Exhibit 10-r-1

 

AGREEMENT AND GENERAL RELEASE

 

 

NEAL J. KEATING, on the one hand, and ROCKWELL COLLINS, INC., on the other hand,
have reached the following Agreement and General Release (hereinafter the
“Agreement”).  In this Agreement, “EMPLOYEE” refers to NEAL J. KEATING, and
“COMPANY” refers to Rockwell Collins, Inc. and its subsidiaries and affiliates.

 

FIRST:                                                                                                          
Benefits.

 

a)                                      EMPLOYEE and COMPANY agree to the
following:

i)                                         EMPLOYEE will cease actively working
for COMPANY as of 4:00 p.m. on May 28, 2002.   Thereafter, EMPLOYEE will remain
on COMPANY’s active payroll from May 28, 2002 through the close of business on
July 6, 2004 (hereinafter referred to as his “salary continuation period”), at
which time EMPLOYEE will be placed on layoff.  EMPLOYEE will receive no
additional pay or notice at the time of his layoff.  EMPLOYEE will not be
expected to perform any work for the COMPANY during his salary continuation
period and will not accrue vacation or receive long term disability insurance
coverage.  During his salary continuation period, EMPLOYEE will be paid at his
current monthly base salary rate as of May 28, 2002.  Except as provided in the
Eighth Paragraph of this Agreement, COMPANY will continue to pay EMPLOYEE salary
continuation whether or not he obtains other employment during the salary
continuation period.  Except as otherwise provided in this Agreement, EMPLOYEE
agrees to return to the COMPANY by no later than June 4, 2002 all property of
the COMPANY which has been entrusted to EMPLOYEE for purposes of his employment
including but not limited to company proprietary documents, company telephone
lists, credit cards, keys, badges and personal digital assistants (such as a
Palm Pilot).

ii)                                      EMPLOYEE will receive a pro-rata
(8/12ths) share of his Fiscal Year 2002 Incentive Compensation, less all
applicable federal, state and local taxes and other applicable deductions, at
the time the Fiscal Year 2002 ICP is paid out to the other participants and in
accordance with and based upon Rockwell Collins Inc.’s Incentive Compensation
Plan (“ICP”) and the enterprise performance criteria approved by the
Compensation Committee of the COMPANY.  COMPANY and EMPLOYEE further agree that
EMPLOYEE shall not be eligible to receive any incentive compensation or bonus
for the COMPANY’s Fiscal Years 2003 and 2004.

 

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iii)                                   EMPLOYEE will receive a pro-rata
(8/24ths) share of the Fiscal Years  2002-2003 cash long term incentive plan
(“cash LTIP”) payment, less all applicable federal, state and local taxes and
other applicable deductions, at the time the cash LTIP is paid out to the other
participants and in accordance with and based upon the Rockwell Collins, Inc.
2001 Long-Term Incentives Plan and the enterprise performance criteria approved
by the Compensation Committee of the COMPANY.  COMPANY and EMPLOYEE further
agree that EMPLOYEE will not be eligible to participate in any future cash LTIP
programs, if any, for the COMPANY’s Fiscal Years 2003 and 2004.

iv)                                  EMPLOYEE shall not be eligible for award of
any stock option grants after May 28, 2002.  Previously granted stock options
may be exercised, will vest, and will be forfeited according to the terms and
conditions of the COMPANY’S stock option plans and any written agreements
between COMPANY and EMPLOYEE related thereto.

v)                                     Within 15 days of EMPLOYEE signing this
Agreement, COMPANY will pay EMPLOYEE for all of his accrued but unused vacation
during EMPLOYEE’s employment with COMPANY through May 28, 2002, after taking
into account EMPLOYEE’S use of vacation covering the period from May 28, 2002
through July 6, 2002.

 

b)                     In addition, except as noted in subparagraph iii) below,
COMPANY and EMPLOYEE agree that the EMPLOYEE will be provided the following
benefits until July 6, 2004:

i)                                         COMPANY will continue to provide
EMPLOYEE a monthly car allowance of $1,700.

ii)                                      Outplacement services or career
transition counseling.

iii)                                   Reimbursement for out of pocket income
tax preparation/estate planning expenses in an amount not to exceed $5,000 for
each Calendar Years 2002, 2003, and 2004 (EMPLOYEE may seek reimbursement for
such expenses related to Calendar Year 2004 until April 15, 2005).

iv)                                  An annual COMPANY paid executive physical
in Fiscal Years 2002 and 2003.

v)                                     Continued use of the COMPANY provided
cellular telephone and continued use of the Sprint VPN FONCARD (the telephone
bills of which are paid for by the COMPANY) for the sole purpose of seeking
employment with another company.

vi)                                  Medical, including vision and dental,
benefits coverage for amounts and under terms and conditions comparable to that
being provided to the active executive vice presidents working at the COMPANY
during the salary continuation period.

vii)                               COMPANY will continue to pay the membership
dues and assessments at the Elmcrest Country Club.

 

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viii)                            EMPLOYEE will be eligible to contribute to the
COMPANY’s retirement savings plan for salaried employees (including the COMPANY
matching contributions).

ix)                                    COMPANY will permit EMPLOYEE to continue
using the COMPANY-provided lap top computer currently in his possession,
provided, however, that EMPLOYEE provides the COMPANY access to that computer by
no later than June 4, 2002 so that COMPANY can inspect the hard drive and delete
any COMPANY proprietary information or software, as necessary to comply with
license agreements with third parties, contained therein and remove any COMPANY
Network access.

x)                                       Life insurance and other death benefit
coverage for amounts and under terms and conditions comparable to that being
provided to the active executive vice presidents working at the COMPANY during
the salary continuation period (it being understood, however, that such benefits
shall not include any short-term or long-term disability coverages).

 

c)                                      COMPANY and EMPLOYEE specifically
acknowledge and agree that any entitlement by EMPLOYEE to certain benefits
provided by this First Paragraph is subject to forfeiture pursuant to the Eighth
Paragraph of this Agreement.

d)                     In addition, any COMPANY property used by EMPLOYEE during
the salary continuation period must be returned to the COMPANY by no later
than   July 6, 2004.

e)                      EMPLOYEE agrees to inform the COMPANY’s General Counsel
within two business days after obtaining full or part time reemployment whether
as an employee, consultant, agent, director, or otherwise.

 

SECOND:                                                                                           
No Obligation to Provide These Benefits Under Normal Policies.

 

EMPLOYEE acknowledges that, under COMPANY’S normal policies and procedures and
absent this Agreement, he would receive only 13 weeks rather than 24 months of
salary continuation and medical coverage between the date he stops work for the
COMPANY and the date of his layoff, he would not receive pro-rata Fiscal Year
2002 incentive compensation, he would not receive a pro-rata Fiscal Years
2002-2003 cash LTIP payment; he would not be eligible to contribute to the
COMPANY’s retirement savings plan for salaried employees (including the COMPANY
matching contributions); he would not continue using the COMPANY-provided lap
top computer currently in his possession; he would not receive a car allowance
of $1,700 per month for two years to defray automobile expenses; and he would
not be eligible to receive $5,000 in income tax preparation/estate planning
benefits for three calendar years, to receive an annual COMPANY paid physical
for two years, to receive continued use of his cellular telephone and Sprint VPN
FONCARD for two years, to receive the country club membership paid for by the
COMPANY for two years and to receive free outplacement services for two years,
which benefits are set forth in the First Paragraph of this Agreement.

 

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THIRD:                                                                                                      
Complete Mutual Release.

 

EMPLOYEE and COMPANY agree to release each other and each of their predecessors,
successors and assigns, any subsidiaries, any related companies, and the
employees, directors, officials, agents, officers, representatives and attorneys
of any of them, from all claims or demands EMPLOYEE or COMPANY may have based on
EMPLOYEE’S employment with COMPANY or the termination of that employment.  This
includes, but is not limited to, a release of any rights or claims EMPLOYEE may
have under the Age Discrimination in Employment Act, which prohibits age
discrimination in employment; under Title VII of the Civil Rights Act of 1964;
or under any other federal, state or local laws or regulations prohibiting
employment discrimination.  This also includes, but is not limited to, a release
by EMPLOYEE of any claims for breach of contract or wrongful discharge,
including but not limited to breach of any obligation contained in COMPANY’S
offer of employment to EMPLOYEE, which is superceded by and rendered null and
void by this Agreement.  Furthermore, this includes a release by EMPLOYEE of any
claims under any and all state workers compensation  or unemployment statutes. 
This release covers both claims that EMPLOYEE knows about and those he may not
know about.  Notwithstanding the provisions of any state laws or statutes, and
for the purpose of implementing a full and complete release, EMPLOYEE and
COMPANY expressly acknowledge that this Agreement is intended to include all
claims which EMPLOYEE does not know or suspect to exist in EMPLOYEE’S favor at
the time of his signature on this Agreement, and that this Agreement will
extinguish any such claims.

 

This release does not include, however, a release of EMPLOYEE’s rights, if any,
to pension, retiree, health or similar benefits under the COMPANY’s standard
retirement programs, to EMPLOYEE’s rights under the COMPANY’s stock option
plans, or to any claims arising after EMPLOYEE signs this Agreement.

 

FOURTH:                                                                                          
No Future Lawsuits.

 

EMPLOYEE promises never to file a lawsuit or request arbitration asserting any
claims that are released in the Third Paragraph of this Agreement.  EMPLOYEE
also promises never to file any claims for workers compensation, unemployment
benefits, or with any administrative agencies or initiate a lawsuit or request
arbitration asserting any claims that are released in the Third Paragraph of
this Agreement.

 

FIFTH:                                                                                                         
Non-Release of Future Claims.

 

This Agreement does not waive or release any rights or claims that EMPLOYEE may
have under the Age Discrimination in Employment Act which arise after the date
the EMPLOYEE signs this Agreement.

 

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SIXTH:                                                                                                       
Consequences of EMPLOYEE’S Violation of Promises.

 

If a party breaks its or his promise in the Fourth Paragraph of this Agreement
and files a lawsuit, request for arbitration or other claim or action based on
legal claims that the party has released, that party will pay for all costs
incurred by the other party, any related companies or the directors or employees
of any of them, including reasonable attorneys’ fees, in defending against the
claim.

 

SEVENTH:                                                                                     
Confidentiality and Cooperation.

 

EMPLOYEE agrees to maintain strict confidentiality regarding the existence of
and the terms and conditions in this Agreement except to show this Agreement to
his personal attorney, personal accountant or any other personal adviser as
required for the sole purpose of obtaining advice with respect to the terms and
conditions hereof, provided that such person to whom disclosure is made agrees
to be bound by the confidentiality provisions hereof.

 

EMPLOYEE agrees to reasonable cooperation with COMPANY in the defense or
prosecution of any litigation, arbitration, or claim against or by any person or
party.  COMPANY agrees to pay EMPLOYEE’S reasonable, documented, out-of-pocket 
expenses in providing any such cooperation pursuant to the terms of this
Paragraph.  EMPLOYEE shall not, however, be paid for his time or inconvenience
in providing cooperation pursuant to the terms of this Paragraph.

 

EIGHTH:                                                                                               
Non-Competition, Non-Solicitation and Confidential Information.

 

In consideration for the receipt of salary continuation and all of the other
benefits set forth herein, the EMPLOYEE agrees that for a two year period
commencing on the date EMPLOYEE signs this Agreement, EMPLOYEE shall not (i)
directly or indirectly, except with the advance written approval, which shall
not unreasonably be withheld, of the President and Chief Executive Officer of
the COMPANY, engage or otherwise participate in any business which is
competitive with any significant line of business of the COMPANY (other than
through ownership of not more than 5% of the voting securities of any such
competitive business) or (ii) solicit or induce any employee of the COMPANY to
leave his or her employment with the COMPANY to accept employment or other
engagement with any such competitive business.  In the event that EMPLOYEE
breaches this undertaking, in addition to any and all other remedies the COMPANY
may have, the EMPLOYEE shall reimburse the COMPANY for all monies paid to the
EMPLOYEE by the COMPANY under this Agreement, salary continuation payments shall
immediately and permanently cease, EMPLOYEE shall be laid off immediately and he
forfeits his right to any future payments or benefits set forth in this
Agreement.

 

In addition, EMPLOYEE acknowledges that, by virtue of his senior management
position with the COMPANY, EMPLOYEE has detailed and extensive current knowledge
of the COMPANY’s highly confidential and proprietary information, including but
not limited to competitive operating and strategic plans and objectives,
customer lists, cost structures and capabilities and that disclosure of such
information to

 

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the COMPANY’s competitors would cause irreparable harm to the COMPANY.  EMPLOYEE
agrees that he shall maintain such information as strictly confidential for a
period of two years commencing on the date EMPLOYEE signs this Agreement.   In
the event that EMPLOYEE breaches this undertaking, in addition to any and all
other remedies the COMPANY may have, the EMPLOYEE shall reimburse the COMPANY
for all monies paid to the EMPLOYEE by the COMPANY under this Agreement, salary
continuation payments shall immediately and permanently cease, EMPLOYEE shall be
laid off immediately and EMPLOYEE forfeits his right to any future payments or
benefits set forth in this Agreement.

 

NINTH:                                                                                                     
Period for Review and Consideration of Agreement.

 

EMPLOYEE understands that EMPLOYEE has been given a period of 21 days to review
and consider this Agreement before signing it.  EMPLOYEE further understands
that EMPLOYEE may use as much of this 21-day period as EMPLOYEE wishes prior to
signing.

 

TENTH:                                                                                                   
Non-Admission of Liability.

 

By making this Agreement, the COMPANY does not admit that it has done anything
wrong.

 

ELEVENTH:                                                                              
Representation by Counsel.

 

EMPLOYEE was encouraged by COMPANY to consult with an attorney before signing
this Agreement.

 

TWELFTH:                                                                                 
EMPLOYEE’S Right to Revoke Agreement.

 

EMPLOYEE may revoke this Agreement within seven (7) days of EMPLOYEE’S signing
it.  Revocation can be made by delivering a written notice of revocation to:

 

GARY R. CHADICK

Senior Vice President, General Counsel & Secretary

Rockwell Collins, Inc.

400 COLLINS ROAD NE

Cedar Rapids, IA 52498

 

For this revocation to be effective, written notice must be received by Mr.
Chadick no later than the close of business on the seventh day after EMPLOYEE
signs this Agreement.  If EMPLOYEE revokes this Agreement, it shall not be
effective or enforceable and EMPLOYEE will not receive the benefits described in
this Agreement.

 

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THIRTEENTH:                                                               
Arbitration.

 

Any and all disputes regarding this Agreement will be resolved by binding
Arbitration pursuant to the “Mutual Agreement to Arbitrate Claims” between
EMPLOYEE and COMPANY, and such arbitration to take place at the American
Arbitration Association’s offices nearest to COMPANY’S Cedar Rapids, Iowa
Headquarters.

 

FOURTEENTH:                                                            In the
Event of a Change of Control.

 

EMPLOYEE agrees and understands that after this Agreement becomes effective, the
Change of Control Agreement dated June 29, 2001 between EMPLOYEE and COMPANY
becomes null and void and EMPLOYEE will not be entitled to any benefits so
described in that Change of Control Agreement.

 

FIFTEENTH:                                                                          
Parties Affected.

 

This Agreement shall be binding on the EMPLOYEE and his heirs, successors, and
legal representatives.  EMPLOYEE may not assign this Agreement or any of his
rights hereunder and may not delegate any obligation hereunder.  This Agreement
is intended to benefit EMPLOYEE and COMPANY, including its subsidiaries,
affiliates, employees, directors, officers, agents, attorneys, successors, and
assigns thereof.

 

SIXTEENTH:                                                                        
Equitable Relief

 

It is agreed that remedies for breach of the Eighth Paragraph of this Agreement
shall include equitable relief in addition to any other legal remedies available
to the COMPANY under the circumstances.

 

SEVENTEENTH:                                                       Governing Law

 

This Agreement is governed by the laws of the State of Iowa, without reference
to its conflict of laws provisions.

 

EIGHTEENTH:                                                                
Entire Agreement/Modifications

 

This is the entire agreement between EMPLOYEE and COMPANY regarding the subject
matter hereof.  The “Mutual Agreement to Arbitrate Claims” agreement and
EMPLOYEE’s October 15, 2001 stock option agreement are specifically incorporated
herein by reference and shall continue to bind both parties.  COMPANY has made
no promises of any kind pertaining to the subject matter hereof to EMPLOYEE
other than those set forth in this Agreement.  Any amendment, modification or
change to this Agreement shall not be binding unless in writing and duly
executed by an authorized representative of both parties.  This Agreement may be
executed in counterparts.

 

EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS
VOLUNTARILY ENTERING INTO IT.

 

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PLEASE READ THIS AGREEMENT CAREFULLY.  IT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.  THIS AGREEMENT WILL NOT TAKE EFFECT FOR SEVEN (7) DAYS AFTER
EMPLOYEE SIGNS IT.

 

IN WITNESS THEREOF, the parties have caused this Agreement to be signed below on
the dates shown opposite their signatures.  This Agreement is effective upon the
execution of this Agreement by both parties provided that prior to execution of
this Agreement EMPLOYEE executes a resignation letter in which EMPLOYEE resigns
from all corporate officer positions of the COMPANY.

 

Dated:

  July 16, 2002

 

AN INDIVIDUAL

 

 

 

 

 

 

By:

  /s/ Neal J. Keating

 

 

 

 

 

 

 

NEAL J. KEATING

 

 

 

 

 

 

 

 

Dated:

  July 16, 2002

 

ROCKWELL COLLINS, INC.

 

 

 

 

 

 

By:

  /s/ William J. Richter

 

 

 

 

 

 

 

WILLIAM J. RICHTER,
SENIOR VICE PRESIDENT,
HUMAN RESOURCES

 

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