except for the environmental matters set forth in Section 8.2(a)(i)
of the Disclosure Schedule, Parent shall indemnify the Holdings Indemnified
Parties from and against and in respect of any and all Environmental Losses
incurred by a Holdings Indemnified Party, which may be imposed on, sustained,
incurred or suffered by or assessed against a Holdings Indemnified Party,
directly or indirectly, to the extent relating to or arising out of: (A) the
Remediation of Hazardous Substances that were disposed of or released on or into
the air, soils, groundwater, surface water, sediments or similar environmental
media, at, on, under or migrating from or to any Bison Property on or before the
Closing Date; (B) Litigation by Third Parties in respect of bodily injury or
property damage as a result of Hazardous Substances that were disposed of or
released into the soils, groundwater, surface water, sediments or similar
environmental media, on or before the Closing Date, at, on, under or migrating
from any Bison Property; (C) the disposal, storage, transportation, discharge,
release, treatment or recycling of Hazardous Substances, or the arrangement for
the same activities, by Parent or any of its Subsidiaries with respect to the
Business, prior to the Closing Date, at any Off&#45;Site Location, including
Environmental Losses related to bodily injury, property damage or the
Remediation of such Hazardous Substances; and (D) any violation by Parent or any
of its Subsidiaries of any Environmental Law applicable to the Business
(including Permits or other authorizations issued pursuant to any applicable
Environmental Law) on or prior to the Closing Date.</p>
<p align="center">75</p>
<blockquote>
  <p>(ii) Parent&#39;s obligation to indemnify the Holdings Indemnified Parties for
  the matters addressed in Section 8.2(a)(i)(A) through (C) shall be limited to
  those matters as to which Holdings provides Parent with written notice of said
  Claim in the manner set forth in Section 8.1(e) within 10 years after the
  Closing Date. Parent&#39;s obligation to indemnify the Holdings Indemnified
  Parties for matters addressed in Section 8.2(a)(i)(D) shall be limited to
  those matters as to which Holdings provides Parent with written notice of said
  Claim in the manner set forth in Section 8.1(e) within two years after the
  Closing Date.</p>
  <p>(iii) Notwithstanding the foregoing, Parent shall not have any liability
  with respect to the payment of any indemnification amounts pursuant to Section
  8.2(a)(i)(A) through (D) until such time as the aggregate amount of such
  Environmental Losses incurred by the Holdings Indemnified Parties, excluding
  any and all Environmental Losses related to, or arising out of, (A) the Dover
  Municipal Landfill located in Dover, New Hampshire and (B) the Cardinal
  Landfill located in Farmington, New Hampshire, for which such parties would
  otherwise be entitled to indemnification pursuant to Section 8.2(a)(i)(A)
  through (D) exceeds five million dollars ($5,000,000) and thereafter, Parent
  shall only be liable to the extent of such Environmental Losses in excess of
  five million dollars ($5,000,000); <u>provided</u>, <u>however</u>, that (A)
  Holdings shall not make any claim against Parent which individually does not
  exceed fifty thousand dollars ($50,000), and such claims not meeting this
  threshold shall not be applied in calculating the five million dollar
  ($5,000,000) limitation specified above, and (B) Parent&#39;s maximum aggregate
  indemnification liability pursuant to Section 8.2(a)(i) shall be subject to
  and included within the dollar limitation contained in Section 8.1(d)(i)(B).</p>
  <p>(iv) Notwithstanding any other provision of this Agreement, Parent shall
  not have any liability with respect to the payment of any indemnification
  amounts pursuant to Section 8.2(a)(i)(A) through (D) with respect to
  Environmental Losses related to, or arising out of, (A) the Dover Municipal
  Landfill located in Dover, New Hampshire and (B) the Cardinal Landfill located
  in Farmington, New Hampshire until such time as the aggregate amount of such
  Environmental Losses incurred by the Holdings Indemnified Parties for which
  such parties would otherwise be entitled to indemnification pursuant to
  Section 8.2(a)(i)(A) through (D) exceeds ten million dollars ($10,000,000) and
  thereafter, Parent shall be liable for fifty percent (50%) of such
  Environmental Losses in excess of ten million dollars ($10,000,000).</p>
  <p align="center">76</p>
  <p>(v) Notwithstanding any other provision of this Agreement, if a Holdings
  Indemnified Party has a claim pursuant to Section 8.2(a)(i)(D) of this
  Agreement, Parent shall indemnify the Holdings Indemnified Parties with
  respect to (A) any claims for fines or penalties arising out of said
  noncompliance and (B) Environmental Losses arising out of any expenditures
  made or actions taken by or on behalf of Holdings or C&A Products after
  the Closing Date to correct such noncompliance, but only to the extent that
  the Environmental Losses relate to the least expensive, commercially
  reasonable alternative necessary to correct such noncompliance; <u>provided</u>,
  that Holdings shall not make any claim against Parent pursuant to this Section
  8.2(a)(v)(B) which individually does not exceed fifty thousand dollars
  ($50,000) with respect to any single occurrence of noncompliance; <u>provided</u>,
  <u>further</u>, that with respect to any single occurrence of noncompliance,
  Parent shall only be liable for such Environmental Losses in excess of fifty
  thousand dollars ($50,000). If Holdings elects to correct such noncompliance
  by any means other than the least expensive, commercially reasonable
  alternative, subject to the provisions of this Section 8.2, Parent shall
  indemnify the Holdings Indemnified Parties for Environmental Losses up to an
  amount equal to the difference between the Environmental Losses that otherwise
  would have been incurred if the least expensive, commercially reasonable
  alternative had been implemented and five hundred thousand dollars ($500,000).
  Further, with respect to claims pursuant to Section 8.2(a)(i)(D) which involve
  a violation that commenced prior to the Closing Date and continues after the
  Closing Date, Parent&#39;s indemnification obligation with respect to such
  continuing violation shall apply only with respect to the time period prior to
  the Closing Date. Notwithstanding the above, the foregoing shall not be
  interpreted to preclude the Holdings Indemnified Parties from indemnification
  with respect to the Remediation of Hazardous Substances that are present on or
  before the Closing Date in any environmental media at, on, under or migrating
  from or to, any Bison Property, as otherwise provided in this Agreement,
  including with respect to Hazardous Substances that were discharged into the
  environment prior to the Closing Date and continue to exist in the environment
  after the Closing Date.</p>
</blockquote>
<p>(b) With respect to claims to indemnify Holdings Indemnified Parties that are
described by Section 8.2(a)(i)(A):</p>
<blockquote>
  <p>(i) Parent shall only be required to indemnify Holdings Indemnified Parties
  to the extent that, after the deductible set forth in Section 8.2(a)(iii) is
  met: (A) the Remediation of the Hazardous Substances is required pursuant to
  an applicable Environmental Law that is in effect as of the Closing Date; (B)
  the Remediation Standards applicable to the Remediation are the most cost
  effective Remediation Standards required under Environmental Law assuming
  continued industrial use of the property, <u>provided</u>, that it is a Bison
  Property and where it is not, such other use then associated with such non&#45;Bison Property; and (C) the Remediation shall be</p>
  <p align="center">77</p>
  <p>conducted in a reasonable, cost effective manner consistent with applicable
  Environmental Law or as may be otherwise required by a Governmental Authority.
  Holdings shall accept appropriate engineering controls or institutional
  controls, including, if necessary, deed restrictions limiting property to an
  industrial use or limitations on the drilling and use of water wells on Bison
  Properties (individually or collectively, a &quot;Restriction&quot;), if such
  controls are needed in order to complete a Remediation consistent with the use
  of the least stringent Remediation Standards. Holdings shall not be required
  to consent to any Restriction in connection with completing a Remediation if
  the Restriction would materially impair or otherwise unreasonably interfere
  with the continued operations of the Bison Subsidiary or if the Governmental
  Authority having jurisdiction for such matter does not approve of reliance on
  such Restriction.</p>
  <p>(ii) For the sole purpose of seeking indemnification for Environmental
  Losses pursuant to Section 8.2(a)(i) of this Agreement, after the Closing
  Date, neither Holdings nor its Affiliates shall undertake any effort to
  discover whether there has been a release of Hazardous Substances at, on,
  underneath or migrating from any Bison Property, including the collection of
  soil, groundwater, or surface water samples or samples of other environmental
  media, except that Holdings or its authorized representatives may take such
  samples <u>and</u> the Holdings Indemnified Parties may seek indemnification
  therefor if: (A) required pursuant to an applicable Environmental Law or a
  lawful order of a Governmental Authority; (B) required by a potential acquirer
  of said Bison Property or the Business or a lessee of said Bison Property; (C)
  required in connection with defending against or pursuing a third party claim;
  or (D) required by Holdings&#39; or C&A Products&#39; lender or financial
  underwriter prior to five years from the Closing Date. If Holdings fails to
  comply in any material respect with this provision, Parent shall have no
  obligation to provide any Holdings Indemnified Party with an indemnity for the
  Remediation of Hazardous Substances on such Bison Property or for any Claims
  for bodily injury or property damage related to Hazardous Substances on such
  property; <u>provided</u>, <u>however</u>, that this limitation on
  indemnification shall apply only the extent that any Environmental Losses
  incurred by a Holdings Indemnified Party for which indemnification is sought
  are identified solely as a result of such material noncompliance.</p>
</blockquote>
<p>(c) Claims brought pursuant to this Section 8.2 shall be subject to the
procedures for indemnification set forth in Section 8.1(g) if such Claims are
Third Party Claims. Claims that involve or also involve the Remediation of
Hazardous Substances at any Bison Property shall also be subject to the
procedures set forth in Section 8.2(f).</p>
<p align="center">78</p>
<p>(d) If Holdings or any of its Affiliates intends to sell, lease or otherwise
convey any Bison Subsidiary or any Bison Property, Holdings or said Affiliate
shall include, as a condition of such sale, lease or other agreement, terms and
conditions that will ensure that all Restrictions that have been accepted with
respect to the Bison Property are not disturbed (or, if such Restrictions will
be disturbed, that they will be restored at the expense of the party causing the
disturbance or, if additional Remediation is required as a result of the
disturbance of such Restrictions, that such additional Remediation will be
performed at the sole cost and expense of the party causing the disturbance).</p>
<p>(e) For purposes of this Agreement: (1) the term &quot;Environmental
Losses&quot; shall only include the following costs and expenses (after giving
effect to any related reduction in Taxes and amounts recovered from third
parties, including amounts recovered under insurance policies, with respect to
such Environmental Losses): (A) costs and expenses to implement a Remediation;
(B) damages for third party bodily injury and third party property damage; (C)
fines and penalties; and (D) reasonable attorneys&#39; fees, consultants&#39; fees and
expenses associated with (A), (B) or (C), including costs and expenses
associated with Litigation; (2) the term &quot;Remediation Standard&quot; means
a numerical standard (whether resulting from an enacted statute, promulgated
regulation, guidance or policy document issued by a Governmental Authority, or
developed on a case&#45;by&#45;case basis through a risk assessment or other methodology
authorized pursuant to an applicable Environmental Law and, if appropriate,
approved by a Governmental Authority) that defines the concentrations of
Hazardous Substances that may be permitted to remain in any environmental media
after an investigation, remediation or containment of a release of Hazardous
Substances; (3) the term &quot;Remediation&quot; means any action of any kind to
investigate and/or clean up and/or otherwise respond a release of Hazardous
Substances into an environmental medium, including the following activities: (A)
monitoring, investigation, assessment, treatment, cleanup, containment, removal,
mitigation, remediation, corrective action, response or restoration work; (B)
obtaining any permits, consents, approvals or authorizations of any Governmental
Authority necessary to conduct any such activity; (C) preparing and implementing
any plans or studies for any such activity; and (D) obtaining a written notice
from a Governmental Authority with jurisdiction over the site being addressed
under Environmental Laws that no additional work is required by such
Governmental Authority; and (4) the term &quot;Off&#45;Site Location&quot; means any
location other than (x) any Bison Property or (y) property adjacent to any Bison
Property which has been impacted by a release of Hazardous Substances at, on,
under or from any Bison Property.</p>
<p>(f) <u>Procedures for Remedial Actions</u>.</p>
<blockquote>
  <p>(i) Parent shall be entitled to assume control of Remediations at or with
  respect to any Bison Property (other than the Dover Municipal Landfill and the
  Cardinal Landfill) if the deductible set forth in Section 8.2(a)(iii) is met.
  The election of Parent to assume control of any such Remediation shall be made
  within a reasonable time. In the event that Parent shall control any
  Remediation, it shall promptly provide copies to Holdings of all</p>
  <p align="center">79</p>
  <p align="left">notices, correspondence, draft reports, submissions, draft and
  final work plans and final reports and shall give Holdings a reasonable
  opportunity (at Holding&#39;s own expense) to comment on any submissions Parent
  intends to deliver or submit to the appropriate regulatory body prior to said
  submission. The party not controlling any Remediation may, at its own expense,
  hire its own consultants, attorneys or other professionals to monitor the work
  performed by the party controlling such Remediation, including any field work
  undertaken by such party. Notwithstanding the foregoing, Parent and Holdings,
  as applicable, agree to cooperate with each other, directly and through their
  respective consultants and counsel, to effect the successful completion of the
  Remediation within such period as may be specified by a Governmental Authority
  or under applicable Environmental Laws, or otherwise within a reasonable
  period of time; <u>provided</u>, <u>however</u>, that neither party shall take
  any actions that could unreasonably delay or unreasonably interfere with the
  performance of the work of the party controlling any Remediation.</p>
  <p>(ii) If Holdings is required to or desires to undertake a Remediation at or
  with respect to the Dover Municipal Landfill or the Cardinal Landfill that
  either Holdings or Parent determines is reasonably likely to cause the
  deductible set forth in Section 8.2(a)(iv) to be met, then Holdings shall
  notify Parent prior to undertaking such Remediation, and Parent and Holdings
  shall consult with each other, in good faith, to implement a mutually
  agreeable course of action to effect such Remediation. In the event of such
  determination, Holdings shall promptly provide copies to Parent of all
  notices, correspondence, draft reports, submissions, draft and final work
  plans and final reports and shall give Parent a reasonable opportunity (at
  Parent&#39;s expense) to comment on any submissions Holdings intends to deliver or
  submit to the appropriate regulatory body prior to said submission. Parent
  may, at its own expense, hire its own consultants, attorneys or other
  professionals to monitor the work performed by Holdings, including any field
  work undertaken by Holdings. Parent and Holdings, as applicable, agree to
  cooperate with each other, directly and through their respective consultants
  and counsel, to effect the successful completion of the Remediation within
  such period as may be specified by a Governmental Authority or under
  applicable Environmental Laws, or otherwise within a reasonable period of
  time; <u>provided</u>, <u>however</u>, that neither party shall take any
  actions that could unreasonably delay or unreasonably interfere with the
  performance of the Remediation.</p>
</blockquote>
<p>(g) <u>Exclusive Remedy for Environmental Matters; Indemnification by
Holdings</u>. Notwithstanding anything to the contrary in this Agreement,
Holdings hereby agrees that its sole and exclusive remedy against any Parent
Indemnified Party with respect to any and all Losses arising under or related to
any Environmental Law or any Hazardous Substances or the environment, </p>
<p align="center">80</p>
<p>including statutory or common law claims for Environmental Losses, damages,
fines, penalties or response costs related to Hazardous Substances or the
environment, in connection with the Bison Subsidiaries, shall be the indemnity
set forth in this Section 8.2. Except with respect to the remedy referred to in
the preceding sentence, Holdings hereby waives, to the fullest extent permitted
under applicable Law, and forever releases the Parent Indemnified Parties, in
connection with the Bison Subsidiaries from, and shall indemnify the Parent
Indemnified Parties against, any and all Environmental Losses arising under or
related to Environmental Laws or Hazardous Substances. Parent Indemnified
Parties shall not make any claim against Holdings for indemnification for any
Loss, including any Environmental Loss, pursuant to this Section 8.2(g) which
individually does not exceed fifty thousand dollars ($50,000). Holdings&#39;
obligation to indemnify the Parent Indemnified Parties pursuant to this Section
8.2(g) shall be limited to those matters as to which Parent provides Holdings
with written notice of said Claim in the manner set forth in Section 8.1(e).</p>
<p>(h) <u>Disputes</u>. In the event of any dispute between Parent and Holdings
or C&A Products concerning a Claim for indemnification for Environmental
Losses under this Section 8.2 which cannot be resolved within thirty (30) days,
such dispute shall be promptly referred to an independent third party having
expertise in the matters at issue and mutually acceptable to the parties (or if
the parties cannot agree, the CPR Institute for Dispute Resolution, in New York,
New York shall select a recognized expert who shall be independent from each of
the parties), whose fees and expenses shall be shared equally by the parties,
and who shall evaluate the facts and circumstances at issue and recommend a
course of action that the expert believes in its good faith judgment satisfies
the requirements of this Agreement and applicable Environmental Laws. Such
recommendations shall be final and binding on the parties. The parties agree to
act as promptly as practicable in implementing the foregoing procedures; <u>provided</u>,
<u>however</u>, that in the event that actions are required to be taken by a
Governmental Authority or in an emergency to avoid imminent and substantial harm
to health or the environment before the foregoing procedures can be implemented,
Holdings or C&A Products may undertake such actions without prejudice to its
rights under this Section 8.2 to seek indemnification for Environmental Losses.
In all other situations, Holdings&#39; or C&A Products&#39; failure to comply with
the requirements of this Section 8.2(h) shall not limit or reduce the
obligations of Parent under this Agreement except to the extent Parent is
actually and materially prejudiced thereby.</p>
<p>(i) <u>Other</u>. Nothing contained in this Section 8.2 shall restrict
Holdings or C&A Products from taking any action (and, if appropriate
pursuant to Section 8.2(a)(i), seeking indemnification therefore) where required
to be taken by any Governmental Authority or in an emergency to avoid imminent
and substantial harm to health or the environment.</p>
<font COLOR="#ff0000">
<p>8.3 <a NAME="_Toc508437314"></a></font><u><a NAME="_Toc521492953">Quota
Purchase Agreement Indemnification</a></u>.</p>
<p>Holdings and C&A Products shall indemnify Parent from and against and in
respect of any and all Losses incurred by Parent under any guarantee agreement
by and between Parent and S.W. Industries Inc., or any successor thereto,
relating to any assignment by Parent to C&A Products of Parent&#39;s rights, and
the assumption by C&A Products of Parent&#39;s obligations,</p>
<p align="center">81</p>
<p>under the Quota Purchase Agreement dated as of May 31, 2000 by and between
Textron International Holdings, S.L. and S.W. Industries Inc., or if no such
assignment has occurred prior to the Closing, the parties hereto shall take the
actions relating to the Brazilian Entities specified in the Transition
Agreement.</p>
<font COLOR="#ff0000">
<p>8.4 <a NAME="_Toc503343010"></a><a NAME="_Toc503343111"></a><a NAME="_Toc503343356"></a><a NAME="_Toc508437315"></a></font><u><a NAME="_Toc521492954">Name
Changes</a></u>.</p>
<p>On or before the six month anniversary of the Closing Date, Holdings or
C&A Products will change the names of the entities listed in Section 8.4 of
the Disclosure Schedule and cease using the name &quot;Parent&quot; in any
manner. Holdings and C&A Products agree that from and after the Closing
Date, (i) the name &quot;Parent&quot; and all similar related names (all such
names being the &quot;Parent Names&quot;) shall be owned by Parent or a Non&#45;Bison Subsidiary, (ii) neither Holdings, C&A Products nor any Bison
Subsidiary shall have any rights in, and shall not, after the three month
anniversary of the Closing Date, use, any Parent Name and (iii) neither
Holdings, C&A Products nor any Bison Subsidiary shall contest the ownership
or validity of any rights of Parent or any Non&#45;Bison Subsidiary in or to the
Parent Names.</p>
<font COLOR="#ff0000">
<p ALIGN="CENTER">ARTICLE IX<a NAME="_Toc503343113"></a><a NAME="_Toc503343358"></a></font><br>
<br>
<a NAME="_Toc503343012"></a><a NAME="_Toc503343962"></a><a NAME="_Toc503667944"></a><a NAME="_Toc503684875"></a><a NAME="_Toc504459567"></a><a NAME="_Toc505070830"></a><a NAME="_Toc505137426"></a><a NAME="_Toc505767673"></a><a NAME="_Toc506346244"></a><a NAME="_Toc506628561"></a><a NAME="_Toc506775372"></a><a NAME="_Toc507592240"></a><a NAME="_Toc508437317"></a><a NAME="_Toc508709263"></a><a NAME="_Toc514732049"></a><a NAME="_Toc514732787"></a><a NAME="_Toc516456630"></a><a NAME="_Toc516460990"></a><a NAME="_Toc516463406"></a><a NAME="_Toc516560591"></a><a NAME="_Toc518363284"></a><a NAME="_Toc518466865"></a><a NAME="_Toc518733514"></a><a NAME="_Toc519520882"></a><a NAME="_Toc519701057"></a><a NAME="_Toc520104904"></a><a NAME="_Toc520108758"></a><a NAME="_Toc520261566"></a><a NAME="_Toc520609495"></a><a NAME="_Toc521132992"></a><a NAME="_Toc521305015"></a><a NAME="_Toc521330792"></a><a NAME="_Toc521426505"></a><a NAME="_Toc521468904"></a><a NAME="_Toc521492955">MISCELLANEOUS
AND GENERAL</a></p>
<font COLOR="#ff0000">
<p>9.1 <a NAME="_Toc503343013"></a><a NAME="_Toc503343114"></a><a NAME="_Toc503343359"></a></font><a NAME="_Toc521492956"><u>Interpretation</u>.</a></p>
<p>(a) Whenever the words &quot;include&quot;, &quot;includes&quot; or
&quot;including&quot; are used in this Agreement they shall be deemed to be
followed by the words &quot;without limitation.&quot;</p>
<p>(b) The words &quot;hereof&quot;, &quot;hereby&quot;, &quot;herein&quot; and
&quot;herewith&quot; and words of similar import shall, unless otherwise stated,
be construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified.</p>
<p>(c) The plural of any defined term shall have a meaning correlative to such
defined term, the singular of any defined term shall have a meaning correlative
to such term defined in the plural and words denoting any gender shall include
all genders. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.</p>
<p>(d) A reference to any party to this Agreement or any other agreement or
document shall include such party&#39;s permitted successors and permitted assigns.</p>
<p>(e) A reference to any legislation or to any provision of any legislation
shall include any amendment, modification or re&#45;enactment thereof, any
legislative provision substituted therefore and all regulations and statutory
instruments issued thereunder or pursuant thereto.</p>
<p align="center">82</p>
<p>(f) The parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.</p>
<font COLOR="#ff0000">
<p>9.2 </font><u><a NAME="_Toc521492957">Principle of Construction</a></u>.</p>
<p>In construing this Agreement, for the avoidance of doubt, those Contracts and
assets not owned as of any date of determination by a Bison Subsidiary (and the
related liabilities) but which are intended to be made the subject of the
transfer and assignment contemplated by the Assignment and Assumption Agreement
shall be construed as pertaining to the business, operations, assets,
properties, liabilities and Contracts of the Bison Subsidiaries and the
Business. In furtherance thereof, any action not permitted to be taken by a
Bison Subsidiary with respect to the Business shall apply to Parent and its
Subsidiaries.</p>
<font COLOR="#ff0000">
<p>9.3 <a NAME="_Toc503343014"></a><a NAME="_Toc503343115"></a><a NAME="_Toc503343360"></a><a NAME="_Toc508437319"></a></font><u><a NAME="_Toc521492958">Payment
of Expenses and Other Payments</a></u>.</p>
<p>Whether or not the Transactions shall be consummated and except as otherwise
provided in this Agreement, each party hereto shall pay its own expenses
incident to preparing, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.</p>
<font COLOR="#ff0000">
<p>9.4 <a NAME="_Toc503343015"></a><a NAME="_Toc503343116"></a><a NAME="_Toc503343361"></a><a NAME="_Toc508437320"></a></font><u><a NAME="_Toc521492959">Amendment</a></u>.</p>
<p>This Agreement may be amended only by a written agreement signed by each of
the parties hereto.</p>
<font COLOR="#ff0000">
<p>9.5 <a NAME="_Toc503343016"></a><a NAME="_Toc503343117"></a><a NAME="_Toc503343362"></a></font><u><a NAME="_Toc521492960">Waiver
and Extension</a></u>.</p>
<p>At any time prior to the Closing Date, the parties may (a) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) except to
the extent prohibited by Law, waive compliance with any of the agreements
described or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by such party. The failure of any party at any time
or times to demand performance of any provision hereof shall in no manner affect
the right of such party at a later time to enforce the same or any other
provision of this Agreement. No waiver of any condition or the breach of any
term contained in this Agreement in one or more instances shall be deemed to be
a, or construed as a further or continuing, waiver of such condition or breach.</p>
<font COLOR="#ff0000">
<p>9.6 <a NAME="_Toc503343017"></a><a NAME="_Toc503343118"></a><a NAME="_Toc503343363"></a><a NAME="_Toc508437322"></a></font><u><a NAME="_Toc521492961">Counterparts</a></u>.</p>
<p>For the convenience of the parties hereto, this Agreement may be executed in
any number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute one agreement.</p>
<font COLOR="#ff0000">
<p>9.7 <a NAME="_Toc503343018"></a><a NAME="_Toc503343119"></a><a NAME="_Toc503343364"></a><a NAME="_Toc508437323"></a></font><u><a NAME="_Toc521492962">Governing
Law</a></u>,</p>
<p>This Agreement shall be governed by, and construed in accordance with, the
Laws of the State of Delaware.</p>
<p align="center">83</p>
<p><a NAME="_Toc503343019"></a><a NAME="_Toc503343120"></a><a NAME="_Toc503343365"></p>
<font COLOR="#ff0000">
<p>9.8 </font></a><font COLOR="#ff0000"><a NAME="_Toc508437324"></a></font><a NAME="_Toc521492963"><u>Notices</u></a>.</p>
<p>Any notice, request, instruction or other document to be given hereunder by
any party to another party shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation (with a
confirming copy sent by overnight courier) if sent by facsimile or like
transmission and on the next business day when sent by Federal Express, United
Parcel Service, Express Mail, or other reputable overnight courier, as follows:</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <p>(a)&nbsp;&nbsp;&nbsp;&nbsp; If to Parent, to:</p>
        <blockquote>
          <p style="margin-top: 0; margin-bottom: 0">Textron Inc.</p>
          <p style="margin-top: 0; margin-bottom: 0">40 Westminster Street</p>
          <p style="margin-top: 0; margin-bottom: 0">Providence, RI 02903</p>
          <p style="margin-top: 0; margin-bottom: 0">Attention: Terrance O&#39;Donnell</p>
          <p style="margin-top: 0; margin-bottom: 0">Executive Vice President
          and General Counsel</p>
          <p style="margin-top: 0; margin-bottom: 0">(401) 457&#45;2555 (telephone)</p>
          <p style="margin-top: 0; margin-bottom: 0">(401) 457&#45;2418 (facsimile)</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>with a copy to:</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p style="margin-top: 0; margin-bottom: 0">Skadden, Arps, Slate,
          Meagher & Flom LLP</p>
          <p style="margin-top: 0; margin-bottom: 0">One Beacon Street</p>
          <p style="margin-top: 0; margin-bottom: 0">Boston, MA&nbsp;&nbsp;
          02108</p>
          <p style="margin-top: 0; margin-bottom: 0">Attention:&nbsp; Louis A.
          Goodman, Esq.</p>
          <p style="margin-top: 0; margin-bottom: 0">(617) 673&#45;4800 (telephone)</p>
          <p style="margin-top: 0; margin-bottom: 0">(617 573&#45;4822 (facsimile)</p>
          <p style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <p>(b)&nbsp;&nbsp;&nbsp;&nbsp; If to Holdings or C&A Products to:</p>
        <blockquote>
          <p style="margin-top: 0; margin-bottom: 0">Collins & Aikman
          Corporation</p>
          <p style="margin-top: 0; margin-bottom: 0">5755 New King Court</p>
          <p style="margin-top: 0; margin-bottom: 0">Troy, Michigan 48098</p>
          <p style="margin-top: 0; margin-bottom: 0">Attention: Thomas E. Evans,
          CEO</p>
          <p style="margin-top: 0; margin-bottom: 0">(248) 824&#45;1510 (telephone)</p>
          <p style="margin-top: 0; margin-bottom: 0">(248) 824&#45;1512 (facsimile)</p>
        </blockquote>
        <p>and</p>
        <blockquote>
          <p style="margin-top: 0; margin-bottom: 0">Attention: Ronald T.
          Lindsay, General Counsel</p>
          <p style="margin-top: 0; margin-bottom: 0">(248) 824&#45;1633 (telephone)</p>
          <p style="margin-top: 0; margin-bottom: 0">(248) 824&#45;1882 (facsimile)</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>with a copy to:</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p style="margin-top: 0; margin-bottom: 0">Cahill, Gordon &
          Reindel</p>
          <p style="margin-top: 0; margin-bottom: 0">80 Pine Street</p>
          <p style="margin-top: 0; margin-bottom: 0">New York, NY 10005</p>
          <p style="margin-top: 0; margin-bottom: 0">Attention: W. Leslie Duffy,
          Esq.</p>
          <p style="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Jonathan Schaffzin, Esq.</p>
          <p style="margin-top: 0; margin-bottom: 0">(212) 701&#45;3000 (telephone)</p>
          <p style="margin-top: 0; margin-bottom: 0">(212) 269&#45;5420 (facsimile)</p>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<p>&nbsp;</p>
<p>or to such other persons or addresses as may be designated in writing by the
party to receive such notice. Nothing in this Section 9.7 shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including Litigation arising out of or in
connection with this Agreement), which service shall be effected as required by
applicable Law.</p>
<font COLOR="#ff0000">
<p>9.9 <a NAME="_Toc503343020"></a><a NAME="_Toc503343121"></a><a NAME="_Toc503343366"></a><a NAME="_Toc508437325"></a></font><a NAME="_Toc521492964"><u>Entire
Agreement; Assignment</u>.</a></p>
<p>The Transaction Agreements (including all exhibits and schedules to such
agreements) together (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all other prior agreements
and understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned or
transferred by operation of law or otherwise without the prior written consent
of each other party hereto.</p>
<font COLOR="#ff0000">
<p>9.10 <a NAME="_Toc503343021"></a><a NAME="_Toc503343122"></a><a NAME="_Toc503343367"></a><a NAME="_Toc508437326"></a></font><u><a NAME="_Toc521492965">Parties
in Interest</a>.</p>
</u>
<p>This Agreement is not intended to confer any rights or remedies upon any
Person except the parties hereto and their respective successors and assigns and
any other Person which is indemnified under this Agreement pursuant to Sections
8.1 and 8.2.</p>
<font COLOR="#ff0000">
<p>9.11 <a NAME="_Toc503343022"></a><a NAME="_Toc503343123"></a><a NAME="_Toc503343368"></a><a NAME="_Toc508437327"></a></font><u><a NAME="_Toc521492966">Validity</a></p>
</u>
<p>The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provisions of this
Agreement, each of which shall remain in full force and effect.</p>
<font COLOR="#ff0000">
<p>9.12 <a NAME="_Toc503343023"></a><a NAME="_Toc503343124"></a><a NAME="_Toc503343369"></a><a NAME="_Toc508437328"></a></font><u><a NAME="_Toc521492967">Captions</a></p>
</u>
<p>The Article, Section and paragraph captions herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.</p>
<font COLOR="#ff0000">
<p>9.13 <a NAME="_Toc503343024"></a><a NAME="_Toc503343125"></a><a NAME="_Toc503343370"></a><a NAME="_Toc508437329"></a></font><u><a NAME="_Toc521492968">Transfer,
Sales and Stamp Taxes</a></p>
</u>
<p>All transfer, value added, sales and stamp taxes and similar charges, fees
and assessments incurred in connection with the Transactions, shall be borne
equally by Parent and C&A Products. Holdings and C&A Products shall
prepare and file (or cause to be filed), to the extent required by, or
permissible under, applicable Law, all necessary Tax Returns and other
documentation with respect to all such transfer, value added, sales and stamp
taxes and similar charges, </p>
<p align="center">85</p>
<p>fees and assessments, and, if required by applicable Law, Parent shall join
in the execution of any such Tax Returns and other documentation as reasonably
requested by Holdings.</p>
<b>
<p ALIGN="CENTER">[</b>SIGNATURE PAGE FOLLOWS<b>]</b></p>
<p ALIGN="CENTER">86</p>
<p>IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.</p>
<div align="left">
  <table width="100%">
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">TEXTRON INC.</td>
    </tr>
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">&nbsp;</td>
    </tr>
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">By:_________________________________</td>
    </tr>
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">&nbsp;&nbsp;&nbsp;&nbsp; Name:<br>
        &nbsp;&nbsp;&nbsp;&nbsp; Title</td>
    </tr>
  </table>
</div>
<p ALIGN="JUSTIFY">&nbsp;</p>
<table width="100%">
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">COLLINS & AIKMAN CORPORATION</td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">&nbsp;</td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">By:_________________________________</td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">&nbsp;&nbsp;&nbsp;&nbsp; Name:<br>
      &nbsp;&nbsp;&nbsp;&nbsp; Title</td>
  </tr>
</table>
<p ALIGN="JUSTIFY">&nbsp;</p>
<table width="100%">
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">COLLINS & AIKMAN PRODUCTS CO.</td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">&nbsp;</td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">By:_________________________________</td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">&nbsp;&nbsp;&nbsp;&nbsp; Name:<br>
      &nbsp;&nbsp;&nbsp;&nbsp; Title</td>
  </tr>
</table>

<p ALIGN="CENTER">&nbsp;</p>
<p ALIGN="right"><b>EXHIBIT 1</b></p>
<p ALIGN="CENTER">&nbsp;</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <p ALIGN="CENTER">CERTIFICATE OF DESIGNATION OF THE POWERS,
          PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL
          RIGHTS OF THE 15% SERIES A REDEEMABLE PREFERRED STOCK, THE 16% SERIES
          B REDEEMABLE PREFERRED STOCK AND THE 16% SERIES&nbsp;C REDEEMABLE
          PREFERRED STOCK AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
          THEREOF</p>
        </blockquote>
      </blockquote>
      <p ALIGN="CENTER">________________________________________</p>
      <p ALIGN="CENTER">Pursuant to Section&nbsp;151 of the<br>
      General Corporation Law of the State of Delaware</p>
      <p ALIGN="CENTER">________________________________________</p>
    </blockquote>
  </blockquote>
</blockquote>
<p>Collins & Aikman Products Co. (the &quot;<b>Company</b>&quot;), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that, pursuant to authority conferred
upon the Board of Directors of the Company by its Certificate of Incorporation
(hereinafter referred to as the &quot;<b>Certificate of Incorporation</b>&quot;)
and pursuant to the provisions of Section&nbsp;151 of the General Corporation
Law of the State of Delaware, said Board of Directors, by unanimous written
consent dated
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;],
2001, duly approved and adopted the following resolution (the &quot;<b>Resolution</b>&quot;):</p>
<p>RESOLVED, that pursuant to the authority vested in the Board of Directors by
the Certificate of Incorporation, the Board of Directors hereby creates,
authorizes and provides for the issuance of six series of Preferred Stock of the
Company, designated as (1)&nbsp;15% Series&nbsp;A1 Redeemable Preferred Stock,
without par value, of the Company, (2)&nbsp;16% Series&nbsp;B1 Redeemable
Preferred Stock, without par value, of the Company, (3)&nbsp;16% Series&nbsp;C1
Redeemable Preferred Stock, without par value, of the Company, (4)&nbsp;15%
Series&nbsp;A2 Redeemable Preferred Stock, without par value, of the Company,
(5) 16%&nbsp;Series&nbsp;B2 Redeemable Preferred Stock, without par value, of
the Company and (6)&nbsp;16% Series&nbsp;C2 Redeemable Preferred Stock, without
par value, of the Company, having the designations, preferences, relative,
participating, optional and other special rights of the shares of each such
series, and the qualifications, limitations and restrictions thereof that are
set forth in the Certificate of Incorporation and in this Resolution, as
follows:</p>
<p>SECTION 1. <u>Designation, Amount and Issuance</u>. (a) Of the six series of
Preferred Stock authorized by this Resolution, the Series&nbsp;A1 Redeemable
Preferred Stock, the Series&nbsp;B1 Redeemable Preferred Stock and the
Series&nbsp;C1 Redeemable Preferred Stock are to be initially issued in
connection with the Acquisition and the Series&nbsp;A2 Redeemable Preferred
Stock, the Series&nbsp;B2 Redeemable Preferred Stock and the Series&nbsp;C2
Redeemable Preferred&nbsp;</p>
<p align="center">&#45;2&#45;</p>
<p> Stock are to be initially issued as necessary to comply
with the registration and exchange provisions of the Registration Rights
Agreement. Additional shares of Redeemable Preferred Stock may also be issued in
accordance with Section&nbsp;1(b), additional shares of Series&nbsp;A1
Redeemable Preferred Stock or Series&nbsp;A2 Redeemable Preferred Stock may be
issued in accordance with Section&nbsp;7(d) and additional shares of
Series&nbsp;B1 Redeemable Preferred Stock or Series&nbsp;B2 Redeemable Preferred
Stock may also be issued in accordance with Section&nbsp;5(e). The designations
for the six series of Preferred Stock authorized by this Resolution shall be
(1)&nbsp;the 15% Series&nbsp;A1 Redeemable Preferred Stock, without par value
(the &quot;<b>Series&nbsp;A1 Redeemable Preferred Stock</b>&quot;), (2)&nbsp;the
16% Series&nbsp;B1 Redeemable Preferred Stock, without par value (the &quot;<b>Series&nbsp;B1
Redeemable Preferred Stock</b>&quot;), (3)&nbsp;the 16% Series&nbsp;C1
Redeemable Preferred Stock, without par value (the &quot;<b>Series&nbsp;C1
Redeemable Preferred Stock</b>&quot;), (4)&nbsp;the 15% Series&nbsp;A2
Redeemable Preferred Stock, without par value (the &quot;<b>Series&nbsp;A2
Redeemable Preferred Stock</b>&quot; and, together with the Series&nbsp;A1
Redeemable Preferred Stock, the &quot;<b>Series&nbsp;A Redeemable Preferred
Stock</b>&quot;), (5)&nbsp;the 16% Series&nbsp;B2 Redeemable Preferred Stock,
without par value (the &quot;<b>Series&nbsp;B2 Redeemable Preferred Stock</b>&quot;
and, together with the Series&nbsp;B1 Redeemable Preferred Stock, the &quot;<b>Series&nbsp;B
Redeemable Preferred Stock</b>&quot;), and (6)&nbsp;the 16% Series&nbsp;C2
Redeemable Preferred Stock, without par value (the &quot;<b>Series&nbsp;C2
Redeemable Preferred Stock</b>&quot; and, together with the Series&nbsp;C1
Redeemable Preferred Stock, the &quot;<b>Series&nbsp;C Redeemable Preferred
Stock</b>&quot; and such Series&nbsp;C Redeemable Preferred Stock, together with
the Series&nbsp;A Redeemable Preferred Stock and the Series&nbsp;B Redeemable
Preferred Stock, the &quot;<b>Redeemable Preferred Stock</b>&quot;). The
liquidation preference of the Series&nbsp;A1 Redeemable Preferred Stock, the
Series&nbsp;B1 Redeemable Preferred Stock and the Series&nbsp;C1 Redeemable
Preferred Stock at their Issuance Date is $1,000 per share and the original
issue price for each such share is $1,000. The issue price per share or
Liquidation Preference of the Redeemable Preferred Stock shall not for any
purpose be considered to be a determination by the Board of Directors with
respect to the capital and surplus of the Company. The liquidation preference of
the Series&nbsp;A2 Redeemable Preferred Stock, the Series&nbsp;B2 Redeemable
Preferred Stock and the Series&nbsp;C2 Redeemable Preferred Stock at their
Issuance Date will equal the Liquidation Preference of the Series&nbsp;A1
Redeemable Preferred Stock, the Series&nbsp;B1 Redeemable Preferred Stock and
the Series&nbsp;C1 Redeemable Preferred Stock, respectively, at such Issuance
Date pursuant to the terms of the Registration Rights Agreement (which is
inclusive of an amount of Series&nbsp;A Accrued Dividends, Series&nbsp;B Accrued
Dividends and Series&nbsp;C Accrued Dividends, respectively, equal to that of
the Series&nbsp;A1 Redeemable Preferred Stock, the Series&nbsp;B1 Redeemable
Preferred Stock and the Series&nbsp;C1 Redeemable Preferred Stock at such time).<b>
</b>The number of shares constituting the Series&nbsp;A1 Redeemable Preferred
Stock shall be 130,000 shares. The number of shares<a NAME="WrapTest"></a>
constituting the Series&nbsp;B1 Redeemable Preferred Stock shall be 95,000
shares. The number of shares constituting the Series&nbsp;C1 Redeemable
Preferred Stock shall be 20,000 shares. The number of shares constituting the
Series&nbsp;A2 Redeemable Preferred Stock shall be 130,000 shares. The number of
shares constituting the Series&nbsp;B2 Redeemable Preferred Stock shall be
95,000 shares. The number of shares constituting the Series&nbsp;C2 Redeemable
Preferred Stock shall be 20,000 shares. In addition, each series of Redeemable
Preferred Stock shall be&nbsp;</p>
<p align="center"> &#45;3&#45;</p>
<p> constituted by up to an additional
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;] shares of such series to be
available for issuance from time to time as provided for in Sections&nbsp;1(b)
and 7(d) and each series of Series&nbsp;B Preferred Stock shall be further
constituted by up to an additional
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;] shares of such series to be
available for issuance as provided in Section&nbsp;5(e). None of the shares of
Redeemable Preferred Stock acquired by the Company by reason of redemption,
purchase or otherwise shall be reissued as such, but may be redesignated for
reissuance as shares of a different class or series of Preferred Stock in
compliance with the terms hereof. Except as provided in Section&nbsp;1(b),
Section&nbsp;7(d) and Section&nbsp;5(e), the Company shall only issue the shares
of the Series&nbsp;A2 Redeemable Preferred Stock, the Series&nbsp;B2 Redeemable
Preferred Stock and the Series&nbsp;C2 Redeemable Preferred Stock to the Holders
of the Series&nbsp;A1 Redeemable Preferred Stock, the Series&nbsp;B1 Redeemable
Preferred Stock and the Series&nbsp;C1 Redeemable Preferred Stock, as
applicable, as is necessary to comply with the registration and exchange
provisions of the Registration Rights Agreement.</p>
<p>(b) In the event that the Company shall be required to pay Liquidated Damages
pursuant to the Registration Rights Agreement and shall elect to pay such
Liquidated Damages in kind, on each Dividend Payment Date the Company shall
issue to each Holder entitled to Liquidated Damages in respect of shares of a
series of Redeemable Preferred Stock held by such Holder such number of newly
issued shares of such series of Redeemable Preferred Stock as is equal to
(x)&nbsp;the Liquidated Damages then due to such Holder in respect of shares of
Redeemable Preferred Stock of such series held by such Holder, divided by
(y)&nbsp;the Liquidation Preference plus Total Cash Dividends in Arrears
(inclusive of Additional Dividends and accrued regular dividends from the
preceding Dividend Payment Date if not concurrently paid or accrued in
accordance with the terms hereof) in respect of each share of Redeemable
Preferred Stock of such series as of such Dividend Payment Date. Each newly
issued share of Redeemable Preferred Stock of a series issued to a Holder shall
be identical in all respects, including Liquidation Preference and Total Cash
Dividends in Arrears, to all other shares of Redeemable Preferred Stock of the
same series held by such Holder. In lieu of any issuing any fractional shares of
Redeemable Preferred Stock of any series, the Company may deliver to a Holder an
amount in cash equal to such fraction multiplied by the amount set forth in
clause&nbsp;(y) of the preceding sentence with respect to such series.</p>
<p>SECTION 2. <u>Dividends</u>. (a)&nbsp;&nbsp;Subject to Section&nbsp;7(d) in
the case of Textron Shares only, all shares of Redeemable Preferred Stock will
bear dividends, whether or not earned or declared, out of funds legally
available therefor, from the Issuance Date thereof accruing on the Liquidation
Preference thereof at the rate of (x)&nbsp;15% per annum (the &quot;<b>Series&nbsp;A
Dividend Rate</b>&quot;) in the case of the Series&nbsp;A Redeemable Preferred
Stock, (y)&nbsp;16% per annum (the &quot;<b>Series&nbsp;B Dividend Rate</b>&quot;)
in the case of the Series&nbsp;B Redeemable Preferred Stock and (z)&nbsp;16% per
annum (the &quot;<b>Series&nbsp;C Dividend Rate</b>&quot; and, together with the
Series&nbsp;A Dividend Rate and the Series&nbsp;B Dividend Rate, the &quot;<b>Dividend
Rate</b>&quot;) in the case of the Series&nbsp;C Redeemable Preferred Stock and,
in each case, will be payable quarterly in arrears on each Dividend Payment
Date, commencing on March&nbsp;1, 2002, to Holders of record on the
February&nbsp;15, May&nbsp;15, August&nbsp;15 and November&nbsp;15&nbsp;</p>
<p align="center">&#45;4&#45;</p>
<p> immediately
preceding the relevant Dividend Payment Date. In calculating the amount of
dividends due on any Dividend Payment Date, the Liquidation Preference utilized
shall be the Liquidation Preference in effect on the first business day
following the immediately preceding Dividend Payment Date. The Company may, at
its option and without notice, elect to accrue up to (but not more than) an
amount (rounded to the nearest $.01) equivalent to 7% per annum of the dividends
on the Series&nbsp;A Redeemable Preferred Stock payable on any Dividend Payment
Date and up to (but not more than) an amount (rounded to the nearest $.01)
equivalent to 8% per annum of the dividends on each of the Series&nbsp;B
Redeemable Preferred Stock and the Series&nbsp;C Redeemable Preferred Stock
payable on any Dividend Payment Date in lieu of payment of such dividends in
cash and, in each such case, any such accrued dividends (respectively, the
&quot;<b>Series&nbsp;A Accrued Dividends,</b>&quot; &quot;<b>Series&nbsp;B
Accrued Dividends</b>&quot; and &quot;<b>Series&nbsp;C Accrued Dividends</b>&quot;)
will be added to the Liquidation Preference of the applicable series of
Redeemable Preferred Stock. Additional dividends are payable in cash in respect
of Series&nbsp;A Redeemable Preferred Stock constituting Textron Shares as
provided in Section&nbsp;7(d) (&quot;<b>Liquidity Dividends</b>&quot;). For the
avoidance of doubt, Liquidity Dividends shall not be subject to accrual as
provided in the second preceding sentence but shall be treated as dividends
payable in cash for all purposes of this Section&nbsp;2. Dividends shall cease
to accumulate in respect of the shares of Redeemable Preferred Stock upon their
redemption unless the Company shall have failed to pay the relevant redemption
price on the Redemption Date.</p>
<p>(b)&nbsp;&nbsp;All dividends (including pursuant to Section&nbsp;2(f)) paid
with respect to shares of the Redeemable Preferred Stock pursuant to this
Certificate of Designation shall be paid <i>pro</i> <i>rata</i> to the Holders
entitled thereto.</p>
<p>(c)&nbsp;&nbsp;Dividends with respect to Redeemable Preferred Stock are
payable when, as and if declared by the Board of Directors, and nothing
contained in this Certificate of Designation shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Company to pay or set apart for payment, any dividends on shares
of the Redeemable Preferred Stock at any time. Dividends on the Redeemable
Preferred Stock will accrue whether or not the Company has earnings or profits,
whether or not there are funds legally available for the payment of such
dividends and whether or not dividends are declared. The accrual of dividends as
Series&nbsp;A Accrued Dividends, Series&nbsp;B Accrued Dividends or
Series&nbsp;C Accrued Dividends as permitted by Section&nbsp;2(a) shall be
deemed to be a payment of dividends and shall fulfill the Company&#39;s
obligations with respect to the payment of such portion of the dividends payable
upon the Redeemable Preferred Stock for all purposes hereof. Other dividends
will accumulate to the extent they are not paid on the Dividend Payment Date for
the period to which they relate as Cash Dividends in Arrears and accumulated and
unpaid dividends which are required to be paid in cash will bear Additional
Dividends until paid on the same basis as set forth in Section&nbsp;2(a) of this
Certificate of Designation, compounded quarterly on each Dividend Payment Date.</p>
<p align="center">&#45;5&#45;</p>
<p>(d)&nbsp;&nbsp;Subject to the Company&#39;s option to accrue a portion of the
dividends provided for in Section&nbsp;2(a), Holders shall be entitled to
receive the cash dividends provided for in this Certificate of Designation
(including the Total Cash Dividends in Arrears) in preference to and in priority
over any cash dividends (including accumulated and unpaid dividends) payable
upon any Junior Securities.</p>
<p>(e) At the Issuance Date of the Series&nbsp;A2 Redeemable Preferred Stock and
the Series&nbsp;B2 Redeemable Preferred Stock and the Series&nbsp;C2 Redeemable
Preferred Stock, such shares shall be issued with Total Cash Dividends in
Arrears and accumulated and unpaid dividends for the then current dividend
period equal to that of the Series&nbsp;A1 Redeemable Preferred Stock, the
Series&nbsp;B1 Redeemable Preferred Stock and the Series&nbsp;C1 Redeemable
Preferred Stock for which it is exchanged pursuant to the Registration Rights
Agreement.</p>
<p>(f)&nbsp;&nbsp;At any time and from time to time when there shall be Total
Cash Dividends in Arrears, the Company may declare and pay, to the Holders of
record of the Redeemable Preferred Stock on any record date chosen by the
Company (which record date shall be not less than 10 and not more than 60 days
prior to the payment date for such special dividend) for such dividends, a
special dividend per share of Redeemable Preferred Stock equal to all or a
portion of the Total Cash Dividends in Arrears as of the payment date. Upon
payment of such a dividend, if less than the Total Cash Dividends in Arrears
with respect to a share has been paid, the Cash Dividends in Arrears and
Additional Dividends with respect to such share shall be reduced on a <i>pro
rata</i> basis by the amount of such dividend.</p>
<p>(g)&nbsp;&nbsp;No full dividends may be declared or paid or funds set apart
for the payment of dividends on, and the Company shall not make any other
distribution with respect to, any Parity Securities for any period unless the
entire Total Cash Dividends in Arrears for all issued and outstanding shares of
Redeemable Preferred Stock shall have been declared and paid in full, except as
provided below. If at any time there shall exist Total Cash Dividends in
Arrears, the Redeemable Preferred Stock will share dividends <i>pro rata </i>with
the Parity Securities (on the basis of the relative unpaid amount of Cash
Dividends in Arrears and Additional Dividends, in the case of the Redeemable
Preferred Stock and of cumulative accrued and unpaid dividends, in the case of
such Parity Securities).</p>
<p>(h)&nbsp;&nbsp;Cash Dividends in Arrears, Additional Dividends and other
dividends in connection with any redemption may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to Holders of
record of the Redeemable Preferred Stock on such date, not more than 60 days
prior to the payment thereof, as may be fixed by the Board of Directors.</p>
<p>(i)&nbsp;&nbsp;Dividends payable on the Redeemable Preferred Stock shall be
computed on the basis of a 360&#45;day year of twelve 30&#45;day months and the actual
number of days elapsed in the period for which dividends are payable and shall
be deemed to accrue on a daily basis.</p>
<p align="center">&#45;6&#45;</p>
<p>SECTION 3. <u>Liquidation Preference</u>.&nbsp;&nbsp;Upon any voluntary or
involuntary liquidation, dissolution or winding&#45;up of the Company, Holders will
be entitled to be paid, out of the assets of the Company available for
distribution to stockholders, the Liquidation Preference per share of Redeemable
Preferred Stock, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends (including any Total Cash Dividends in
Arrears), if any, thereon to the date fixed for liquidation, dissolution or
winding&#45;up (including an amount equal to a prorated dividend for the period from
the last Dividend Payment Date to the date fixed for liquidation, dissolution or
winding&#45;up), plus, in the case of the Series&nbsp;C Redeemable Preferred Stock
only, an amount in cash equal to the Common Participation Amount, before any
distribution is made on any Junior Securities, including, without limitation, on
any Common Stock of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding&#45;up of the Company, the amounts payable with
respect to the Redeemable Preferred Stock and all other Parity Securities are
not paid in full, the Holders of the Redeemable Preferred Stock and the holders
of the Parity Securities will share equally and ratably in any distribution of
assets of the Company in proportion to their relative liquidation preferences,
together with all accumulated and unpaid dividends to which each is entitled.
After payment of the full amount of the Liquidation Preference and, without
duplication, accumulated and unpaid dividends (including any Total Cash
Dividends in Arrears) to which they are entitled, and, in the case of the
Series&nbsp;C Redeemable Preferred Stock only, an amount in cash equal to the
Common Participation Amount, Holders will not be entitled to any further
participation in any distribution of assets of the Company. For the avoidance of
doubt, the Series&nbsp;A Redeemable Preferred Stock, the Series&nbsp;B
Redeemable Preferred Stock and the Series&nbsp;C Redeemable Preferred Stock
shall constitute Parity Securities with respect to one another. For the purposes
of this Section&nbsp;3, neither the sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Company nor the consolidation
or merger of the Company with one or more entities shall be deemed to be a
liquidation, dissolution or winding&#45;up of the Company. Any payment of
accumulated and unpaid dividends shall be paid prior to any other payments
called for pursuant to this Section 3.</p>
<p>SECTION 4. <u>Voting Rights</u>. (a)&nbsp;&nbsp;Except as otherwise required
under the laws of the State of Delaware or as set forth below, Holders shall not
be entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Company.</p>
<p>(b)&nbsp;&nbsp;If (i)&nbsp;after December&nbsp;1, 2002, there shall exist any
Total Cash Dividends in Arrears remaining in arrears and unpaid for any two
consecutive quarterly dividend periods; (ii)&nbsp;the Company fails to discharge
its obligation to redeem Redeemable Preferred Stock on any Redemption Date to
the extent required by Section&nbsp;5; (iii)&nbsp;the Company fails to make a
Par Offer if such offer is required by the second paragraph of Section&nbsp;7(d)
hereof or fails to purchase shares of Series&nbsp;A Redeemable Preferred Stock
from Holders who elect to have such shares purchased pursuant to such Par Offer;
(iv)&nbsp;a breach or&nbsp;</p>
<p align="center">&#45;7&#45;</p>
<p> violation of any other provisions contained in
Section&nbsp;7 hereof occurs and the breach or violation continues for a period
of 45 days or more after the Company receives notice thereof specifying the
default from the Holders of at least 25% of the shares of Redeemable Preferred
Stock then outstanding; (v) Indebtedness of the Company and/or any Restricted
Subsidiary having an individual or aggregate outstanding principal amount of
$25,000,000 or more is declared due and payable following an event of default
prior to its scheduled stated maturity or is not paid in full upon its scheduled
stated maturity; (vi)&nbsp;a decree or order is entered by a court having
jurisdiction in the premises granting relief in respect of any Significant
Subsidiary in any involuntary case under the Federal Bankruptcy Code, adjudging
such Significant Subsidiary a bankrupt, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of any Significant Subsidiary under any Bankruptcy Law, or appointing a
receiver, liquidator, custodian, assignee, trustee, sequestrator (or other
similar official) of any Significant Subsidiary, or of substantially all of its
properties, or ordering the winding&#45;up or liquidation of its affairs under any
such law, and any such decree or order continues unstayed and in effect for a
period of 60 consecutive days; or (vii)&nbsp; any Significant Subsidiary
institutes proceedings to be adjudicated a bankrupt, or any Significant
Subsidiary consents to the institution of bankruptcy proceedings against it, or
any Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any Bankruptcy Law, or any Significant Subsidiary
consents to the filing of any such petition or to the appointment of a receiver,
liquidator, custodian, assignee, trustee, sequestrator (or other similar
official) of any Significant Subsidiary, or of substantially all of its
properties under any such law, then, in each such case, the Holders of the
majority of the then outstanding affected series of Redeemable Preferred Stock
(voting or consenting, as the case may be, as one class to the extent such
Voting Rights Triggering Event relates to both series of Redeemable Preferred
Stock) will be entitled to elect two members of the Board of Directors of the
Company; <i>provided</i>, <i>however</i>, that in no event shall such Holders be
entitled to elect more than two such members. Such voting rights will continue
until such time as (x)&nbsp;in the case of a dividend default described in
clause&nbsp;(i) above, all Total Cash Dividends in Arrears on the Redeemable
Preferred Stock are paid in full, (y)&nbsp;in the case of an event described in
clause&nbsp;(v) above, any such acceleration or event of default has been
rescinded, cured or waived or the Indebtedness relating to such acceleration has
been paid, redeemed, repurchased or defeased in full and (z)&nbsp;in all other
cases, any failure, breach, default or event giving rise to such voting rights
is remedied, cured or waived by the Holders of at least a majority of the then
outstanding affected series of Redeemable Preferred Stock (voting or consenting,
as the case may be, as one class to the extent such Voting Rights Triggering
Event relates to both series of Redeemable Preferred Stock), after which time
the term of the directors elected pursuant to the provisions of this paragraph
shall terminate. Each such event described in clauses&nbsp;(i) through (vii)
above is referred to herein as a &quot;<b>Voting Rights Triggering Event</b>.&quot;</p>
<p align="center">&#45;8&#45;</p>
<p>(c)&nbsp;&nbsp;The Company shall not modify, change, affect or amend
(including in connection with a merger or consolidation, except to the limited
extent contemplated by Section&nbsp;7(e)) the Certificate of Incorporation or
this Certificate of Designation to affect materially and adversely the specified
rights, preferences, privileges or voting rights of the Holders of the
Redeemable Preferred Stock, or authorize the issuance of any additional shares
of Redeemable Preferred Stock, without the affirmative vote or consent of
Holders of at least a majority of the shares of Redeemable Preferred Stock then
outstanding, voting or consenting, as the case may be, as one class. In
addition, the Company shall not authorize, create (by way of reclassification,
merger, consolidation or otherwise) or issue (i)&nbsp;any Parity Securities, or
any obligation or security convertible into or evidencing the right to purchase
any Parity Securities, without the affirmative vote or consent of the Holders of
a majority of the then outstanding shares of Redeemable Preferred Stock,
(ii)&nbsp;any Senior Securities, or any obligation or security convertible into
or evidencing the right to purchase Senior Securities, without the affirmative
vote or consent of the Holders of at least a majority of the outstanding shares
of the Redeemable Preferred Stock and (iii)&nbsp;any Junior Securities
constituting Disqualified Stock, or any obligation or security convertible into
or evidencing the right to purchase Junior Securities constituting Disqualified
Stock, without the affirmative vote or consent of the Holders of at least a
majority of the outstanding shares of the Redeemable Preferred Stock, in each
case voting or consenting, as the case may be, as one class. Except as expressly
set forth above, (i)&nbsp;the creation, authorization or issuance of any shares
of Junior Securities, Parity Securities or Senior Securities, including the
designation of series thereof within the existing class of Preferred Stock of
the Company, or (ii)&nbsp;the increase or decrease in the amount of authorized
Capital Stock of any class, including any Preferred Stock of the Company (other
than the Redeemable Preferred Stock), shall not require the consent of the
Holders and shall not be deemed to affect materially and adversely the specified
rights, preferences, privileges or voting rights of Holders. The affirmative
vote or consent of Holders of at least a majority of the then issued and
outstanding shares of Redeemable Preferred Stock shall be required to increase
the amount of authorized Redeemable Preferred Stock. No vote of the Holders
shall be required to decrease the number of authorized shares of the Redeemable
Preferred Stock; <i>provided</i>, <i>however</i>, that such number shall not be
decreased below the number of the then currently issued and outstanding shares
of Redeemable Preferred Stock.</p>
<p>(d)&nbsp;&nbsp;Immediately after voting power to elect directors shall have
become vested and be continuing in the Holders pursuant to Section&nbsp;4(b) or
if vacancies shall exist in the offices of directors elected by the Holders,
Holders of at least 10% of the then issued and outstanding shares of Redeemable
Preferred Stock or a proper officer of the Company shall call a special meeting
of the Holders for the purpose of electing the directors which such Holders are
entitled to elect. Any such meeting shall be held at the earliest practicable
date, and the Company shall provide Holders with access to the lists of Holders.
At any meeting held for the purpose of electing directors at which the Holders
shall have the right, voting separately as a class, to elect directors, the
presence in person or by proxy of the Holders of at least a majority of the
outstanding shares of Redeemable Preferred Stock shall be required to constitute
a quorum of such Holders.</p>
<p align="center">&#45;9&#45;</p>
<p>(e)&nbsp;&nbsp;Any vacancy occurring in the office of a director elected by
the Holders shall be filled by the Holders.</p>
<p>(f)&nbsp;&nbsp;In any case in which the Holders shall be entitled to vote
pursuant to this Section&nbsp;4 or pursuant to the General Corporation Law of
the State of Delaware, each Holder shall be entitled to one vote for each share
of Redeemable Preferred Stock held.</p>
<p>(g)&nbsp;&nbsp;Holders of at least a majority of the then outstanding shares
of Redeemable Preferred Stock, voting or consenting, as the case may be,
separately as a single class, may waive compliance with any provision of this
Certificate of Designation.</p>
<p>SECTION 5. <u>Redemption and Series&nbsp;C Exchange</u>.</p>
<p>(a)&nbsp;&nbsp;<u>Optional Redemption</u>. (i)&nbsp;&nbsp;The Series A
Redeemable Preferred Stock and the Series B Redeemable Preferred Stock will be
redeemable at the election of the Company, as a whole or from time to time in
part, at any time on or after December&nbsp;1, 2006, at the applicable
redemption prices (expressed as a percentage of the Liquidation Preference
thereof) set forth below, plus, without duplication, an amount in cash equal to
a prorated dividend for the period from the Dividend Payment Date immediately
prior to the date of redemption (the &quot;<b>Optional Redemption Date</b>&quot;)
to the Optional Redemption Date, if redeemed during the 12&#45;month period
beginning on December&nbsp;1 of the years indicated below.</p>
<p ALIGN="RIGHT">&nbsp;
<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="558">
  <tr>
    <td WIDTH="43%">&nbsp;</td>
    <td WIDTH="57%" COLSPAN="2">
      <p ALIGN="CENTER" style="border-bottom-style: solid; border-bottom-width: 1">Redemption Price</td>
  </tr>
  <tr>
    <td WIDTH="43%"><u>
      <p><br>
      Year</u></td>
    <td WIDTH="28%">
      <p ALIGN="CENTER" style="border-bottom-style: solid; border-bottom-width: 1">Series&nbsp;A Redeemable Preferred Stock</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER" style="border-bottom-style: solid; border-bottom-width: 1">Series&nbsp;B Redeemable Preferred Stock</td>
  </tr>
  <tr>
    <td WIDTH="43%">
      <p>2006</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">107.500%</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">108.000%</td>
  </tr>
  <tr>
    <td WIDTH="43%">
      <p>2007</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">105.000%</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">105.333%</td>
  </tr>
  <tr>
    <td WIDTH="43%">
      <p>2008</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">102.500%</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">102.667%</td>
  </tr>
  <tr>
    <td WIDTH="43%">
      <p>2009 and thereafter</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">100.000%</td>
    <td WIDTH="28%">
      <p ALIGN="CENTER">100.000%</td>
  </tr>
</table>
<p>(ii) No optional redemption may be made unless prior to such redemption any
Total Cash Dividends in Arrears shall have been fully paid on all shares of the
Redeemable Preferred Stock. If less than all the Redeemable Preferred Stock of
any series is to be redeemed, the particular shares of such series to be
redeemed will be determined <i>pro</i> <i>rata</i> among Holders of such series,
except that the Company may redeem such shares held by any Holder of fewer than
100 shares without regard to such <i>pro</i> <i>rata</i> redemption requirement.
If any Redeemable Preferred Stock is to be redeemed in part, the Redemption
Notice that relates to such Redeemable Preferred Stock shall state the portion
of the Liquidation Preference to be redeemed. New shares of the same series of
Redeemable Preferred Stock having an aggregate Liquidation Preference equal to
the unredeemed portion will be issued in the name of the Holder thereof upon
cancellation of the original shares of Redeemable Preferred Stock.</p>
<p align="center">&#45;10&#45;</p>
<p>(b)&nbsp;&nbsp;<u>Mandatory Redemption</u>. (i)&nbsp;&nbsp;The Company shall
redeem all outstanding Series&nbsp;A Redeemable Preferred Stock and
Series&nbsp;B Redeemable Preferred Stock (subject to the legal availability of
funds therefor) in whole on December&nbsp;1, 2012; <i>provided</i> that such
date shall be automatically changed upon the issuance of the Acquisition Notes
to be the date that is the first Business Day which is one year following the
final stated maturity date of the Acquisition Notes (without giving effect to
any amendment, modification or waiver thereof), at a redemption price equal to
100% of the Liquidation Preference thereof, plus, without duplication, all
accumulated and unpaid dividends (including any Total Cash Dividends in
Arrears), if any, to the Maturity Redemption Date. The Company shall redeem all
outstanding Series&nbsp;C Redeemable Preferred Stock (subject to the legal
availability of funds therefor) in whole on January&nbsp;1, 2022, at a
redemption price equal to 100% of the Liquidation Preference thereof, plus,
without duplication, all accumulated and unpaid dividends (including any Total
Cash Dividends in Arrears), if any, to the Maturity Redemption Date, plus the
Common Participation Amount.</p>
<p>(ii) The Company shall make an offer to redeem (a &quot;<b>Change of Control
Offer</b>&quot;) all outstanding Redeemable Preferred Stock (subject to legal
availability of funds therefor) not later than 60 days following a Change of
Control (the &quot;<b>Change of Control Redemption Date</b>&quot;) at a
redemption price equal to 100% of the Liquidation Preference thereof, plus,
without duplication, all accumulated and unpaid dividends (including any Total
Cash Dividends in Arrears), if any, to the Change of Control Redemption Date,
plus, in the case of the Series&nbsp;C Redeemable Preferred Stock only, an
amount equal to the Common Participation Amount; <i>provided</i> that
(A)&nbsp;no redemption under this Section&nbsp;5(b)(ii) shall be required unless
(i)&nbsp;all Existing Notes shall have ceased to be outstanding, (ii)&nbsp;the
Company shall have consummated a defeasance with respect to the Existing Notes
in accordance with the terms thereof or (iii)&nbsp;the holders of Existing Notes
shall have consented to the Company&#39;s performance of its obligations under
this Section&nbsp;5(b)(ii) and (B)&nbsp;no redemption shall be effected until
after the Company has performed all of its obligations arising upon a
&quot;change of control&quot; under any debt instruments of the Company. The
Company shall not consummate a transaction resulting in a Change of Control
unless at the time of or prior to the Change of Control, the Company shall have
entered into customary financial and/or other arrangements which permit the
timely redemption of the Redeemable Preferred Stock under this
Section&nbsp;5(b)(ii) (disregarding the proviso of the preceding sentence). The
Company may (but shall not be obligated to) discharge any obligation arising
under this Section&nbsp;5(b)(ii) if a Person other than the Company (whether or
not an Affiliate) makes and consummates a Change of Control Offer in the manner
contemplated, and as required by, this Certificate of Designation.</p>
<p>(iii) In the event of any Asset Disposition resulting in Net Cash Proceeds to
the Company or any Restricted Subsidiary required by the terms of the Company&#39;s
then outstanding Indebtedness to be applied towards the repayment of, or any
offer to repay, any outstanding Indebtedness of the Company to the extent that
such Net Cash Proceeds are not applied by the Company within 365 days following
such Asset Disposition toward the repayment of any such Indebtedness or are not</p>
<p align="center">&#45;11&#45;</p>
<p>&nbsp;reinvested in the business of the Company and the Restricted Subsidiaries within
365 days following such Asset Disposition, <i>first</i> the Company shall apply
such Net Cash Proceeds towards the making and consummation of any remaining
obligation to offer to purchase or other repayment of any outstanding
Indebtedness of the Company to the extent required by, and in accordance with,
the terms thereof, and towards any fees and expenses associated therewith, and, <i>second</i>,
to the extent that any Net Cash Proceeds remain after any such purchase or
repayment and payment of associated fees and expenses (such remaining proceeds
being &quot;<b>Net Available Proceeds</b>&quot;) and provided no default or
event of default would result under the terms of any Indebtedness of the
Company, the Company shall (a)&nbsp;declare a special dividend pursuant to
Section&nbsp;2(e) in an amount equal to the lesser of (x)&nbsp;the full amount
of the entire Total Cash Dividends in Arrears (together with all other dividends
payable in respect thereof) or (y)&nbsp;the amount of such Net Available
Proceeds, and (b) after fulfilling any obligations with respect to special
dividends referred to in the preceding clause (a), apply any remaining Net
Available Proceeds (&quot;<b>Remaining Net Available Proceeds</b>&quot;) towards
the making and consummation of an offer (an &quot;<b>Asset Disposition Offer</b>&quot;)
to redeem shares of Redeemable Preferred Stock, at a redemption price equal to
100% of the Liquidation Preference thereof, plus, without duplication, all
accumulated and unpaid dividends (including any Total Cash Dividends in
Arrears), if any, to the redemption date (the &quot;<b>Asset Disposition
Redemption Date</b>&quot;), which shall be not more than 60 nor less than 30
days following the Company&#39;s satisfaction of all obligations in respect of
such Asset Disposition and the application of the Net Cash Proceeds therefrom
required hereby to be performed prior to the making of an Asset Disposition
Offer, plus, in the case of the Series C Redeemable Preferred Stock only, an
amount equal to the Common Participation Amount. Notwithstanding anything herein
to the contrary, the amount of Net Available Proceeds may be recalculated to
take account of the <i>pro rata</i> rights of any holders of Parity Securities,
if any.</p>
<p>(c)&nbsp;&nbsp;<u>Dividend Payment</u>. Any payment of accumulated and unpaid
dividends shall be made prior to the payment of any redemption price made
pursuant to this Section&nbsp;5. In addition, the Company shall declare and pay
a special dividend as provided in Section&nbsp;2(e) in respect of the full
amount of any Total Cash Dividends in Arrears prior to the payment of any
redemption price made pursuant to this Section&nbsp;5. Notwithstanding anything
herein to the contrary, this Section&nbsp;5(c) shall not result in any
requirement to make a duplicative payment upon any redemption hereunder.</p>
<p>(d)&nbsp;&nbsp;<u>Procedure for Redemptions</u>. (i)&nbsp;&nbsp;Not more than
60 and not less then 30 days prior to any Redemption Date (or, in the case of a
redemption pursuant to Section&nbsp;5(b)(ii), not more than 60 and not less than
5 Business Days prior to any Redemption Date), written notice (the &quot;<b>Redemption
Notice</b>&quot;) shall be given by first&#45;class mail, postage prepaid, to each
Holder of record of shares to be redeemed on the record date fixed for such
redemption of the Redeemable Preferred Stock or entitled to the benefits of a
Change of Control Offer or Asset Disposition Offer, as the case may be, at such
Holder&#39;s address as the same appears on the stock register of the Company; <i>provided</i>,
<i>however</i>, that (1)&nbsp;a Redemption</p>
<p align="center">&#45;12&#45;</p>
<p>&nbsp;Notice may be given with respect to a
redemption pursuant to Section&nbsp;5(b)(ii) on a basis that is conditioned upon
and subject to the occurrence of a Change of Control upon a date that may be
subsequently changed (a &quot;<b>Conditional Redemption Notice</b>&quot;) and
(2)&nbsp;no failure to give such notice nor any deficiency therein shall affect
the validity of the procedure for the redemption of any shares of Redeemable
Preferred Stock to be redeemed except as to the Holder or Holders to whom the
Company has failed to give such notice or except as to the Holder or Holders
whose notice was defective. The Redemption Notice shall state:</p>
<blockquote>
    <p>(A)&nbsp;&nbsp; in the case of a Change of Control Offer or Asset Disposition Offer only,
    that a Change of Control has occurred or that Remaining Net Available
    Proceeds resulting from an Asset Disposition exist, as the case may be, and
    that such Holder has the right to require the Company to redeem such Holder&#39;s
    Redeemable Preferred Stock at the within mentioned Redemption Price, in the
    case of an Asset Disposition Offer, up to a maximum aggregate Redemption
    Price equal to the Remaining Net Available Proceeds less the amount of fees
    and expenses associated with the making and consummation of the Asset
    Disposition Offer;</p>
    <p>(B)&nbsp;&nbsp; the Redemption Price or, if unascertainable, how the Redemption Price
    will be calculated;</p>
    <p>(C)&nbsp;&nbsp; in the case of an optional redemption only, whether all or less than all
    the outstanding shares of a series of Redeemable Preferred Stock are to be
    redeemed and the total number of shares of such Redeemable Preferred Stock
    being redeemed;</p>
    <p>(D)&nbsp;&nbsp; in the case of an optional redemption only, the number and series of
    shares of Redeemable Preferred Stock held by the Holder that the Company
    intends to redeem;</p>
    <p>(E)&nbsp;&nbsp; in the case of an Asset Disposition Offer only, the aggregate Remaining
    Net Available Proceeds available to redeem shares of Redeemable Preferred
    Stock pursuant to the Asset Disposition Offer and to pay fees and expenses
    associated therewith;</p>
    <p>(F)&nbsp;&nbsp; in the case of an Asset Disposition Offer only, that any shares of
    Redeemable Preferred Stock tendered in excess of the maximum number able to
    be repurchased with the Remaining Net Available Proceeds (net of fees and
    expenses associated with the Asset Disposition Offer) will be returned to
    the Holder and will be treated for all purposes as if such shares had not
    been tendered for redemption, and that in the event of such an excess
    tender, the Company shall select the shares of Redeemable Preferred Stock to
    be redeemed as nearly as practicable on a <i>pro rata</i> basis;</p>
    <p>(G)&nbsp;&nbsp; the Redemption Date or, in the case of a Conditional Redemption Notice,
    the first possible and intended Redemption Date;</p>
    <p align="center">&#45;13&#45;</p>
    <p>(H)&nbsp;&nbsp; in the case of an optional redemption or maturity date redemption only,
    that the Holder is to surrender to the Company, at the place or places that
    shall be designated in such Redemption Notice, its certificates representing
    the shares of Redeemable Preferred Stock to be redeemed;</p>
    <p>(I)&nbsp;&nbsp; in the case of a Change of Control Offer or Asset Disposition Offer only,
    that the Holder is to surrender to the Company, at the place or places that
    shall be designated in such Redemption Notice, its certificates representing
    the shares of Redeemable Preferred Stock that such Holder has elected to be
    redeemed;</p>
    <p>(J)&nbsp;&nbsp; that dividends on the shares of any Redeemable Preferred Stock to be
    redeemed shall cease to accumulate on the day prior to such Redemption Date
    unless the Company defaults in the payment of the redemption price; and</p>
    <p>(K)&nbsp;&nbsp; the name of any bank or trust company performing the duties referred to
    in subsection (d)(iv) below.</p>
</blockquote>
<p>(ii) On or before a Redemption Date, each Holder of Redeemable Preferred
Stock to be redeemed shall surrender the certificate or certificates
representing such shares of Redeemable Preferred Stock to the Company, in the
manner and at the place designated in the Redemption Notice, and on the
Redemption Date the full redemption price for such shares shall be payable in
cash to the person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be returned to authorized
but unissued shares. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.</p>
<p>(iii) On and after the Redemption Date, unless the Company defaults in the
payment in full of the applicable redemption price, dividends on the Redeemable
Preferred Stock called or tendered for redemption shall cease to accumulate on
the day prior to the Redemption Date, and the Holders of such shares shall cease
to have any further rights with respect thereto on the Redemption Date, other
than the right to receive the redemption price, without interest.</p>
<p>(iv) If a Redemption Notice shall have been duly given or if the Company
shall have given to the bank or trust company hereinafter referred to
irrevocable authorization promptly to give such notice, and if on or before the
Redemption Date specified therein the funds necessary for such redemption shall
have been deposited by the Company with such bank or trust company in trust for
the <i>pro</i> <i>rata</i> benefit of the Holders of the Redeemable Preferred
Stock called or tendered for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have been surrendered
for cancellation, from and after the time of such deposit, all shares so called
or tendered, or to be so called or tendered pursuant to such irrevocable
authorization, for redemption shall no longer be deemed to be outstanding and
all rights with respect to&nbsp;</p>
<p align="center">&#45;14&#45;</p>
<p> such shares shall forthwith cease and terminate,
except only the right of the Holders thereof to receive from such bank or trust
company at any time after the time of such deposit the funds so deposited,
without interest. The aforesaid bank or trust company shall be organized and in
good standing under the laws of the United States of America or of any state
within the United States, shall have capital, surplus and undivided profits
aggregating at least $25,000,000 (a &quot;<b>Qualified Bank</b>&quot;) and shall
be identified in the Redemption Notice. Any interest accrued on such funds from
and after the Redemption Date shall be paid to the Company from time to time.
Any funds so set aside or deposited, as the case may be, and unclaimed at the
end of one year from such Redemption Date shall, to the extent permitted by law,
be released or repaid to the Company, after which release or repayment the
Holders of the shares so called for redemption shall look only to the Company
for payment thereof.</p>
<p>(e) <u>Exchange of Series&nbsp;C Redeemable Preferred Stock for Series&nbsp;B
Redeemable Preferred Stock</u>. At any time after the second anniversary of the
Issuance Date of the Series C1 Redeemable Preferred Stock but prior to the third
anniversary of the Issuance Date of the Series C1 Redeemable Preferred Stock, at
the option of the Company or upon the written request of Holders of a majority
of the outstanding shares of Series&nbsp;C Redeemable Preferred Stock, the
Company shall exchange, in whole and not in part, all outstanding shares of
Series&nbsp;C Redeemable Preferred Stock for newly issued shares of
Series&nbsp;B Redeemable Preferred Stock. If any Series&nbsp;B Redeemable
Preferred Stock shall be outstanding immediately prior to such exchange, all
newly issued shares of Series&nbsp;B Redeemable Preferred Stock shall be of the
same series as all other outstanding shares of Series&nbsp;B Redeemable
Preferred Stock at such time and identical to such outstanding shares in all
respects, including as to Liquidation Preference, Total Cash Dividends in
Arrears (inclusive of any Additional Dividends accruing from the most recent
Dividend Payment Date), accrued regular dividends and, if previously obtained
with respect to outstanding Series B Redeemable Preferred Stock, CUSIP number.
If no shares of Series&nbsp;B Redeemable Preferred Stock shall be outstanding
immediately prior to such exchange, all newly issued shares of Series&nbsp;B
Redeemable Preferred Stock shall be issued with the same Liquidation Preference,
Total Cash Dividends in Arrears (inclusive of any Additional Dividends accruing
from the most recent Dividend Payment Date) and accrued regular dividends as the
shares of Series&nbsp;C Redeemable Preferred Stock immediately prior to such
exchange (and the Common Exchange Factor shall be calculated on such basis). The
ratio of exchange shall be one share of Series&nbsp;B Redeemable Preferred Stock
multiplied by the Common Exchange Factor for each share of Series&nbsp;C
Redeemable Preferred Stock exchanged. In lieu of issuing any fractional shares
of Series B Redeemable Preferred Stock, the Company may deliver to a Holder an
amount in cash equal to such fraction multiplied by the sum of the Liquidation
Preference plus Total Cash Dividends in Arrears (inclusive of any Additional
Dividends accruing from the most recent Dividend Payment Date) plus accrued
regular dividends in respect of each share of Series B Redeemable Preferred
Stock being issued.</p>
<p align="center">&#45;15&#45;</p>
<p>Not more than 60 and not less than 10 days prior to an exchange provided for
in the preceding paragraph , written notice (the &quot;<b>Exchange Notice</b>&quot;)
shall be given by first&#45;class mail, postage prepaid, to each Holder of record of
shares to be exchanged on the record date fixed for such exchange of
Series&nbsp;B Redeemable Preferred Stock for Series&nbsp;C Redeemable Preferred
Stock, at such Holder&#39;s address as the same appears on the stock register of
the Company; <i>provided</i>, <i>however</i>, that no failure to give such
notice nor any deficiency therein shall affect the validity of the procedure for
such exchange. The Exchange Notice shall state (i)&nbsp;the date set for
exchange, (ii)&nbsp;the method used to calculate the Common Exchange Factor,
(iii)&nbsp;that the Holder is to surrender to the Company, at the place or
places that shall be designated in such Exchange Notice, its certificates
representing the shares of Series&nbsp;C Redeemable Preferred Stock to be
exchanged, (iv)&nbsp;that following the date set for exchange, such &#39;Holder&#39;s
shares of Series&nbsp;C Redeemable Preferred Stock shall cease to accrue
dividends, whether or not submitted for exchange, and (v)&nbsp;that following
the date set for exchange, dividends on newly issued shares of Series&nbsp;B
Redeemable Preferred Stock shall accrue from the most recent Dividend Payment
Date.</p>
<p>SECTION 6. <u>Ranking</u>. The Redeemable Preferred Stock shall, with respect
to dividends and distributions upon liquidation, winding&#45;up and dissolution of
the Company, rank (a)&nbsp;senior to all classes of Common Stock of the Company,
and to each other class of Capital Stock or series of Preferred Stock of the
Company established after the Issuance Date of the Series&nbsp;A1 Redeemable
Preferred Stock, Series&nbsp;B1 Redeemable Preferred Stock and Series&nbsp;C1
Redeemable Preferred Stock the terms of which expressly provide that it ranks
junior to the Redeemable Preferred Stock as to dividends and distributions upon
liquidation, winding&#45;up and dissolution of the Company (collectively referred
to, together with all classes of Common Stock of the Company, as &quot;<b>Junior
Securities</b>&quot;), (b)&nbsp;subject to any required approval of the Holders
in accordance with Section&nbsp;4(c) hereof, on a parity with each other class
of Capital Stock or series of Preferred Stock established after the Issuance
Date of the Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1 Redeemable
Preferred Stock and Series&nbsp;C1 Redeemable Preferred Stock the terms of which
expressly provide that such class or series will rank on a parity with the
Redeemable Preferred Stock as to dividends and distributions upon liquidation,
winding&#45;up and dissolution of the Company (collectively referred to as &quot;<b>Parity
Securities</b>&quot;), and (c)&nbsp;subject to any required approval of the
Holders in accordance with Section&nbsp;4(c) hereof, junior to each class of
Capital Stock or series of Preferred Stock established after the Issuance Date
of the Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1 Redeemable
Preferred Stock and Series&nbsp;C1 Redeemable Preferred Stock by the Board of
Directors and the terms of which do not expressly provide that such class or
series will rank junior to, or on a parity with, the Redeemable Preferred Stock
as to dividends and distributions upon liquidation, winding&#45;up and dissolution
of the Company (collectively referred to as &quot;<b>Senior Securities</b>&quot;).
For the avoidance of doubt, each series of Redeemable Preferred Stock shall
constitute Parity Securities with respect to one another.</p>
<p align="center">&#45;16&#45;</p>
<p>SECTION 7. <u>Certain Additional Provisions</u>.</p>
<p>(a)&nbsp;&nbsp;<u>Limitation on Indebtedness</u>. The Company shall not Incur
any Indebtedness, and the Company shall not permit any of the Restricted
Subsidiaries to Incur any Indebtedness, other than, in any such case, Permitted
Indebtedness; <i>provided</i> that the Company or a Restricted Subsidiary may
Incur Indebtedness if immediately after giving <i>pro forma</i><u> </u>effect
thereto and the use of the proceeds thereof (in accordance with the definition
of &quot;Consolidated Coverage Ratio&quot;), the Consolidated Coverage Ratio is
at least equal to [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]:1.00.<sup>a</sup></p>
<p>For purposes of determining compliance with this Section&nbsp;7(a),
(i)&nbsp;in the event that an item of Indebtedness meets the criteria of more
than one of the types of Permitted Indebtedness or the provisions of the first
paragraph of this Section&nbsp;7(a), the Company in its sole discretion may
classify, and may from time to time reclassify, such item of Indebtedness and
only be required to include the amount of such Indebtedness as one of such types
and such item of Indebtedness may be divided and classified in more than one of
such types, (ii)&nbsp;the liquidation preference of any Preferred Stock will be
the amount of all obligations of such Person with respect to the redemption of
such Preferred Stock at its stated maturity or upon liquidation or dissolution
(whichever is greater) and (iii)&nbsp;in no event shall the accrual of dividends
or interest or issuance of pay&#45;in&#45;kind dividends or interest subsequent to the
issuance or Incurrence of Indebtedness or Preferred Stock giving rise thereto
constitute an Incurrence required to be tested under this Section&nbsp;7(a).</p>
<p>(b)&nbsp;&nbsp;<u>Limitations on Restricted Payments</u>. Without limiting
other prohibitions in this Certificate of Designation (including
Sections&nbsp;4(c) and 5(a)(ii)), the Company shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, (i)&nbsp;declare or pay
any dividend or make any distribution to the holders of any Junior Securities or
Parity Securities (other than dividends or distributions payable solely in
shares of Qualified Capital Stock or in options, warrants or other rights to
purchase shares of Qualified Capital Stock); (ii)&nbsp;purchase, redeem or
otherwise acquire or retire for value any Junior Securities or Parity Securities
or any options, warrants or other rights to acquire Junior Securities or Parity
Securities (other than such options, warrants or rights owned by the Company or
a Restricted Subsidiary); or (iii)&nbsp;make any Investment (other than a
Permitted Investment) in any Person (any of the foregoing actions described in
clause&nbsp;(i), (ii) or (iii), other than the&nbsp;</p>
<p style="margin-bottom: 0">_________________________________</p>
<p style="margin-top: 0"><sup>a</sup> To be set with 0.25:1.00 greater capacity
than provided for in the Acquisition Notes or, if the Acquisition Notes are not
issued on or before the first Issuance Date, at a level reasonably acceptable to
the Company and Textron.&nbsp; In no event will the Consolidated Coverage Ratio
be greater than 2.0:1.00</p>
<p>&nbsp;</p>
<p align="center">&#45;17&#45;</p>
<p> exclusions therefrom, are
collectively referred to herein as &quot;<b>Restricted Payments</b>&quot;),
unless at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:</p>
<blockquote>
  <blockquote>
    <p>(1)&nbsp; no Voting Rights Triggering Event shall have occurred and be continuing
    (or result therefrom);</p>
    <p>(2)&nbsp; after giving effect to such Restricted Payment, the Consolidated Coverage
    Ratio shall be equal to or greater than
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]:1.00;<sup>a</sup></p>
    <p>(3)&nbsp; the aggregate amount of such Restricted Payment and all other Restricted
    Payments declared or made subsequent to the Issuance Date of the
    Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1 Redeemable
    Preferred Stock and Series&nbsp;C1 Redeemable Preferred Stock would not
    exceed the sum of (without duplication):</p>
    <blockquote>
        <p>(A)&nbsp;&nbsp; 50% of the Consolidated Net Income accrued during the period (treated
        as one accounting period) from the Issuance Date of the Series&nbsp;A1
        Redeemable Preferred Stock, Series&nbsp;B1 Redeemable Preferred Stock
        and Series&nbsp;C1 Redeemable Preferred Stock to the end of the most
        recent fiscal quarter ending prior to the date of such Restricted
        Payment as to which financial results are available (or, in case such
        Consolidated Net Income shall be a deficit, minus 100% of such deficit);
        plus</p>
        <p>(B)&nbsp;&nbsp; the aggregate net cash proceeds or fair market value of property
        received by the Company from the issue or sale of Qualified Capital
        Stock of the Company or other capital contributions in respect of
        Qualified Capital Stock of the Company subsequent to the Issuance Date
        of the Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1
        Redeemable Preferred Stock and Series&nbsp;C1 Redeemable Preferred
        Stock, <i>provided</i> that any such net proceeds received, directly or
        indirectly, by the Company from an employee stock ownership plan
        financed by loans from the Company or a Subsidiary of the Company shall
        be included only to the extent such loans have been repaid with cash on
        or prior to the date of determination; plus</p>
        <p>(C)&nbsp;&nbsp; the amount by which Indebtedness of the Company or a Restricted
        Subsidiary (other than, in either case, Indebtedness owed to the Company
        or a Restricted Subsidiary) is reduced on the Company&#39;s consolidated
        balance sheet upon the conversion or exchange subsequent to the Issuance
        Date of the Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1
        Redeemable Preferred Stock and</p>
    </blockquote>
  </blockquote>
</blockquote>
        <p style="margin-top: 0; margin-bottom: 0">______________________</p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a&nbsp;</sup> To be same as set
forth in the first paragraph of Section 7(a)</p>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <p align="center">&#45;18&#45;</p>
      </blockquote>
        <p>Series&nbsp;C1 Redeemable Preferred Stock
        of any such Indebtedness into or for Qualified Capital Stock of the
        Company (less the amount of any cash, or other property, distributed by
        the Company or such Restricted Subsidiary, as applicable, upon such
        conversion or exchange on account of such Indebtedness other than on
        account of interest or dividends in respect thereof); plus</p>
        <p>(D)&nbsp;&nbsp; to the extent not included in Consolidated Net Income, the net
        reduction (received by the Company or any Restricted Subsidiary in cash)
        in Investments (other than Permitted Investments) made by the Company
        and the Restricted Subsidiaries since the Issuance Date of the
        Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1 Redeemable
        Preferred Stock and Series&nbsp;C1 Redeemable Preferred Stock (including
        if such reduction occurs by reason of the return of equity capital, the
        repayment of the principal of loans or advances or the redesignation of
        an Unrestricted Subsidiary as a Restricted Subsidiary), not to exceed,
        in the case of any Investments in any Person, the amount of Investments
        (other than Permitted Investments) made by the Company and its
        Restricted Subsidiaries in such Person since the Issuance Date of the
        Series A1 Redeemable Preferred Stock, Series B1 Redeemable Preferred
        Stock and Series&nbsp;C1 Redeemable Preferred Stock.</p>
    </blockquote>
  </blockquote>
</blockquote>
<p>Notwithstanding the foregoing paragraph, so long as no Voting Rights
Triggering Event shall have occurred and be continuing (except as to clauses
(i), (ii), (iii), (vi), (viii), (ix) and (x) below) the foregoing provisions
shall not prohibit the following actions:</p>
<blockquote>
    <p>(i) retirements, redemptions, dividends and other distributions made or
    paid within 60 days after the date of declaration or issuance of notice of
    redemption or retirement if at such date of declaration or issuance of
    notice of redemption or retirement such dividend would have complied with
    this Section&nbsp;7(b);</p>
    <p>(ii) any purchase, retirement or redemption of Capital Stock of the
    Company made (x)&nbsp;by exchange for, or out of the proceeds of any
    substantially concurrent capital contribution in respect of or substantially
    concurrent sale of, Qualified Capital Stock of the Company (other than
    Capital Stock issued or sold to a Subsidiary) or (y)&nbsp;by exchange for
    shares of Capital Stock of Parent;</p>
    <p>(iii) any purchase, retirement or redemption of Parity Securities
    effected together with a purchase or redemption of the Redeemable Preferred
    Stock on a basis that is in proportion to their relative liquidation
    preferences and otherwise in compliance with this Certificate of
    Designation;</p>
    <p align="center">&#45;19&#45;</p>
    <p>(iv) payments (including through dividends or distributions to Parent to
    enable it to make payments) (A)&nbsp;of amounts necessary and when necessary
    to purchase, redeem, acquire, cancel or otherwise retire for value Capital
    Stock of Parent of the Company, in each case held by full time officers,
    directors or employees of Parent, the Company or any of the Company&#39;s
    Subsidiaries, upon, in connection with or following death, disability,
    retirement, severance or termination of employment or service or pursuant to
    any agreement or plan under which such Capital Stock was issued or which was
    otherwise approved by the Board of Directors of the Parent or the Company
    and creates an obligation on the part of the Parent or the Company with
    respect to its Capital Stock of the type contemplated by this subclause&nbsp;(A),
    (B)&nbsp;to redeem or repurchase stock purchase or similar rights in respect
    of Capital Stock or (C)&nbsp;to make cash payments to holders of Capital
    Stock in lieu of the issuance of fractional shares of its Capital Stock; <i>provided</i>,
    <i>however</i>, that the amount of such payments pursuant to subclauses&nbsp;(A),
    (B) and (C) of this clause&nbsp;(iv) after the Issuance Date of the
    Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1 Redeemable
    Preferred Stock and Series&nbsp;C1 Redeemable Preferred Stock does not
    exceed $[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;] million in any fiscal
    year plus any unutilized portion of such amount in any prior fiscal year and
    $[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;] million in the aggregate after
    such Issuance Date;<sup>a</sup></p>
    <p>(v) Restricted Payments (other than Investments and other Restricted
    Payments otherwise permitted hereunder) in an aggregate amount not to exceed
    $[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;] million;*</p>
    <p>(vi) the payment of dividends or distributions to Parent in amounts and
    at the times necessary to permit Parent to pay amounts, if any, owing by
    Parent in connection with the Acquisition, the Credit Facility, the
    Receivables Facility, the Acquisition Notes, the Bridge Financing, the
    Redeemable Preferred Stock and fees and expenses related to any of the
    foregoing;</p>
    <p>(vii) Investments (other than Permitted Investments or Investments
    otherwise permitted hereunder) in an aggregate amount not to exceed
    $[&nbsp;&nbsp;&nbsp;] million.*</p>
    <p>(viii) subject to compliance with the other applicable provisions hereof,
    the payment of dividends or distributions in respect of the Redeemable
    Preferred Stock or other Preferred Stock issued pursuant to and in
    compliance with this Certificate of Designation and purchases, retirements
    or redemptions of any shares of Redeemable Preferred Stock in accordance
    with the terms hereof;</p>
</blockquote>
    <p style="margin-top: 0; margin-bottom: 0">___________________________</p>
    <p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> To provide 15%
    additional flexibility in amount as provided for in the Acquisition Notes
    or, if the Acquisition Notes are not issued on or prior to the first
    Issuance Date, in amounts to be reasonably acceptable to the Company and
    Textron.</p>
<blockquote>
    <p align="center">&#45;20&#45;</p>
    <p>(ix) dividends or other Restricted Payments (including tax sharing
    payments) to Parent to the extent used by Parent to pay its operating and
    administrative expenses incurred in the ordinary course of its business,
    including directors&#39; fees, legal and audit expenses, listing fees,
    judgments, awards or settlements payable by Parent arising from the
    businesses of the Company or its Subsidiaries or Parent&#39;s status as a
    public company, public company compliance expenses and corporate, franchise
    and other taxes; or</p>
    <p>(x) any Investment made by the exchange for, or out of the proceeds of a
    capital contribution in respect of or the substantially concurrent sale of,
    Qualified Capital Stock of the Company or by exchange for shares of Capital
    Stock of Parent.</p>
</blockquote>
<p>Notwithstanding any other provision of this Section 7(b), for so long as any
Textron Shares remain issued and outstanding, the Company shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly make any
Restricted Payment of the type described in clause (i) or (ii) of the definition
thereof other than (a) Restricted Payments permitted by clauses (ii), (iii),
(iv), (vi), (viii) and (ix) of the preceding paragraph, (b) any dividend or
distribution to Parent to the extent required by Parent to service Indebtedness
owing to any Person that is not an Affiliate of Parent or the Company if such
Restricted Payment would otherwise be permitted by this Section 7(b), and (c)
any dividend or distribution to Parent to the extent required by Parent in
connection with any financing of the Acquisition in lieu of any of the debt
financing contemplated by the Debt Commitment Letter (as defined in the Purchase
Agreement), including the Acquisition Notes and any Refinancing of the Bridge
Financing. The provisions of this paragraph shall operate solely for the benefit
of Textron and its Subsidiaries in their capacity as holders of Textron Shares.
Notwithstanding anything in this Certificate of Designation to the contrary, in
the event of a breach of these provisions and no other provision of this
Certificate of Designation, the sole affected Holders entitled to voting rights
under Section 4 shall be the Holders of the Textron Shares.</p>
<p>The amount of any non&#45;cash Restricted Payment shall be the fair market value,
on the date such Restricted Payment is made, of the assets or securities
proposed to be transferred or issued by the Company pursuant to such Restricted
Payment. For the purposes of calculating the aggregate amount of Restricted
Payments made for the purposes of clause&nbsp;(2) of the first paragraph of this
Section&nbsp;7(b), any payment made pursuant to clauses (i), (ii), (iv), (v)
and, (x) of the second preceding paragraph shall be included and any payment
made pursuant to clauses (iii), (vi), (vii), (viii) and (ix) of the second
preceding pragraph shall be excluded.</p>
<p align="center">&#45;21&#45;</p>
<p>(c) <u>Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries</u>. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary (i)&nbsp;to pay dividends (in cash or otherwise) or make
any other distributions in respect of its Capital Stock owned by the Company or
any other Restricted Subsidiary or pay any Indebtedness or other obligation owed
to the Company or any other Restricted Subsidiary; (ii)&nbsp;to make loans or
advances to the Company or any other Restricted Subsidiary; or (iii)&nbsp;to
transfer any of its property or assets to the Company or any other Restricted
Subsidiary. Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, create or otherwise cause or suffer to become
effective any such encumbrance or restriction (A)&nbsp;pursuant to any agreement
in effect on the Issuance Date of the Series&nbsp;A1 Redeemable Preferred Stock,
the Series&nbsp;B1 Redeemable Preferred Stock and the Series&nbsp;C1 Redeemable
Preferred Stock; (B)&nbsp;pursuant to the terms of any Credit Facility, Currency
Agreement, Interest Rate Agreement, Commodity Agreement, Receivables Facility or
Indebtedness Incurred pursuant to clause&nbsp;(iii)&nbsp;or&nbsp;(iv)&nbsp;of
the definition of &quot;Permitted Indebtedness&quot;; <i>provided</i> that the
Company determines in good faith that the provisions relating to such
encumbrance or restriction at the time any such agreement is entered into
(i)&nbsp;are customary in similar agreements entered into by Persons of a
comparable size and credit worthiness to the Company and (ii) could not
reasonably be expected to materially adversely affect the Company&#39;s ability to
make required cash dividend payments with respect to the Redeemable Preferred
Stock or to redeem the Redeemable Preferred Stock on the Maturity Redemption
Date; (C)&nbsp;pursuant to an agreement existing prior to the date on which such
Person became a Subsidiary of the Company and outstanding on such date and not
created in anticipation of becoming a Subsidiary, which encumbrance or
restriction is not applicable to any other Person or the properties or assets of
any other Person; (D)&nbsp;pursuant to an agreement effecting a renewal,
refunding or extension of Indebtedness Incurred or Preferred Stock issued
pursuant to an agreement referred to in clause&nbsp;(A), (B) or (C) above or
this clause (D), <i>provided</i> that the provisions contained in such renewal,
refunding or extension agreement relating to such encumbrance or restriction are
not, in the aggregate, more restrictive in any material respect than the
provisions contained in the agreement the subject thereof, as determined in good
faith by the Company; (E)&nbsp;in the case of clause&nbsp;(iii) above,
restrictions contained in any mortgage, security or lease agreement (including a
capital or operating lease) securing Indebtedness of a Subsidiary or relating to
property or assets of a Subsidiary otherwise permitted hereunder, but only to
the extent such restrictions restrict the transfer of the property or asset
subject to such mortgage, security or lease agreement; (F)&nbsp;in the case of
clause&nbsp;(iii) above, customary nonassignment provisions entered into in the
ordinary course of business consistent with past practice in leases and other
contracts to the extent such provisions restrict the transfer or subletting of
any such lease or the assignment of rights under such contract; (G)&nbsp;any
restriction with respect to a Subsidiary of the Company imposed pursuant to an
agreement which has been entered into for the sale or disposition of Capital
Stock or assets of such Subsidiary; (H)&nbsp;any encumbrance or restriction with
respect to a Foreign Subsidiary pursuant to an agreement relating to
Indebtedness or Liens Incurred by such Foreign Subsidiary which is permitted
hereunder; <i>provided</i>, that the Company determines in good faith that the
provisions relating to such encumbrance or restriction at the time any such
agreement is entered into (i)&nbsp; are customary in similar agreement entered
into by persons of a comparable size and credit worthiness to the Company and
(ii)&nbsp;could not reasonably be expected to materially adversely affect the
Company&#39;s ability to make required cash dividend payments with respect to the
Redeemable Preferred Stock or to redeem the Redeemable Preferred Stock on the
Maturity Redemption Date; or (I)&nbsp;any encumbrance or restriction which by
its terms permits payments to the Company to the extent needed to pay dividends
on any Dividend Payment Date or as otherwise required hereunder.</p>
<p align="center">&#45;22&#45;</p>
<p>(d)&nbsp;&nbsp;<u>Textron Share Liquidity Provisions</u>. The provisions of
this Section 7(d) are solely for the benefit of Holders of Series&nbsp;A
Redeemable Preferred Stock that constitute Textron Shares. In the event that
either (I)&nbsp;both (A)&nbsp;the Liquidity Condition is satisfied at any time
and (B)&nbsp;no Par Offer has been properly made on or before the First Dividend
Payment Date and all Textron Shares purchased pursuant thereto or (II)&nbsp;both
(A)&nbsp;the Existing Notes are repaid at their final Stated Maturity and
(B)&nbsp;no Par Offer has been properly made on or before the final Stated
Maturity of the Existing Notes, the Series&nbsp;A Dividend Rate applicable
solely to Textron Shares will increase by 1.00% per annum for the first dividend
period commencing on the first day after the First Dividend Payment Date and by
an additional 0.50% per annum for each dividend period thereafter; <i>provided</i>
that (1)&nbsp;the Series&nbsp;A Dividend Rate applicable to Textron Shares in
effect at any time shall not exceed 20% per annum and (2)&nbsp;the Series&nbsp;A
Dividend Rate will return to the Dividend Rate otherwise applicable under
Section&nbsp;2(a) once a Par Offer has been properly made and all Textron Shares
purchased pursuant thereto. The period during which the increased Series&nbsp;A
Dividend Rate in respect of Textron Shares shall be in effect under the
immediately preceding sentence is referred to herein as the &quot;<b>Restricted
Period</b>.&quot; During the Restricted Period, if any, the Company and the
Restricted Subsidiaries shall not Incur any Indebtedness (other than Permitted
Restricted Period Debt or Indebtedness Incurred for the purpose financing a Par
Offer) unless the Adjusted Consolidated Coverage Ratio (or, if there has been an
Asset Acquisition after the Issuance Date of the Series&nbsp;A1 Preferred Stock,
the Adjusted Consolidated Pro Forma Coverage Ratio) after giving effect to the
Incurrence of such Indebtedness is equal to or greater than the ratios specified
below for the four fiscal quarter periods ending when specified below:</p>
<p ALIGN="CENTER"><center>
<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="474">
  <tr>
    <td WIDTH="79%">
      <p>Periods ending on or prior to December 31, 2002</td>
    <td WIDTH="21%">
      <p>3.00:1.0</td>
  </tr>
  <tr>
    <td WIDTH="79%">
      <p>Periods ending on or between January 1, 2003 and<br>
      &nbsp;December 31, 2003</td>
    <td WIDTH="21%">
      <p><br>
      3.25:1.0</td>
  </tr>
  <tr>
    <td WIDTH="79%">
      <p>Periods ending on and after January 1, 2004</td>
    <td WIDTH="21%">
      <p>3.50:1.0.</td>
  </tr>
</table>
</center>
<p>For so long as there are any issued and outstanding Textron Shares, the
Company will not, and will not permit any Restricted Subsidiary to, refinance,
repay, retire or defease Existing Notes (other than at their final Stated
Maturity) in an aggregate principal amount greater than $25&nbsp;million, unless
prior to or concurrently therewith a Par Offer shall have been made.</p>
<p align="center">&#45;23&#45;</p>
<p>For so long as there are any issued and outstanding Textron Shares, within 60
days after an Asset Acquisition occurring following the Issuance Date of the
Series&nbsp;A1 Preferred Stock and prior to a Par Offer, the Company shall
deliver a certificate of its Chief Financial Officer to the Holders of Textron
Shares certifying that attached five full fiscal year &quot;stand alone&quot;
projections (the &quot;<b>Certified Projections</b>&quot;) of Consolidated Cash
Flow and Consolidated Interest Expense for the Persons or assets acquired
pursuant to such Asset Acquisition (assuming for the purposes of such
projections that such Persons or assets are the &quot;Company and the Restricted
Subsidiaries&quot; and disregarding clause (viii) of the definition of
Consolidated Interest Expense) are (1)&nbsp;projections that are utilizing
consistent operating assumptions with any projections delivered to lenders to
the Company in connection with the particular Asset Acquisition (it being agreed
that the Certified Projections are &quot;stand alone&quot; projections and will
accordingly give no effect to any impact of combining or integrating the
acquired Person or assets with the Company and the Restricted Subsidiaries) or
(2)&nbsp;in the absence of the projections referred to in the preceding clause
(1), the projections utilized by the Board of Directors of the Company (or any
duly authorized Committee thereof) in approving the particular Asset
Acquisition. Such Certified Projections may include a prospective reasonable
methodology for allocating the indicated Consolidated Cash Flow and Consolidated
Interest Expense across quarters for the entire period covered by the Certified
Projections.</p>
<p>The benefit of the provisions of this Section 7(d) are solely intended for
Textron and its Subsidiaries and shall terminate as to any shares of
Series&nbsp;A Redeemable Preferred Stock that are transferred or otherwise
disposed of to any other Person, regardless of their subsequent reacquisition by
Textron or any of its Subsidiaries.</p>
<p>In the event of any transfer of Textron Shares to a Person other than Textron
or its Subsidiaries (a &quot;<b>Non&#45;Textron Transferee</b>&quot;), if
immediately prior to such transfer there shall exist Total Liquidity Dividends
in Arrears with respect to such Textron Shares, then immediately following such
transfer such Total Liquidity Dividends in Arrears shall cease to exist with
respect to such transferred Textron Shares (the &quot;<b>Transferred Shares</b>&quot;)
and the Transferred Shares shall be for all purposes shares of Series A
Redeemable Preferred Stock not entitled to any of the benefits afforded to
Textron Shares. For the avoidance of doubt, but without limitation, the
Transferred Shares shall have a Liquidation Preference and be entitled to Total
Cash Dividends in Arrears, if any, as if such shares (or any predecessor shares)
had never been Textron Shares. As promptly as practicable following a written
notice of a transfer of Textron Shares to a Non&#45;Textron Transferee, the Company
shall issue to such Non&#45;Textron Transferee additional shares of Series A
Redeemable Preferred Stock identical to the Transferred Shares in all respects
(including, without limitation, as to Liquidation Preference, Total Cash
Dividends in Arrears, if any, and accrued regular dividends), with the number of
such newly issued shares being equal to (x) the Total Liquidity Dividends in
Arrears formerly applicable to the Transferred Shares, divided by (y) the
Liquidation Preference plus Total Cash Dividends in Arrears (inclusive of
Additional Dividends accruing from the most recent Dividend Payment Date) plus
accrued regular dividends from the most recent Dividend Payment Date in respect
of each share of newly issued Series A Redeemable Preferred Stock as of its date
of issuance. In lieu of any issuing any fractional shares of Series A Redeemable
Preferred Stock, the Company may deliver to a Non&#45;Textron Transferee an amount
in cash equal to such fraction multiplied by the amount set forth in clause (y)
of the preceding sentence. The Company may require reasonable certifications and
indemnities from Textron and/or any Non&#45;Textron Transferee concerning the
transfer of Textron Shares as a condition to issuing additional shares of Series
A Redeemable Preferred Stock (or cash payments in respect of fractional shares)
as contemplated by this paragraph.</p>
<p align="center">&#45;24&#45;</p>
<p>(e)&nbsp;&nbsp;<u>Consolidation, Merger and Sale of Assets</u>. The Company
shall not, in a single transaction or through a series of transactions,
consolidate with or merge with or into any other Person or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets to any other Person or Persons or permit any of the
Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in the sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company and the Restricted Subsidiaries on a consolidated basis to any other
Person or Persons, unless at the time and immediately after giving effect
thereto:</p>
<blockquote>
    <p>(i) either (a)&nbsp;the Company shall be the continuing corporation or
    (b)&nbsp;the Person (if other than the Company) formed by such consolidation
    or into which the Company or such Subsidiary is merged or the Person that
    acquires by sale, assignment, conveyance, transfer, lease or disposition all
    or substantially all the properties and assets of the Company and the
    Restricted Subsidiaries on a consolidated basis (the &quot;<b>Surviving
    Entity</b>&quot;) shall be a corporation duly organized and validly existing
    under the laws of the United States of America, any state thereof or the
    District of Columbia;</p>
    <p>(ii) the Redeemable Preferred Stock shall be converted into or exchanged
    for and shall become shares of the Surviving Entity having in respect of the
    Surviving Entity the same rights and privileges that the Redeemable
    Preferred Stock had immediately prior to such transaction or series of
    transactions with respect to the Company;</p>
    <p>(iii) no Voting Rights Triggering Event shall have occurred and be
    continuing; and</p>
    <p>(iv) after giving effect to such transaction or series of transactions,
    the Consolidated Coverage Ratio shall be equal to or greater than
    [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]:1.00.<sup>a</sup></p>
</blockquote>
<p>Any Surviving Entity shall file<b> </b>an appropriate certificate of
designation with respect to the preferred stock referred to in clause&nbsp;(ii)
above with the Secretary of State (or similar public official) of the
jurisdiction under whose laws it is organized. In such event, the Company shall
be released from its obligations under this Certificate of Designation.</p>
<p style="margin-top: 0; margin-bottom: 0">___________________________</p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> To be the same as the
first paragraph of Section 7(a).</p>
<p align="center">&#45;25&#45;</p>
<p><a NAME="_Toc386622247"></a><a NAME="_Toc451526646">(f)&nbsp;&nbsp;<u>Limitation
on Transactions with Affiliates</u>.</a><a NAME="_Toc386622248"></a> The Company
shall not, and shall not permit any of the Restricted Subsidiaries to, directly
or indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) involving payments or value to such Affiliate with
or for the benefit of any Affiliate of the Company or any of the Restricted
Subsidiaries (an &quot;<b>Affiliate Transaction</b>&quot;) unless the terms of
such Affiliate Transaction are either (x)&nbsp;fair to the Company or such
Restricted Subsidiary from a financial point of view or (y)&nbsp;no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could be obtained at the time of such transaction in arm&#39;s&#45;length
dealings with a Person who is not such an Affiliate. For any transaction that
involves in excess of $1,000,000, a majority of the disinterested members of the
Board of Directors shall determine that the transaction satisfies the criteria
of the preceding sentence. For any Affiliate Transaction that involves in excess
of $25,000,000, the Company shall obtain an opinion from a nationally recognized
independent investment banking firm or other firm with experience in evaluating
or appraising the terms and conditions of the type of transaction (or series of
related transactions) for which the opinion is required (an &quot;<b>Independent
Evaluation Firm</b>&quot;) stating in substance that the terms of such Affiliate
Transaction are in compliance with either clause&nbsp;(x) or (y) above. For any
Affiliate Transaction (other than as set forth in clauses (i) through (x) (other
than clause&nbsp;(viii)) below) that involves in excess of $1,000,000, for so
long as Textron and its Subsidiaries are the Holders of at least a majority of
the aggregate Liquidation Preference of any of the Series&nbsp;A Redeemable
Preferred Stock, the Series&nbsp;B Redeemable Preferred Stock or the
Series&nbsp;C Redeemable Preferred Stock, the Company shall obtain the prior
consent of Textron unless the Company shall have obtained an opinion from an
Independent Evaluation Firm stating in substance that the terms of such
Affiliate Transaction are in compliance with either clause&nbsp;(x) or (y)
above.</p>
<p>The requirements of the immediately preceding paragraph shall not apply to:</p>
<blockquote>
    <p>(i) any Restricted Payment permitted to be made pursuant to
    Section&nbsp;7(b);</p>
    <p>(ii) any issuance of securities, or other payments, awards or grants in
    cash, securities or otherwise pursuant to employment arrangements, or any
    stock options and stock ownership plans for the benefit of employees,
    officers and directors, consultants and advisors approved by the Board of
    Directors of the Company, or any loans or advances to employees in the
    ordinary course of business of the Company or any of its Subsidiaries;</p>
    <p>(iii) any transaction between or among the Company and any Restricted
    Subsidiary or between or among Restricted Subsidiaries so long as, in the
    case of any Restricted Subsidiary that is not a Wholly Owned Subsidiary, no
    Affiliate of the Company (other than a Restricted Subsidiary) owns any
    Capital Stock (other than directors&#39; qualifying shares) in such Restricted
    Subsidiary;</p>
    <p>(iv) indemnification agreements with, and the payment of fees and
    indemnities to, directors, officers and employees of the Company and its
    Subsidiaries or any employment, noncompetition or confidentiality agreements
    entered into by the Company or any of its Subsidiaries with its directors,
    officers or employees in the ordinary course of business;</p>
    <p>(v) the issuance of Capital Stock of the Company or the receipt of
    capital contributions by the Company otherwise in compliance with this
    Certificate of Designation;</p>
    <p align="center">&#45;26&#45;</p>
    <p>(vi) transactions pursuant to agreements as in existence on the Issuance
    Date of the Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1
    Redeemable Preferred Stock and Series&nbsp;C1 Redeemable Preferred Stock;</p>
    <p>(vii) payments contemplated by the Advisory Agreement and payments in
    connection with the Acquisition, including the reimbursement of out&#45;of&#45;pocket expenses incurred in connection with the Acquisition;</p>
    <p>(viii) for so long as Textron and its Subsidiaries are the Holders of at
    least a majority of the aggregate Liquidation Preference of any of the
    Series&nbsp;A Redeemable Preferred Stock, the Series&nbsp;B Redeemable
    Preferred Stock or the Series&nbsp;C Redeemable Preferred Stock, any
    Affiliate Transaction with respect to which the Company shall have obtained
    the prior consent of Textron;</p>
    <p>(ix) any management, service, purchase, supply or similar agreement
    relating to operations of a business entered into in the ordinary course of
    the Company&#39;s business between the Company or any Restricted Subsidiary
    and any Affiliate (including an Unrestricted Subsidiary), so long as any
    such agreement is on terms no less favorable to the Company than those that
    could be obtained in a comparable arm&#39;s&#45;length transaction with an entity
    that is not an Affiliate or a Related Person; and</p>
    <p>(x) any reasonable corporate service agreements, tax sharing agreements
    and other agreements customary in connection with spin&#45;off transactions
    entered into between the Company or any Restricted Subsidiary and any spun&#45;off entity.</p>
    <p align="center">&#45;27&#45;</p>
</blockquote>
<p>(g) <u>Reports</u>. At all times during which the Parent continues to file
reports on Form 10&#45;K and Form 10&#45;Q with the Securities and Exchange Commission
(the &quot;<b>Commission</b>&quot;) containing the information required by the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder, the Company will provide (i)&nbsp;to each Holder, within 10 Business
Days following the filing of any such report with the Commission, a copy (if
necessary) of any reconciliation of any material differences between the
consolidated financial statements of the Parent contained in such report and the
consolidated financial results and condition of the Company and its Subsidiaries
during the relevant period or as of the relevant date, as the case may be, to
the extent required to evaluate financial differences between the legal entities
and (ii)&nbsp;at all times that (A) the Company is not subject to Section 13 or
15(d) of the Exchange Act and (B) the requesting Holder is unable to transfer
its Redeemable Preferred Stock pursuant to Rule 144(k) under the Securities Act,
within 10 Business Days of any written request by a Holder, to the requesting
Holder or a proposed transferee of such Holder the information required to be
provided by Rule 144A(d)(4) under the Securities Act. If at any time the Parent
shall cease to file such reports on Form 10&#45;K and Form 10&#45;Q with the Commission,
the Company shall provide to each Holder (i) within 135 days of the end of each
fiscal year of the Company, audited year end financial statements of the Company
(including a balance sheet, income statement and statement of changes in cash
flows) prepared in accordance with GAAP, and (ii) within 60 days after the end
of each of the first three fiscal quarters of each fiscal year of the Company,
unaudited quarterly consolidated financial statements (including a balance
sheet, income statement and statement of changes in cash flows) prepared in
accordance with GAAP.</p>
<p>(h) <u>Limitation on Issuance of Preferred Stock of Restricted Subsidiaries</u>.
The Company will not sell, and will not permit any Restricted subsidiary to
issue or sell, any Preferred Stock of a Restricted Subsidiary except (i) to the
Company or a Restricted Subsidiary, (ii) the issuance and sale of Preferred
Stock of a Foreign Subsidiary, (iii) upon the request of the lenders party to
the Debt Commitment Letter in accordance with the agreements relating to the
various financings referred to therein, the issuance and sale of Preferred Stock
issued in lieu of any of the debt financing contemplated by the Debt Commitment
Letter, including the Acquisition Notes and any Refinancing of the Bridge
Financing, (iv) the issuance of Preferred Stock by a Restricted Subsidiary which
is a joint venture with a third party which is not an Affiliate of the Company
or a Restricted Subsidiary, and (v) pursuant to obligations with respect to the
issuance or sale of Preferred Stock of a Restricted Subsidiary which exist at
the time it becomes a Restricted Subsidiary of the Company.</p>
<p>SECTION 8. <u>Exchange</u>.</p>
<p>(a)<u> Requirements</u>. The outstanding Series&nbsp;A1 Redeemable Preferred
Stock, Series&nbsp;A2 Redeemable Preferred Stock, Series&nbsp;B1 Redeemable
Preferred Stock, Series&nbsp;B2 Redeemable Preferred Stock, Series&nbsp;C1
Redeemable Preferred Stock and Series&nbsp;C2 Redeemable Preferred Stock are
exchangeable, as a whole but not in part, solely at the option of the Company on
any Dividend Payment Date for, respectively, the Company&#39;s Series&nbsp;A1, 15%
Subordinated Notes (the &quot;<b>Series&nbsp;A1 Exchange Notes</b>&quot;),
Series&nbsp;A2, 15% Subordinated Notes (the &quot;<b>Series&nbsp;A2 Exchange
Notes</b>&quot;), Series&nbsp;B1, 16% Subordinated Notes (the &quot;<b>Series&nbsp;B1
Exchange Notes</b>&quot;), Series&nbsp;B2, 16% Subordinated Notes (the &quot;<b>Series&nbsp;B2
Exchange Notes</b>&quot;), Series&nbsp;C1, 16% Subordinated Notes (the &quot;<b>Series&nbsp;C1
Exchange Notes</b>&quot;) or Series&nbsp;C2,&nbsp;</p>
<p align="center">&#45;28&#45;</p>
<p> 16% Subordinated Notes (the &quot;<b>Series&nbsp;C2
Exchange Notes</b>&quot; and, together with the Series&nbsp;A1 Exchange Notes,
Series&nbsp;A2 Exchange Notes, Series&nbsp;B1 Exchange Notes, Series&nbsp;B2
Exchange Notes and Series&nbsp;C1 Exchange Notes, the &quot;<b>Exchange Notes</b>&quot;),
each to be substantially in the form set forth in the Exchange Indenture, <i>provided</i>
that any such exchange may only be made if on or prior to the date of such
exchange no Total Cash Dividends in Arrears shall exist and the Company
otherwise has paid all accumulated dividends on the Redeemable Preferred Stock
(including the dividends payable on the date of exchange); <i>provided, further</i>,
that for so long as Textron and its Subsidiaries are the Holders of at least a
majority of the aggregate Liquidation Preference of any of the Series&nbsp;A
Redeemable Preferred Stock, the Series&nbsp;B Redeemable Preferred Stock or the
Series&nbsp;C Redeemable Preferred Stock, as the case may be, the Company shall
obtain the written consent of Textron (which consent may be withheld by Textron
in its sole discretion) prior to initiating the procedures for exchange with
respect to such series of Redeemable Preferred Stock. The exchange rate shall be
$1.00 principal amount of Exchange Notes for each $1.00 of the aggregate
Liquidation Preference of Redeemable Preferred Stock, including, to the extent
necessary, Exchange Notes in principal amounts less than $1,000.</p>
<p>(b) <u>Procedure for Exchange</u>. (i)&nbsp;&nbsp;At least thirty (30) days
and not more than sixty (60) days prior to the date fixed for exchange, written
notice (the &quot;<b>Exchange Notice</b>&quot;) shall be given by first class
mail, postage prepaid, to each Holder of record on the record date fixed for
such exchange of the Redeemable Preferred Stock at such Holder&#39;s address as
the same appears on the share books of the Company, <i>provided</i> that no
failure to give such notice nor any deficiency therein shall affect the validity
of the procedure for the exchange of any Redeemable Preferred Stock to be
exchanged except as to the Holder or Holders to whom the Company has failed to
give said notice or except as to the Holder or Holders whose notice was
defective. The Exchange Notice shall state:</p>
<blockquote>
    <p>(A)&nbsp; the Exchange Date;</p>
    <p>(B)&nbsp; that the Holder is to surrender to the Company, in the manner and at the
    place or places designated, his certificate or certificates representing the
    Redeemable Preferred Stock to be exchanged;</p>
    <p>(C)&nbsp; that dividends on the Redeemable Preferred Stock to be exchanged shall
    cease to accrue on such Exchange Date whether or not certificates for
    Redeemable Preferred Stock are surrendered for exchange on such Exchange
    Date unless the Company shall default in the delivery of Exchange Notes; and</p>
    <p>(D)&nbsp; that interest on the Exchange Notes shall accrue from the Exchange Date
    whether or not certificates for Redeemable Preferred Stock are surrendered
    for exchange on such Exchange Date.</p>
    <p align="center">&#45;29&#45;</p>
</blockquote>
<p>(ii) On or before the Exchange Date, each Holder of Redeemable Preferred
Stock shall surrender the certificate or certificates representing such
Redeemable Preferred Stock, in the manner and at the place designated in the
Exchange Notice. The Company shall cause the Exchange Notes to be executed on
the Exchange Date and, upon surrender in accordance with the Exchange Notice of
the certificates for any Redeemable Preferred Stock so exchanged, duly endorsed
(or otherwise in proper form for transfer, as determined by the Company), such
shares shall be exchanged by the Company into Exchange Notes. The Company shall
pay interest on the Exchange Notes at the rate and on the dates specified
therein from the Exchange Date.</p>
<p>(iii) If notice has been mailed as aforesaid, and if before the Exchange Date
specified in such notice (1) the Exchange Indenture shall have been duly
executed and delivered by the Company and the trustee thereunder and (2) all
Exchange Notes necessary for such exchange shall have been duly executed by the
Company and delivered to the trustee under the Exchange Indenture with
irrevocable instructions to authenticate the Exchange Notes necessary for such
exchange, then the rights of the Holders of Redeemable Preferred Stock so
exchanged as shareholders of the Company shall cease (except the right to
receive Exchange Notes, an amount equal to the amount of accrued and unpaid
dividends to the Exchange Date), and the Person or Persons entitled to receive
the Exchange Notes issuable upon exchange shall be treated for all purposes as
the registered Holder or Holders of such Exchange Notes as of the Exchange Date.</p>
<p>(c) <u>No Exchange in Certain Cases</u>. Notwithstanding the foregoing
provisions of this Section 8, the Company shall not be entitled to exchange the
Redeemable Preferred Stock for Exchange Notes if such exchange, or any term or
provision of the Exchange Indenture or the Exchange Notes, or the performance of
the Company&#39;s obligations under the Exchange Indenture or the Exchange Notes,
shall materially violate or conflict with any applicable law or if, at the time
of such exchange, the Company is insolvent or if it would be rendered insolvent
by such exchange.</p>
<p>(d) <u>Exchange Indenture</u>. The Exchange Notes shall be issued pursuant to
an indenture (the &quot;<b>Exchange Indenture</b>&quot;) to be entered into
between the Company and a trustee acceptable to it substantially in the form of
Annex A hereto.<sup>a</sup></p>
<p style="margin-top: 0; margin-bottom: 0"><sup>___________________________</sup></p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a </sup>The Exchange Indebenture
will be prepared prior to closing.&nbsp; The Exchange Notes and the Exchange
Indebenture shall (i) be subordinated to all obligations (including trade
payables) and Indebtedness of the Company on terms imposed by senior lenders to
the Company and its subsidiaries (including with respect to payment blockages),
(ii) not be guaranteed by any of the Company&#39;s Subsidiaries or
otherwise, (iii) contain the</p>
<p style="margin-top: 0; margin-bottom: 0" align="right">Footnote continued on
next page.</p>
<p style="margin-top: 0; margin-bottom: 0" align="center"><sup>&nbsp;</sup>&#45;30&#45;</p>
<p>(e) <u>Exchange Taxes</u>. The Company shall be responsible for any transfer
or stamp tax imposed as a result of any exchange made pursuant to this Section
8, regardless of upon whom such tax is imposed (collectively, &quot;<b>Exchange
Taxes</b>&quot;). The Company shall indemnify and hold the Holders harmless
against any Exchange Taxes and shall gross&#45;up Holders and their Affiliates any
additional amount necessary to reflect the tax consequences to the Holders or
their Affiliates (without taking into account any loss credit or other offset
against Tax) of the receipt or accrual of any payments required to be made under
this Section 8(e).</p>
<p>SECTION 9. <u>Conversion or Exchange</u>. The Holders of Redeemable Preferred
Stock shall not have any rights hereunder to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Company.</p>
<p>SECTION 10. <u>Reissuance of Senior Preferred Stock</u>. Shares of Redeemable
Preferred Stock reacquired pursuant to the exchange offer contemplated by the
Registration Rights Agreement may be designated and reissued as Preferred Stock
of another series or class; <i>provided</i> that any issuance of such shares of
Preferred Stock must be in compliance with the terms hereof.</p>
<p>SECTION 11. <u>Business Day</u>. If any payment or redemption shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment or redemption shall be made on the immediately succeeding Business
Day.</p>
<p style="margin-top: 0; margin-bottom: 0">___________________________</p>
<p style="margin-top: 0; margin-bottom: 0">Footnote continued from previous
page.</p>
<p style="margin-top: 12; margin-bottom: 12">covenants and provisions set forth
in Section 7 (with respect to the Exchange Notes), and the related definitions
of Section 13 hereof, except that the limitations in Sections 7(a), (b) and (c)
will not restrict the ability of the Company or any of its Subsidiaries to issue
Preferred Stock, (iv) contain events of default that are equivalent to the
Voting Rights Triggering Events listed in clauses (i) through (v) of Section
4(b) of the Resolution and customary remedies provisions for subordinated high
yield debt instruments (and no shareholder or governance voting rights in any
event), (v) provide for quarterly payments of interest in cash and/or in&#45;kind
or by accrual at the rates and on the same basis and dates as set forth in
Section 2, (vi) mature as provided in Section 5(b)(i) and be subject to
redemption as provided in Sections 5(a) and 5(b)(ii) (with appropriate
provisions to ensure the prior payment of senior debt) and (vii) contain such
other immaterial terms as are appropriate to a high yield debt indenture.&nbsp;
Subject to the foregoing, the Exchange Notes and the Exchange Indebenture shall
be mutually acceptably to the parties.</p>
<p align="center">&#45;31&#45;</p>
<p>SECTION 12. <u>Transfer Restrictions</u>. (a)&nbsp;&nbsp;The Redeemable
Preferred Stock will bear a legend to the following effect (as applicable)
unless otherwise agreed by the Company and the Holder thereof:</p>
<blockquote>
    <p>THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
    THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, OR
    OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
    UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
    REQUIREMENTS THEREOF.</p>
</blockquote>
<p>In addition, each share of Redeemable Preferred Stock shall also bear the
following legend:</p>
<blockquote>
    <p>THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
    REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING,
    OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY OR
    SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
    PREFERENCES AND/OR RIGHTS.</p>
</blockquote>
<p>(b)&nbsp;&nbsp;The transfer agent for the Preferred Stock may refuse to
register any transfer of Redeemable Preferred Stock in violation of the
restrictions contained in the legend provided for in Section&nbsp;12(a).</p>
<p>(c)&nbsp;&nbsp;The legend provided for in the first paragraph of
Section&nbsp;12(a) may be removed if the Redeemable Preferred Stock has been
registered pursuant to an effective registration statement under the Securities
Act and will be removed as to Redeemable Preferred Stock held by any Holder
after the expiration of the holding period applicable to sales of the Redeemable
Preferred Stock under Rule 144(k) under the Securities Act upon the written
representation of such Holder that such Holder is not an affiliate (as defined
in Rule 144 under the Securities Act) of the Company and has not been an
affiliate of the Company at any time during the three months preceding such
request.</p>
<p>SECTION 13. <u>Definitions</u>. As used in this Certificate of Designation,
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:</p>
<p align="center">&#45;32&#45;</p>
<p>&quot;<b>Acquisition</b>&quot; means the acquisition by the Company of the
Bison Subsidiaries (as defined in the Purchase Agreement) pursuant to the
Purchase Agreement and the related transactions.</p>
<p>&quot;<b>Acquisition Notes</b>&quot; means the debt securities issued by the
Company at or prior to the date of the Acquisition to finance, in part, the
Acquisition or any debt securities first issued by the Company after the date of
the Acquisition to refinance in whole or in part any bridge or interim loans
(including any rollover or exchange notes issued in exchange therefor or upon
the maturity thereof) issued or incurred on or prior to the date of the
Acquisition to finance, in part, the Acquisition, as the same may be amended,
modified, waived or refinanced with new debt securities.</p>
<p>&quot;<b>Additional Dividends</b>&quot; means, with respect to a series of
Redeemable Preferred Stock, the Series&nbsp;A Additional Dividends, the
Series&nbsp;B Additional Dividends or the Series&nbsp;C Additional Dividends, as
applicable.</p>
<p>&quot;<b>Adjusted Consolidated Coverage Ratio</b>&quot; means, as of any date
of determination, the Consolidated Coverage Ratio as of such date; <i>provided</i>
that in calculating Consolidated Cash Flow and Consolidated Interest Expense for
such purpose, clause&nbsp;(viii) of the definition of Consolidated Interest
Expense shall be disregarded.</p>
<p>&quot;<b>Adjusted Consolidated Pro Forma Coverage Ratio</b>&quot; means, as
of any date of determination, the ratio of (i) the aggregate amount of
Consolidated Cash Flow for the period of the four most recent fiscal quarters of
the Company, <u>minus</u> Projected Time Adjusted Acquisition Cash Flow to (ii)
Consolidated Interest Expense for such four fiscal quarter period (without
giving effect to clause (viii) of the definition thereof), <u>minus</u>
Projected Time Adjusted Acquisition Interest Expense.</p>
<p>&quot;<b>Advisory Agreement</b>&quot; means the Services Agreement dated as
of February&nbsp;23, 2001, as amended on the date of the Purchase Agreement,
among the Parent, the Company and Heartland Industrial Partners, L.P. (or any
other Affiliate thereof), as the same may be amended or modified from time to
time; but without giving effect to any amendment or modification after the
Issuance Date of the Series A1 Redeemable Preferred Stock, the Series B1
Redeemable Preferred Stock and the Series&nbsp;C1 Redeemable Preferred Stock
that would increase the net fees payable thereunder to Heartland Industrial
Partners, L.P. and its Affiliates that have not been made subject to compliance
with the provisions of Section 7(f).</p>
<p>&quot;<b>Affiliate</b>&quot; of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
&quot;control&quot; when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and
the terms &quot;controlling&quot; and &quot;controlled&quot; have meanings
correlative to the foregoing.</p>
<p align="center">&#45;33&#45;</p>
<p>&quot;<b>Asset Acquisition</b>&quot; means (i)&nbsp;an Investment by the
Company or any Restricted Subsidiary in any other Person pursuant to which such
Person will become a Restricted Subsidiary or will be merged or consolidated
with or into the Company or any Restricted Subsidiary or (ii)&nbsp;the
acquisition by the Company or any Restricted Subsidiary of the assets of any
Person which constitute substantially all of the assets of such Person or any
division or line of business of such Person.</p>
<p>&quot;<b>Asset Disposition</b>&quot; means any sale, lease, transfer,
issuance or other disposition (or series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan) of shares of Capital
Stock of (or other equity interests in) a Restricted Subsidiary (other than
directors&#39; qualifying shares), or of any other property or other assets (each
referred to for the purposes of this definition as a &quot;disposition&quot;) by
the Company or any of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction) other than (i)&nbsp;a
disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Restricted Subsidiary, (ii)&nbsp;any disposition in
the ordinary course of business, and (iii)&nbsp;any disposition of obsolete or
worn out equipment or equipment that is no longer used or useful in the conduct
of the business of the Company and its Restricted Subsidiaries and that is
disposed of in each case in the ordinary course of business. Notwithstanding
anything to the contrary contained above, a Restricted Payment or other payment
made in compliance with Section&nbsp;7(b) shall not constitute an Asset
Disposition.</p>
<p>&quot;<b>Asset Disposition Offer</b>&quot; has the meaning specified in
Section 5(b)(iii) hereof.</p>
<p>&quot;<b>Asset Disposition Offer Redemption Date</b>&quot; has the meaning
specified in Section 5(b)(iii) hereof.</p>
<p>&quot;<b>Bridge Financing</b>&quot; means collectively the &quot;Senior
Unsecured Facility&quot; and the &quot;Subordinated Facility&quot;, in each case
as defined in the Debt Commitment Letter.</p>
<p>&quot;<b>Business Day</b>&quot; means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New York
City or place of payment are authorized or obligated by law, regulation or
executive order to close.</p>
<p>&quot;<b>Capital Stock</b>&quot; of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.</p>
<p>&quot;<b>Capitalized Lease Obligations</b>&quot; means an obligation to pay
rent or other payment amounts under a lease that is required to be classified
and accounted for as a capitalized lease or a liability for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP.</p>
<p align="center">&#45;34&#45;</p>
<p>&quot;<b>Cash Dividends in Arrears</b>&quot; means, with respect to a share
of Redeemable Preferred Stock at any date of determination, the Series&nbsp;A
Cash Dividends in Arrears, the Series&nbsp;B Cash Dividends in Arrears or the
Series&nbsp;C Cash Dividends in Arrears, as applicable, at such date of
determination.</p>
<p>&quot;<b>Certified Projections</b>&quot; has the meaning specified in Section
7(d) hereof.</p>
<p>&quot;<b>Change of Control</b>&quot; means the occurrence of any of the
following events: (A)&nbsp;any &quot;person&quot; or &quot;group&quot; (as such
terms are used in Sections&nbsp;13(d) and 14(d) of the Exchange Act), excluding
Sponsor and, in the case of the Company, Parent, shall become the
&quot;beneficial owner&quot; (as defined in Rules 13d&#45;3 and 13d&#45;5 under the
Exchange Act), directly or indirectly, of more than 50% of the total voting
power of the then outstanding Voting Stock of the Company or of Parent; <i>provided,
however</i>, that (1)&nbsp;any such Person or group shall be deemed to
beneficially own any Voting Stock beneficially owned by any other Person (the
&quot;<b>parent entity</b>&quot;) so long as such Person or group beneficially
owns, directly or indirectly, a majority of the then outstanding Voting Stock of
the parent entity and no other Person or group has the right to designate or
appoint a majority of the directors (or similar governing body) of such parent
entity, and (2)&nbsp;the effect of any stockholders agreements with respect to
voting for directors that exist on the date of, and after giving effect to, the
Acquisition will be disregarded, or (B)&nbsp;any other event constituting a
&quot;change of control&quot; under any Acquisition Notes that constitutes
either an event of default or a circumstance that permits holders of Acquisition
Notes to require that the Company repurchase their Acquisition Notes.</p>
<p>&quot;<b>Change of Control Redemption Date</b>&quot; has the meaning
specified in Section&nbsp;5(b)(ii) hereof.</p>
<p>&quot;<b>Code</b>&quot; means the Internal Revenue Code of 1986, as amended.</p>
<p>&quot;<b>Commission</b>&quot; means the Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act.</p>
<p>&quot;<b>Commodity Agreement</b>&quot; means any commodity future contract,
commodity option or other similar agreement or arrangement entered into by the
Company or any Restricted Subsidiary that is designed to protect the Company or
any Restricted Subsidiary against fluctuations in the price of commodities used
by the Company or a Restricted Subsidiary as raw materials in the ordinary
course of business.</p>
<p>&quot;<b>Common Fair Market Value</b>&quot; means the fair market value per
share of Common Stock of the Company, as determined from time to time by the
board of directors of the Company acting in good faith, which determination
shall be conclusive.</p>
<p align="center">&#45;35&#45;</p>
<p>&quot;<b>Common Equivalent Shares</b>&quot; means, with respect to each share
of Series C Redeemable Preferred Stock, (x) as of the initial Issuance Date of
the Series C1 Redeemable Preferred Stock, [&nbsp;&nbsp;&nbsp;&nbsp;] shares of
Common Stock of the Company and (y) as of any other date, such number of shares
of Common Stock of the Company, as increased or decreased from time to time by
the board of directors of the Company acting in good faith, which determination
shall be conclusive, to reflect (A) dividends and distributions in respect of
Common Stock of the Company paid in Common Stock of the Company, (B)
subdivisions, combinations and reclassifications of Common Stock of the Company,
(C) the issuance to all holders of Common Stock of the Company of rights,
options or warrants entitling such holders to purchase from the Company its
Common Stock at a price below the Common Fair Market Value at the record date
with respect to the issuance of such rights, options or warrants, and (D)
capital contributions to the Company either (i) not accompanied by any issuance
of Common Stock of the Company to the Person making any such capital
contribution, or (ii) accompanied by the issuance of Common Stock of the Company
(or securites convertible into or exchangeable therefor) to the person making
any such capital contribution at an implied price per share of Common Stock of
the Company that is less than the Common Fair Market Value as of the date of
such capital contribution.</p>
<p>&quot;<b>Common Exchange Factor</b>&quot; means as of any date of
determination (x) the Liquidation Preference per share of the Series C
Redeemable Preferred Stock as of such date, plus the Total Cash Dividends in
Arrears (inclusive of any Additional Dividends accruing from the most recent
Dividend Payment Date) with respect to a share of Series C Redeemable Preferred
Stock as of such date, plus accrued regular dividends per share of Series C
Redeemable Preferred Stock as of such date, plus the Common Participation
Amount, divided by (y) the Liquidation Preference per share of the Series B
Redeemable Preferred Stock as of such date, plus the Total Cash Dividends in
Arrears (inclusive of any Additional Dividends accruing from the most recent
Dividend Payment Date) with respect to a share of Series B Redeemable Preferred
Stock as of such date, plus accrued regular dividends per share of Series B
Redeemable Preferred Stock as of such date.</p>
<p style="margin-top: 0; margin-bottom: 0">____________________________</p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> As of the Issuance Date
of the Series C1 Redeemable Preferred Stock, and only as of such date, this
number will equal a fraction, (i) the numerator of which is (x) $1,000 (the
initial Liquidation Preference of the Series C1 Redeemable Preferred stock),
multiplied by (y) the number of outstanding shares of Common Stock of Collins
& Aikman Products Co. on such date, and (ii) the denominator of which is (x)
the number of outstanding shares of Common Stock of Collins & Aikman
Corporation on such date (after giving effect to the transactions contemplated
by the Purchase Agreement), multiplied by (y) $5 per share.&nbsp; After the
Issuance Date of the Series C1 Redeemable Preferred Stock, this number will be
adjusted from time to time as set forth in the definition.</p>
<p align="center">&#45;36&#45;</p>
<p>&quot;<b>Common Participation Amount</b>&quot; means fifteen percent of the
difference between (x) the product of the number of Common Equivalent Shares
multiplied by the Common Fair Market Value, in each case as of the time of any
event requiring the calculation of the Common Participation Amount, minus (y)
the product of the number of Common Equivalent Shares multiplied by the Common
Fair Market Value, in each case as of the Issuance Date of the Series C1
Redeemable Preferred Stock; <i>provided</i> that (i) the Common Participation
Amount shall not exceed an amount per share of Series C Redeemable Preferred
Stock equal to (p) $2,000,000 divided by (q) the total number of outstanding
shares of Series C Redeemable Preferred Stock as of the time of any event
requiring the calculation of the Common Participation Amount and (ii) the Common
Participation Amount cannot be less than zero.</p>
<p>&quot;<b>Common Stock</b>&quot; of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated,
whether voting or non&#45;voting) of such Person&#39;s common stock, whether
outstanding on the Issuance Date or issued after the Issuance Date, and
includes, without limitation, all series and classes of such common stock.</p>
<p>&quot;<b>Company</b>&quot; means the Person named as the &quot;Company&quot;
in the first paragraph of this Certificate of Designation until a successor or
other Person shall have become such pursuant to the applicable provisions of
this Certificate of Designation, and thereafter &quot;Company&quot; shall mean
such successor Person.</p>
<p>&quot;<b>Consolidated Cash Flow</b>&quot; for any period means the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income: (i)&nbsp;consolidated
income tax expense; (ii)&nbsp;Consolidated Interest Expense;
(iii)&nbsp;depreciation expense; (iv)&nbsp;amortization expense; (v)&nbsp;all
other noncash items reducing Consolidated Net Income; (vi)&nbsp;all management
and other fees directly or indirectly paid during such period to Sponsor to the
extent permitted hereunder; and (vii) non&#45;recurring and customary fees and
expenses related to any issue of Capital Stock, Incurrence of Indebtedness or
other financing transaction. Notwithstanding the foregoing, the consolidated
income tax expense, depreciation expense and amortization expense of a
Subsidiary of the Company shall be included in Consolidated Cash Flow only to
the extent (and in the same proportion) that the net income of such Subsidiary
was included in calculating Consolidated Net Income.</p>
<p>&quot;<b>Consolidated Coverage Ratio</b>&quot; as of any date of
determination means the ratio of (i)&nbsp;the aggregate amount of Consolidated
Cash Flow for the period of the most recent four consecutive fiscal quarters
ending prior to the date of such determination and as to which financial
statements are available to (ii)&nbsp;Consolidated Interest Expense for such
four fiscal quarters; <i>provided</i> that (1)&nbsp;if the Company or any of the
Restricted Subsidiaries has Incurred any Indebtedness since the&nbsp;</p>
<p align="center">&#45;37&#45;</p>
<p> beginning of
such period through the date of determination of the Consolidated Coverage Ratio
that remains outstanding or if the transaction giving rise to the need to
calculate Consolidated Coverage Ratio is an incurrence of Indebtedness,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a <i>pro forma</i><u> </u>basis to
(A)&nbsp;such Indebtedness (<i>provided</i> that, if such Indebtedness is
Incurred under a revolving credit facility (or similar arrangement or under any
predecessor revolving credit or similar arrangement), only that portion of such
Indebtedness that constitutes the one year projected average balance of such
Indebtedness (as determined in good faith by senior management of the Company)
shall be deemed outstanding for purposes of this calculation) and (B)&nbsp;the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2)&nbsp;if since the beginning of
such period any Indebtedness of the Company or any of the Restricted
Subsidiaries has been repaid, repurchased, defeased or otherwise discharged
(other than Indebtedness under a revolving credit or similar arrangement unless
such revolving credit Indebtedness has been permanently repaid and has not been
replaced), Consolidated Interest Expense for such period shall be calculated
after giving <i>pro forma</i> effect thereto as if such Indebtedness had
been repaid, repurchased, defeased or otherwise discharged on the first day of
such period, (3)&nbsp;if since the beginning of such period the Company or any
of the Restricted Subsidiaries shall have made any Asset Disposition or if the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
involves an Asset Disposition, Consolidated Cash Flow for such period shall be
reduced by an amount equal to the Consolidated Cash Flow (if positive)
attributable to the assets which are the subject of such Asset Disposition for
such period or increased by an amount equal to the Consolidated Cash Flow (if
negative) attributable thereto for such period, and Consolidated Interest
Expense for such period shall be reduced by an amount equal to the Consolidated
Interest Expense attributable to any Indebtedness of the Company or any of the
Restricted Subsidiaries repaid, repurchased, defeased or otherwise discharged
with respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital Stock
of any Restricted Subsidiary of the Company is sold, transferred or otherwise
disposed of, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and the continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale, transfer or other disposition), (4)&nbsp;if since
the beginning of such period the Company or any of the Restricted Subsidiaries
(by merger or otherwise) shall have made an Asset Acquisition, Consolidated Cash
Flow and Consolidated Interest Expense for such period shall be calculated after
giving <i>pro forma</i><u> </u>effect thereto (including the incurrence of any
Indebtedness) as if such Asset Acquisition occurred on the first day of such
period and (5)&nbsp;if since the beginning of such period any Person that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period shall
have made any Asset Disposition or Asset Acquisition that would have required an
adjustment pursuant to clause&nbsp;(3) or (4) above if made by the Company or a
Restricted Subsidiary during such period, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving <i>pro
forma</i> effect thereto as if such Asset Disposition or Asset
Acquisition occurred on the first day&nbsp;</p>
<p align="center">&#45;38&#45;</p>
<p> of such period. For purposes of this
definition, whenever <i>pro forma</i> effect is to be given to an Asset
Acquisition, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the <i>pro forma</i><u> </u>calculations shall be
determined in good faith by the Company. If any Indebtedness or Preferred Stock
bears a floating rate of interest or dividends and is being given <i>pro forma</i><u>
</u>effect, the interest expense on such Indebtedness shall be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable to
any such Indebtedness if such Interest Rate Agreement has a remaining term that
extends at least until the end of such period).<sup>a</sup></p>
<p>&quot;<b>Consolidated Interest Expense</b>&quot; means, for any period, the
total interest expense of the Company and the Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP, plus, to
the extent not included in such interest expense, (i)&nbsp;interest expense
attributable to capital leases, (ii)&nbsp;amortization of debt discount,
(iii)&nbsp;capitalized interest, (iv)&nbsp;noncash interest expense,
(v)&nbsp;commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers acceptance financing, (vi)&nbsp;interest actually
paid by the Company or any such Restricted Subsidiary under any guarantee of
Indebtedness or other obligation of any other Person and (vii)&nbsp;net payments
(whether positive or negative) pursuant to Interest Rate Agreements and, to the
extent related to Indebtedness, Currency Agreements. Notwithstanding the
foregoing, consolidated interest expense and the other items referred to in the
preceding clauses of a Subsidiary of the Company shall be included only to the
extent (and in the same proportion) that the net income of such Subsidiary was
included in calculating Consolidated Interest Expense.</p>
<p>&quot;<b>Consolidated Net Income</b>&quot; means, for any period, the net
income (loss) of the Company and the consolidated Restricted Subsidiaries for
such period determined in accordance with GAAP; <i>provided</i>, <i>however</i>,
that there shall not be included in such Consolidated Net Income: (i)&nbsp;any
gain or loss realized upon the sale or other disposition of any assets of the
Company or the Restricted Subsidiaries (including pursuant to any sale/leaseback
transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person; (ii)&nbsp;any extraordinary or nonrecurring
gain or loss; (iii)&nbsp;the cumulative effect of a change in accounting&nbsp;</p>
<p style="margin-top: 0; margin-bottom: 0">_______________________</p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> Solely for purposes of
Section 7(a), (b) and (e), this definition and the definitions of Consolidated
Net Income, Consolidated Cash Flow and Consolidated Interest Expense will be
conformed to the similar interest coverage calculations and definitions in the
Acquisition Notes if the Acquisition Notes are issued on or prior to the first
Issuance Date.</p>
<p align="center">&#45;39&#45;</p>
<p>
principles; (iv)&nbsp;any noncash expenses attributable to grants or exercises
of employee stock options or other employee benefit arrangements; (v) the net
income or loss of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition; and (vi) any net income or
loss of any Restricted Subsidiary to the extent such Restricted Subsidiary is
subject to restrictions on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly, to the
Company.</p>
<p>&quot;<b>Credit Facilities</b>&quot;<sup>a</sup> means (i)&nbsp;the credit agreement
dated as of
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;],
2001, among
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;],
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;],
as administrative agent and each of the lenders that is a signatory thereto,
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing, increasing the total commitment of, or
otherwise restructuring (including by way of adding Subsidiaries of the Company
as additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders,
(ii)&nbsp;any other senior term or revolving credit facilities with one or more
financial institutions and (iii)&nbsp;any refinancing, refunding, renewal,
replacement or extension in whole or in part of any of the foregoing.</p>
<p>&quot;<b>Currency Agreement</b>&quot; means in respect of a Person any
foreign exchange contract, currency swap agreement or other similar agreement as
to which such Person is a party or a beneficiary.</p>
<p>&quot;<b>Debt Commitment Letter</b>&quot; has the meaning specified in the
Purchase Agreement, as amended, supplemented or modified from time to time.</p>
<p>&quot;<b>Disqualified Stock</b>&quot; means (a)&nbsp;any Capital Stock of the
Company which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i)&nbsp;matures (excluding any maturity as the result of an optional redemption
by the issuer thereof) or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise or is redeemable at the option of the holder thereof, in
whole or in part, on or prior to the Mandatory Redemption Date, or (ii)&nbsp;is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (a)&nbsp;Indebtedness of the Company or any Restricted Subsidiary
or (b)&nbsp;any Capital Stock referred to in (i) above, in each case at any time
prior to the Mandatory Redemption Date. Notwithstanding the preceding&nbsp;</p>
<p style="margin-top: 0; margin-bottom: 0">_________________________</p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> Information to be
completed at closing.</p>
<p align="center">&#45;40&#45;</p>
<p> sentence,
(1)&nbsp;any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale shall not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such
Capital Stock if prohibited by the terms hereof and (2)&nbsp;Capital Stock in
respect of which the Company may have an obligation of the type referred to in
clause&nbsp;(iv) of the second paragraph of Section&nbsp;7(b)(iv) shall not
constitute Disqualified Stock. For avoidance of doubt, the Redeemable Preferred
Stock is not Disqualified Stock.</p>
<p>&quot;<b>Dividend Payment Date</b>&quot; means each March&nbsp;1,
June&nbsp;1, September&nbsp;1 and December&nbsp;1 of each year on which
dividends shall be paid or are payable, any Redemption Date and any other date
on which dividends in arrears may be paid.</p>
<p>&quot;<b>Dividend Rate</b>&quot; has the meaning specified in
Section&nbsp;2(a) hereof.</p>
<p>&quot;<b>Exchange Act</b>&quot; means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission thereunder.</p>
<p>&quot;<b>Exchange Date</b>&quot; means the date on which Redeemable Preferred
Stock is exchanged by the Company for Exchange Notes.</p>
<p>&quot;<b>Exchange Notes</b>&quot; shall have the meaning ascribed to it in
Section 6 hereof.</p>
<p>&quot;<b>Exchange Notice</b>&quot; shall have the meaning ascribed to it in
Section 6 hereof.</p>
<p>&quot;<b>Exchange Offer</b>&quot; means the exchange offer contemplated by
the Registration Rights Agreement.</p>
<p>&quot;<b>Existing Notes</b>&quot; means the Company&#39;s 11&nbsp;1/2% Senior
Subordinated Notes Due 2006 and the related indenture and supplemental
indentures, as each may be amended or modified from time to time (including in
connection with the Acquisition).</p>
<p>&quot;<b>fair market value</b>&quot; means, with respect to any asset or
property, the price which could be negotiated in an arm&#39;s&#45;length transaction,
for cash, between an informed and willing seller under no compulsion to sell and
an informed and willing buyer under no compulsion to buy. Fair market value
shall be conclusively determined by the Board of Directors of the Company acting
in good faith.</p>
<p>&quot;<b>First Dividend Payment Date</b>&quot; means the first Dividend
Payment Date following the occurrence of a Liquidity Condition.</p>
<p>&quot;<b>Foreign Subsidiary</b>&quot; means a Subsidiary that is organized
under the laws of any country other than the United States and substantially all
of the assets of which are located outside the United States.</p>
<p align="center">&#45;41&#45;</p>
<p>&quot;<b>GAAP</b>&quot; means generally accepted accounting principles in the
United States of America as in effect from time to time, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession.</p>
<p>&quot;<b>guarantee</b>&quot; means any obligation, contingent or otherwise,
of any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i)&nbsp;to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep&#45;well, to purchase assets,
goods, securities or services, to take&#45;or&#45;pay, or to maintain financial
statement conditions or otherwise) or (ii)&nbsp;entered into for purposes of
assuring in any other manner the obligee to such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); <i>provided</i>, <i>however</i>, that the term &quot;guarantee&quot;
shall not include endorsements for collection or deposit in the ordinary course
of business. The term &quot;guarantee&quot; used as a verb has a corresponding
meaning.</p>
<p>&quot;<b>Holder</b>&quot; means the record holder of shares of Redeemable
Preferred Stock.</p>
<p>&quot;<b>Incur</b>&quot; means issue, assume, guarantee, incur or otherwise
become liable for; <i>provided</i>, <i>however</i>, that any Indebtedness of a
Person existing at the time such person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.</p>
<p>&quot;<b>Indebtedness</b>&quot; means, (a) with respect to any Person on any
date of determination (without duplication), (i)&nbsp;the principal of and
premium (if any) in respect of indebtedness of such Person for borrowed money,
(ii)&nbsp;the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii)&nbsp;all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto) (other than obligations with respect to letters of credit securing
obligations (other than obligations described in clauses&nbsp;(i), (ii) and (v))
entered into in the ordinary course of business of such Person to the extent
that such letters of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the tenth Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit), (iv)&nbsp;all obligations of such Person to pay the deferred
and unpaid purchase price of property or services (except trade payables and
accrued expenses incurred in the ordinary course of business), (v)&nbsp;all
Capitalized Lease Obligations of such Person, (vi)&nbsp;all Indebtedness of
other Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; <i>provided</i>, <i>however</i>, that
the amount of such Indebtedness shall be the lesser of the fair market value of
such asset at such date of determination and the amount of such Indebtedness of
such other Person, and (vii)&nbsp;all Indebtedness of other Persons to the
extent guaranteed by such Person and (b) any Preferred Stock of any Restricted
Subsidiary permitted under Section 7(h).</p>
<p align="center">&#45;42&#45;</p>
<p>&quot;<b>Independent Evaluation Firm</b>&quot; has the meaning specified on
Section 7(f) hereof.</p>
<p>&quot;<b>Interest Rate Agreement</b>&quot; means with respect to any Person
any interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.</p>
<p>&quot;<b>Investment</b>&quot; by any Person means any loan, advance or other
extension of credit or capital contribution (by means of transfers of cash or
other property to others or payments for property or services for the account or
use of others, or otherwise) to, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Indebtedness issued
by, any other Person, including any payment on a guarantee of any obligation of
such other Person, but shall not include trade accounts receivable in the
ordinary course of business. Upon any issuance or sale of Capital Stock of any
Restricted Subsidiary such that it ceases to be a Restricted Subsidiary, the
Company shall be deemed to have made an Investment in the retained Capital Stock
and other Investments in such Subsidiary at such time. For purposes of Section
7(b) and the definitions of &quot;Permitted Investments&quot; and
&quot;Unrestricted Subsidiary,&quot; with respect to a Restricted Subsidiary
that is designated as an Unrestricted Subsidiary, &quot;Investment&quot; shall
include the portion (proportionate to the Company&#39;s equity interest in such
Subsidiary) of the fair market value of the net assets of such Subsidiary at the
time that such Subsidiary is designated an Unrestricted Subsidiary and, with
respect to a Person that is designated as an Unrestricted Subsidiary
simultaneously with its becoming a Subsidiary of the Company,
&quot;Investment&quot; shall mean the Investment made by the Company and the
Restricted Subsidiaries to acquire such Subsidiary.</p>
<p>&quot;<b>Issuance Date</b>&quot; means (1) in the case of the Series&nbsp;A1
Redeemable Preferred Stock, the Series&nbsp;B1 Redeemable Preferred Stock and
the Series&nbsp;C1 Redeemable Preferred Stock, the date on which such Redeemable
Preferred Stock is originally issued under this Certificate of Designation and
(2) in the case of the Series&nbsp;A2 Redeemable Preferred Stock, the
Series&nbsp;B2 Redeemable Preferred Stock and the Series&nbsp;C2 Redeemable
Preferred Stock, the Exchange Date.</p>
<p>&quot;<b>Junior Securities</b>&quot; has the meaning specified in
Section&nbsp;6 hereof.</p>
<p>&quot;<b>Lien</b>&quot; means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).</p>
<p align="center">&#45;43&#45;</p>
<p>&quot;<b>Liquidated Damages</b>&quot; has the meaning specified in the
Registration Rights Agreement.</p>
<p>&quot;<b>Liquidation Preference</b>&quot; means, with respect to a series of
Redeemable Preferred Stock, the Series&nbsp;A Liquidation Preference, the
Series&nbsp;B Liquidation Preference or the Series&nbsp;C Liquidation
Preference, as applicable.</p>
<p>&quot;<b>Liquidity Condition</b>&quot; means the date upon which audited
annual or unaudited quarterly consolidated financial information for the Company
and the Restricted Subsidiaries is available reflecting that the Company&#39;s
Adjusted Consolidated Pro Forma Coverage Ratio is greater than or equal to the
ratios specified below for the periods specified below:</p>
<p ALIGN="RIGHT">&nbsp;
<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="581">
  <tr>
    <td WIDTH="382">
      <blockquote>
        <p>Periods Ending on or prior to December 31,<br>
        2002
      </blockquote>
    </td>
    <td WIDTH="167">
      <p>
      3.75:1.0</td>
  </tr>
  <tr>
    <td WIDTH="382">
      <blockquote>
        <p>Periods ending on or between January 1, 2003<br>
        and March 31, 2003
      </blockquote>
    </td>
    <td WIDTH="167">
      <p>
      3.50:1.0</td>
  </tr>
  <tr>
    <td WIDTH="382">
      <blockquote>
        <p>Period ending on or between April 1, 2003 and<br>
        June 30, 2003
      </blockquote>
    </td>
    <td WIDTH="167">
      <p>
      3.25:1.0</td>
  </tr>
  <tr>
    <td WIDTH="382">
      <blockquote>
        <p>Periods ending on or between July 1, 2003 and<br>
        December 31, 2003
      </blockquote>
    </td>
    <td WIDTH="167">
      <p>
      3.00:1.0</td>
  </tr>
  <tr>
    <td WIDTH="382">
      <blockquote>
        <p>Periods ending on or between January 1, 2004<br>
        and December 31, 2004
      </blockquote>
    </td>
    <td WIDTH="167">
      <p>
      2.75:1.0</td>
  </tr>
  <tr>
    <td WIDTH="382">
      <blockquote>
        <p style="margin-top: 12">Periods ending on and after January 1, 2005
      </blockquote>
    </td>
    <td WIDTH="167">
      <p>2.50:1.0.</td>
  </tr>
</table>
<p>&quot;<b>Maturity Redemption Date</b>&quot; with respect to a series of
Redeemable Preferred Stock means the mandatory redemption date for such series
specified in Section&nbsp;5(b)(i) hereof.</p>
<p>&quot;<b>Net Available Proceeds</b>&quot; has the meaning specified in
Section 5(b)(iii) hereof.</p>
<p>&quot;<b>Net Cash Proceeds</b>&quot; means the aggregate cash proceeds
received by the Company or any of its Restricted Subsidiaries in respect of any
Asset Disposition (including, without limitation, any cash received upon the
sale or other disposition of any non&#45;cash consideration received in any Asset
Disposition), net of the direct costs relating to such Asset Disposition
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any related expenses Incurred as a result thereof,
taxes paid or payable as a result thereof, amounts required to be applied to the
repayment of Indebtedness secured by a lien on the asset or assets that were the
subject of such Asset Disposition and any reserve for adjustment in respect of
the sale price of such asset or assets established in accordance with GAAP.</p>
<p align="center">&#45;44&#45;</p>
<p>&quot;<b>Optional Redemption Date</b>&quot; has the meaning specified in
Section&nbsp;5(a)(i) hereof.</p>
<p>&quot;<b>Parent</b>&quot; means Collins & Aikman Corporation, a Delaware
corporation, and any successor thereto that continues to control the Company.</p>
<p>&quot;<b>Par Offer</b>&quot; means any offer to purchase for cash any and all
Textron Shares at a purchase price per share equal to the aggregate Liquidation
Preference of the Textron Shares, plus accumulated and unpaid dividends
(including Total Cash Dividends in Arrears), if any; <i>provided </i>that
(1)&nbsp;any such offer shall be made pursuant to a written notice addressed to
Textron, with instructions as to the manner in which the offer may be accepted
and Textron Shares tendered for purchase, and shall remain available for
acceptance for not less than 10 Business Days and (2)&nbsp;any and all Textron
Shares as to which an acceptance has been made, and in respect of which
certificates therefor have been timely delivered to the offeror, shall have been
purchased. The written notice shall state that (i)&nbsp;it is a Par Offer;
(ii)&nbsp;any Textron Shares not delivered and duly endorsed for transfer to the
offeror on a timely basis will remain outstanding and continue to accumulate
dividends, but will have no further benefit of Section 7(d); (iii)&nbsp;unless
the offeror defaults in the payment of the Par Offer, all Textron Shares
delivered for payment pursuant to the Par Offer will cease to accumulate
dividends upon payment; and (iv)&nbsp;the Par Offer must be accepted by the
offeror in whole and may not be accepted in part. A &quot;<b>Par Offer</b>&quot;
may be made and consummated by any Person, whether or not the Company or one of
its Affiliates, pursuant to these provisions and shall nonetheless be an
effective Par Offer.</p>
<blockquote>
  <blockquote>
<p>&quot;<b>Parity Securities</b>&quot; has the meaning specified in
Section&nbsp;6 hereof.</p>
<p>&quot;<b>Permitted Indebtedness and Preferred Stock</b>&quot; means:</p>
  </blockquote>
    <p>(i) Indebtedness Incurred by the Company or any Restricted Subsidiary
    pursuant to one or more Credit Facilities; <i>provided</i>, <i>however</i>,
    that the aggregate principal amount of all Indebtedness Incurred pursuant to
    this clause&nbsp;(i)&nbsp;does not exceed $[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
    million at any time outstanding less the amount of any Net Cash Proceeds
    from an Asset Disposition used to permanently reduce the availability under
    the term loan portion of any such Credit Facilities;<sup>a</sup></p>
</blockquote>
    <p style="margin-top: 0; margin-bottom: 0">___________________________</p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> To provide 15%
flexibility in amount as compared with the similar basket in the Acquisition
Notes or, if the Acquisition Notes are not issued on or prior to the first
Issuance Date, the amount will equal the total commitments under Credit Facility
to be entered into in connection with the Acquisition plus an additional 15% to
allow for future growth</p>
<blockquote>
    <p align="center">&#45;45&#45;</p>
    <p>(ii) Indebtedness of the Company or any Restricted Subsidiary under [the
    Bridge Financing and] any Acquisition Notes and any replacement, refunding,
    refinancing, renewal or extension thereof in an aggregate principal amount
    or liquidation preference not to exceed $[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
    million at any time outstanding;<sup>a</sup></p>
    <p>(iii) Indebtedness of any Foreign Subsidiary (other than a Foreign Subsidiary
    organized under the laws of Canada) incurred for working capital purposes
    not to exceed at any time outstanding the sum of (x)&nbsp;the consolidated
    book value of the accounts receivable of such Foreign Subsidiary plus
    (y)&nbsp;the consolidated book value of the inventories of such Foreign
    Subsidiary;<sup>b</sup></p>
    <p>(iv) Indebtedness of the Company or any Restricted Subsidiary constituting and
    any replacement, refunding or refinancing of a Receivables Facility and any
    replacement, refunding, refinancing, renewal or extension thereof; <i>provided</i>
    that the aggregate principal amount of Indebtedness Incurred pursuant to
    this clause&nbsp;(iv) shall not exceed $[&nbsp;&nbsp;&nbsp;&nbsp;] million
    at any time outstanding;<sup>c</sup></p>
    <p>(v) Indebtedness of the Company or any Restricted Subsidiary represented by
    Capitalized Lease Obligations, mortgage financing or purchase money
    obligations, in each case Incurred for the purpose of financing all or any
    part of the purchase price or cost of construction or improvement of
    property or Incurred to refinance any such purchase price or cost of
    construction or improvement, in each case Incurred no later than 365 days
    after the date of such acquisition or the date of completion of such
    construction or improvement;<sup>d</sup></p>
</blockquote>
    <p>___________________________</p>
    <p><sup>a</sup> To equal amount of Bridge Financing or Acquisition Notes.</p>
<p><sup>b</sup> To be limited in the same manner as the Acquisition Notes, if
any, plus a 15% margin in the case of a dollar limitation or receivables plus
inventory limitation.</p>
<p><sup>c</sup> To provide 25% in excess of an amount equal to the US/Canadian
Receivables Facility entered into at Acquisition closing.</p>
<p><sup>d</sup> To be limited to a dollar amount if so provided in the
Acquisition Notes, plus a 15% margin.</p>
<blockquote>
    <p align="center">&#45;46&#45;</p>
    <p>(vi) Indebtedness of the Company or any Restricted Subsidiary in a principal
    amount or liquidation preference not to exceed $[&nbsp;&nbsp;&nbsp;&nbsp;]
    million outstanding at any time (it being understood that any Indebtedness
    Incurred under this clause&nbsp;(vi) shall cease to be outstanding for
    purposes of this clause&nbsp;(vi) but shall be deemed to be Incurred or
    issued for purposes of the first paragraph of Section&nbsp;7(a) from and
    after the first date on which the Company or such Restricted Subsidiary
    could have Incurred such Indebtedness under the first paragraph of
    Section&nbsp;7(a) without reliance upon this clause&nbsp;(vi));<sup>a</sup></p>
    <p>(vii) (A)&nbsp;Indebtedness of the Company owing to and held by any Restricted
    Subsidiary or (B)&nbsp;Indebtedness of a Restricted Subsidiary owing to and
    held by the Company or any Restricted Subsidiary; <i>provided</i>, <i>however</i>,
    that any subsequent issuance (other than directors&#39; qualifying shares) or
    transfer of any Capital Stock or any other event which results in any such
    Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
    subsequent transfer of any such Indebtedness (except, in the case of
    subclause&nbsp;(A), to a Restricted Subsidiary or, in the case of
    subclause&nbsp;(B), to the Company or a Restricted Subsidiary) shall be
    deemed in each case to constitute the Incurrence of such Indebtedness;</p>
    <p>(viii) (A) other Indebtedness outstanding on the Issuance Date of the
    Series&nbsp;A1 Redeemable Preferred Stock, the Series&nbsp;B1 Redeemable
    Preferred Stock and the Series&nbsp;C1 Redeemable Preferred Stock, including
    without limitation the Existing Notes and Indebtedness assumed by reason of
    the Acquisition, and any refinancing, replacement, refunding, renewal or
    extension thereof and (B) any refinancing, replacement, refunding, renewal
    or extension of any Indebtedness Incurred under the first paragraph of
    Section 7(a);</p>
    <p>(ix) Indebtedness of the Company or any Restricted Subsidiary (A)&nbsp;in
    respect of performance bonds, bankers&#39; acceptances and surety or appeal
    bonds provided by the Company or any of the Restricted Subsidiaries to their
    customers in the ordinary course of their business and not for money
    borrowed, (B)&nbsp;in respect of performance bonds or similar obligations of
    the Company or any of the Restricted Subsidiaries for or in connection with
    pledges, deposits or payments made or given in the ordinary course of
    business and not for money borrowed in connection with or to secure
    statutory, regulatory or similar obligations, including obligations under
    health, safety or environmental obligations, (C)&nbsp;arising from
    guarantees to suppliers, lessors, licensees,&nbsp;</p>
</blockquote>
    <p style="margin-top: 0; margin-bottom: 0">_________________________</p>
    <p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> To equal amount of
    &quot;rainy day&quot; basket in Acquisition Notes plus 20% or, if
    Acquisition Notes are not issued, an amount to be reasonably acceptable to
    the Company and Textron, but not less than $60 million (<i>i.e.,</i> 120% of
    the rainy day basket under Existing Notes) in any event.</p>
<p align="center">&#45;47&#45;</p>
<blockquote>
    <p> contractors, franchises or
    customers of obligations (other than Indebtedness) incurred in the ordinary
    course of business and not for money borrowed and (D)&nbsp;under Currency
    Agreements, Interest Rate Agreements and Commodity Agreements; <i>provided</i>,
    <i>however</i>, that in the case of subclause&nbsp;(D), such agreements are
    entered into for <i>bona fide</i> hedging purposes of the Company or any of
    the Restricted Subsidiaries (as determined in good faith by the Company);</p>
    <p>(x) Indebtedness of the Company or any Restricted Subsidiary arising from
    agreements providing for indemnification, adjustment of purchase price or
    similar obligations, or from guarantees or letters of credit, surety bonds
    or performance bonds securing any obligations of the Company or any of the
    Restricted Subsidiaries pursuant to such agreements, in each case Incurred
    or issued in connection with the disposition of any business, assets or
    Subsidiary of the Company in a principal amount or liquidation preference
    not to exceed the gross proceeds actually received by the Company or any of
    the Restricted Subsidiaries in connection with such disposition;</p>
    <p>(xi) Indebtedness consisting of (A)&nbsp;guarantees by the Company or any
    Restricted Subsidiary of Indebtedness Incurred or Preferred Stock issued by
    a Restricted Subsidiary otherwise permitted hereunder, (B)&nbsp;guarantees
    by a Restricted Subsidiary of Indebtedness or Preferred Stock Incurred or
    issued by the Company otherwise permitted hereunder, or (C) guarantees by
    the Company or any Restricted Subsidiary of Indebtedness Incurred by a
    Foreign Subsidiary in the ordinary course of business; and</p>
    <p>(xii) Indebtedness consisting of Preferred Stock of Restricted Subsidiaries to
    the extent that such Preferred Stock is issued or sold in accordance with
    Section&nbsp;7(h) hereof.</p>
</blockquote>
<p>For the purposes of determining Indebtedness permitted above in connection
with a replacement, refunding, refinancing, renewal or extension of such
Indebtedness (a &quot;<b>Refinancing</b>&quot; and the term &quot;<b>Refinanced</b>&quot;
having a correlative meaning), the aggregate principal amount of Indebtedness
Incurred in connection with such Refinancing shall not exceed the principal
amount of the Indebtedness being Refinanced, plus the amount of any premium
required to be paid in connection with such Refinancing pursuant to the terms of
the Indebtedness being Refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such Refinancing by means
of a tender offer or privately negotiated purchase or repayment, plus the fees
and expenses of the Company or Restricted Subsidiary, as the case may be,
Incurred in connection with such Refinancing.</p>
<p align="center">&#45;48&#45;</p>
<p>&quot;<b>Permitted Investments</b>&quot;<sup>a</sup> means (i)&nbsp;Investments in cash
equivalents, (ii)&nbsp;any Investments included in the definition of Permitted
Indebtedness, including in respect of Currency Agreements, Interest Rate
Agreements and Commodity Agreements, (iii)&nbsp;Investments in existence on the
Issuance Date of the Series&nbsp;A1 Redeemable Preferred Stock, Series&nbsp;B1
Redeemable Preferred Stock and Series&nbsp;C1 Redeemable Preferred Stock,
(iv)&nbsp;Investments in any Restricted Subsidiary by the Company or any
Restricted Subsidiary, including any Investment made to acquire such Restricted
Subsidiary, (v)&nbsp;Investments in any Receivables Facility,
(vi)&nbsp;Investments in the Company by any Restricted Subsidiary,
(vii)&nbsp;sales of goods or services on trade credit terms consistent with the
Company&#39;s and its Subsidiaries&#39; past practices or otherwise consistent with
trade credit terms in common use in the industry and recorded as accounts
receivable on the balance sheet of the Person making such sale,
(viii)&nbsp;loans or advances to employees for purposes of purchasing common
stock of Parent or the Company in an aggregate amount outstanding at any one
time not to exceed $[&nbsp;&nbsp;&nbsp;] million and other loans and advances to
employees of the Company and its Subsidiaries in the ordinary course of
business, including travel, moving and other like advances, (ix)&nbsp;loans or
advances to vendors or contractors of the Company and its Subsidiaries (other
than Affiliates of the Company) in the ordinary course of business,
(x)&nbsp;lease, utility and other similar deposits in the ordinary course of
business, (xi)&nbsp;stock, obligations or securities received in the ordinary
course of business in settlement of debts owing to the Company or a Subsidiary
thereof as a result of foreclosure, perfection, enforcement of any Lien or in a
bankruptcy proceeding, (xii)&nbsp;Investments in Unrestricted Subsidiaries,
partnerships or joint ventures involving the Company or its Restricted
Subsidiaries if the amount of such Investment (after taking into account the
amount of all other Investments made pursuant to this clause (xii), less any
return of capital realized or any repayment of principal received on such
Permitted Investments, or any release or other cancellation of any guarantee
constituting such Permitted Investment, which has not at such time been
reinvested in Permitted Investments made pursuant to this clause (xii)) does not
exceed the greater of $[&nbsp;&nbsp;&nbsp;] million or [&nbsp;&nbsp;&nbsp;]% of
the consolidated assets of the Company and the Restricted Subsidiaries,
(xiii)&nbsp;Investments in Persons to the extent any such Investment represents
the non&#45;cash consideration received by the Company or the Restricted
Subsidiaries in connection with an Asset Disposition and (xiv) Investments
consisting of guarantees of Indebtedness of Foreign Subsidiaries Incurred in the
ordinary course of business.</p>
<p style="margin-top: 0; margin-bottom: 0">____________________________</p>
<p style="margin-top: 0; margin-bottom: 0"><sup>a</sup> Baskets and concepts are
to be modified to provide equivalent flexibility to the Acquisition Notes plus
additional flexibility reasonably acceptable to the Company and Textron; if
Acquisition Notes are not issued on or prior to the first Issuance Date, the
Company and Textron will negotiate to complete the blank information and to
supplement this definition for additional identified ordinary course needs on a
basis reasonably acceptable to each of them.</p>
<p align="center">&#45;49&#45;</p>
<p>&quot;<b>Permitted Restricted Period Debt</b>&quot; means Indebtedness (i)
under any revolving credit or letter of credit facility required for funding the
Company and the Restricted Subsidiaries in the ordinary course of business
(including under the Credit Facility), (ii) of the type set forth in
clauses&nbsp;(i), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x) and
(xi)&nbsp;of the definition of &quot;Permitted Indebtedness&quot; and any
Refinancing thereof and (iii) Incurred for the purpose of Refinancing
Indebtedness of the Company or a Restricted Subsidiary having a Stated Maturity
within one year of the date of such Incurrence; provided in each case that the
proceeds to the Company and the Restricted Subsidiaries from the Incurrence of
any such Indebtedness are not applied as consideration in respect of any Asset
Acquisition.</p>
<p>&quot;<b>Person</b>&quot; means any individual, corporation, limited
liability company, partnership, joint venture, association, joint&#45;stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.</p>
<p>&quot;<b>Preferred Stock</b>&quot;, means Capital Stock of any class or
classes (however designated) which is preferred as to the payment of dividends
or distribution of funds, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.</p>
<p>&quot;<b>Projected Consolidated Interest Expense</b>&quot; means, with
respect to a particular Asset Acquisition, the projected Consolidated Interest
Expense (without giving effect to clause (viii) thereof and assuming for this
purpose that the acquired Persons or assets are the &quot;Company and the
Restricted Subsidiaries&quot;) attributable to Indebtedness Incurred or assumed
to effect the particular Asset Acquisition, as set forth in the Certified
Projections with respect to such Asset Acquisition, for the time period for
which the Adjusted Consolidated Pro Forma Coverage Ratio is being calculated
(but not to cover any time period in which the particular Asset Acquisition had
not been made).</p>
<p>&quot;<b>Projected Period Cash Flow</b>&quot; means, with respect to a
particular Asset Acquisition, the projected Consolidated Cash Flow (assuming for
this purpose that the acquired Persons or assets are the &quot;Company and the
Restricted Subsidiaries&quot;) of the Persons or assets which are the subject of
such Asset Acquisition, as set forth in the Certified Projections with respect
to such Asset Acquisition, for the time period for which the Adjusted
Consolidated Pro Forma Coverage Ratio is being calculated (but not to cover any
time period in which the particular Asset Acquisition had not been made).</p>
<p>&quot;<b>Projected Time Adjusted Acquisition Cash Flow</b>&quot; means the
sum of the following calculations determined for each Asset Acquisition effected
after the Issuance Date of the Series&nbsp;A1 Redeemable Preferred Stock,
Series&nbsp;B1 Redeemable Preferred Stock and Series&nbsp;C1 Redeemable
Preferred Stock. The following calculation shall be made for each Asset
Acquisition utilizing the time periods of the Certified Projections for the
Subject Acquisition for which the Adjusted Consolidated Pro Forma Coverage Ratio
is being calculated: the Time Period Factor for the subject Acquisition shall be
multiplied by the Projected Period Cash Flow of such Asset Acquisition.</p>
<p align="center">&#45;50&#45;</p>
<p>&quot;<b>Projected Time Adjusted Acquisition Interest Expense</b>&quot; means
the sum of the following calculations determined for each Asset Acquisition
effected after the Issuance Date of the Series&nbsp;A1 Redeemable Preferred
Stock, Series&nbsp;B1 Redeemable Preferred Stock and Series&nbsp;C1 Redeemable
Preferred Stock. For each Asset Acquisition the following calculation shall be
made utilizing the time periods of the Certified Projections for which the
Adjusted Consolidated Pro Forma Coverage Ratio is being calculated: the Time
Period Factor with respect to the subject Acquisition shall be multiplied by the
Projected Consolidated Interest Expense of such Asset Acquisition.</p>
<p>&quot;<b>Purchase Agreement</b>&quot; means the Purchase Agreement dated
August&nbsp;7, 2001 among Textron, Parent and the Company.</p>
<p>&quot;<b>Qualified Bank</b>&quot; has the meaning specified in
Section&nbsp;5(c)(iv) hereof.</p>
<p>&quot;<b>Qualified Capital Stock</b>&quot; of the Company shall mean any
Capital Stock of the Company which is not Disqualified Stock.</p>
<p>&quot;<b>Receivables Facility</b>&quot; means any receivables financing
facilities pursuant to which the Company or any of its Subsidiaries sells,
transfers, assigns or pledges its accounts receivable and/or any rights
ancillary thereto to a special purpose entity or trust and in connection
therewith such entity or trust Incurs Indebtedness secured by such accounts
receivable and/or ancillary rights with customary repurchase obligations for
breaches of representations warranties or covenants or recourse based upon the
collectability of the accounts receivable or ancillary rights sold, including,
without limitation the Receivables Facility contemplated by the Debt Commitment
Letter.</p>
<p>&quot;<b>Receivables Financing Subsidiary</b>&quot; means a Subsidiary formed
for the purpose of monetizing accounts receivable of the Company and/or one or
more of its Subsidiaries whose assets consent of cash, such accounts receivable
and related intangibles and assets.</p>
<p>&quot;<b>Redeemable Preferred Stock</b>&quot; has the meaning set forth in
Section&nbsp;1 hereof.</p>
<p>&quot;<b>Redemption Date</b>&quot; means the Optional Redemption Date, the
Maturity Redemption Date, the Change of Control Redemption Date or the Asset
Disposition Redemption Date, as the case may be.</p>
<p>&quot;<b>Redemption Notice</b>&quot; has the meaning specified in
Section&nbsp;5(c)(i) hereof.</p>
<p>&quot;<b>Redemption Price</b>&quot; means the price at which the Redeemable
Preferred Stock may be redeemed.</p>
<p align="center">&#45;51&#45;</p>
<p>&quot;<b>Registration Rights Agreement</b>&quot; means that certain Exchange
and Registration Rights Agreement, dated as of
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;], 2001, by and between
the Company and Textron, as amended or modified in accordance with its terms.</p>
<p>&quot;<b>Remaining Net Available Proceeds</b>&quot; has the meaning specified
in Section 5(b)(iii) hereof.</p>
<p>&quot;<b>Restricted Payment</b>&quot; has the meaning specified in
Section&nbsp;7(b) hereof.</p>
<p>&quot;<b>Restricted Period</b>&quot; has the meaning specified in Section
7(d) hereof.</p>
<p>&quot;<b>Restricted Subsidiary</b>&quot; means any Subsidiary of the Company
other than an Unrestricted Subsidiary.</p>
<p>&quot;<b>Securities Act</b>&quot; means the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the Commission thereunder.</p>
<p>&quot;<b>Senior Securities</b>&quot; has the meaning specified in
Section&nbsp;6 hereof.</p>
<p>&quot;<b>Series&nbsp;A Accrued Dividends</b>&quot; has the meaning specified
in Section 2(a) hereof.</p>
<p>&quot;<b>Series&nbsp;A Additional Dividends</b>&quot; means, as of any date
of determination with respect to a share of Series&nbsp;A Redeemable Preferred
Stock, the aggregate amount of dividends accrued upon the Series&nbsp;A Cash
Dividends in Arrears in respect of such share pursuant to Section 2(c), to the
extent that payment in cash of such dividends has not been made on or prior to
such date of determination.</p>
<p>&quot;<b>Series&nbsp;A Cash Dividends in Arrears</b>&quot; means, as of any
date of determination with respect to a share of Series&nbsp;A Redeemable
Preferred Stock, the aggregate of all accumulated and unpaid dividends upon such
share of Series&nbsp;A Redeemable Preferred Stock that were required to be paid
in cash on any Dividend Payment Date occurring prior to such date of
determination, to the extent that payment in cash of such dividends has not been
made on or prior to such date of determination.</p>
<p>&quot;<b>Series&nbsp;A Dividend Rate</b>&quot; has the meaning set forth in
Section&nbsp;2(a) hereof.</p>
<p>&quot;<b>Series&nbsp;A Liquidation Preference</b>&quot; means with respect to
a share of Series&nbsp;A Redeemable Preferred Stock, $1,000 plus the aggregate
amount of all Series&nbsp;A Accrued Dividends in respect of such share through
and including the date of determination.</p>
<p>&quot;<b>Series&nbsp;A Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section&nbsp;1(a) hereof.</p>
<p align="center">&#45;52&#45;</p>
<p>&quot;<b>Series&nbsp;A1 Exchange Notes</b>&quot; shall have the meaning
ascribed to it in Section 6 hereof.</p>
<p>&quot;<b>Series&nbsp;A1 Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section&nbsp;1(a) hereof.</p>
<p>&quot;<b>Series&nbsp;A2 Exchange Notes</b>&quot; shall have the meaning
ascribed to it in Section 6 hereof.</p>
<p>&quot;<b>Series&nbsp;A2 Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section&nbsp;1(a) hereof.</p>
<p>&quot;<b>Series&nbsp;B Accrued Dividends</b>&quot; has the meaning specified
in Section 2(a) hereof.</p>
<p>&quot;<b>Series&nbsp;B Additional Dividends</b>&quot; means, as of any date
of determination with respect to a share of Series&nbsp;B Redeemable Preferred
Stock, the aggregate amount of dividends accrued upon the Series&nbsp;B Cash
Dividends in Arrears in respect of such share pursuant to Section 2(c), to the
extent that payment in cash of such dividends has not been made on or prior to
such date of determination.</p>
<p>&quot;<b>Series&nbsp;B Cash Dividends in Arrears</b>&quot; means, as of any
date of determination with respect to a share of Series&nbsp;B Redeemable
Preferred Stock, the aggregate of all accumulated and unpaid dividends upon such
share of any Series&nbsp;B Redeemable Preferred Stock that were required to be
paid in cash on any Dividend Payment Date occurring prior to such date of
determination, to the extent that payment in cash of such dividends has not been
made on or prior to such date of determination.</p>
<p>&quot;<b>Series&nbsp;B Dividend Rate</b>&quot; has the meaning set forth in
Section&nbsp;2(a) hereof.</p>
<p>&quot;<b>Series&nbsp;B Liquidation Preference</b>&quot; means $1,000 plus the
aggregate amount of all Series&nbsp;B Accrued Dividends through and including
the date of determination.</p>
<p>&quot;<b>Series&nbsp;B Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section&nbsp;1(a) hereof.</p>
<p>&quot;<b>Series&nbsp;B1 Exchange Notes</b>&quot; shall have the meaning
ascribed to it in Section 6 hereof.</p>
<p>&quot;<b>Series&nbsp;B1 Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section&nbsp;1(a) hereof.</p>
<p>&quot;<b>Series&nbsp;B2 Exchange Notes</b>&quot; shall have the meaning
ascribed to it in Section 6 hereof.</p>
<p align="center">&#45;53&#45;</p>
<p>&quot;<b>Series&nbsp;B2 Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section&nbsp;1(a) hereof.</p>
<p>&quot;<b>Series&nbsp;C Accrued Dividends</b>&quot; has the meaning specified
in Section 2(a) hereof.</p>
<p>&quot;<b>Series&nbsp;C Additional Dividends</b>&quot; means, as of any date
of determination with respect to a share of Series&nbsp;C Redeemable Preferred
Stock, the aggregate amount of dividends accrued upon the Series&nbsp;C Cash
Dividends in Arrears in respect of such share pursuant to Section 2(c), to the
extent that payment in cash of such dividends has not been made on or prior to
such date of determination.</p>
<p>&quot;<b>Series&nbsp;C Cash Dividends in Arrears</b>&quot; means, as of any
date of determination with respect to a share of Series&nbsp;C Redeemable
Preferred Stock, the aggregate of all accumulated and unpaid dividends upon such
share of any Series&nbsp;C Redeemable Preferred Stock that were required to be
paid in cash on any Dividend Payment Date occurring prior to such date of
determination, to the extent that payment in cash of such dividends has not been
made on or prior to such date of determination.</p>
<p>&quot;<b>Series&nbsp;C Dividend Rate</b>&quot; has the meaning set forth in
Section&nbsp;2(a) hereof.</p>
<p>&quot;<b>Series&nbsp;C Liquidation Preference</b>&quot; means $1,000 plus the
aggregate amount of all Series&nbsp;C Accrued Dividends through and including
the date of determination.</p>
<p>&quot;<b>Series&nbsp;C Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section 1(a) hereof.</p>
<p>&quot;<b>Series&nbsp;C1 Exchange Notes</b>&quot; shall have the meaning
ascribed to it in Section 6 hereof.</p>
<p>&quot;<b>Series&nbsp;C1 Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section 1(a) hereof.</p>
<p>&quot;<b>Series&nbsp;C2 Exchange Notes</b>&quot; shall have the meaning
ascribed to it in Section 6 hereof.</p>
<p>&quot;<b>Series&nbsp;C2 Redeemable Preferred Stock</b>&quot; shall have the
meaning ascribed to it in Section 1(a) hereof.</p>
<p>&quot;<b>Significant Subsidiary</b>&quot; means any Restricted Subsidiary
that would be a &quot;significant subsidiary&quot; of the Company within the
meaning of Rule 1&#45;02 under Regulation S&#45;X promulgated by the Securities and
Exchange Commission.</p>
<p>&quot;<b>Sponsor</b>&quot; means Heartland Industrial Partners, L.P. and its
Affiliates.</p>
<p align="center">&#45;54&#45;</p>
<p>&quot;<b>Stated Maturity</b>&quot; means, with respect to any other
Indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness, or
any installment of interest thereon, is due and payable.</p>
<p>&quot;<b>Subsidiary</b>&quot; of any Person means any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person. Unless otherwise specified herein, each
reference to a Subsidiary shall refer to a Subsidiary shall refer to a
Subsidiary of the Company.</p>
<p>&quot;<b>Surviving Entity</b>&quot; has the meaning specified in
Section&nbsp;7(e)(i).</p>
<p>&quot;<b>Textron</b>&quot; means Textron, Inc. and its legal successors.</p>
<p>&quot;<b>Textron Shares</b>&quot; means all shares of Series&nbsp;A
Redeemable Preferred Stock held beneficially and of record solely by Textron
and/or any of Textron's Subsidiaries to the extent solely and continuously
beneficially owned since the Issuance Date of the Series&nbsp;A1 Preferred
Stock; <i>provided</i> that the Company may require reasonable certifications
and indemnities from Textron as to such beneficial ownership and continuous
beneficial ownership since the Issuance Date of the Series&nbsp;A1 Preferred
Stock as a condition to complying with the provisions of, or determining
eligibility for, a Par Offer or for ascertaining the need to comply with the
penultimate paragraph of Section&nbsp;7(b).</p>
<p>&quot;<b>Time Period Factor</b>&quot; is to be utilized in order to determine
the portion of the annual Certified Projections to be utilized when the four
fiscal quarter period for which the Adjusted Consolidated Pro Forma Coverage
Ratio is being calculated doesn&#39;t match. To that end, the portion of any
fiscal year set forth in the Certified Projections to be utilized will be based
upon, with respect to a particular Asset Acquisition, the fraction obtained by
dividing (1) the actual number of days of a particular fiscal year of the
Company to be reflected in Adjusted Consolidated Pro Forma Coverage Ratio
by&nbsp;(2)&nbsp; 365 days. In addition, to the extent an Asset Acquisition was
consummated during the four fiscal quarter period for which the Adjusted
Consolidated Pro Forma Coverage Ratio is being calculated (<i>i.e.</i>, less
than a full year), the Time Period Factor will equal the fraction obtained by
dividing&nbsp;(1) the actual number of days for which the Asset Acquisition has
been included in Consolidated Cash Flow of the Company by (2) 365 days.</p>
<p>&quot;<b>Total Cash Dividends in Arrears</b>&quot; means, with respect to any
share of Redeemable Preferred Stock at any date of determination, the total of
(1) the Cash Dividends in Arrears with respect to such share, if any, at the
date of determination and (2) the associated Additional Dividends with respect
to such share at such date of determination.</p>
<p align="center">&#45;55&#45;</p>
<p>&quot;<b>Total Liquidity Dividends in Arrears</b>&quot; means, with respect
to any Textron Share at any date of determination, the total of (1) the
aggregate of all accumulated and unpaid Liquidity Dividends upon such Textron
Share, if any, at the date of determination and (2) the associated Additional
Dividends with respect to such share at such date of determination.</p>
<p>&quot;<b>Unrestricted Subsidiary</b>&quot; means (i)&nbsp;any Subsidiary of
the Company that at the time of determination shall be designated an
Unrestricted Subsidiary by the Board of Directors in the manner provided below,
(ii)&nbsp;any Receivables Financing Subsidiary and (iii)&nbsp;any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated to the extent not
otherwise permitted hereby; <i>provided</i>, <i>however</i>, that after giving
effect to any such designation, the Company could (1)&nbsp;Incur $1.00 of
Indebtedness under the first paragraph of Section 7(a) and (2)&nbsp;make an
Investment in such Subsidiary under Section 7(b). Any such designation shall be
deemed to have resulted in an Investment by the Company for purposes of
Section&nbsp;7(b). The Board of Directors may designate any Unrestricted
Subsidiary (other than a Receivables Financing Subsidiary) to be a Restricted
Subsidiary; <i>provided</i>, <i>however</i>, that all Indebtedness of such
Unrestricted Subsidiary outstanding immediately following such designation, if
Incurred at such time, would have been permitted to be Incurred for all purposes
of this Certificate of Designation. Any such designation by the Board of
Directors shall be evidenced to the holders of the Redeemable Preferred Stock by
promptly delivering to the transfer agent for the Preferred Stock a copy of the
Board Resolution giving effect to such designation and an Officers&#39;
Certificate certifying that such designation complied with the foregoing
provisions. Notwithstanding the foregoing, any Subsidiary which shall be
designated an &quot;Unrestricted Subsidiary&quot; in accordance with the terms
of the Acquisition Notes shall be deemed to be an Unrestricted Subsidiary for
purposes hereunder.</p>
<p>&quot;<b>Voting Rights Triggering Event</b>&quot; has the meaning set forth
above in Section&nbsp;4(b) hereof.</p>
<p>&quot;<b>Voting Stock</b>&quot; means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of any Person (irrespective of whether or not, at the time,
stock of any other class or classes shall have, or might have, voting power by
reason of the happening of any contingency).</p>
<p>&quot;<b>Wholly Owned Subsidiary</b>&quot; of any Person means a Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors&#39; qualifying shares) shall at the time be owned
by such Person or by one or&nbsp;</p>
<p align="center">&#45;56&#45;</p>
<p> more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.</p>
<p align="center">&#45;57&#45;</p>
<p>IN WITNESS WHEREOF, the Company has caused this Certificate of Designation to
be duly executed in its corporate name on this&nbsp;&nbsp;&nbsp;&nbsp; day of
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2001.</p>
<p>&nbsp;</p>
<div align="left">
  <table border="0" width="100%">
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">COLLINS & AIKMAN PRODUCTS CO.</td>
    </tr>
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">&nbsp;</td>
    </tr>
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">By:______________________________________<br>
        &nbsp;&nbsp;&nbsp;&nbsp; Name:<br>
        &nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; </td>
    </tr>
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">&nbsp;</td>
    </tr>
    <tr>
      <td width="50%">&nbsp;</td>
      <td width="50%">By:______________________________________<br>
        &nbsp;&nbsp;&nbsp;&nbsp; Name:<br>
        &nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; </td>
    </tr>
  </table>
</div>

<p>&nbsp;</p>
<b>
<p ALIGN="RIGHT"><a NAME="SendMailTemp"></a>EXHIBIT 7</p>
<p ALIGN="CENTER">ASSET PURCHASE AGREEMENT</p>
</b>
<p>ASSET PURCHASE AGREEMENT (the &quot;Agreement&quot;) dated as of August 7,
2001 between Textron Automotive Exteriors Inc., a Delaware corporation
(&quot;Exteriors&quot;) and JPS Automotive, Inc., a Delaware corporation
(&quot;JPS &quot;). Except as expressly defined herein, capitalized terms used
in this Agreement shall have the meaning ascribed to them in the Purchase
Agreement dated as of August 7, 2001 (the &quot;Purchase Agreement&quot;) by and
among Textron Inc. (&quot;Parent&quot;), Collins & Aikman Products Co., a
Delaware corporation (&quot;C&A Products&quot;) and Collins & Aikman
Corporation, a Delaware corporation.</p>
<p>WHEREAS, the Purchase Agreement provided for the sale of certain of Parent&#39;s
automotive trim operations currently managed as a unit of Textron Automotive
Corporation Inc. a Delaware corporation, to C&A Products and those entities
specified in the Purchase Agreement;</p>
<p>WHEREAS, Exteriors desires to sell and assign to JPS, and JPS to purchase and
assume from Exteriors, certain assets, Contracts, other obligations and
liabilities relating to the business conducted by Exteriors; and</p>
<p>NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and in the Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:</p>
<p>1. <u>Sale and Purchase of Assets</u>. (a)&nbsp;On the terms and subject to
the conditions of this Agreement, at the Closing, Exteriors shall sell,
transfer, assign and deliver to JPS, or cause to be sold, transferred, assigned
and delivered to JPS, free and clear of any Liens (other than Permitted Liens),
and JPS shall purchase and assume from Exteriors, all of Exteriors&#39; right,
title and interest in and to the Transferred Assets. To the extent that the
Transferred Assets consist of written documents (including microfilms and
computer files) which are necessary to the maintenance of Exteriors' records in
accordance with reasonable practice, Exteriors may either deliver to JPS a
duplicate copy of such documents and retain the original or deliver to JPS the
original of such documents and retain a duplicate copy; <i>provided</i>,<i>
however</i>, that Exteriors shall deliver the original of any such document when
delivery of the original is necessary to effectuate the transfer of any
Transferred Asset.</p>
<p>(b) For purposes of this Agreement, &quot;<u>Transferred Assets</u>&quot;
shall mean the Evart, Michigan and Americus, Georgia plants (the
&quot;Plants&quot;) including, the following used primarily at or related
primarily to the Plants:</p>
<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="667">
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(i)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>the real estate, buildings thereon, fixtures, equipment and other
      personal property in the buildings,</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(ii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>Contracts, to the extent their transfer is permitted by their terms,
      for products produced at the Plants,</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(iii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>to the extent their transfer is permitted by Law, all Permits relating
      to the Plants issued to Exteriors by any Governmental Authority;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(iiii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all rights in and to products sold (including, without limitation,
      products hereafter repossessed or returned and unpaid, Exteriors, rights
      of replevin, rescission, reclamation and rights to stoppage in transit)
      which were manufactured at the Plants;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(iv)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all rights of way, easements, appurtenances and similar realty
      interests of Exteriors pertaining to the real property on which the Plants
      are located;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(v)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all machinery, equipment, furniture, furnishings, vehicles and other
      fixed assets used primarily on or relating primarily to the Plants;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(vi)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all leases of vehicles and of tangible assets which are used primarily
      at or related primarily to the Plants;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(viii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all inventories of raw materials, work&#45;in&#45;progress, spare parts,
      replacement and component parts, office and other supplies and finished
      goods for the Plants (the &quot;<u>Inventory</u>&quot;);</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(ivii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all Contracts relating primarily to the Plants to the extent their
      transfer is permitted by their terms (the &quot;<u>Purchased Contracts</u>&quot;),
      including, without limitation, any right to receive payment for products
      sold or services rendered, and to receive goods and services, pursuant to
      such agreements;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(x)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all customer lists relating primarily to the Plants (the &quot;<u>Customer
      Lists</u>&quot;);</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(viii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all Pre&#45;paid Expenses, credits, deferred charges, advance payments,
      security deposits and other prepaid items related primarily to the
      Transferred Assets;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(ixi)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all rights, claims, credits, causes of action or rights of set&#45;off
      against third parties related primarily to the Transferred Assets or the
      Assumed Liabilities, including, without limitation, unliquidated rights
      under manufacturers&#39; and vendors&#39; warranties and rights under
      insurance policies covering the Transferred Assets, other than in relation
      to liabilities that are the obligations of Exteriors and rights to sue for
      and remedies against past, present and future infringements of any
      Intellectual Property rights;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(xiii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all trade accounts and notes receivable and payments for services as of
      the Closing Date which arose from the operation of the Plants in the
      ordinary course prior to the Closing Date;</td>
  </tr>
  <tr>
    <td WIDTH="100%" VALIGN="TOP" colspan="3" align="center">2</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(xi)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all books, records, manuals and other materials (in any form or
      medium), including, without limitation, all advertising materials,
      catalogues, price lists, correspondence, mailing lists, distribution
      lists, photographs, production data, sales and promotional materials and
      records, purchasing materials and records, personnel records,
      manufacturing and quality control records and procedures, blueprints,
      research and development files, records, data and laboratory books, media
      materials and plates, accounting records, customer records, sales order
      files and litigation files used primarily in or relating primarily to the
      Plants;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(xii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all guarantees, warranties, indemnities and similar rights in favor of
      Exteriors with respect to any Transferred Asset;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(xiii)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>any and all of the databases, software, source codes, object codes,
      documentation, technical data, manuals, comments and instructions, and
      computer processes used primarily at or relating primarily to the Plants;</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(xiv)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all goodwill and any other intangible assets related primarily to the
      Plants, including without limitation all relationships with brokers and
      representatives relating to the sales, marketing, distribution or
      promotion of products manufactured in the Plants; and</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="7%" VALIGN="TOP">
      <p ALIGN="RIGHT">(xv)</td>
    <td WIDTH="76%" VALIGN="TOP">
      <p>all other assets (other than Contracts) which are used primarily at or
      relate primarily to the business of such plants.</td>
  </tr>
</table>
<p>2. <u>Purchase Price</u>. (a) The purchase price for the Transferred Assets
shall be one hundred twenty&#45;five million dollars ($125,000,000) minus the
estimated amount of Assumed Liabilities which are treated as liabilities for
income tax purposes as of the Closing Date (the &quot;Purchase Price&quot;). The
estimate of said Assumed Liabilities shall be made by the parties in good faith
shortly prior to the closing. JPS shall deliver to Exteriors at the Closing a
promissory note in the principal amount of the Purchase Price bearing 11%
interest compounded annually and payable quarterly in arrears maturing on the
fifth anniversary of the Closing. Such note shall have terms and provisions as
are acceptable to both Exteriors and JPS.</p>
<p>(b) Real property, personal property and other ad valorem Taxes of Exteriors
related to the Transferred Assets shall be allocated between JPS and Exteriors
on the basis of a daily proration and the net amount owing from JPS to Exteriors
or from Exteriors to JPS on account of such proration shall be paid promptly
upon written request by the party entitled to receive such payment. If an
assessment for the tax period that includes the Closing Date (the &quot;<u>Current
Period</u>&quot;) has not been made by the time that payment is due under the
preceding sentence, a tentative payment shall be made at that time based on the
assessment for the immediately preceding tax period, and JPS or Exteriors, as
the case may be, shall make an appropriate adjusting payment within 10 days
following receipt of the assessment for the Current Period.</p>
<p align="center">3</p>
<p>(c) Upon the terms and subject to the conditions of this Agreement and the
Purchase Agreement, at the Closing JPS shall, by appropriate instruments to be
executed and delivered at Closing, assume and agree to buy, perform and
discharge in accordance with the terms thereof, when due all of the liabilities
and obligations related primarily to the Plants on the Closing Date of whatever
kind or nature, absolute or contingent, known or unknown, whenever arising (the
&quot;Assumed Liabilities&quot;).</p>
<p>(d) On terms and subject to the conditions of this Agreement, the closing of
the Transaction (the &quot;<u>Closing</u>&quot;) shall take place at the offices
of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York,
New York at 8:00 a.m. (New York time) as promptly as practicable, but no later
than the second Business Day following the satisfaction or waiver of the
conditions set forth in Section 3 (other than conditions which by their nature
are to be satisfied at Closing, but subject to those conditions) or at such
other time, date or place as JPS and Exteriors may agree. The date on which the
Closing occurs is hereinafter referred to as the &quot;<u>Closing Date</u>&quot;</p>
<p>3. <u>Conditions</u>. The obligation of each party to complete the purchase
of the Plants by JPS are subject to the satisfaction on or prior to the Closing
Date of the conditions set forth in Section 6.1 of the Purchase Agreement. The
obligations of JPS to complete the purchase of the Plants is subject to the
satisfaction on or prior to the Closing Date of the conditions set forth in
Section 6.2 or the Purchase Agreement. The obligations of Exteriors to complete
the sale of the Plants is subject to the satisfaction on or prior to the closing
date of the conditions set forth in Section 6.3 or the Purchase Agreement.</p>
<p>4. <u>Rescission</u>. In the event that the Closing pursuant to the Purchase
Agreement does not occur within two Business Days after the Closing pursuant to
this Agreement, Exteriors and JPS shall rescind the purchase of the Transferred
Assets and the assumption of the Assumed Liabilities by JPS.</p>
<p>5. <u>Termination</u>. This Agreement may be terminated at any time prior to
the Closing by either Exterior or JPS if the Purchase Agreement has been
terminated.</p>
<p>6. <u>Miscellaneous</u>. (a)&nbsp;This Agreement shall be construed and the
rights and duties of the parties determined in accordance with the laws of the
State of Delaware.</p>
<p>(b) This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective assigns and successors.</p>
<p>(c) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same<b> </b>instrument.</p>
<p>(d) This Agreement may be amended only by a written agreement signed by JPS
and Exteriors.</p>
<p>(e) Any notice, request, instruction or other document to be given hereunder
by any party to another party shall be given in the manner and to the parties
specified in the Purchase Agreement.</p>
<p align="center">4</p>
<p>(f) In case any term, provision, covenant or restriction of this Agreement is
held to be invalid, illegal or unenforceable in any jurisdiction. the validity,
legality and enforceability of the remaining terms, provisions, covenants or
restrictions, or of such term provision, covenant or restriction in any other
jurisdiction, shall not in any way be affected or impaired thereby.</p>
<p>(g) In the event of any conflict between this Agreement and the agreements
attached as Exhibits 2, 3A, 3B, 3C and 4 to the Purchase Agreement, the latter
agreements shall apply.</p>
<p>(h) Upon the reasonable request of JPS, Exteriors shall on and after the
Closing Date execute and deliver to JPS such other documents, releases,
assignments and other instruments as may be required to effectuate completely
the transactions contemplated hereby, and to otherwise carry out the purposes of
this Agreement. Upon the reasonable request of Exteriors, JPS shall on the
Closing Date execute and deliver to Exteriors such other documents, releases,
assignments and other instruments as may be required to effectuate completely
the transactions.</p>
<p ALIGN="CENTER">[SIGNATURE PAGE FOLLOWS]</p>
<p ALIGN="CENTER">5</p>
<p>IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed and delivered as of the date and year first written
above.</p>
<table CELLSPACING="0" BORDER="0" CELLPADDING="7" WIDTH="667">
  <tr>
    <td WIDTH="48%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="52%" VALIGN="TOP">
      <p>TEXTRON AUTOMOTIVE EXTERIORS INC.</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="52%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="52%" VALIGN="TOP">
      <p style="margin-top: 0; margin-bottom: 0">By:____________________________________</p>
      <p style="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;&nbsp;&nbsp;Name:</p>
      <p style="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;&nbsp;&nbsp;Title:</p>
    </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="52%" VALIGN="TOP">
      <p>JPS AUTOMOTIVE, INC.</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="52%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="52%" VALIGN="TOP">
      <p style="margin-top: 0; margin-bottom: 0">By:____________________________________</p>
      <p style="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;&nbsp;&nbsp;Name:</p>
      <p style="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;&nbsp;&nbsp;Title:</p>
    </td>
  </tr>
</table>
<u>
<p>&nbsp;</p>
</u>
<p align="center">6</p>
<p align="left">&nbsp;</p>

</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>4
<FILENAME>tweone.htm
<DESCRIPTION>COMPENSATION OF RATIO
<TEXT>
<html>

<head>
<title>EXHIBIT 12</title>
</head>

<body>

<u>
<p ALIGN="RIGHT">EXHIBIT 12.1</p>
</u><b>
<p ALIGN="CENTER">TEXTRON MANUFACTURING<br>
</p>
<p ALIGN="CENTER">COMPUTATION OF RATIO OF INCOME TO<br>
COMBINED FIXED CHARGES AND PREFERRED SECURITIES DIVIDENDS<br>
</p>
<p ALIGN="CENTER">(unaudited)<br>
</p>
</b>
<p ALIGN="CENTER">(In millions except ratio)<br>
</p>
<table CELLSPACING="1" WIDTH="696">
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="19%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Nine Months<br>
      Ended<br>
      September 29,<br>
      2001</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>Fixed charges:</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Interest expense</td>
    <td WIDTH="3%" VALIGN="TOP">
      <p>$</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">135</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Distributions on
      preferred securities of manufacturing subsidiary trust</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">19</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;Estimated interest
      portion of rents</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">24</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid">
      <p><br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      fixed charges</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">
      <p><br>
      $</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right"><br>
      178</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>Income:</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Loss before income
      taxes and distributions on preferred<br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;securities
      of subsidiary trusts</td>
    <td WIDTH="3%" VALIGN="TOP">
      <p><br>
      $</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (3)</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Eliminate equity in
      undistributed pre&#45;tax income of Textron Finance</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">(98)</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;Fixed charges *</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">159</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid">
      <p><br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Adjusted
      income</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">
      <p><br>
      $</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right"><br>
      58</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p><br>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid">
      <p>Ratio of income to fixed charges</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right">.33</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
</table>
<p ALIGN="JUSTIFY">For the nine months ended September 29, 2001, earnings are
insufficient to cover fixed charges as evidenced by a less than
one&#45;to&#45;one coverage ratio as shown above. Additional earnings of
$120 million were necessary to provide a one&#45;to&#45;one coverage
ratio. If the special charges and restructuring&#45;related expenses,
including a write&#45;down of goodwill and intangibles related to its
OmniQuip business, of $415 million were excluded from this calculation, the
ratio would be 2.66.</p>
  <p>*&#160;&#160;&#160;&#160;&#160;Adjusted to exclude
  distributions on preferred securities of manufacturing subsidiary trust.</p>
<blockquote>
  <p>&nbsp;</p>
</blockquote>

</body>

</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>5
<FILENAME>twetwo.htm
<DESCRIPTION>COMPENSATION OF RATIO
<TEXT>
<html>

<head>
<title>EXHIBIT 12</title>
</head>

<body>

<u>
<p ALIGN="RIGHT">EXHIBIT 12.2</p>
</u>
<p>&nbsp;</p>
<b>
<p ALIGN="CENTER">TEXTRON INC.<br>
INCLUDING ALL MAJORITY&#45;OWNED SUBSIDIARIES<br>
<br>
COMPUTATION OF RATIO OF INCOME TO<br>
COMBINED FIXED CHARGES AND PREFERRED SECURITIES DIVIDENDS<br>
<br>
(unaudited)<br>
<br>
</b>(In millions except ratio)<br>
</p>
<table CELLSPACING="1" WIDTH="696">
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="18%" VALIGN="TOP" COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">
      <p ALIGN="CENTER">Nine Months<br>
      Ended<br>
      September 29,<br>
      2001</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>Fixed charges:</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Interest expense</td>
    <td WIDTH="3%" VALIGN="TOP">
      <p ALIGN="RIGHT">$</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">350</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Distributions on
      preferred securities of subsidiary trusts</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">19</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;Estimated interest
      portion of rents</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">25</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid">
      <p><br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Total
      fixed charges</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      $</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right"><br>
      394</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>Income:</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p>&#160;&#160;&#160;&#160;&#160;Loss before income
      taxes and distributions on preferred<br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;securities
      of subsidiary trusts</td>
    <td WIDTH="3%" VALIGN="TOP">
      <p ALIGN="RIGHT"><br>
      $</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
      (3)</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p>&#160;&#160;&#160;&#160;&#160;Fixed charges *</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="margin-right: 20" align="right">375</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid">
      <p><br>
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Adjusted
      income</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">
      <p ALIGN="RIGHT"><br>
      $</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right"><br>
      372</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">
      <p><br>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right"><br>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP" style="border-bottom-style: solid">
      <p>Ratio of income to fixed charges</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP" style="border-bottom-style: solid">
      <p style="margin-right: 20" align="right">.94</td>
    <td WIDTH="3%" VALIGN="TOP" style="border-bottom-style: solid">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="78%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
    <td WIDTH="16%" VALIGN="TOP">
      <p style="margin-right: 20" align="right">&nbsp;</p>
    </td>
    <td WIDTH="3%" VALIGN="TOP">&nbsp;</td>
  </tr>
</table>
<p ALIGN="JUSTIFY">For the nine months ended September 29, 2001, earnings are
insufficient to cover fixed charges as evidenced by a less than
one&#45;to&#45;one coverage ratio as shown above. Additional earnings of
$22 million were necessary to provide a one&#45;to&#45;one coverage
ratio. If the special charges and restructuring&#45;related expenses,
including a write&#45;down of goodwill and intangibles related to its
OmniQuip business, of $415 million were excluded from the calculation, the ratio
would be 2.00.</p>
  <p>*&#160;&#160;&#160;&#160;&#160;Adjusted to exclude
  distributions on preferred securities of subsidiary trusts.</p>

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