Exhibit 10-h-3


 


ROCKWELL COLLINS 

NON-QUALIFIED PENSION PLAN


 


This Plan is a continuation of
the Rockwell International Corporation Non-Qualified Pension Plan.  Effective as of June 29, 2001, Rockwell
Collins, Inc. assumed such plan and all liabilities thereunder with
respect to the Rockwell Collins Participants (as defined in the Employee
Matters Agreement).  Such plan has been
renamed as the Rockwell Collins Non-Qualified Pension Plan.


 


On November 4,
2003, the Board of Directors of Rockwell Collins approved a freezing of the
Plan. The said freezing of the Plan, which is effective as of the close of
business on September 30, 2006 (the “Freeze Date”), has the effect of
terminating further accrual of benefits under the Plan as of that Date and
closing Plan participation off for new employees after that Freeze Date.


 


Effective as of December 31,
2004, the Unfunded Supplemental Pension Plan for Employees Who Are
Participating in a Base Compensation Deferral Agreement, which provides
benefits to highly paid employees who deferred compensation under the Rockwell
Collins Deferred Compensation Plan, was merged into and with this Plan.


 


For purposes of
retaining “grandfathered” status under Section 409A of the Internal
Revenue Code of 1986, as amended, the Plan was amended effective as of January 1,
2005 to limit the Plan to accrued benefits that were earned and vested as of December 31,
2004.


 


ARTICLE I

DEFINITIONS


 


1.005      Affiliate
means:


 


(a)                                  any
company incorporated under the laws of one of the United States of America of
which the Company owns, directly or indirectly, eighty percent (80%)
or more of the combined voting power of all classes of stock or eighty
percent (80%) or more of the total value of the shares of all classes
of stock (all within the meaning of Code §1563);


 


(b)                                 any
partnership or other business entity organized under such laws, of which the
Company owns, directly or indirectly, eighty percent (80%) or more of the
voting power or eighty percent (80%) or more of the total value (all
within the meaning of Code §414(c)); and


 


(c)                                  any
other company deemed to be an Affiliate by the Board of Directors.


 

















 


1.010      Benefit Limitation
means the limitations on benefits payable from Defined Benefit Plans which are
imposed by §415 of the Code.


 


1.020      Board of Directors
means the Company’s Board of Directors.


 


1.030      Change of Control
means any of the following occurring at any time after June 29,
2001:


 


(a)           The acquisition by any individual,
entity or group (within the meaning of §13(d)(3) or §14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (1) the then outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”)
or (2) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of
Control:  (w) any acquisition
directly from the Company, (x) any acquisition by the Company, (y) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company, Rockwell or any corporation controlled by the
Company or Rockwell or (z) any acquisition pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection (c) of this
Section 1.030; or


 


(b)           Individuals who, as of June 29,
2001, constitute the Board of Directors of the Company (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a director subsequent
to that date whose election, or nomination for election by the Company’s
shareowners, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors; or


 


(c)           Consummation of a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets of the Company or the acquisition of assets of another entity
(a “Company Transaction”), in each case, unless, following such Company
Transaction, (1) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Company Transaction beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Company Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries)  in substantially the
same proportions as their ownership, immediately prior to such Company
Transaction of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (excluding any
employee benefit plan (or related trust) of the Company, of Rockwell or of such
corporation resulting from such Company Transaction) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Company 


 


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Transaction or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Company Transaction and (3) at least a majority of the members of the
board of directors of the corporation resulting from such Company Transaction were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing for such
Company Transaction; or


 


(d)           Approval by the Company’s shareowners
of a complete liquidation or dissolution of the Company.


 


1.040      Code
means the Internal Revenue Code of 1986, as amended.


 


1.050      Committee
means the Compensation and Management Development Committee of the Board of
Directors.


 


1.060      Company
means Rockwell Collins, Inc., a Delaware corporation and its predecessor,
Rockwell International Corporation.


 


1.065      Company Officer
means an employee who has been elected by the
Board of Directors as an officer of the Company pursuant to the Company’s
by-laws.


 


1.070      Company Pension Plan
means the Rockwell Collins Pension Plan.


 


1.080      Compensation Limit
means the limitation imposed by §401(a)(17) of the Code on the amount of
compensation which can be considered in determining the amount of a participant’s
benefit under the Company Pension Plan.


 


1.090      Defined Benefit Plan  has the same meaning given that term in §3(35) of ERISA.


 


1.100      Employee
means any person who is employed by the Company or by an Affiliate, including,
to the extent permitted by §406 of the Code, any United States citizen
regularly employed by a foreign Affiliate of the Company.


 


1.110      Employee Matters Agreement
means the Employee Matters Agreement dated as of June 29, 2001 by and
among Rockwell International Corporation, New Rockwell Collins, Inc. and
Rockwell Scientific Company LLC.


 


1.120      ERISA
means the Employee Retirement Income Security Act of 1974, as amended.


 


1.130      Highly Compensated
Employee means a participant in or
retiree under the Company Pension Plan whose compensation would otherwise be
considered under such Plan in determining his benefits thereunder in excess of
the Compensation Limit.


 


1.140      Participant
means any participant in the Company Pension Plan who is a Rockwell Collins
Participant as defined in the Employee Matters Agreement whose benefits payable
therefrom are restricted by the Benefit Limitation or the Compensation
Limit.  Employees who (1) are
Company Officers hired on or after January 1, 1993 but eligible for the
pre-1993 formula 


 


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under the Company Pension Plan,
or (2) are participants in the Company Pension Plan who deferred
compensation under the Rockwell Collins Deferred Compensation Plan are also
eligible to participate in this Plan. Notwithstanding any other provision of
this Plan or the Company Pension Plan to the contrary, no Employee or any other
person, individual or entity shall become a Participant in this Plan on or
after the day on which a Change of Control occurs.


 


1.150      Plan
means this Rockwell Collins Non-Qualified Pension Plan and its predecessor, the
Rockwell International Corporation Non-Qualified Pension Plan.


 


1.160      Plan Administrator
means the person from time to time so designated by name or corporate office by
the Board of Directors.


 


1.165      Section 409A
means Section 409A of the Code and any regulations and other guidance
issued thereunder.


 


1.170      Securities Exchange Act  means the Securities Exchange Act of 1934, as amended.


 


1.180      Third Party Administrator
means an independent third party selected by the
Trustee and approved by the individual who, immediately prior to a Change of
Control, was the Company’s Chief Executive Officer or, if not so identified,
the Company’s highest ranking officer (the “Ex-CEO”).


 


1.190      Trust
means the master trust established by agreement between the Company and the
Trustee, which will be a grantor trust.


 


1.200      Trustee
means Wells Fargo Bank, N.A., or any successor trustee of the Trust described
in Section 1.190 of this Plan.


 


1.210      2005 NQ Pension Plan means the Rockwell Collins 2005 Non-Qualified Pension
Plan.


 


Terms not otherwise defined in
this Article I shall have meanings set forth in the Company Pension Plan
document.


 


ARTICLE II

DETERMINATION OF BENEFITS


 


2.005      Effective
as of the close of business on September 30, 2006 (the “Freeze Date”), and
notwithstanding any other provision in this Plan (or in the Company Pension
Plan) to the contrary, accrual of additional benefits under this Plan (as well
as under the Company Pension Plan) will no longer be possible for current Plan
Participants and individuals who first become Employees on or after the said
Freeze Date will not be eligible to become Participants in this Plan after the
said Freeze Date.


 


2.010      This Plan has been established by the
Company as a non-qualified pension plan for those employees of the Company and
its Affiliates whose retirement benefits under the Company Pension Plan are, in
the determination of those benefits, reduced by reason of application
of the 


 


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Compensation Limit and/or the
Benefit Limitation.  This Plan also
provides enhanced benefits to (a) Company Officers hired on or after January 1,
1993 but eligible for the pre-1993 formula under the Company Pension Plan, and (b) participants
in the Company Pension Plan who deferred compensation under the Rockwell
Collins Deferred Compensation Plan.  The
Company shall pay from its general assets or from the Trust, as the case may
be, to each Participant, or to the beneficiary, surviving spouse or joint
annuitant of the Participant, a benefit which is equal to the amount of such
reduction or enhancement.


 


2.020      If the monthly benefit for which a
Participant would have been otherwise eligible at retirement under the Company
Pension Plan is reduced because of application of the Compensation Limit, for
purposes of determining the benefit payable under this Plan, a Participant’s
Average Annual Earnings, as otherwise defined in Section 1.140 of the
Company Pension Plan shall mean the highest amount that can be determined by
averaging the Participant’s Earnings (as defined in the Company Pension Plan)
for any five (5) calendar years within the ten (10) calendar years
(or lesser period, if applicable) of active employment which immediately
precede the earliest of the dates on which the Participant retires, dies,
terminates or commences an approved absence for disability or the date of the
Company Pension Plan freeze (September 30, 2006) in accordance with the
Company Pension Plan.  In determining
Average Annual Earnings (as defined in the Company Pension Plan), any calendar
year in which the Participant has less than a full year of Credited Service (as
defined in the Company Pension Plan) may be disregarded.  In addition, in determining the benefit
payable to the Participant under this Plan, amounts awarded to the Participant
under the Company’s incentive compensation plan (including both the amount of
cash and the value of Employer stock awarded thereunder) will be included as
compensation to be considered hereunder.


 


2.025      In the case of a
Participant who first becomes an Employee on or after January 1, 1993 and,
prior to his retirement from the Company, either:


 


(a)                                  becomes
a Company Officer, or


 


(b)                                 is
an employee who attains Salary Grade 21 or higher and is approved in writing by
the Company’s Chief Executive Officer (authority for which approval can be
delegated by him to the Company’s Senior Vice President, Human Resources) for
the enhanced benefit treatment set forth in this Section,


 


the monthly benefit payable to
such Participant from this Plan shall be calculated pursuant to the same
formula as is set forth in Section 5.010(a) of the Company Pension
Plan for participants in that Plan who were first employed by the Company prior
to January 1, 1993.


 


2.030      Subject to the provisions of Section 2.040,
any benefit payable under this Plan shall be paid to or in respect of the
Participant in the same manner and at the same times that benefits become
payable under the Company Pension Plan.


 


2.040      A Participant (including, for purposes of
this Section 2.040, a retiree who is currently receiving benefits under
this Plan) or his surviving spouse or joint annuitant may elect to have the
present value of the benefits due hereunder (such present value to be based
upon the interest 


 


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and mortality assumptions in
effect for the Company Retirement Plan at the time of the Participant’s
retirement or death, as applicable) paid in a lump sum in the event of the
occurrence of a Change of Control, subject to the following:


 


(a)                                  To
be effective, the election of a Participant or his surviving spouse or
joint annuitant pursuant to this Section must be made in writing and filed
with the Committee prior to the occurrence of a Change of Control.


 


(b)                                 An
election made hereunder shall be revocable by the Participant or his surviving
spouse or joint annuitant until such time as a Change of Control shall have
occurred at which point the said election shall be irrevocable.


 


(c)                                  Lump
sum payments to be made under this Section 2.040 to Participants or, in
the case of the Participant’s death, to the Participant’s surviving spouse or
joint annuitant shall be made within forty-five (45) days following the
Participant’s retirement, termination of employment or death; provided,
however, that lump sum payments which are to be made under this Section to
Participants, surviving spouses or joint annuitants who are currently receiving
benefits at the time of a Change of Control shall be made within
forty-five (45) days following the Change of Control.


 


Notwithstanding any provision of
this Plan to the contrary, such election may only be made by a Participant or
beneficiary of a Participant who first became eligible to participate in the
Rockwell International Corporation Non-Qualified Pension Plan prior to June 29,
2001.


 


ARTICLE III

CLAIMS PROCEDURE


 


3.010      Any person claiming a right to participate
in this Plan, claiming a benefit under this Plan or requesting information
under this Plan shall present the claim or request in writing to the Committee,
who shall respond in writing within ninety (90) days following his receipt of
the request.


 


3.020      If the claim or request is denied, the
written notice of denial shall state:


 


(a)                                  the
reasons for denial;


 


(b)                                 a
description of any additional material or information required and an
explanation of why it is necessary; and


 


(c)                                  an
explanation of this Plan’s claim review procedure.


 


3.030      Any person whose claim or request is
denied may make a request for review by notice given in writing to the
Committee.


 


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3.040      A decision on a request for review shall
normally be made within ninety (90) days after the date of such
request.  If an extension of time is
required for a hearing or other special circumstances, the claimant shall be
notified and the time limit shall be extended by an additional sixty (60) days
from the date of such request.  The
decision shall be in writing and shall be final and binding on all parties
concerned.


 


ARTICLE IV

AMENDMENT AND TERMINATION; MISCELLANEOUS PROVISIONS


 


4.010      The Board of Directors shall have the
power to amend, suspend or terminate this Plan at any time, except that no such
action shall adversely affect rights with respect to any benefit without the
consent of the person affected.


 


4.020      This Plan shall be interpreted and
administered by the Committee; provided, that interpretations by the Plan
Administrator of those provisions of the Company Pension Plan which are also
applicable to this Plan shall be binding on the Committee.


 


Notwithstanding any other
provision of this Plan to the contrary, upon and after the occurrence of a
Change of Control, the Plan will be administered by the Third-Party
Administrator.  The Third-Party
Administrator will have the discretionary power to determine all questions
arising in connection with the administration of the Plan and the
interpretation of the Plan and Trust including, but not limited, to benefit
entitlement determinations; provided, however, upon and after the occurrence of
a Change of Control, such administrator will have no power to direct the
investment of Plan or Trust assets or select any investment manager or
custodial firm for the Plan or Trust.


 


Upon and after the occurrence of
a Change of Control, the Company will be required to:


 


(a)                                  pay
all reasonable administrative expenses and fees of the Third-Party
Administrator;


 


(b)                                 indemnify
the Third-Party Administrator against any costs, expenses and liabilities
including, without limitation, attorney’s fees and expenses arising in connection
with the performance of such administrator hereunder, except with respect to
matters resulting from the gross negligence or willful misconduct of the said
administrator or its employees or agents; and


 


(c)                                  supply
full and timely information to the Third-Party Administrator on all matters
relating to the Plan, the Trust, the Participants and any surviving spouses and
contingent annuitants, the benefits of the Participants, the date of
circumstances of the retirement, disability, death or termination of employment
of the Participants, and such other pertinent information as the Third-Party
Administrator may reasonably require.


 


(d)                                 upon
and after a Change of Control, the Third-Party Administrator may not be
terminated by the Company and may only be terminated (and a replacement
appointed) by the Trustee, but only with the approval of the Ex-CEO (as defined
in Section 1.180).


 


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4.030      This Plan is an unfunded employee benefit
plan primarily for providing deferred compensation to an identified group of
management or highly compensated employees of the Company and is also an excess
benefit plan (as defined by §3(36) of ERISA).  This Plan is intended to be unfunded for tax
purposes and for purposes of Title I of ERISA. 
Participants and their beneficiaries, estates, heirs, successors and
assigns shall have no legal or equitable rights, interest or claims in any
property or assets of the Company or its Affiliates.  Any and all of the assets of the Company and
its Affiliates shall be, and remain, the general, unpledged, unrestricted
assets of the Company and its Affiliates. 
The Company’s and any Affiliate’s sole obligation under this Plan shall
be merely that of an unfunded and unsecured promise of the Company or such
Affiliate to pay money in the future.


 


4.040      Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of
actual receipt, any interest he may have hereunder.  A Participant’s rights to benefits described
herein are and shall be nonassignable and nontransferable prior to actual
distribution as provided by this Plan. 
Any such attempted assignment or transfer shall be ineffective with
respect to the Company and with respect to any Affiliate, and the Company’s and
any Affiliate’s sole obligation shall be to distribute benefits to
Participants, their beneficiaries or estates as appropriate.  No part of any Participant’s benefits
hereunder shall, prior to actual payment as provided by this Plan, be
subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor shall any such benefits be transferable by operation of law in the
event of a Participant’s or any other persons bankruptcy or insolvency,
except as otherwise required by law.


 


4.050      This Plan shall not be deemed to
constitute a contract of employment between the Company or any of its
Affiliates and any Participant, and no Participant, beneficiary or estate shall
have any right or claim against the Company or any of its Affiliate under this
Plan except as may otherwise be specifically provided in this Plan.  Nothing in this Plan shall be deemed to give
a Participant the right to be retained in the service of the Company or any
Affiliate or to interfere with the right of the Company or any Affiliate to
discipline, discharge or change the status of a Participant at any time.


 


4.060      A Participant will cooperate with the
Committee by furnishing any and all information requested by the Committee or
its delegates in order to facilitate proper administration (including
distributions to and in respect of Participants) of this Plan and by taking
such other action as may be reasonably requested by the Committee or its
delegate.


 


4.070      Subject to ERISA, the provisions of this
Plan shall be construed and interpreted according to the laws of the State of Iowa.  In the event that any provision of this Plan
shall be held illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining provisions of this Plan, which shall be
construed and enforced as if such illegal or invalid provision were not
included in this Plan.  The provisions of
this Plan shall bind and obligate the Company and its Affiliates and their
successors, including, but not limited to, any corporate or other business
entity which shall, whether by merger, consolidation, purchase or otherwise,
acquire all or substantially all of the business and assets of the Company or
its Affiliates and their successors of any such company or other business
entity.


 


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4.080      All words used in this Plan in the
masculine gender shall be construed as if used in the feminine gender where
appropriate.  All words used in this Plan
in the singular or plural shall be construed as if used in the plural or
singular where appropriate.


 


ARTICLE V

TRUST


 


5.010      Establishment of the Trust.
The Company shall establish the Trust (which may be referred to herein as a “Rabbi
Trust”).  The Trust shall become
irrevocable upon a Change of Control (to the extent not then irrevocable).  After the Trust has become irrevocable with
respect to the Plan, except as otherwise provided in Section 12 of the
Trust, the Trust shall remain irrevocable with respect to the Plan until all
benefits due under this Plan and benefits and account balances due to any
participants and beneficiaries under any other plan covered by the Trust have
been paid in full.  Upon establishment of
the Trust, the Company shall provide for funding of the Trust in accordance
with the terms of the Trust.


 


5.020      Interrelationship of the
Plan and the Trust.  The
provisions of the Plan and any Participant’s Participation Agreement Form will
govern the rights of a Participant to receive distributions pursuant to the
Plan.  The provisions of the Trust will
govern the rights of the Company and its Affiliates, Participants and the
creditors of the Company and its Affiliates to the assets transferred to the
Trust.  The Company and each of its
Affiliates employing any Participant will at all times remain liable to carry
out their obligations under the Plan.


 


5.030      Distributions From the
Trust. The Company’s and each of its Affiliate’s obligations
under the Plan may be satisfied with Trust assets distributed pursuant to the
terms of the Trust, and any such distribution will reduce their obligations
under this Plan.


 


5.040      Rabbi Trust.   The Rabbi Trust shall:


 


(a)                                  be
a non-qualified grantor trust which satisfies in all material respects the
requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue
Procedure or other applicable authority);


 


(b)                                 be
irrevocable upon a Change of Control (to the extent not then irrevocable); and


 


(c)                                  provide
that any successor trustee shall be a bank trust department or other party that
may be granted corporate trustee powers under state law.


 


ARTICLE VI

SECTION 409A


 


6.010       Effective as of January 1, 2005, for purposes of
retaining “grandfathered” status under Section 409A, this Plan is limited
to accrued benefits that were earned and vested as of


 


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December 31, 2004. Effective as of January 1, 2005, any
accrued benefits under the Plan that were earned and vested after December 31,
2004 will be credited under, and all liabilities related thereto will be
transferred to, the 2005 NQ Pension Plan.


 


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