Document:

exv10waw9

 

Exhibit 10-a-9

ROCKWELL COLLINS, INC.

2001 LONG-TERM INCENTIVES PLAN

AS AMENDED AS OF JANUARY 1, 2005

Section 1: Purpose

The purpose of the Plan is to promote the interests of the Corporation (as defined in Section 2)
and its shareowners by providing incentive compensation opportunities to assist in (i) attracting,
motivating and retaining Employees (as defined in Section 2) and (ii) aligning the interests of
Employees participating in the Plan with the interests of the Corporation’s shareowners.

Section 2: Definitions

As used in the Plan, the following terms shall have the respective meanings specified below.

	 	a.	 	“Award” means an award granted pursuant to Section 4.
	 
	 	b.	 	“Award Agreement” means a document described in Section 6 setting
forth the terms and conditions applicable to an Award granted to a
Participant.
	 
	 	c.	 	“Board of Directors” means the Board of Directors of the Corporation,
as it may be comprised from time to time.
	 
	 	d.	 	“Change of Control” means 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 the Corporation
(the “Outstanding Collins Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Corporation
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 the Corporation, (x) any acquisition by the Corporation, (y)
any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation, Rockwell International
Corporation (“Rockwell”) or any

 

 

	 	 	 	corporation controlled by the Corporation 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 date of the pro rata
distribution of all the outstanding Stock by Rockwell to its
shareowners (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 the Corporation’s
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 the Corporation 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 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

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	 	 	 	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 the Corporation’s shareowners of a complete
liquidation or dissolution of the Corporation.

Notwithstanding any other provision of this Plan to the contrary, the Company in its sole
discretion may modify the definition of Change of Control to the extent necessary to meet the
requirements of Section 409A.

	 	e.	 	“Code” means the Internal Revenue Code of 1986, as amended from time
to time.
	 
	 	f.	 	“Committee” means the Compensation and Management Development
Committee of the Board of Directors, as it may be comprised from time to
time.
	 
	 	g.	 	“Corporation” means Rockwell Collins, Inc. and any successor thereto.
	 
	 	h.	 	“Covered Employee” means a covered employee within the meaning of
Code Section 162(m)(3).
	 
	 	i.	 	“Dividend Equivalent” means an amount equal to the amount of cash
dividends payable with respect to a share of Stock after the date specified
in an Award Agreement with respect to an Award settled in Stock or an Award
of Restricted Stock.
	 
	 	j.	 	“Employee” means an individual who is an employee or a leased
employee of, or a consultant to, the Corporation or a Subsidiary, but
excludes members of the Board of Directors, other than the non-executive
Chairman of the Board of Directors (who shall be deemed an Employee), who are
not also employees of the Corporation or a Subsidiary.
	 
	 	k.	 	“Exchange Act” means the Securities Exchange Act of 1934, and any
successor statute, as it may be amended from time to time.
	 
	 	l.	 	“Executive Officer” means an Employee who is an executive officer of
the Corporation as defined in Rule 3b-7 under the Exchange Act as it may be
amended from time to time.
	 
	 	m.	 	“Fair Market Value” means the closing sale price of the Stock as
reported in the New York Stock Exchange—Composite Transactions (or if the
Stock is not then traded on the New York Stock Exchange, the closing sale
price of the Stock on the stock exchange or over-the-counter market on which
the Stock is principally trading on the relevant date) on the date of a
determination (or on the next

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	 	 	 	preceding day the Stock was traded if it was not traded on the date of a
determination).

	 	n.	 	“Incentive Stock Option” means an Option (or an option to purchase
Stock granted pursuant to any other plan of the Corporation or a Subsidiary)
intended to comply with Code Section 422.
	 
	 	o.	 	“Non-Qualified Stock Option” means an Option that is not an Incentive
Stock Option.
	 
	 	p.	 	“Option” means an option to purchase Stock granted pursuant to
Section 4(a).
	 
	 	q.	 	“Participant” means any Employee who has been granted an Award.
	 
	 	r.	 	“Performance Goal” means the level of performance, whether absolute
or relative to a peer group or index, established by the Committee as the
performance goal with respect to a Performance Measure. Performance Goals may
vary from Performance Period to Performance Period and from Participant to
Participant and may be established on a stand-alone basis, in tandem or in
the alternative.
	 
	 	s.	 	“Performance Formula” means, for a Performance Period, one or more
objective formulas or standards established by the Committee for purposes of
determining whether or the extent to which an Award has been earned based on
the level of performance attained with respect to one or more Performance
Goals. Performance Formulas may vary from Performance Period to Performance
Period and from Participant to Participant and may be established on a
stand-alone basis, in tandem or in the alternative.
	 
	 	t.	 	“Performance Measure” means one or more of the following selected by
the Committee to measure the performance of the Corporation, a business unit
(which may but need not be a Subsidiary) of the Corporation or both for a
Performance Period: basic or diluted earnings per share; revenue; sales;
operating income; earnings before or after interest, taxes, depreciation or
amortization; return on capital; return on invested capital; return on
equity; return on assets; return on net assets; cash flow; operating cash
flow; free cash flow (operating cash flow plus proceeds from property
dispositions less capital expenditures); working capital; stock price and
total shareowner return. Each such measure, to the extent applicable, shall
be determined in accordance with generally accepted accounting principles as
consistently applied by the Corporation and, if so determined by the
Committee at the time the Award is granted and to the extent permitted under
Code Section 162(m), adjusted to omit the effects of extraordinary items,
gain or loss on the disposal of a business segment, unusual or infrequently
occurring events and transactions and cumulative effects of changes in
accounting principles. Performance Measures may vary from Performance Period
to Performance Period and from Participant to

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	 	 	 	Participant and may be established on a stand-alone basis, in tandem or in the
alternative.

	 	u.	 	“Performance Period” means one or more periods of time (of not less
than one fiscal year of the Corporation), as the Committee may designate,
over which the attainment of one or more Performance Goals will be measured
for the purpose of determining a Participant’s rights in respect of an Award.
	 
	 	v.	 	“Plan” means this 2001 Long-Term Incentives Plan as adopted by the
Corporation and in effect from time to time.
	 
	 	w.	 	“SAR” means a stock appreciation right granted pursuant to Section
4(b).
	 
	 	x.	 	“Section 409A” means Code Section 409A, including any regulations and
other guidance issued thereunder.
	 
	 	y.	 	“Stock” means shares of Common Stock, par value $.01 per share, of
the Corporation or any security of the Corporation issued in substitution,
exchange or lieu thereof.
	 
	 	z.	 	“Subsidiary” means (i) any corporation or other entity in which the
Corporation, directly or indirectly, controls 50% or more of the total
combined voting power of such corporation or other entity and (ii) any
corporation or other entity in which the Corporation has a significant equity
interest and which the Committee has determined to be considered a Subsidiary
for purposes of the Plan.

Section 3: Eligibility

The Committee may grant one or more Awards to any Employee designated by it to receive an Award.

Section 4: Awards

The Committee may grant any one or more of the following types of Awards, and any such Award may be
granted by itself, together with another Award that is linked and alternative to the Award with
which it is granted or together with another Award that is independent of the Award with which it
is granted:

	 	a.	 	Options. An Option is an option to purchase a specific number of shares of Stock exercisable at such time or times and subject to such terms
and conditions as the Committee may determine consistent with the provisions
of the Plan, including the following:

	 	(i)	 	The exercise price of an Option shall not be less than
100% of the Fair Market Value of the Stock on the date the Option is
granted, and no Option may be exercisable more than 10 years after
the date the Option is granted.
	 
	 	(ii)	 	The exercise price of an Option shall be paid in cash or,
at the discretion of the Committee, in Stock or in a combination of
cash and Stock. Any Stock accepted in payment of the

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	 	 	 	exercise price of an Option shall be valued at its Fair Market Value
on the date of exercise.

	 
	 	(iii)	 	No fractional shares of Stock will be issued or
accepted. The Committee may impose such other conditions,
restrictions and contingencies with respect to shares of Stock
delivered pursuant to the exercise of an Option as it deems
desirable.
	 
	 	(iv)	 	Incentive Stock Options shall be subject to the following
additional provisions:

	 	A.	 	No grant of Incentive Stock Options to any
one Employee shall cover a number of shares of Stock whose
aggregate Fair Market Value (determined on the date the
Option is granted), together with the aggregate Fair Market
Value (determined on the respective date of grant of any
Incentive Stock Option) of the shares of Stock covered by any
Incentive Stock Options which have been previously granted
under the Plan or any other plan of the Corporation or any
Subsidiary and which are exercisable for the first time
during the same calendar year, exceeds $100,000 (or such
other amount as may be fixed as the maximum amount permitted
by Code Section 422(d)).
	 
	 	B.	 	No Incentive Stock Option may be granted
under the Plan after June 1, 2011.
	 
	 	C.	 	No Incentive Stock Option may be granted to
an Employee who on the date of grant is not an employee of
the Corporation or a corporation that is a subsidiary of the
Corporation within the meaning of Code Section 424(f).

	 	b.	 	Stock Appreciation Rights (SARs). A SAR is the right to receive a
payment measured by the increase in the Fair Market Value of a specified
number of shares of Stock from the date of grant of the SAR to the date on
which the Participant exercises the SAR. SARs may be (i) freestanding SARs
or (ii) tandem SARs granted in conjunction with an Option, either at the time
of grant of the Option or at a later date, and exercisable at the
Participant’s election instead of all or any part of the related Option. The
payment to which the Participant is entitled on exercise of a SAR may be in
cash, in Stock valued at Fair Market Value on the date of exercise or partly
in cash and partly in Stock, as the Committee may determine.
	 
	 	c.	 	Restricted Stock. Restricted Stock is Stock that is issued to a
Participant subject to restrictions on transfer and such other restrictions
on incidents of ownership as the Committee may determine, which restrictions
shall lapse at such time or times, or upon the occurrence of such event or
events, including but not limited to the achievement of one or more specific
goals with respect to

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	 	 	 	performance of the Corporation, a business unit (which may but need not be a
Subsidiary) of the Corporation or that Participant over a specified period of
time as the Committee may determine. Subject to the specified restrictions,
the Participant as owner of those shares of Restricted Stock shall have the
rights of the holder thereof, except that the Committee may provide at the
time of the Award that any dividends or other distributions paid with respect
to that Stock while subject to those restrictions shall be accumulated, with
or without interest, or reinvested in Stock and held subject to the same
restrictions as the Restricted Stock and such other terms and conditions as
the Committee shall determine. Shares of Restricted Stock shall be registered
in the name of the Participant and, at the Corporation’s sole discretion,
shall be held in book entry form subject to the Corporation’s instructions or
shall be evidenced by a certificate, which shall bear an appropriate
restrictive legend, shall be subject to appropriate stop-transfer orders and
shall be held in custody by the Corporation until the restrictions on those shares of Restricted Stock lapse.

	 	d.	 	Performance Units. A Performance Unit is an Award denominated in
cash, the amount of which may be based on the achievement of one or more
specific goals with respect to performance of the Corporation, a business
unit (which may but need not be a Subsidiary) of the Corporation or the
Participant to whom the Performance Units are granted over a specified period
of time. The maximum amount of compensation that may be paid to any one
Participant with respect to Performance Units for any one Performance Period
shall be $5 million. The payout of Performance Units may be in cash, in
Stock, valued at Fair Market Value on the payout date (or at the sole
discretion of the Committee, the day immediately preceding that date), or
partly in cash and partly in Stock, as the Committee may determine.
	 
	 	e.	 	Performance Shares. A Performance Share is an Award denominated in
Stock, the amount of which may be based on the achievement of one or more
specific goals with respect to performance of the Corporation, a business
unit (which may but need not be a Subsidiary) of the Corporation or the
Participant to whom the Performance Shares are granted over a specified
period of time. The payout of Performance Shares shall be made in Stock, in
accordance with the terms and conditions specified by the Committee;
provided, however, that the Committee may in whole or in part, in its
discretion, make a cash payment equal to the Fair Market Value of Stock
otherwise required to be issued to a participant pursuant to an Award of
Performance Shares.
	 
	 	f.	 	Performance Compensation Awards.

	 	(i)	 	The Committee may, at the time of grant of an Award (other
than an Option or SAR) designate such Award as a Performance Compensation
Award in order that such Award constitute qualified performance-based
compensation under Code Section

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	 	 	 	162(m); provided, however, that no Performance Compensation Award may be
granted to an Employee who on the date of grant is a leased employee of,
or a consultant to, the Corporation or a Subsidiary. With respect to each
such Performance Compensation Award, the Committee shall (on or before the
90th day of the applicable Performance Period or such other
period as may be required by Code Section 162 (m)), establish, in writing,
a Performance Period, Performance Measure(s), Performance Goal(s) and
Performance Formula(s). Once established for a Performance Period, such
items shall not be amended or otherwise modified if and to the extent such
amendment or modification would cause the compensation payable pursuant to
the Award to fail to constitute qualified performance-based compensation
under Code Section 162(m).

	 	(ii)	 	A Participant shall be eligible to receive payment in respect
of a Performance Compensation Award only to the extent that the
Performance Goal(s) for that Award are achieved and the Performance
Formula as applied against such Performance Goal(s) determines that all
or some portion of such Participant’s Award has been earned for the
Performance Period. As soon as practicable after the close of each
Performance Period, the Committee shall review and determine whether, and
to what extent, the Performance Goal(s) for the Performance Period have
been achieved and, if so, determine the amount of the Performance
Compensation Award earned by the Participant for such Performance Period
based upon such Participant’s Performance Formula. The Committee shall
then determine the actual amount of the Performance Compensation Award to
be paid to the Participant and, in so doing, may in its sole discretion
decrease, but not increase, the amount of the Award otherwise payable to
the Participant based upon such performance. The maximum Performance
Compensation Award for any one Participant for any one Performance Period
shall be determined in accordance with Sections 4(d) and 5(b), as
applicable.

	 	g.	 	Deferrals. The Committee may require or permit Participants to defer
the issuance or vesting of shares of Stock or the settlement of Awards under
such rules and procedures as it may establish under the Plan. The Committee
may also provide that deferred settlements include the payment of, or
crediting of interest on, the deferral amounts or the payment or crediting of
Dividend Equivalents on deferred settlements in shares of Stock.
Notwithstanding the foregoing, no deferral will be permitted if it will
result in the Plan becoming an “employee pension benefit plan” under Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), that is not otherwise exempt under Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA. Notwithstanding the foregoing, it is the intent of the
Corporation that any deferral made under this Section 4(g) shall (A) satisfy
the requirements for exemption under Section 409A or (B) satisfy the
requirements of Section 409A.

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	 	h.	 	Other Section 409A Provisions. In addition to the provisions related
to the deferral of Awards under the Plan set forth in Section 4(g) and
notwithstanding any other provision of the Plan to the contrary, the
following provisions shall apply to Awards:

	 	(i)	 	To the extent not otherwise set forth in the Plan, it is the
intent of the Corporation that the Award Agreement for each Award shall
set forth (or shall incorporate by reference to the Corporation’s 2005
Deferred Compensation Plan) such terms and conditions as are necessary
to (A) satisfy the requirements for exemption under Section 409A or (B)
satisfy the requirements of Section 409A;
	 
	 	(ii)	 	Without limiting the generality of the foregoing, it is the
intent of the Corporation that the payment of dividends on Restricted
Stock or the payment of Dividend Equivalents on Restricted Stock Units
or Performance Shares shall (A) satisfy the requirements for exemption
under Section 409A or (B) satisfy the requirements of Section 409A,
including without limitation, to the extent necessary, the establishment
of a separate written arrangement providing for the payment of such
dividends or Dividend Equivalents;
	 
	 	(iii)	 	Notwithstanding any other provision of this Plan or an
Award Agreement to the contrary, any Performance Unit or Performance
Compensation Award granted under this Plan prior to September 12, 2007
shall be payable in the calendar year in which the Performance Period
ends; and
	 
	 	(iv)	 	Notwithstanding any other provision of this Plan to the
contrary, the Corporation makes no representation that the Plan or any
Award will be exempt from or comply with Section 409A and makes no
undertaking to preclude Section 409A from applying to the Plan or any
Award.

Section 5: Stock Available under Plan

	 	a.	 	Subject to the adjustment provisions of Section 9, the number of shares of Stock which may be delivered upon exercise of Options or upon grant
or in payment of other Awards under the Plan shall not exceed 14 million, and
the number of those shares which may be delivered upon grant or in payment of
all Awards other than Options and SARs shall not exceed 12 million. In
addition, (i) no more than 1 million shares of Stock shall be granted in the
form of Restricted Stock or Performance Shares; and (ii) SARs shall be
granted with respect to no more than 100,000 shares of Stock. For purposes of
applying the limitations provided in this Section 5(a), all shares of Stock
with respect to the unexercised, undistributed or unearned portion of any
terminated or forfeited Award shall be available for further Awards.

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	 	b.	 	Subject to the adjustment provisions of Section 9, no single
Participant shall receive, in any fiscal year of the Corporation, Awards in
the form of (i) Options with respect to more than that number of shares of
Stock determined by subtracting from 2,500,000 the number of shares of Stock
with respect to which Options or options to purchase Stock under any other
plan or program of the Corporation or a Subsidiary have been granted to such
Participant during the immediately preceding four fiscal years of the
Corporation; and (ii) Restricted Stock or Performance Shares for more than
that number of shares of Stock determined by subtracting from 250,000 the
number of shares of Stock granted as Restricted Stock or Performance Shares
or as restricted stock or performance shares under any other plan or program
of the Corporation or a Subsidiary to such Participant during the immediately
preceding four fiscal years of the Corporation.
	 
	 	c.	 	The Stock that may be delivered on grant, exercise or settlement of
an Award under the Plan may be reacquired shares held in treasury or
authorized but unissued shares.

Section 6: Award Agreements

Each Award under the Plan shall be evidenced by an Award Agreement. Each Award Agreement shall set
forth the terms and conditions applicable to the Award, including but not limited to provisions for
(i) the time at which the Award becomes exercisable or otherwise vests; (ii) the treatment of the
Award in the event of the termination of a Participant’s status as an Employee; (iii) any special
provisions applicable in the event of an occurrence of a Change in Control, as determined by the
Committee consistent with the provisions of the Plan; and (iv) in the Committee’s sole discretion,
any additional provisions as are required to (A) satisfy the requirements for exemption under
Section 409A or (B) satisfy the requirements of Section 409A.

Section 7: Amendment and Termination

The Board of Directors may at any time amend, suspend or terminate the Plan, in whole or in part;
provided, however, that no such action shall be effective without the approval of the shareowners
of the Corporation to the extent that such approval is necessary to comply with any tax or
regulatory requirement applicable to the Plan; and provided, further, that subject to Section 9, no
such action shall impair the rights of any holder of an Award without the holder’s consent. The
Committee may, subject to the Plan, at any time alter or amend any or all Award Agreements to the
extent permitted by applicable law; provided, however, that subject to Section 9, no such
alteration or amendment shall impair the rights of any holder of an Award without the holder’s
consent. Notwithstanding the foregoing, neither the Board of Directors nor the Committee shall
(except pursuant to Section 9) amend the Plan or any Award Agreement to increase the number of
shares of Stock available for Awards as set forth in Section 5 or to reprice any Option or SAR
whose exercise price is above the then Fair Market Value of the Stock subject to the Award, whether
by decreasing the exercise price, canceling the Award and granting a substitute Award, or
otherwise.

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Section 8: Administration

	 	a.	 	The Plan and all Awards shall be administered by the Committee. The
members of the Committee shall be designated by the Board of Directors from
among its members who are not eligible for Awards under the Plan.
	 
	 	b.	 	Any member of the Committee who, at the time of any proposed grant of
one or more Awards, is not both an “outside director” as defined for purposes
of Code Section 162(m) and a “Non-Employee Director” as defined in Rule
16b-3(b)(3)(i) under the Exchange Act (or any successor provision) shall
abstain from and take no part in the Committee’s action on the proposed
grant.
	 
	 	c.	 	The Committee shall have full and complete authority, in its sole and
absolute discretion, (i) to exercise all of the powers granted to it under
the Plan, (ii) to construe, interpret and implement the Plan and any related
document, (iii) to prescribe, amend and rescind rules relating to the Plan,
(iv) to make all determinations necessary or advisable in administering the
Plan, and (v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan. The actions and determinations of the Committee on
all matters relating to the Plan and any Awards will be final and conclusive.
The Committee’s determinations under the Plan need not be uniform and may be
made by it selectively among Employees who receive, or who are eligible to
receive, Awards under the Plan, whether or not such persons are similarly
situated.
	 
	 	d.	 	The Committee and others to whom the Committee has delegated such
duties shall keep a record of all their proceedings and actions and shall
maintain all such books of account, records and other data as shall be
necessary for the proper administration of the Plan.
	 
	 	e.	 	The Corporation shall pay all reasonable expenses of administering
the Plan, including but not limited to the payment of professional fees.
	 
	 	f.	 	It is the intent of the Corporation that the Plan and Awards
hereunder satisfy, and be interpreted in a manner that satisfy, (i) in the
case of Participants who are or may be Executive Officers, the applicable
requirements of Rule 16b-3 under the Exchange Act, so that such persons will
be entitled to the benefits of Rule 16b-3, or other exemptive rules under
Section 16 of the Exchange Act, and will not be subjected to avoidable
liability under Section 16(b) of the Exchange Act; (ii) in the case of
Performance Compensation Awards to Covered Employees, the applicable
requirements of Code Section 162(m); and (iii) either the requirements for
exemption under Section 409A or the requirements of Section 409A. If any
provision of this Plan or of any Award Agreement would otherwise frustrate or
conflict with the intent expressed in this Section 8(f), that provision to
the extent possible shall be interpreted and deemed amended so as to avoid
such conflict. To the extent of any remaining irreconcilable

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	 	 	 	conflict with such intent, such provision shall be deemed void as to Executive
Officers or Covered Employees, as applicable.

	 	g.	 	The Committee may appoint such accountants, counsel, and other
experts as it deems necessary or desirable in connection with the
administration of the Plan.
	 
	 	h.	 	The Committee may delegate, and revoke the delegation of, all or any
portion of its authority and powers under the Plan to the Chief Executive
Officer of the Corporation, except that the Committee may not delegate any
discretionary authority with respect to substantive decisions or functions
regarding the Plan or Awards to the extent inconsistent with the intent
expressed in Section 8(f) or to the extent prohibited by applicable law.

Section 9: Adjustment Provisions

	 	a.	 	In the event of any change in or affecting the outstanding shares of
Stock by reason of a stock dividend or split, merger or consolidation
(whether or not the Corporation is a surviving corporation),
recapitalization, reorganization, combination or exchange of shares or other
similar corporate changes or an extraordinary dividend in cash, securities or
other property, the Board of Directors shall make or take such amendments to
the Plan and outstanding Awards and Award Agreements and such adjustments and
actions thereunder as it deems appropriate, in its sole discretion, under the
circumstances. Such amendments, adjustments and actions may include, but are
not limited to, changes in the number of shares of Stock then remaining
subject to the Plan, and the maximum number of shares that may be granted or
delivered to any single Participant pursuant to the Plan, including those
that are then covered by outstanding Awards, or accelerating the vesting of
outstanding Awards.
	 
	 	b.	 	The existence of the Plan and the Awards granted hereunder shall not
affect or restrict in any way the right or power of the Board of Directors or
the shareowners of the Corporation to make or authorize any adjustment,
recapitalization, reorganization or other change in the capital structure of
its business, any merger or consolidation of the Corporation, any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Stock or the rights thereof, the dissolution or liquidation of the
Corporation or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding.

Section 10: Miscellaneous

	 	a.	 	Nonassignability. Except as otherwise provided by the Committee, no
Award shall be assignable or transferable except by will or by the laws of
descent and distribution.
	 
	 	b.	 	Other Payments or Awards. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Corporation or a Subsidiary

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	 	 	 	from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.

	 	c.	 	Payments to Other Persons. If payments are legally required to be
made to any person other than the person to whom payment is to be provided
under the Plan, then payments shall be made accordingly; provided, however,
to the extent that such payments would cause an Award to fail to satisfy the
requirements for exemption under Section 409A or the requirements of Section
409A, the Committee may determine in its sole discretion not to make such
payments in such manner. Any such payment shall be a complete discharge of
the liability hereunder.
	 
	 	d.	 	Unfunded Plan. The Plan shall be unfunded. No provision of the Plan
or any Award Agreement shall require the Corporation or a Subsidiary, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made
or otherwise to segregate any assets, nor shall the Corporation or a
Subsidiary maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered
fund for such purposes. Participants shall have no rights under the Plan
other than as unsecured general creditors of the Corporation or a Subsidiary,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under generally applicable law.
	 
	 	e.	 	Limits of Liability. Any liability of the Corporation or a Subsidiary
to any Participant with respect to an Award shall be based solely upon
contractual obligations created by the Plan and the Award Agreement. Neither
the Corporation or its Subsidiaries, nor any member of the Board of Directors
or of the Committee, nor any other person participating in any determination
of any question under the Plan, or in the interpretation, administration or
application of the Plan, shall have any liability to any party for any action
taken, or not taken, in good faith under the Plan.
	 
	 	f.	 	Rights of Employees. Status as an eligible Employee shall not be
construed as a commitment that any Award shall be made under the Plan to such
eligible Employee or to eligible Employees generally. Nothing contained in
the Plan or in any Award Agreement shall confer upon any Employee or
Participant any right to continue in the employ or other service of the
Corporation or a Subsidiary or constitute any contract or limit in any way
the right of the Corporation or a Subsidiary to change such person’s
compensation or other benefits or to terminate the employment or other
service of such person with or without cause. A transfer of an Employee from
the Corporation to a Subsidiary, or vice versa, or from one Subsidiary to
another, and a leave of absence, duly authorized by the Corporation, shall
not be deemed a termination of employment or other service.

13

 

	 	g.	 	Rights as a Shareowner. A Participant shall have no rights as a
shareowner with respect to any Stock covered by an Award until the date the
Participant becomes the holder of record thereof. Except as provided in
Section 9, no adjustment shall be made for dividends or other rights, unless
the Award Agreement specifically requires such adjustment.
	 
	 	h.	 	Withholding. Applicable taxes, to the extent required by law, shall
be withheld in respect of all Awards. A Participant may satisfy the
withholding obligation by paying the amount of any taxes in cash or, with the
approval of the Committee, shares of Stock may be delivered to the
Corporation or deducted from the payment to satisfy the obligation in full or
in part. The amount of the withholding and the number of shares of Stock to
be paid or deducted in satisfaction of the withholding requirement shall be
determined by the Committee with reference to the Fair Market Value of the
Stock when the withholding is required to be made; provided, however, that
the amount of withholding to be paid in respect of Options exercised through
the cashless method in which shares of Stock for which the Options are
exercised are immediately sold may be determined by reference to the price at
which said shares are sold. The Corporation shall have no obligation to
deliver any Stock pursuant to the grant or settlement of any Award until it
has been reimbursed for all required withholding taxes.
	 
	 	i.	 	Section Headings. The section headings contained herein are for the
purpose of convenience only, and in the event of any conflict, the text of
the Plan, rather than the section headings, shall control.
	 
	 	j.	 	Construction. In interpreting the Plan, the masculine gender shall
include the feminine, the neuter gender shall include the masculine or
feminine, and the singular shall include the plural unless the context
clearly indicates otherwise. Any reference to a statutory provision or a
rule under a statute shall be deemed a reference to that provision or any
successor provision unless the context clearly indicates otherwise.
	 
	 	k.	 	Invalidity. If any term or provision contained herein or in any Award
Agreement shall to any extent be invalid or unenforceable, such term or
provision will be reformed so that it is valid, and such invalidity or
unenforceability shall not affect any other provision or part thereof.
	 
	 	l.	 	Applicable Law. The Plan, the Award Agreements and all actions taken
hereunder or thereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware without regard to the conflict of law
principles thereof.
	 
	 	m.	 	Compliance with Laws. Notwithstanding anything contained herein or in
any Award Agreement to the contrary, the Corporation shall not be required to
sell, issue or deliver shares of Stock hereunder or thereunder if the sale,
issuance or delivery thereof would constitute a violation by the Participant
or the Corporation of any provisions of

14

 

	 	 	 	any law or regulation of any governmental authority or any national securities
exchange; and as a condition of any sale or issuance the Corporation may
require such agreements or undertakings, if any, as the Corporation may deem
necessary or advisable to assure compliance with any such law or regulation.

	 	n.	 	Supplementary Plans. The Committee may authorize Supplementary Plans
applicable to Employees subject to the tax laws of one or more countries
other than the United States and providing for the grant of Non-Qualified
Stock Options, SARs or Restricted Stock to such Employees on terms and
conditions, consistent with the Plan, determined by the Committee which may
differ from the terms and conditions of other Awards in those forms pursuant
to the Plan for the purpose of complying with the conditions for
qualification of Awards for favorable treatment under foreign tax laws.
Notwithstanding any other provision hereof, Options granted under any
Supplementary Plan shall include provisions that conform with Sections
4(a)(i), (ii) and (iii); SARs granted under any Supplementary Plan shall
include provisions that conform with Section 4(b); and Restricted Stock
granted under any Supplementary Plan shall include provisions that conform
with Section 4(c).
	 
	 	o.	 	Effective Date and Term. The Plan was adopted by the Board of
Directors and shall be submitted to the sole shareowner of the Corporation,
and if approved, shall be effective as of the Collins Distribution Date. The
Plan also shall be submitted to the shareowners of the Corporation for
approval at the first Annual Meeting of Shareowners to be held in 2002, and
no Award may be granted, and no Performance Unit may be paid under the Plan
after the date of that meeting unless such shareowner approval is obtained.
If such shareowner approval is not obtained, the rights of any holder of an
outstanding Award shall continue in force and effect after termination of the
Plan, except as they may lapse or be terminated pursuant to the terms of the
Plan or by their own terms and conditions. The Plan shall remain in effect
until all Awards under the Plan have been exercised or terminated under the
terms of the Plan and applicable Award Agreements; provided,
however, that Awards under the Plan may be granted only within ten
(10) years from the effective date of the Plan. The Plan was amended and
restated on September 12, 2007 effective as of January 1, 2005 to reflect
changes in respect of Section 409A.

15exv10waw10

 

Exhibit 10-a-10

2006 LONG-TERM INCENTIVES PLAN

(As Amended)

Section 1: Purpose

The purpose of the Plan is to promote the interests of the Corporation and its shareowners by
providing incentive compensation opportunities to assist in (i) attracting, motivating and
retaining Employees and Non-Employee Directors and (ii) aligning the interests of Employees and
Non-Employee Directors participating in the Plan with the interests of the Corporation’s
shareowners.

Section 2: Definitions

As used in the Plan, the following terms shall have the respective meanings specified below.

	 	a.	 	“Award” means an award granted pursuant to Section 4.
	 
	 	b.	 	“Award Agreement” means a document described in Section 6 setting
forth the terms and conditions applicable to an Award granted to a
Participant.
	 
	 	c.	 	“Board of Directors” means the Board of Directors of the Corporation,
as it may be comprised from time to time.
	 
	 	d.	 	“Change of Control” means any of the events outlined in Section 10.
	 
	 	e.	 	“Code” means the Internal Revenue Code of 1986, as amended from time
to time.
	 
	 	f.	 	“Committee” means the Compensation Committee of the Board of
Directors, as it may be comprised from time to time.
	 
	 	g.	 	“Corporation” means Rockwell Collins, Inc. and any successor thereto.
	 
	 	h.	 	“Covered Employee” means a covered employee within the meaning of
Code Section 162(m)(3).
	 
	 	i.	 	“Dividend Equivalent” means an amount equal to the amount of cash
dividends payable with respect to a share of Stock after the date specified
in an Award Agreement with respect to an Award settled in Stock, an Award of
Restricted Stock or an Award of Restricted Stock Units.
	 
	 	j.	 	“Employee” means an individual who is an employee or a leased
employee of the Corporation or a Subsidiary.
	 
	 	k.	 	“Exchange Act” means the Securities Exchange Act of 1934, and any
successor statute, as it may be amended from time to time.
	 
	 	l.	 	“Executive Officer” means an Employee who is an executive officer of
the Corporation as defined in Rule 3b-7 under the Exchange Act as it may be
amended from time to time.
	 
	 	m.	 	“Fair Market Value” means the closing sale price of the Stock as
reported in the New York Stock Exchange-Composite Transactions (or if the
Stock is not then traded on the New York Stock Exchange, the closing sale
price of the Stock on the stock exchange or over-the-counter market on which
the Stock is principally trading on the relevant date) on the date of a
determination (or on the next preceding day the Stock was traded if it was
not traded on the date of a determination).
	 
	 	n.	 	“Incentive Stock Option” means an Option (or an option to purchase
Stock granted pursuant to any other plan of the Corporation or a Subsidiary)
intended to comply with Code Section 422.
	 
	 	o	 	 “Non-Employee Director” means a member of the Board of Directors who
is not an Employee.

 

 

	 	p.	 	“Non-Qualified Stock Option” means an Option that is not an Incentive
Stock Option.
	 
	 	q.	 	“Option” means an option to purchase Stock granted pursuant to
Section 4(a).
	 
	 	r.	 	“Participant” means any Employee or Non-Employee Director who has
been granted an Award.
	 
	 	s.	 	“Performance Formula” means, for a Performance Period, one or more
objective formulas or standards established by the Committee for purposes of
determining whether or the extent to which an Award has been earned based on
the level of performance attained with respect to one or more Performance
Goals. Performance Formulas may vary from Performance Period to Performance
Period and from Participant to Participant and may be established on a
stand-alone basis, in tandem or in the alternative.
	 
	 	t.	 	“Performance Goal” means the level of performance, whether absolute
or relative to a peer group or index, established by the Committee as the
performance goal with respect to a Performance Measure. Performance Goals
may vary from Performance Period to Performance Period and from Participant
to Participant and may be established on a stand-alone basis, in tandem or in
the alternative.
	 
	 	u.	 	“Performance Measure” means one or more of the following selected by
the Committee to measure the performance of the Corporation, a business unit
(which may but need not be a Subsidiary) of the Corporation or both for a
Performance Period: basic or diluted earnings per share; revenue; sales;
operating income; earnings before or after interest, taxes, depreciation or
amortization; return on capital; return on invested capital; return on
equity; return on assets; return on net assets; return on sales; cash flow;
operating cash flow; free cash flow (operating cash flow plus proceeds from
property dispositions less capital expenditures); working capital; stock
price; and total shareowner return. Each such measure, to the extent
applicable, shall be determined in accordance with generally accepted
accounting principles as consistently applied by the Corporation and, if so
determined by the Committee at the time the Award is granted and to the
extent permitted under Code Section 162(m), adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business segment,
unusual or infrequently occurring events and transactions and cumulative
effects of changes in accounting principles. Performance Measures may vary
from Performance Period to Performance Period and from Participant to
Participant and may be established on a stand-alone basis, in tandem or in
the alternative.
	 
	 	v.	 	“Performance Period” means one or more periods of time (of not less
than one fiscal year of the Corporation), as the Committee may designate,
over which the attainment of one or more Performance Goals will be measured
for the purpose of determining a Participant’s rights in respect of an Award.
	 
	 	w.	 	“Performance Share” means an Award denominated in shares of Stock
based on the achievement of performance goals granted pursuant to Section
4(f).
	 
	 	x.	 	“Performance Unit” means an Award denominated in cash based on the
achievement of performance goals granted pursuant to Section 4(e).
	 
	 	y.	 	“Plan” means this 2006 Long-Term Incentives Plan as adopted by the
Corporation and in effect from time to time.
	 
	 	z.	 	“Restricted Stock” means Stock granted pursuant to Section 4(c) which
may not be traded or sold until the date that the restrictions on
transferability imposed by the Committee or the Board of Directors, as the
case may be, with respect to such Stock lapse.
	 
	 	aa.	 	“Restricted Stock Unit” means the right to receive in cash, Stock or
a combination of cash and Stock, the Fair Market Value of one share of Stock
granted pursuant to Section 4(d).
	 
	 	bb.	 	“SAR” means a stock appreciation right granted pursuant to Section
4(b).

2

 

	 	cc.	 	“Section 409A” means Code Section 409A, including any regulations and
other guidance issued thereunder.
	 
	 	dd.	 	“Stock” means shares of Common Stock, par value $.01 per share, of
the Corporation or any security of the Corporation issued in substitution,
exchange or lieu thereof.
	 
	 	ee.	 	“Subsidiary” means (i) any corporation or other entity in which the
Corporation, directly or indirectly, controls 50% or more of the total
combined voting power of such corporation or other entity and (ii) any
corporation or other entity in which the Corporation has a significant equity
interest and which the Committee has determined to be considered a Subsidiary
for purposes of the Plan.

Section 3: Eligibility

The Committee or, with respect to Awards under Section 4(h), the Committee or the Board of
Directors, may grant one or more Awards to any Employee or Non-Employee Director designated by it
to receive an Award. Non-Employee Directors are eligible to receive Awards only to the extent
provided in Section 4(h).

Section 4: Awards

The Committee or, with respect to Awards under Section 4(h), the Committee or the Board of
Directors, may grant any one or more of the following types of Awards, and any such Award may be
granted by itself, together with another Award that is linked and alternative to the Award with
which it is granted or together with another Award that is independent of the Award with which it
is granted:

	 	a.	 	Options. An Option is an option to purchase a specific number of shares of
Stock exercisable at such time or times and subject to such terms and conditions as the
Committee may determine consistent with the provisions of the Plan, including the
following:

	 	(i)	 	The exercise price of an Option shall not be less than
100% of the Fair Market Value of the Stock on the date the Option is
granted, and no Option may be exercisable more than 10 years after
the date the Option is granted.
	 
	 	(ii)	 	The exercise price of an Option shall be paid in cash or,
at the discretion of the Committee, in Stock or in a combination of
cash and Stock. Any Stock accepted in payment of the exercise price
of an Option shall be valued at its Fair Market Value on the date of
exercise.
	 
	 	(iii)	 	No fractional shares of Stock will be issued or
accepted. The Committee may impose such other conditions,
restrictions and contingencies with respect to shares of Stock
delivered pursuant to the exercise of an Option as it deems
desirable.
	 
	 	(iv)	 	Incentive Stock Options shall be subject to the following
additional provisions:

	 	A.	 	No grant of Incentive Stock Options to any
one Employee shall cover a number of shares of Stock whose
aggregate Fair Market Value (determined on the date the
Option is granted), together with the aggregate Fair Market
Value (determined on the respective date of grant of the
Incentive Stock Option) of the shares of Stock covered by any
Incentive Stock Options that have been previously granted
under the Plan or any other plan of the Corporation or any
Subsidiary and that are exercisable for the first time during
the same calendar year, exceeds $100,000 (or such other
amount as may be fixed as the maximum amount permitted by
Code Section 422(d)); provided, however, that, if the
limitation is exceeded, the Incentive Stock Options in excess
of such limitation shall be treated as Non-Qualified Stock
Options.
	 
	 	B.	 	No Incentive Stock Option may be granted
under the Plan after November 17, 2015.

3

 

	 	C.	 	No Incentive Stock Option may be granted to
an Employee who on the date of grant is not an employee of
the Corporation or a corporation that is a subsidiary of the
Corporation within the meaning of Code Section 424(f).

	 	b.	 	Stock Appreciation Rights (SARs). A SAR is the right to receive a
payment measured by the increase in the Fair Market Value of a specified
number of shares of Stock from the date of grant of the SAR to the date on
which the Participant exercises the SAR. SARs may be (i) freestanding SARs
or (ii) tandem SARs granted in conjunction with an Option, either at the time
of grant of the Option or at a later date, and exercisable at the
Participant’s election instead of all or any part of the related Option. The
payment to which the Participant is entitled on exercise of a SAR may be in
cash, in Stock valued at Fair Market Value on the date of exercise or partly
in cash and partly in Stock, as the Committee may determine.
	 
	 	c.	 	Restricted Stock. Restricted Stock is Stock that is issued to a
Participant subject to restrictions on transfer and such other restrictions
on incidents of ownership as the Committee may determine, which restrictions
shall lapse at such time or times, or upon the occurrence of such event or
events, including but not limited to the achievement of one or more specific
goals with respect to performance of the Corporation, a business unit (which
may but need not be a Subsidiary) of the Corporation or that Participant over
a specified period of time as the Committee may determine. For restrictions
that lapse based on the passage of time, the minimum time period for full
vesting shall be three years, unless the Committee determines otherwise.
Subject to the specified restrictions, the Participant as owner of those
shares of Restricted Stock shall have the rights of the holder thereof,
except that the Committee may provide at the time of the Award that any
dividends or other distributions paid with respect to that Stock while
subject to those restrictions shall be accumulated, with or without interest,
or reinvested in Stock and held subject to the same restrictions as the
Restricted Stock and such other terms and conditions as the Committee shall
determine. Shares of Restricted Stock shall be registered in the name of the
Participant and, at the Corporation’s sole discretion, shall be held in book
entry form subject to the Corporation’s instructions or shall be evidenced by
a certificate, which shall bear an appropriate restrictive legend, shall be
subject to appropriate stop-transfer orders and shall be held in custody by
the Corporation until the restrictions on those shares of Restricted Stock
lapse.
	 
	 	d.	 	Restricted Stock Unit. A Restricted Stock Unit is an Award of a
contractual right to receive at a specified future date an amount based on
the Fair Market Value of one share of Stock, subject to such terms and
conditions as the Committee may establish. Restricted Stock Units that
become payable in accordance with their terms and conditions shall be settled
in cash, Stock, or a combination of cash and Stock, as determined by the
Committee. The Committee may provide for the accumulation of Dividend
Equivalents in cash, with or without interest, or the reinvestment of
Dividend Equivalents in Stock held subject to the same conditions as the
Restricted Stock Unit and such terms and conditions as the Committee shall
determine. Any person who holds Restricted Stock Units shall have no
ownership interest in the shares of Stock to which such Restricted Stock
Units relate until and unless payment with respect to such Restricted Stock
Units is actually made in shares of Stock.
	 
	 	e.	 	Performance Units. A Performance Unit is an Award denominated in
cash, the amount of which may be based on the achievement, over a specified
period of time, of one or more specific goals with respect to performance of
the Corporation, a business unit (which may but need not be a Subsidiary) of
the Corporation or the Participant to whom the Performance Units are granted.
The amount that may be paid to any one Participant with respect to
Performance Units shall not exceed an annual average of $10 million during
any consecutive three year period. The payout of Performance Units may be in
cash, in Stock valued at the Fair Market Value on the payout date (or at the
sole discretion of the Committee, the day immediately preceding that date),
or partly in cash and partly in Stock, as the Committee may determine.

4

 

	 	f.	 	Performance Shares. A Performance Share is an Award denominated in
Stock, the amount of which may be based on the achievement, over a specified
period of time, of one or more specific goals with respect to performance of
the Corporation, a business unit (which may but need not be a Subsidiary) of
the Corporation or the Participant to whom the Performance Shares are
granted. The payout of Performance Shares may be in Stock, in cash based on
the Fair Market Value on the payout date (or at the sole discretion of the
Committee, the day immediately preceding that date), or partly in cash and
partly in Stock, as the Committee may determine.
	 
	 	g.	 	Performance Compensation Awards.

	 	(i)	 	The Committee may, at the time of grant of an Award (other
than an Option or SAR) designate such Award as a Performance Compensation
Award in order that such Award constitute qualified performance-based
compensation under Code Section 162(m); provided, however, that no
Performance Compensation Award may be granted to an Employee who on the
date of grant is a leased employee of the Corporation or a Subsidiary.
With respect to each such Performance Compensation Award, the Committee
shall (on or before the 90th day of the applicable Performance
Period or such other period as may be required by Code Section 162 (m))
establish, in writing, a Performance Period, Performance Measure(s),
Performance Goal(s) and Performance Formula(s). Once established for a
Performance Period, such items shall not be amended or otherwise modified
if and to the extent such amendment or modification would cause the
compensation payable pursuant to the Award to fail to constitute
qualified performance-based compensation under Code Section 162(m).
	 
	 	(ii)	 	A Participant shall be eligible to receive payment in respect
of a Performance Compensation Award only to the extent that the
Performance Goal(s) for that Award are achieved and the Performance
Formula as applied against such Performance Goal(s) determines that all
or some portion of such Participant’s Award has been earned for the
Performance Period. As soon as practicable after the close of each
Performance Period, the Committee shall review and determine whether, and
to what extent, the Performance Goal(s) for the Performance Period have
been achieved and, if so, determine the amount of the Performance
Compensation Award earned by the Participant for such Performance Period
based upon such Participant’s Performance Formula. The Committee shall
then determine the actual amount of the Performance Compensation Award to
be paid to the Participant and, in so doing, may in its sole discretion
decrease, but not increase, the amount of the Award otherwise payable to
the Participant based upon such performance. The maximum Performance
Compensation Award for any one Participant for any one Performance Period
shall be determined in accordance with Sections 4(e) and 5(b), as
applicable.

	 	h.	 	Awards to Non-Employee Directors.

	 	(i)	 	Initial Award. Subject to the provisions of Section 4(h)(v),
each newly elected Non-Employee Director shall, as soon as practicable
after initially becoming a member of the Board of Directors, be granted
an Award of a whole number of Restricted Stock Units determined by
dividing $200,000 (or such other amount determined by the Board of
Directors) by the Fair Market Value on the date of such initial
appointment and rounding up to the next highest whole number, with terms
and conditions including restrictions as determined by the Board of
Directors or the Committee. The restrictions on the Restricted Stock
Units shall lapse and it is intended that the Restricted Stock Units
shall be payable only upon permissible payment events under Section 409A
or in a manner that meets the requirements of an exemption from Section
409A, as set forth in the applicable Award Agreement.
	 
	 	(ii)	 	Annual Award. Subject to the provisions of Section 4(h)(v),
immediately following the Annual Meeting of Shareowners held in the year
2006 and each annual Meeting of Shareowners thereafter, each Non-Employee
Director who has served as a director for at least one year and is
elected a director at, or who was previously elected and

5

 

	 	 	 	continues as a director after, that Annual Meeting shall be granted a
whole number of Restricted Stock Units determined by dividing $100,000 (or
such other amount determined by the Board of Directors) by the Fair
Market Value on the date of the Annual Meeting and rounding up to the next
highest whole number, with terms and conditions including restrictions as
determined by the Board of Directors or the Committee. The restrictions
on the Restricted Stock Units shall lapse and it is intended that the
Restricted Stock Units shall be payable only upon permissible payment
events under Section 409A or in a manner that meets the requirements of an
exemption from Section 409A, as set forth in the applicable Award
Agreement.
	 
	 	(iii)	 	Restricted Stock Units in Lieu of Cash Compensation.
Subject to the provisions of Section 4(h)(v), in lieu of cash
compensation, each Non-Employee Director may elect to receive all or a
portion of his or her annual retainer or other fees for service on the
Board of Directors or its committees by delivery of a whole number of shares of Restricted Stock Units, determined by dividing the portion of
the retainer fee or other fees to be paid in Restricted Stock Units by
the Fair Market Value on the date when payment is made and rounding up to
the next highest whole number. The restrictions on the Restricted Stock
Units shall lapse and it is intended that the Restricted Stock Units
shall be payable only upon permissible payment events under Section 409A
or in a manner that meets the requirements of an exemption from Section
409A, as set forth in the applicable Award Agreement.
	 
	 	(iv)	 	Timing to Elect to Receive Restricted Stock Units in Lieu of
Cash Compensation. To the extent that such arrangement is subject to
Section 409A, any election made by a Non-Employee Director under Section
4(h)(iii) to forego cash compensation must be made by December 31 of the
calendar year preceding the calendar year in which the Non-Employee
Director will be performing the services underlying such cash
compensation; provided, however, that such election may be made within 30
days after the date a Non-Employee Director first becomes eligible to
participate in the Plan (but only with respect to amounts earned after
the date of the election).
	 
	 	(v)	 	Changes to Award Grants. At such times as it may determine,
the Board of Directors may change (A) the form of any Award provided for
in Sections 4(h)(i), 4(h)(ii) and 4(h)(iii) to any other type of Award
set forth in this Section 4 and (B) the size and the vesting period of
any such Award.
	 
	 	(vi)	 	For grants of Awards to Non-Employee Directors, all
references to the Committee in this Section 4 and in Sections 8(a), 8(c),
8(d) and 8(g) shall be deemed to refer to the Committee or the Board of
Directors.

	 	i.	 	Deferrals. The Committee may require or permit Participants to defer
the issuance or vesting of shares of Stock or the settlement of Awards under
such rules and procedures as it may establish under the Plan. The Committee
may also provide that deferred settlements include the payment or crediting
of interest on the deferral amounts, or the payment or crediting of Dividend
Equivalents on deferred settlements in shares of Stock. Notwithstanding the
foregoing, no deferral will be permitted if it will result in the Plan
becoming an “employee pension benefit plan” under Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that
is not otherwise exempt under Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA. Notwithstanding the foregoing, it is the intent of the Corporation
that any deferral made under this Section 4(i) shall (A) satisfy the
requirements for exemption under Section 409A or (B) satisfy the requirements
of Section 409A.
	 
	 	j.	 	Other Section 409A Provisions. In addition to the provisions related
to the deferral of Awards under the Plan set forth in

Section 4(i) and
notwithstanding any other provision of the Plan to the contrary, the
following provisions shall apply to Awards:

	 	(i)	 	To the extent not otherwise set forth in the Plan, it is the
intent of the Corporation that the Award Agreement for each Award shall
set forth (or shall incorporate by reference

6

 

	 	 	 	to the Corporation’s Post-2004 Deferred Compensation Plan) such terms and
conditions as are necessary to (A) satisfy the requirements for exemption
under Section 409A or (B) satisfy the requirements of Section 409A;
	 
	 	(ii)	 	Without limiting the generality of the foregoing, it is the
intent of the Corporation that the payment of dividends on Restricted
Stock or the payment of Dividend Equivalents on Restricted Stock Units
or Performance Shares shall (A) satisfy the requirements for exemption
under Section 409A or (B) satisfy the requirements of Section 409A,
including without limitation, to the extent necessary, the establishment
of a separate written arrangement providing for the payment of such
dividends or Dividend Equivalents; and
	 
	 	(iii)	 	Notwithstanding any other provision of this Plan or an
Award Agreement to the contrary, any Performance Compensation Award
granted under this Plan prior to September 12, 2007 shall be payable in
the calendar year in which the Performance Period ends; and
	 
	 	(iv)	 	Notwithstanding any other provision of this Plan to the
contrary, the Corporation makes no representation that the Plan or any
Award will be exempt from or comply with Section 409A and makes no
undertaking to preclude Section 409A from applying to the Plan or any
Award.

Section 5: Stock Available under Plan

	 	a.	 	Subject to the adjustment provisions of Section 9, 11 million shares
of Stock are hereby reserved for grant and issuance for the purpose of making
Awards under the Plan. With respect to shares of Stock issued pursuant to
Awards of Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units, the shares of Stock available for grant and issuance
hereunder will be reduced by 3 shares of Stock for every such share of Stock
so issued. For purposes of applying the limitations provided in this Section
5(a), all shares of Stock with respect to the unexercised, undistributed or
unearned portion of any terminated or forfeited Award shall be available for
further Awards. If shares of Stock are withheld or tendered as payment of
the exercise price or for taxes in connection with an Award, however, such
shares of Stock may not be reused, reissued or otherwise treated as being
available for additional Awards or issuance under the Plan. For SARs settled
in stock, both the shares of Stock issued pursuant to the Award and the
specified number of shares of Stock underlying the Award shall be treated as
being unavailable for other Awards or other issuances pursuant to the Plan
unless the SAR is forfeited, terminated or cancelled without the delivery of
shares of Stock. For SARs settled in cash, the specified number of shares of
Stock underlying the Award shall be treated as being unavailable for other
Awards or other issuances pursuant to the Plan unless the SAR is forfeited,
terminated or cancelled without the delivery of cash.
	 
	 	b.	 	Subject to the adjustment provisions of Section 9, no single
Participant shall receive Awards, as an annual average during any consecutive
three year period, of more than 600,000 Options (measured by the number of
shares of Stock underlying such Options), SARs (measured by the number of
shares of Stock underlying such SARs), shares of Restricted Stock, Restricted
Stock Units, Performance Shares or any combination thereof under the Plan.
For purposes of determining such limit on Awards to a Participant under this
Section 5, each share of Stock underlying an Award of Restricted Stock,
Restricted Stock Units or Performance Shares shall count as 3 shares.
	 
	 	c.	 	The Stock that may be delivered on grant, exercise or settlement of
an Award under the Plan may be reacquired shares held in treasury or
authorized but unissued shares. At all times the Corporation will reserve
and keep available a sufficient number of shares of Stock to satisfy the
requirements of all outstanding Awards made under the Plan.

7

 

Section 6: Award Agreements

Each Award under the Plan shall be evidenced by an Award Agreement. Each Award Agreement shall set
forth the terms and conditions applicable to the Award, including but not limited to: (i)
provisions for the time at which the Award becomes exercisable or otherwise vests; (ii) provisions
for the treatment of the Award in the event of the termination of a Participant’s status as an
Employee; (iii) any special provisions applicable in the event of an occurrence of a Change of
Control, as determined by the Committee consistent with the provisions of the Plan; and (iv) in the
Committee’s sole discretion, any additional provisions as are required to (A) satisfy the
requirements for exemption under Section 409A or (B) satisfy the requirements of Section 409A.

Section 7: Amendment and Termination

The Board of Directors may at any time amend, suspend or terminate the Plan, in whole or in part;
provided, however, that, without the approval of the shareowners of the Corporation, no such action
shall (i) increase the number of shares of Stock available for Awards as set forth in Section 5
(other than adjustments pursuant to Section 9), or (ii) materially increase the benefits accruing
to Participants under the Plan or otherwise make any material revision to the Plan, or otherwise be
effective to the extent that such approval is necessary to comply with any tax or regulatory
requirement applicable to the Plan, including applicable requirements of the New York Stock
Exchange; and provided, further, that, subject to Section 9, no such action shall impair the rights
of any holder of an Award without the holder’s consent. The Committee may, subject to the Plan, at
any time alter or amend any or all Award Agreements to the extent permitted by applicable law;
provided, however, that, subject to Section 9, no such alteration or amendment shall impair the
rights of any holder of an Award without the holder’s consent. Notwithstanding the foregoing,
neither the Board of Directors nor the Committee shall (except pursuant to Section 9) amend the
Plan or any Award Agreement to reprice any Option or SAR whose exercise price is above the then
Fair Market Value of the Stock subject to the Award, whether by decreasing the exercise price,
canceling the Award and granting a substitute Award, or otherwise.

Section 8: Administration

	 	a.	 	The Plan and all Awards shall be administered by the Committee. The
members of the Committee shall be designated by the Board of Directors.
	 
	 	b.	 	Any member of the Committee who, at the time of any proposed grant of
one or more Awards, is not both an “outside director” as defined for purposes
of Code Section 162(m) and a “Non-Employee Director” as defined in Rule
16b-3(b)(3)(i) under the Exchange Act (or any successor provision), shall
abstain from and take no part in the Committee’s action on the proposed
grant.
	 
	 	c.	 	The Committee shall have full and complete authority, in its sole and
absolute discretion, (i) to exercise all of the powers granted to it under
the Plan, (ii) to construe, interpret and implement the Plan and any related
document, (iii) to prescribe, amend and rescind rules relating to the Plan,
(iv) to make all determinations necessary or advisable in administering the
Plan, and (v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan. The actions and determinations of the Committee
on all matters relating to the Plan and any Awards will be final and
conclusive. The Committee’s determinations under the Plan need not be uniform
and may be made by it selectively among Employees and Non-Employee Directors
who receive, or who are eligible to receive, Awards under the Plan, whether
or not such persons are similarly situated.
	 
	 	d.	 	The Committee and others to whom the Committee has delegated such
duties shall keep a record of all their proceedings and actions and shall
maintain all such books of account, records and other data as shall be
necessary for the proper administration of the Plan.
	 
	 	e.	 	The Corporation shall pay all reasonable expenses of administering
the Plan, including but not limited to the payment of professional fees.
	 
	 	f.	 	It is the intent of the Corporation that the Plan and Awards
hereunder satisfy, and be interpreted in a manner that satisfy: (i) in the
case of Participants who are or may be Executive Officers or Non-Employee
Directors, the applicable requirements of Rule 16b-3 under the Exchange Act,
so that such persons will be entitled to the benefits of Rule 16b-3,

8

 

	 	 	 	or other exemptive rules under Section 16 of the Exchange Act, and will not be
subjected to avoidable liability under Section 16(b) of the Exchange Act; (ii)
in the case of Performance Compensation Awards to Covered Employees, the
applicable requirements of Code Section 162(m); and (iii) either the
requirements for exemption under Section 409A or the requirements of Section
409A. If any provision of the Plan or of any Award Agreement would otherwise
frustrate or conflict with the intent expressed in this Section 8(f), that
provision to the extent possible shall be interpreted and deemed amended so as
to avoid such conflict. To the extent of any remaining irreconcilable
conflict with such intent, and to the extent legally permitted, such provision
shall be deemed void as to Executive Officers, Non-Employee Directors or
Covered Employees, as applicable.
	 
	 	g.	 	The Committee may appoint such accountants, counsel, and other
experts as it deems necessary or desirable in connection with the
administration of the Plan.
	 
	 	h.	 	The Committee may delegate, and revoke the delegation of, all or any
portion of its authority and powers under the Plan to the Chief Executive
Officer of the Corporation, except that the Committee may not delegate any
discretionary authority with respect to Awards granted to the Chief Executive
Officer or Non-Employee Directors or substantive decisions or functions
regarding the Plan or Awards to the extent inconsistent with the intent
expressed in Section 8(f) or to the extent prohibited by applicable law.

Section 9: Adjustment Provisions

	 	a.	 	In the event of any change in or affecting the outstanding shares of
Stock by reason of a stock dividend or split, merger or consolidation
(whether or not the Corporation is a surviving corporation),
recapitalization, reorganization, combination or exchange of shares or other
similar corporate changes or an extraordinary dividend in cash, securities or
other property, the Board of Directors shall make such amendments to the Plan
and outstanding Awards and Award Agreements and make such adjustments and
take actions thereunder as it deems appropriate, in its sole discretion,
under the circumstances. Such amendments, adjustments and actions may
include, but are not limited to, changes in the number of shares of Stock
then remaining subject to the Plan, and the maximum number of shares that may
be granted or delivered to any single Participant pursuant to the Plan,
including those that are then covered by outstanding Awards, or accelerating
the vesting of outstanding Awards.
	 
	 	b.	 	The existence of the Plan and the Awards granted hereunder shall not
affect or restrict in any way the right or power of the Board of Directors or
the shareowners of the Corporation to make or authorize any adjustment,
recapitalization, reorganization or other change in the capital structure of
its business, any merger or consolidation of the Corporation, any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Stock or the rights thereof, the dissolution or liquidation of the
Corporation or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding.

Section 10: Miscellaneous

	 	a.	 	Change of Control. Except as otherwise determined by the Committee
at the time of the grant of an Award, and except as is necessary to satisfy
the requirements for exemption under Section 409A or the requirements of
Section 409A (in which event, the Committee may determine to modify the
definition of Change of Control in order to satisfy such requirements), upon
a Change of Control of the Corporation, all outstanding Stock Options and
SARs shall become vested and exercisable; all restrictions on Restricted
Stock and Restricted Stock Units shall lapse; all performance goals shall be
deemed achieved at levels determined by the Committee and all other terms and
conditions met; all Performance Shares shall be delivered; all Performance
Units and Restricted Stock Units shall be paid out as promptly as
practicable; and all other Awards shall be delivered or paid. The term
“Change of Control” shall mean the occurrence of any of the following:

9

 

	 	(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 the Corporation (the “Outstanding
Rockwell Collins Common Stock”) or (B) the combined voting power of the
then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the “Outstanding Rockwell 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 the Corporation;
(x) any acquisition by the Corporation; (y) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation, or any corporation controlled by the Corporation; or (z) any
acquisition pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (iii) of this Section 10(a); or
	 
	 	(ii)	 	Individuals who, as of November 17, 2005, 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 the Corporation’s
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
the Corporation 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 Rockwell
Collins Common Stock and Outstanding Rockwell 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
through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Corporate Transaction, of
the Outstanding Rockwell Collins Common Stock and Outstanding Rockwell
Collins Voting Securities, as the case may be, (B) no Person (excluding
any employee benefit plan (or related trust) of the Corporation, 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 the Corporation’s shareowners of a complete
liquidation or dissolution of the Corporation.

	 	 	 	Notwithstanding the foregoing provisions of this definition, unless otherwise
determined by the Board of Directors, no Change of Control shall be deemed to
have occurred with

10

 

	 	 	 	respect to an Award if (A) the holder of such Award is a member of a group
that first announces a proposal which, if successful, would result in a Change
of Control and which proposal (including any modifications thereof) is
ultimately successful, (B) the holder of such Award acquires a two percent
(2%) or more equity interest in the entity that ultimately acquires the
Company pursuant to the transaction described in clause (A) above, or (C)
treatment of an event that is otherwise a Change of Control under this Section
10(a) with respect to such Award would result in violation of the rules
relating to “nonqualified deferred compensation plans” under Section 409A(a).
	 
	 	b.	 	Nonassignability. Except as otherwise provided by the Committee, no
Award shall be assignable or transferable except by will or by the laws of
descent and distribution.
	 
	 	c.	 	Other Payments or Awards. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Corporation or a Subsidiary from
making any award or payment to any person under any other plan, arrangement
or understanding, whether now existing or hereafter in effect.
	 
	 	d.	 	Payments to Other Persons. If payments are legally required to be
made to any person other than the person to whom any payment is to be
provided under the Plan, then payments shall be made accordingly; provided,
however, to the extent that such payments would cause an Award to fail to
satisfy the requirements for exemption under Section 409A or the requirements
of Section 409A, the Committee may determine in its sole discretion not to
make such payments in such manner. Any such payment shall be a complete
discharge of the liability hereunder.
	 
	 	e.	 	Unfunded Plan. The Plan shall be unfunded. No provision of the Plan
or any Award Agreement shall require the Corporation or a Subsidiary, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made
or otherwise to segregate any assets, nor shall the Corporation or a
Subsidiary maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered
fund for such purposes. Participants shall have no rights under the Plan
other than as unsecured general creditors of the Corporation or a Subsidiary,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under generally applicable law.
	 
	 	f.	 	Limits of Liability. Any liability of the Corporation or a
Subsidiary to any Participant with respect to an Award shall be based solely
upon contractual obligations created by the Plan and the Award Agreement.
Neither the Corporation or its Subsidiaries, nor any member of the Board of
Directors or of the Committee, nor any other person participating in any
determination of any question under the Plan, or in the interpretation,
administration or application of the Plan, shall have any liability to any
party for any action taken, or not taken, in good faith under the Plan.
	 
	 	g.	 	Rights of Employees and Non-Employee Directors. Except as provided
in Section 4(h), status as an eligible Employee or Non-Employee Director
shall not be construed as a commitment that any Award shall be made under the
Plan to such eligible Employee or Non-Employee Director or to eligible
Employees and Non-Employee Directors generally. Nothing contained in the
Plan or in any Award Agreement shall confer upon any Employee, Non-Employee
Director or Participant any right to continue in the employ or other service
of the Corporation or a Subsidiary, and shall not constitute any contract or
limit in any way the right of the Corporation or a Subsidiary to change such
person’s compensation or other benefits or to terminate the employment or
other service of such person with or without cause. A transfer of an
Employee from the Corporation to a Subsidiary, or vice versa, or from one
Subsidiary to another, and a leave of absence, duly authorized by the
Corporation, shall not be deemed a termination of employment or other
service; provided, however, that, to the extent that Section 409A is
applicable to an Award, Section 409A’s definition of “separation of service”,
to the extent contradictory, shall apply to determine when a Participant
becomes entitled to a distribution upon termination of employment.

11

 

	 	h.	 	Rights as a Shareowner. A Participant shall have no rights as a
shareowner with respect to any Stock covered by an Award until the date the
Participant becomes the holder of record thereof. Except as provided in
Section 9, no adjustment shall be made for dividends or other rights, unless
the Award Agreement specifically requires such adjustment.
	 
	 	i.	 	Withholding. Applicable taxes, to the extent required by law, shall
be withheld in respect of all Awards. A Participant may satisfy the
withholding obligation by paying the amount of any taxes in cash or, with the
approval of the Committee, shares of Stock may be delivered to the
Corporation or deducted from the payment to satisfy the obligation in full or
in part. The amount of the withholding and the number of shares of Stock to
be paid or deducted in satisfaction of the withholding requirement shall be
determined by the Committee with reference to the Fair Market Value of the
Stock when the withholding is required to be made; provided, however, that
the amount of withholding to be paid in respect of Options exercised through
the cashless method in which shares of Stock for which the Options are
exercised are immediately sold may be determined by reference to the price at
which said shares are sold. The Corporation shall have no obligation to
deliver any Stock pursuant to the grant or settlement of any Award until it
has been reimbursed for all required withholding taxes.
	 
	 	j.	 	Section Headings. The section headings contained herein are for the
purpose of convenience only, and in the event of any conflict, the text of
the Plan, rather than the section headings, shall control.
	 
	 	k.	 	Construction. In interpreting the Plan, the masculine gender shall
include the feminine, the neuter gender shall include the masculine or
feminine, and the singular shall include the plural unless the context
clearly indicates otherwise. Any reference to a statutory provision or a
rule under a statute shall be deemed a reference to that provision or any
successor provision unless the context clearly indicates otherwise.
	 
	 	l.	 	Invalidity. If any term or provision contained herein or in any
Award Agreement shall to any extent be invalid or unenforceable, such term or
provision will be reformed so that it is valid, and such invalidity or
unenforceability shall not affect any other provision or part thereof.
	 
	 	m.	 	Applicable Law. The Plan, the Award Agreements and all actions taken
hereunder or thereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware without regard to the conflict of law
principles thereof.
	 
	 	n.	 	Compliance with Laws. Notwithstanding anything contained herein or
in any Award Agreement to the contrary, the Corporation shall not be required
to sell, issue or deliver shares of Stock hereunder or thereunder if the
sale, issuance or delivery thereof would constitute a violation by the
Participant or the Corporation of any provisions of any law or regulation of
any governmental authority or any national securities exchange; and as a
condition of any sale or issuance the Corporation may require such agreements
or undertakings, if any, as the Corporation may deem necessary or advisable
to assure compliance with any such law or regulation.
	 
	 	o	 	Supplementary Plans. The Committee may authorize supplementary plans
applicable to Employees subject to the tax laws of one or more countries
other than the United States and providing for the grant of Non-Qualified
Stock Options, SARs, Restricted Stock, Restricted Stock Units or Performance
Shares to such Employees on terms and conditions, consistent with the Plan,
determined by the Committee, which may differ from the terms and conditions
of other Awards pursuant to the Plan for the purpose of complying with the
conditions for qualification of Awards for favorable treatment under foreign
tax laws. Notwithstanding any other provision hereof, Options granted under
any supplementary plan shall include provisions that conform with Sections
4(a)(i), (ii) and (iii); SARs granted under any supplementary plan shall
include provisions that conform with Section 4(b); Restricted Stock granted
under any supplementary plan shall include provisions that conform with
Section 4(c); Restricted Stock Units granted under any supplementary plan

12

 

	 	 	 	shall include provisions that conform with Section 4(d); and Performance
Shares granted under any supplementary plan shall include provisions that
conform with Section 4(f).
	 
	 	p.	 	Effective Date and Term. The Plan was adopted by the Board of
Directors on November 17, 2005 and a by shareowners of the Company on
February 7, 2006. The Plan shall remain in effect until all Awards under the
Plan have been exercised or terminated under the terms of the Plan and
applicable Award Agreements; provided, however, that Awards
under the Plan may be granted only within ten (10) years from the effective
date of the Plan. The Plan was amended and restated on September 12, 2007
effective as of February 7, 2006 to reflect changes in respect of Section
409A. The Plan was further amended and restated on November 13, 2007.

13

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