Document:

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                                                                    EXHIBIT 10.1

                                                                  CONFORMED COPY

                               U.S. $2,016,856,000

                            NATIONAL RURAL UTILITIES
                         COOPERATIVE FINANCE CORPORATION

                           Medium-Term Notes, Series C

                           CALCULATION AGENT AGREEMENT

                                This AGREEMENT dated June 15, 2001, between
                        National Rural Utilities Cooperative Finance
                        Corporation, a District of Columbia cooperative
                        association (hereinafter called the "Issuer"), whose
                        principal office is at Woodland Park, 2201 Cooperative
                        Way, Herndon, Virginia 20171, and Lehman Brothers Inc.,
                        a Delaware corporation (hereinafter sometimes called the
                        "Calculation Agent" which term shall, unless the context
                        shall otherwise require, include its successors and
                        assignees), whose principal office is at 3 World
                        Financial Center, New York, New York 10285-0900.

                WHEREAS (A) The Issuer proposes to issue from time to time an
aggregate principal amount of up to $2,016,856,000 of Medium-Term Notes, Series
C (the "Notes") entitled to the benefits of the Indenture dated as of December
15, 1987 (as supplemented by the First Supplemental Indenture dated as of
October 1, 1990, and as it may be supplemented or amended from time to time, the
"Indenture"), between the Issuer and The Bank of New York, as successor trustee;

                (B) Each Note will bear interest at either (a) a fixed rate or
(b) a floating rate determined by reference to an interest rate formula (the
"Floating Rate Notes");

                NOW IT IS HEREBY AGREED THAT,

                1.      Terms defined in the "Description of Debt Securities"
and "Description of the Medium-Term Notes" shall bear the same meanings herein
unless the context otherwise requires. The "Description of Debt Securities"
means the terms and conditions of the Notes as set forth in

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                                                                               2

the Prospectus, dated June 13, 2001, as supplemented by a Prospectus Supplement,
dated June 14, 2001, relating to the Notes. The "Description of the Medium-Term
Notes" means the terms and conditions of the Notes as set forth in the
Prospectus Supplement, dated June 14, 2001, relating to the Notes. Such
Prospectus Supplement will be supplemented or amended by one or more Pricing
Supplements (each a "Supplement") setting forth additional terms and conditions
of the Notes.

                2.      The Issuer hereby appoints Lehman Brothers Inc. as
Calculation Agent for the Notes, upon the terms and subject to the conditions
herein mentioned, and Lehman Brothers Inc. hereby accepts such appointment. The
Calculation Agent shall act as an agent of the Issuer for the purpose of
determining the interest rate of the Floating Rate Notes in accordance with the
Description of the Medium-Term Notes and the provisions of this Agreement.

                3.      The Calculation Agent shall calculate the applicable
interest rates for the Floating Rate Notes in accordance with the provisions set
forth in the Prospectus Supplement relating to the Notes dated June 14, 2001,
under the heading "Description of the Medium-Term Notes--Floating Rate Notes"
which provisions are incorporated by reference herein as if set forth in full in
this Agreement.

                4.      In no event shall the interest rate be less than the
floor, if any, or more than the ceiling, if any, designated in the applicable
Supplement.

                5.      The Calculation Agent will, as soon as practicable after
(i) 3:00 p.m., New York City time, on the Calculation Date pertaining to each
Interest Determination Date relating to Commercial Paper Rate Notes, Fed Funds
Rate Notes, CD Rate Notes and Treasury Rate Notes or (ii) 11:00 a.m., London
time, on each Interest Determination Date relating to LIBOR Notes, determine
(and notify the Issuer and the Trustee of) the interest rate applicable during
the next succeeding interest period (if the interest rate cannot be determined
in accordance with the provisions set forth in the Prospectus Supplement
relating to the Notes dated June 14, 2001, in clause (i) under the heading
"Description of the Medium-Term Notes--Floating Rate Notes--LIBOR", the
Calculation Agent agrees to determine (and notify the Issuer and Trustee of) the
interest rate in accordance with the provisions in clause (ii) of such heading).

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                6.      As soon as determined after each Interest Determination
Date, the Calculation Agent will cause to be forwarded to the Issuer, the
Trustee and the Paying Agent information regarding the interest rates and the
interest periods for each interest period and the relevant Interest Payment
Date.

                7.      The Issuer will pay such compensation as shall be agreed
upon and the expenses, including reasonable counsel fees, properly incurred by
the Calculation Agent in connection with its duties hereunder, upon receipt of
such invoices as the Issuer shall reasonably require.

                8.      The Issuer will indemnify the Calculation Agent against
any losses, liabilities, costs, claims, actions or demands which it may incur or
sustain or which may be made against it in connection with its appointment or
the exercise of its powers and duties hereunder as well as the reasonable costs,
including the expenses and fees of counsel in defending any claim, action or
demand, except such as may result from the negligence, wilful default or bad
faith of the Calculation Agent or any of its employees. The Calculation Agent
shall incur no liability and shall be indemnified and held harmless by the
Issuer for, or in respect of, any actions taken or suffered to be taken in good
faith by the Calculation Agent in reliance upon (i) the written opinion or
advice of counsel or (ii) written instructions from the Issuer.

                9.      The Calculation Agent accepts its obligations herein
(and agrees to act in good faith in the performance of its obligations) set
forth upon the terms and conditions hereof, including the following, to all of
which the Issuer agrees:

                (i) in acting under this Agreement and in connection with the
        Notes, the Calculation Agent, acting as agent for the Issuer, does not
        assume any obligation towards, or any relationship of agency or trust
        for or with, any of the holders of the Notes;

                (ii) unless herein otherwise specifically provided, any order,
        certificate, notice, request or communication from the Issuer made or
        given under any provision of this Agreement shall be sufficient if
        signed by any person whom the Calculation Agent reasonably believes to
        be a duly authorized officer of the Issuer;

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                (iii) the Calculation Agent shall be obligated to perform only
        such duties as are set forth specifically herein and any duties
        necessarily incidental thereto; and

                (iv) the Calculation Agent shall be protected and shall incur no
        liability for or in respect of any action taken or omitted to be taken
        by it in reliance upon anything contained in a Floating Rate Note, the
        Description of Debt Securities, the Description of the Medium-Term Notes
        or one or more Prospectus Supplements.

                10.     (A) The Issuer agrees to notify the Calculation Agent at
least five London Business Days prior to the issuance of any LIBOR Note. The
Calculation Agent agrees to select four Reference Banks prior to the issuance of
the first LIBOR Note by the Issuer; to make all appropriate arrangements for
such banks to act as Reference Banks; and to notify the Issuer, the Trustee and
each of the Agents as to the names and addresses of such Reference Banks. The
Calculation Agent covenants that, for so long as it is required so to do in
accordance with the applicable Description of the Medium-Term Notes, it shall
ensure that there shall at all times be four Reference Banks. Forthwith upon any
change in the identity of the Reference Banks, the Calculation Agent shall
notify the Issuer, the Trustee and the Agents of such change. If fewer than two
Reference Banks are quoting, the Calculation Agent agrees to select three major
banks in the City of New York in accordance with the applicable Description of
the Medium-Term Notes. The Calculation Agent shall not be responsible to the
Issuer or any third party for any failure of the Reference Banks to fulfill
their duties or meet their obligations as Reference Banks or as a result of the
Calculation Agent having acted (except in the event of negligence, wilful
default or bad faith) on any certificate given by any Reference Bank which
subsequently may be found to be incorrect.

                (B) If necessary, in accordance with the provisions set forth in
the Prospectus Supplement relating to the Notes dated June 14, 2001, under the
Heading "Description of the Medium-Term Notes--Floating Rate Notes--Prime Rate",
the Calculation Agent agrees to select a substitute major bank or trust company
(meeting the requirements specified under such heading). The Calculation Agent
shall not be responsible to the Issuer or any third party for the failure of
such bank or trust company to fulfill any duty or obligation contemplated under
such heading.

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                (C) Except as provided below, the Calculation Agent may at any
time resign as Calculation Agent by giving written notice to the Issuer and the
Trustee of such intention on its part, specifying the date on which its desired
resignation shall become effective, provided that such notice shall be given not
less than two months prior to the said effective date unless the Issuer and the
Trustee otherwise agree in writing. Except as provided below, the Calculation
Agent may be removed by the filing with it of an instrument in writing signed by
the Issuer specifying such removal and the date when it shall become effective
(such effective date being at least 20 days after said filing). Such resignation
or removal shall take effect upon:

                (i) the appointment by the Issuer as hereinafter provided of a
        successor Calculation Agent approved by the Trustee, which shall be a
        responsible financial firm or institution having an established place of
        business in The City of New York;

                (ii) the acceptance of such appointment by such successor
        Calculation Agent; and

                (iii) the giving of notice of such appointment to the holders of
        the Notes, provided that if the Calculation Agent fails duly to
        establish the amount of interest for any interest period, such removal
        will take effect immediately upon such appointment of, and acceptance
        thereof by, a successor Calculation Agent approved by the Trustee and
        qualified as aforesaid, in which event notice of such appointment shall
        be given to the holders of the Notes as soon as practicable thereafter.
        Upon its resignation or removal becoming effective, the retiring
        Calculation Agent shall be entitled to the payment of its compensation
        and the reimbursement of all expenses incurred by such retiring
        Calculation Agent pursuant to paragraph 7 hereof.

                (D) If at any time the Calculation Agent shall resign or be
removed, or shall become incapable of acting or shall be adjudged bankrupt or
insolvent, or liquidated or dissolved, or an order is made or an effective
resolution is passed to wind up the Calculation Agent, or if the Calculation
Agent shall file a voluntary petition in bankruptcy or make an assignment for
the benefit of its creditors, or shall consent to the appointment of a receiver,
administrator or other similar official of all or any substantial part of its
property, or shall admit in writing its inability to pay or meet its debts as
they

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mature, or if a receiver, administrator or other similar official of the
Calculation Agent or of all or any substantial part of its property shall be
appointed, or if any order of any court shall be entered approving any petition
filed by or against the Calculation Agent under the provisions of any applicable
bankruptcy or insolvency law, or if any public officer shall take charge or
control of the Calculation Agent or its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then a successor Calculation Agent,
approved by the Trustee, shall be appointed by the Issuer by an instrument in
writing filed with the successor Calculation Agent. Upon the appointment as
aforesaid of a successor Calculation Agent and acceptance by the latter of such
appointment and (except in cases of removal for failure to establish the amount
of interest) the giving of notice to the holders of the Notes, the former
Calculation Agent shall cease to be Calculation Agent hereunder.

                (E) Any successor Calculation Agent appointed hereunder shall
execute and deliver to its predecessor and the Issuer an instrument, in the form
acceptable to the Trustee, accepting such appointment hereunder, and thereupon
such successor Calculation Agent, without any further act, deed or conveyance,
shall become vested with all the authority, rights, powers, trusts, immunities,
duties and obligations of such predecessor with like effect as if originally
named as the Calculation Agent hereunder, and such predecessor shall thereupon
become obliged to transfer and deliver, and such successor Calculation Agent
shall be entitled to receive, copies of any relevant records maintained by such
predecessor Calculation Agent.

                (F) Any corporation into which the Calculation Agent may be
merged or converted or any corporation with which the Calculation Agent may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Calculation Agent shall be a party shall, to the
extent permitted by applicable law and provided that it shall be a responsible
financial firm or institution having an established place of business in The
City of New York, be the successor Calculation Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. Notice of any such merger, conversion or
consolidation shall forthwith be given to the Issuer and the Trustee.

                11.     Any notice required to be given hereunder shall be
delivered in person, sent by letter or telex or communicated by telephone
(subject, in the case of communication by telephone, to

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confirmation dispatched within two business days by letter or telex), in the
case of the Issuer, to it at Woodland Park, 2201 Cooperative Way, Herndon,
Virginia 20171, Attention: Chief Financial Officer; in the case of the
Calculation Agent, to it at 3 World Financial Center, New York, New York 10285,
Attention: Medium-Term Note Department; and in the case of the Trustee, to it at
The Bank of New York, 101 Barclay Street, 21W, New York, New York 10286,
Attention: Trust Administrator or, in any case, to any other address of which
the party receiving notice shall have notified the party giving such notice in
writing.

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                12.     This Agreement may be amended only by a writing duly
executed and delivered by each of the parties signing below.

                13.     THE PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                14.     This Agreement may be executed in counterparts and the
executed counterparts shall together constitute a single instrument.

                IN WITNESS WHEREOF, this Agreement has been executed and
delivered as of the day and year first above written.

                                    NATIONAL RURAL UTILITIES COOPERATIVE
                                    FINANCE CORPORATION,

                                       by /s/ Steven L. Lilly
                                          ---------------------------

                                          Name: Steven L. Lilly
                                          Title: Sr. Vice President & Chief
                                                 Financial Officer

                                    LEHMAN BROTHERS INC.,

                                       by /s/ Erin Callan
                                          ---------------------------

                                          Name:  Erin Callan
                                          Title: Managing Director<PAGE>   1
                                                                  EXHIBIT 4.b.1

                             ROCKWELL COLLINS, INC.

                             2001 STOCK OPTION PLAN

1.  PURPOSE

      In connection with the Collins Distribution, certain stock options granted
pursuant to Rockwell's Option Plans will be adjusted so that following the
Collins Distribution those options will entitle the respective grantees to
purchase Collins Shares in addition to or instead of Rockwell Shares, and
Collins will assume Rockwell's obligations with respect to those adjusted stock
options for Collins Shares. The purpose of the 2001 Stock Option Plan is to
provide a means for Collins to perform its obligations with respect to those
adjusted stock options for Collins Shares and to foster creation of and enhance
Collins shareowner value by linking the compensation of officers and other key
employees of Collins, whose stock options granted pursuant to Rockwell's Option
Plans generally will be converted into stock options for Collins Shares, to
increases in the price of Collins stock, thus providing means by which persons
of outstanding abilities can be motivated and retained.

2.  DEFINITIONS

      For the purpose of the Plan, the following terms shall have the meanings
set forth below:

      a. Boeing. The Boeing Company, a Delaware corporation.

      b. Boeing North American. Boeing North American, Inc. (formerly Rockwell
International Corporation), a Delaware corporation incorporated in 1928 that was
the surviving corporation in a merger with Boeing NA, Inc., a wholly-owned
subsidiary of Boeing.

      c. Board of Directors. The Board of Directors of Collins.

      d. Change of Control. Any of the following:

            (i) The acquisition by any individual, entity or group (within the
      meaning of Section 13(d)(3) or 14(d)(2) of 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 (A) the then outstanding shares
      of Common Stock of Collins (the Outstanding Collins Common
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      Stock) or (B) the combined voting power of the then outstanding voting
      securities of Collins entitled to vote generally in the election of
      directors (the Outstanding Collins Voting Securities); provided, however,
      that for purposes of this subparagraph (i), the following acquisitions
      shall not constitute a Change of Control: (w) any acquisition directly
      from Collins, (x) any acquisition by Collins, (y) any acquisition by any
      employee benefit plan (or related trust) sponsored or maintained by
      Collins, Rockwell or any corporation controlled by Collins or Rockwell or
      (z) any acquisition pursuant to a transaction which complies with clauses
      (A), (B) and (C) of subsection (iii) of this Section 2(d); or

            (ii) Individuals who, as of the Collins Distribution Date,
      constitute the Board of Directors (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 Collins'
      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

            (iii) Consummation of a reorganization, merger or consolidation or
      sale or other disposition of all or substantially all of the assets of
      Collins or the acquisition of assets of another entity (a Corporate
      Transaction), in each case, unless, following such Corporate Transaction,
      (A) all or substantially all of the individuals and entities who were the
      beneficial owners, respectively, of the Outstanding Collins Common Stock
      and Outstanding Collins Voting Securities immediately prior to such
      Corporate 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 Corporate Transaction (including, without
      limitation, a corporation which as a result of such transaction owns the
      Corporation or all or substantially all of the Corporation's assets either
      directly or

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      through one or more subsidiaries) in substantially the same proportions as
      their ownership, immediately prior to such Corporate Transaction, of the
      Outstanding Collins Common Stock and Outstanding Collins Voting
      Securities, as the case may be, (B) no Person (excluding any employee
      benefit plan (or related trust) of the Corporation, of Rockwell or of such
      corporation resulting from such Corporate Transaction) beneficially owns,
      directly or indirectly, 20% or more of, respectively, the then outstanding
      shares of common stock of the corporation resulting from such Corporate
      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 Corporate Transaction and (C) at least a majority of
      the members of the board of directors of the corporation resulting from
      such Corporate 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 Corporate Transaction; or

            (iv) Approval by Collins' shareowners of a complete liquidation or
      dissolution of Collins.

      e. Committee.  The Compensation and Management Development Committee
designated by the Board of Directors from among its members excluding any
members thereof who hold Collins Options governed by the Plan.

      f. Collins. Rockwell Collins, Inc., a Delaware corporation, and any
successor thereto.

      g. Collins Distribution. The pro rata distribution of all outstanding
Collins Shares to Rockwell's shareowners.

      h. Collins Distribution Date. The date on which Rockwell completes the
Collins Distribution.

      i. Collins Option. An option to purchase Collins Shares derived from
adjustment of a Rockwell Option in connection with the Collins Distribution.

      j. Collins Shares. Shares of Common Stock, par value $.01 per share, of
Collins, or any security of Collins issued in substitution or exchange therefor
or in lieu thereof.

      k. Corporation. Rockwell and those of its subsidiary corporations or
affiliates designated by the Committee to participate in any of Rockwell's

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Option Plans and after consummation of the Collins Distribution, Collins and its
direct or indirect subsidiary corporations.

      l. Employees. Officers and other key employees of the Corporation, but not
directors who are not also employees of the Corporation.

      m. Exchange Act. The Securities Exchange Act of 1934, as amended, and any
successor statute.

      n. Fair Market Value. The closing price of the Common Stock of Collins as
reported on the New York Stock Exchange - Composite Transactions on the date of
a determination (or on the next preceding day such stock was traded if it was
not traded on the date of a determination).

      o. Merger Closing Date. The Closing Date as defined in the Agreement and
Plan of Merger dated as of July 31, 1996 among Rockwell International
Corporation, a Delaware corporation incorporated in 1928, Boeing and Boeing NA,
Inc.

      p. Meritor. Meritor Automotive, Inc., a Delaware corporation, and,
effective July 7, 2000, ArvinMeritor, Inc., an Indiana corporation.

      q. Meritor Distribution Date. The Distribution Date as defined in the
Distribution Agreement between Rockwell and Meritor relating, among other
things, to the distribution of shares of Meritor Common Stock to Rockwell's
shareowners.

      r. Non-Employee Director. A present or former Non-Employee Director of
Rockwell.

      s. Participant. (i) Any Employee (a Continuing USA Participant) as of the
close of business on May 31, 1996 who then held one or more outstanding Rockwell
Options and who on or before the close of business on the Merger Closing Date
became an employee of United Space Alliance, LLC (USA) immediately upon
termination of employment (by retirement or otherwise) by Rockwell or a
subsidiary corporation of Rockwell, but only for purposes of determining such an
Employee's rights with respect to his or her outstanding Collins Options and
only so long as such Employee shall remain an employee of USA and Boeing or any
of its subsidiaries shall continue to own at least 50% of the total ownership
interests in USA; (ii) any Employee (a Continuing Boeing Participant) as of the
opening of business on the Merger Closing Date who then held one or more
outstanding Rockwell Options and who as of the close of business on that date
remained or became an employee of Boeing North American, Boeing or any of their
respective subsidiaries, but only for purposes of

                                      -4-
<PAGE>   5
determining such an Employee's rights with respect to his or her outstanding
Collins Options and only so long as such Employee shall remain an employee of
Boeing or any of its subsidiaries; (iii) any Employee (a Continuing Meritor
Participant) as of the opening of business on the Meritor Distribution Date who
then held one or more outstanding Rockwell Options and who as of the close of
business on that date remained or became an employee of Meritor or any of its
subsidiaries, but only for purposes of determining such an Employee's rights
with respect to his or her outstanding Collins Options and only so long as such
an Employee shall remain an employee of Meritor or any of its subsidiaries; (iv)
any Employee (a Continuing Collins Participant) as of the opening of business on
the Collins Distribution Date who then held one or more outstanding Rockwell
Options and who as of the close of business on that date remains or becomes an
employee of Collins or any of its subsidiaries, but only for purposes of
determining such an Employee's rights with respect to his or her outstanding
Collins Options and only so long as such an Employee shall remain an employee of
Collins or any of its subsidiaries; and (v) any other person (a Continuing
Rockwell Participant) who on the Collins Distribution Date held one or more
outstanding Rockwell Options, but only for purposes of determining the rights of
such a person with respect to his or her outstanding Collins Options and only so
long as such person (or his or her legatees, heirs or permitted assigns) shall
remain entitled to exercise the Rockwell Options from which his or her Collins
Options are derived.

      t. Plan. This 2001 Stock Option Plan.

      u. Rockwell. Rockwell International Corporation, a Delaware corporation,
and any successor thereto.

      v. Rockwell Option. An option to purchase Rockwell Shares granted pursuant
to any of Rockwell's Option Plans.

      w. Rockwell's Option Plans. As the context requires, any or all of
Rockwell's 1988 Long-Term Incentives Plan, as amended, Rockwell's 1995 Long-Term
Incentives Plan, as amended, Rockwell's 2000 Long-Term Incentives Plan, as
amended, and Rockwell's Directors Stock Plan, as amended.

      x. Rockwell Shares. Shares of Common Stock, par value $1 per share, of
Rockwell, or any security of Rockwell issued in substitution or exchange
therefor or in lieu thereof.

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3. PLAN ADMINISTRATION

      a. The Committee shall exercise all responsibilities, powers and authority
relating to the administration of the Plan not reserved to the Board of
Directors.

      b. The Board of Directors reserves the right, in its sole discretion, to
exercise or authorize another committee or person to exercise some or all of the
responsibilities, powers and authority vested in the Committee under the Plan.

4. COLLINS OPTIONS

      The outstanding Collins Options entitle the respective holders thereof to
purchase such number of Collins Shares at such exercise price as shall be
determined pursuant to resolutions to be adopted by Rockwell's Board of
Directors before the Collins Distribution Date and otherwise have the same terms
and conditions as the Rockwell Options from which they are derived; provided,
however, that the purchase price of the Collins Shares with respect to which a
Collins Option or portion thereof is exercised cannot be paid by delivery of
Rockwell Shares but shall be payable in full in cash or in Collins Shares or in
a combination of cash and Collins Shares. The value of any Collins Share
delivered in payment of the purchase price shall be its Fair Market Value on the
date the Collins Option is exercised.

5. EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT

      a. If the employment by Rockwell or any of its subsidiaries of a
Continuing Rockwell Participant, the service as a director of Rockwell of any
Non-Employee Director, the employment by USA of a Continuing USA Participant,
the employment by Boeing North American, Boeing or any of their respective
subsidiaries of a Continuing Boeing Participant, the employment by Meritor or
any of its subsidiaries of a Continuing Meritor Participant, the employment by
Collins or any of its subsidiaries of a Continuing Collins Participant who (or
whose permitted transferee) holds any outstanding Collins Options terminates by
reason of the death of the Participant, the Collins Options not theretofore
exercised may be exercised from and after the date of the death of the
Participant for a period of three years (or until the expiration date specified
in the Rockwell Option from which the Collins Option is derived, if earlier)
even if any of them was not exercisable at the date of death.

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<PAGE>   7
      b. If a Continuing USA Participant, a Continuing Boeing Participant, a
Continuing Meritor Participant or a Continuing Collins Participant who (or whose
permitted transferee) holds outstanding Collins Options retires under a
retirement plan of USA, Boeing North American, Boeing, Meritor, Collins or any
of their respective subsidiaries, at any time after a portion of those Collins
Options has become exercisable, the Collins Options not theretofore exercised
may be exercised from and after the date upon which they are first exercisable
under the terms thereof for a period of five years from the date of retirement
(or until the expiration date specified in the Rockwell Option from which the
Collins Option is derived, if earlier) even if any of them was not exercisable
at the date of retirement, except that Collins Options derived from Rockwell
Options granted prior to November 30, 1994 may be exercised for such period, not
to exceed three years, from the date of retirement as specified in the Rockwell
Option from which the Collins Option is derived (or until the expiration date
specified in such Rockwell Option, if earlier) and only to the extent the
grantee thereof (or a permitted transferee) was entitled to exercise the Collins
Options at the time of such retirement.

      c. If a Continuing Rockwell Participant who (or whose permitted
transferee) holds outstanding Collins Options retires or has retired under a
retirement plan of Rockwell or any of its subsidiaries at any time after a
portion of those Collins Options has become exercisable, the Collins Options not
theretofore exercised may be exercised from and after the date upon which they
are first exercisable under the terms thereof for a period of five years from
the date of retirement (or until the expiration date specified in the Rockwell
Option from which the Collins Option is derived, if earlier) even if any of them
was not exercisable at the date of retirement, except that Collins Options
derived from Rockwell Options granted prior to November 30, 1994 may be
exercised for such period, not to exceed three years, from the date of
retirement as specified in the Rockwell Option from which the Collins Option is
derived (or until the expiration date specified in such Rockwell Option, if
earlier) and only to the extent the Continuing Rockwell Participant (or
permitted transferee) was entitled to exercise the Collins Options at the time
of such retirement.

      d. If a Non-Employee Director who holds outstanding Collins Options
retires as a director of Rockwell after attaining age 72 or completing ten years
service as a director of Rockwell whether or not any portion of those Collins
Options was exercisable at the date of retirement, the Collins Options not
theretofore exercised may be exercised from and after the date upon which they
are first exercisable under the terms thereof for a period of five years from
the date of retirement (or until the expiration date specified in the Rockwell
Option from which the Collins Option is derived, if earlier) even if any of them
was not exercisable at the date of retirement.

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      e. If the employment by Rockwell or any of its subsidiaries of a
Continuing Rockwell Participant who was an Employee prior to the Collins
Distribution Date, the employment by USA of a Continuing USA Participant, the
employment by Boeing North American, Boeing or any of their respective
subsidiaries of a Continuing Boeing Participant, the employment by Meritor or
its subsidiaries of a Continuing Meritor Participant or the employment by
Collins or its subsidiaries of a Continuing Collins Participant who (or whose
permitted transferee) holds any outstanding Collins Options is terminated or has
heretofore terminated for any reason other than death or retirement under a
retirement plan of Rockwell, USA, Boeing North American, Boeing, Meritor,
Collins or any of their respective subsidiaries, the Collins Options not
theretofore exercised may be exercised only within 90 days after the termination
of such employment (or until the expiration date specified in the Rockwell
Option from which the Collins Option is derived, if earlier) and only to the
extent the grantee thereof (or a permitted transferee) was entitled to exercise
the Options at the time of termination of such employment, unless and except to
the extent the Committee may otherwise determine; provided, however, that the
Committee shall not in any event permit a longer period of exercise than would
have been applicable had the provisions of paragraph b. or c. above been
applicable.

6. SHARES AVAILABLE

      The total number of Collins Shares which may be delivered upon exercise of
Collins Options shall not exceed the number (presently estimated to be 15
million) necessary to provide for exercise of all Collins Options outstanding on
the Collins Distribution Date, as adjusted from time to time as herein provided.
Collins Shares which may be delivered upon exercise of Collins Options may
consist in whole or in part of unissued or reacquired Shares.

7. ADJUSTMENTS

      If there shall be any change in or affecting Collins Shares on account of
any merger, consolidation, reorganization, recapitalization, reclassification,
stock dividend, stock split or combination, or other distribution to holders of
Collins Shares (other than a cash dividend), there shall be made or taken such
amendments to the Plan and such adjustments and actions thereunder as the Board
of Directors may deem appropriate under the circumstances. Such amendments,
adjustments and actions may include, without limitation, changes in the number
of Collins Shares which may be issued or transferred pursuant to the Plan, the

                                      -8-
<PAGE>   9
number of Collins Shares subject to outstanding Collins Options and the related
price per share. Without limiting the generality of the foregoing, (i) if any
such change in or affecting Collins Shares shall result in an increase in the
number of outstanding Collins Shares, the number of Collins Shares remaining
subject to the Plan and the number of Collins Shares then covered by outstanding
Collins Options shall be proportionately increased and the price for each
Collins Share then covered by an outstanding Collins Option shall be
proportionately reduced, and (ii) if any such change in or affecting Collins
Shares shall result in a decrease in the number of outstanding Collins Shares,
the number of Collins Shares remaining subject to the Plan and the number of
Collins Shares then covered by outstanding Collins Options shall be
proportionately decreased and the price for each Collins Share then covered by
an outstanding Collins Option shall be proportionately increased.

8. AMENDMENT AND TERMINATION

      The Committee shall have the power in its discretion to amend, suspend or
terminate the Plan or Collins Options subject thereto at any time except that,
subject to the provisions of Section 7, (a) without the consent of the person
affected, no such action shall cancel or reduce an outstanding Collins Option
other than as provided for or contemplated in the agreement evidencing the
Rockwell Option from which the Collins Option is derived and (b) without the
approval of the shareowners of Collins, the Committee may not (i) increase the
number of Shares provided in Section 6 or (ii) reduce the exercise price of any
Collins Option.

9. MISCELLANEOUS

      a. No employee of Collins shall have any right as a Participant to
continue in the employ of Collins for any period of time or to a continuation of
any particular rate of compensation, and Collins expressly reserves the right to
discharge or change the assignment of any of its employees who are Participants
at any time. There is no obligation for uniformity of treatment of Participants
under the Plan.

      b. No Collins Option may be assigned, pledged or transferred except (i) by
will or by the laws of descent and distribution; or (ii) by gift to any member
of the Participant's immediate family or to a trust for the benefit of one or
more members of the Participant's immediate family, if permitted in the
applicable agreement governing the Rockwell Option from which that Collins
Option is derived; or (iii) as otherwise determined by the Committee. Each
Collins Option shall be exercisable during the lifetime of the Participant to
whom the Rockwell Option from which it is derived was

                                      -9-
<PAGE>   10
granted only by such Participant unless the Collins Option has been transferred
in accordance with the provisions of the applicable agreement governing the
Rockwell Option from which that Collins Option is derived, to a member of the
Participant's immediate family or a trust for the benefit of one or more members
of the Participant's immediate family, in which case it shall be exercisable
only by such transferee (or by the legal representative of the estate or by the
heirs or legatees of such transferee). For purposes of this provision, a
Participant's "immediate family" shall mean the Participant's spouse and
natural, adopted or step-children and grandchildren.

      c. No person shall have the rights or privileges of a shareowner with
respect to Collins Shares subject to a Collins Option until exercise of such
Collins Option.

      d. No fractional Collins Shares shall be issued or transferred pursuant to
the Plan. If any Collins Option shall be exercisable for a fractional Collins
Share, the person entitled thereto shall be paid an amount equal to the excess
of the Fair Market Value as of the date of exercise over the exercise price for
any fractional Collins Share deliverable in respect of exercise of that Collins
Option.

      e. Notwithstanding any other provision of the Plan, if a Change of Control
shall occur, then all Collins Options then outstanding pursuant to the Plan
shall forthwith become fully exercisable whether or not otherwise then
exercisable.

      f. Collins shall have the right in connection with the delivery of any
Collins Shares upon exercise of a Collins Option to require as a condition of
such delivery that the recipient represent that such Collins Shares are being
acquired for investment and not with a view to the distribution thereof.

      g. Collins shall have the right, in connection with any exercise of a
Collins Option, to deduct from any amount otherwise payable by Collins, an
amount equal to any taxes required by law to be withheld with respect to
exercise of that Collins Option or to require the Employee or other person
effecting such exercise, as a condition of and prior to delivery of Collins
Shares upon such exercise, to pay to Collins an amount sufficient to provide for
any such taxes so required to be withheld.

      h. Unless otherwise determined by the Committee or provided in an
agreement between any Participant and his or her employer, for purposes of the
Plan a Participant on authorized leave of absence will be considered as being in
the employ of Rockwell, USA, Boeing North American, Boeing, Meritor, Collins or
any of their respective subsidiaries, as the case may be.

                                      -10-
<PAGE>   11
      i. Collins shall bear all expenses and costs in connection with the
operation of the Plan, including costs related to the purchase, issue or
transfer of Collins Shares, but excluding taxes imposed on any person receiving
a payment or delivery of Shares under the Plan.

10. INTERPRETATIONS AND DETERMINATIONS

      The Committee shall have the power from time to time to interpret the
Plan, to adopt, amend and rescind rules, regulations and procedures relating to
the Plan, to make, amend and rescind determinations under the Plan and to take
all other actions that the Committee shall deem necessary or appropriate for the
implementation and administration of the Plan. All interpretations,
determinations and other actions by the Committee not revoked or modified by the
Board of Directors shall be final, conclusive and binding upon all parties.

11. EFFECTIVE DATE

      Upon approval by the sole shareowner of Collins, the Plan shall become
effective as of the Collins Distribution Date.

                                      -11-

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