Exhibit 10.1
TRANCHE 1

PURCHASE AGREEMENT

PURCHASE AGREEMENT, dated as of August 16, 2005 (the “Agreement”), by and
between Rockwell Collins, Inc. (the “Issuer”), and UBS AG, London Branch (“UBS”)
acting through UBS Securities LLC (“Agent”) as agent.

W I T N E S S E T H

WHEREAS, the Issuer has publicly announced its intention to repurchase shares of
its common stock, par value $.01 per share (the “Common Stock”), from time to
time (the “Repurchase Program”); and

WHEREAS, the Issuer desires to enter into the Agreement with UBS in order to
effect a portion of the Repurchase Program;

NOW, THEREFORE, in consideration of the premises, the covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

Section 1. Definitions.

As used herein the following terms shall have the meanings set forth below:

“Announcement Date” means in respect of a Merger Event, the date of the first
public announcement of a firm intention to merge or to make an offer that leads
to the Merger Event, as reasonably determined in good faith by the Calculation
Agent.

“Bankruptcy” means the Issuer is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability generally to pay its
debts as they become due; (3) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors’ rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A) results in a
judgment of insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of the institution
or presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a consolidation,
amalgamation or merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all its assets
or has a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 days thereafter;
(8) causes or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to any of the
events specified in clauses (1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the foregoing acts.

“Bloomberg Screen Volume at Price Page” shall mean the display designated as
page Volume at Price on the Bloomberg Financial Service, or such page as may
replace the Volume at Price page on that service for the purpose of displaying
daily volume and weighted trading prices of equity securities or, if such
service does not then publish daily volume and weighted trading prices of the
Common Stock, such other page and services reasonably selected in good faith by
the Calculation Agent that reports daily volume and weighted trading prices of
the Common Stock.

“Borrowed Shares” means, as of any date, the number of Shares borrowed by UBS in
connection with this Transaction, as reasonably determined in good faith by the
Calculation Agent.

“Calculation Agent” shall mean UBS Securities LLC.

“Calculation Date” has the meaning ascribed to it in Section 3(a).

“Closing Price” of the Common Stock on any day shall mean the last reported
sales price regular way on such day or, in case no such sales price is reported
on such day, the average of the reported closing bid and asked prices regular
way of the Common Stock, in each case on the New York Stock Exchange, or if not
then traded on the New York Stock Exchange the principal securities exchange or
quotation system on which the Common Stock is then listed or admitted to
trading, or if not then listed or admitted to trading on a securities exchange
or quotation system, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market on the day in question as reported
by the National Quotations Bureau Incorporated, or a similarly generally
accepted reporting service, or, if not so available in such manner, as furnished
by any New York Stock Exchange member firm reasonably selected in good faith by
the Calculation Agent.

“Combined Consideration” means New Shares in combination with Other
Consideration.

“Commission” means the amount per Share specified on Schedule 1 hereto.

“Cross Default” means the occurrence or existence of (1) a default, event of
default or other similar condition or event (however described) in respect of
the Issuer under one or more agreements or instruments in respect of
indebtedness for borrowed money in an aggregate amount of not less than
$50 million which has resulted in such agreement or instrument becoming due and
payable before it would otherwise have been due and payable or (2) a default by
the Issuer in making one or more payments on the due date thereof in an
aggregate amount of not less than $50 million under such agreements or
instruments (after giving effect to any applicable notice requirement or grace
period).

“Determined Amount” has the meaning ascribed to it in Section 3(d).

“Discount” means the amount set forth on Schedule 1 hereto.

“Dividend Amount” shall mean, as of each of the dates set out below (each a
“Dividend Adjustment Date”), the amount set forth opposite such Dividend
Adjustment Date:

      Dividend Adjustment Date   Dividend Amount
The date immediately preceding the ex-dividend date
for the Issuer’s regularly scheduled fourth calendar
quarter 2005 dividend, currently anticipated to be
November 14, 2005
 

$0.12

“Dividend Event” means the payment of an ordinary or extraordinary dividend or
distribution by the Issuer in any of the time periods specified above with a
value, as reasonably determined by the Calculation Agent in good faith, that
exceeds the amount specified above for such period by more than $0.01.

“Excess Shares” means the number of Shares (if any) equal to (a)(i) the
Settlement Amount divided by (ii) the Reference Price minus (b) the Determined
Amount.

“Execution Period” shall mean the period commencing on the First Averaging Date
and ending on the earlier of (i) the Last Averaging Date or (ii) the Termination
Event Termination Date.

“Failure to Pay or Deliver” means failure by the Issuer to make, when due, any
payment under this Agreement or any delivery of Shares under this Agreement
required to be made by it if such failure is not remedied on or before the third
Trading Day after notice of such failure is given to the Issuer by UBS.

“Final Price” means (i) the arithmetic average of daily volume-weighted average
prices of Shares on each Trading Day from the First Averaging Date up to and
including the Last Averaging Date, as listed on Bloomberg Screen Volume at Price
Page, minus (ii) the Discount.

“First Averaging Date” means the date specified as such on Schedule 1 hereto.

“First Possible Last Averaging Date” means the date specified as such on
Schedule 1 hereto.

“Hedge Account Shares” means, as of any date, the Number of Shares minus the
Borrowed Shares.

“Last Averaging Date” means a trading day between and including the First
Possible Last Averaging Date and the Last Possible Last Averaging Date, as
determined by UBS. Notice of the Last Averaging Date shall be given by UBS not
later than 8:00 p.m. New York time on the Last Averaging Date. Notice shall be
irrevocable once provided to Issuer. If no notice is provided, then the Last
Averaging Date shall be the Last Possible Last Averaging Date.

“Last Possible Last Averaging Date” means the date specified as such on Schedule
1 hereto.

“Merger Event” means, in respect of any relevant Shares, any
(i) reclassification or change of such Shares that results in a transfer of or
an irrevocable commitment to transfer all of such Shares outstanding,
(ii) consolidation, amalgamation or merger of the Issuer with or into another
entity (other than a consolidation, amalgamation or merger in which such Issuer
is the continuing entity and which does not result in any such reclassification
or change of all of such Shares outstanding) or (iii) other takeover offer for
such Shares that results in a transfer or an irrevocable commitment to transfer
all such Shares (other than such Shares owned or controlled by the offeror), in
each case if the Merger Event is on or before the Last Averaging Date.

“Net Share Settlement” shall mean settlement by the Issuer of its obligations
hereunder in accordance with Section 3(c).

“New Shares” means shares (whether of the offeror or a third party).

“Notice Date” has the meaning ascribed to it in Section 8.

“Number of Shares” has the meaning ascribed to it in Section 2.

“Other Consideration” means cash and/or any securities (other than New Shares)
or assets (whether of the offeror or a third party).

“Payment Date” has the meaning ascribed to it in Section 3(b).

“Principal Account” means the notional principal account referred to in Section
3(a).

“Proceeding” has the meaning ascribed to it in Section 7.

“Purchase Price” has the meaning ascribed to it in Section 2(a).

“Purchasing Date” means any Trading Day during the Execution Period.

“Reference Price” means the Closing Price of the Common Stock on the last
Trading Day of the Execution Period.

“Registered Shares” has the meaning ascribed to it in Section 3(c).

“SEC” has the meaning ascribed to it in Section 3(c).

“Settlement Amount” shall mean (i) in the case of the Issuer, the amount of any
negative balance in the Principal Account as of the Calculation Date, and
(ii) in the case of UBS, the amount of any positive balance in the Principal
Account as of the Calculation Date, in each case as reasonably determined in
good faith by the Calculation Agent.

“Share-for-Combined” means, in respect of a Merger Event, that the consideration
for the relevant Shares consists of Combined Consideration.

“Share-for-Other” means, in respect of a Merger Event, that the consideration
for the relevant Shares consists solely of Other Consideration.

“Share-for-Share” means, in respect of a Merger Event, that the consideration
for the relevant Shares consists (or, at the option of the holder of such
Shares, may consist) solely of New Shares.

“Shelf Registration” means a registration statement in form and substance
reasonably acceptable to UBS for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act, registering UBS’s resale, in any
manner or manners designated by UBS, of all the Settlement Shares, any
Make-Whole Shares, and any other Shares held by UBS in connection with this
transaction which, in the opinion of counsel to UBS, are required to be included
in the Shelf Registration to be resold by UBS to the public.

“Short Squeeze” shall mean a situation where (i) UBS has determined in good
faith, in its reasonable judgment, that it is unable to hedge its exposure to
the transaction contemplated hereby because of the lack of sufficient shares of
Common Stock being made available for borrowing from lenders, including without
limitation UBS’ being required to redeliver shares of Common Stock to any lender
at the demand of such lender and not being able to meet such obligation in full
in a timely manner by reasonable efforts to borrow shares of Common Stock from
another lender or lenders, or (ii) UBS would incur a cost to borrow shares of
Common Stock to hedge its exposure to the transaction contemplated hereby that
is greater than a rate equal to thirty (30) basis points per annum.

“Stock Settlement Amount” shall mean (i) in the case that the Issuer is required
to pay the Settlement Amount to UBS and has elected to pay the Settlement Amount
by delivery of shares of Common Stock to UBS pursuant to Section 3(c), an
amount, reasonably determined in good faith by the Calculation Agent, equal to
the Settlement Amount to be paid by the Issuer pursuant to Section 3(b), divided
by the Reference Price, and (ii) in the case that UBS is required to pay the
Settlement Amount to the Issuer and the Issuer has elected to require UBS to
satisfy the obligation by delivery of shares of Common Stock to the Issuer
pursuant to Section 3(h), an amount, reasonably determined in good faith by the
Calculation Agent, equal to the Settlement Amount to be paid by UBS pursuant to
Section 3(b), divided by the weighted average price per share actually paid by
UBS to purchase such Stock Settlement Shares.

“Stock Settlement Shares” shall mean such whole number of shares equal to the
Stock Settlement Amount.

“Termination Event” shall mean the occurrence of a (i) Bankruptcy, (ii) Cross
Default, (iii) Failure to Pay or Deliver (iv) Short Squeeze or (v) Dividend
Event.

“Termination Event Termination Date” has the meaning ascribed to it in
Section 8.

“Trading Day” shall mean any day on which the Common Stock is traded on the New
York Stock Exchange or, if not then traded on the New York Stock Exchange, the
principal securities exchange or quotation system on which such securities are
then traded or, if not then traded on a securities exchange or quotation system,
in the over-the-counter market.

Section 2. Purchase and Sale.

Subject to the terms and conditions set forth herein, UBS agrees to sell to the
Issuer, and the Issuer agrees to purchase from UBS, 2,000,000 shares (the
“Number of Shares”) of Common Stock (the “Shares”) at a purchase price per Share
(the “Purchase Price”) equal to the Closing Price of the Common Stock on
August 16, 2005 or on such other date and at such other time as the parties may
mutually agree (the “Execution Date”). At 4:00 p.m. on the third Trading Day
after the Execution Date, UBS shall deliver or cause to be delivered the Shares
through the facilities of The Depository Trust Company to the Issuer (the
“Settlement Date”), against payment by the Issuer of the Purchase Price by wire
transfer of immediately available funds. The parties understand and agree that
the delivery of the Shares by or on behalf of UBS upon the payment of the
Purchase Price by the Issuer is irrevocable and that as of the Settlement Date
the Issuer will be the sole beneficial owner of the Shares for all purposes.

As compensation to UBS for its commitment and services hereunder, the Issuer on
the Settlement Date will pay to UBS by wire transfer of immediately available
funds an amount per share equal to the Commission for the Shares to be delivered
by UBS hereunder on the Settlement Date. The commission payable to UBS shall not
be subject to refund.

Section 3. Settlement.

(a) On the Settlement Date, the Calculation Agent shall establish a notional
Principal Account in an amount equal to the product of (x) the Number of Shares
and (y) the Purchase Price. The Calculation Agent shall adjust the Principal
Account as follows:

(i) The Principal Account shall be reduced on each Dividend Adjustment Date in
an amount equal to the product of (x) the number of Borrowed Shares and (y) the
Dividend Amount corresponding to such Dividend Adjustment Date; and

(ii) The Principal Account shall be reduced on the third day following the Last
Averaging Date in an amount equal to the product of (x) the Number of Shares and
(y) the Final Price.

On the first Trading Day immediately following the last day of the Execution
Period (“Calculation Date”), the Calculation Agent will calculate the Settlement
Amount and, if applicable, the Stock Settlement Amount, notify (the “Settlement
Amount Notification”) the Issuer of the Settlement Amount and, if applicable,
the Stock Settlement Amount and provide a schedule of its calculations thereof.
The Calculation Agent shall respond promptly to all questions raised by the
Issuer relating to such calculations. If the Issuer objects to the calculation
of the Settlement Amount or the Stock Settlement Amount or any other
determination or calculation by the Calculation Agent hereunder, the Issuer
shall promptly notify the Calculation Agent, and the Issuer and UBS agree to use
their good faith best efforts to reach an agreement as to the Settlement Amount
or the Stock Settlement Amount or such other determination or calculation. In
the further event that the Issuer and UBS are not able to reach an agreement,
the Issuer and UBS shall appoint a third party with sufficient expertise to
determine the calculation of the Settlement Amount or the Stock Settlement
Amount or such other determination or calculation, and such determinations or
calculations shall be binding on both parties.

(b) On the third Trading Day immediately following the Calculation Date (the
“Payment Date”), if the Settlement Amount is positive, UBS shall pay the
Settlement Amount to the Issuer and, if the Settlement Amount is negative, the
Issuer shall pay the absolute value of such Settlement Amount to UBS; provided,
however, that to the extent that a Last Averaging Date has not been declared by
UBS pursuant to the terms of the other agreement between the parties hereto, in
substantially the form hereof, relating to the purchase of Shares by the Issuer
and dated the date hereof, on or prior to such Payment Date, the Issuer may
elect to delay the payment of such Settlement Amount to UBS until the date that
is the Payment Date with respect to such second agreement. Except as provided in
paragraphs (c), (d) and (h) of this Section, all payments to be made under this
Section 3 shall be made on the Payment Date by wire transfer of immediately
available funds.

(c) If the Issuer is required to pay the Settlement Amount to UBS pursuant to
paragraph (b) of this Section, the Issuer may, at its option, satisfy the
obligation by the delivery to UBS of a number of whole shares of Common Stock
(and a payment of cash in lieu of fractional shares, if any) equal to the Stock
Settlement Amount. In order to exercise this option, the following conditions
must be satisfied (each, a “Condition on Net Share Settlement”) (i) the Issuer
must notify UBS of its election to have any Settlement Amount payable in shares
of Common Stock no later than 30 days prior to the First Possible Last Averaging
Date (the “Stock Election Notice”), (ii) the Issuer must enter into a
registration rights agreement with UBS in form and substance reasonably
acceptable to UBS (the “Registration Rights Agreement”) not later than the
10 days prior to the First Possible Last Averaging Date , which agreement will
contain, among other things, customary representations and warranties and
indemnification and other rights, including rights to customary opinions of
counsel and accountant’s “comfort letters,” relating to the registration of the
Stock Settlement Shares, the Make-whole Shares and any additional shares of
Common Stock as to which UBS is named as a selling securityholder in the Shelf
Registration (the “Registered Shares”); (iii) the Shelf Registration shall have
been declared effective by the Securities and Exchange Commission (the “SEC”)
not less than five Trading Days prior to the First Possible Last Averaging Date;
and (iv) the Issuer shall use its reasonable best efforts to maintain the
effectiveness of the Shelf Registration until all Registered Shares have been
sold by UBS. Subject to paragraph 3(g) below, if any of the conditions in the
preceding sentence are not met, the provisions of this paragraph (c) shall be
inoperative and the Issuer shall be obligated to pay any applicable Settlement
Amount by wire transfer of immediately available funds. If the Issuer complies
with all of its obligations under this paragraph (c), then at 9:30 a.m. on the
Payment Date, the Issuer shall deliver to UBS (i) a certificate or certificates
representing the fully paid and nonassessable Stock Settlement Shares, in such
denominations and in such names as UBS may specify and (ii) the cash payment, if
any, in lieu of fractional shares by wire transfer of immediately available
funds. The parties understand and agree that the deliveries made pursuant to the
preceding sentence shall be irrevocable and shall satisfy in full the Issuer’s
obligations under this Section 3.

If the Issuer delivers Stock Settlement Shares to UBS pursuant to this paragraph
(c) and within ten Trading Days after the Payment Date, UBS resells all or any
portion of the Stock Settlement Shares and the net proceeds received by UBS upon
resale of such  shares exceeds the Settlement Amount (or if less than all of the
Stock Settlement Shares are resold, the applicable pro rata portion of the
Settlement Amount), UBS shall promptly refund in cash such difference to the
Issuer; provided that UBS may, at its option, satisfy its obligation under this
sentence by returning to the Issuer any portion of the Stock Settlement Shares
that would, if sold, have resulted in net proceeds in excess of the Settlement
Amount. In the event that such net proceeds are less than the Settlement Amount
(or if less than all of the Stock Settlement Shares are resold, the applicable
pro rata portion of the Settlement Amount), the Issuer shall pay in cash or
additional shares of Common Stock (the “Make-Whole Shares”) such difference (the
“Make-Whole Amount”) to UBS promptly after receipt of notice thereof. In the
event that Issuer elects to pay the Make-whole Amount in additional shares of
Common Stock, the requirements set forth in this paragraph (c) with respect to
payment of the Settlement Amount in Shares, including make-whole requirements,
shall apply, such that UBS shall pay to the Issuer any such excess and the
Issuer shall pay to UBS in cash or Make-Whole Shares any additional Make-Whole
Amount. In calculating the net proceeds from the resale of any Stock Settlement
Shares there shall be deducted from such proceeds any amount equal to the
customary underwriting discount or commission for underwritten offerings of
common stock by companies comparable to the Issuer multiplied by the total
number of Shares sold for the account of UBS pursuant to a Shelf Registration.

(d) Notwithstanding any other provision in this Agreement, if Issuer exercises
its right pursuant to Section 3(c) above, Issuer shall not be obliged to
deliver, in connection with this Agreement, in excess of 15,000,000 Shares of
Common Stock, as recalculated from time to time (the “Determined Amount”). In
the event that, but for this Section 3, Issuer would be obliged to deliver a
number of Shares of Common Stock equal to the Determined Amount plus the Excess
Shares, Issuer agrees to (x) satisfy its remaining obligation by cash payment;
or (y) (i) use its reasonable best efforts to increase its number of authorized
shares, thereby increasing the Determined Amount, to the extent necessary so
that, but for this Section 3, the number of Shares of Common Stock Issuer would
be obliged to deliver does not exceed the (recalculated) Determined Amount and
(ii) allocate such newly authorized shares of Common Stock in satisfaction of
Issuer’s delivery obligations under this Agreement in priority to any other use
of such Common Stock. For the avoidance of doubt, the obligation of Issuer to so
use its reasonable best efforts is an ongoing obligation.

(e) Issuer hereby represents and warrants that it will:

(i) calculate the Determined Amount based on the maximum amount able to be
calculated in accordance with EITF 00-19 or any successor financial statement
guidance; and

(ii) in respect of all equity derivative transactions in respect of which
Issuer’s equity securities constitute (all or part of) the instruments
underlying such transactions (the “Derivative Trades”), use the same methodology
to derive the Determined Amount (howsoever described) applicable to each
Derivative Trade as is used to derive the Determined Amount for this Agreement.

(f) UBS agrees that, in respect of any obligations Issuer has duly elected be
satisfied pursuant to Section 3(c) above, in the event of Issuer’s bankruptcy,
UBS shall not have rights in bankruptcy that rank senior to the rights in
bankruptcy of common shareholders of Issuer.

(g) If the Issuer has used its best efforts to satisfy the Conditions on Net
Share Settlement but has been unable to because the Shelf Registration is not
declared effective by the SEC within the time set out in paragraph 3(c) (or,
where UBS has previously agreed to extend such period based on a request by the
Issuer pursuant to paragraph 3(g)(ii), within such period as extended pursuant
to paragraph 3(g)(ii)), then the Issuer may elect to:

  (i)   deliver the relevant number of Shares to UBS in which case:  

(A) the day on which the Issuer makes such an election to receive such Shares
from Issuer is the “Issuer Election Date”, and

(B) Issuer shall withdraw any Registration Statement filed with the SEC in
connection with the Shares, and

(C) Issuer will enter into a private placement purchase agreement with UBS in
form and substance acceptable to UBS no later than the next Trading Day
following the Issuer Election Date, and

(D) Issuer shall deliver to UBS such Shares on the Settlement Date which, for
the purposes of this paragraph 3(g)(i)(D), shall be the third Trading Day
following the Issuer Election Date, and

(E) in addition to any Make-whole Amount payable by Issuer pursuant to paragraph
3(c), Issuer shall deliver to UBS such additional Shares until UBS has realized
actual net proceeds upon resale of such Shares equal to the Settlement Amount.
At its election, UBS may by a written notice to Issuer retain a number of Shares
delivered by Issuer pursuant to this paragraph 3(g)(i). If UBS so elects, UBS
shall be deemed to have sold each such retained Share for an amount equal to the
price per Share obtained by UBS in the last Share sold by UBS prior to sending
written notice of its intention to retain Shares to Issuer. In no event will UBS
be obligated to exercise its right to retain Shares; or

(ii) request UBS to extend the period within which the Registration Statement is
to be declared effective by the SEC for a further period specified in writing by
UBS at the time of such extension.

(h) If UBS is required to pay the Settlement Amount to the Issuer pursuant to
paragraph (b) of this Section, the Issuer may, at its option, elect that UBS
satisfy the obligation by the delivery to the Issuer of a number of whole shares
of Common Stock (and a payment of cash in lieu of fractional shares, if any)
equal to the Stock Settlement Amount. In order to exercise this option, the
Issuer must notify UBS of its election to have any Settlement Amount payable in
shares of Common Stock no later than 15 days prior to the Payment Date (the
“Stock Election Notice”). If the condition in the preceding sentence is not met,
the provisions of this paragraph (h) shall be inoperative and UBS shall be
obligated to pay any applicable Settlement Amount by wire transfer of
immediately available funds. If the Issuer complies with all of its obligations
under this paragraph (h), then at 9:30 a.m. on the Payment Date, UBS shall
deliver to the Issuer (i) a certificate or certificates representing the fully
paid and nonassessable Stock Settlement Shares, and (ii) the cash payment, if
any, in lieu of fractional shares by wire transfer of immediately available
funds. The parties understand and agree that the deliveries made pursuant to the
preceding sentence shall be irrevocable and shall satisfy in full UBS’
obligations under this Section 3.

Section 4. Anti-dilution Adjustments.

(a) Subdivisions and Combinations of Common Stock. In the event that the
outstanding shares of the Common Stock shall be subdivided or split into a
greater number of shares of Common Stock where the effective date of such
subdivision or the record date for such split occurs during the Execution
Period, the number of shares of Common Stock referred to herein shall be deemed
to be proportionately increased and the Final Price and Discount shall be deemed
to be proportionately decreased; conversely, in case outstanding shares of
Common Stock shall each be combined into a smaller number of shares of Common
Stock through a combination of shares of Common Stock or a reverse stock split
where the effective date of such combination or the record date for such reverse
stock split occurs during the Execution Period, the number of shares of Common
Stock referred to herein shall be deemed to be proportionately decreased and the
Final Price and Discount shall be deemed to be proportionately increased. Any
adjustment pursuant to this paragraph (a) shall become effective (i) in the case
of a subdivision or combination of the Common Stock, at the close of business on
the effective date for such subdivision or combination or (ii) in the case of a
stock split or reverse stock split, at the close of business on the record date
for such stock split or reverse stock split.

(b) Merger Events. In respect of each Merger Event, UBS and the Issuer or the
person formed by such consolidation or resulting from such merger or which
acquired such assets or which acquires the Issuer’s Common Stock, as the case
may be, shall negotiate in good faith to amend this Agreement to give
appropriate effect to such transaction.

If payment is required of the Issuer in connection with a Merger Event, the
Issuer shall have the right, in its sole discretion, to elect (the
“Extraordinary Transaction Election”) to satisfy any such payment obligation by
Net Share Settlement of this Transaction; provided that, in connection with a
“Share-for-Combined” Merger Event or “Share-for-Other” Merger Event, the
Extraordinary Transaction Election is available to satisfy only the percentage
of such payment obligation equal to the percentage of the non-cash consideration
over the total Combined Consideration (in the case of a “Share-for-Combined”
Merger Event) or total Other Consideration (in the case of a “Share-for-Other”
Merger Event). The remaining percentage of such payment obligation must be
satisfied in cash. The Issuer shall make any election to settle the Transaction
by way of Net Share Settlement within two Trading Days of the Announcement Date
but in any event not less than twenty Trading Days prior to the effective date
of such merger.

(c) Tender Offers. In the event an offer is made to the holders of Common Stock
to tender shares of Common Stock for cash, UBS and the Issuer shall negotiate in
good faith to amend this Agreement to give appropriate effect to such event.

(d) Adjustments. In the event that the Issuer objects to any adjustments made
pursuant to this Section 4, the Issuer shall promptly so notify UBS, and the
Issuer and UBS agree to use their good faith best efforts to reach an agreement
as to the adjustment. In the further event that the Issuer and UBS are not able
to reach an agreement in respect of any such adjustment, or any of the events
contemplated by this Section 4, the Issuer and UBS shall appoint a third party
with sufficient expertise to determine the adjustment and such adjustment shall
be binding on both parties.

Section 5. Acknowledgement.

The Issuer acknowledges and agrees that it is not relying, and has not relied,
upon UBS or Agent with respect to the legal, accounting, tax or other
implications of this Agreement and that it has conducted its own analysis of the
legal, accounting, tax and other implications of this Agreement. The Issuer
further acknowledges and agrees that neither UBS nor Agent has acted as its
advisor in any capacity in connection with this Agreement or the transactions
contemplated by this Agreement. The Issuer acknowledges that neither UBS nor
Agent is acting as the agent for the Issuer in effecting any purchase of Common
Stock pursuant to this Agreement. The Issuer understands and acknowledges that
UBS and its affiliates, subject to compliance with applicable law, may from time
to time effect transactions, for their own account or the account of customers,
and hold positions, in securities or options on securities of the Issuer and
that UBS and its affiliates may continue to conduct such transactions during the
Execution Period.

Section 6. Representations and Warranties.

(a) The Issuer hereby represents and warrants to UBS that:

(i) it has all power and authority to enter into this Agreement and the
Registration Rights Agreement and the transactions contemplated hereby and
thereby;

(ii) this Agreement has been duly authorized, validly executed and delivered by
the Issuer and constitutes a valid and legally binding obligation of the Issuer
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles;

(iii) the Registration Rights Agreement, when and if executed and delivered
pursuant to Section 3(c) hereof, shall have been duly authorized, validly
executed and delivered by the Issuer and shall constitute a valid and legally
binding obligation of the Issuer enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights and to general equity principles;

(iv) if Stock Settlement Shares are delivered pursuant to Section 3(c) or
Section 3(g), as the case may be, the Stock Settlement Shares, when delivered to
UBS,will have been duly authorized and will be duly and validly issued, fully
paid and nonassessable and free of preemptive and other rights;

(v) the Issuer is not entering into this Agreement to facilitate a distribution
of the Common Stock (or any security convertible into or exchangeable for Common
Stock) or in connection with a future issuance of securities;

(vi) the Issuer is not entering into this Agreement to raise or depress the
price of the Common Stock (or any security convertible into or exchangeable for
Common Stock);

(vii) the repurchase of the Shares by the Issuer, the compliance by the Issuer
with all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach
(each, a “Breach”) of any of the terms or provisions of, or constitute a default
(each a “Default”) under, any indenture, mortgage, deed of trust, loan agreement
or any other agreement or instrument (collectively, “Contracts”) to which the
Issuer or any of its subsidiaries is a party or by which the Issuer or any of
its subsidiaries is bound or to which any of the property or assets of the
Issuer or any of its subsidiaries is subject (except such Breach or Default as
would not reasonably be expected to materially adversely affect the ability of
the Issuer to perform its obligations under this Agreement), nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Issuer, nor will such action result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Issuer or any of its
properties; and

(viii) no consent, approval, authorization, order, registration or qualification
of or with any court or governmental agency or body having jurisdiction over the
Issuer or any of its properties is required for the repurchase of the Shares by
the Issuer, the compliance by the Issuer with all the terms of this Agreement,
or the consummation by the Issuer of the transactions contemplated by this
Agreement, other than the registration of the Stock Settlement Shares and any
Make-whole Shares under the Securities Act in accordance with the provisions of
Section 3(c), and such authorizations, orders, registrations and qualifications
as may be required under state securities or blue sky laws in connection with
the resale by UBS of the Registered Shares.

(b) UBS hereby represents and warrants to the Issuer:

(i) it has all power and authority to enter into this Agreement and the
Registration Rights Agreement and the transactions contemplated hereby and
thereby;

(ii) this Agreement has been duly authorized, validly executed and delivered by
UBS and constitutes a valid and legally binding obligation of UBS enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles; and

(iii) the Registration Rights Agreement, when and if executed and delivered
pursuant to Section 3(c) hereof, shall have been duly authorized, validly
executed and delivered by UBS and shall constitute a valid and legally binding
obligation of UBS enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.

(iv) UBS is not entering into this Agreement to facilitate a distribution of the
Common Stock (or any security convertible into or exchangeable for Common Stock)
or in connection with a future issuance of securities;

(v) UBS is not entering into this Agreement to raise or depress the price of the
Common Stock (or any security convertible into or exchangeable for Common
Stock);

(vi) the compliance by UBS with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a Breach of any of the terms or provisions of, or constitute a Default
under, any Contract to which UBS or any of its subsidiaries is a party or by
which UBS or any of its subsidiaries is bound or to which any of the property or
assets of UBS or any of its subsidiaries is subject (except such Breach or
Default as would not reasonably be expected to materially adversely affect the
ability of UBS to perform its obligations under this Agreement), nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws or similar organizational documents of UBS, nor will
such action result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
UBS or any of its properties; and

(vii) no consent, approval, authorization, order, registration or qualification
of or with any court or governmental agency or body having jurisdiction over UBS
or any of its properties is required for the compliance by UBS with all the
terms of this Agreement, or the consummation by UBS of the transactions
contemplated by this Agreement.

Section 7. Indemnification.

In the event that UBS becomes involved in any capacity in any action, proceeding
or investigation (“Proceeding”) brought by or against any person in connection
with any matter referred to in this Agreement, the Issuer periodically will
reimburse UBS for its reasonable out-of-pocket legal and other expenses
(including the reasonable cost of any investigation and preparation) incurred in
connection therewith; provided that such expenses will be promptly refunded to
the Issuer to the extent incurred in connection with a matter as to which UBS is
not entitled to indemnification under this Section 7. The Issuer also will
indemnify and hold UBS harmless against any losses, claims, damages or
liabilities to which UBS may become subject in connection with any matter
referred to in this Agreement, except to the extent that any such loss, claim,
damage or liability results from the gross negligence, bad faith or willful
misconduct of UBS. If for any reason the foregoing indemnification is
unavailable to UBS or insufficient to hold it harmless, then the Issuer shall
contribute to the amount paid or payable by UBS as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the Issuer, on the one hand, and UBS, on the other
hand, in the matters contemplated by this Agreement but also the relative fault
of the Issuer and UBS with respect to such loss, claim, damage or liability and
any other relevant equitable considerations. The relative benefits to the
Issuer, on the one hand, and UBS, on the other hand, shall be in the same
proportion as the Aggregate Purchase Price bears to the commissions received by
UBS pursuant to the last paragraph of Section 2. The reimbursement, indemnity
and contribution obligations of the Issuer under this Section 7 shall be in
addition to any liability which the Issuer may otherwise have, shall extend upon
the same terms and conditions to any affiliate of UBS and the partners,
directors, officers, agents, employees and controlling persons (if any), as the
case may be, of UBS and any such affiliate and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Issuer, UBS, any such affiliate and any such person. The Issuer also agrees
that UBS nor any of such affiliates, partners, directors, officers, agents,
employees or controlling persons shall have any liability to the Issuer for or,
in connection with any matter referred to in this Agreement except to the extent
that any losses, claims, damages, liabilities or expenses incurred by the Issuer
result from the gross negligence, bad faith or willful misconduct of UBS in
effecting the transactions that are the subject of this Agreement. The foregoing
provisions shall survive any termination or completion of this Agreement. UBS
promptly will notify the Issuer upon receipt of actual notice of a Proceeding
with respect to which indemnity or reimbursement of expenses is sought
hereunder. The Issuer may, at its option, assume the defense of any such
Proceeding, including the employment of counsel reasonably satisfactory to UBS.
UBS shall have the right to employ separate counsel in any such Proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of UBS, unless (i) the Issuer shall have failed in a
timely manner to assume the defense thereof and employ counsel as provided above
or (ii) the named parties to any such Proceeding include UBS and the Issuer and
UBS shall have been advised in writing by counsel that there may be one or more
legal defenses available to it that are different from or in addition to those
available to the Issuer, provided that the Issuer shall not in any event be
responsible hereunder for the fees and expenses of more than one firm of
separate counsel in connection with any Proceeding. UBS will not settle any
Proceeding in respect of which indemnity or reimbursement of expenses may be
sought hereunder, whether or not the Issuer is an actual or potential party to
such Proceeding, without the Issuer’s prior written consent.

Section 8. Termination Event.

Upon the occurrence of a Termination Event and so long as such Termination Event
shall be continuing, UBS may, in its discretion, by notice to the Issuer (the
date of such notice and the notice referred to in the succeeding clause being
referred to herein as the “Notice Date”), direct that the Execution Period shall
forthwith terminate on the date specified in such notice (the “Termination Event
Termination Date”). In such an event, (i) the Execution Period shall terminate
on the Termination Event Termination Date, (ii) the Principal Account shall be
reduced on such date by an amount equal to the sum of (A) the product of (x) the
number of Hedge Account Shares and (y) the arithmetic average of daily
volume-weighted average prices of Shares in each Trading Day from the First
Averaging Date up to and excluding the Notice Date, as listed on Bloomberg
Screen Volume at Price Page and (B) the total purchase price paid by UBS for the
Shares of Common Stock that are purchased by UBS during the period commencing on
and including the Notice Date to and including the Termination Event Termination
Date in order to cover the remaining number of Borrowed Shares, (iii) the
Principal Account shall be increased to reflect an appropriate accrual of
interest at the Federal Funds Open Rate, as reasonably determined in good faith
by the Calculation Agent, to reflect interest earned by UBS in respect of the
aggregate Purchase Price received from the Issuer, (iv) the Principal Account
shall be decreased to reflect UBS’s actual cost of borrowing shares, as
reasonably determined in good faith by the Calculation Agent, of Common Stock to
hedge its obligations hereunder and (v) the Settlement Amount shall be further
adjusted by the amount that UBS reasonably determines in good faith to be its
total losses and costs in connection with the early termination of this
Agreement, including any loss of bargain, cost of funding, or loss or cost
incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position. In the event that the
Issuer objects to any adjustments made pursuant to this Section 8, the Issuer
shall promptly so notify UBS, and the Issuer and UBS agree to use their good
faith best efforts to reach an agreement as to the adjustment. In the further
event that the Issuer and UBS are not able to reach an agreement in respect of
any such adjustment, the Issuer and UBS shall appoint a third party with
sufficient expertise to determine the adjustment and such adjustment shall be
binding on both parties.

Section 9. Miscellaneous.

(a) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

(b) Assignment. Neither the rights under this Agreement nor the obligations
created by this Agreement shall be assignable or delegable, in whole or in part,
by either party hereto without the prior written consent of the other (which
consent shall not be unreasonably withheld), and any attempt to assign or
delegate any rights or obligations arising under this Agreement without such
consent shall be void.

(c) Waivers, etc. No failure or delay on the part of either party in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No
amendment, modification or waiver of any provision of this Agreement nor consent
to any departure by either party therefrom shall in any event be effective
unless the same shall be in writing and, in the case of a waiver or consent,
shall be effective only in the specific instance and for the purpose for which
given.

(d) Beneficiaries. This Agreement shall be binding upon, and inure solely to the
benefit of, the Issuer, UBS and, to the extent provided in Section 7 hereof, the
affiliates, partners, directors, officers, agents, employees and controlling
persons, if any, of UBS, and their respective successors, assigns, heirs and
personal representatives, and no other person shall acquire any rights
hereunder.

(e) Rights of Set-Off. In addition to any rights of set-off a party may have as
a matter of law or otherwise, upon occurrence of a failure to perform at
maturity with respect to either party (the “defaulting party”), the other party
(the “non-defaulting party”) shall have the right, without prior notice to the
defaulting party or any other person, to set off any obligation of the
defaulting party owing to the nondefaulting party in respect of this Agreement
against any obligations of the nondefaulting party owing to the defaulting party
in respect of the other agreement between the parties hereto, in substantially
the form hereof, relating to the purchase of Shares by the Issuer and dated the
date hereof. Nothing in this Section 9(e) will have the effect of creating a
charge or other security interest.

(f) Changes of Law. If, due to any change in applicable law or regulations or
the interpretation thereof by any court of law or other body having jurisdiction
subsequent to the date of this Agreement, performance of any provision of this
Agreement or any transaction contemplated thereby shall become impracticable or
impossible, the parties hereto shall use their reasonable best efforts to find
and employ an alternative means to achieve the same or substantially the same
result as contemplated by such provision.

(g) Confidentiality. Subject to any contrary requirement of law and to the right
of each party to enforce its rights hereunder in any legal action, each party
shall keep strictly confidential and shall cause its employees and agents to
keep strictly confidential the terms of this Agreement and any information of or
concerning the other party which it or any of its agents or employees may
acquire pursuant to, or in the course of performing its obligations under, any
provision of this Agreement. In the event disclosure is permitted pursuant to
the preceding sentence, the disclosing party shall (i) provide prior notice of
such disclosure to the other party, (ii) use its best efforts to minimize the
extent of such disclosure and (iii) comply with all reasonable requests of the
other party to minimize the extent of such disclosure. This Section 9(g) shall
not prevent either party from disclosing information as necessary to third-party
advisors in connection with the transactions contemplated hereby provided that
such advisors agree to be bound by this Section 9(g) as if a party hereto. UBS
hereby consents to the issuance of a press release by the Issuer announcing its
entry into this Agreement and the filing with the SEC of a copy of this
Agreement.

(h) Agent. UBS Securities LLC shall act as “agent” for UBS and the Issuer within
the meaning of Rule 15a-6 under the Exchange Act. As a broker-dealer registered
with the Securities and Exchange Commission, UBS Securities LLC, in its capacity
as agent, will be responsible for (i) effecting the transaction contemplated in
this Agreement, (ii) issuing all required notices, confirmations and statements
to Buyer and Seller and (iii) maintaining books and records relating to this
Agreement.

(i) Headings. Descriptive headings herein are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.

(j) Counterparts. This Agreement may be executed by the parties hereto in
counterparts, and each such executed counterpart shall be, and shall be deemed
to be, an original instrument and all such counterparts, taken together, shall
constitute one and the same instrument.

(k) Notices. All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be validly given, made or served if in
writing and delivered personally, by telegram, by telecopy or sent by overnight
courier, postage prepaid, to:

UBS at:

c/o UBS Securities LLC
677 Washington Boulevard
Stamford, CT 06901
Attention of: Adam Frieman
Fax Number: 203-719-7031

With a copy to such address to attention of:
Legal and External Affairs

the Issuer at:

Rockwell Collins, Inc.
400 Collins Road, N.E.
Cedar Rapids, IA 52498

Attention of: Douglas E. Stenske
Fax Number: 319-295-0020

With a copy to such address to the attention of:
Gary R. Chadick, Esq.
Fax Number: 319-295-3599

or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by telegram or telecopy
shall be deemed delivered when evidence of the transmission is received by the
sender and shall be confirmed in writing by overnight courier, postage prepaid.
Notice given by overnight courier as set out above shall be deemed delivered the
business day after the date the same is mailed.

(l) Account Details.

UBS:

Cash Payments for Stock Purchase

Citibank, New York

ABA# 021 000 089

A/C# 4065 2556

UBS Securities, LLC

Cash Payments for Settlement

UBS AG Stamford

f/o UBS AG London Branch

ABA# 026-007-993

AC# 101-WA-140007-000

Issuer:

Mellon Bank

ABA No. 043-000-261

A/C No. 091-2704

(m) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without reference
to conflict of law principles. Each party hereto irrevocably submits to the
extent permitted under applicable law to the non-exclusive jurisdiction of the
federal and state courts located in the Borough of Manhattan, State of New York.
Each party waives, to the fullest extent permitted by applicable law, any right
it may have to a trial by jury in respect of any suit, action or proceeding
relating to this Agreement.

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IN WITNESS WHEREOF, UBS and the Issuer have caused this Agreement to be duly
authorized, executed and delivered as of the date first written above.

UBS AG, LONDON BRANCH

By:     

Name:

Title:

By:     

Name:

Title:

UBS SECURITIES LLC

By:     

Name:

Title:

ROCKWELL COLLINS, INC.

By:     

Name:

Title:

2