Document:

<PAGE>
                                                                   Exhibit 10e-5

              [TERMS AND CONDITIONS - NON-COMPETE, ISOS, PRIORITY]

                       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 Plan.

         (b)      CHARLES SCHWAB: Charles Schwab & Co., Inc. the Stock Option
                  Administrator whom Rockwell Automation has engaged to
                  administer and process all Option exercises.

         (c)      CORPORATION: Rockwell Automation and its Subsidiaries (as such
                  term is defined in the Plan).

         (d)      CUSTOMER SERVICE CENTER: Charles Schwab's Customer Service
                  Center that is used to facilitate Option transactions. Contact
                  Charles Schwab at (888) 852-2135.

         (e)      EXERCISE REQUEST AND ATTESTATION FORM: The form attached as
                  Exhibit 1 or any other form accepted by Charles Schwab in
                  connection with the use of 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.

         (f)      OPTIONS: The stock option or stock options listed in the first
                  paragraph of the letter dated October 1, 2001 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.

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

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

         (i)      ROCKWELL AUTOMATION: Rockwell International Corporation, a
                  Delaware corporation doing business as Rockwell Automation,
                  and any successor thereto.
<PAGE>
         (j)      SCHWAB OPTIONCENTER(R): Charles Schwab's stock option
                  management website which you can use to access your stock
                  option account and to facilitate stock option transactions
                  securely on the Web at www.schwab.com/optioncenter.

         (k)      SHARES: Shares of Rockwell Automation Common Stock.

         (l)      STOCK OPTION AGREEMENT: These Stock Option Terms and
                  Conditions together with the letter dated October 1, 2001 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) of the Option Shares granted as
         nonqualified stock options (NQs) and incentive stock options (ISOs)
         during the period beginning on October 1, 2002 and ending on October 1,
         2011, as to an additional one-third (rounded to the nearest whole
         number) of the Option Shares granted as NQs and ISOs during the period
         beginning on October 1, 2003 and ending on October 1, 2011 and as to
         the balance of the Option Shares granted as NQs and ISOs during the
         period beginning on October 1, 2004 and ending on October 1, 2011, and
         only during those periods, provided that:

         (a)      if you die while an Employee (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 October 1, 2002, 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 October 1, 2002 by reason of your retirement
                           under a retirement plan of Rockwell Automation, or
                           under a retirement plan of a subsidiary or affiliate
                           of Rockwell Automation, 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;
                           and

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                  (iv)     if your employment by the Corporation terminates on
                           or after October 1, 2002 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 October 1, 2011 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 Stock Option
                  Administrator, Charles Schwab, by using the Customer Service
                  Center or Schwab OptionCenter(R) as follows:

                  (i)      contact the Customer Service Center by calling
                           888-852-2135, Monday through Friday 9 a.m. to 9 p.m.,
                           ET, or exercise via the Web through the Schwab
                           OptionCenter(R) at www.schwab.com/optioncenter;

                  (ii)     confirm the Option transaction through the Customer
                           Service Center or Schwab OptionCenter(R);

                  (iii)    at any time you may speak to a Customer Service
                           Representative for assistance by calling
                           888-852-2135;

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

                           -        by check (wire) to your Charles Schwab
                                    account; or

                           -        in already-owned Shares; or

                           -        in a combination of check (wire) to your
                                    Charles Schwab account and Shares; or

                           -        by authorizing Charles Schwab or a third
                                    party approved by Rockwell Automation to
                                    sell the Shares (or a sufficient portion of
                                    the Shares) acquired upon exercise of the
                                    Options; 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 Charles Schwab or the
                           Secretary

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<PAGE>
                           of Rockwell Automation 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 (wire), upon (A) completion of your transaction
                           by using the Customer Service Center or Schwab
                           OptionCenter(R) and full payment of the exercise
                           price and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein; 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, upon (A) completion
                           of your transaction by using the Customer Service
                           Center or Schwab OptionCenter(R) and full payment of
                           the exercise price (as described in Section 3(d)(i)
                           herein) and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein.

         (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 Charles Schwab a check (wire) 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 Charles Schwab full
                           payment, by check or (if prior arrangements are made
                           with Charles Schwab) by wire transfer, of the
                           exercise price of those Option Shares.

                  In either event, in accordance with Section 3(e) herein, full
                  payment of the exercise price for the Option Shares purchased
                  must be made within three (3) business days after the exercise
                  has been completed through the Customer Service Center or
                  Schwab OptionCenter(R).

         (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 Charles Schwab an Exercise Request
                           and Attestation Form and cash representing one share,
                           per grant exercised, of Rockwell Automation shares to
                           settle the rounding of the exercise costs. To perform
                           such a stock swap transaction or a partial swap
                           transaction, the Exercise Request and Attestation
                           Form must be submitted via fax (720-785-8874) by 4 PM
                           ET on the date of exercise. Any questions concerning
                           a stock swap transaction should be

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                           referred to 877-636-7551 (Stock Option Administration
                           Group Hotline). The Exercise Request and Attestation
                           Form must attest to your ownership of Shares
                           representing:

                           -        at least the number of Shares whose value,
                                    based on the closing price of Common Stock
                                    of Rockwell Automation on the New York Stock
                                    Exchange -- Composite Transactions on the
                                    day you have exercised your Options through
                                    the Customer Service Center or Schwab
                                    OptionCenter(R) , equals the exercise price
                                    for the Option Shares; 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 to which
                                    you are attesting, based on the closing
                                    price of Common Stock of Rockwell Automation
                                    on the New York Stock Exchange -- Composite
                                    Transactions on the day you have exercised
                                    your Options through the Customer Service
                                    Center or Schwab OptionCenter(R).

                  (ii)     Charles Schwab 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) herein, and any funds required to pay in
                           full the exercise price for the Option Shares
                           purchased. In accordance with Section 3(e) herein,
                           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 three (3) business
                           days following the effective date of such exercise of
                           the Options under Section 3(b)(ii) herein.

                  (iii)    Notwithstanding any other provision of this Stock
                           Option Agreement, the Secretary of Rockwell
                           Automation 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 completed through the Customer Service Center or
                  Schwab OptionCenter(R), whether or not full payment of the
                  exercise price for the Option Shares is received by Charles
                  Schwab, 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 Charles Schwab any balance
                  of the exercise price for the Option Shares to be purchased
                  upon the exercise pursuant to the transaction conducted
                  through the Customer Service Center or Schwab OptionCenter(R)
                  required to pay in full the exercise price for those Option

                                     - 5 -
<PAGE>
                  Shares, that payment being by check, wire transfer, in Shares
                  or in a combination of check and Shares, on or before the
                  third business day after the date on which you complete the
                  transaction through the Customer Service Center or Schwab
                  OptionCenter(R). 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)      An Exercise Confirmation representing the number of Option
                  Shares purchased will be issued the third business day (trade
                  date plus three business days) (i) after Charles Schwab has
                  received full payment therefor or (ii) at Rockwell
                  Automation's or Charles Schwab's election in their sole
                  discretion, after Rockwell Automation or Charles Schwab 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 herein.

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

         Rockwell Automation or Charles Schwab 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 Automation or Charles
         Schwab 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 Automation or Charles Schwab 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 three (3) business days after the completion of the
         Option exercise (Section 3(a)(ii) herein). If such payment is not made,
         Rockwell Automation, 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) herein
         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.

                                     - 6 -
<PAGE>
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 Automation 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 Automation's obligation to
         issue Option Shares hereunder are subject to applicable laws and
         regulations.

         Exhibit 1 Exercise Request and Attestation Form (for use with
         already-owned shares).

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<PAGE>
                         2000 LONG-TERM INCENTIVES PLAN
                            FORM OF OPTION AGREEMENT
                        [EXISTING ARBITRATION AGREEMENT]

[Grant Date]

To:

Social Security/Account Number:

Dear Optionee:

We are pleased to notify you that you have been granted 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.

All option holders must activate an account with Charles Schwab in order to
exercise their stock options. There is no cost to open or maintain this account.
Please note that if you fail to activate an account with Schwab, you will
experience unnecessary delays in the exercise of your options. Instructions for
opening your Schwab account are enclosed.

A copy of the Plan and Plan Prospectus are enclosed. Please carefully read the
enclosed documents and retain them for future reference.

                                             ROCKWELL INTERNATIONAL CORPORATION

                                             By:
<PAGE>
                         2000 LONG-TERM INCENTIVES PLAN
                            FORM OF OPTION AGREEMENT
                    [NON-COMPETE, NEW ARBITRATION AGREEMENT]

[Grant Date]

To:

Social Security/Account Number:

Dear Optionee:

We are pleased to notify you that you have been granted 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 terms and
conditions of the Options 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.

All option holders must activate an account with Charles Schwab in order to
exercise their stock options. There is no cost to open or maintain this account.
Please note that if you fail to activate an account with Schwab, you will
experience unnecessary delays in the exercise of your options. Instructions for
opening your Charles Schwab account are enclosed.

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 the Corporation,
               engage or otherwise participate in any business which is
               competitive with any significant line of business of the
               Corporation 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 the Corporation or any of its affiliates to leave his or her
               employment with the Corporation 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 the Corporation may have, (i) the
               Corporation 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 the
               Corporation upon written demand the amount of the excess of the
               Fair Market Value (as defined in the Plan) of any shares of the
               Corporation'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>
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 Automation
                                    Corporate Compensation (MW42)
                                    777 East Wisconsin Avenue, Suite 1400
                                    Milwaukee, WI  53202

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 Corporate Compensation Department of
Rockwell Automation at the above address on or before DECEMBER 31, 2001, unless
Rockwell Automation (in its sole discretion) elects in writing to extend that
date.

A copy of the Plan and Plan Prospectus are enclosed. Please carefully read the
enclosed documents and retain them for future reference.

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

Employee Signature
[Social Security No.]
<PAGE>
                      [TERMS AND CONDITIONS - INSIDER/ISOS]

                       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 Plan.

         (b)      CHARLES SCHWAB: Charles Schwab & Co., Inc., the Stock Option
                  Administrator whom Rockwell Automation has engaged to
                  administer and process all Option exercises.

         (c)      CORPORATION: Rockwell Automation and its Subsidiaries (as such
                  term is defined in the Plan).

         (d)      CUSTOMER SERVICE CENTER: Charles Schwab's Customer Service
                  Center that is used to facilitate Option transactions. Contact
                  Charles Schwab at (888) 852-2135.

         (e)      EXERCISE REQUEST AND ATTESTATION FORM: The form attached as
                  Exhibit 2 or any other form accepted by Charles Schwab in
                  connection with the use of 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.

         (f)      NOTICE OF EXERCISE FORM: The form attached as Exhibit 1 or any
                  other form accepted by the Secretary of Rockwell Automation in
                  his sole discretion.

         (g)      OPTIONS: The stock option or stock options listed in the first
                  paragraph of the letter dated October 1, 2001 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.

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

         (i)      PLAN: Rockwell Automation's 2000 Long-Term Incentives Plan, as
                  such Plan may be amended and in effect at the relevant time.
<PAGE>
         (j)      ROCKWELL AUTOMATION: Rockwell International Corporation, a
                  Delaware corporation doing business as Rockwell Automation,
                  and any successor thereto.

         (k)      SCHWAB OPTIONCENTER(R): Charles Schwab's stock option
                  management website which you can use to access your stock
                  option account and to facilitate stock option transactions
                  securely on the Web at www.schwab.com/optioncenter.

         (l)      SHARES: Shares of Rockwell Automation Common Stock.

         (m)      STOCK OPTION AGREEMENT: These Stock Option Terms and
                  Conditions together with the letter dated October 1, 2001 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) of the Option Shares granted as
         nonqualified stock options (NQs) and incentive stock options (ISOs)
         during the period beginning on October 1, 2002 and ending on October 1,
         2011, as to an additional one-third (rounded to the nearest whole
         number) of the Option Shares granted as NQs and ISOs during the period
         beginning on October 1, 2003 and ending on October 1, 2011 and as to
         the balance of the Option Shares granted as NQs and ISOs during the
         period beginning on October 1, 2004 and ending on October 1, 2011, and
         only during those periods, provided that:

         (a)      if you die while an Employee (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 October 1, 2002, 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 October 1, 2002 by reason of your retirement
                           under a retirement plan of Rockwell Automation, or
                           under a retirement plan of a subsidiary or affiliate
                           of Rockwell Automation, 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

                                     - 2 -
<PAGE>
                           your retirement date or (y) such earlier date as the
                           Committee shall determine by action taken not later
                           than 60 days after your retirement date; and

                  (iv)     if your employment by the Corporation terminates on
                           or after October 1, 2002 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 October 1, 2011 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 first obtain authorization
                  from the Rockwell Automation's Office of the Secretary by
                  submitting a Notice of Exercise Form to Rockwell Automation's
                  Office of the Secretary (Attention: Stock Option
                  Administration; facsimile number (414) 212-5297) or by other
                  means acceptable to the Secretary of Rockwell Automation, and
                  then contact the Stock Option Administrator, Charles Schwab,
                  by using the Customer Service Center as follows:

                  (i)      contact the Customer Service Center by calling
                           888-852-2135, Monday through Friday 9 a.m. to 9 p.m.,
                           ET, and follow the instructions provided;

                  (ii)     confirm the Option transaction through the Customer
                           Service Center;

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

                           -        by check (wire) to your Charles Schwab
                                    account; or

                           -        in already-owned Shares; or

                           -        in a combination of check (wire) to your
                                    Charles Schwab account and Shares; or

                           -        by authorizing Charles Schwab or a third
                                    party approved by Rockwell Automation to
                                    sell the Shares (or a sufficient portion of
                                    the Shares) acquired upon exercise of the
                                    Options; and

                                     - 3 -
<PAGE>
                  (iv)     in the case of an exercise of the Options by any
                           person other than you seeking to exercise the
                           Options, such documents as Charles Schwab or the
                           Secretary of Rockwell Automation 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 (wire), upon (A) completion of your transaction
                           by using the Customer Service Center and full payment
                           of the exercise price and withholding taxes (if
                           applicable) are received by Charles Schwab within
                           three (3) business days following the exercise; and
                           (B) receipt of any documents required pursuant to
                           Section 3(a)(iv) herein; 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, upon (A) completion
                           of your transaction by using the Customer Service
                           Center and full payment of the exercise price (as
                           described in Section 3(d)(i) herein) and withholding
                           taxes (if applicable) are received by Charles Schwab
                           within three (3) business days following the
                           exercise; and (ii) receipt of any documents required
                           pursuant to Section 3(a)(iv) herein.

         (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 Charles Schwab a check (wire) 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 Charles Schwab full
                           payment, by check or (if prior arrangements are made
                           with Charles Schwab) by wire transfer, of the
                           exercise price of those Option Shares.

                  In either event, in accordance with Section 3(e) herein, full
                  payment of the exercise price for the Option Shares purchased
                  must be made within three (3) business days after the exercise
                  has been completed through the Customer Service Center.

         (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 Charles Schwab an Exercise Request
                           and Attestation Form and cash representing one share,
                           per grant exercised, of Rockwell Automation Shares to
                           settle the rounding of the exercise costs. To perform
                           such a stock swap transaction or a partial swap
                           transaction, the Exercise Request and Attestation

                                     - 4 -
<PAGE>
                           Form must be submitted via fax (720-785-8874) by 4 PM
                           ET on the date of exercise. Any questions concerning
                           a stock swap transaction should be referred to
                           877-636-7551 (Stock Option Administration Group
                           Hotline). The Exercise Request and Attestation Form
                           must attest to your ownership of Shares representing:

                           -        at least the number of Shares whose value,
                                    based on the closing price of Common Stock
                                    of Rockwell Automation on the New York Stock
                                    Exchange -- Composite Transactions on the
                                    day you have exercised your Options through
                                    the Customer Service Center, equals the
                                    exercise price for the Option Shares; 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 to which
                                    you are attesting, based on the closing
                                    price of Common Stock of Rockwell Automation
                                    on the New York Stock Exchange -- Composite
                                    Transactions on the day you have exercised
                                    your Options through the Customer Service
                                    Center.

                  (ii)     Charles Schwab 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) herein, and any funds required to pay in
                           full the exercise price for the Option Shares
                           purchased. In accordance with Section 3(e) herein,
                           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 three (3) business
                           days following the effective date of such exercise of
                           the Options under Section 3(b)(ii) herein.

                  (iii)    Notwithstanding any other provision of this Stock
                           Option Agreement, the Secretary of Rockwell
                           Automation 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 completed through the Customer Service Center,
                  whether or not full payment of the exercise price for the
                  Option Shares is received by Charles Schwab, 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 Charles Schwab any balance of the exercise
                  price for the Option Shares to be purchased upon the exercise
                  pursuant to the transaction conducted through the

                                     - 5 -
<PAGE>
                  Customer Service Center 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 third business day after the date on
                  which you complete the transaction through the Customer
                  Service Center. 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)      An Exercise Confirmation representing the number of Option
                  Shares purchased will be issued the third business day (trade
                  date plus three business days) (i) after Charles Schwab has
                  received full payment therefor or (ii) at Rockwell
                  Automation's or Charles Schwab's election in their sole
                  discretion, after Rockwell Automation or Charles Schwab 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 herein.

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

         Rockwell Automation or Charles Schwab 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 Automation or Charles
         Schwab 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 Automation or Charles Schwab 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 three (3) business days after the completion of the
         Option exercise (Section 3(a)(ii) herein). If such payment is not made,
         Rockwell Automation, 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) herein
         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.

                                     - 6 -
<PAGE>
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 Automation 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 Automation's obligation to
         issue Option Shares hereunder are subject to applicable laws and
         regulations.

        Exhibit 1         Notice of Exercise Form

        Exhibit 2         Exercise Request and Attestation Form
                          (for use with already-owned shares)

                                     - 7 -
<PAGE>

                             NOTICE OF EXERCISE FORM
                             FOR CORPORATE OFFICERS
EXHIBIT 1

To:      Rockwell Automation
         Office of the Secretary (MW31)
         777 East Wisconsin Avenue, Suite 1400
         Milwaukee, WI  53202

         Fax No. (414) 212-5297

         1. OPTIONS EXERCISED: Subject to the terms and conditions of the Stock
Option Agreement dated October 1, 2001, with Rockwell International Corporation
(Rockwell Automation) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
                  Date of           Number of                     Exercise                     Total
                    Grant              Shares                       Price               Purchase Price
                  <S>               <C>                       <C>                       <C>
                  -------           ---------                 $                         $

                  -------           ---------                 $                         $

                  -------           ---------                 $                         $

</TABLE>

         2. PAYMENT: The following must be received by Charles Schwab & Co, Inc.
(Charles Schwab) within three business days following the date of exercise:

         -        A check payable to Rockwell International Employee Stock
                  Option Program or a wire transfer to Charles Schwab for credit
                  to the Rockwell International Employee Stock Option Program in
                  the amount of the Total Purchase Price of the above-itemized
                  stock option(s); OR

         -        A number of shares of Rockwell Automation Common Stock
                  surrendered or sold to pay the Total Purchase Price of the
                  above-itemized stock option(s); OR

         -        A combination of (i) a check payable to Rockwell International
                  Employee Stock Option Program or a wire transfer to Charles
                  Schwab for credit to the Rockwell International Employee Stock
                  Option Program, and (ii) a number of Shares surrendered or
                  sold, which together amount to the Total Purchase Price of the
                  Above-itemized stock option(s).

                                     - 8 -
<PAGE>
                                                         Notice of Exercise Form
                                                 For Officers and Directors Only
                                                                          Page 2

         If full payment of the Total Purchase Price of the stock option(s)
listed in Item 1 is not delivered within three (3) business days after the
exercise date, Rockwell Automation is authorized forthwith to set off the
balance due against any amounts due or which may become due me to satisfy my
obligation to pay the Total Purchase Price.

THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR AFTER
THE DATE OF SUCH RECEIPT.

-----------------------------------------------------
                    (Signature)

Printed Name
            -----------------------------------------

Dated:
      -----------------------------------------------

                                     - 9 -
<PAGE>
             [TERMS AND CONDITIONS - NON-COMPETE, ISOS, NONPRIORITY]

                       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 Plan.

         (b)      CHARLES SCHWAB: Charles Schwab & Co., Inc. the Stock Option
                  Administrator whom Rockwell Automation has engaged to
                  administer and process all Option exercises.

         (c)      CORPORATION: Rockwell Automation and its Subsidiaries (as such
                  term is defined in the Plan).

         (d)      CUSTOMER SERVICE CENTER: Charles Schwab's Customer Service
                  Center that is used to facilitate Option transactions. Contact
                  Charles Schwab at (800) 654-2593.

         (e)      EXERCISE REQUEST AND ATTESTATION FORM: The form attached as
                  Exhibit 1 or any other form accepted by Charles Schwab in
                  connection with the use of 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.

         (f)      OPTIONS: The stock option or stock options listed in the first
                  paragraph of the letter dated October 1, 2001 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.

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

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

         (i)      ROCKWELL AUTOMATION: Rockwell International Corporation, a
                  Delaware corporation doing business as Rockwell Automation,
                  and any successor thereto.
<PAGE>
         (j)      SCHWAB OPTIONCENTER(R): Charles Schwab's stock option
                  management website which you can use to access your stock
                  option account and to facilitate stock option transactions
                  securely on the Web at www.schwab.com/optioncenter.

         (k)      SHARES: Shares of Rockwell Automation Common Stock.

         (l)      STOCK OPTION AGREEMENT: These Stock Option Terms and
                  Conditions together with the letter dated October 1, 2001 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) of the Option Shares granted as
         nonqualified stock options (NQs) and incentive stock options (ISOs)
         during the period beginning on October 1, 2002 and ending on October 1,
         2011, as to an additional one-third (rounded to the nearest whole
         number) of the Option Shares granted as NQs and ISOs during the period
         beginning on October 1, 2003 and ending on October 1, 2011 and as to
         the balance of the Option Shares granted as NQs and ISOs during the
         period beginning on October 1, 2004 and ending on October 1, 2011, and
         only during those periods, provided that:

         (a)      if you die while an Employee (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 October 1, 2002, 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 October 1, 2002 by reason of your retirement
                           under a retirement plan of Rockwell Automation, or
                           under a retirement plan of a subsidiary or affiliate
                           of Rockwell Automation, 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;
                           and

                                     - 2 -
<PAGE>
                  (iv)     if your employment by the Corporation terminates on
                           or after October 1, 2002 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 October 1, 2011 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 Stock Option
                  Administrator, Charles Schwab, by using the Customer Service
                  Center or Schwab OptionCenter(R) as follows:

                  (i)      contact the Customer Service Center by calling
                           800-654-2593, Monday through Friday 9 a.m. to 9 p.m.,
                           ET, or exercise via the Web through the Schwab
                           OptionCenter(R) at www.schwab.com/optioncenter;

                  (ii)     confirm the Option transaction through the Customer
                           Service Center or Schwab OptionCenter(R);

                  (iii)    at any time you may speak to a Customer Service
                           Representative for assistance by calling
                           800-654-2593;

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

                           -        by check (wire) to your Charles Schwab
                                    account; or

                           -        in already-owned Shares; or

                           -        in a combination of check (wire) to your
                                    Charles Schwab account and Shares; or

                           -        by authorizing Charles Schwab or a third
                                    party approved by Rockwell Automation to
                                    sell the Shares (or a sufficient portion of
                                    the Shares) acquired upon exercise of the
                                    Options; 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 Charles Schwab or the
                           Secretary

                                     - 3 -
<PAGE>
                           of Rockwell Automation 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 (wire), upon (A) completion of your transaction
                           by using the Customer Service Center or Schwab
                           OptionCenter(R) and full payment of the exercise
                           price and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein; 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, upon (A) completion
                           of your transaction by using the Customer Service
                           Center or Schwab OptionCenter(R) and full payment of
                           the exercise price (as described in Section 3(d)(i)
                           herein) and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein.

         (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 Charles Schwab a check (wire)
                                    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 Charles
                                    Schwab full payment, by check or (if prior
                                    arrangements are made with Charles Schwab)
                                    by wire transfer, of the exercise price of
                                    those Option Shares.

                  In either event, in accordance with Section 3(e) herein, full
                  payment of the exercise price for the Option Shares purchased
                  must be made within three (3) business days after the exercise
                  has been completed through the Customer Service Center or
                  Schwab OptionCenter(R).

         (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 Charles Schwab an Exercise Request
                           and Attestation Form and cash representing one share,
                           per grant exercised, of Rockwell Automation shares to
                           settle the rounding of the exercise costs. To perform
                           such a stock swap transaction or a partial swap
                           transaction, the Exercise Request and Attestation
                           Form must be submitted via fax (720-785-8874) by 4 PM
                           ET on the date of exercise. Any questions concerning
                           a stock swap transaction should be

                                     - 4 -
<PAGE>
                           referred to 877-636-7551 (Stock Option Administration
                           Group Hotline). The Exercise Request and Attestation
                           Form must attest to your ownership of Shares
                           representing:

                           -        at least the number of Shares whose value,
                                    based on the closing price of Common Stock
                                    of Rockwell Automation on the New York Stock
                                    Exchange -- Composite Transactions on the
                                    day you have exercised your Options through
                                    the Customer Service Center or Schwab
                                    OptionCenter(R) , equals the exercise price
                                    for the Option Shares; 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 to which
                                    you are attesting, based on the closing
                                    price of Common Stock of Rockwell Automation
                                    on the New York Stock Exchange -- Composite
                                    Transactions on the day you have exercised
                                    your Options through the Customer Service
                                    Center or Schwab OptionCenter(R).

                  (ii)     Charles Schwab 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) herein, and any funds required to pay in
                           full the exercise price for the Option Shares
                           purchased. In accordance with Section 3(e) herein,
                           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 three (3) business
                           days following the effective date of such exercise of
                           the Options under Section 3(b)(ii) herein.

                  (iii)    Notwithstanding any other provision of this Stock
                           Option Agreement, the Secretary of Rockwell
                           Automation 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 completed through the Customer Service Center or
                  Schwab OptionCenter(R), whether or not full payment of the
                  exercise price for the Option Shares is received by Charles
                  Schwab, 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 Charles Schwab any balance
                  of the exercise price for the Option Shares to be purchased
                  upon the exercise pursuant to the transaction conducted
                  through the Customer Service Center or Schwab OptionCenter(R)
                  required to pay in full the exercise price for those Option

                                     - 5 -
<PAGE>
                  Shares, that payment being by check, wire transfer, in Shares
                  or in a combination of check and Shares, on or before the
                  third business day after the date on which you complete the
                  transaction through the Customer Service Center or Schwab
                  OptionCenter(R). 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)      An Exercise Confirmation representing the number of Option
                  Shares purchased will be issued the third business day (trade
                  date plus three business days) (i) after Charles Schwab has
                  received full payment therefor or (ii) at Rockwell
                  Automation's or Charles Schwab's election in their sole
                  discretion, after Rockwell Automation or Charles Schwab 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 herein.

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

         Rockwell Automation or Charles Schwab 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 Automation or Charles
         Schwab 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 Automation or Charles Schwab 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 three (3) business days after the completion of the
         Option exercise (Section 3(a)(ii) herein). If such payment is not made,
         Rockwell Automation, 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) herein
         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.

                                     - 6 -
<PAGE>
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 Automation 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 Automation's obligation to
         issue Option Shares hereunder are subject to applicable laws and
         regulations.

         Exhibit 1 Exercise Request and Attestation Form (for use with
         already-owned shares).

                                     - 7 -
<PAGE>
                         2000 LONG-TERM INCENTIVES PLAN
                            FORM OF OPTION AGREEMENT
                           [NEW ARBITRATION AGREEMENT]

[Grant Date]

To:

Social Security/Account Number:

Dear Optionee:

We are pleased to notify you that you have been granted 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.

All option holders must activate an account with Charles Schwab in order to
exercise their stock options. There is no cost to open or maintain this account.
Please note that if you fail to activate an account with Schwab, you will
experience unnecessary delays in the exercise of your options. Instructions for
opening your Schwab account are enclosed.

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 Automation
                                    Corporate Compensation (MW42)
                                    777 East Wisconsin Avenue, Suite 1400
                                    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 Corporate
Compensation Department of Rockwell Automation on or before DECEMBER 31, 2001,
unless Rockwell Automation (in its sole discretion) elects in writing to extend
that date.

A copy of the Plan and Plan Prospectus are enclosed. Please carefully read the
enclosed documents and retain them for future reference.

                                             ROCKWELL INTERNATIONAL CORPORATION

                                             By:
                                                --------------------------------
<PAGE>
                      [TERMS AND CONDITIONS - STANDARD, NQ]

                       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 Plan.

         (b)      CHARLES SCHWAB: Charles Schwab & Co., Inc. the Stock Option
                  Administrator whom Rockwell Automation has engaged to
                  administer and process all Option exercises.

         (c)      CORPORATION: Rockwell Automation and its Subsidiaries (as such
                  term is defined in the Plan).

         (d)      CUSTOMER SERVICE CENTER: Charles Schwab's Customer Service
                  Center that is used to facilitate Option transactions. Contact
                  Charles Schwab at (800) 654-2593.

         (e)      EXERCISE REQUEST AND ATTESTATION FORM: The form attached as
                  Exhibit 1 or any other form accepted by Charles Schwab in
                  connection with the use of 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.

         (f)      OPTIONS: The stock option or stock options listed in the first
                  paragraph of the letter dated October 1, 2001 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.

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

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

         (i)      ROCKWELL AUTOMATION: Rockwell International Corporation, a
                  Delaware corporation doing business as Rockwell Automation,
                  and any successor thereto.
<PAGE>
         (j)      SCHWAB OPTIONCENTER(R): Charles Schwab's stock option
                  management website which you can use to access your stock
                  option account and to facilitate stock option transactions
                  securely on the Web at www.schwab.com/optioncenter.

         (k)      SHARES: Shares of Rockwell Automation Common Stock.

         (l)      STOCK OPTION AGREEMENT: These Stock Option Terms and
                  Conditions together with the letter dated October 1, 2001 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) of the Option Shares during the
         period beginning on October 1, 2002 and ending on October 1, 2011, as
         to an additional one-third (rounded to the nearest whole number) of the
         Option Shares during the period beginning on October 1, 2003 and ending
         on October 1, 2011 and as to the balance of the Option Shares during
         the period beginning on October 1, 2004 and ending on October 1, 2011,
         and only during those periods, provided that:

         (a)      if you die while an Employee (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 October 1, 2002, 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 October 1, 2002 by reason of your retirement
                           under a retirement plan of Rockwell Automation, or
                           under a retirement plan of a subsidiary or affiliate
                           of Rockwell Automation, 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;
                           and

                                     - 2 -
<PAGE>
                  (iv)     if your employment by the Corporation terminates on
                           or after October 1, 2002 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 October 1, 2011 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 Stock Option
                  Administrator, Charles Schwab, by using the Customer Service
                  Center or Schwab OptionCenter(R) as follows:

                  (i)      contact the Customer Service Center by calling
                           800-654-2593, Monday through Friday 9 a.m. to 9 p.m.,
                           ET, or exercise via the Web through the Schwab
                           OptionCenter(R) at www.schwab.com/optioncenter;

                  (ii)     confirm the Option transaction through the Customer
                           Service Center or Schwab OptionCenter(R);

                  (iii)    at any time you may speak to a Customer Service
                           Representative for assistance by calling
                           800-654-2593;

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

                           -        by check (wire) to your Charles Schwab
                                    account; or

                           -        in already-owned Shares; or

                           -        in a combination of check (wire) to your
                                    Charles Schwab account and Shares; or

                           -        by authorizing Charles Schwab or a third
                                    party approved by Rockwell Automation to
                                    sell the Shares (or a sufficient portion of
                                    the Shares) acquired upon exercise of the
                                    Options; 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 Charles Schwab or the
                           Secretary of Rockwell Automation shall require to
                           establish to their satisfaction that the person
                           seeking to exercise the Options is entitled to do so.

                                     - 3 -
<PAGE>
         (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 (wire), upon (A) completion of your transaction
                           by using the Customer Service Center or Schwab
                           OptionCenter(R) and full payment of the exercise
                           price and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein; 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, upon (A) completion
                           of your transaction by using the Customer Service
                           Center or Schwab OptionCenter(R) and full payment of
                           the exercise price (as described in Section 3(d)(i)
                           herein) and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein.

         (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 Charles Schwab a check (wire)
                                    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 Charles
                                    Schwab full payment, by check or (if prior
                                    arrangements are made with Charles Schwab)
                                    by wire transfer, of the exercise price of
                                    those Option Shares.

                  In either event, in accordance with Section 3(e) herein, full
                  payment of the exercise price for the Option Shares purchased
                  must be made within three (3) business days after the exercise
                  has been completed through the Customer Service Center or
                  Schwab OptionCenter(R).

         (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 Charles Schwab an Exercise Request
                           and Attestation Form and cash representing one share,
                           per grant exercised, of Rockwell Automation shares to
                           settle the rounding of the exercise costs. To perform
                           such a stock swap transaction or a partial swap
                           transaction, the Exercise Request and Attestation
                           Form must be submitted via fax (720-785-8874) by 4 PM
                           ET on the date of exercise. Any questions concerning
                           a stock swap transaction should be referred to
                           877-636-7551 (Stock Option Administration Group
                           Hotline). The

                                     - 4 -
<PAGE>
                           Exercise Request and Attestation Form must attest to
                           your ownership of Shares representing:

                           -        at least the number of Shares whose value,
                                    based on the closing price of Common Stock
                                    of Rockwell Automation on the New York Stock
                                    Exchange -- Composite Transactions on the
                                    day you have exercised your Options through
                                    the Customer Service Center or Schwab
                                    OptionCenter(R) , equals the exercise price
                                    for the Option Shares; 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 to which
                                    you are attesting, based on the closing
                                    price of Common Stock of Rockwell Automation
                                    on the New York Stock Exchange -- Composite
                                    Transactions on the day you have exercised
                                    your Options through the Customer Service
                                    Center or Schwab OptionCenter(R).

                  (ii)     Charles Schwab 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) herein, and any funds required to pay in
                           full the exercise price for the Option Shares
                           purchased. In accordance with Section 3(e) herein,
                           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 three (3) business
                           days following the effective date of such exercise of
                           the Options under Section 3(b)(ii) herein.

                  (iii)    Notwithstanding any other provision of this Stock
                           Option Agreement, the Secretary of Rockwell
                           Automation 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 completed through the Customer Service Center or
                  Schwab OptionCenter(R), whether or not full payment of the
                  exercise price for the Option Shares is received by Charles
                  Schwab, 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 Charles Schwab any balance
                  of the exercise price for the Option Shares to be purchased
                  upon the exercise pursuant to the transaction conducted
                  through the Customer Service Center or Schwab OptionCenter(R)
                  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

                                     - 5 -
<PAGE>
                  check and Shares, on or before the third business day after
                  the date on which you complete the transaction through the
                  Customer Service Center or Schwab OptionCenter(R). 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)      An Exercise Confirmation representing the number of Option
                  Shares purchased will be issued the third business day (trade
                  date plus three business days) (i) after Charles Schwab has
                  received full payment therefor or (ii) at Rockwell
                  Automation's or Charles Schwab's election in their sole
                  discretion, after Rockwell Automation or Charles Schwab 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 herein.

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

         Rockwell Automation or Charles Schwab 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 Automation or Charles
         Schwab 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 Automation or Charles Schwab 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 three (3) business days after the completion of the
         Option exercise (Section 3(a)(ii) herein). If such payment is not made,
         Rockwell Automation, 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) herein
         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.
<PAGE>
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 Automation 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 Automation's obligation to
         issue Option Shares hereunder are subject to applicable laws and
         regulations.

         Exhibit 1 Exercise Request and Attestation Form (for use with
         already-owned shares).

                                      - 7 -
<PAGE>
              [TERMS AND CONDITIONS - NON-COMPETE, NQ, NONPRIORITY]

                       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 Plan.

         (b)      CHARLES SCHWAB: Charles Schwab & Co., Inc. the Stock Option
                  Administrator whom Rockwell Automation has engaged to
                  administer and process all Option exercises.

         (c)      CORPORATION: Rockwell Automation and its Subsidiaries (as such
                  term is defined in the Plan).

         (d)      CUSTOMER SERVICE CENTER: Charles Schwab's Customer Service
                  Center that is used to facilitate Option transactions. Contact
                  Charles Schwab at (800) 654-2593.

         (e)      EXERCISE REQUEST AND ATTESTATION FORM: The form attached as
                  Exhibit 1 or any other form accepted by Charles Schwab in
                  connection with the use of 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.

         (f)      OPTIONS: The stock option or stock options listed in the first
                  paragraph of the letter dated October 1, 2001 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.

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

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

         (i)      ROCKWELL AUTOMATION: Rockwell International Corporation, a
                  Delaware corporation doing business as Rockwell Automation,
                  and any successor thereto.
<PAGE>
         (j)      SCHWAB OPTIONCENTER(R): Charles Schwab's stock option
                  management website which you can use to access your stock
                  option account and to facilitate stock option transactions
                  securely on the Web at www.schwab.com/optioncenter.

         (k)      SHARES: Shares of Rockwell Automation Common Stock.

         (l)      STOCK OPTION AGREEMENT: These Stock Option Terms and
                  Conditions together with the letter dated October 1, 2001 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) of the Option Shares during the
         period beginning on October 1, 2002 and ending on October 1, 2011, as
         to an additional one-third (rounded to the nearest whole number) of the
         Option Shares during the period beginning on October 1, 2003 and ending
         on October 1, 2011 and as to the balance of the Option Shares during
         the period beginning on October 1, 2004 and ending on October 1, 2011,
         and only during those periods, provided that:

         (a)      if you die while an Employee (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 October 1, 2002, 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 October 1, 2002 by reason of your retirement
                           under a retirement plan of Rockwell Automation, or
                           under a retirement plan of a subsidiary or affiliate
                           of Rockwell Automation, 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;
                           and

                                     - 2 -
<PAGE>
                  (iv)     if your employment by the Corporation terminates on
                           or after October 1, 2002 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 October 1, 2011 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 Stock Option
                  Administrator, Charles Schwab, by using the Customer Service
                  Center or Schwab OptionCenter(R) as follows:

                  (i)      contact the Customer Service Center by calling
                           800-654-2593, Monday through Friday 9 a.m. to 9 p.m.,
                           ET, or exercise via the Web through the Schwab
                           OptionCenter(R) at www.schwab.com/optioncenter;

                  (ii)     confirm the Option transaction through the Customer
                           Service Center or Schwab OptionCenter(R);

                  (iii)    at any time you may speak to a Customer Service
                           Representative for assistance by calling
                           800-654-2593;

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

                           -        by check (wire) to your Charles Schwab
                                    account; or

                           -        in already-owned Shares; or

                           -        in a combination of check (wire) to your
                                    Charles Schwab account and Shares; or

                           -        by authorizing Charles Schwab or a third
                                    party approved by Rockwell Automation to
                                    sell the Shares (or a sufficient portion of
                                    the Shares) acquired upon exercise of the
                                    Options; 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 Charles Schwab or the
                           Secretary of Rockwell Automation shall require to
                           establish to their satisfaction that the person
                           seeking to exercise the Options is entitled to do so.

                                     - 3 -
<PAGE>
         (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 (wire), upon (A) completion of your transaction
                           by using the Customer Service Center or Schwab
                           OptionCenter(R) and full payment of the exercise
                           price and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein; 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, upon (A) completion
                           of your transaction by using the Customer Service
                           Center or Schwab OptionCenter(R) and full payment of
                           the exercise price (as described in Section 3(d)(i)
                           herein) and withholding taxes (if applicable) are
                           received by Charles Schwab within three (3) business
                           days following the exercise; and (B) receipt of any
                           documents required pursuant to Section 3(a)(v)
                           herein.

         (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 Charles Schwab a check (wire)
                                    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 Charles
                                    Schwab full payment, by check or (if prior
                                    arrangements are made with Charles Schwab)
                                    by wire transfer, of the exercise price of
                                    those Option Shares.

                  In either event, in accordance with Section 3(e) herein, full
                  payment of the exercise price for the Option Shares purchased
                  must be made within three (3) business days after the exercise
                  has been completed through the Customer Service Center or
                  Schwab OptionCenter(R).

         (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 Charles Schwab an Exercise Request
                           and Attestation Form and cash representing one share,
                           per grant exercised, of Rockwell Automation shares to
                           settle the rounding of the exercise costs. To perform
                           such a stock swap transaction or a partial swap
                           transaction, the Exercise Request and Attestation
                           Form must be submitted via fax (720-785-8874) by 4 PM
                           ET on the date of exercise. Any questions concerning
                           a stock swap transaction should be referred to
                           877-636-7551 (Stock Option Administration Group
                           Hotline). The

                                     - 4 -
<PAGE>
                           Exercise Request and Attestation Form must attest to
                           your ownership of Shares representing:

                           -        at least the number of Shares whose value,
                                    based on the closing price of Common Stock
                                    of Rockwell Automation on the New York Stock
                                    Exchange -- Composite Transactions on the
                                    day you have exercised your Options through
                                    the Customer Service Center or Schwab
                                    OptionCenter(R), equals the exercise price
                                    for the Option Shares; 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 to which
                                    you are attesting, based on the closing
                                    price of Common Stock of Rockwell Automation
                                    on the New York Stock Exchange -- Composite
                                    Transactions on the day you have exercised
                                    your Options through the Customer Service
                                    Center or Schwab OptionCenter(R).

                  (ii)     Charles Schwab 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) herein, and any funds required to pay in
                           full the exercise price for the Option Shares
                           purchased. In accordance with Section 3(e) herein,
                           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 three (3) business
                           days following the effective date of such exercise of
                           the Options under Section 3(b)(ii) herein.

                  (iii)    Notwithstanding any other provision of this Stock
                           Option Agreement, the Secretary of Rockwell
                           Automation 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 completed through the Customer Service Center or
                  Schwab OptionCenter(R), whether or not full payment of the
                  exercise price for the Option Shares is received by Charles
                  Schwab, 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 Charles Schwab any balance
                  of the exercise price for the Option Shares to be purchased
                  upon the exercise pursuant to the transaction conducted
                  through the Customer Service Center or Schwab OptionCenter(R)
                  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

                                     - 5 -
<PAGE>
                  check and Shares, on or before the third business day after
                  the date on which you complete the transaction through the
                  Customer Service Center or Schwab OptionCenter(R). 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)      An Exercise Confirmation representing the number of Option
                  Shares purchased will be issued the third business day (trade
                  date plus three business days) (i) after Charles Schwab has
                  received full payment therefor or (ii) at Rockwell
                  Automation's or Charles Schwab's election in their sole
                  discretion, after Rockwell Automation or Charles Schwab 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 herein.

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

         Rockwell Automation or Charles Schwab 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 Automation or Charles
         Schwab 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 Automation or Charles Schwab 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 three (3) business days after the completion of the
         Option exercise (Section 3(a)(ii) herein). If such payment is not made,
         Rockwell Automation, 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) herein
         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.

                                     - 6 -
<PAGE>
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 Automation 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 Automation's obligation to
         issue Option Shares hereunder are subject to applicable laws and
         regulations.

         Exhibit 1 Exercise Request and Attestation Form (for use with
         already-owned shares).

                                     - 7 -<PAGE>

                                                                  Exhibit 10-e-6

                       ROCKWELL INTERNATIONAL CORPORATION

             MEMORANDUM OF ADJUSTMENTS TO OUTSTANDING OPTIONS UNDER
              ROCKWELL INTERNATIONAL CORPORATION'S 1988 LONG-TERM
                INCENTIVES PLAN, 1995 LONG-TERM INCENTIVES PLAN,
             2000 LONG-TERM INCENTIVES PLAN AND DIRECTORS STOCK PLAN
                  ADOPTED BY BOARD OF DIRECTORS ON JUNE 6, 2001

            Effective upon consummation of the distribution (the "Distribution")
by Rockwell International Corporation ("Rockwell") to each holder of shares of
Common Stock, par value $1 per share, of Rockwell ("Rockwell Common Stock") as
of the close of business on the Record Date (as defined in the Distribution
Agreement (the "Distribution Agreement") to be entered into prior to the
Distribution by and among Rockwell, New Rockwell Collins, Inc. (to be renamed
Rockwell Collins, Inc.) ("Rockwell Collins") and Rockwell Scientific Company
LLC) of one share of Common Stock, par value $.01 per share ("Collins Common
Stock"), and one associated preferred share purchase right ("Right"), of
Rockwell Collins for each share of Rockwell Common Stock held by such holder on
the Record Date (which is subject to satisfaction or waiver of the conditions
set forth in the Distribution Agreement), all outstanding options under the
Rockwell International Corporation 1988 Long-Term Incentives Plan (the "1988
Plan"), the Rockwell International Corporation 1995 Long-Term Incentives Plan
(the "1995 Plan"), the Rockwell International Corporation 2000 Long-Term
Incentives Plan (the "2000 Plan") and the Rockwell International Corporation
Directors Stock Plan (the "Directors Plan," and, together with the 1988 Plan,
the 1995 Plan and the 2000 Plan, the "Rockwell Stock Plans"), pursuant to the
equitable adjustment provisions of the applicable Rockwell Stock Plan, shall be
adjusted as set forth in this memorandum.

            Capitalized terms used in this memorandum but not defined herein
will have the meanings ascribed to such terms in the form of Distribution
Agreement previously approved by the Board of Directors or, if not defined
therein, in the form of Employee Matters Agreement (as defined in the
Distribution Agreement) approved by the Board of Directors on the date hereof.
As used in this memorandum (including Annex A hereto), the following terms will
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

            "ACTIVE ROCKWELL AUTOMATION EMPLOYEE" means any individual who,
      immediately after the Time of Distribution, will be employed by a member
      of the Rockwell Automation Group pursuant to Section 2.01(a) of the
      Employee Matters Agreement (other than any such individual who was an
      employee of the corporate office of Rockwell or its predecessors prior to
      the Distribution and who has not accepted permanent employment with a
      member of the Rockwell Automation Group as of the Time of Distribution).

                                       1
<PAGE>
            "ACTIVE ROCKWELL COLLINS EMPLOYEE" means any individual who,
      immediately after the Time of Distribution, will be employed by a member
      of the Rockwell Collins Group pursuant to Section 2.01(b) of the Employee
      Matters Agreement.

            "AVERAGE PRICE OF OLD ROCKWELL COMMON STOCK" means the average of
      the daily closing prices per share of Rockwell Common Stock trading on a
      "regular way" basis (i.e., including the value of the Rockwell Collins
      Common Stock to be distributed in respect thereof) as reported on the NYSE
      Composite Transactions reporting system for the Pre-Distribution Period;
      provided, that (a) if any day during the Pre-Distribution Period is an
      Excluded Day, then such Excluded Day will not be included in the three-day
      averaging period and up to three Substitute Old Rockwell Trading Days will
      be included in lieu thereof so that a total of three trading days are
      included in such averaging period and (b) if any Substitute Old Rockwell
      Trading Day is so included in the averaging period, then the per share
      value for such day described in the definition of Substitute Old Rockwell
      Trading Day will be included for purposes of calculating the Average Price
      of Old Rockwell Common Stock.

            "AVERAGE PRICE OF ROCKWELL AUTOMATION COMMON STOCK" means the
      average of the daily closing prices per share of Rockwell Common Stock
      trading on an "ex-distribution when-issued" basis (i.e., without the value
      of the Rockwell Collins Common Stock to be distributed in respect thereof)
      as reported on the NYSE Composite Transactions reporting system for the
      Pre-Distribution Period; provided, that if on any day during the
      Pre-Distribution Period, the daily trading volume of such "ex-distribution
      when-issued" trading is less than 10,000 shares, then for purposes of
      calculating the Average Price of Rockwell Automation Common Stock, the
      Deemed Rockwell Automation When-Issued Value for such day will be included
      in lieu of the closing price per share of Rockwell Common Stock trading on
      an "ex-distribution when-issued" basis for such day; provided, further,
      that (a) if any day during the Pre-Distribution Period is an Excluded Day,
      then such Excluded Day will not be included in the three-day averaging
      period and up to three Substitute Rockwell Automation Trading Days will be
      included in lieu thereof so that a total of three trading days are
      included in such averaging period and (b) if any Substitute Rockwell
      Automation Trading Day is so included in the averaging period, then the
      per share value for such day described in the definition of Substitute
      Rockwell Automation Trading Day will be included for purposes of
      calculating the Average Price of Rockwell Automation Common Stock.

            "AVERAGE PRICE OF ROCKWELL COLLINS COMMON STOCK" means the average
      of the daily closing prices per share of Rockwell Collins Common Stock
      trading on a "when-issued" basis as reported on the NYSE Composite
      Transactions reporting system for the Pre-Distribution Period; provided,
      that (a) if any day during the Pre-Distribution Period is an Excluded Day,
      then such Excluded Day will not be included in the three-day averaging
      period and up to three Substitute Rockwell Collins Trading Days will be
      included in lieu thereof so that a total of

                                       2
<PAGE>
      three trading days are included in such averaging period and (b) if any
      Substitute Rockwell Collins Trading Day is so included in the averaging
      period, then the per share value for such day described in the definition
      of Substitute Rockwell Collins Trading Day will be included for purposes
      of calculating the Average Price of Rockwell Collins Common Stock.

            "COMMITTEE" means the committee appointed by the Rockwell Board on
      June 6, 2001 for certain purposes, including in respect of the option
      adjustments provided for in this Memorandum.

            "DEEMED ROCKWELL AUTOMATION WHEN-ISSUED VALUE" means, for any
      trading day in the Pre-Distribution Period or the Earlier Period, the
      remainder of (a) the closing price per share of Rockwell Common Stock
      trading on a "regular way" basis (i.e., including the value of the
      Rockwell Collins Common Stock to be distributed in respect thereof) as
      reported on the NYSE Composite Transactions reporting system for such day,
      minus (b) the closing price per share of Rockwell Collins Common Stock
      trading on a "when-issued" basis as reported on the NYSE Composite
      Transaction reporting system for such day.

            "EARLIER PERIOD" means the three consecutive full NYSE trading days
      immediately preceding the Pre-Distribution Period.

            "EXCLUDED DAY" means any day during the Pre-Distribution Period or
      the Earlier Period (a) on which the daily trading volume of Rockwell
      Collins Common Stock trading on a "when-issued" basis is less than 10,000
      shares or (b) with respect to which the Committee determines (on or before
      2:00 p.m., New York City time, on the first NYSE trading day following the
      Distribution Date) that (i) the closing price per share of Rockwell
      Collins Common Stock trading on a "when-issued" basis does not fairly
      represent the per share value of Rockwell Collins Common Stock and/or (ii)
      the closing price per share of Rockwell Common Stock trading on an
      "ex-distribution when-issued" basis or the Deemed Rockwell Automation
      When-Issued Value does not fairly represent the per share value of
      Rockwell Common Stock (excluding the value of Rockwell Collins Common
      Stock to be distributed in respect thereof).

            "NYSE" means the New York Stock Exchange, Inc.

            "POST-DISTRIBUTION ROCKWELL OPTION SPREAD" means, with respect to
      any Rockwell Split Option (after its being adjusted pursuant to paragraph
      (c) of this memorandum), the product of (a) the Average Price of Rockwell
      Automation Common Stock minus the per share exercise price of such
      adjusted Rockwell Split Option, multiplied by (b) the number of shares of
      Rockwell Common Stock subject to such Rockwell Split Option.

            "PRE-DISTRIBUTION PERIOD" means the three consecutive full NYSE
      trading days ending on and including the Distribution Date.

                                       3
<PAGE>
            "PRE-DISTRIBUTION ROCKWELL OPTION SPREAD" means, with respect to any
      Rockwell Split Option (prior to its being adjusted pursuant to paragraph
      (c) of this memorandum), (i) the Average Price of Old Rockwell Common
      Stock minus the per share exercise price of such unadjusted Rockwell Split
      Option, multiplied by (ii) the number of shares of Rockwell Common Stock
      subject to such Rockwell Split Option.

            "ROCKWELL AUTOMATION OPTION RATIO" means the amount obtained by
      dividing (i) the Average Price of Rockwell Automation Common Stock by (ii)
      the Average Price of Old Rockwell Common Stock.

            "ROCKWELL AUTOMATION OPTIONEE" means any Person who (i) immediately
      after the Time of Distribution is an Active Rockwell Automation Employee,
      other than those who were employees of the Rockwell corporate office prior
      to the Time of Distribution and become employees of the Rockwell
      Automation Business (or remain employees of the Rockwell corporate office)
      in connection with the Distribution or (ii) is set forth in Schedule 1.02
      to the Employee Matters Agreement.

            "ROCKWELL COLLINS OPTION" means an option to purchase from Rockwell
      Collins shares of Rockwell Collins Common Stock provided to a holder of a
      Rockwell Option pursuant to the provisions of this Memorandum.

            "ROCKWELL COLLINS OPTION RATIO" means the amount obtained by
      dividing (i) the Average Price of Rockwell Collins Common Stock by (ii)
      the Average Price of Old Rockwell Common Stock.

            "ROCKWELL COLLINS OPTION SPREAD" means, with respect to any Rockwell
      Collins Option received by a holder of a Rockwell Split Option pursuant to
      paragraph (c) of this memorandum, the Pre-Distribution Rockwell Option
      Spread of the corresponding Rockwell Option minus the Post-Distribution
      Rockwell Option Spread of such Rockwell Option.

            "ROCKWELL COLLINS OPTIONEE" means any Person who (i) immediately
      after the Time of Distribution is an Active Rockwell Collins Employee,
      other than those who were employees of the Rockwell corporate office prior
      to the Time of Distribution and become employees of the Rockwell Collins
      Business in connection with the Distribution or (ii) is set forth in
      Schedule 1.03 to the Employee Matters Agreement.

            "ROCKWELL OPTION" means an option to purchase from Rockwell shares
      of Rockwell Common Stock granted pursuant to one of the Rockwell Stock
      Plans.

            "ROCKWELL SPLIT OPTION" means any Rockwell Option outstanding as of
      the Time of Distribution held by a Rockwell Split Optionee.

                                       4
<PAGE>
            "ROCKWELL SPLIT OPTIONEE" means any individual who holds Rockwell
      Options at the Time of Distribution who is not a Rockwell Automation
      Optionee or a Rockwell Collins Optionee.

            "SUBSTITUTE OLD ROCKWELL TRADING DAY" means the first immediately
      preceding NYSE trading day in the Earlier Period that is not already a
      Substitute Old Rockwell Trading Day or an Excluded Day; provided, that if
      there are an insufficient number of Substitute Old Rockwell Trading Days
      available in the Earlier Period for a total of three trading days to be
      included in the averaging period for the Average Price of Old Rockwell
      Common Stock, then up to three NYSE trading days immediately following the
      Distribution Date will be included as Substitute Old Rockwell Trading Days
      so that a total of three trading days are included in the averaging
      period; provided, further, that (a) if any NYSE trading day in the Earlier
      Period is included as a Substitute Old Rockwell Trading Day, then, for
      purposes of calculating the Average Price of Old Rockwell Common Stock,
      the closing price per share for that day of Rockwell Common Stock trading
      on a "regular way" basis (i.e., including the Rockwell Collins Common
      Stock to be distributed in respect thereof) as reported on the NYSE
      Composite Transactions reporting system will be included for that
      Substitute Old Rockwell Trading Day and (b) if any NYSE trading day
      immediately following the Distribution Date is included as a Substitute
      Old Rockwell Trading Day, then, for purposes of calculating the Average
      Price of Old Rockwell Common Stock, the sum of the closing prices per
      share for that day of Rockwell Common Stock and Rockwell Collins Common
      Stock, each trading on a "regular way" basis and as reported on the NYSE
      Composite Transactions reporting system, will be included for that
      Substitute Old Rockwell Trading Day.

            "SUBSTITUTE ROCKWELL AUTOMATION TRADING DAY" means the first
      immediately preceding NYSE trading day in the Earlier Period that is not
      already a Substitute Rockwell Automation Trading Day or an Excluded Day;
      provided that if there are an insufficient number of Substitute Rockwell
      Automation Trading Days available in the Earlier Period for a total of
      three trading days to be included in the averaging period for the Average
      Price of Rockwell Automation Common Stock, then up to three NYSE trading
      days immediately following the Distribution Date will be included as
      Substitute Rockwell Automation Trading Days so that a total of three
      trading days are included in the averaging period; provided, further, that
      (a) if any NYSE trading day in the Earlier Period is included as a
      Substitute Rockwell Automation Trading Day, then, for purposes of
      calculating the Average Price of Rockwell Automation Common Stock, (i) the
      closing price per share for that day of Rockwell Common Stock trading on
      an "ex-distribution when-issued" basis as reported on the NYSE Composite
      Transactions reporting system (if the trading volume for such day of such
      "ex-distribution when-issued" trading is at least 10,000 shares) or (ii)
      the Deemed Rockwell Automation When-Issued Value for that day (if the
      trading volume for such day of such "ex-distribution when-issued" trading
      is less than 10,000 shares), will be included for that Substitute Rockwell
      Automation Trading Day and (b) if any NYSE trading day immediately
      following the Distribute Date is included as a

                                       5
<PAGE>
      Substitute Rockwell Automation Trading Day, then, for purposes of
      calculating the Average Price of Rockwell Automation Common Stock, the
      closing price per share for that day of Rockwell Common Stock, trading on
      a "regular way" basis, as reported on the NYSE Composite Transactions
      reporting system will be included for that Substitute Rockwell Automation
      Trading Day.

            "SUBSTITUTE ROCKWELL COLLINS TRADING DAY" means the first
      immediately preceding NYSE trading day in the Earlier Period that is not
      already a Substitute Rockwell Collins Trading Day or an Excluded Day;
      provided, that if there are an insufficient number of Substitute Rockwell
      Collins Trading Days available in the Earlier Period for a total of three
      trading days to be included in the averaging period for the Average Price
      of Rockwell Collins Common Stock, then up to three NYSE trading days
      immediately following the Distribution Date will be included as Substitute
      Rockwell Collins Trading Days so that a total of three trading days are
      included in the averaging period; provided, further, that (a) if any NYSE
      trading day in the Earlier Period is included as a Substitute Rockwell
      Collins Trading Day, then, for purposes of calculating the Average Price
      of Rockwell Collins Common Stock, the closing price per share for that day
      of Rockwell Collins Common Stock trading on a "when-issued" basis as
      reported on the NYSE Composite Transactions reporting system will be
      included for that Substitute Rockwell Collins Trading Day and (b) if any
      NYSE trading day immediately following the Distribution Date is included
      as a Substitute Rockwell Collins Trading Day, then, for purposes of
      calculating the Average Price of Rockwell Collins Common Stock, the
      closing price per share for that day of Rockwell Collins Common Stock,
      trading on a "regular way" basis, as reported on the NYSE Composite
      Transactions reporting system will be included for that Substitute
      Rockwell Collins Trading Day.

            The adjustments shall be made as follows:

            (a) Each Rockwell Option held by a Rockwell Automation Optionee that
      is outstanding as of the Time of Distribution will be adjusted pursuant to
      the equitable adjustment and other provisions of the applicable Rockwell
      Stock Plan under which such Rockwell Option was granted so that the number
      of shares of Rockwell Common Stock subject to the adjusted Rockwell Option
      will equal the number of shares subject to such Rockwell Option
      immediately prior to the Time of Distribution and prior to such
      adjustment, multiplied by the reciprocal of the Rockwell Automation Option
      Ratio. The adjusted Rockwell Option will have a per share exercise price
      equal to the per share exercise price of such Rockwell Option immediately
      prior to the Time of Distribution and prior to such adjustment, multiplied
      by the Rockwell Automation Option Ratio, rounded up to the nearest
      hundredth of a cent.

            (b) Each Rockwell Option held by a Rockwell Collins Optionee that is
      outstanding as of the Time of Distribution will be and become a Rockwell
      Collins Option pursuant to the equitable adjustment and other provisions
      of the applicable Rockwell Stock Plan under which such Rockwell Option was
      granted. The

                                       6
<PAGE>
      number of shares of Rockwell Collins Common Stock subject to such Rockwell
      Collins Option will equal the number of shares of Rockwell Common Stock
      subject to such Rockwell Option being replaced immediately prior to the
      Time of Distribution, multiplied by the reciprocal of the Rockwell Collins
      Option Ratio. The per share exercise price of such Rockwell Collins Option
      will equal the per share exercise price of such Rockwell Option being
      replaced immediately prior to the Time of Distribution, multiplied by the
      Rockwell Collins Option Ratio, rounded up to the nearest hundredth of a
      cent.

            (c)(i) Each Rockwell Split Option held by any Person that is
      outstanding as of the Time of Distribution will be adjusted pursuant to
      the equitable adjustment and other provisions of the applicable Rockwell
      Stock Plan under which such Rockwell Split Option was granted so that the
      per share exercise price of such Rockwell Split Option will equal the per
      share exercise price of such Rockwell Split Option immediately prior to
      the Time of Distribution and prior to such adjustment, multiplied by the
      Rockwell Automation Option Ratio, rounded up to the nearest hundredth of a
      cent. The number of shares subject to the adjusted Rockwell Split Option
      will equal the number of shares subject to such Rockwell Split Option
      immediately prior to the Time of Distribution.

            (c)(ii) Each Person holding a Rockwell Split Option as of the Time
      of Distribution will receive a Rockwell Collins Option pursuant to the
      equitable adjustment and other provisions of the applicable Rockwell Stock
      Plan under which such Rockwell Split Option was granted. The Rockwell
      Collins Option will have a per share exercise price equal to the per share
      exercise price of such Rockwell Split Option immediately prior to the Time
      of Distribution (before the adjustment contemplated by paragraph (c)(i) of
      this memorandum), multiplied by the Rockwell Collins Option Ratio, rounded
      up to the nearest hundredth of a cent. The number of shares of Rockwell
      Collins Common Stock subject to such Rockwell Collins Option will equal
      the quotient of (i) the Rockwell Collins Option Spread divided by (ii) the
      remainder of the Average Price of Rockwell Collins Common Stock minus the
      per share exercise price of such Rockwell Collins Option (as determined
      pursuant to the preceding sentence).

            Attached as Annex A are examples of the option adjustments set forth
in this memorandum.

                                       7
<PAGE>
                                                                         Annex A

                           Option Adjustment Examples

      Each of the following examples is based on the following assumptions:

            -     the employee has been granted options to acquire 1,000 shares
                  of Rockwell Common Stock;

            -     the Average Price of Old Rockwell Common Stock is $50;

            -     the Average Price of Rockwell Automation Common Stock is $25;
                  and

            -     the Average Price of Rockwell Collins Common Stock is $25.

A.    ROCKWELL AUTOMATION OPTIONEES

   1. In-the-Money Option:

      Pre-Distribution Exercise Price: $30.00

<TABLE>
<CAPTION>
                                        Rockwell              Rockwell
                                    Pre-Distribution     Post-Distribution
                                    ----------------     -----------------
<S>                                 <C>                  <C>
     Number of Option Shares                 1,000                 2,000(1)
     Exercise Price                   $      30.00          $      15.00(2)
     Average Price                    $      50.00          $      25.00
     Aggregate Spread                 $     20,000          $     20,000
</TABLE>

      (1) 1,000 x $50.00/$25.00 (Reciprocal of Rockwell Automation Option Ratio)

      (2) $30.00 x $25.00/$50.00 (Rockwell Automation Option Ratio)

                                       8
<PAGE>
   2. Out-of-the-Money Option:

      Pre-Distribution Exercise Price: $60.00

<TABLE>
<CAPTION>
                                        Rockwell              Rockwell
                                    Pre-Distribution      Post-Distribution
                                    ----------------      -----------------
<S>                                 <C>                   <C>
     Number of Option Shares                 1,000                 2,000(1)
     Exercise Price                   $      60.00          $      30.00(2)
     Average Price                    $      50.00          $      25.00
     Aggregate Spread                 $    (10,000)         $    (10,000)
</TABLE>

      (1) 1,000 x $50.00/$25.00 (Reciprocal of Rockwell Automation Option Ratio)

      (2) $60.00 x $25.00/$50.00 (Rockwell Automation Option Ratio)

B.    ROCKWELL COLLINS OPTIONEES

   1. In-the-Money Option:

      Pre-Distribution Exercise Price: $30.00

<TABLE>
<CAPTION>
                                        Rockwell              Collins
                                    Pre-Distribution      Post-Distribution
                                    ----------------      -----------------
<S>                                 <C>                   <C>
     Number of Option Shares                 1,000                 2,000(1)
     Exercise Price                   $      30.00          $      15.00(2)
     Average Price                    $      50.00          $      25.00
     Aggregate Spread                 $     20,000          $     20,000
</TABLE>

   (1) 1,000 x $50.00/$25.00 (Reciprocal of Rockwell Collins Option Ratio)

   (2) $30.00 x $25.00/$50.00 (Rockwell Collins Option Ratio)

                                       9
<PAGE>
   2. Out-of-the-Money Option:

      Pre-Distribution Exercise Price: $60.00

<TABLE>
<CAPTION>
                                        Rockwell              Collins
                                    Pre-Distribution      Post-Distribution
                                    ----------------      -----------------
<S>                                 <C>                   <C>
     Number of Option Shares                 1,000                 2,000(1)
     Exercise Price                   $      60.00          $      30.00(2)
     Average Price                    $      50.00          $      25.00
     Aggregate Spread                 $    (10,000)         $    (10,000)
</TABLE>

   (1) 1,000 x $50.00/$25.00 (Reciprocal of Rockwell Collins Option Ratio)

   (2) $60.00 x $25.00/$50.00 (Rockwell Collins Option Ratio)

                                       10
<PAGE>
C.    ROCKWELL SPLIT OPTIONEES

   1. In-the-Money Option:

      Pre-Distribution Exercise Price: $30.00

<TABLE>
<CAPTION>
                                        Rockwell              Rockwell                 Collins
                                    Pre-Distribution      Post-Distribution        Post-Distribution
                                    ----------------      -----------------        -----------------
<S>                                 <C>                   <C>                      <C>
    Number of Option Shares                  1,000                 1,000                    1,000(3)
    Exercise Price                    $      30.00          $      15.00(1)          $      15.00(2)
    Average Price                     $      50.00          $      25.00             $      25.00
    Aggregate Spread                  $     20,000          $     10,000             $     10,000
</TABLE>

      (1)

<TABLE>
<CAPTION>
   Pre-Dist.                                                                             New Rockwell
   Exer. Price        Times                Rockwell Automation Option Ratio         =    Exer. Price
   -----------        -----                --------------------------------              -----------
<S>                   <C>                <C>        <C>                <C>          <C>  <C>
                      Times
        $30.00        Quotient of        $25.00     Divided By         $50.00       =       $15.00
</TABLE>

      (2)

<TABLE>
<CAPTION>
   Pre-Dist.                                                                             New Collins
   Exer. Price        Times                  Rockwell Collins Option Ratio          =    Exer. Price
   -----------        -----                  -----------------------------               -----------
<S>                   <C>                <C>        <C>                <C>          <C>  <C>
                      Times
        $30.00        Quotient of        $25.00      Divided By        $50.00       =       $15.00
</TABLE>

      (3)

<TABLE>
<CAPTION>
   Rockwell
   Collins Option                         Avg. Price of               Collins                          Number of
   Spread           Divided By the      Rockwell Collins              Post-Distribution                Collins Option
                    Remainder of          Common Stock       Minus    Exer. Price               =      Shares
                    ------------          ------------       -----    -----------                      ------
<S>                 <C>                 <C>                  <C>      <C>                       <C>    <C>
                    Divided By the
     $10,000(4)     Remainder  of            $25.00          Minus        $15.00                =          1,000
</TABLE>

   (4) Pre-Distribution Rockwell Option Spread of corresponding Rockwell Split
       Option ($20,000) - Post-Distribution Rockwell Option Spread of such
       Rockwell Split Option ($10,000)

                                       11
<PAGE>
   2. Out-of-the-Money Option:

      Pre-Distribution Exercise Price: $60.00

<TABLE>
<CAPTION>
                                       Rockwell               Rockwell                  Collins
                                   Pre-Distribution       Post-Distribution         Post-Distribution
                                   ----------------       -----------------         -----------------
<S>                                <C>                    <C>                       <C>
    Number of Option Shares                 1,000                  1,000                     1,000(3)
    Exercise Price                   $      60.00           $      30.00(1)           $      30.00(2)
    Average Price                    $      50.00           $      25.00              $      25.00
    Aggregate Spread                 $    (10,000)          $     (5,000)             $     (5,000)
</TABLE>

      (1)

<TABLE>
<CAPTION>
   Pre-Dist.                                                                             New Rockwell
   Exer. Price        Times                Rockwell Automation Option Ratio         =    Exer. Price
   -----------        -----                --------------------------------              -----------
<S>                   <C>                <C>         <C>               <C>          <C>  <C>
                      Times
        $60.00        Quotient of        $25.00      Divided By        $50.00       =       $30.00
</TABLE>

      (2)

<TABLE>
<CAPTION>
   Pre-Dist.                                                                             New Collins Exer.
   Exer. Price        Times                 Rockwell Collins Option Ratio           =    Price
   -----------        -----                 -----------------------------           -    -----
<S>                   <C>                <C>         <C>               <C>          <C>  <C>
                      Times
        $60.00        Quotient of       $25.00       Divided By        $50.00       =       $30.00
</TABLE>

      (3)

<TABLE>
<CAPTION>
   Rockwell                                                         Collins
   Collins                              Avg. Price of               Post                   Number of
   Option          Divided By the     Rockwell Collins              Distribution           Collins Option
   Spread          Remainder of         Common Stock      Minus     Exer. Price     =      Shares
   ------          ------------         ------------      -----     -----------            ------
<S>                <C>                <C>                 <C>       <C>             <C>    <C>
                   Divided By the
   $(5,000)(4)     Remainder of             $25.00        Minus       $30.00        =         1,000
</TABLE>

   (4) Pre-Distribution Rockwell Option Spread of corresponding Rockwell Split
       Option ($10,000) - Post-Distribution Rockwell Option Spread of such
       Rockwell Split Option ($5,000)

                                       12

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