Document:

Exhibit
10-h-5

    

    MEMORANDUM
OF PROPOSED AMENDMENTS

    to
the

    ROCKWELL
COLLINS 2005

    NON-QUALFIED
PENSION PLAN

    

    It is
proposed that the Rockwell Collins 2005 Non-Qualified Pension Plan (the “Plan”),
be amended in order to clarify (1) that the lump sum benefit payable to a Plan
participant who has been laid-off by the Company, on or after attaining age 50
and prior to attaining age 55, shall be calculated as if the participant had
retired at age 55, and (2) the calculation of the amount of a lump-sum
distribution payable to Plan participants upon a 409A Change of
Control.

     

    It is
further proposed that such amendments be made effective as of January 1,
2005.  Such amendments are as set forth below.  It is
specifically proposed to:

    

    (1)          Amend
the Plan by adding a new Section 1.155 as follows:

    

    1.155   Layoff-Slide  means
the Separation from Service by a Participant resulting from a reduction in
force, for a Participant who has attained age 50 but not attained age 55 at the
time of such Separation from Service, if service completed prior to the
Layoff-Slide will be considered in the event the Participant is re-employed,
under applicable policies or procedures.  A Participant shall be
deemed to be on Layoff-Slide status for that period of time during which such
service will be reinstated in the event of such re-employment.

     

    (2)          Amend
Section 2.040(a) of the Plan in its entirety to read as follows:

    

    
      	
               
      

            	
              (a)

            	
              For
      purposes of calculating the amount of any lump-sum distribution under this
      Plan, the Plan shall use the Interest Rate and Mortality
      Assumptions.  For benefits commencing upon Retirement, the
      calculation of the amount of such lump-sum distribution will reflect the
      immediate benefit payable.  Except as otherwise provided in the
      immediately following sentence, for benefits commencing upon Separation
      from Service, the calculation of the amount of the lump-sum distribution
      will reflect the normal age 65 retirement benefit (as defined in the
      Company Pension Plan).  For benefits commencing upon a
      Layoff-Slide, the calculation of the amount of the lump sum distribution
      will reflect the retirement benefit payable at age 55 (as defined in the
      Company Pension Plan).

            

    

     

    (3)          Insert
Section 2.050(e) of the Plan in its entirety to read as follows:

    

    
      
        	
              	
                (e) 

              	
                For
      purposes of calculating the amount of the lump-sum distribution under this
      Plan, Participants who have attained age 50 but not attained age 55 at the
      time of a 409A Change of Control, shall be treated as if they were
      separated from service by reason of Layoff-Slide.  For purposes
      of calculating the amount of the lump sum distribution under this Plan,
      Participants, who are age 55 or older at the time of a 409A Change of
      Control, shall be treated as if they were separated from service by reason
      of Retirement.Unassociated Document

    Exhibit
10-q-7

    For
Persons Not With a Change of Control Agreement

    

    ROCKWELL
COLLINS, INC.

     

    PERFORMANCE SHARE
AGREEMENT

     

    PERFORMANCE SHARE TERMS AND
CONDITIONS

     

    [Date]

    

    Target
Performance Shares:  _____________shares of Company Common
Stock

    

    PERSONAL
AND CONFIDENTIAL

     

    [Name]

     

    Personnel
Number:___________

     

    Dear
[Name]:

     

    We are
pleased to confirm that, as a key employee of Rockwell Collins, Inc. and its
subsidiaries (“Rockwell Collins” or the “Company”), you have been granted
performance shares denominated in shares of Common Stock of the Company and
based on the target shares stated above (the “Performance Shares”) pursuant to
this agreement (this “Agreement”) and under the Rockwell Collins 2006 Long-Term
Incentives Plan, as amended (the “Plan”).

     

    Any
payout of your Performance Shares is based on the achievement by Rockwell
Collins of the goals for Cumulative Sales and Return on Sales for
its fiscal years of ______ through _______
[covering three fiscal years] (the “Performance Period”) as set forth in
the matrix attached as Exhibit A (the “Matrix”).  Any payout based on
performance pursuant to the Matrix is to be further adjusted based on Total
Shareowner Return (TSR) as specified below. The terms and conditions of these
Performance Shares are as set forth in more detail below.

     

    1.  Confirmation of
Award.  Together with any letter transmitting this document to
you, this Agreement confirms your award in accordance with the terms as set
forth herein.

     

    2.  Amount Payable Pursuant to
Awards.  Subject to the provisions of this Agreement, the share
amounts payable to you pursuant to your Performance Shares shall be determined
as follows:

     

    (a)  The
percentage of target awards earned will be the percentage found at the
intersection in the Matrix of the final results achieved for Cumulative Sales
and for Return on Sales for the Performance Period (as determined pursuant to
Section 3).

     

    (b)  If
the final results achieved for the Performance Period fall between the levels of
performance specified in the Matrix, the percentage of target awards payable
will be interpolated consistent with the range in which the Cumulative Sales and
Return on Sales falls as conclusively determined by the Committee (as defined
below).

    
      
        
           

          Without
Change of Control

        

         

      

      
        1

        
          

        

      

      
         

      

    

     

    (c)  No
amount shall be payable for the Performance
Period if the Cumulative Sales or Return on Sales (as
determined pursuant to paragraph 3) for the Performance Period is less than the
minimum level for the Performance Period as indicated in the
Matrix.

     

    (d)  The
payments as determined for achievement against goals for Cumulative Sales and
for Return on Sales for the Performance Period will be further adjusted for the
Company’s Total Shareowner Return (TSR) performance (as determined pursuant to
Section 3) relative to the 14 peer companies listed on the attached Exhibit
B.  If relative performance is among the top 4 of the peer companies,
the payments will be adjusted upward by 20%.  If relative performance
is among the bottom 4 of the peer companies, the payments will be reduced by
20%.  If the relative performance is not among the top 4 companies or
among the bottom 4 companies, it will be deemed to be among the middle group of
companies and there will be no adjustment.

     

    Subject
to the provisions of this Agreement the amount payable to you pursuant to the
Performance Shares with respect to the Performance Period shall be paid in
Common Stock, less applicable taxes, by Rockwell Collins as soon as practicable
after the end of the Performance Period and after receipt of the accountant’s
letter for the Performance Period pursuant to Section 13, and in any event
within the calendar year within which the Performance Period
ends.  The Performance Shares represent the Company’s unfunded and
unsecured promise to issue shares of Common Stock at a future date, subject to
the terms of this Agreement and the Plan.  You have no rights under
the Performance Shares or this Agreement other than the rights of a general
unsecured creditor of the Company.  Until the distribution of any
Common Stock after vesting is evidenced in book entry form at the transfer
agent, is placed into a brokerage account or a stock certificate is issued, you
shall not have, with respect to the Performance Shares, rights to vote or
receive dividends or any other rights as a shareowner.

     

    3.  Definitions and
Determination of Financial Performance.  “Cumulative Sales”
means, for the Performance Period, the total Sales as reported by the Company in
its audited financial statements.  “Return on Sales” means, for the
Performance Period, the rate determined by dividing Net Income by
Sales.  Both Net Income and Sales will be the three year cumulative
values as reported in the Company’s audited financial statements after adjusting
for extraordinary income and expense items.  The foregoing definitions
and measures will exclude the base sales and net income for all divestitures and
for acquisitions with sales for the acquired business’ last twelve completed
months that comprise up to 10% of Rockwell Collins base sales for its last
twelve completed months at the time of acquisition.  Such definitions
and measures will include post-acquisition growth related to these
acquisitions.   With respect to acquisitions with sales that
comprise up to 10% of total Rockwell Collins’ base sales revenue at the time of
divestiture or acquisition, Net Income will also be adjusted for “fair value”
expenses of the transaction including investment banker charges, amortization of
intangibles, physical property step-ups, and imputed interest on the acquisition
value.  The Committee reserves its discretion pursuant to Section 10
below to make necessary or appropriate adjustments to the definitions and
measures or otherwise for acquisitions, divestitures and other matters
referenced in Section 10.

     

     TSR
is measured by adding (i) the total stock price growth for the Performance
Period, measured by comparing the average stock price during October ____ [the
first year of the Performance Period] to the average stock price during
September _____ [the last year of the Performance Period], and (ii) dividends
paid, measured as if reinvested in stock at the payment date.  In the
event of substantial changes causing an inability to calculate TSR for one or
more of the peer companies listed on the attached Exhibit B (or in the event of
spinoffs or similar transactions causing a peer company to split into two or
more peer companies), the list of peer companies shall be adjusted accordingly
to take such events into account and the new group of peer companies shall for
purposes of Section 2(d) be divided into a top, middle and bottom group of
performers.  If the number of peer companies is 14, 15 or 16
companies, there will be 4 of the resulting peers in each of the top and bottom
groupings and the remaining number of peer companies shall be assigned to the
middle group.  If the number of peer companies is 10, 11, 12 or 13
companies, there will be 3 of the resulting peers in each of the top and bottom
groupings and the remaining number of peer companies shall be assigned to the
middle group.

    
      
        
           

          Without
Change of Control

        

         

      

      
        2

        
          

        

      

      
         

      

    

     

    In
connection with the receipt of the accountant's letter for the Performance
Period pursuant to Section 13, the committee of the Board of Directors of
Rockwell Collins administering the Plan (which committee is herein called the
“Committee” and which, on the date hereof, is the Compensation Committee) shall
determine the Cumulative Sales, Return on Sales and the TSR results and
ranking for
the Performance Period after taking into account any adjustment as contemplated
in Section 10.

     

    4.  Payment of Performance
Shares Denominated in Shares of Common Stock.  The Performance
Shares denominated in shares of Common Stock are payable in shares of the
Company’s Common Stock; provided, however, that the Committee may, in its sole
discretion, make a cash payment equal to the Fair Market Value of shares of
Common Stock otherwise required to be issued.  The Company may issue
shares of Common Stock in book entry form in connection with the payout of
Performance Shares.  In lieu of fractional shares the Company may
determine, in its sole discretion, to pay cash or to round such shares to the
closest whole number.   The future value of the shares of Common
Stock underlying the Performance Shares is unknown and cannot be predicted with
certainty.

     

    5.  Transferability of
Award.  The Performance Shares shall not be transferable by you
except by will or by the laws of descent and distribution.

     

    6.  Termination of Employment
for Death or Disability.  If your employment by the Company
terminates during the Performance Period by reason of your death, disability or
retirement under a retirement plan of the Company, you will continue to be
eligible to receive a payment, if any, that would otherwise be payable pursuant
to Section 2, but any such amount shall be pro rated for the portion of the
Performance Period that elapsed prior to this termination of employment and
shall be paid at the time such amount would otherwise be payable as specified in
Section 2.  Disability shall be defined for purposes of this Agreement
as a disability for a continuous period of at least six months under the
Company’s long-term disability plan during the period of your continuous service
as an employee of the company.

     

    7.  Termination of Employment
for Other Reasons.  Except as otherwise provided in Sections 9
through 12, if your employment by the Company terminates during the Performance
Period other than by reason of your death, disability, or retirement under a
retirement plan of the Company, you will not be entitled to any payment pursuant
to Section 2 with respect to the Performance Period.

     

    8.  Forfeiture of Award for
Detrimental Activity.  If you engage in detrimental activity
(as defined in this Section 8) at any time (whether before or after termination
of your employment), you will not be entitled to any payment hereunder and you
will forfeit all rights with respect to the Performance Shares under this
Agreement.  For purposes of this Section 8, "detrimental activity"
shall mean willful, reckless or grossly negligent activity that is determined by
the Committee to be detrimental to or destructive of the business or property of
the Company.  Any such determination of the Committee shall be final
and binding for all purposes.  Notwithstanding the foregoing, no
payment hereunder shall be forfeited or become not payable by virtue of this
Section 8 on or after the date of a Change of Control (as defined in the Plan)
unless the “Cause” standard set forth in Section 11(b) is
satisfied.

    
      
        
           

          Without
Change of Control

        

         

      

      
        3

        
          

        

      

      
         

      

    

    9.  Transfer of Employment;
Leave of Absence.  Except as otherwise required by Internal
Revenue Code Section 409A, for the purposes of this Agreement, (a) a transfer of
your employment from Rockwell Collins to a subsidiary or vice versa, or from one
subsidiary of Rockwell Collins to another, without an intervening period, shall
not be deemed a termination of employment, and (b) if you are granted in writing
a leave of absence, you shall be deemed to have remained in the employ of
Rockwell Collins or a subsidiary of Rockwell Collins during such leave of
absence.  If your level of employment changes, the Company may adjust
your target payment hereunder to pro rate the portion of the Performance Period
that elapses (i) prior to the change in employment status at the old target
payment level and (ii) after the change at the new target payment level, if
any.  Any promotion to the ranks of “Designated Senior Executive”
requires Committee action to adjust the target payment hereunder.  If
you are entitled to payment under this Agreement upon a termination of
employment, Section 409A's definition of "separation of service," including its
rules on leaves of absences, will be used to determine the date on which you
actually terminate employment.

     

    10.  Adjustments.  (a)  Adjustments
(which may be increases or decreases) may be made by the Committee in the
Cumulative Sales and Return on Sales as well as in the TSR and list of peer
companies, to
take into account changes in law and accounting and tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events
or circumstances, including, without limitation, acquisitions or divestitures by
or other material changes in the Company or peer companies, provided that no
adjustment shall be made which would result in an increase in your compensation
if your compensation is subject to the limitation on deductibility under Section
162(m) of the Internal Revenue Code, as amended, or any successor provision, for
the year with respect to which the adjustment occurs.

     

    (b)  In
the event of any change in or affecting the outstanding shares of Common Stock
of the Company by reason of a stock dividend or split, merger or consolidation,
or various other events, adjustments will be made as appropriate in connection
with the Performance Shares as contemplated in the Plan.

     

    (c)  Subject
to the provisions of Section 11, the determination of the Committee as to the
terms of any adjustment made pursuant to this Section 10 shall be binding and
conclusive upon you and any other person or persons who are at any time entitled
to receipt of any payment pursuant to the award.

     

    11.  Change of
Control.  (a)  Notwithstanding any other provision of
this Agreement to the contrary, in the event that during the Performance Period
your employment is terminated on or after a Change of Control (as defined in the
Plan) (i) by the Company other than for Cause (as defined in Section 11(b)) or
(ii) by you for Good Reason (as defined in Section 11(c)), your award shall
become nonforfeitable and shall be paid out on the date of your “separation from
service” within the meaning of Section 409A, as if the Performance Period
hereunder had been completed or satisfied and as if the Cumulative Sales and
Return on Sales as well as TSR for
the Company for the Performance Period were sufficient to enable a payment to
you pursuant to Section 2 of the amount that is equal to your target performance
shares set forth on the first page of this letter multiplied by the average
actual percentage payout for the Company’s long-term incentive performance
shares for the prior three completed performance periods, not to exceed the
maximum allowed in the cycle being paid.

     

    (b)           For
purposes of Sections 8 and 11(a), termination for "Cause" shall
mean:

     

    (i)       
    your willful and continued failure to perform
substantially your duties with the Company or one of its affiliates (other than
any such failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to you by the
Senior Vice President, Human Resources of the Company or his/her designee which
specifically identifies the manner in which the Senior Vice President, Human
Resources or his/her designee believes that you have not substantially performed
your duties, or

    
      
        
           

          Without
Change of Control

        

         

      

      
        4

        
          

        

      

      
         

      

    

     

    (ii)           your
willful engaging in illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.

     

    For
purposes of this provision, no act or failure to act, on the part of you, shall
be considered "willful" unless it is done, or omitted to be done, by you in bad
faith or without reasonable belief that your action or omission was in the best
interests of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Company
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by you in good faith and in the best
interests of the Company.

     

    
      (c)           For
purposes of this Agreement, "Good Reason" shall mean:

    

     

    (i)           the
assignment to you of any duties inconsistent in any material respect with your
most significant position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities held, exercised and
assigned at any time during the 120-day period immediately preceeding the Change
of Control, or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by you;

     

    (ii)           any
failure by the Company to maintain your compensation at a level consistent with
that generally in effect prior to any Change of Control, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
you;

     

    (iii)          requiring
you to be based at any office or location other than the location where you were
employed immediately preceding the Change of Control unless any office or
location is less than 35 miles from such location, or if the distance from the
new location to your residence is less than the distance from the old location
to the residence;

     

    (iv)          any
purported termination by the Company of your employment otherwise than as
expressly  permitted by this Agreement; or

     

    (v)           any
failure by the Company to comply with and satisfy Section 18(b) of this
Agreement.

     

    For
purposes of this Section 11(c), any good faith determination of "Good Reason"
made by you shall be conclusive.

     

    (d)           Notwithstanding
anything to the contrary in this Agreement (except to the extent that Section
11(a) provides for an earlier payment upon a termination of employment), if a
Change of Control occurs during the Performance Period, the payment date for
your Performance Shares will be deemed to be November 2012.

    
      
        
           

          Without
Change of Control

        

         

      

      
        5

        
          

        

      

      
         

      

    

    12.  Divestiture.  In
the event that your principal employer is a subsidiary of Rockwell Collins, it
is possible that your principal employer may cease to be a subsidiary of
Rockwell Collins during the Performance Period and that your employment with the
Company terminates as a result (the date of such cessation is herein called the
Divestiture Date).  If your Performance Shares are nonforfeitable at
the time of the Divestiture Date and the divestiture of your principal employer
at that time constitutes a "change in control event" that meets the requirements
of Section 409A, then your Performance Shares shall become nonforfeitable (to
the extent not already nonforfeitable) and shall be paid out on the Divestiture
Date (x) as if the Performance Period hereunder had been completed or satisfied
and as if the Cumulative Sales and Return on Sales as well as TSR for
the Company for the Performance Period were sufficient to enable a payment to
you pursuant to Section 2 of the amount that is equal to your target performance
shares set
forth on the first page of this letter, multiplied by the average actual
percentage payout for the Company’s long-term incentive performance shares for
the prior three completed performance periods, not to exceed the maximum allowed
in the cycle being paid.  If the divestiture of your principal
employer at that time does not meet the requirements of a "change in control
event" under Section 409A, then your Performance Shares shall become
nonforfeitable (to the extent not already nonforfeitable) on the Divestiture
Date and shall be paid out in November 2012 consistent with the payout amount
approved by the Compensation Committee at their November 2012
meeting.

     

    13.  Accountant's
Letter.  As soon as practicable after the end of the
Performance Period, the Committee shall obtain a letter or other communication
from the Company’s Senior Vice President and Chief Financial Officer or the Vice
President, Finance and Controller, or one of their successors or designees,
to the effect that such person has reviewed the determination for the
Performance Period of the Cumulative Sales and Return on Sales as well as TSR
results and ranking of the Company and that in such person’s opinion such
determinations have been made in accordance with Section 3.

     

    14.  Employment
Rights.  You shall not have any rights of continued employment
with the Company as a result of the Performance Shares, other than the payment
rights expressly contemplated herein.

     

    15.  Section
409A.

     

    (a)           Notwithstanding
any other provision of this Agreement to the contrary, the Company makes no
representation that any amount payable under this Agreement will be exempt from
or comply with Section 409A and makes no undertaking to preclude
Section 409A from applying to such amount.

     

    (b)           To
the extent that any amount payable under this Agreement is paid upon a
“separation from service” (within the meaning of Section 409A) to a “specified
employee” (within the meaning of Section 409A), then such amount will not be
paid during the six (6) month period following such separation from
service.

     

    16.  Tax
Withholding.  Upon any payment to you of cash and/or Common
Stock of the Company hereunder, Federal income and other tax withholding (and
state and local income tax withholding, if applicable) may be required by the
Company in respect of taxes on income realized by you.  The Company
will withhold such required amounts from your payments, unless the Company has
made other arrangements with you for you to promptly remit an amount sufficient
to pay such withholding taxes.

     

    17.  Governing
Law.  This Agreement and the awards provided for hereunder
shall be governed by and construed in accordance with the laws of the State of Delaware.

     

    18.  Successors.  (a)  This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

    
      
        
           

          Without
Change of Control

        

         

      

      
        6

        
          

        

      

      
         

      

    

    (b)  The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.

     

    19.  Administration.  Consistent
with Section 8 of the Plan, the Committee shall interpret and administer the
Plan, this Agreement and the Performance Shares.  The actions and
determinations of the Committee on all matters relating to the Plan, this
Agreement and the Performance Shares will be final and conclusive.

     

    20.  Entire
Agreement.  This Agreement and the other terms applicable to
Performance Shares granted under the Plan embody the entire agreement and
understanding between Rockwell Collins and you with respect to the Performance
Shares, and there are no representations, promises, covenants, agreements or
understandings with respect to the Performance Shares other than those expressly
set forth in this Agreement and the Plan.  Notwithstanding anything in
this Agreement to the contrary, the terms of this Agreement shall be subject to
the terms of the Plan, a copy of which may be obtained from the office of the
Secretary of the Company.

     

    
      
        	
                Sincerely
      yours,

              
	 
      
	
                ROCKWELL
      COLLINS, INC.

              
	 
      
	
                Gary
      R. Chadick

              
	
                Senior
      Vice President,

              
	
                General
      Counsel and Secretary

              
	 
      
	
                Rockwell
      Collins, Inc.

              
	
                400
      Collins Road NE, M/S 124-323

              
	
                Cedar
      Rapids, IA 52498-0001

              

      

    

    
      
        
           

          Without
Change of Control

        

         

      

      
        7

        
          

        

      

      
         

      

    

    For
Persons With a Change of Control
Agreement         

     

    ROCKWELL
COLLINS, INC.

     

    PERFORMANCE SHARE
AGREEMENT

     

    PERFORMANCE SHARE TERMS AND
CONDITIONS

     

    [Date]

    

    Target
Performance Shares: _________________ shares of
Company Common Stock

    

    PERSONAL
AND CONFIDENTIAL

     

    [Name]

     

    Personnel
Number: ____________

     

    Dear
[Name]:

     

    We are
pleased to confirm that, as a key employee of Rockwell Collins, Inc. and its
subsidiaries (“Rockwell Collins” or the “Company”), you have been granted
performance shares denominated in shares of Common Stock of the Company and
based on the target shares stated above (the “Performance Shares”) pursuant to
this agreement (this “Agreement”) and under the Rockwell Collins 2006 Long-Term
Incentives Plan, as amended (the “Plan”).

     

    Any
payout of your Performance Shares is based on the achievement by Rockwell
Collins of the goals for Cumulative Sales and Return on Sales for
its fiscal years of ______ through _______
[covering three fiscal years] (the “Performance Period”) as set forth in
the matrix attached as Exhibit A (the “Matrix”).  Any payout based on
performance pursuant to the Matrix is to be further adjusted based on Total
Shareowner Return (TSR) as specified below. The terms and conditions of these
Performance Shares are as set forth in more detail below.

     

    1.  Confirmation of
Award.  Together with any letter transmitting this document to
you, this Agreement confirms your award in accordance with the terms as set
forth herein.

     

    2.  Amount Payable Pursuant to
Awards.  Subject to the provisions of this Agreement, the share
amounts payable to you pursuant to your Performance Shares shall be determined
as follows:

     

    (a)  The
percentage of target awards earned will be the percentage found at the
intersection in the Matrix of the final results achieved for Cumulative Sales
and for Return on Sales for the Performance Period (as determined pursuant to
Section 3).

     

    (b)  If
the final results achieved for the Performance Period fall between the levels of
performance specified in the Matrix, the percentage of target awards payable
will be interpolated consistent with the range in which the Cumulative Sales and
Return on Sales falls as conclusively determined by the Committee (as defined
below).

     

    (c)  No
amount shall be payable for the Performance
Period if the Cumulative Sales or Return on Sales (as
determined pursuant to Section 3) for the Performance Period is less than the
minimum level for the Performance Period as indicated in the
Matrix.

    
      
        
           

          With
Change of Control

        

         

      

      
        1

        
          

        

      

      
         

      

    

     

    (d)  The
payments as determined for achievement against goals for Cumulative Sales and
for Return on Sales for the Performance Period will be further adjusted for the
Company’s TSR performance (as determined pursuant to Section 3) relative to the
14 peer companies listed on the attached Exhibit B.  If relative
performance is among the top 4 of the peer companies, the payments will be
adjusted upward by 20%.  If relative performance is among the bottom 4
of the peer companies, the payments will be reduced by 20%.  If the
relative performance is not among the top 4 companies or among the bottom 4
companies, it will be deemed to be among the middle group of companies and there
will be no adjustment.

     

    Subject
to the provisions of this Agreement, the amount payable to you pursuant to the
Performance Shares with respect to the Performance Period shall be paid in
Common Stock, less applicable taxes, by Rockwell Collins as soon as practicable
after the end of the Performance Period and after receipt of the accountant’s
letter for the Performance Period pursuant to Section 13, and in any event
within the calendar year within which the Performance Period
ends.  The Performance Shares represent the Company’s unfunded and
unsecured promise to issue shares of Common Stock at a future date, subject to
the terms of this Agreement and the Plan.  You have no rights under
the Performance Shares or this Agreement other than the rights of a general
unsecured creditor of the Company.  Until the distribution of any
Common Stock after vesting is evidenced in book entry form at the transfer
agent, is placed into a brokerage account or a stock certificate is issued, you
shall not have, with respect to the Performance Shares, rights to vote or
receive dividends or any other rights as a shareowner.

     

    3.  Definitions and
Determination of Financial Performance.  “Cumulative Sales”
means, for the Performance Period, the total Sales as reported by the Company in
its audited financial statements.  “Return on Sales” means, for the
Performance Period, the rate determined by dividing Net Income by
Sales.  Both Net Income and Sales will be the three year cumulative
values as reported in the Company’s audited financial statements after adjusting
for extraordinary income and expense items.  The foregoing definitions
and measures will exclude the base sales and net income for all divestitures and
for acquisitions with sales for the acquired business’ last twelve completed
months that comprise up to 10% of Rockwell Collins base sales for its last
twelve completed months at the time of acquisition.  Such definitions
and measures will include post-acquisition growth related to these
acquisitions.   With respect to acquisitions with sales that
comprise up to 10% of total Rockwell Collins’ base sales revenue at the time of
divestiture or acquisition, Net Income will also be adjusted for “fair value”
expenses of the transaction including investment banker charges, amortization of
intangibles, physical property step-ups, and imputed interest on the acquisition
value.  The Committee reserves its discretion pursuant to Section 10
below to make necessary or appropriate adjustments to the definitions and
measures or otherwise for acquisitions, divestitures and other matters
referenced in Section 10.

     

    TSR is
measured by adding (i) the total stock price growth for the Performance Period,
measured by comparing the average stock price during October ____ [the first
year of the Performance Period] to the average stock price during September
_____ [the last year of the Performance Period], and (ii) dividends paid,
measured as if reinvested in stock at the payment date.  In the event
of substantial changes causing an inability to calculate TSR for one or more of
the peer companies listed on the attached Exhibit B (or in the event of spinoffs
or similar transactions causing a peer company to split into two or more peer
companies), the list of peer companies shall be adjusted accordingly to take
such events into account and the new group of peer companies shall for purposes
of Section 2(d) be divided into a top, middle and bottom group of
performers.  If the number of peer companies is 14, 15 or 16
companies, there will be 4 of the resulting peers in each of the top and bottom
groupings and the remaining number of peer companies shall be assigned to the
middle group.  If the number of peer companies is 10, 11, 12 or 13
companies, there will be 3 of the resulting peers in each of the top and bottom
groupings and the remaining number of peer companies shall be assigned to the
middle group.

    
      
        
           

          With
Change of Control

        

         

      

      
        2

        
          

        

      

      
         

      

    

     

    In
connection with the receipt of the accountant's letter for the Performance
Period pursuant to Section 13, the committee of the Board of Directors of
Rockwell Collins administering the Plan (which committee is herein called the
“Committee” and which, on the date hereof, is the Compensation Committee) shall
determine the Cumulative Sales, Return on Sales and the TSR results and
ranking for
the Performance Period after taking into account any adjustment as contemplated
in Section 10.

     

    4.  Payment of Performance
Shares Denominated in Shares of Common Stock.  The Performance
Shares denominated in shares of Common Stock are payable in shares of the
Company’s Common Stock; provided, however, that the Committee may, in its sole
discretion, make a cash payment equal to the Fair Market Value of shares of
Common Stock otherwise required to be issued.  The Company may issue
shares of Common Stock in book entry form in connection with the payout of
Performance Shares.  In lieu of fractional shares the Company may
determine, in its sole discretion, to pay cash or to round such shares to the
closest whole number.   The future value of the shares of Common
Stock underlying the Performance Shares is unknown and cannot be predicted with
certainty.

     

    5.  Transferability of
Award.  The Performance Shares shall not be transferable by you
except by will or by the laws of descent and distribution.

     

    6.  Termination of Employment
for Death or Disability.  If your employment by the Company
terminates during the Performance Period by reason of your death, disability or
retirement under a retirement plan of the Company, you will continue to be
eligible to receive a payment, if any, that would otherwise be payable pursuant
to Section 2, but any such amount shall be pro rated for the portion of the
Performance Period that elapsed prior to this termination of employment and
shall be paid at the time such amount would otherwise be payable as specified in
Section 2.  Disability shall be defined for purposes of this Agreement
as a disability for a continuous period of at least six months under the
Company’s long-term disability plan during the period of your continuous service
as an employee of the Company.

     

    7.  Termination of Employment
for Other Reasons.  Except as otherwise provided in Sections 9
through 12, if your employment by the Company terminates during the Performance
Period other than by reason of your death, disability, or retirement under a
retirement plan of the Company, you will not be entitled to any payment pursuant
to Section 2 with respect to the Performance Period.

     

    8.  Forfeiture of Award for
Detrimental Activity.  If you engage in detrimental activity
(as defined in this Section 8) at any time (whether before or after termination
of your employment), you will not be entitled to any payment hereunder and you
will forfeit all rights with respect to the Performance Shares under this
Agreement.  For purposes of this Section 8, "detrimental activity"
shall mean willful, reckless or grossly negligent activity that is determined by
the Committee to be detrimental to or destructive of the business or property of
the Company.  Any such determination of the Committee shall be final
and binding for all purposes.  Notwithstanding the foregoing, no
payment hereunder shall be forfeited or become not payable by virtue of this
Section 8 on or after the date of a Change of Control (as defined in the Plan)
unless the “Cause” standard set forth in Section 11(b) is
satisfied.

     

    9.  Transfer of Employment;
Leave of Absence.  Except as otherwise required by Internal
Revenue Code Section 409A, for the purposes of this Agreement, (a) a transfer of
your employment from Rockwell Collins to a subsidiary or vice versa, or from one
subsidiary of Rockwell Collins to another, without an intervening period, shall
not be deemed a termination of employment, and (b) if you are granted in writing
a leave of absence, you shall be deemed to have remained in the employ of
Rockwell Collins or a subsidiary of Rockwell Collins during such leave of
absence.  If your level of employment changes, the Company may adjust
your target payment hereunder to pro rate the portion of the Performance Period
that elapses (i) prior to the change in employment status at the old target
payment level and (ii) after the change at the new target payment level, if
any.  Any promotion to the ranks of “Designated Senior Executive”
requires Committee action to adjust the target payment hereunder.  If
you are entitled to payment under this Agreement upon a termination of
employment, Section 409A's definition of "separation of service," including its
rules on leaves of absences, will be used to determine the date on which you
actually terminate employment.

    
      
        
           

          With
Change of Control

        

         

      

      
        3

        
          

        

      

      
         

      

    

     

    10.  Adjustments.  (a)  Adjustments
(which may be increases or decreases) may be made by the Committee in the
Cumulative Sales and Return on Sales as well as in the TSR and list of peer
companies, to
take into account changes in law and accounting and tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events
or circumstances, including, without limitation, acquisitions or divestitures by
or other material changes in the Company or peer companies, provided that no
adjustment shall be made which would result in an increase in your compensation
if your compensation is subject to the limitation on deductibility under Section
162(m) of the Internal Revenue Code, as amended, or any successor provision, for
the year with respect to which the adjustment occurs.

     

    (b)  In
the event of any change in or affecting the outstanding shares of Common Stock
of the Company by reason of a stock dividend or split, merger or consolidation,
or various other events, adjustments will be made as appropriate in connection
with the Performance Shares as contemplated in the Plan.

     

    (c)  Subject
to the provisions of Section 11, the determination of the Committee as to the
terms of any adjustment made pursuant to this Section 10 shall be binding and
conclusive upon you and any other person or persons who are at any time entitled
to receipt of any payment pursuant to the award.

     

    11.  Change of
Control.  (a)  Notwithstanding any other provision of
this Agreement to the contrary, in the event that during the Performance Period
your employment is terminated on or after a Change of Control (as defined in the
Plan) (i) by the Company other than for Cause (as defined in Section 11(b)) or
(ii) by you for Good Reason (as defined in Section 11(c)), your award shall
become nonforfeitable and shall be paid out on the date of your “separation from
service” within the meaning of Section 409A, as if the Performance Period
hereunder had been completed or satisfied and as if the Cumulative Sales and
Return on Sales as well as TSR for
the Company for the Performance Period were sufficient to enable a payment to
you pursuant to Section 2 of the amount that is equal to your target performance
shares set forth on the first page of this letter multiplied by the average
actual percentage payout for the Company’s long-term incentive performance
shares for the prior three completed performance periods, not to exceed the
maximum allowed in the cycle being paid.

     

    (b)           For
purposes of Sections 8 and 11(a), termination for "Cause" shall
mean:

    
      
        
           

          With
Change of Control

        

         

      

      
        4

        
          

        

      

      
         

      

    

     

    (i)           your
willful and continued failure to perform substantially your duties with the
Company or one of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to you by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or the Chief Executive Officer of the Company believes that you have not
substantially performed your duties, or

     

    (ii)           your
willful engaging in illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.

     

    For
purposes of this provision, no act or failure to act, on the part of you, shall
be considered "willful" unless it is done, or omitted to be done, by you in bad
faith or without reasonable belief that your action or omission was in the best
interests of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Company
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by you in good faith and in the best
interests of the Company.  The cessation of your employment shall not
be deemed to be for Cause unless and until there shall have been delivered to
you a copy of the resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at the meeting of the
Board called and held for such purpose (after reasonable notice is provided to
you and you are given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, you are guilty
of the conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.

     

    
      (c)      
     For
purposes of this Agreement, "Good Reason" shall mean:

    

     

    (i)        
   the assignment to you of any duties inconsistent in any
material respect with your most significant position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities held,
exercised and assigned at any time during the 120-day period immediately
preceeding the Change of Control, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by you;

     

    (ii)
          requiring you to be
based at any office or location other than the location where you were employed
immediately preceding the Change of Control or any office or location less than
35 miles from such location, or if the distance from the new location to your
residence is less than the distance from the old location to the
residence;

     

    (iii)          any
failure by the Company to maintain your compensation at a level consistent with
that generally in effect prior to any Change of Control, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
you;

     

    (iv)          any
purported termination by the Company of your employment otherwise than as
expressly permitted by this Agreement; or

     

    (v)        any
failure by the Company to comply with and satisfy Section 18(b) of this
Agreement.

     

    For
purposes of this Section 11(c), any good faith determination of "Good Reason"
made by you shall be conclusive.

    
      
        
           

          With
Change of Control

        

         

      

      
        5

        
          

        

      

      
         

      

    

     

    (d)           Notwithstanding
anything to the contrary in this Agreement (except to the extent that paragraph
11(a) provides for an earlier payment upon a termination of employment), if a
Change of Control occurs during the Performance Period, the payment date for
your Performance Shares will be deemed to be November 2012.

     

    12.  Divestiture.  In
the event that your principal employer is a subsidiary of Rockwell Collins, it
is possible that your principal employer may cease to be a subsidiary of
Rockwell Collins during the Performance Period and that your employment with the
Company terminates as a result (the date of such cessation is herein called the
Divestiture Date).  If your Performance Shares are nonforfeitable at
the time of the Divestiture Date and the divestiture of your principal employer
at that time constitutes a "change in control event" that meets the requirements
of Section 409A, then your Performance Shares shall become nonforfeitable (to
the extent not already nonforfeitable) and shall be paid out on the Divestiture
Date (x) as if the Performance Period hereunder had been completed or satisfied
and as if the Cumulative Sales and Return on Sales as well as TSR for
the Company for the Performance Period were sufficient to enable a payment to
you pursuant to Section 2 of the amount that is equal to your target performance
shares set
forth on the first page of this letter multiplied by the average actual
percentage payout for the Company’s long-term incentive performance shares for
the prior three completed performance periods, not to exceed the maximum allowed
in the cycle being paid. If the divestiture of your principal employer at that
time does not meet the requirements of a "change in control event" under Section
409A, then your Performance Shares shall become nonforfeitable (to the extent
not already nonforfeitable) on the Divestiture Date and shall be paid out in
November 2012 consistent with the payout amount approved by the Compensation
Committee at its November 2012 meeting

     

    13.  Accountant's
Letter.  As soon as practicable after the end of the
Performance Period, the Committee shall obtain a letter or other communication
from the Company’s Senior Vice President and Chief Financial Officer or the Vice
President, Finance and Controller, or one of their successors or designees,
to the effect that such person has reviewed the determination for the
Performance Period of the Cumulative Sales and Return on Sales as well as TSR
results and ranking of the Company and that in such person’s opinion such
determinations have been made in accordance with Section 3.

     

    14.  Employment
Rights.  You shall not have any rights of continued employment
with the Company as a result of the Performance Shares, other than the payment
rights expressly contemplated herein.

     

    15.  Section
409A.

     

    (a)           Notwithstanding
any other provision of this Agreement to the contrary, the Company makes no
representation that any amount payable under this Agreement will be exempt from
or comply with Section 409A and makes no undertaking to preclude
Section 409A from applying to such amount.

     

    (b)           To
the extent that any amount payable under this Agreement is paid upon a
“separation from service” (within the meaning of Section 409A) to a “specified
employee” (within the meaning of Section 409A), then such amount will not be
paid during the six (6) month period following such separation from
service.

     

    16.  Tax
Withholding.  Upon any payment to you of cash and/or Common
Stock of the Company hereunder, Federal income and other tax withholding (and
state and local income tax withholding, if applicable) may be required by the
Company in respect of taxes on income realized by you.  The Company
will withhold such required amounts from your payments, unless the Company has
made other arrangements with you for you to promptly remit an amount sufficient
to pay such withholding taxes.

    
      
        
           

          With
Change of Control

        

         

      

      
        6

        
          

        

      

      
         

      

    

     

    17.  Governing
Law.  This Agreement and the awards provided for hereunder
shall be governed by and construed in accordance with the laws of the State of Delaware.

     

    18.  Successors.  (a)  This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

     

    (b)  The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.

     

    19.  Administration.  Consistent
with Section 8 of the Plan, the Committee shall interpret and administer the
Plan, this Agreement and the Performance Shares.  The actions and
determinations of the Committee on all matters relating to the Plan, this
Agreement and the Performance Shares will be final and conclusive.

     

    20.  Entire
Agreement.  This Agreement and the other terms applicable to
Performance Shares granted under the Plan embody the entire agreement and
understanding between Rockwell Collins and you with respect to the Performance
Shares, and there are no representations, promises, covenants, agreements or
understandings with respect to the Performance Shares other than those expressly
set forth in this Agreement and the Plan.  Notwithstanding anything in
this Agreement to the contrary, the terms of this Agreement shall be subject to
the terms of the Plan, a copy of which may be obtained from the office of the
Secretary of the Company.

     

    
      
        	
                Sincerely
      yours,

              
	 
      
	
                ROCKWELL
      COLLINS, INC.

              
	 
      
	
                Gary
      R. Chadick

              
	
                Senior
      Vice President,

              
	
                General
      Counsel and Secretary

              
	 
      
	
                Rockwell
      Collins, Inc.

              
	
                400
      Collins Road NE, M/S 124-323

              
	
                Cedar
      Rapids, IA 52498-0001

              

      

    

    
      
        
           

          With
Change of Control

        

         

      

      
        7

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