Document:

<PAGE>   1
                                                                  EXHIBIT 10-e-2

                         2000 LONG-TERM INCENTIVES PLAN
                            NONTRANSFERABLE OPTIONS
                            FORM OF OPTION AGREEMENT
            (EXISTING ARBITRATION AGREEMENT, NO PERFORMANCE VESTING)

[Grant Date]

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant          Type of Grant              Number of Shares              Option Price
     -------------          -------------              ----------------              ------------
<S>                         <C>                        <C>                           <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended. The enclosed
Stock Option Terms and Conditions are incorporated in and are part of this Stock
Option Agreement.

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

                                           ROCKWELL INTERNATIONAL CORPORATION

                                           By:

<PAGE>   2
                         2000 LONG-TERM INCENTIVES PLAN
                            NONTRANSFERRABLE OPTIONS
                            FORM OF OPTION AGREEMENT
             (PERFORMANCE VESTING; EXISTING ARBITRATION AGREEMENT)

[Grant Date]

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant            Type of Grant                Number of Shares          Option Price
     -------------            -------------                ----------------          ------------
<S>                           <C>                          <C>                       <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended. The exercise
terms for your performance vesting shares are outlined in paragraph 2 of the
Stock Options Terms and Conditions. Other terms and conditions are substantially
the same as options previously granted. The enclosed Stock Option Terms and
Conditions are incorporated in and are part of this Stock Option Agreement.

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

                                    ROCKWELL INTERNATIONAL CORPORATION

                                    By:
                                        ----------------------------------------

<PAGE>   3
                         2000 LONG-TERM INCENTIVES PLAN
                            NONTRANSFERRABLE OPTIONS
                            FORM OF OPTION AGREEMENT
              (NEW ARBITRATION AGREEMENT, NO PERFORMANCE VESTING)

[Grant Date]

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant          Type of Grant              Number of Shares              Option Price
     -------------          -------------              ----------------              ------------
<S>                         <C>                        <C>                           <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended. The enclosed
Stock Option Terms and Conditions are incorporated in and are part of this Stock
Option Agreement.

This stock option grant is also subject to the condition that you sign and
return one copy of the Mutual Agreement to Arbitrate Claims to:

                            Rockwell International Corporation
                            Office of the Secretary
                            777 East Wisconsin Avenue, Suite 1400, (MW31)
                            Milwaukee, WI  53202

These stock option(s) will be of no effect if the copy of the Mutual Agreement
to Arbitrate Claims, properly signed by you, is not received by the Secretary of
Rockwell on or before December 1, 2000, unless Rockwell (in its sole discretion)
elects in writing to extend that date.

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

                                    ROCKWELL INTERNATIONAL CORPORATION

                                    By:
                                        ------------------------------

<PAGE>   4

                         2000 LONG-TERM INCENTIVES PLAN
                           NONTRANSFERRRABLE OPTIONS
                            FORM OF OPTION AGREEMENT
                (PERFORMANCE VESTING; NEW ARBITRATION AGREEMENT)

[Grant Date]

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant            Type of Grant                Number of Shares          Option Price
     -------------            -------------                ----------------          ------------
<S>                           <C>                          <C>                       <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended. The exercise
terms for your performance vesting shares are outlined in paragraph 2 of the
Stock Option Terms and Conditions. Other terms and conditions are substantially
the same as options previously granted. The enclosed Stock Option Terms and
Conditions are incorporated in and are part of this Stock Option Agreement.

This stock option grant is also subject to the condition that you sign and
return one copy of the Mutual Agreement to Arbitrate Claims to:

                         Rockwell International Corporation
                         Office of the Secretary
                         777 East Wisconsin Avenue, Suite 1400, (MW31)
                         Milwaukee, WI  53202

These stock option(s) will be of no effect if the copy of the Mutual Agreement
to Arbitrate Claims, properly signed by you, is not received by the Secretary of
Rockwell on or before December 1, 2000, unless Rockwell (in its sole discretion)
elects in writing to extend that date.

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

                                 ROCKWELL INTERNATIONAL CORPORATION

                                 By:
                                     ------------------------------

<PAGE>   5
                         2000 LONG-TERM INCENTIVES PLAN
                            NONTRANSFERRABLE OPTIONS
                            FORM OF OPTION AGREEMENT
            (NONCOMPETE, EXISTING ARBITRATION AGREEMENT, WITHOUT PV)

October 2, 2000

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant            Type of Grant                Number of Shares          Option Price
     -------------            -------------                ----------------          ------------
<S>                           <C>                          <C>                       <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended. The exercise
terms for your performance vesting shares are outlined in paragraph 2 of the
Stock Option Terms and Conditions. Other terms and conditions are substantially
the same as options previously granted. The attached Stock Option Terms and
Conditions are incorporated in and are part of this Stock Option Agreement.

In partial consideration for the grant of the Options to you, you undertake and
agree by your acceptance of this Stock Option Agreement that

         (a)      during your employment with the Corporation (as defined in the
                  Plan) and for two years after the date of your retirement or
                  other termination of such employment, you shall not (i)
                  directly or indirectly, except with the approval of Rockwell,
                  engage or otherwise participate in any business which is
                  competitive with any significant line of business of Rockwell
                  or any of its affiliates (otherwise than through ownership of
                  not more than 5% of the voting securities of any such
                  competitive business) or (ii) solicit or induce any employee
                  of Rockwell or any of its affiliates to leave his or her
                  employment with Rockwell or any of its affiliates to accept
                  employment or other engagement with any such competitive
                  business; and

         (b)      in the event that you breach this undertaking, in addition to
                  any and all other remedies Rockwell may have, (i) Rockwell
                  shall have the right to determine by written notice to you
                  that any of the Options then outstanding shall immediately
                  lapse and cease to be exercisable; and (ii) you agree to pay
                  Rockwell upon written demand the amount of the excess of the
                  Fair Market Value (as defined in the Plan) of any shares of
                  Rockwell's Common Stock you acquired upon exercise of any of
                  the Options (other than Options exercised more than two years
                  before the date of your retirement or other termination of
                  employment) over the exercise price for those Shares.

If a Change of Control (as defined in the Plan) shall occur, however, the
foregoing provisions (a) and (b) shall immediately terminate as of, and shall
not limit your activities after, the date of such Change of Control.

<PAGE>   6

[Grant Date]
Page 2

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

                         Rockwell International Corporation
                         Office of the Secretary
                         777 East Wisconsin Avenue, Suite 1400, (MW31)
                         Milwaukee, WI  53202

The Options will lapse and be of no effect if a copy of this Stock Option
Agreement, properly signed by you, is not received by the Secretary of Rockwell
at the above address on or before                 , unless Rockwell (in its sole
discretion) elects in writing to extend that date.

Agreed to:                                    ROCKWELL INTERNATIONAL CORPORATION
Date:
     ----------------------

                                              By:
---------------------------                       ------------------------------
Employee Signature
[Social Security No.]

<PAGE>   7
                         2000 LONG-TERM INCENTIVES PLAN
                            NONTRANSFERRABLE OPTIONS
                            FORM OF OPTION AGREEMENT
    (NONCOMPETE, EXISTING ARBITRATION AGREEMENT, WITH PERFORMANCE VESTING)

[Grant Date]

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant            Type of Grant                Number of Shares          Option Price
     -------------            -------------                ----------------          ------------
<S>                           <C>                          <C>                       <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended.  The exercise
terms for your performance vesting shares are outlined in paragraph 2 of the
Stock Option Terms and Conditions. Other terms and conditions are substantially
the same as options previously granted. The attached Stock Option Terms and
Conditions are incorporated in and are part of this Stock Option Agreement.

In partial consideration for the grant of the Options to you, you undertake and
agree by your acceptance of this Stock Option Agreement that

         (a)      during your employment with the Corporation (as defined in the
                  Plan) and for two years after the date of your retirement or
                  other termination of such employment, you shall not (i)
                  directly or indirectly, except with the approval of Rockwell,
                  engage or otherwise participate in any business which is
                  competitive with any significant line of business of Rockwell
                  or any of its affiliates (otherwise than through ownership of
                  not more than 5% of the voting securities of any such
                  competitive business) or (ii) solicit or induce any employee
                  of Rockwell or any of its affiliates to leave his or her
                  employment with Rockwell or any of its affiliates to accept
                  employment or other engagement with any such competitive
                  business; and

         (b)      in the event that you breach this undertaking, in addition to
                  any and all other remedies Rockwell may have, (i) Rockwell
                  shall have the right to determine by written notice to you
                  that any of the Options then outstanding shall immediately
                  lapse and cease to be exercisable; and (ii) you agree to pay
                  Rockwell upon written demand the amount of the excess of the
                  Fair Market Value (as defined in the Plan) of any shares of
                  Rockwell's Common Stock you acquired upon exercise of any of
                  the Options (other than Options exercised more than two years
                  before the date of your retirement or other termination of
                  employment) over the exercise price for those Shares.

If a Change of Control (as defined in the Plan) shall occur, however, the
foregoing provisions (a) and (b) shall immediately terminate as of, and shall
not limit your activities after, the date of such Change of Control.

<PAGE>   8

[Grant Date]
Page 2

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

The Options will lapse and be of no effect if a copy of this Stock Option
Agreement, properly signed by you, is not received by the Secretary of Rockwell
at the above address on or before December 1, 2000, unless Rockwell (in its sole
discretion) elects in writing to extend that date.

Agreed to:                                   ROCKWELL INTERNATIONAL CORPORATION
Date:
     ----------------------

                                             By:
---------------------------                      ------------------------------

Employee Signature
[Social Security No."SSN"]

<PAGE>   9

                         2000 LONG-TERM INCENTIVES PLAN
                            NONTRANSFERRABLE OPTIONS
                            FORM OF OPTION AGREEMENT
               (NONCOMPETE, NEW ARBITRATION AGREEMENT, WITHOUT PV)

[Grant Date]

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant            Type of Grant                Number of Shares          Option Price
     -------------            -------------                ----------------          ------------
<S>                           <C>                          <C>                       <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended. Other terms
and conditions are substantially the same as options previously granted. The
enclosed Stock Option Terms and Conditions are incorporated in and are part of
this Stock Option Agreement.

In partial consideration for the grant of the Options to you, you undertake and
agree by your acceptance of this Stock Option Agreement that

         (a)      during your employment with the Corporation (as defined in the
                  Plan) and for two years after the date of your retirement or
                  other termination of such employment, you shall not (i)
                  directly or indirectly, except with the approval of Rockwell,
                  engage or otherwise participate in any business which is
                  competitive with any significant line of business of Rockwell
                  or any of its affiliates (otherwise than through ownership of
                  not more than 5% of the voting securities of any such
                  competitive business) or (ii) solicit or induce any employee
                  of Rockwell or any of its affiliates to leave his or her
                  employment with Rockwell or any of its affiliates to accept
                  employment or other engagement with any such competitive
                  business; and

         (b)      in the event that you breach this undertaking, in addition to
                  any and all other remedies Rockwell may have, (i) Rockwell
                  shall have the right to determine by written notice to you
                  that any of the Options then outstanding shall immediately
                  lapse and cease to be exercisable; and (ii) you agree to pay
                  Rockwell upon written demand the amount of the excess of the
                  Fair Market Value (as defined in the Plan) of any shares of
                  Rockwell's Common Stock you acquired upon exercise of any of
                  the Options (other than Options exercised more than two years
                  before the date of your retirement or other termination of
                  employment) over the exercise price for those Shares.

If a Change of Control (as defined in the Plan) shall occur, however, the
foregoing provisions (a) and (b) shall immediately terminate as of, and shall
not limit your activities after, the date of such Change of Control.

<PAGE>   10
[Grant Date]
Page 2

This stock option grant is also subject to the condition that you sign and
return one copy of the Mutual Agreement to Arbitrate Claims to:

                          Rockwell International Corporation
                          Office of the Secretary
                          777 East Wisconsin Avenue, Suite 1400, (MW31)
                          Milwaukee, WI  53202

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

The Options will lapse and be of no effect if a copy of this Stock Option
Agreement and a copy of the Mutual Agreement to Arbitrate Claims, each properly
signed by you, are not received by the Secretary of Rockwell at the above
address on or before            , unless Rockwell (in its sole discretion)
elects in writing to extend that date.

Agreed to:                               ROCKWELL INTERNATIONAL CORPORATION
Date:
     ----------------------

                                         By:
---------------------------                  ------------------------------
Employee Signature
[Social Security No.]

<PAGE>   11

                         2000 LONG-TERM INCENTIVES PLAN
                            NONTRANSFERRABLE OPTIONS
                            FORM OF OPTION AGREEMENT
        (NONCOMPETE, NEW ARBITRATION AGREEMENT, WITH PERFORMANCE VESTING)

[Grant Date]

To:

Dear Optionee:

We are pleased to notify you that the Compensation and Management Development
Committee has granted to you the following stock options under the 2000
Long-Term Incentives Plan (the "Plan"):

<TABLE>
<CAPTION>
     Date of Grant            Type of Grant                Number of Shares          Option Price
     -------------            -------------                ----------------          ------------
<S>                           <C>                          <C>                       <C>

</TABLE>

These stock options (the "Options") have been granted under and may be exercised
only upon the terms and conditions of this Stock Option Agreement, subject in
all respects to the provisions of the Plan, as it may be amended. The exercise
terms for your performance vesting shares are outlined in paragraph 2 of the
Stock Option Terms and Conditions. Other terms and conditions are substantially
the same as options previously granted. The enclosed Stock Option Terms and
Conditions are incorporated in and are part of this Stock Option Agreement.

In partial consideration for the grant of the Options to you, you undertake and
agree by your acceptance of this Stock Option Agreement that

         (a)      during your employment with the Corporation (as defined in the
                  Plan) and for two years after the date of your retirement or
                  other termination of such employment, you shall not (i)
                  directly or indirectly, except with the approval of Rockwell,
                  engage or otherwise participate in any business which is
                  competitive with any significant line of business of Rockwell
                  or any of its affiliates (otherwise than through ownership of
                  not more than 5% of the voting securities of any such
                  competitive business) or (ii) solicit or induce any employee
                  of Rockwell or any of its affiliates to leave his or her
                  employment with Rockwell or any of its affiliates to accept
                  employment or other engagement with any such competitive
                  business; and

         (b)      in the event that you breach this undertaking, in addition to
                  any and all other remedies Rockwell may have, (i) Rockwell
                  shall have the right to determine by written notice to you
                  that any of the Options then outstanding shall immediately
                  lapse and cease to be exercisable; and (ii) you agree to pay
                  Rockwell upon written demand the amount of the excess of the
                  Fair Market Value (as defined in the Plan) of any shares of
                  Rockwell's Common Stock you acquired upon exercise of any of
                  the Options (other than Options exercised more than two years
                  before the date of your retirement or other termination of
                  employment) over the exercise price for those Shares.

<PAGE>   12
[Grant Date]
Page 2

If a Change of Control (as defined in the Plan) shall occur, however, the
foregoing provisions (a) and (b) shall immediately terminate as of, and shall
not limit your activities after, the date of such Change of Control.

This stock option grant is also subject to the condition that you sign and
return one copy of the Mutual Agreement to Arbitrate Claims to:

                          Rockwell International Corporation
                          Office of the Secretary
                          777 East Wisconsin Avenue, Suite 1400, (MW31)
                          Milwaukee, WI  53202

A copy of the Plan is enclosed. A copy of the Plan Prospectus will be mailed to
you. The Plan Prospectus and the Stock Option Participant Booklet will be
available on the Rweb soon. You will receive additional information about the
Rweb location by mail.

Please carefully read the enclosed documents and retain them for future
reference.

The Options will lapse and be of no effect if a copy of this Stock Option
Agreement and a copy of the Mutual Agreement to Arbitrate Claims, each properly
signed by you, are not received by the Secretary of Rockwell at the above
address on or before December 1, 2000, unless Rockwell (in its sole discretion)
elects in writing to extend that date.

Agreed to:                                ROCKWELL INTERNATIONAL CORPORATION
Date:
     ----------------------

                                          By:
---------------------------                   ------------------------------
Employee Signature
[Social Security No.]

<PAGE>   13
                  [TERMS AND CONDITIONS FOR THREE-YEAR VESTING]

                       ROCKWELL INTERNATIONAL CORPORATION
                         2000 LONG-TERM INCENTIVES PLAN
                             STOCK OPTION AGREEMENT
                        STOCK OPTION TERMS AND CONDITIONS

1.       Definitions

         As used in these Stock Option Terms and Conditions, the following words
         and phrases shall have the respective meanings ascribed to them below
         unless the context in which any of them is used clearly indicates a
         contrary meaning:

         (a)      CHANGE OF CONTROL: Change of Control shall have the same
                  meaning as such term has in the 2000 Long-Term Incentives
                  Plan.

         (b)      CHASEMELLON: ChaseMellon Shareholder Services, the Stock
                  Option Administrator whom Rockwell has engaged to administer
                  and process all Stock Option exercises.

         (c)      IVR: Integrated Voice Response system that is used to
                  facilitate all Stock Option transactions.

         (d)      OPTIONS: The stock option or stock options listed in the first
                  paragraph of the letter dated [here insert grant date] to
                  which these Stock Option Terms and Conditions are attached and
                  which together with these Stock Option Terms and Conditions
                  constitute the Stock Option Agreement.

         (e)      OPTION SHARES: The shares of Rockwell Common Stock issuable or
                  transferable on exercise of the Options.

         (f)      PLAN: Rockwell's 2000 Long-Term Incentives Plan, as such Plan
                  may be amended and in effect at the relevant time.

         (g)      ROCKWELL: Rockwell International Corporation, a Delaware
                  corporation.

         (h)      SHARES: Shares of Rockwell Common Stock.

         (i)      STOCK OPTION AGREEMENT: These Stock Option Terms and
                  Conditions together with the letter dated [here insert grant
                  date] to which they are attached.

2.       When Options May be Exercised

         The Options may be exercised, in whole or in part (but only for a whole
         number of shares) and at one time or from time to time, as to one-third
         (rounded to the nearest whole number)

<PAGE>   14

         of the Option Shares during the period beginning on [here insert first
         anniversary of grant date] and ending on [here insert tenth anniversary
         of grant date], as to an additional one-third (rounded to the nearest
         whole number) of the Option Shares during the period beginning on [here
         insert second anniversary of grant date] and ending on [here insert
         tenth anniversary of grant date] and as to the balance of the Option
         Shares during the period beginning on [here insert third anniversary of
         grant date] and ending on [here insert tenth anniversary of grant
         date], and only during those periods, provided that:

         (a)      if you die while an employee of the Corporation (as defined in
                  the Plan), your estate, or any person who acquires the Options
                  by bequest or inheritance, may exercise all the Options not
                  theretofore exercised within (and only within) the period
                  beginning on your date of death (even if you die before you
                  have become entitled to exercise all or any part of the
                  Options) and ending three years thereafter; and

         (b)      if your employment by the Corporation terminates other than by
                  death, then:

                  (i)      if your retirement or other termination date is
                           before [here insert first anniversary of grant date],
                           the Options shall lapse on your retirement or other
                           termination and may not be exercised at any time;

                  (ii)     if your employment by the Corporation is terminated
                           for cause, as determined by the Committee (as defined
                           in the Plan), the Options shall expire forthwith upon
                           your termination and may not be exercised thereafter;

                  (iii)    if your employment by the Corporation terminates on
                           or after [here insert first anniversary of grant
                           date] by reason of your retirement under a retirement
                           plan of Rockwell, or a subsidiary or affiliate of
                           Rockwell, you (or if you die after your retirement
                           date, your estate or any person who acquires the
                           Options by bequest or inheritance) may thereafter
                           exercise the Options within (and only within) the
                           period starting on the date you would otherwise have
                           become entitled to exercise the part of the Options
                           so exercised and ending on the fifth anniversary of
                           your retirement date; or if you retire prior to age
                           62, the earlier of (x) the fifth anniversary of your
                           retirement date or (y) such earlier date as the
                           Compensation and Management Development Committee
                           shall determine by action taken not later than 60
                           days after your retirement date;

                  (iv)     if your employment by the Corporation terminates on
                           or after [here insert first anniversary of grant
                           date] for any reason not specified in subparagraph
                           (a) or in clauses (ii) or (iii) of this subparagraph
                           (b), you (or if you die after your termination date,
                           your estate or any person who acquires the Options by
                           bequest or inheritance) may thereafter exercise the
                           Options within (and only within) the period ending
                           three months after your termination date but only to
                           the extent they were exercisable on your termination
                           date.

         In no event shall the provisions of the foregoing subparagraphs (a) and
         (b) extend to a date after November 1, 2010 the period during which the
         Options may be exercised.

                                      -2-
<PAGE>   15

Notwithstanding any other provision of this Agreement, if a Change of Control
shall occur, then all Options then outstanding pursuant to this Agreement shall
forthwith become fully exercisable whether or not then otherwise exercisable in
accordance with their terms.

3.       Exercise Procedure

         (a)      To exercise all or any part of the Options, you (or after your
                  death, your estate or any person who has acquired the Options
                  by bequest or inheritance) must contact the administrator,
                  ChaseMellon Shareholder Services, by using the IVR system as
                  follows:

                  (i)      contact ChaseMellon using a touch-tone phone and
                           follow the instructions provided (or contact
                           ChaseMellon using a rotary phone and speak to a
                           Customer Service Representative);

                  (ii)     confirm the Option transaction through the IVR system
                           by receiving a confirmation number;

                  (iii)    at any time you may speak to a Customer Service
                           Representative for assistance;

                  (iv)     full payment of the exercise price for the Option
                           Shares to be purchased on exercise of the Options may
                           be made by:

                           -        check; or

                           -        in Shares; or

                           -        in a combination of check and Shares; and

                  (v)      in the case of an exercise of the Options by any
                           person other than you seeking to exercise the
                           Options, such documents as ChaseMellon or the
                           Secretary of Rockwell shall require to establish to
                           their satisfaction that the person seeking to
                           exercise the Options is entitled to do so.

         (b)      An exercise of the whole or any part of the Options shall be
                  effective:

                  (i)      if you elect (or after your death, the person
                           entitled to exercise the Options elects) to pay the
                           exercise price for the Option Shares entirely by
                           check, (i) upon confirmation of your transaction by
                           using the IVR system and full payment of the exercise
                           price and withholding taxes (if applicable) are
                           received by ChaseMellon within five business days
                           following the confirmation; and (ii) receipt of any
                           documents required pursuant to Section 3(a)(v); and

                  (ii)     if you elect (or after your death, the person
                           entitled to exercise the Options elects) to pay the
                           exercise price of the Option Shares in Shares or in a

                                      -3-

<PAGE>   16

                           combination of Shares and check, (i) upon
                           confirmation of your transaction by using the IVR
                           system and full payment of the exercise price (as
                           defined in Section 3(d)(i)) and withholding taxes (if
                           applicable) are received by ChaseMellon within five
                           business days following the confirmation; and (ii)
                           receipt of any documents required pursuant to Section
                           3(a)(v).

         (c)      If you choose (or after your death, the person entitled to
                  exercise the Options chooses) to pay the exercise price for
                  the Option Shares to be purchased on exercise of any of the
                  Options entirely by check, payment must be made by:

                  -        delivering to ChaseMellon a check in the full amount
                           of the exercise price for those Option Shares; or

                  -        arranging with a stockbroker, bank or other financial
                           institution to deliver to ChaseMellon full payment,
                           by check or (if prior arrangements are made with
                           ChaseMellon) by wire transfer, of the exercise price
                           of those Option Shares.

                  In either event, in accordance with Section 3(e), full payment
                  of the exercise price for the Option Shares purchased must be
                  made within five business days after the exercise has been
                  conducted and confirmed through the IVR system.

         (d)      (i)      If you choose (or after your death, the person
                           entitled to exercise the Options chooses) to use
                           already-owned Shares to pay all or part of the
                           exercise price for the Option Shares to be purchased
                           on exercise of any of the Options, you (or after your
                           death, the person entitled to exercise the Options)
                           must deliver to ChaseMellon one or more certificates
                           (and executed stock powers) representing:

                           -        at least the number of Shares whose value,
                                    based on the closing price of Common Stock
                                    of Rockwell on the New York Stock Exchange
                                    -- Composite Transactions on the day you
                                    have exercised your Options through the IVR
                                    system; or

                           -        any lesser number of Shares you desire (or
                                    after your death, the person entitled to
                                    exercise the Options desires) to use to pay
                                    the exercise price for those Option Shares
                                    and a check in the amount of such exercise
                                    price less the value of the Shares
                                    delivered, based on the closing price of
                                    Common Stock of Rockwell on the New York
                                    Stock Exchange -- Composite Transactions on
                                    the day you have exercised your Options
                                    through the IVR system.

                  (ii)     ChaseMellon will advise you (or any other person who,
                           being entitled to do so, exercises the Options) of
                           the exact number of Shares, valued in accordance with
                           Section 6(e) of the Plan at the closing price on the
                           New York Stock Exchange-- Composite Transactions on
                           the effective date of exercise

                                      -4-

<PAGE>   17
                           under Section 3(b)(ii), and any funds required to pay
                           in full the exercise price for the Option Shares
                           purchased. In accordance with Section 3(e), you (or
                           such other person) must pay, by check, in Shares or
                           in a combination of check and Shares, any balance
                           required to pay in full the exercise price of the
                           Option Shares purchased within five business days
                           following the effective date of such exercise of the
                           Options under Section 3(b)(ii).

                  (iii)    Notwithstanding any other provision of this Stock
                           Option Agreement, the Secretary of Rockwell may limit
                           the number, frequency or volume of successive
                           exercises of any of the Options in which payment is
                           made, in whole or in part, by delivery of Shares
                           pursuant to this subparagraph (d) to prevent
                           unreasonable pyramiding of such exercises.

         (e)      An exercise conducted and confirmed through the IVR system,
                  whether or not full payment of the exercise price for the
                  Option Shares is received by ChaseMellon, shall constitute a
                  binding contractual obligation by you (or the other person
                  entitled to exercise the Options) to proceed with and complete
                  that exercise of the Options (but only so long as you
                  continue, or the other person entitled to exercise the Options
                  continues, to be entitled to exercise the Options on that
                  date). By your acceptance of this Stock Option Agreement, you
                  agree (for yourself and on behalf of any other person who
                  becomes entitled to exercise the Options) to deliver or cause
                  to be delivered to ChaseMellon any balance of the exercise
                  price for the Option Shares to be purchased upon the exercise
                  pursuant to the transaction conducted through the IVR system
                  required to pay in full the exercise price for those Option
                  Shares, that payment being by check, wire transfer, in Shares
                  or in a combination of check and Shares, on or before the
                  later of the fifth business day after the date on which you
                  confirm the transaction through the IVR system. If such
                  payment is not made, you (for yourself and on behalf of any
                  other person who becomes entitled to exercise the Options)
                  authorize the Corporation, in its discretion, to set off
                  against salary payments or other amounts due or which may
                  become due you (or the other person entitled to exercise the
                  Options) any balance of the exercise price for those Option
                  Shares remaining unpaid thereafter.

         (f)      A book-entry statement representing the number of Option
                  Shares purchased will be issued as soon as practicable (i)
                  after ChaseMellon has received full payment therefor or (ii)
                  at Rockwell's or ChaseMellon's election in their sole
                  discretion, after Rockwell or ChaseMellon has received (x)
                  full payment of the exercise price of those Option Shares and
                  (y) any reimbursement in respect of withholding taxes due
                  pursuant to Section 5.

4.       Transferability

         The Options are not transferable by you otherwise than by will or by
         the laws of descent and distribution. During your lifetime, only you
         are entitled to exercise the Options.

5.       Withholding

                                      -5-

<PAGE>   18

         Rockwell or ChaseMellon shall have the right, in connection with the
         exercise of the Options in whole or in part, to deduct from any payment
         to be made by Rockwell or ChaseMellon under the Plan an amount equal to
         the taxes required to be withheld by law with respect to such exercise
         or to require you (or any other person entitled to exercise the
         Options) to pay to it an amount sufficient to provide for any such
         taxes so required to be withheld. By your acceptance of this Stock
         Option Agreement, you agree (for yourself and on behalf of any other
         person who becomes entitled to exercise the Options) that if Rockwell
         or ChaseMellon elects to require you (or such other person) to remit an
         amount sufficient to pay such withholding taxes, you (or such other
         person) must remit that amount within five business days after the
         confirmation of the Option exercise (Section 3(a)(ii)). If such payment
         is not made, Rockwell, in its discretion, shall have the same right of
         set-off with respect to payment of the withholding taxes in connection
         with the exercise of the Option as provided under Section 3(e) with
         respect to payment of the exercise price.

6.       Headings

         The section headings contained in these Stock Option Terms and
         Conditions are solely for the purpose of reference, are not part of the
         agreement of the parties and shall in no way affect the meaning or
         interpretation of this Stock Option Agreement.

7.       References

         All references in these Stock Option Terms and Conditions to Sections,
         paragraphs, subparagraphs or clauses shall be deemed to be references
         to Sections, paragraphs, subparagraphs and clauses of these Stock
         Option Terms and Conditions unless otherwise specifically provided.

8.       Entire Agreement

         This Stock Option Agreement and the Plan embody the entire agreement
         and understanding between Rockwell and you with respect to the Options,
         and there are no representations, promises, covenants, agreements or
         understandings with respect to the Options other than those expressly
         set forth in this Stock Option Agreement and the Plan.

9.       Applicable Laws and Regulations

         This Stock Option Agreement and Rockwell's obligation to issue Option
         Shares hereunder are subject to applicable laws and regulations.

                                      -6-

<PAGE>   19

                       ROCKWELL INTERNATIONAL CORPORATION
                         2000 LONG-TERM INCENTIVES PLAN
                             STOCK OPTION AGREEMENT
                        STOCK OPTION TERMS AND CONDITIONS

1.       Definitions

         As used in these Stock Option Terms and Conditions, the following words
         and phrases shall have the respective meanings ascribed to them below
         unless the context in which any of them is used clearly indicates a
         contrary meaning:

         (a)      CHANGE OF CONTROL: Change of Control shall have the same
                  meaning as such term has in the 2000 Long-Term Incentives
                  Plan.

         (b)      CHASEMELLON: ChaseMellon Shareholder Services, the Stock
                  Option Administrator whom Rockwell has engaged to administer
                  and process all Stock Option exercises.

         (c)      IVR: Integrated Voice Response system that is used to
                  facilitate all Stock Option transactions.

         (d)      OPTIONS: The stock option or stock options listed in the first
                  paragraph of the letter dated [here insert grant date] to
                  which these Stock Option Terms and Conditions are attached and
                  which together with these Stock Option Terms and Conditions
                  constitute the Stock Option Agreement.

         (e)      OPTION SHARES: The shares of Rockwell Common Stock issuable or
                  transferable on exercise of the Options.

         (f)      PLAN: Rockwell's 2000 Long-Term Incentives Plan, as such Plan
                  may be amended and in effect at the relevant time.

         (g)      ROCKWELL: Rockwell International Corporation, a Delaware
                  corporation.

         (h)      SHARES: Shares of Rockwell Common Stock.

         (i)      STOCK OPTION AGREEMENT: These Stock Option Terms and
                  Conditions together with the letter dated [here insert grant
                  date] to which they are attached.

2.       When Options May be Exercised

         The Options may be exercised, in whole or in part (but only for a whole
         number of shares) and at one time or from time to time, as follows:

         -        Performance Vesting Options: The total number of Option Shares
                  beginning on the date on which the closing price of Shares as
                  reported on the New York Stock Exchange -- Composite
                  Transactions shall have been at least   % of the Fair Market
                  Value (as defined in the Plan) on [here insert grant date],
                  for at least 20 consecutive trading days or,

<PAGE>   20

                  if earlier, on                   and ending on [here insert
                  tenth anniversary of grant date] and only during that period;

         -        All other Options (ISO and NQ combined): One-third (rounded to
                  the nearest whole number) of the Option Shares (including all
                  of the Option Shares covered by any Options granted as
                  incentive stock options) during the period beginning on [here
                  insert first anniversary of grant date] and ending on [here
                  insert tenth anniversary of grant date], as to an additional
                  one-third (rounded to the nearest whole number) of the Option
                  Shares during the period beginning on [here insert second
                  anniversary of grant date] and ending on [here insert tenth
                  anniversary of grant date] and as to the balance of the Option
                  Shares during the period beginning on [here insert third
                  anniversary of grant date] and ending on [here insert tenth
                  anniversary of grant date], and only during those periods,

         provided that:

         (a)      if you die while an employee of the Corporation (as defined in
                  the Plan), your estate, or any person who acquires the Options
                  by bequest or inheritance, may exercise all the Options not
                  theretofore exercised within (and only within) the period
                  beginning on your date of death (even if you die before you
                  have become entitled to exercise all or any part of the
                  Options) and ending three years thereafter; and

         (b)      if your employment by the Corporation terminates other than by
                  death, then:

                  (i)      if your retirement or other termination date is
                           before [here insert first anniversary of grant date],
                           the Options shall lapse on your retirement or other
                           termination and may not be exercised at any time;

                  (ii)     if your employment by the Corporation is terminated
                           for cause, as determined by the Committee (as defined
                           in the Plan), the Options shall expire forthwith upon
                           your termination and may not be exercised thereafter;

                  (iii)    if your employment by the Corporation terminates on
                           or after [here insert first anniversary of grant
                           date] by reason of your retirement under a retirement
                           plan of Rockwell, or a subsidiary or affiliate of
                           Rockwell, you (or if you die after your retirement
                           date, your estate or any person who acquires the
                           Options by bequest or inheritance) may thereafter
                           exercise the Options within (and only within) the
                           period starting on the date you would otherwise have
                           become entitled to exercise the part of the Options
                           so exercised and ending on the fifth anniversary of
                           your retirement date; or if you retire prior to age
                           62, the earlier of (x) the fifth anniversary of your
                           retirement date or (y) such earlier date as the
                           Compensation and Management Development Committee
                           shall determine by action taken not later than 60
                           days after your retirement date;

                  (iv)     if your employment by the Corporation terminates on
                           or after [here insert first anniversary of grant
                           date] for any reason not specified in subparagraph
                           (a) or in clauses (ii) or (iii) of this subparagraph
                           (b), you (or if you die after your termination date,
                           your estate or any person who acquires the Options by
                           bequest or inheritance) may thereafter exercise the
                           Options within (and only

                                      -2-

<PAGE>   21

                           within) the period ending three months after your
                           termination date but only to the extent they were
                           exercisable on your termination date.

         In no event shall the provisions of the foregoing subparagraphs (a) and
         (b) extend to a date after [here insert tenth anniversary of grant
         date] the period during which the Options may be exercised.

Notwithstanding any other provision of this Agreement, if a Change of Control
shall occur, then all Options then outstanding pursuant to this Agreement shall
forthwith become fully exercisable whether or not then otherwise exercisable in
accordance with their terms.

3.       Exercise Procedure

         (a)      To exercise all or any part of the Options, you (or after your
                  death, your estate or any person who has acquired the Options
                  by bequest or inheritance) must contact the administrator,
                  ChaseMellon Shareholder Services, by using the IVR system as
                  follows:

                  (i)      contact ChaseMellon using a touch-tone phone and
                           follow the instructions provided (or contact
                           ChaseMellon using a rotary phone and speak to a
                           Customer Service Representative);

                  (ii)     confirm the Option transaction through the IVR system
                           by receiving a confirmation number;

                  (iii)    at any time you may speak to a Customer Service
                           Representative for assistance;

                  (iv)     full payment of the exercise price for the Option
                           Shares to be purchased on exercise of the Options may
                           be made by:

                           -        check; or

                           -        in Shares; or

                           -        in a combination of check and Shares; and

                  (v)      in the case of an exercise of the Options by any
                           person other than you seeking to exercise the
                           Options, such documents as ChaseMellon or the
                           Secretary of Rockwell shall require to establish to
                           their satisfaction that the person seeking to
                           exercise the Options is entitled to do so.

         (b)      An exercise of the whole or any part of the Options shall be
                  effective:

                  (i)      if you elect (or after your death, the person
                           entitled to exercise the Options elects) to pay the
                           exercise price for the Option Shares entirely by
                           check, (i) upon confirmation of your transaction by
                           using the IVR system and full payment of the exercise
                           price and withholding taxes (if applicable) are
                           received by ChaseMellon within five business days
                           following the

                                      -3-

<PAGE>   22

                           confirmation; and (ii) receipt of any documents
                           required pursuant to Section 3(a)(v); and

                  (ii)     if you elect (or after your death, the person
                           entitled to exercise the Options elects) to pay the
                           exercise price of the Option Shares in Shares or in a
                           combination of Shares and check, (i) upon
                           confirmation of your transaction by using the IVR
                           system and full payment of the exercise price (as
                           defined in Section 3(d)(i)) and withholding taxes (if
                           applicable) are received by ChaseMellon within five
                           business days following the confirmation; and (ii)
                           receipt of any documents required pursuant to Section
                           3(a)(v).

         (c)      If you choose (or after your death, the person entitled to
                  exercise the Options chooses) to pay the exercise price for
                  the Option Shares to be purchased on exercise of any of the
                  Options entirely by check, payment must be made by:

                  -        delivering to ChaseMellon a check in the full amount
                           of the exercise price for those Option Shares; or

                  -        arranging with a stockbroker, bank or other financial
                           institution to deliver to ChaseMellon full payment,
                           by check or (if prior arrangements are made with
                           ChaseMellon) by wire transfer, of the exercise price
                           of those Option Shares.

                  In either event, in accordance with Section 3(e), full payment
                  of the exercise price for the Option Shares purchased must be
                  made within five business days after the exercise has been
                  conducted and confirmed through the IVR system.

         (d)      (i)      If you choose (or after your death, the person
                           entitled to exercise the Options chooses) to use
                           already-owned Shares to pay all or part of the
                           exercise price for the Option Shares to be purchased
                           on exercise of any of the Options, you (or after your
                           death, the person entitled to exercise the Options)
                           must deliver to ChaseMellon one or more certificates
                           (and executed stock powers) representing:

                           -        at least the number of Shares whose value,
                                    based on the closing price of Common Stock
                                    of Rockwell on the New York Stock Exchange
                                    -- Composite Transactions on the day you
                                    have exercised your Options through the IVR
                                    system; or

                           -        any lesser number of Shares you desire (or
                                    after your death, the person entitled to
                                    exercise the Options desires) to use to pay
                                    the exercise price for those Option Shares
                                    and a check in the amount of such exercise
                                    price less the value of the Shares
                                    delivered, based on the closing price of
                                    Common Stock of Rockwell on the New York
                                    Stock Exchange -- Composite Transactions on
                                    the day you have exercised your Options
                                    through the IVR system.

                                      -4-

<PAGE>   23

                  (ii)     ChaseMellon will advise you (or any other person who,
                           being entitled to do so, exercises the Options) of
                           the exact number of Shares, valued in accordance with
                           Section 6(e) of the Plan at the closing price on the
                           New York Stock Exchange--Composite Transactions on
                           the effective date of exercise under Section
                           3(b)(ii), and any funds required to pay in full the
                           exercise price for the Option Shares purchased. In
                           accordance with Section 3(e), you (or such other
                           person) must pay, by check, in Shares or in a
                           combination of check and Shares, any balance required
                           to pay in full the exercise price of the Option
                           Shares purchased within five business days following
                           the effective date of such exercise of the Options
                           under Section 3(b)(ii).

                  (iii)    Notwithstanding any other provision of this Stock
                           Option Agreement, the Secretary of Rockwell may limit
                           the number, frequency or volume of successive
                           exercises of any of the Options in which payment is
                           made, in whole or in part, by delivery of Shares
                           pursuant to this subparagraph (d) to prevent
                           unreasonable pyramiding of such exercises.

         (e)      An exercise conducted and confirmed through the IVR system,
                  whether or not full payment of the exercise price for the
                  Option Shares is received by ChaseMellon, shall constitute a
                  binding contractual obligation by you (or the other person
                  entitled to exercise the Options) to proceed with and complete
                  that exercise of the Options (but only so long as you
                  continue, or the other person entitled to exercise the Options
                  continues, to be entitled to exercise the Options on that
                  date). By your acceptance of this Stock Option Agreement, you
                  agree (for yourself and on behalf of any other person who
                  becomes entitled to exercise the Options) to deliver or cause
                  to be delivered to ChaseMellon any balance of the exercise
                  price for the Option Shares to be purchased upon the exercise
                  pursuant to the transaction conducted through the IVR system
                  required to pay in full the exercise price for those Option
                  Shares, that payment being by check, wire transfer, in Shares
                  or in a combination of check and Shares, on or before the
                  later of the fifth business day after the date on which you
                  confirm the transaction through the IVR system. If such
                  payment is not made, you (for yourself and on behalf of any
                  other person who becomes entitled to exercise the Options)
                  authorize the Corporation, in its discretion, to set off
                  against salary payments or other amounts due or which may
                  become due you (or the other person entitled to exercise the
                  Options) any balance of the exercise price for those Option
                  Shares remaining unpaid thereafter.

         (f)      A book-entry statement representing the number of Option
                  Shares purchased will be issued as soon as practicable (i)
                  after ChaseMellon has received full payment therefor or (ii)
                  at Rockwell's or ChaseMellon's election in their sole
                  discretion, after Rockwell or ChaseMellon has received (x)
                  full payment of the exercise price of those Option Shares and
                  (y) any reimbursement in respect of withholding taxes due
                  pursuant to Section 5.

4.      Transferability

         The Options are not transferable by you otherwise than by will or by
         the laws of descent and distribution. During your lifetime, only you
         are entitled to exercise the Options.

                                      -5-

<PAGE>   24

5.       Withholding

         Rockwell or ChaseMellon shall have the right, in connection with the
         exercise of the Options in whole or in part, to deduct from any payment
         to be made by Rockwell or ChaseMellon under the Plan an amount equal to
         the taxes required to be withheld by law with respect to such exercise
         or to require you (or any other person entitled to exercise the
         Options) to pay to it an amount sufficient to provide for any such
         taxes so required to be withheld. By your acceptance of this Stock
         Option Agreement, you agree (for yourself and on behalf of any other
         person who becomes entitled to exercise the Options) that if Rockwell
         or ChaseMellon elects to require you (or such other person) to remit an
         amount sufficient to pay such withholding taxes, you (or such other
         person) must remit that amount within five business days after the
         confirmation of the Option exercise (Section 3(a)(ii)). If such payment
         is not made, Rockwell, in its discretion, shall have the same right of
         set-off with respect to payment of the withholding taxes in connection
         with the exercise of the Option as provided under Section 3(e) with
         respect to payment of the exercise price.

6.       Headings

         The section headings contained in these Stock Option Terms and
         Conditions are solely for the purpose of reference, are not part of the
         agreement of the parties and shall in no way affect the meaning or
         interpretation of this Stock Option Agreement.

7.       References

         All references in these Stock Option Terms and Conditions to Sections,
         paragraphs, subparagraphs or clauses shall be deemed to be references
         to Sections, paragraphs, subparagraphs and clauses of these Stock
         Option Terms and Conditions unless otherwise specifically provided.

8.       Entire Agreement

         This Stock Option Agreement and the Plan embody the entire agreement
         and understanding between Rockwell and you with respect to the Options,
         and there are no representations, promises, covenants, agreements or
         understandings with respect to the Options other than those expressly
         set forth in this Stock Option Agreement and the Plan.

9.       Applicable Laws and Regulations

         This Stock Option Agreement and Rockwell's obligation to issue Option
         Shares hereunder are subject to applicable laws and regulations.

                                      -6-<PAGE>   1
                                                                          10-m-2

                                                           [ROCKWELL LETTERHEAD]

September 6, 2000

Donald R. Beall
Retired Chairman and
Chief Executive Officer
Rockwell International Corporation
5 Civic Plaza, Suite 320
Newport Beach, California 92660-5956

Dear Don:

This confirms our understanding that you will continue to act as a
consultant to the Corporation for the period beginning October 1, 2000 and
ending March 31, 2001 on the same terms and conditions as set forth in the
letter agreement dated September 30, 1999, a copy of which is attached for
reference.

If this correctly sets forth our understanding, please sign the duplicate
original of this letter and return it to me.

Sincerely,

ROCKWELL INTERNATIONAL CORPORATION

/s/ Don H. Davis, Jr.
---------------------
Don H. Davis, Jr.
Chairman and Chief Executive Officer

ACCEPTED:

/s/ Donald R. Beall
-------------------
Donald R. Beall

<PAGE>   2

                                                           [ROCKWELL LETTERHEAD]

September 30, 1999

Mr. Donald R. Beall
Retired Chairman and
Chief Executive Officer
Rockwell International Corporation
5 Civic Plaza, Suite 320
Newport Beach, CA 92660-5956

Dear Don:

This confirms the arrangements which have been agreed upon under which you will
continue to act as a consultant to the Corporation for the period beginning
October 1, 1999 and ending September 30, 2000.

It is understood that your responsibilities as a consultant will require you to
devote a reasonable portion of your time to this work, but you will not be
otherwise restricted in your business activities so long as they do not
interfere with your reasonable availability to the Corporation. It is agreed,
however, that you will not engage in any activity which presents a conflict of
interest in the light of your relationship with the Corporation.

You will be treated as an employee of the Corporation for purposes of payment of
compensation, income tax withholding and employment taxes, but as an independent
contractor for all other purposes. Without limiting the generality of the
foregoing, you shall not by reason of your services to the Corporation under
this agreement be eligible for participation in or be entitled to benefits under
any employee benefit plans or programs sponsored by the Corporation or any of
its affiliates.

The Corporation will pay you a fee at the rate of $300,000 per year, payable in
monthly installments on the first day of each month during the period of this
agreement. In addition, the Corporation will reimburse you for the reasonable
expenses of maintaining an office and for reasonable travel expenses and
out-of-pocket expenditures which you may incur in serving as a consultant to the

<PAGE>   3

Donald R. Beall
September 30, 1999 Page 2

Corporation.

In order to facilitate your providing the contemplated services you shall also,
during the term of this agreement:

-        Have available full-time secretarial service at your office;

-        Continue to have the use of the automobile the Corporation presently
         provides you, including maintenance and insurance, until October 31,
         1999, after which you will be eligible for the Executive Auto Cash
         Allowance Program through September 30, 2000;

-        Be authorized to use the Corporation's aircraft, subject to
         availability, for business travel related to your services as a
         consultant and for travel to attend meetings of the boards of directors
         of other companies on which you presently serve;

-        Continue to be eligible for the dental and vision care benefits
         presently provided you; and

-        Continue to be reimbursed through the term of this agreement for the
         membership costs for the Los Angeles Country Club, Big Canyon Country
         Club, Balboa Bay Club, the Center Club and the Pacific Club (with the
         understanding that you will be entitled to purchase the Corporation's
         equity interest in the Big Canyon Country Club and the Los Angeles
         Country Club memberships at the end of the term of this agreement).

If this correctly sets forth our understanding, please sign the duplicate
original of this letter and return it to me.

Sincerely,

ROCKWELL INTERNATIONAL CORPORATION

/s/ Don H. Davis, Jr.
---------------------
Don H. Davis, Jr.
Chairman and Chief Executive Officer

ACCEPTED:

/s/ Donald R. Beall
-------------------
Donald R. Beall

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