Document:

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                                                                    EXHIBIT 10.2
                                                                       [5/30/01]

                                    FORM OF

                            ROCKWELL COLLINS, INC.

                             DIRECTORS STOCK PLAN

1.    PURPOSE OF THE PLAN.

      The purpose of the Directors Stock Plan (the Plan) is to link the
      compensation of non-employee directors of Rockwell Collins, Inc. (Collins)
      directly with the interests of the Collins shareowners.

2.    PARTICIPANTS.

      Participants in the Plan shall consist of directors, other than the
      non-executive Chairman of the Board, of Collins who are not employees of
      Collins or any of its subsidiaries (Non-Employee Directors). The term
      "subsidiary" as used in the Plan means a corporation more than 50% of the
      voting stock of which, or an unincorporated business entity more than 50%
      of the equity interest in which, shall at the time be owned directly or
      indirectly by Collins.
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3.   SHARES RESERVED UNDER THE PLAN.

     Subject to the provisions of Section 8 of the Plan, there shall be reserved
     for delivery under the Plan 325,000 shares of Common Stock, par value $.01
     per share, of Collins (Shares). Shares to be delivered under the Plan may
     be authorized and unissued Shares, Shares held in treasury or any
     combination thereof.

4.   ADMINISTRATION OF THE PLAN.

     The Plan shall be administered by the Compensation and Management
     Development Committee (the Committee) of the Board of Directors of Collins
     (the Board), subject to the right of the Board, in its sole discretion, to
     exercise or authorize another committee or person to exercise some or all
     of the responsibilities, powers and authority vested in the Committee under
     the Plan. The Committee (or the Board or any other committee or person
     authorized by the Board) shall have authority to interpret the Plan and to
     prescribe, amend and rescind rules and regulations relating to the
     administration of the Plan, and all such interpretations, rules and
     regulations shall be conclusive and binding on all persons.

5.   EFFECTIVE DATE OF THE PLAN.

     The Plan has been approved by the Board and shall be submitted to the sole
     shareowner of Collins, and, if approved, shall become effective on the date
     on which Rockwell International Corporation (Rockwell) completes the

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     pro rata distribution of all the outstanding Shares to Rockwell's
     shareowners (the Distribution). The Plan shall also be submitted to the
     shareowners of Collins for approval at the Annual Meeting of Shareowners to
     be held in 2002, and, if approved by the shareowners, shall continue in
     full force and effect as provided herein.

6.   STOCK OPTIONS.

     (a)  Grant of Options.

           (i) Initial Grants and Grants upon Election or Appointment to the
               Board. Effective concurrently with the first grant of options
               under the Collins 2001 Long-Term Incentives Plan (the Initial
               Grant Date), each Non-Employee Director at such time shall be
               granted an option to purchase 10,000 Shares. Any individual who
               is elected or appointed for the first time as a Non-Employee
               Director of Collins after the Initial Grant Date, other than an
               individual who has served as the non-executive Chairman of the
               Board, shall be granted an option to purchase 10,000 Shares at
               the meeting of the Board at which, or immediately following the
               Annual Meeting of Shareowners at which, the Non-Employee Director
               is first elected a director of Collins.

          (ii) Annual Grants. Immediately following the Annual Meeting of
               Shareowners held in the year 2003 and each Annual Meeting of
               Shareowners thereafter, each Non-Employee Director who has served
               as a director for at least one year and is

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               elected a director at, or who was previously elected and
               continues as a director after, that Annual Meeting shall be
               granted an option to purchase 5,000 Shares.

         (iii) Discretionary Grants. At such times as the Board may determine,
               the Board may grant to each Non-Employee Director, or to one or
               more designated Non-Employee Directors, options to purchase such
               additional number of Shares as the Board in its sole discretion
               shall determine.

     (b)  Exercise Price.

          The exercise price per share for each option granted under Section
          6(a) shall be one hundred percent (100%) of the closing price per
          share (the Fair Market Value) of the Shares on the date of grant as
          reported on the New York Stock Exchange-Composite Transactions (or on
          the next preceding day that Shares were traded if they were not traded
          on the date of grant).

     (c)  Exercise and Termination.

          The purchase price of the Shares with respect to which an option or
          portion thereof is exercised shall be payable in full in cash, Shares
          valued at their Fair Market Value on the date of exercise, or a
          combination thereof. Each option may be exercised in whole or in part
          at any time after it becomes exercisable; and each option shall become
          exercisable in three approximately equal installments on each of the
          first, second and third anniversaries of the date the

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          option is granted. No option shall be exercisable prior to one year
          nor after ten years from the date of the grant thereof; provided,
          however, that if the holder of an option dies, the option may be
          exercised from and after the date of the optionee's death for a period
          of three years (or until the expiration date specified in the option,
          if earlier) even if it was not exercisable at the date of death.
          Moreover, if an optionee retires after attaining age 70 or before age
          70 with at least five years service as a director, all options then
          held by such optionee shall be exercisable even if they were not
          exercisable at such retirement date; provided, however, that each such
          option shall expire at the earlier of five years from the date of the
          optionee's retirement or the expiration date specified in the option.
          If an optionee ceases to be a director by reason of disability or
          resignation from the Board for reasons of the antitrust laws,
          compliance with Collins' conflict of interest policies or other
          circumstances that the Committee may determine as serving the best
          interests of Collins, all options then held by such optionee may be
          exercised from and after such termination date for a period of one
          year (or until the expiration date specified in the option, if
          earlier), even if they were not exercisable at such termination date,
          unless otherwise determined by the Committee. If an optionee ceases to
          be a director while holding unexercised options for any reason not
          specified above, such options are then void. If a Change of Control

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          as defined in Article III, Section 13(I)(1) of Collins' By-laws shall
          occur, then all options then outstanding pursuant to the Plan shall
          forthwith become fully exercisable whether or not otherwise then
          exercisable.

     (d)  Nonassignability.

          Options granted under the Plan are not transferable other than (i) by
          will or by the laws of descent and distribution; or (ii) by gift to
          the grantee's spouse or natural, adopted or step-children or
          grandchildren (Immediate Family Members) or to a trust for the benefit
          of one or more of the grantee's Immediate Family Members or to a
          family charitable trust established by the grantee or a member of the
          grantee's family.

7.   RESTRICTED SHARES IN LIEU OF CASH COMPENSATION.

     (a)  Minimum Award.

           (i) In accordance with the further provisions of Sections 7(a)(ii),
               (iii) and (iv), each person who is a Non-Employee Director shall
               receive fifty percent (50%) of his or her annual retainer fee for
               service on the Board (or the applicable pro rata portion thereof)
               by delivery of a whole number of restricted Shares (Restricted
               Shares) determined by dividing the portion of the retainer fee to
               be paid in Restricted Shares by the closing price of the Shares
               as reported on the New York Stock

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               Exchange-Composite Transactions on the date when payment is made
               (or on the next preceding day that Shares were traded if they
               were not traded on such date) and rounding up to the next higher
               whole number.

          (ii) Each person who is a Non-Employee Director immediately following
               the Distribution shall receive the Restricted Shares to which he
               or she is entitled pursuant to Section 7(a)(i) on the date when
               payment of the initial installment of the retainer fee is made.

         (iii) Each other person who is first elected or appointed as a
               Non-Employee Director after the Distribution but before the first
               day of Collins' 2002 fiscal year shall receive the Restricted
               Shares to which he or she is entitled pursuant to Section 7(a)(i)
               immediately following such election or appointment.

          (iv) On and after the first day of Collins' 2002 fiscal year, each
               Non-Employee Director shall receive the Restricted Shares to
               which he or she is entitled pursuant to Section 7.1(a)(i) on the
               first business day of Collins' 2002 fiscal year and each
               subsequent fiscal year (or, if later, the first business day
               during that fiscal year on which such person serves as a
               Non-Employee Director).

     (b)  Elective Awards.

          Each Non-Employee Director may elect each year, not later than

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          December 31 of the year preceding the year as to which an election is
          to be applicable, to receive all or any part of the cash portion of
          his or her retainer or other fees to be paid for board, committee or
          other service in the following calendar year through the issuance or
          transfer of Restricted Shares, valued at the closing price as reported
          on the New York Stock Exchange-Composite Transactions on the date when
          each payment of such retainer amount would otherwise be made in cash.

     (c)  Discretionary Grants.

          At such times as the Board may determine, the Board may grant to each
          Non-Employee Director, or to one or more designated Non-Employee
          Directors, awards of such additional numbers of Restricted Shares as
          the Board in its sole discretion may determine.

     (d)  Terms of Restricted Shares.

          Upon receipt of Restricted Shares, the recipient shall have the right
          to vote the Shares and to receive dividends thereon, and the Shares
          shall have all the attributes of outstanding Shares, except that the
          Restricted Shares shall be held in book-entry accounts subject to the
          direction of Collins (or if Collins elects, certificates therefor may
          be issued in the recipient's name but delivered to and held by
          Collins) until ten days after (i) the recipient retires from the Board
          after attaining age 70 and having served at least three years service
          as a director or (ii) the recipient ceases to be a director by reason
          of the

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          antitrust laws, compliance with Collins' conflict of interest
          policies, death, disability or other circumstances the Board
          determines not to be adverse to the best interests of Collins, when
          the restrictions on such book-entry accounts shall be released (or any
          certificates issued shall be delivered to the director), and such
          Shares shall cease to be Restricted Shares. If a Change of Control as
          defined in Article III, Section 13(I)(1) of Collins' By-laws shall
          occur, then the restrictions on all shares granted as Restricted
          Shares under the Plan at any time before the occurrence of a Change of
          Control shall forthwith lapse, those Shares shall cease to be
          Restricted Shares and certificates for those Shares shall be delivered
          as promptly as practicable to the directors in whose names they are
          registered.

8.   ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

     If there shall be any change in or affecting Shares on account of any
     merger, consolidation, reorganization, recapitalization, reclassification,
     stock dividend, stock split or combination, or other distribution to
     holders of Shares (other than a cash dividend), there shall be made or
     taken such amendments to the Plan and such adjustments and actions
     thereunder as the Board may deem appropriate under the circumstances.

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9.   GOVERNMENT AND OTHER REGULATIONS.

     The obligations of Collins to deliver Shares under the Plan or upon
     exercise of options granted under Section 6 of the Plan shall be subject to
     (i) all applicable laws, rules and regulations and such approvals by any
     governmental agencies as may be required, including, without limitation,
     compliance with the Securities Act of 1933, as amended, and (ii) the
     condition that such Shares shall have been duly listed on the New York
     Stock Exchange.

10.  AMENDMENT AND TERMINATION OF THE PLAN.

     The Plan may be amended by the Board in any respect, provided that, without
     shareowner approval, no amendment shall materially increase the maximum
     number of Shares available for delivery under the Plan (other than
     adjustments pursuant to Section 8 hereof). The Plan may also be terminated
     at any time by the Board. Termination of the Plan shall not affect the
     rights of Non-Employee Directors with respect to awards previously granted
     to them and all unexpired awards shall continue in force and effect after
     termination of the Plan except as they may lapse or be terminated by their
     own terms and conditions.

11.  MISCELLANEOUS.

     (a)  Nothing contained in the Plan shall be deemed to confer upon any
          person any right to continue as a director of or to be associated in

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          any other way with Collins.

     (b)  To the extent that Federal laws do not otherwise control, the Plan and
          all determinations made and actions taken pursuant hereto shall be
          governed by the law of the State of Delaware.

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                                                                    EXHIBIT 10.3
                                                                       (5/30/01)

                                    FORM OF

                             ROCKWELL COLLINS, INC.

                             2001 STOCK OPTION PLAN

1.  PURPOSE

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

2.  DEFINITIONS

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

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

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

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

      d. Change of Control. Any of the following:

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

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

            (iii) Consummation of a reorganization, merger or consolidation or
      sale or other disposition of all or substantially all of the assets of
      Collins or the acquisition of assets of another entity (a Corporate
      Transaction), in each case, unless, following such Corporate Transaction,
      (A) all or substantially all of the individuals and entities who were the
      beneficial owners, respectively, of the Outstanding Collins Common Stock
      and Outstanding Collins Voting Securities immediately prior to such
      Corporate Transaction beneficially own, directly or indirectly, more than
      50% of, respectively, the then outstanding shares of common stock and the
      combined voting power of the then outstanding voting securities entitled
      to vote generally in the election of directors, as the case may be, of the
      corporation resulting from such Corporate Transaction (including, without
      limitation, a corporation which as a result of such transaction owns the
      Corporation or all or substantially all of the Corporation's assets either
      directly or

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      through one or more subsidiaries) in substantially the same proportions as
      their ownership, immediately prior to such Corporate Transaction, of the
      Outstanding Collins Common Stock and Outstanding Collins Voting
      Securities, as the case may be, (B) no Person (excluding any employee
      benefit plan (or related trust) of the Corporation, of Rockwell or of such
      corporation resulting from such Corporate Transaction) beneficially owns,
      directly or indirectly, 20% or more of, respectively, the then outstanding
      shares of common stock of the corporation resulting from such Corporate
      Transaction or the combined voting power of the then outstanding voting
      securities of such corporation, except to the extent that such ownership
      existed prior to the Corporate Transaction and (C) at least a majority of
      the members of the board of directors of the corporation resulting from
      such Corporate Transaction were members of the Incumbent Board at the time
      of the execution of the initial agreement, or of the action of the Board
      of Directors, providing for such Corporate Transaction; or

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      t. Plan. This 2001 Stock Option Plan.

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

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

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

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

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3. PLAN ADMINISTRATION

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

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

4. COLLINS OPTIONS

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

5. EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT

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

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

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

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

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

6. SHARES AVAILABLE

      The total number of Collins Shares which may be delivered upon exercise of
Collins Options shall not exceed the number (presently estimated to be 14
million) necessary to provide for exercise of all Collins Options outstanding on
the Collins Distribution Date, as adjusted from time to time as herein provided.
Collins Shares which may be delivered upon exercise of Collins Options may
consist in whole or in part of unissued or reacquired Shares.

7. ADJUSTMENTS

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

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

8. AMENDMENT AND TERMINATION

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

9. MISCELLANEOUS

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

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

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

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

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

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

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

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

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

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

10. INTERPRETATIONS AND DETERMINATIONS

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

11. EFFECTIVE DATE

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

                                      -11-

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