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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2007
Commission file number 001-16445
 
Rockwell Collins, Inc.
(Exact name of registrant as specified in its charter)
     
Delaware
(State or other jurisdiction of
incorporation or organization)
  52-2314475
(I.R.S. Employer
Identification No.)
     
400 Collins Road NE
Cedar Rapids, Iowa
(Address of principal executive offices)
  52498
(Zip Code)
Registrant’s telephone number, including area code: (319) 295-1000
SECURITIES REGISTERED PURSUANT
TO SECTION 12(b) OF THE ACT:
     
Title of each class   Name of each exchange on which registered
     
Common Stock, par value $.01 per share
(including the associated Preferred Share Purchase Rights)
  New York Stock Exchange
SECURITIES REGISTERED PURSUANT
TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ                                Accelerated filer o                                Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No     þ
The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant on March 30, 2007 was approximately $11.2 billion. For purposes of this calculation, the registrant has assumed that its directors and executive officers are affiliates.
162,916,744 shares of the registrant’s Common Stock were outstanding on October 26, 2007.
 
 


 

DOCUMENTS INCORPORATED BY REFERENCE
(1)   Certain information contained in the Annual Report to Shareowners of the registrant for the fiscal year ended September 30, 2007 is incorporated by reference into Part I, Part II and Part IV.
(2)   Certain information contained in the Proxy Statement for the Annual Meeting of Shareowners of the registrant to be held on February 12, 2008 is incorporated by reference into Part III.
Rockwell Collins, Inc.
Annual Report on Form 10-K
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    S-1  
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    E-1  
  2001 Long-Term Incentives Plan, as amended
  2006 Long-Term Incentives Plan, as amended
  2006 Annual Incentive Compensation Plan
  Incentive Compensation Plan, as amended
  Deferred Compensation Plan, as amended
  2005 Deferred Compensation Plan
  Non-Qualified Savings Plan, as amended
  2005 Non-Qualified Savings Plan
  Non-Qualified Pension Plan, as amended
  2005 Non-Qualified Pension Plan
  Master Trust, as amended
  Form of Change of Control Agreement
  Schedule Identifying Executives of the Company
  Form of Three-Year Performance Share Agreement
  Form of Three-Year Performance Share Agreement
  Non-Employee Directors' Compensation Summary
  Statement Re: Computation of Ratio of Earnings to Fixed Charges
  Portions of 2007 Annual Report to Shareowners
  List of Subsidiaries of the Company
  Consent of Independent Registered Public Accounting Firm
  Powers of Attorney
  Section 302 Certification of Chief Executive Officer
  Section 302 Certification of Chief Financial Officer
  Section 906 Certification of Chief Executive Officer
  Section 906 Certification of Chief Financial Officer

 


Table of Contents

PART I
Item 1. Business .
General
Our company, Rockwell Collins, Inc., is a leader in providing design, production and support of communications and aviation electronics for military and commercial customers worldwide. While our products and systems are primarily focused on aviation applications, our Government Systems business also offers products and systems for ground and shipboard applications. We also provide a wide range of services and support to our customers through our network of service centers worldwide, including equipment repair and overhaul, service parts, field service engineering, training, technical information services and aftermarket used equipment sales. We operate in multiple countries and are headquartered in Cedar Rapids, Iowa.
Our company’s heritage is rooted in the Collins Radio Company formed in 1933. Rockwell Collins, Inc., the parent company, is incorporated in Delaware. As used herein, the terms “we”, “us”, “our”, “Rockwell Collins” or the “Company” include subsidiaries and predecessors unless the context indicates otherwise.
Whenever reference is made in any Item of this Annual Report on Form 10-K to information under specific captions of our 2007 Annual Report to Shareowners (the “2007 Annual Report”) or to information in our Proxy Statement for the Annual Meeting of Shareowners to be held on February 12, 2008 (the “2008 Proxy Statement”), such information shall be deemed to be incorporated herein by such reference.
All date references contained herein relate to our fiscal year ending on the Friday closest to September 30 unless otherwise stated. For ease of presentation, September 30 is utilized consistently throughout this report to represent the fiscal year end date.
Financial Information About Our Business Segments
Financial information with respect to our business segments, including product line disclosures, revenues, operating income and total assets, is contained under the caption Segment Financial Results in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2007 Annual Report, and in Note 23 of the Notes to Consolidated Financial Statements in the 2007 Annual Report.
Access to the Company’s Reports and Governance Information
We maintain an Internet website at www.rockwellcollins.com . Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on this site as soon as reasonably practicable after the reports are filed with or furnished to the Securities and Exchange Commission (SEC). All reports we file with the SEC are also available free of charge via EDGAR through the SEC’s website at www.sec.gov . We also post corporate governance information (including our corporate governance guidelines and Board committee charters) and other information related to our company on our Internet website and this information is available free of charge on this site. We will provide, without charge, upon written request, copies of our SEC reports and corporate governance information. Our Internet website and the information contained therein or connected thereto are not incorporated into this Annual Report on Form 10-K.
Description of Business by Segment
We serve our worldwide customer base through our Government Systems and Commercial Systems business segments. These two segments are described in detail below.

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Government Systems
Our Government Systems business supplies defense communications and defense electronics systems, products and services, which include subsystems, displays, navigation equipment and simulation systems, to the U.S. Department of Defense, other government agencies, civil agencies, defense contractors and foreign ministries of defense. These systems, products and services support airborne (fixed wing and rotary), ground and shipboard applications.
Our defense communications and defense electronics systems and products include:
    Communications systems and products designed to help customers transfer information across the communications spectrum, ranging from Very Low and Low Frequency to High, Very High and Ultra High Frequency to satellite communications.
 
    Military data link systems and products.
 
    Navigation systems and products, including radio navigation systems, global positioning systems (GPS), handheld navigation systems and multi-mode receivers.
 
    Subsystems for the flight deck that combine flight operations with navigation and guidance functions and that can include flight controls and displays, information/data processing and communications, navigation and/or safety and surveillance systems.
 
    Cockpit display systems, including flat panel, multipurpose, wide fields of view, head up, head down and helmet mounted displays for tactical fighter and attack aircraft.
 
    Integrated computer systems for future combat systems.
 
    Simulation and training systems, including visual system products, training systems and engineering services.
 
    Maintenance, repair, parts and after-sales support services.
Highlights for the Government Systems segment in 2007 included:
    The U.S. Army Communications-Electronics Life Cycle Management Command (C-E LCMC) selected us to supply Global Positioning System (GPS) receivers for the Ground-Based GPS Receiver Application Module (GB-GRAM) program. GB-GRAM incorporates the Selective Availability Anti-Spoofing Module (SAASM) security device and fulfills a GPS Wing initiative to migrate to an open architecture system for ground-based embedded military applications. Under the GB-GRAM contract, we are providing a low-cost, 12-channel Miniature Precision Lightweight GPS Receiver Engine SAASM (MPE TM -S) as a small, lightweight, third-generation GPS receiver. The MPE-S offers geolocation and precise positioning capabilities for military navigation, tactical communications and battlefield computing requirements. Additional features include the ability to reprogram the unit in the field, dual frequencies, direct-Y acquisition and extended jamming protection. The five-year base contract and an additional five-year option represent a total potential contract value of more than $300 million.
 
    We were awarded contracts from Thai Aviation Industries, Inc. and Singapore Technologies Aerospace to upgrade C-130 aircraft for the Royal Thai Air Force and Republic of Singapore. Both upgrade programs, which will provide an integrated communication/navigation/surveillance and air traffic management (CNS/ATM) solution, will feature Rockwell Collins Flight2 TM avionics. Flight2 avionics augments and enhances aircraft operational capabilities by providing an open systems architecture that interfaces with multiple products, such as weather radar, guidance systems, and flight and situational awareness displays. Flight2 avionics are designed to improve cockpit efficiency, safety and ease of use, while the system provides a plug-and-play capability that allows for growth with evolving requirements. These awards

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      represent the latest in a number of successful CNS/ATM upgrade programs for Rockwell Collins, including the U.S. Air Force C/KC-135 GATM aircraft fleet upgrade and several other international C-130 programs.
 
    In December 2006, we delivered our 100,000th Defense Advanced Global Positioning System Receiver (DAGR) for use by U.S. and international warfighters and reached the 225,000 unit sales milestone for our Selective Availability Anti-Spoofing Module (SAASM). Primarily used by the U.S. Army, the DAGR is considered the handheld standard for GPS position, navigation and situational awareness. The receiver provides precise timing to synchronize tactical radios for the digital battlespace and includes a graphical user interface designed to greatly enhance the soldier’s effectiveness and safety. The Rockwell Collins SAASM is a single, tamper-resistant multi-chip security module that can be combined with other components and software into a complete GPS receiver.
 
    We were awarded a contract with Eurocopter Deutschland for the development of a German Avionics Management System (GAMS) for the German Army CH-53 G helicopter. The GAMS will be based on Rockwell Collins’ Common Avionics Architecture System (CAAS) and integrated into the new glass cockpit of the CH-53 G helicopter. The first two qualification/verification aircraft are scheduled for delivery in mid-2009. A majority of the development and production of GAMS is being performed by our facility in Heidelberg, Germany.
 
    Boeing elevated us to major subcontractor status on the Family of Advanced Beyond Line-of-Sight Terminals (FAB-T), a transformational Department of Defense (DoD) initiative. The announcement was made in conjunction with our receiving an award for an additional $74 million in technology development contract expansions for the first increment of wideband satellite communications (SATCOM) terminals for the program. Boeing cited our outstanding SATCOM execution performance to date on the program. This award adds to our existing $53 million contract for a total current program worth more than $127 million, with opportunities for further expansions in future increments. The FAB-T program will establish a network centric, Software Communications Architecture (SCA) compliant, family of terminals that uses a common open system architecture to link warfighters to different satellites and enable planned incremental capability for robust, secure, global strategic and tactical communications between ground, air and space platforms. FAB-T represents a key building block in the DoD’s vision of an integrated battlespace of the future, where networked information and communications systems provide a competitive edge to decision makers and military personnel.
 
    We announced the introduction of our new Software Defined Radio (SDR) Software Communications Architecture Waveform Development System (SCA WDS). Made possible through a strategic relationship with PrismTech, we will bundle our FlexNet Four Radio with PrismTech’s Spectra Software Defined Radio development products. This combination should allow international customers and SDR users to develop their own SCA-compliant waveforms, either new or legacy, on operationally ready FlexNet Four Radio hardware, outside a test or lab environment. This enhanced capability would allow customers to reduce significantly transition time to port newly developed waveforms onto operational hardware as well as to customize their SDRs to host legacy or country-unique waveforms.
 
    Our visualization systems were selected by Lockheed Martin for Joint Strike Fighter (JSF) pilot training devices and by the UK Ministry of Defence for the UK Army’s Aviation Command and Tactics Trainer. We will provide image generator configurations to be installed in a Full-Mission Simulator and a Deployable Mission Rehearsal Trainer, as well as EPX TM technology-based database generation tools and a database preview station, for the JSF program. For the UK Aviation and Tactics Trainer, we were awarded the fifth phase of the Mission Command Trainer (MCT) TM upgrade program which calls for the delivery of 62 channels of the EPX-50 Image Generator, visual databases, avionics, semi automated forces, weapons and after action review upgrades. EPX technology is designed to deliver flexibility, responsiveness, and performance for the most demanding military training requirements and is capable of running on hardware with varying capabilities.
 
    We acquired Information Technology & Applications Corporation (ITAC), a privately-held engineering and products company that provides intelligence, surveillance, reconnaissance and communications

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      solutions to support the global war on terror and homeland security, in a cash transaction for approximately $37 million. Founded in 1986, ITAC’s focus is the development of cutting-edge capabilities for warfighters that facilitate access to and use of near real-time geospatial intelligence and other mission-critical information.
 
    General Dynamics and Rockwell Collins delivered the first Integrated Computer Systems (ICS) for the Future Combat Systems (FCS) program. ICS is the common computing environment for 13 of the 14 platforms in the FCS family of systems, which comprises a network of sensors, unmanned aerial platforms and manned and unmanned ground platforms. The ICS integrates a wide range of traditionally independent computing applications into a single, integrated, secure processing environment and provides FCS-equipped platforms with unprecedented processing, networking, data storage and information assurance capabilities. General Dynamics and Rockwell Collins designed, built, tested and delivered the Current Force ICS on schedule, in just 21 months, in order to support the rapid spin-out of FCS capability into Current Force vehicles. Bradley fighting vehicles, Abrams main battle tanks and Command Variant High-Mobility Multi-purpose Wheeled Vehicles will be equipped with ICS as part of the first spin-out of FCS future force technologies in 2008.
 
    The United Kingdom Ministry of Defence awarded an $18 million contract to us to meet a war-related urgent operational requirement and provide a suite of products for the next generation Forward Air Controller and Forward Observation Officer (FAC/FOO) system. The FAC/FOO system, as part of the Improved Targeting Geolocation Accuracy program, is comprised of a suite of new lightweight, fully integrated digital hardware and software. At the heart of the system is a tablet computer that hosts the Rockwell Collins Rosetta Joint Fires software package, providing targeting and communication capabilities. The Rockwell Collins Azimuth Augmentation system, an important part of the FAC/FOO package, provides unparalleled targeting precision by correcting Laser Range Finder inaccuracies and enabling the precise delivery of modern GPS-guided weapons. The majority of work for this program will be done at our facility in Reading, England.
Commercial Systems
Our Commercial Systems business supplies aviation electronics systems, products and services to customers located throughout the world. The customer base is comprised of original equipment manufacturers (OEMs) of commercial air transport, regional and business aircraft, commercial airlines, and fractional and other business aircraft operators. These systems and products include flight deck electronic systems and products, including communications, navigation, surveillance, displays and automatic flight control and flight management systems, as well as in-flight entertainment, cabin electronics, information management, electro mechanical pilot controls and actuation and simulation and training.
Our aviation electronics systems, products and services include:
    Integrated avionics systems and products, such as the Pro Line 21 system, which provide advanced avionics such as liquid crystal flight displays, flight management, integrated flight control, automatic flight controls, engine indication and crew alerts.
 
    Cabin electronics systems and products, including passenger connectivity and entertainment, business support systems, network capabilities, passenger flight information systems and lighting and other environmental controls.
 
    Communications systems and products, such as data link, High Frequency (HF), Very High Frequency (VHF) and satellite communications systems.
 
    Navigation systems and products, including multi-mode receivers, radio and geophysical navigation sensors, as well as flight management systems.

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    Situational awareness and surveillance systems and products, such as Head-Up Guidance Systems, weather radar and collision avoidance systems.
 
    Flight deck systems and products, which include a broad offering of multi-function cockpit liquid crystal display (LCD) units, cathode ray tube (CRT) display units and head-up displays (HUDs).
 
    Integrated information systems to provide information management solutions that help improve flight operations, maintenance and cabin services, as well as provide worldwide TV coverage.
 
    Electro mechanical pilot controls and actuation systems, including horizontal stabilizer and trim actuation systems, throttle quadrants, cockpit petals and other pilot controls.
 
    Simulation and training systems, including visual system products, training systems and engineering services.
 
    Maintenance, repair, parts and after-sales support services.
Highlights for the Commercial Systems segment in 2007 included:
    Cessna Aircraft Company selected Rockwell Collins Pro Line 21 avionics as standard equipment for its new XLS+ aircraft, scheduled to go into service in 2008, and its new CJ4, scheduled to enter service in 2010.
 
    Rockwell Collins Pro Line 21 avionics and Airshow 21 Cabin Management System were selected by Raytheon Aircraft Company for its Hawker 750 and Hawker 900 aircraft.
 
    Boeing selected us to provide the avionics system for its new 747-8 airplane family. We will provide the entire suite of displays, autopilot, communication, navigation, surveillance, maintenance, emergency and data management systems.
 
    Our airline selectable air transport avionics equipment was selected to be included on various new and currently in service Airbus and Boeing aircraft by Air Berlin, Air China, Avianca Airlines, Continental Airlines, Nippon Cargo Airlines, Shandong Airlines, Shanghai Airlines, Sichuan Airlines, Singapore Airlines, Skybus Airlines and TAP Portugal. The avionics equipment selected by several of these airlines included our WXR-2100 MultiScan™ Hazard Detection System and our GLU-925 Multi-mode Receiver.
 
    Boeing Business Jets and Rockwell Collins introduced an Enhanced Vision System (EVS) offering for Boeing Business Jet (BBJ) operators. The Rockwell Collins EVS presents an image of the external environment on the Head-up Guidance System (HGS®) and head-down displays to enhance pilot situational awareness of terrain and the airport environment at night or in poor weather condition situations, thereby increasing the safety and operational capability of the aircraft.
 
    Cessna selected our VenueTM next-generation digital cabin management system (CMS) for Cessna CJ4 aircraft. The new CMS, which is optimized to meet the size and weight constraints of the light to super-mid jet market, is high definition-capable and integrates a breadth of portable entertainment devices.
 
    Gulfstream Aerospace selected us to be its fleet wide Head-Up Guidance System (HGS®) supplier. Beginning in late 2008, the Rockwell Collins HGS-6000, an all new digital display featuring advanced active-matrix LCD technology, will be standard equipment on new Gulfstream G450 and G550 aircraft, and optional equipment on new G150, G200, G350 and G500 aircraft.

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    Hawker Beechcraft selected Rockwell Collins Pro Line 21 avionics, featuring three 8-inch by 10-inch active matrix LCD displays and the Rockwell Collins Integrated Flight Information System, for its King Air C90GT aircraft.
 
    We reintroduced our eXchange TM broadband connectivity offering that now features the ARINC SKYLink SM network service. Under the terms of an agreement with ARINC that is subject to customary closing conditions, we will supply airborne broadband hardware and after sales support, while ARINC SKYLink will provide the Ku-band satellite service. ARINC will continue to provide SKYLink system sales and support until the transition to our eXchange hardware is completed. We are also in negotiations with ViaSat to acquire certain hardware products related to this offering.
 
    GB Airways will be the launch customer for our new single isle in-flight entertainment offering, dPAVES (digital programmable audio visual system), for it’s new A 320 aircraft.
 
    We certified the world’s first raster-only liquid crystal on silicon (LCoS) display system to meet the Federal Aviation Administration (FAA) Level D/ICAO 9625 certification standard on a Boeing Alteon B777 full-flight simulator in December 2006. More raster-only display systems combined with the EP-1000CT image generator have been approved by the following regulatory agencies: Civil Aviation Authority (UK), Civil Aviation Safety Authority (Australia), Direction générale de l’Aviation civile (France), and FAA. Based on the successful introduction of this display system, we now have over fifty confirmed orders for LCoS-based visual systems.
 
    We introduced Pro Line Fusion TM as our next generation of avionics for the business jet market. A new avionics solution that combines the success of Pro Line 21 with key technological advancements, Pro Line Fusion provides an empowering human interface and extensive situational awareness, while offering information enabled capabilities and flexible, adaptable integration.
 
    Bombardier selected Rockwell Collins as the avionics systems integrator for its new Global Vision TM flight deck for Global 5000 TM and Global Express XRS TM aircraft. This award marks the debut of our avionics in long-range and ultra long-range business jets as well as the debut of Pro Line Fusion™, a new avionics offering featuring the most advanced flight deck technology available. The initial offering will feature high resolution 15-inch diagonal LCD displays working in concert with Head-Up Guidance Systems (HGS™), graphical flight planning, Synthetic-Enhanced Vision and Rockwell Collins’ award-winning MultiScan™ Hazard Detection system.
Customers; Sales and Marketing
We serve a broad range of customers worldwide, including the U.S. Department of Defense, U.S. Coast Guard, civil agencies, defense contractors, foreign ministries of defense, manufacturers of commercial air transport, business and regional aircraft, commercial airlines, and fractional and other business jet operators. We market our systems, products and services directly to Government Systems and Commercial Systems customers through an internal marketing and sales force. In addition, we utilize a worldwide dealer network to distribute our products and international sales representatives to assist with international sales and marketing. In 2007, various branches of the U.S. Government accounted for 36% of our total sales.
Our largest customers have substantial bargaining power with respect to price and other commercial terms. Although we believe that we generally enjoy good relations with our customers, the loss of all or a substantial portion of our sales to any of our large volume customers for any reason, including the loss of contracts, bankruptcy, reduced or delayed customer requirements or strikes or other work stoppages affecting production by these customers, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Competition
We operate in a highly competitive environment. Principal competitive factors include total cost of ownership, product and system performance, quality, service, warranty and indemnification terms, technology, design engineering capabilities, new product innovation and timely delivery. We compete worldwide with a number of United States and international companies, including approximately ten principal competitors in each of our Government Systems and Commercial Systems businesses. Many of these competitors are also our suppliers or customers on some of our programs. Some of our principal competitors include Honeywell International, Inc., Thales S.A., Panasonic, Raytheon Co., Harris Corp., BAE Systems Aerospace, Inc., General Dynamics Corporation, L3 Communications, Inc., The Boeing Company and Northrop Grumman Corp. Several of our competitors are significantly larger than us in terms of resources and market share, and can offer a broader range of products. Some of our competitors have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas. In addition, some of our competitors offer avionics and communications solutions with fewer features and lower prices that may compete with our solutions. As a result, these competitors may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or may be able to devote greater resources to the development, promotion and sale of their products. Furthermore, competitors who have greater financial resources may be better able to provide a broader range of financing alternatives to their customers in connection with sales of their products.
Industry consolidation has had a major impact on the competitive environment in which we operate. Over the past several years, our competitors have undertaken a number of mergers, alliances and realignments that have contributed to a very dynamic competitive landscape. During the past three years, we have completed five acquisitions and entered into several strategic alliances to improve our competitive position and expand our market reach.
Raw Materials, Supplies and Working Capital
We believe we have adequate sources for the supply of raw materials and components for our manufacturing and service needs with suppliers located around the world. Electronic components and other raw materials used in the manufacture of our products are generally available from several suppliers. We continue to work with our supply base for raw materials and components to ensure an adequate source of supply, utilizing strategic alliances, dual sourcing, identification of substitute or alternate parts that meet performance requirements and life-time buys. These life-time buys involve purchases of multiple years of supply in order to meet production and service requirements over the life span of a product. Although historically we have not experienced any significant difficulties in obtaining an adequate supply of raw materials and components necessary for our manufacturing operations or service needs, the loss of a significant supplier or the inability of a supplier to meet performance and quality specifications or delivery schedules could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our investment in inventory is a significant part of our working capital and historically we have maintained sufficient inventory to meet our customers’ requirements on a timely basis. This investment includes production stock, finished goods, spare parts and goods on consignment with airlines. Our accounts receivable also constitute a significant part of our working capital. Accounts receivable includes unbilled receivables related to sales recorded under the percentage-of-completion method of accounting that have not been billed to customers in accordance with applicable contract terms. The critical accounting policies involving inventory valuation reserves and long-term contracts are discussed under the caption Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2007 Annual Report.

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Backlog
The following table summarizes our backlog (in billions):
                 
    September 30  
    2007     2006  
Commercial Systems
  $ 1.1     $ 0.9  
Government Systems:
               
Funded Orders
    2.5       2.5  
Unfunded Orders
    0.3       0.3  
 
           
Total Backlog
  $ 3.9     $ 3.7  
 
           
Our backlog represents the aggregate of the sales price of orders received from customers, but not recognized as revenue, and excludes unexercised options. Although we believe that the orders included in backlog are firm, most of our backlog involves orders that can be modified or terminated by the customer. Our backlog includes approximately $1.8 billion of orders not expected to be filled by us in 2008.
Joint Ventures
Joint ventures, strategic investments and other cooperative arrangements are part of our business strategies to broaden the market for our products and develop new technologies. We currently have interests in several non-majority owned joint ventures.
We have a 50% ownership interest in each of the following:
    Data Link Solutions LLC (DLS), a joint venture with BAE Systems, plc, for joint pursuit of the worldwide military data link market;
 
    Vision Systems International, LLC (VSI), a joint venture with Elbit Systems, Ltd., for joint pursuit of helmet mounted cueing systems for the worldwide military fixed wing marketplace;
 
    Integrated Guidance Systems LLC (IGS), a joint venture with Honeywell International, Inc., for joint pursuit of the development of weapons guidance and navigation solutions; and
 
    Quest Flight Training Limited, a joint venture with Quadrant Group plc, which provides aircrew training services primarily for the United Kingdom Ministry of Defence.
Highlights for our Joint Ventures in 2007 included:
    DLS and an industry team successfully demonstrated Multifunctional Information Distribution System – Joint Tactical Radio System (MIDS JTRS) capabilities. The demonstration involved a MIDS-JTRS form-fit terminal interfacing with a legacy MIDS Low Volume Terminal (LVT) radio and a Tactical Air Navigation (TACAN) beacon simulator. MIDS JTRS provides an incremental path for migration to an Software Communications Architecture (SCA) compliant architecture and adds three JTRS channels within the MIDS-LVT form factor, while maintaining plug-and-play backward compatibility with the MIDS-LVT for Link 16 and TACAN capabilities. The three additional channels will provide the capability to run other advanced networking waveforms such as Tactical Targeting Network Technology (TTNT), Wideband Networking Waveform, Soldier Radio Waveform, and Mobile User Objective System. DLS is currently developing design specifications and initial hardware for TTNT, and is expecting a contract award in the near future to complete the design, integration, and qualification of this early networking waveform onto MIDS JTRS hardware. The initial host platforms for the new radio are the U.S. Navy F/A-18 and U.S. Air Force Battlefield Airborne Communications Node (BACN).

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    A Helmet Mounted Display System (HMDS) made by VSI flew for the first time on an F-35 Joint Strike Fighter aircraft. The HMDS provides critical flight information to the pilot throughout the entire mission. In addition to standard HMD capabilities, such as extreme off-axis targeting and cueing offered on VSI’s other HMDs, Joint Helmet Mounted Cueing System (JHMCS) and Display & Sight Helmet (DASH), this system fully utilizes the advanced avionics architecture of the F-35. The Joint Strike Fighter’s HMDS is the industry’s lightest binocular HMD with fully integrated night vision capability. The HMDS provides the pilot video with imagery in day or night conditions combined with precision symbology to give the pilot unprecedented situational awareness and tactical capability. Integration of the Joint Strike Fighter HMDS’ precision head tracking to the JSF’s distributed night vision capability creates a sphere of night vision surrounding the airplane resulting in the innovative ability for the pilot to see through the airplane. Also, by virtue of precise head tracking capability and low latency graphics processing, it provides the pilot with a virtual heads-up display (HUD). As a result, the F-35 is the first tactical fighter jet in 50 years to fly without a HUD.
 
    IGS introduced the IGS-200, a deeply integrated guidance and navigation system. This product is G-hardened for artillery, guidance or other applications, and is the first in a family of integrated products being developed. This deeply integrated guidance system is housed in a lightweight, rugged, low-power package that meets the demands of the military’s gun-hardened projectile and missile applications. Prototypes have demonstrated survivability, having been successfully gun-launched and tested to operate in high-G environments on multiple weapon systems.
Acquisitions and Dispositions
We continually consider various business opportunities, including strategic acquisitions and alliances, licenses and marketing arrangements, and we review the prospects of our existing businesses to determine whether any of them should be modified, sold or otherwise discontinued.
We completed five acquisitions in the past three years to augment our internal growth plans. These acquisitions were:
    satellite intelligence products and software applications: the August 2007 acquisition of Information Technology & Applications Corporation;
 
    software applications: the September 2006 acquisition of Anzus, Inc.;
 
    digital communications and networking technology: the September 2006 acquisition of IP Unwired Inc.;
 
    visual systems for military and commercial simulation: the May 2006 acquisition of certain assets of Evans & Sutherland Computer Corporation; and
 
    military aviation electronics: the April 2005 acquisition of TELDIX GmbH.
In September 2006, we completed the disposition of our 50% interest in Rockwell Scientific Company LLC to Teledyne Brown Engineering, Inc.
Additional information relating to our acquisitions and disposition is contained in Note 3 and Note 8, respectively, of the Notes to Consolidated Financial Statements in the 2007 Annual Report.
Research and Development
We have significant research, development, engineering and product design capabilities. At September 30, we employed approximately 5,200 engineers.

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Amounts attributed to our research and development activities are as follows (in millions):
                         
    2007     2006     2005  
Customer-funded 1
  $ 480     $ 443     $ 348  
Company-funded
    347       279       243  
 
                 
Total
  $ 827     $ 722     $ 591  
 
                 
 
1   Customer-funded research and development includes activities relating to the development of new products and the improvement of existing products for which we are reimbursed by our customers.
Intellectual Property
We own numerous United States and foreign patents and have numerous pending patent applications, including patents and patent applications purchased in our acquisitions. We also license certain patents relating to our manufacturing and other activities. While in the aggregate we consider our patents and licenses important to the operation of our business, we do not consider any individual patent or license to be of such importance that the loss or termination of any one patent or license would materially affect us.
Rockwell Automation, Inc. (Rockwell) continues to own the “Rockwell” name. In connection with our spin-off from Rockwell in 2001, we were granted the exclusive right to continue to use the Rockwell Collins name for use in our business other than in connection with the Rockwell Automation business or industrial automation products. This exclusive right would terminate following certain change of control events applicable to us as described in our distribution agreement with Rockwell.
Employees
As of September 30, 2007, we had approximately 19,500 employees. Approximately 2,350 of our employees in the United States are covered by collective bargaining agreements. Collective bargaining agreements expire in May 2008 with each of (1) International Brotherhood of Electrical Workers, Local Union No. 1362, (2) International Brotherhood of Electrical Workers, Local Union No. 1634, and (3) International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, Local Union No. 787, which as of September 30, 2007, covered in the aggregate 2,120 employees located throughout the United States. Failure to reach new agreements with these bargaining units could result in work stoppages which could adversely affect our business, financial condition, operating results and cash flows.
Cyclicality and Seasonality
The avionics and communications markets in which we sell our products are, to varying degrees, cyclical and have experienced periodic downturns. For example, markets for our commercial aviation electronic products have experienced downturns during periods of slowdowns in the commercial airline industry and during periods of weak conditions in the economy in general, as demand for new aircraft generally declines during these periods. Although we believe that our Government Systems business and aftermarket demand for many of our products reduces our exposure to these business downturns, we may experience downturns in the future. Our Government Systems business is also subject to some cyclicality primarily as a result of U.S. Government defense budget cycles.
Our business tends to be seasonal with our fourth quarter usually producing relatively higher sales and cash flow and our first quarter usually producing relatively lower sales and cash flow. A large part of this seasonality variance is attributable to our Government Systems business and relates to the U.S. Government procurement cycle.
Regulatory Matters
As a defense contractor, our contract costs are audited and reviewed on a continual basis by the Defense Contract Audit Agency. Audits and investigations are conducted from time to time to determine if our performance and administering of our U.S. Government contracts are compliant with applicable contractual requirements and procurement regulations and other applicable Federal statutes and regulations. Under present U.S. Government procurement regulations, if indicted or adjudged in violation of procurement or other Federal civil laws, a contractor,

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such as us, could be subject to fines, penalties, repayments or other damages. U.S. Government regulations also provide that certain findings against a contractor may lead to suspension or debarment from eligibility for awards of new U.S. Government contracts for up to three years.
The sale, installation and operation of our products in commercial aviation applications is subject to continued compliance with applicable regulatory requirements and future changes to those requirements. In the U.S., our commercial aviation products are required to comply with Federal Aviation Administration regulations governing production and quality systems, airworthiness and installation approvals, repair procedures and continuing operational safety. Some of our products, such as radio frequency transmitters and receivers, must also comply with Federal Communications Commission regulations governing authorization and operational approval of telecommunications equipment.
Internationally, similar requirements exist for airworthiness, installation and operational approvals. These requirements are administered by the national aviation authorities of each country and, in the case of Europe, coordinated by the European Joint Aviation Authorities. Many countries also impose specific telecommunications equipment requirements, administered through their national aviation authorities or telecommunications authorities. In Europe, approval to import products also requires compliance with European Commission directives, such as those associated with electrical safety, electro-magnetic compatibility, the use of metric units of measurement and restrictions on the use of lead.
Products already in service may also become subject to mandatory changes for continued regulatory compliance as a result of any identified safety issue, which can arise from an aircraft accident, incident or service difficulty report.
Our products and technical data are controlled for export and import under various regulatory agencies. Audits and investigations by these agencies are a regular occurrence to ensure compliance with applicable Federal statutes and regulations. Violations, including as a successor to an acquired business, can result in fines and penalties assessed against the corporation as well as individuals, and the most egregious acts may result in a complete loss of export privileges.
Although we do not have any significant regulatory action pending against us, any such action could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Environmental Matters
Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes, and other activities affecting the environment have had and will continue to have an impact on our manufacturing operations. To date, compliance with environmental requirements and resolution of environmental claims have been accomplished without material effect on our liquidity and capital resources, competitive position or financial condition. We believe that our expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material adverse effect on our business or financial condition, but could possibly be material to the results of operations or cash flows of any one period. Additional information on environmental matters is contained in Note 20 of the Notes to Consolidated Financial Statements in the 2007 Annual Report.
Geographic Information
Our principal markets outside the United States are in France, Canada, the United Kingdom, Australia, Japan, Germany, Israel, Singapore, China, India, Mexico and Brazil. In addition to normal business risks, operations outside the United States are subject to other risks, including political, economic and social environments, governmental laws and regulations, and currency revaluations and fluctuations.
Selected financial information by major geographic area for each of the three years in the period ended September 30, 2007 is contained in Note 23 of the Notes to Consolidated Financial Statements in the 2007 Annual Report.

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Item 1A. Risk Factors .
Our business, financial condition, operating results and cash flows can be impacted by a number of factors, many of which are beyond our control, including but not limited to those set forth below and elsewhere in this Annual Report on Form 10-K, any one or more of which could cause our results to vary materially from recent results or from our anticipated future results.
International conflicts and terrorism may adversely affect our business.
International conflicts such as the war in Iraq, political turmoil in the Middle and Far East and the possibility of future terrorist attacks cause significant uncertainty with respect to U.S. and other business and financial markets and may adversely affect our business. These international conflicts also affect the price of oil, which has a significant impact on the financial health of our air transport and regional customers. Although our Government Systems business may experience greater demand for its products as a result of increased government defense spending, factors arising (directly or indirectly) from international conflicts or terrorism which may adversely affect our business include reduced aircraft build rates, upgrades, maintenance and spending on discretionary products such as in-flight entertainment, as well as increases in the cost of property and aviation products insurance and increased restrictions placed on our insurance policies. The war in Iraq creates the risk that our Government Systems’ customers may need to reprogram funding from our existing business to pay for war-related activities. Furthermore, we currently hold only nominal insurance related to the effects of terrorist acts on our assets and our aircraft products.
We depend to a significant degree on U.S. government contracts, which are subject to unique risks.
In 2007, 36% of our sales were derived from United States government contracts. In addition to normal business risks, our supply of systems and products to the United States government is subject to unique risks which are largely beyond our control. These risks include:
    dependence on Congressional appropriations and administrative allotment of funds;
 
    the ability of the U.S. government to terminate, without prior notice, partially completed government programs and contracts that were previously authorized;
 
    changes in governmental procurement legislation and regulations and other policies which may reflect military and political developments;
 
    significant changes in contract scheduling or program structure, which generally result in delays or reductions in deliveries;
 
    intense competition for available United States government business necessitating increases in time and investment for design and development;
 
    difficulty of forecasting costs and schedules when bidding on developmental and highly sophisticated technical work;
 
    changes over the life of United States government contracts, particularly development contracts, which generally result in adjustments of contract prices; and
 
    claims based on United States government work, which may result in fines, the cancellation or suspension of payments or suspension or debarment proceedings affecting potential further business with the United States government.

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Our business is heavily concentrated in the aviation industry.
          As a provider of products and services to the aviation industry, we are significantly affected by the overall economic condition of that industry. The aviation industry is historically cyclical.
          Our business, financial condition and results of operations may be adversely impacted, among other things, by the following:
    reductions in demand for aircraft and delayed aircraft delivery schedules;
 
    deterioration in the financial condition of some of our existing and potential customers, as well as airlines currently in bankruptcy;
 
    reductions in the need for, or the deferral of, aircraft maintenance and repair services and spare parts support;
 
    retirement of older generation aircraft, resulting in fewer retrofits and less demand for services for those aircraft; and
 
    continued historically high fuel costs.
New airspace management technologies may impact future sales.
The aerospace industry is experiencing a global transition from traditional communications, navigation, surveillance and air traffic control systems to air traffic management systems utilizing satellite-based technologies that will allow pilots to fly at desired paths and speeds selected in real time, while still complying with instrument flight regulations. The transition to these technologies will require the use of digital communications systems, global positioning system navigation, satellite surveillance techniques and ground surveillance systems. These technologies are expected to result in more direct and efficient flight routes, fewer flight delays and reduced airport congestion. Although we believe that we are well positioned to participate in this market evolution, our ability to capitalize on the transition to these airspace management technologies is subject to various risks, including:
    delays in the development of the necessary satellite and ground infrastructure by U.S. and foreign governments;
 
    delays in adopting national and international regulatory standards;
 
    competitors developing better products;
 
    failure of our product development investments in communications, navigation and surveillance products that enable airspace management technologies to coincide with market evolution to, and demand for, these products; and
 
    the ability and desire of customers to invest in products enabling airspace management technologies.
We derive a significant portion of our revenues from international sales and are subject to the risks of doing business outside the United States.
In 2007, revenues from products and services exported from the U.S. or manufactured and serviced abroad were 32% of our total sales. We expect that international sales will continue to account for a significant portion of our total sales. As a result, we are subject to risks of doing business internationally, including:
    laws, regulations and policies of non-U.S. governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad;

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    changes in regulatory requirements, including imposition of tariffs or embargoes, export controls and other trade restrictions and antitrust and data privacy requirements;
 
    uncertainties and restrictions concerning the availability of funding, credit or guarantees;
 
    import and export licensing requirements and regulations;
 
    uncertainties as to local laws and enforcement of contract and intellectual property rights; and
 
    rapid changes in government, economic and political policies, political or civil unrest or the threat of international boycotts or U.S. anti-boycott legislation.
We have made, and expect to continue to make, strategic acquisitions that involve significant risks and uncertainties.
We completed five acquisitions in the last three years and we intend to enter into acquisitions in the future in an effort to enhance shareowner value. Acquisitions involve a certain amount of risks and uncertainties such as:
    the difficulty in integrating newly-acquired businesses and operations in an efficient and cost-effective manner and the risk that we encounter significant unanticipated costs or other problems associated with integration;
 
    the challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions;
 
    the risk that our markets do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in those markets;
 
    the risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties;
 
    the potential loss of key employees of the acquired businesses; and
 
    the risk of diverting the attention of senior management from our existing operations.
We enter into fixed-price contracts that could subject us to losses in the event that we have cost overruns.
During 2007, approximately 89% of our total sales were from, and a significant portion of our anticipated future sales will be from, firm, fixed-price contracts. This allows us to benefit from cost savings, but it carries the burden of potential cost overruns since we assume all of the cost risk. If our initial estimates are incorrect, we can incur losses on these contracts. These fixed-price contracts can expose us to potentially large losses because the customer may compel us to complete a project or, in the event of a termination for default, pay the entire incremental cost of its replacement by another provider regardless of the size of any cost overruns that occur over the life of the contract. Because many of these projects involve new technologies and applications and can last for years, unforeseen events, such as technological difficulties, fluctuations in the price of raw materials, problems with subcontractors and cost overruns, can result in the contractual price becoming less favorable or even unprofitable to us over time. Furthermore, if we do not meet project deadlines or specifications, we may need to renegotiate contracts on less favorable terms, be forced to pay penalties or liquidated damages or suffer major losses if the customer exercises its right to terminate. In addition, some of our contracts have provisions relating to cost controls and audit rights, and if we fail to meet the terms specified in those contracts we may not realize their full benefits. Our results of operations are dependent on our ability to maximize our earnings from our contracts. Lower earnings caused by cost overruns could have an adverse impact on our financial condition, operating results and cash flows.
Costs of certain employee and retiree benefits may continue to rise.
Over the last few years, we have experienced significant volatility in the costs related to medical and pension benefits. Although we have taken action seeking to contain this cost volatility, including making material changes to these plans, there are risks that our costs for these benefits will increase as a result of:
    continued increases in medical costs related to current employees due to increased usage of medical benefits and medical inflation in the United States;

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    the effect declines in the stock and bond markets have on the performance of our pension plan assets; and
 
    potential reductions in the discount rate used to determine the present value of our benefit obligations.
Tax law changes expected to impact our effective tax rate.
Our effective tax rate has been lower than the statutory tax rate primarily as a result of the tax benefits derived from the Research and Development Tax Credit (“R&D Tax Credit”), which provides a tax benefit on certain incremental R&D expenditures, the Extraterritorial Income Exclusion (“ETI”), which provided through December 31, 2006, a tax benefit on export sales, and the Domestic Manufacturing Deduction under Section 199 (“Domestic Manufacturing Deduction”), which provides a tax benefit on U.S. based manufacturing.
The American Jobs Creation Act of 2004 (the “Act”) repealed and replaced the ETI with a new deduction for income generated from qualified production activities by U.S. manufacturers. The ETI export tax benefit completely phased out December 31, 2006 and the Domestic Manufacturing Deduction benefit is being phased in through fiscal 2010. As a result, the Act is expected to have an adverse impact on our effective tax rate for years 2008 through 2010.
The R&D Tax Credit is set to expire effective December 31, 2007. Assuming the R&D Tax Credit or a tax benefit equivalent to the R&D Tax Credit is not extended beyond December 31, 2007, a loss of the R&D Tax Credit would have an adverse impact on our effective tax rate beginning in 2008.
Cautionary Statement
This Annual Report on Form 10-K, and documents that are incorporated by reference in this Annual Report on Form 10-K, contain statements, including certain projections and business trends, that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the potential impacts of geopolitical events; the financial condition of our customers (including major U.S. airlines); the health of the global economy; the continued recovery of the commercial aerospace industry and the continued support for military transformation and modernization programs; delays related to the award of domestic and international contracts; the potential adverse impact of oil prices on the commercial aerospace industry; the cost of the global war on terrorism on U.S. government military procurement expenditures and program budgets; changes in domestic and foreign government spending, budgetary and trade policies adverse to our businesses; market acceptance of our new and existing technologies, products and services; reliability of and customer satisfaction with our products and services; favorable outcomes on or potential cancellation or restructuring of contracts, orders or program priorities by our customers; recruitment and retention of qualified personnel; customer bankruptcies; risk of a labor strike in fiscal year 2008 as collective bargaining agreements expire in May 2008; performance of our suppliers and subcontractors; risks inherent in fixed price contracts, particularly the risk of cost overruns; risk of significant disruption to air travel; our ability to execute to our internal performance plans such as our productivity improvement and cost reduction initiatives; achievement of our acquisition and related integration plans; continuing to maintain our planned effective tax rates, including the risk that Congress will not enact research and development tax credit legislation applicable to all of fiscal year 2008; our ability to develop contract compliant systems and products and satisfy our contractual commitments; risk of fines and penalties related to noncompliance with export control regulations; risk of asset impairments; government claims related to our pension plan freeze; our ability to win new business and convert those orders to sales within the fiscal year in accordance with our annual operating plan; and the uncertainties of the outcome of litigation, as well as other risks and uncertainties, including but not limited to those detailed herein and from time to time in our Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof.
Item 1B. Unresolved Staff Comments.
None

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Item 2. Properties .
As of September 30, 2007, we operated 16 manufacturing facilities throughout the United States and one manufacturing facility each in Mexico, France, Germany and the United Kingdom. The Company also had engineering facilities, sales offices, warehouses and service locations in approximately 20 countries around the world. These facilities have aggregate floor space of approximately 6.3 million square feet, substantially all of which is in use. Of this floor space, approximately 63% is owned and approximately 37% is leased. There are no major encumbrances on any of our plants or equipment, other than financing arrangements which in the aggregate are not significant. In the opinion of management, our properties have been well maintained, are in sound operating condition and contain all equipment and facilities necessary to operate at present levels. A summary of floor space of these facilities at September 30, 2007 is as follows:
                         
    Owned     Leased        
    Facilities     Facilities      Total   
Location   (in thousands of square feet)  
United States
    3,640       1,937       5,577  
Europe
    329       196       525  
Canada and Mexico
          76       76  
Asia Pacific
          121       121  
South America
          7       7  
 
                 
Total
    3,969       2,337       6,306  
 
                 
                         
    Owned     Leased        
    Facilities     Facilities      Total   
Type of Facility   (in thousands of square feet)  
Manufacturing
    1,937       721       2,658  
Sales, engineering, service and general office space
    2,032       1,616       3,648  
 
                 
Total
    3,969       2,337       6,306  
 
                 
We have facilities with a total of at least 100,000 square feet in the following cities: Cedar Rapids, Iowa (2,750,000 square feet), Richardson, Texas (360,000 square feet), Melbourne, Florida (337,000 square feet), Heidelberg, Germany (240,000 square feet), San Jose, California (225,000 square feet), Irvine, California (220,000 square feet), Tustin, California (216,000 square feet), Coralville, Iowa (180,000 square feet), Salt Lake City, Utah (132,000 square feet), Sterling, Virginia (130,000 square feet), Toulouse, France (130,000 square feet) and Mexicali, Mexico (105,000 square feet). Most of our facilities are generally shared for the benefit of our Government Systems and Commercial Systems businesses. One owned facility with 77,000 total square feet of space is currently vacant.
Certain of our facilities, including those located in California and Mexicali, Mexico, are located near major earthquake fault lines. We maintain earthquake insurance with a deductible of five percent of the insured values with respect to these facilities. We also maintain property insurance for wind damage, including hurricanes and tornados, for our facilities. This insurance covers physical damage to property and any resulting business interruption. All losses are subject to a $5 million deductible with certain exceptions that could affect the deductible.
Item 3. Legal Proceedings.
Various lawsuits, claims and proceedings have been or may be instituted or asserted against us relating to the conduct of our business, including those pertaining to product liability, intellectual property, environmental, safety and health, exporting or importing, contract, employment and regulatory matters. Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, management believes the disposition of matters that are pending or asserted will not have a material adverse effect on our business or financial condition, but could possibly be material to the results of operations or cash flows of any one quarter.

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Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth quarter of 2007.
Item 4A. Executive Officers of the Company.
The name, age, office and position held with us, and principal occupations and employment during the past five years of each of our executive officers as of November 13, 2007 are as follows:
         
Name, Office and Position, and Principal Occupations and Employment   Age
Clayton M. Jones — Chairman of the Board of Rockwell Collins since June 2002; President and Chief Executive Officer of Rockwell Collins since June 2001
    58  
 
       
Barry M. Abzug — Senior Vice President, Corporate Development of Rockwell Collins since October 2001
    55  
 
       
Patrick E. Allen — Senior Vice President and Chief Financial Officer of Rockwell Collins since January 2005; Vice President and Controller of Rockwell Collins’ Commercial Systems business from January 2004 to December 2004; Vice President, Finance and Treasurer of Rockwell Collins prior thereto
    43  
 
       
John-Paul E. Besong — Senior Vice-President, e-Business of Rockwell Collins since April 2007; Senior Vice President of e-Business & Lean Electronics of Rockwell Collins from February 2003 to April 2007; Vice President of e-Business & Lean Electronics of Rockwell Collins prior thereto
    54  
 
       
Gary R. Chadick — Senior Vice President, General Counsel and Secretary of Rockwell Collins since July 2001
    46  
 
       
Gregory S. Churchill — Executive Vice President and Chief Operating Officer, Government Systems of Rockwell Collins since May 2002
    50  
 
       
Ronald W. Kirchenbauer — Senior Vice President, Human Resources, of Rockwell Collins since April 2003; Senior Vice President, Employee and Workplace Services, of Cadence Design Systems, Inc. (electronic design technologies and services) prior thereto
    60  
 
       
Nan Mattai — Senior Vice President, Engineering and Technology of Rockwell Collins since November 2004; Vice President, Government Systems Engineering of Rockwell Collins prior thereto
    55  
 
       
Jeffrey A. Moore — Senior Vice President of Operations of Rockwell Collins since April 2006; Acting Senior Vice President of Operations of Rockwell Collins from October 2005 to April 2006; Vice President of Manufacturing Operations of Rockwell Collins prior thereto
    54  
 
       
Robert K. Ortberg — Executive Vice President and Chief Operating Officer, Commercial Systems of Rockwell Collins since October 2006; Vice President and General Manager, Air Transport Systems of Rockwell Collins prior thereto
    47  
 
       
Marsha A. Schulte — Vice President, Finance & Controller of Rockwell Collins since May 2006; Vice President & Controller, Operations of Rockwell Collins from January 2004 to May 2006; Vice President, Strategic & Financial Planning of Rockwell Collins prior thereto
    50  
 
       

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Name, Office and Position, and Principal Occupations and Employment   Age
Kent L. Statler — Executive Vice President, Rockwell Collins Services since October 2006; Senior Vice President and General Manager of Rockwell Collins Services from October 2005 to October 2006; Senior Vice President of Operations of Rockwell Collins from January 2003 to October 2005; Vice President of Manufacturing Operations of Rockwell Collins prior thereto
    42  
 
       
Douglas E. Stenske —Treasurer of Rockwell Collins since February 2004; Senior Director, Risk and Asset Management of Rockwell Collins prior thereto
    41  
There are no family relationships, as defined, between any of the above executive officers and any other executive officer or any director. No officer was selected pursuant to any arrangement or understanding between the officer and any person other than us. All executive officers are elected annually.
PART II
Item 5.   Market for the Company’s Common Equity, Related Stockholder Matters and Company Purchases of Equity Securities.
Market Information
Our common stock, par value $.01 per share, is listed on the New York Stock Exchange and trades under the symbol “COL”. On October 31, 2007, there were 30,769 shareowners of record of our common stock.
The following table sets forth the high and low sales price of our common stock on the New York Stock Exchange—Composite Transactions reporting system during each quarter of our years ended September 30, 2007 and 2006:
                                 
    2007   2006
Fiscal Quarters   High   Low   High   Low
First
  $ 64.31     $ 54.38     $ 48.80     $ 43.25  
Second
    69.91       62.45       56.63       43.49  
Third
    72.28       64.79       60.41       49.13  
Fourth
    74.69       61.25       56.61       51.34  
Dividends
The following table sets forth the cash dividends per share paid by us during each quarter of our years ended September 30, 2007 and 2006:
                 
Fiscal Quarters   2007   2006
First
  $ 0.16     $ 0.12  
Second
    0.16       0.12  
Third
    0.16       0.16  
Fourth
    0.16       0.16  
Based on our current dividend policy, we will pay quarterly cash dividends which, on an annual basis, will equal $0.64 per share. The declaration and payment of dividends by us, however, will be at the sole discretion of our Board of Directors.

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Repurchases
Our Board of Directors has authorized certain repurchases of our common stock. During 2007, we repurchased approximately 4.6 million shares of our common stock at a total cost of $314 million, which resulted in a weighted average cost of $68.31 per share. During 2006, we repurchased approximately 9.3 million shares at a total cost of $492 million, which resulted in a weighted average cost of $52.82 per share. In December 2006, we paid $19 million for the settlement of 4.7 million shares repurchased in September 2006 through an accelerated share repurchase. The payment reduced the dollar value of remaining shares available to be purchased by $19 million.
The following table provides information with respect to purchases made by or on behalf of us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934) of shares of our common stock during the three months ended September 30, 2007:
                             
                            Maximum Number
                            (or Approximate
                    Total Number of   Dollar Value) of
                    Shares Purchased as   Shares that May Yet
                    Part of Publicly   Be Purchased Under
    Total Number of   Average Price   Announced Plans or   the Plans or
Period   Shares Purchased   Paid per Share   Programs   Programs (1)
July 1, 2007 through July 31, 2007
    474,800     $ 72.63       474,800     $312 million
August 1, 2007 through August 31, 2007
    695,000     $ 67.52       695,000     $265 million
September 1, 2007 through September 30, 2007
    360,000     $ 68.69       360,000     $240 million
Total (2)
    1,529,800     $ 69.38       1,529,800     $240 million
 
(1)   On February 13, 2007, we announced that our Board authorized the repurchase of an additional $500 million of our common stock. This authorization has no stated expiration.
 
(2)   In September 2007, we entered into an accelerated share repurchase agreement with an investment bank under which we purchased on October 1, 2007 a total of three million shares of our outstanding common stock for an initial price of $224 million. The initial price will be subject to a purchase price adjustment based on the volume-weighted average price of the Company’s shares, less a discount, over a subsequent period of time that ends not later than December 14, 2007. These share repurchases are excluded from this table since they were purchased after the end of the quarter. After taking these repurchases into account, the remaining balance available for future repurchases is $16 million as of October 1, 2007.
Item 6. Selected Financial Data.
See the information in the table captioned Selected Financial Data in the 2007 Annual Report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
See the discussion and analysis under the caption Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2007 Annual Report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
See the discussion and analysis under the caption Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2007 Annual Report.
Item 8. Financial Statements and Supplementary Data.
See Management’s Report on Internal Control Over Financial Reporting, Reports of Independent Registered Public Accounting Firm, Consolidated Statement of Financial Position, Consolidated Statement of Operations,

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Consolidated Statement of Cash Flows, Consolidated Statement of Shareowners’ Equity and Comprehensive Income, and Notes to Consolidated Financial Statements in the 2007 Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chairman, President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s disclosure control objectives.
We have carried out an evaluation, under the supervision and with the participation of our management, including our Chairman, President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report (the “Evaluation Date”). Based upon that evaluation, our Chairman, President and Chief Executive Officer and Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the Evaluation Date.
Evaluation of Internal Control Over Financial Reporting
Management’s report on internal control over financial reporting as of September 30, 2007 is included within Item 8 of this Annual Report Form 10-K and is incorporated herein by reference. The report of Deloitte & Touche LLP on management’s assessment and the effectiveness of internal control over financial reporting is included within Item 8 of this Annual Report Form 10-K and is incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
See the information under the captions Election of Directors, Information as to Nominees for Directors and Continuing Directors and Section  16(a) Beneficial Ownership Reporting Compliance in the 2008 Proxy Statement. See also the information with respect to executive officers of the Company under Item 4A of Part I.
No nominee for director was selected pursuant to any arrangement or understanding between the nominee and any person other than us pursuant to which such person is or was to be selected as a director or nominee.

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The members of the Audit Committee of our board of directors are: Joseph F. Toot, Jr., Chris A. Davis and Andrew J. Policano. The board of directors has determined that all these members are “independent” as defined under applicable SEC and New York Stock Exchange rules and that Mr. Toot and Ms. Davis are “audit committee financial experts”. The Board’s affirmative determination with respect to Mr. Toot was based upon his extensive experience as a chief executive officer of a public company in actively supervising chief financial officers and his extensive audit committee experience. The Board’s affirmative determination with respect to Ms. Davis was based upon her education and more than twenty years in chief financial officer positions of public companies and her extensive audit committee experience.
We have adopted a handbook entitled Rockwell Collins Standards of Business Conduct and we have supporting policies covering standards of business conduct and conflicts of interest (collectively, the “code of ethics”). The code of ethics applies to our Chief Executive Officer, Chief Financial Officer, Vice President, Finance & Controller (who serves as our principal accounting officer), as well as to all of our other employees and to the members of our Board of Directors. The code of ethics is publicly available on our website at www.rockwellcollins.com . If we make any amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the code applicable to our Chief Executive Officer, Chief Financial Officer or principal accounting officer requiring disclosure under applicable SEC rules, we intend to disclose the nature of such amendment or waiver on our website.
Item 11. Executive Compensation.
See the information under the captions Compensation of Directors, Executive Compensation, Compensation Discussion and Analysis and Compensation Committee Report in the 2008 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
See the information under the captions Voting Securities and Equity Ownership of Certain Beneficial Owners and Management in the 2008 Proxy Statement.
Equity Compensation Plan Information
The following table gives information as of September 30, 2007, about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans:
                         
                    (c) Number of
                    securities remaining
    (a) Number of           available for future
    securities to be issued   (b) Weighted-average   issuance under equity
    upon exercise of   exercise price of   compensation plans
    outstanding options,   outstanding options,   (excluding securities
Plan Category   warrants and rights   warrants and rights   reflected in column (a))
Equity compensation plans approved by security holders (1)
    6,489,510 (2)   $ 30.99       14,839,635 (3)(4)
Equity compensation plans not approved by security holders
  None     None     None  
 
                       
Total
    6,489,510     $ 30.99       14,839,635  

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(1)   Consists of the following equity compensation plans: 2001 Stock Option Plan, 2001 Long-Term Incentives Plan, Directors Stock Plan and 2006 Long-Term Incentives Plan.
 
(2)   Includes 321,240 performance shares, which is the maximum number of shares that can be issued in the future if maximum performance is achieved under existing performance agreements. Also includes 38,330 restricted stock units (RSUs). Such performance shares and RSUs are not included in the weighted average price calculation.
 
(3)   Also includes 4,459,658 shares available under our Employee Stock Purchase Plan (ESPP), which allows employees to have withheld up to 15 percent of their base compensation toward the purchase of our common stock. Shares are purchased each month by participants at 95 percent of the fair market value on the last day of the month pursuant to the ESPP.
 
(4)   Of the 9,929,905 shares available for future grant under the 2006 Long-Term Incentives Plan, each share issued pursuant to an award of restricted stock, restricted stock units, performance shares and performance units counts as 3 shares against this limit.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
See the information under the caption Corporate Governance; Board of Directors and Committees and Certain Transactions and Other Relationships in the 2008 Proxy Statement.
Item 14. Principal Accountant Fees and Services.
See the information under the caption Proposal to Approve the Selection of Auditors in the 2008 Proxy Statement.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
  (a)   Financial Statements, Financial Statement Schedules and Exhibits.
  (1)   Financial Statements (all financial statements listed below are those of the Company and its consolidated subsidiaries and are incorporated by reference in Item 8 of this Form 10-K from the 2007 Annual Report).
 
      Consolidated Statement of Financial Position, as of September 30, 2007 and 2006.
 
      Consolidated Statement of Operations, years ended September 30, 2007, 2006 and 2005.
 
      Consolidated Statement of Cash Flows, years ended September 30, 2007, 2006 and 2005.
 
      Consolidated Statement of Shareowners’ Equity and Comprehensive Income, years ended September 30, 2007, 2006 and 2005.
 
      Notes to Consolidated Financial Statements.
 
      Reports of Independent Registered Public Accounting Firm.
 
  (2)   Financial Statement Schedule for the years ended September 30, 2007, 2006 and 2005.
     
    Page
Report of Independent Registered Public Accounting Firm
  S-1
 
Schedule II — Valuation and Qualifying Accounts
  S-2
      Schedules not filed herewith are omitted because of the absence of conditions under which they are required or because the information called for is shown in the financial statements or notes thereto.

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(3)   Exhibits
     
3-a-1
  Restated Certificate of Incorporation of the Company, as amended, filed as Exhibit 3-a-1 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
3-a-2
  Certificate of Merger effecting name change of the Company from “New Rockwell Collins, Inc.” to “Rockwell Collins, Inc.”, filed as Exhibit 3-a-2 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
3-b-1
  Amended By-Laws of the Company, filed as Exhibit 3-b-1 to the Company’s Form 10-Q for quarter ended June 30, 2004, is incorporated herein by reference.
 
   
4-a-1
  Rights Agreement dated as of June 28, 2001 by and between the Company and Mellon Investor Services LLC, as Rights Agent, filed as Exhibit 4.1 to the Company’s current report on Form 8-K dated July 11, 2001, is incorporated herein by reference.
 
   
4-a-2
  Indenture dated as of November 1, 2001 between the Company and Citibank, N.A., as Trustee, filed as Exhibit 4.b to the Company’s Registration Statement on Form S-3 (No. 333-72914), is incorporated herein by reference.
 
   
4-a-3
  Form of certificate for the Company’s 4 3 / 4 % Notes due 2013, filed as Exhibit 4-a to the Company’s current report on Form 8-K dated November 21, 2003, is incorporated herein by reference.
 
   
*10-a-1
  The Company’s 2001 Long-Term Incentives Plan, as amended by the Company’s Board of Directors on September 8, 2005, filed as Exhibit 10-a-1 to the Company’s Form 10-K for year ended September 30, 2005, is incorporated herein by reference.
 
   
*10-a-2
  Forms of Stock Option Agreements under the Company’s 2001 Long-Term Incentives Plan, filed as Exhibit 10-a-2 to the Company’s Form 10-K for year ended September 30, 2001, are incorporated herein by reference.
 
   
*10-a-3
  Form of Stock Option Agreement under the Company’s 2001 Long-Term Incentives Plan for stock option grants to the non-executive Chairman of the Board of Directors, filed as Exhibit 10-a-3 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-a-4
  Form of Restricted Stock Agreement under the Company’s 2001 Long-Term Incentives Plan for restricted stock grants to the non-executive Chairman of the Board of Directors, filed as Exhibit 10-a-4 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-a-5
  The Company’s 2006 Long-Term Incentives Plan, attached as Appendix B to the Company’s 2006 Proxy Statement dated December 12, 2005, is incorporated herein by reference.
 
   
*10-a-6
  The Company’s 2006 Annual Incentive Compensation Plan for Senior Executives, attached as Appendix C to the Company’s 2006 Proxy Statement dated December 12, 2005, is incorporated herein by reference.
 
   
*10-a-7
  Form of Restricted Stock Unit Award under the Company’s 2006 Long-Term Incentives Plan, filed as Exhibit 10.1 to the Company’s Form 8-K dated February 7, 2006, is incorporated herein by reference.
 
   
*10-a-8
  Forms of Stock Option Agreements under the Company’s 2006 Long-Term Incentives Plan filed as Exhibit 10-a-8 to the Company’s Form 10-K for year ended September 30, 2006, is incorporated herein by reference.
 
   
*10-a-9
  2001 Long-Term Incentives Plan, as amended.
 
   
*10-a-10
  2006 Long-Term Incentives Plan, as amended.
 
   
*10-a-11
  2006 Annual Incentive Compensation Plan for Senior Executives, as amended.

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*10-b-1
  The Company’s Directors Stock Plan, adopted by the Company’s Board of Directors on June 1, 2001 and approved by the Company’s shareowners at the 2002 Annual Meeting of Shareowners, filed as Exhibit 10.2 to the Company’s Registration Statement on Form 10 (File No. 001-16445) (the “Form 10”), is incorporated herein by reference.
 
   
*10-b-2
  Form of Stock Option Agreement under the Company’s Directors Stock Plan, filed as Exhibit 10-b-2 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-b-3
  Form of Restricted Stock Agreement under the Company’s Directors Stock Plan, filed as Exhibit 10-b-3 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-c-1
  The Company’s Annual Incentive Compensation Plan for Senior Executive Officers, adopted by the Company’s Board of Directors on June 1, 2001 and approved by the Company’s shareowners at the 2002 Annual Meeting of Shareowners, filed as Exhibit 10.4 to the Form 10, is incorporated herein by reference.
 
   
*10-d-1
  The Company’s Incentive Compensation Plan, adopted by the Company’s Board of Directors on June 11, 2003, filed as Exhibit 10-d-1 to the Company’s Form 10-Q for quarter ended June 30, 2003, is incorporated herein by reference.
 
   
*10-d-2
  The Company’s Incentive Compensation Plan, as amended.
 
   
*10-e-1
  The Company’s 2001 Stock Option Plan, adopted by the Company’s Board of Directors on June 1, 2001, filed as Exhibit 10.3 to the Form 10, is incorporated herein by reference.
 
   
*10-f-1
  The Company’s Deferred Compensation Plan, adopted by the Company’s Board of Directors on June 13, 2001, filed as Exhibit 10-f-1 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-f-2
  The Company’s Deferred Compensation Plan, as amended.
 
   
*10-f-3
  The Company’s 2005 Deferred Compensation Plan.
 
   
*10-g-1
  The Company’s Non-Qualified Savings Plan, adopted by the Company’s Board of Directors on June 13, 2001, filed as Exhibit 10-g-1 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-g-2
  The Company’s Non-Qualified Savings Plan, as amended.
 
   
*10-g-3
  The Company’s 2005 Non-Qualified Savings Plan.
 
   
*10-h-1
  The Company’s Non-Qualified Pension Plan, adopted by the Company’s Board of Directors on June 13, 2001, filed as Exhibit 10-h-1 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-h-2
  The Company’s Memorandum of Proposed Amendments to the Non-Qualified Pension Plan, adopted by the Company’s Board of Directors on November 6, 2003, filed as Exhibit 10-h-2 to the Company’s Form 10-Q for quarter ended December 31, 2003, is incorporated herein by reference.
 
   
*10-h-3
  The Company’s Non-Qualified Pension Plan, as amended.
 
   
*10-h-4
  The Company’s 2005 Non-Qualified Pension Plan.
 
   
*10-i-1
  The Company’s Master Trust — Deferred Compensation and Non-Qualified Savings and Non-Qualified Pension Plans, adopted by the Company’s Board of Directors on June 13, 2001, filed as Exhibit 10-i-1 to the Company’s Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
 
   
*10-i-2
  The Company’s Master Trust, as amended.

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10-k-1
  Distribution Agreement dated as of June 29, 2001 by and among Rockwell International Corporation, the Company and Rockwell Scientific Company LLC, filed as Exhibit 2.1 to the Company’s current report on Form 8-K dated July 11, 2001, is incorporated herein by reference.
 
   
10-l-1
  Employee Matters Agreement dated as of June 29, 2001 by and among Rockwell International Corporation, the Company and Rockwell Scientific Company LLC, filed as Exhibit 2.2 to the Company’s current report on Form 8-K dated July 11, 2001, is incorporated herein by reference.
 
   
10-m-1
  Tax Allocation Agreement dated as of June 29, 2001 by and between Rockwell International Corporation and the Company, filed as Exhibit 2.3 to the Company’s current report on Form 8-K dated July 11, 2001, is incorporated herein by reference.
 
   
*10-n-1
  Form of Change of Control Agreement between the Company and certain executives of the Company (Three-Year Agreement) as amended.
 
   
*10-n-2
  Schedule identifying executives of the Company who are party to a Change of Control Agreement (Three-Year Agreement).
 
   
10-o-1
  Five-Year Credit Agreement dated as of May 24, 2005 among the Company, the Banks listed therein, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent, filed as Exhibit 99 to the Company’s Form 8-K dated May 24, 2005, is incorporated herein by reference.
 
   
10-o-2
  Amendment No. 1 dated as of March 7, 2007 to the Five-Year Credit Agreement dated as of May 24, 2005 among us, the Banks listed therein, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent, filed as Exhibit 99 to the Company’s Form 8-K dated March 7, 2007, is incorporated herein by reference.
 
   
*10-p-1
  Form of Three-Year Performance Unit Agreement for Persons With a Change of Control Agreement under the Company’s 2001 Long-Term Incentives Plan, filed as Exhibit 10-p-1 to the Company’s Form 10-K for year ended September 30, 2004, is incorporated herein by reference.
 
   
*10-p-2
  Form of Three-Year Performance Unit Agreement for Persons Not With a Change of Control Agreement under the Company’s 2001 Long-Term Incentives Plan, filed as Exhibit 10-p-2 to the Company’s Form 10-K for year ended September 30, 2004, is incorporated herein by reference.
 
   
*10-q-1
  Form of Three-Year Performance Awards Agreement for Persons With a Change of Control Agreement under the Company’s 2001 Long-Term Incentives Plan, filed as Exhibit 10-q-1 to the Company’s Form 10-K for year ended September 30, 2005, is incorporated herein by reference.
 
   
*10-q-2
  Form of Three-Year Performance Awards Agreement for Persons Not With a Change of Control Agreement under the Company’s 2001 Long-Term Incentives Plan, filed as Exhibit 10-q-2 to the Company’s Form 10-K for year ended September 30, 2005, is incorporated herein by reference.
 
   
*10-q-3
  Form of Three-Year Performance Awards Agreement for Persons With a Change of Control Agreement under the Company’s 2006 Long-Term Incentives Plan, filed as Exhibit 10-q-3 to the Company’s Form 10-K for year ended September 30, 2006, is incorporated herein by reference.
 
   
*10-q-4
  Form of Three-Year Performance Awards Agreement for Persons Not With a Change of Control Agreement under the Company’s 2006 Long-Term Incentives Plan , filed as Exhibit 10-q-4 to the Company’s Form 10-K for year ended September 30, 2006, is incorporated herein by reference.
 
   
*10-q-5
  Form of Three-Year Performance Share Agreement for Persons With a Change of Control Agreement under the Company’s 2006 Long-Term Incentives Plan.
 
   
*10-q-6
  Form of Three-Year Performance Share Agreement for Persons Not With a Change of Control Agreement under the Company’s 2006 Long-Term Incentives Plan.
 
   
*10-s-1
  Non-Employee Directors’ Compensation Summary.
 
   
10-t-1
  Purchase Agreement dated August 16, 2005, between Company and UBS AG, London Branch acting through UBS Securities LLC (TRANCHE 1), filed as Exhibit 10.1 to the Company’s Form 8-K dated August 16, 2005, is incorporated herein by reference.

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10-t-2
  Purchase Agreement dated August 16, 2005, between Company and UBS AG, London Branch acting through UBS Securities LLC (TRANCHE 2), filed as Exhibit 10.2 to the Company’s Form 8-K dated August 16, 2005, is incorporated herein by reference.
 
   
10-t-3
  Purchase Agreement dated September 26, 2006, between the Company and Bank of America, N.A., filed as Exhibit 10.1 to the Company’s Form 8-K dated September 26, 2006, is incorporated herein by reference.
 
   
12
  Statement re: Computation of Ratio of Earnings to Fixed Charges.
 
   
13
  Portions of the 2007 Annual Report to Shareowners of the Company incorporated herein by reference.
 
   
21
  List of subsidiaries of the Company.
 
   
23
  Consent of Independent Registered Public Accounting Firm.
 
   
24
  Powers of Attorney authorizing certain persons to sign this Annual Report on Form 10-K on behalf of certain directors and officers of the Company.
 
   
31.1
  Section 302 Certification of Chief Executive Officer.
 
   
31.2
  Section 302 Certification of Chief Financial Officer.
 
   
32.1
  Section 906 Certification of Chief Executive Officer.
 
   
32.2
  Section 906 Certification of Chief Financial Officer.
 
*   Management contract or compensatory plan or arrangement.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  Rockwell Collins, Inc.
 
 
By /s/ Gary R. Chadick    
  Gary R. Chadick   
  Senior Vice President, General Counsel and
Secretary 
 
Dated: November 15, 2007 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on the 15th day of November, 2007 by the following persons on behalf of the registrant and in the capacities indicated.
         
 
  /s/ Clayton M. Jones   Chairman of the Board, President and Chief Executive
     
 
  Clayton M. Jones   Officer (principal executive officer)
 
       
Donald R. Beall *   Director
 
       
Anthony J. Carbone *   Director
 
       
Michael P.C. Carns *   Director
 
       
Chris A. Davis*   Director
 
       
Mark Donegan*   Director
 
       
Andrew J. Policano*   Director
 
       
Cheryl L. Shavers*   Director
 
       
Joseph F. Toot, Jr. *   Director
 
       
 
  /s/Patrick E. Allen   Senior Vice President and Chief Financial Officer
     
 
  Patrick E. Allen   (principal financial officer)
 
       
 
  /s/ Marsha A. Schulte   Vice President, Finance and Controller
     
 
  Marsha A. Schulte   (principal accounting officer)
 
         
*By
  /s/ Gary R. Chadick    
 
 
 
Gary R. Chadick, Attorney-in-fact**
   
 
**   By authority of the powers of attorney filed herewith.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareowners of Rockwell Collins, Inc.
We have audited the consolidated financial statements of Rockwell Collins, Inc. and subsidiaries (the “Company”) as of September 28, 2007 and September 29, 2006, and for each of the three years in the period ended September 28, 2007, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of September 28, 2007, and the effectiveness of the Company’s internal control over financial reporting as of September 28, 2007, and have issued our reports thereon dated October 31, 2007 (which report on the consolidated financial statements expressed an unqualified opinion and included an explanatory paragraph regarding the Company’s change as of the beginning of fiscal 2006 in its method of accounting for employee stock-based compensation, as of the beginning of fiscal 2007 in its measurement date for its defined benefit plans, and as of September 28, 2007 in its method of accounting for the funded status of its defined benefit plans); such consolidated financial statements and reports are included in your 2007 Annual Report to Shareowners and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of the Company, listed in Item 15(a)(2). This consolidated financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
October 31, 2007
S-1

 


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SCHEDULE II
ROCKWELL COLLINS, INC.
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended September 30, 2007, 2006 and 2005
(in millions)
                                         
    Balance at   Charged to                   Balance at
    Beginning   Costs and                   End of
Description   of Year   Expenses   Other   Deductions (a)   Year
Year ended September 30, 2007:
                                       
Allowance for doubtful accounts
  $ 12     $     $     $ (3 )   $ 9  
Allowance for excess and obsolete inventories
    110       21       1 (b)     (33 )     99  
 
                                       
Year ended September 30, 2006:
                                       
Allowance for doubtful accounts
    11       1                   12  
Allowance for excess and obsolete inventories
    103       13       12 (c)     (18 )     110  
 
                                       
Year ended September 30, 2005:
                                       
Allowance for doubtful accounts
    16       1             (6 )     11  
Allowance for excess and obsolete inventories
    102       21       9 (d)     (29 )     103  
 
(a)   Amounts written off.
 
(b)   Amount represents foreign currency fluctuations for non-U.S. dollar denominated balances.
 
(c)   Amount relates to acquisition of the E&S Simulation Business.
 
(d)   Amount relates to the TELDIX GmbH acquisition.
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EXHIBIT INDEX
     
Exhibit    
Number   Description
 
*10-a-9
  2001 Long-Term Incentives Plan, as amended.
 
   
*10-a-10
  2006 Long-Term Incentives Plan, as amended.
 
   
*10-a-11
  2006 Annual Incentive Compensation Plan for Senior Executives, as amended.
 
   
*10-d-2
  The Company’s Incentive Compensation Plan, as amended.
 
   
*10-f-2
  The Company’s Deferred Compensation Plan, as amended.
 
   
*10-f-3
  The Company’s 2005 Deferred Compensation Plan.
 
   
*10-g-2
  The Company’s Non-Qualified Savings Plan, as amended.
 
   
*10-g-3
  The Company’s 2005 Non-Qualified Savings Plan.
 
   
*10-h-3
  The Company’s Non-Qualified Pension Plan, as amended.
 
   
*10-h-4
  The Company’s 2005 Non-Qualified Pension Plan.
 
   
*10-i-2
  The Company’s Master Trust, as amended.
 
   
*10-n-1
  Form of Change of Control Agreement between the Company and certain executives of the Company (Three-Year Agreement), as amended.
 
   
*10-n-2
  Schedule identifying executives of the Company who are party to a Change of Control Agreement (Three-Year Agreement).
 
   
*10-q-5
  Form of Three-Year Performance Share Agreement for Persons With a Change of Control Agreement under the Company’s 2006 Long-Term Incentives Plan.
 
   
*10-q-6
  Form of Three-Year Performance Share Agreement for Persons Not With a Change of Control Agreement under the Company’s 2006 Long-Term Incentives Plan.
 
   
*10-s-1
  Non-Employee Directors’ Compensation Summary.
 
   
12
  Statement re: Computation of Ratio of Earnings to Fixed Charges.
 
   
13
  Portions of the 2007 Annual Report to Shareowners of the Company incorporated herein by reference.
 
   
21
  List of subsidiaries of the Company.
 
   
23
  Consent of Independent Registered Public Accounting Firm.
 
   
24
  Powers of Attorney authorizing certain persons to sign this Annual Report on Form 10-K on behalf of certain directors and officers of the Company.
 
   
31.1
  Section 302 Certification of Chief Executive Officer.
 
   
31.2
  Section 302 Certification of Chief Financial Officer.
 
   
32.1
  Section 906 Certification of Chief Executive Officer.
 
   
32.2
  Section 906 Certification of Chief Financial Officer.
 
*   Management contract or compensatory plan or arrangement.
E-1

 

 

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 90 th 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.

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  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

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      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.

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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).

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  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.

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  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.

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  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 90 th 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

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      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

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      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.

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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,

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      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:

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  (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

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      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.

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  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

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      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.

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Exhibit 10-a-11
2006 ANNUAL INCENTIVE COMPENSATION PLAN
FOR SENIOR EXECUTIVES, AS AMENDED
1. Purpose
          The purposes of the 2006 Annual Incentive Compensation Plan for Senior Executive Officers (the Plan) are to provide a reward and an incentive to the Corporation’s Senior Executive Officers who have contributed and in the future are likely to contribute to the success of the Corporation, to enhance the Corporation’s ability to attract and retain outstanding persons to serve as its Senior Executive Officers and to preserve for the Corporation the benefit of federal income tax deductions with respect to annual incentive compensation paid to Senior Executive Officers.
2. Definitions
  (a)   Applicable Earnings . For any fiscal year, the pre-tax total segment operating earnings of the Corporation, excluding extraordinary items, gain or loss on the disposal of a segment of a business, restructuring charges, income or loss from discontinued operations, cumulative effects of changes in accounting principles, and other events or transactions of an unusual nature or that occur infrequently, all as defined by or determined in accordance with generally accepted accounting principles. Amounts charged or credited to earnings under the ICP shall not be included in determining Applicable Earnings.
 
  (b)   Board of Directors . The Board of Directors of Rockwell Collins.
 
  (c)   Code . The Internal Revenue Code of 1986, as amended from time to time.
 
  (d)   Committee . The Compensation Committee designated by the Board of Directors from among its members who are not eligible to receive an award under the Plan.
 
  (e)   Corporation . Rockwell Collins and its consolidated subsidiaries.
 
  (f)   ICP . The Corporation’s annual Incentive Compensation Plan for executives other than those eligible under this plan.
 
  (g)   Performance Fund . An incentive compensation fund for each fiscal year in which the Plan is applicable from which awards may be made under the Plan, which shall be equal to 1.5% of the Applicable Earnings for that fiscal year.
 
  (h)   Rockwell Collins . Rockwell Collins, Inc., a Delaware corporation.
 
  (i)   Section 409A . Section 409A of the Internal Revenue Code of 1986, as amended, including any regulations and other guidance issued thereunder.
 
  (j)   Senior Executive Officers . Rockwell Collins’ chief executive officer on the last day of each fiscal year and four other executive officers (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended) which the Committee shall designate on or before the last day of the first quarter of that fiscal year. No member of the Corporation’s Board of Directors who is not also an employee of the Corporation shall be eligible to participate in the Plan.
 
  (k)   2005 DCP. Rockwell Collins, Inc. 2005 Deferred Compensation Plan.

 


 

3. Determination of Applicable Earnings and Performance Fund; Allocation of Potential Awards
  (a)   After the end of each fiscal year, the independent certified public accountants who audit the Corporation’s accounts shall compute the Applicable Earnings and the amount of the Performance Fund for that fiscal year. Those computations shall be reported to the Board of Directors, the Committee and other committees as appropriate.
 
  (b)   There shall be allocated from the Performance Fund for each fiscal year potential awards to each of the Senior Executive Officers equal to the following respective percentages of the Performance Fund for that fiscal year:
 
      Chief Executive Officer — 30%
 
      Two Senior Executive Officers — 20% each
 
      Two Other Senior Executive Officers — 15% each
 
      The maximum potential award to any one Senior Executive Officer under this Plan for any fiscal year shall be Ten Million Dollars ($10,000,000).
4. Awards
  (a)   After the computations and reports prescribed under Section 3(a) have been made, the Committee shall determine the amounts, if any, allocated to the Senior Executive Officers pursuant to Section 3(b) to be awarded from the Performance Fund for that fiscal year. The Committee may determine from time to time the form, terms and conditions of awards, including whether and to what extent awards shall be paid in installments.
 
  (b)   Without limiting the generality of Section 4(a), the Committee may, in its sole discretion, reduce the amount of any award made to any Senior Executive Officer from the amount allocated under Section 3(b), taking into account such factors as it deems relevant, including without limitation: (i) the Applicable Earnings; (ii) other significant financial or strategic achievements during the year; (iii) its subjective assessment of each Senior Executive Officer’s overall performance for the year; and (iv) information about compensation practices at other peer group companies for the purpose of evaluating competitive compensation levels so that the Committee may determine that the amount of the annual incentive award is within the targeted competitive compensation range of the Corporation’s executive compensation program. The Committee shall determine the amount of any reduction in a Senior Executive Officer’s award on the basis of the foregoing and other factors it deems relevant and shall not be required to establish any allocation or weighting formula with respect to the factors it considers. In no event shall any Senior Executive Officer’s award under the Plan exceed the amount of the Performance Fund allocated to a potential award to that Senior Executive Officer.
 
  (c)   The Committee shall have no obligation to disclose the full amount of the Performance Fund for any fiscal year. Amounts allocated but not actually awarded to a Senior Executive Officer may not be re-allocated to other Senior Executive Officers or utilized for awards in respect of other years.
 
  (d)   The Corporation shall promptly notify each person to whom an award has been made and pay the award in accordance with the determinations of the Committee.

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  (e)   A cash award may be made with respect to a Senior Executive Officer who has died. Any such award shall be paid to the legal representative or representatives of the estate of such Senior Executive Officer.
 
  (f)   No person who is eligible for an award under the Plan for any fiscal year of the Corporation shall be eligible for an award under any other annual management incentive compensation plan of any of the Corporation’s businesses for that fiscal year.
 
  (g)   Notwithstanding any other provision of this Plan to the contrary, except to the extent that a Senior Executive Officer has elected to defer receipt of his or her award pursuant to the 2005 DCP pursuant to subclause (h) below, any award payable under this Plan will be paid no later than March 15th of the calendar year following the end of the fiscal year to which such award relates.
 
  (h)   Any Senior Executive Officer who is eligible to participate in the 2005 DCP may elect to defer an award under this Plan subject to and in accordance with the terms and conditions of the 2005 DCP. It is intended that any such deferral will only be permitted to the extent that such election to defer payment complies with Section 409A. Rockwell Collins will provide the Senior Executive Officer with the appropriate deferral election form pursuant to which the Senior Executive Officer may make his or her deferral election. Once an employee has elected to defer payment into the 2005 DCP, the deferred amounts, including the Senior Executive Officer’s ability to make a change to that deferral election and his or her right to receive payment of such deferred amounts, will be subject in all regards to the terms and conditions of the 2005 DCP and the requirements of Section 409A generally. Notwithstanding any other provision of this Plan to the contrary, the Corporation makes no representation that the Plan or the 2005 DCP or any amount deferred pursuant to this subclause (h) or the 2005 DCP will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to this Plan or the 2005 DCP.
5. Finality of Determinations
          The Committee shall have the power to administer and interpret the Plan. All determinations, interpretations and actions of the Committee and all actions of the Board of Directors under or in connection with the Plan shall be final, conclusive and binding upon all concerned. Any member of the Committee who, at the time of any proposed award or at the time an award is made, is not an “outside director” as defined for purposes of Code Section 162(m) shall abstain from, and take no part in, the Committee’s action on the award.
6. Amendment of the Plan
          The Board of Directors and the Committee shall each have the power, in its sole discretion, to amend, suspend or terminate the Plan at any time, except that:
  (a)   No such action shall adversely affect rights under an award already made, without the consent of the person affected; and
 
  (b)   Without approval of the shareowners of Rockwell Collins, neither the Board of Directors nor the Committee shall (1) so modify the method of determining the Performance Fund as to increase materially the maximum amount that may be allocated to it or (2) after the first 90 days of any fiscal year, amend the plan in a manner that would, directly or indirectly: (i) change the method of calculating the amount allocated to the Performance Fund for that year; (ii) increase the maximum award payable to any Senior Executive Officer for that year; or (iii) remove the amendment restriction set forth in this sentence with respect to that year.

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7. Miscellaneous
  (a)   The Corporation shall bear all expenses and costs in connection with the operation of the Plan.
 
  (b)   The Corporation, the Board of Directors, the Committee and the officers of the Corporation shall be fully protected in relying in good faith on the computations and reports made pursuant to or in connection with the Plan by the independent certified public accountants who audit the Corporation’s accounts.
8. Effective Date
          The Plan was approved by the Board of Directors on November 17, 2005, and by shareowners of Rockwell Collins on February 7, 2006 . The Plan is effective for fiscal years commencing on or after September 30, 2006. The Plan was amended and restated on September 12, 2007 effective as of September 30, 2006 to reflect changes in respect of Section 409A.

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Exhibit 10-d-2
ROCKWELL COLLINS, INC.
INCENTIVE COMPENSATION PLAN
1. Purposes
          The purposes of the Incentive Compensation Plan (the “Plan”) are to provide a reward and an incentive to employees of the Corporation in managerial, staff or technical capacities who have contributed and in the future are likely to contribute to the success of the Corporation and to enhance the Corporation’s ability to attract and retain outstanding persons to serve in such capacities.
2. Definitions
          For the purpose of the Plan, the following terms shall have the meanings shown:
          (a)  Board of Directors. The Board of Directors of Rockwell Collins.
          (b)  Committee. The Compensation Committee of Rockwell Collins or such other Incentive Compensation Committee as may be designated by the Board of Directors, consisting of members of the Board of Directors who are not eligible to participate in the Plan.
          (c)  Corporation. Rockwell Collins and its subsidiaries.
          (d)  Designated Senior Executives. The CEO, executives reporting directly to the CEO, persons designated as executive officers by the Board and VP/GM of business units.
          (e)  Employees. Persons in the salaried employ of the Corporation (including those on authorized leave of absence) during some part of the fiscal year for which an award is made. Unless he or she is also an employee of the

 


 

Corporation, no member of the Board of Directors shall be eligible to participate in the Plan.
          (f)  Goals. The financial goals and measures for the enterprise established by the Committee for the Plan each fiscal year.
          (g)  Rockwell Collins. Rockwell Collins, Inc.
          (h) Section 409A. Section 409A of the Internal Revenue Code of 1986, as amended, including any regulations and other guidance issued thereunder.
          (i)  Senior Executive Plan. Rockwell Collins’ Annual Incentive Compensation Plan for Senior Executive Officers.
          (j)  Target Incentive. An estimated amount, expressed as a percentage of an eligible Employee’s base earnings, that is targeted to be paid after the end of the Corporation’s fiscal year to such eligible Employee if the Goals are achieved at the targeted performance level.
          (k)  2005 DCP. Rockwell Collins, Inc. 2005 Deferred Compensation Plan.
3. Annual Goals
          (a) Prior to the beginning of the fiscal year, the Committee will consider key enterprise measures; the weighting of the measures; and the threshold, target and maximum performance required for payment of awards as part of the establishment of the Goals for the new fiscal year. The Goals may include performance measures tied to business unit or shared service measures for the Employees assigned to each unit. These measures for the business units or share services will be subject to approval by the Chief Executive Officer.
          (b) Subject to Section 409A, the Committee may review the Goals during the fiscal year and make adjustments as necessary for prior year performance or unforeseen current fiscal year events.

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          (c) After the end of the fiscal year, the Committee will review the Corporation’s level of actual achievement of the key measures relative to the Goals for the year.
          (d) Eligible employees will prepare and review with their supervisors individual goals for each new fiscal year. Performance reviews on these individual goals between eligible Employees and their supervisors may be held during the fiscal year and will be held after the end of the fiscal year to evaluate individual performance.
4. Awards
          (a) The Target Incentive for each eligible Employee shall be established by the Corporation and communicated to the Employee each fiscal year. The Target Incentives for the Designated Senior Executives shall be subject to approval by the Committee.
          (b) The Chief Executive Officer of Rockwell Collins shall submit to the Committee, within two and one-half months after the end of each completed fiscal year, recommendations concerning awards for the completed fiscal year based on enterprise and individual performance evaluation process contemplated in paragraph 3.
          (c) The Committee, in its discretion, following its receipt of a recommendation described in paragraph 4(b), shall determine for the immediately preceding fiscal year (i) the extent to which awards, if any, shall be made; (ii) the total dollars paid or payable for the awards to all eligible Employees under this Plan (excluding amounts payable to Designated Senior Executives, which are independently approved by the Committee); and (iii) the amount of any award payable to each Designated Senior Executive. The CEO is delegated the authority to determine other individual awards consistent with the Committee approved level of funding and general category of participants, for persons below the level of the Designated Senior Executives.

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          (d) The Corporation shall promptly notify each person to whom an award has been made and pay the award in accordance with the determinations of the Committee.
          (e) A cash award may be made with respect to an employee who has died. Any such award shall be paid to the legal representative or representatives of the estate of such employee.
          (f) No unpaid installment of any award shall bear interest.
          (g) No employee who receives an award under the Senior Executive Plan for any fiscal year of the Corporation shall be eligible for award under this Plan for that fiscal year.
          (h) Notwithstanding any other provision of this Plan to the contrary, except to the extent that an employee has elected to defer receipt of his or her award pursuant to the 2005 DCP pursuant to subclause (i) below, any award payable under this Plan will be paid no later than March 15th of the calendar year following the end of the fiscal year to which such award relates.
          (i) Any employee who is eligible to participate in the 2005 DCP may elect to defer an award under this Plan subject to and in accordance with the terms and conditions of the 2005 DCP. It is intended that any such deferral will only be permitted to the extent that such election to defer payment complies with Section 409A. Rockwell Collins will provide the employee with the appropriate deferral election form pursuant to which the employee may make his or her deferral election. Once an employee has elected to defer payment into the 2005 DCP, the deferred amounts, including the employee’s ability to make a change to that deferral election and his or her right to receive payment of such deferred amounts, will be subject in all regards to the terms and conditions of the 2005 DCP and the requirements of Section 409A generally. Notwithstanding any other provision of this Plan to the contrary, the Corporation makes no representation that the Plan or the 2005 DCP or any amount deferred pursuant to subclause (i) or the 2005 DCP will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to this Plan or the 2005 DCP.

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5. Finality of Determinations
          The Committee shall have the power to administer and interpret the Plan. All determinations, interpretations and actions of the Committee or Chief Executive Officer under or in connection with the Plan shall be final, conclusive and binding upon all concerned.
6. Amendment of the Plan
          The Board of Directors and the Committee shall each have the power, in its sole discretion, to amend, suspend or terminate the Plan at any time, except that no such action shall adversely affect rights under an award already made, without the consent of the person affected.
7. Miscellaneous
          (a) A majority of the members of the Committee shall constitute a quorum. The Committee may act by the vote of a majority of a quorum at a meeting, or by a writing or writings signed by a majority of the members of the Committee.
          (b) Notwithstanding any other provisions of the Plan, if a Change of Control (as defined in Article III, Section 13 (I) (1) of Rockwell Collins’ By-Laws) shall occur, then unless prior to the occurrence thereof the Board of Directors shall determine otherwise by vote of at least two-thirds of its members, all unpaid installments of any awards made under the Plan prior to such Change of Control shall forthwith become due and payable.
          (c) The Corporation shall bear all expenses and costs in connection with the operation of the Plan.
8. Effective Date
The Plan became effective as of June 11, 2003. The Plan was amended and restated on September 12, 2007 effective as of January 1, 2005 to reflect changes in respect of Section 409A.

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Exhibit 10-f-2
ROCKWELL COLLINS
DEFERRED COMPENSATION PLAN
The purpose of this Plan is to provide certain specified benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of Rockwell Collins, Inc. and its affiliates. This Plan is unfunded for tax purposes and for purposes of Title I of ERISA.
This Plan is a continuation of the Rockwell International Corporation Deferred Compensation Plan. Effective as of June 29, 2001, Rockwell Collins, Inc. assumed such plan and all liabilities thereunder with respect to the Rockwell Collins Participants (as defined in the Employee Matters Agreement). Such plan has been renamed as the Rockwell Collins Deferred Compensation Plan.
For purposes of retaining “grandfathered” status under Section 409A of the Internal Revenue Code of 1986, as amended, the Plan was amended effective as of January 1, 2005 to limit the Plan to account balances that were earned and vested as of December 31, 2004 (and any earnings deemed credited thereon).
ARTICLE I: DEFINITIONS
1.010 Account means one of the accounts established for the purpose of measuring and determining a Participant’s interest in this Plan, such accounts being the Participant’s Deferral Account and Company Match Account.
1.020 Account Balance means, with respect to each Participant, an account in the records of the Company equal to the sum of the Participant’s:
(a)   Deferral Account balance, and
 
(b)   Company Match Account balance.
The Account Balance (and each underlying balance making up such Account Balance) is a bookkeeping entry only and will be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his designated Beneficiary, pursuant to this Plan.
1.030 Affiliate means:
(a)   any corporation incorporated under the laws of one of the United States of America of which the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of Code §1563);
 
(b)   any partnership or other business entity organized under such laws, of which the Company owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of Code §414(c)); and

 


 

(c)   any other company deemed to be an Affiliate by the Company’s Board of Directors.
1.040 Annual Company Match Amount for any Plan Year means the amount determined in accordance with Section 3.030.
1.050 Annual Deferral Amount means that portion of a Participant’s Base Annual Salary and/or Incentive Compensation which a Participant elects to have deferred, in accordance with Article III, for any one Plan Year. In the event of a Participant’s Retirement, Disability (if deferrals cease in accordance with Section 9.020), death or a Termination of Employment prior to the end of a Plan Year, such year’s Annual Deferral Amount will be the actual amount withheld prior to such event.
1.060 Annual Installment Method means a benefit payment method involving a series of annual installment payments over the number of years selected by the Participant in accordance with this Plan, which will be calculated in the manner set forth in this Section. The Account Balance of the Participant will be determined as of the close of business on the last business day of the calendar year. The annual installment will be calculated by multiplying this balance by a fraction, the numerator of which is one (1), and the denominator of which is the remaining number of annual payments due the Participant. (By way of example, if a Participant were to elect a 10-year payment under the Annual Installment Method, the first payment would be one-tenth (1/10) of the Account Balance, calculated as described in this definition. The following year, the payment would be one-ninth (1/9) of the Account Balance, calculated as described in this definition.) Each annual installment will be paid within the first sixty (60) days of the calendar year following the applicable year.
1.070 Base Annual Salary means the annual cash compensation relating to services performed during any calendar year, whether or not paid in such calendar year or included on the Federal Income Tax Form W-2 for such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, directors fees and other fees, automobile and other allowances (whether or not such allowances are included in the Employee’s gross income) paid to a Participant for employment services rendered. Base Annual Salary will be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Company or any Affiliate and will be calculated to include amounts not otherwise included in the Participant’s gross income under Code §125, 402(e)(3), 402(h), or 403(b), pursuant to plans established by the Company or an Affiliate; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Participant.
1.080 Beneficiary means one or more persons, trusts, estates or other entities, designated in accordance with Article X who or which are entitled to receive benefits under this Plan upon the death of a Participant.

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1.090 Beneficiary Designation Form means the form established from time to time by the Committee or its delegate that a Participant completes, signs and returns to the Committee or its delegate, in order to designate one or more Beneficiaries.
1.100 Board of Directors means the Company’s Board of Directors.
1.110 Change of Control means any of the following occurring at any time after June 29, 2001:
(a)   The acquisition by any individual, entity or group (within the meaning of §13(d)(3) or §14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company, Rockwell or any corporation controlled by the Company or Rockwell or (z) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this Section 1.110; or
 
(b)   Individuals who, as of June 29, 2001, constitute the Board of Directors of the Company (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 Company’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
 
(c)   Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Company Transaction”), in each case, unless, following such Company Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company 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 Company Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more

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    subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Company Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of the Company, of Rockwell or of such corporation resulting from such Company Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Company 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 Company Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Company 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 Company Transaction; or
 
(d)   Approval by the Company’s shareowners of a complete liquidation or dissolution of the Company.
1.120 Code means the Internal Revenue Code of 1986, as from time to time amended.
1.130 Committee means the Compensation Committee of the Board of Directors.
1.140 Company means Rockwell Collins, Inc., a Delaware corporation and its predecessor, Rockwell International Corporation.
1.150 Company Match Account means:
(a)   the sum of all of a Participant’s Annual Company Match Amounts,
 
(b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Company Match Account, and
 
(c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Company Match Account.
1.152 CSSIP Bonus means a payment which is deemed by the Company, as it determines in its sole discretion, to be payable to certain Participants who:
(a)   were active Employees on September 30, 1982 and were, therefore, eligible at that time for possible payment of a bonus (in the discretion of the Company) pursuant to the terms and conditions of the Company’s payroll practice and personnel procedure known as the Collins Significant Service Indemnity Plan (the “CSSIP Program”);
 
(b)   are active Employees both at the time of such determination; and

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(c)   are otherwise eligible at the time of such determination to be paid the said bonus pursuant to the terms and conditions of the said CSSIP Program.
1.155 CSSIP Bonus Deferral means the deferral by a Participant of all of the CSSIP Bonus otherwise payable to him by the Company pursuant to the CSSIP Program.
1.157 CSSIP Bonus Deferral Account means
(a)   the amount of a Participant’s CSSIP Bonus Deferral or, if there should be more than one CSSIP Bonus payable to a Participant by the Company and deferred by the Participant, the sum of the Participant’s CSSIP Bonus Deferrals;
 
(b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020 which are related to such CSSIP Bonus Deferral(s); and
 
(c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such CSSIP Bonus Account.
1.160 Deduction Limitation means the following described limitation on a benefit that may otherwise be distributable pursuant to the provisions of this Plan. Except as otherwise provided, this limitation will be applied to all distributions that are “subject to the Deduction Limitation” under this Plan. If the Company determines in good faith prior to a Change of Control that there is a reasonable likelihood that any compensation paid to a Participant for a taxable year of the Company would not be deductible by the Company solely by reason of the limitation under Code §162(m), then, to the extent deemed necessary by the Company to ensure that the entire amount of any distribution to the Participant pursuant to this Plan prior to the Change of Control is deductible, the Company may defer all or any portion of a distribution under this Plan. Any amounts deferred pursuant to this limitation will continue to be credited/debited with additional amounts in accordance with Section 4.020(b), even if such amount is being paid out in installments. The amounts so deferred and amounts credited thereon will be distributed to the Participant or his Beneficiary (in the event of the Participant’s death) at the earliest possible date, as determined in good faith by the Company, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Company during which the distribution is made will not be limited by §162(m), or if earlier, the effective date of a Change of Control. Notwithstanding anything to the contrary in this Plan, the Deduction Limitation will not apply to any distributions made after a Change of Control.
1.170 Deferral Election means an election made pursuant to Article III by a Participant to defer receipt of a part of his Base Annual Salary or to defer receipt of all or a part of his Incentive Compensation.
1.180 Deferral Election Form means the form established from time to time by the Committee or its delegate that a Participant completes, signs and returns to the Committee or its delegate to make a Deferral Election pursuant to Article III, in order to defer receipt of a part of his Base Annual Salary or to defer receipt of all or a part of his Incentive Compensation.

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1.190 Determination Date which only has applicability with respect to the provisions of Appendix A of this Plan, as such appendix applies to the interests of individuals who were participants in a Predecessor Plan and as it defines the value from time to time of amounts deferred under such Predecessor Plans prior to the Effective Date, means the last day of each calendar year quarter (i.e., March 31 st , June 30 th , September 30 th and December 31 st ).
1.200 Disability means a period of disability during which a Participant qualifies for permanent disability benefits under the Company’s or an Affiliate’s long-term disability plan, or, if a Participant does not participate in such a plan, a period of disability during which the Participant would have qualified for permanent disability benefits, if the Participant had been a participant in such a plan, as determined. If the Company and its Affiliates do not sponsor such a plan, or if they should discontinue sponsoring such a plan, Disability shall be determined by the Committee or its delegate.
1.210 Effective Date means June 1, 2000 for this Plan and means, respectively for Rockwell International Corporation, April 3, 1985.
1.220 Eligible Employee means:
(a)   For Plan Years commencing January 1, 2000 through January 1, 2003, any Employee who is employed in the United States by the Company or an Affiliate whose Base Annual Salary is greater than or equal to $100,000.
 
(b)   For the Plan Year commencing January 1, 2004, any Employee who is employed in the United States by the Company or an Affiliate whose Base Annual Salary for 2004 is greater than or equal to $110,000. Notwithstanding the foregoing, any Employee who was a Participant in the Plan in 2003 is eligible to participate for the Plan Year ending December 31, 2004 even if such Employee’s Base Annual Salary is less than $110,000 for 2004.
1.230 Employee means any person who is employed by the Company or by an Affiliate.
1.240 Employee Matters Agreement means the Employee Matters Agreement dated as of June 29, 2001 Rockwell International Corporation, New Rockwell Collins, Inc. and Rockwell Scientific Company LLC.
1.250 ERISA means the Employee Retirement Income Security Act of 1974, as from time to time amended.
1.260 Exchange Act means the Securities Exchange Act of 1934, as amended.
1.270 Incentive Compensation means any award payable to a Participant under an Incentive Compensation Plan sponsored by the Company or an Affiliate which, but for a Deferral Election under the Plan, would be paid to the Participant and considered to be “wages” for purposes of United States federal income tax withholding.

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1.280 Incentive Compensation Deferral means a deferral by a Participant of part or all of his Incentive Compensation otherwise payable to him with respect to a particular fiscal year of the Company.
1.290 Incentive Compensation Deferral Account means:
(a)   the sum of all of a Participant’s Incentive Compensation Deferrals,
 
(b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b) which are related to such Incentive Compensation Deferral Account, and
 
(c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Incentive Compensation Deferral Account.
1.300 Interest Rate . One-twelfth of the annual interest rate for quarterly compounding that is one hundred and twenty percent (120%) of the “applicable Federal long-term rate” determined by the Secretary of the Treasury pursuant to Code §1274(d), or any successor provision, as applicable for each of the months in the three-month period ending on the last day of each calendar year quarter.
1.310 Measurement Funds means the investment vehicles offered under this Plan which are identified and described in Appendix B, each of whose purpose is to mirror, to the greatest extent reasonably possible, the investment performance of a particular benchmark mutual fund sponsored and offered by Fidelity Investments, each of which benchmark mutual funds is also described in the said Appendix B.
1.320 Named Fiduciary means the Committee, its delegates, the Trustee and, following the occurrence of a Change of Control, the third-party fiduciary described in Section 13.020 of this Plan.
1.330 Non-Qualified Savings Plan means the Rockwell Collins Non-Qualified Savings Plan, as amended from time to time.
1.340 Participant means any (a) Rockwell Collins Participant (as defined in the Employee Matters Agreement) on whose behalf account balances were retained under this Plan effective as of June 29, 2001 and (b) an Eligible Employee:
(1)   who is an employee of Rockwell Collins, Inc. (or one of its Affiliate);
 
(2)   who elects to participate in the Plan;
 
(3)   who signs a Participation Agreement Form and a Beneficiary Designation Form;
 
(4)   whose signed Participation Agreement Form and Beneficiary Designation Form are accepted by the Committee or its delegate;
 
(5)   who commences participation in the Plan; and

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(6)   who has not elected to terminate participation in the Plan.
A spouse or former spouse of a Participant will not be treated as a Participant in the Plan or have an Account Balance under the Plan, even if the spouse or former spouse has an interest in the Participant’s benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.
Notwithstanding any other provision of this Plan to the contrary, no Eligible Employee or any other person, individual or entity shall become a Participant in this Plan on or after the day on which a Change of Control occurs.
1.350 Participation Agreement means a written agreement, as may be amended from time to time, which is provided by an Eligible Employee or Participant to Committee or its delegate and is then accepted and approved by the said Committee or delegate. Each such Participation Agreement will provide for the entire benefit to which such Participant is entitled under the Plan. The Participation Agreement bearing the latest date of acceptance by the Committee or its delegate will supersede all previous such Participation Agreements in their entirety and will govern the Eligible Employee’s or Participant’s entitlement to benefits hereunder. The terms of any such Participation Agreement may be different for a particular Participant and may provide additional benefits not set forth in the Plan or may limit the benefits otherwise provided under the Plan; provided, however, that any such additional benefits or benefit limitations must be agreed to by both the Committee or its delegate and the Participant.
1.360 Plan means this Rockwell Collins Deferred Compensation Plan, which is evidenced by this instrument and by the forms associated with the said instrument, as they may be amended from time to time.
1.370 Plan Year means each twelve-month period ending on the last day of December.
1.380 Predecessor Plan means the deferred compensation arrangements (namely the Rockwell International Corporation Deferred Compensation Plan) which were in effect and applicable to certain of the Participants hereunder immediately prior to the Effective Date of this Plan, as such arrangements were administered during the period preceding such Effective Date, it being specifically understood and herein provided that such Predecessor Plans form parts of this Plan. To the extent a Predecessor Plan remains in effect with respect to a Participant, it will be governed by the terms of this Plan, except as otherwise provided in Appendix A.
1.390 Pre-Retirement Survivor Benefit means the benefit set forth in Article VII.
1.400 Qualified Savings Plan means the Rockwell Collins Retirement Savings Plan, as amended from time to time.
1.410 Retirement , Retire(s) or Retired means, with respect to an Employee, severance from employment with the Company and all of its Affiliates for any reason other than a leave of absence, death or Disability on or after the attainment of his normal retirement or early retirement age.

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1.420 Retirement Benefit means the benefit set forth in Article VI.
1.430 Salary Deferral Account means:
(a)   the sum of all of a Participant’s Annual Salary Deferral Amounts,
 
(b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Salary Deferral Account, and
 
(c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Salary Deferral Account.
1.435 Section 409A means Section 409A of the Code and any regulations and other guidance issued thereunder.
1.440 Short-Term Payout means the payout set forth in Section 5.010 of the Plan.
1.450 Termination Benefit means the benefit set forth in Article VIII.
1.460 Termination of Employment means the severing of a Participant’s employment with the Company and all Affiliates, voluntarily or involuntarily, for any reason other than Retirement, Disability, death or an authorized leave of absence.
1.470- Third-Party Administrator means an independent third party selected by the Trustee and approved by the individual who, immediately prior to a Change of Control, was the Company’s Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the “Ex-CEO”).
1.480 Trust means the master trust established by agreement between the Company and the Trustee, which will be a grantor trust.
1.490 Trustee means Wells Fargo Bank N.A., or any successor trustee of the Trust described in Section 1.480 of this Plan.
1.495 2005 Plan means the Rockwell Collins 2005 Deferred Compensation Plan.
1.500 Unforeseeable Financial Emergency means an unanticipated emergency that is caused by an event beyond the control of the Participant which would result in severe financial hardship to the Participant and which itself results from:
(a)   a sudden and unexpected illness or accident of the Participant or a dependent of the Participant,
 
(b)   a loss of the Participant’s property due to casualty, or

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(c)   such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the discretion of the Committee or its delegate.
ARTICLE II: PARTICIPATION
2.010 Select Group Defined . Since participation in the Plan is intended to be limited to a select group of management and highly compensated Employees, the Plan is only available to Eligible Employees of the Company and its Affiliates.
2.020 Commencement of Participation . As a condition to initial participation in this Plan, each Eligible Employee who wishes to participate in the Plan will be required to complete, execute and return to the Committee or its delegate a Participation Agreement Form and a Beneficiary Designation Form.
In the case of such an Eligible Employee’s initial election to become a Participant in a particular Plan Year, such documentation must be provided by the Eligible Employee to the Committee or its delegate within sixty (60) days following his being notified of his status as an Eligible Employee.
Notwithstanding the above, in the case of the Plan Year commencing on January 1, 2000, each Eligible Employee will be required to provide the Committee or its delegate with the above Participation Agreement Form and Beneficiary Designation Form on or before May 15, 2000, in order to evidence his desire to participate in the Plan in such Plan Year.
If an Eligible Employee has met all enrollment requirements set forth in this Plan and required by the Committee or its delegate (including returning all required documents to the Committee or its delegate) in the time frames described in the above subsections, that the Eligible Employee will become a Plan Participant as soon as administratively practicable after he completes all such enrollment requirements, except that, if an individual becomes an Eligible Employee during the last three months of a calendar year, that Eligible Employee will become a Plan Participant on the first day of the next calendar year.
If an Eligible Employee fails to meet all such requirements within the period required that Eligible Employee will not be entitled to participate in the Plan until the first day of a subsequent Plan Year following the delivery to and acceptance by the Committee or its delegate of the required documents. In addition, the Committee or its delegate will establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.
2.030 Termination of Participation and/or Deferrals . If the Committee or its delegate determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with ERISA §§201(2), 301(a)(3) and 401(a)(1), the Committee will have the right, in its sole discretion, to:
(a)   terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant’s membership status changes,

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(b)   prevent the Participant from making future deferral elections and/or
 
(c)   immediately distribute the Participant’s then Account Balance as a Termination Benefit and terminate the Participant’s participation in the Plan.
ARTICLE III: DEFERRAL AND COMPANY MATCH CREDITS
3.010 Base Annual Salary Deferral . Each Plan Participant will be permitted to make an irrevocable election to defer (such Deferral Election to be made in whole percentages) receipt of an amount equal to one percent (1%) through fifty percent (50%) of his Base Annual Salary.
(a)   If an Eligible Employee first becomes a Participant after the first day of a Plan Year, or in the case of the Plan Year beginning on January 1, 2000, if such Base Annual Salary Deferral Election goes into effect for the period between June 1, 2000 through December 31, 2000, the Base Annual Salary Deferral will be for an amount equal to the percentage set forth above, multiplied by a fraction, the numerator of which is the number of complete months remaining in the Plan Year and the denominator of which is twelve (12), with the effect that the Participant’s deferred Base Annual Salary would be limited to the amount of salary not yet earned by the Participant as of the date the Participant submits a Participation Agreement Form to the Company or an Affiliate for acceptance.
 
(b)   For each succeeding Plan Year, a Participant, will be permitted, in his sole discretion, to make a similar irrevocable election for the following Plan Year (and such other elections as the Committee or its delegate deems necessary or desirable) and must deliver such Deferral Election to the Company or an Affiliate on a new Deferral Election Form before December 1 st of the Plan Year immediately preceding the Plan Year for which the deferral is intended. If no such Deferral Election Form is timely delivered for a Plan Year, the Annual Deferral Amount will be zero for that Plan Year.
 
(c)   During each Plan Year, the Base Annual Salary Deferral Amount will be withheld from each regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Annual Salary.
3.020 Incentive Compensation Deferral . In addition to the Base Annual Salary deferral described in the preceding Section, each Participant will be permitted to irrevocably elect to defer receipt of an amount equal to one percent (1%) through one hundred percent (100%), such Deferral Election to be made in whole percentages, of the amount of any Incentive Compensation which he might be awarded.
In general, such Deferral Election will be made on a Deferral Election Form and will apply to Incentive Compensation to which the Participant might be entitled for the fiscal year immediately following such Deferral Election.
Notwithstanding the above, however, in the case of deferral of Incentive Compensation awarded for the Company’s 2000 fiscal year, such Deferral Election will be effective for that said 2000 fiscal year, provided that the Deferral Election is made on or before May 15, 2000.

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The Incentive Compensation Deferral Amount will be withheld at the time the said Incentive Compensation are or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself.
3.030 Annual Company Match Amount . A Participant’s Annual Company Match Amount for any Plan Year will be equal to the amount that the Company would have contributed to the Participant’s account in the Qualified Savings Plan as a matching contribution or other employer contribution to that Plan or would have credited to such Participant’s account in the Non-Qualified Savings Plan as a matching credit or other similar credit, but for the fact that the Participant elected to defer Base Annual Salary pursuant to the provisions of Section 3.010 of this Plan. The Annual Company Match Amount which is attributable to a Participant’s Annual Salary Deferral Amount for a particular Plan Year will be calculated in the first month of the immediately succeeding Plan Year and will be credited to the Participant’s Company Match Account no later than January 31 st of such succeeding Plan Year.
(a)   In the event of a Participant’s Retirement or death, the Participant’s Company Match Account will be credited with the Annual Company Match Amount for the Plan Year in which he Retires or dies.
 
(b)   If a Participant is not employed by the Company or an Affiliate as of the last day of a Plan Year for any reason other than the Participant’s Retirement or death, the Annual Company Match Amount for such Plan Year will be zero.
3.040 Deferral of CSSIP Bonus Payments . In addition to the Base Annual Salary and Incentive Compensation deferrals described in the preceding Sections, a Participant who is entitled to receive, as determined by the Company, a CSSIP Bonus may irrevocably elect to have such Bonus not paid to him at that time and have all of such Bonus deferred and credited to his CSSIP Bonus Deferral Account.
(a)   In general, such Deferral Election will be made on a Deferral Election Form and will apply to any CSSIP Bonus to which the Participant might be entitled for calendar year 2003 or for the calendar year immediately following that year, if the Committee should determine to pay such CSSIP Bonus in two installments.
 
(b)   Notwithstanding any other provision of the Plan to the contrary, in the case of deferral of a CSSIP Bonus otherwise payable in calendar year 2003, the Deferral Election related thereto will be effective for that year, if the said Election is made on or before November 1, 2003.
ARTICLE IV: PLAN ACCOUNTS
4.010 Vesting .
(a)   A Participant will have a one hundred percent (100%) vested interest in his Deferral Account and in his Company Match Account.

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(b)   Notwithstanding anything to the contrary contained in this Plan from time to time, in the event of a Change of Control, a Participant’s Deferral Account, Company Match Account and any other interest of his under this Plan at the time of the occurrence of the Change of Control will remain one hundred percent (100%) vested, if such interest is already 100% vested at that time and, if such interest is not one hundred percent (100%) vested at that time, will immediately become one hundred (100%) vested.
4.020 Crediting/Debiting of Account Balances . In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee or its delegate, in its sole discretion, amounts will be credited or debited to a Participant’s Account Balance in the manner set forth in the provisions of this Section; provided, however, that the said provisions will apply individually to, and be administered separately for, on the one hand, the Participant’s Salary Deferral and Company Match Accounts and, on the other hand, his Incentive Compensation Deferral Account, with the intention that that the Participant will be permitted to make separate elections with respect to each.
(a)   Allocation to Measurement Funds . A Participant, in connection with his initial Deferral Election in accordance with Section 3.010 or 3.020 above, will be permitted to also elect to have one or more Measurement Funds used to determine the amounts to be credited to his Account Balance and his election will continue to be in effect thereafter, unless it should be changed in accordance with subsection (c).
 
(b)   Crediting or Debiting Method . The performance (either positive or negative) of each elected Measurement Fund will be determined by the Committee or its delegate, based on the performance of the Measurement Funds themselves. A Participant’s Account Balance will be credited or debited on a daily basis based on the performance of each Measurement Fund selected by the Participant, as determined by the Committee or its delegate in its sole discretion, as though:
  (1)   a Participant’s Account Balance were actually invested in the Measurement Fund(s) selected by the Participant as of the close of business on any business day, at the closing price on that day;
 
  (2)   the portion of the Annual Deferral Amount that was actually deferred during any pay period were invested in the Measurement Fund(s) selected by the Participant, in the percentages applicable on such day, no later than the close of business on the first business day after the day on which such amounts are actually deferred from the Participant’s Base Annual Salary through reductions in his payroll, at the closing price on such date; and
 
  (3)   any distribution made to a Participant that decreases such Participant’s Account Balance ceased being invested in the Measurement Fund(s), in the applicable percentages, no earlier than one business day prior to the distribution, at the closing price on such date.
(c)   Transfers among Measurement Funds . The Participant will be permitted to change, on a daily basis, any previous Measurement Fund election or elections he has made with

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    regard to his Account Balance. The elections and changes to such elections which a Participant makes pursuant to this subsection will be made by means of any method (including any available telephonic or electronic method which is acceptable to the Committee or its delegate at the time the election or change is made by the Participant), and may be made at any time and will be effective as of the New York Stock Exchange closing immediately following the making of that election or change; provided, however, if it is determined by the Committee or its delegate that an investment election made by a Participant is invalid or defective, the Participant’s election, until duly corrected by him, will be deemed to have been made in favor of whatever short-term, money market vehicle is available under the Plan at that time.
 
(d)   No Actual Investment . Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation to his Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account Balance will not be considered or construed in any manner as an actual investment of his Account Balance in any such Measurement Fund. In the event that the Company or the Trustee, in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant will have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Account Balance will at all times be a bookkeeping entry only and will not represent any investment made on his behalf by the Company or the Trust. The Participant will at all times remain an unsecured creditor of the Company.
 
(e)   Company Reservation of Rights . Consistent with the preceding sentence, nothing to the contrary in this Plan or any of its forms or communication material, nor in any document associated with the Trust, should be interpreted or understood to provide Participants or their Beneficiaries with any current, direct rights with respect to the assets held by the Trustee in the Trust.
4.030 Amounts Credited Pursuant to Predecessor Plans . Notwithstanding the provisions of Section 4.020, in the case of amounts which were credited to any Predecessor Plan prior to the Effective Date as incentive compensation plan deferrals, such amounts will be separately accounted for hereunder and will continue to be adjusted and administered (specifically including application, on a quarterly basis, of the Interest Rate to a Participant’s account in such Predecessor Plan) in the manner previously in effect under such Predecessor Plan and as set forth in Appendix A; provided, however, that, unless otherwise provided in the said
Appendix A, administration of such Predecessor Plan deferrals will be in accordance with the provisions of this Plan as they apply to amounts deferred after the Effective Date.
4.040 FICA and Other Taxes .
(a)   Annual Deferral Amounts . For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Company or any Affiliate employing the Participant will withhold from that portion of the Participant’s Base Annual Salary, Incentive Compensation or CSSIP Bonus which is not being deferred the Participant’s share of FICA and other employment taxes on such Annual Deferral Amount.

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(b)   Company Match Amounts . For each Plan Year in which a Company Match Account is credited to a Participant, the Company or any Affiliate employing the Participant will withhold the Participant’s share of FICA and other employment taxes on the amount credited to such Company Match Account.
 
(c)   Distributions . The Company or any Affiliate employing the Participant, or the Trustee of the Trust, will withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Company and the trustee of the Trust.
4.050 Treatment of CSSIP Bonus Deferrals and Accounts . Unless otherwise specifically provided herein to the contrary, in all respects and phases of administration of this Plan, CSSIP Bonus Deferrals and CSSIP Bonus Accounts will be deemed as being a form of and will be treated in the same manner as, respectively, Incentive Compensation Deferrals and Incentive Compensation Deferral Accounts.
ARTICLE V: SHORT-TERM PAYOUTS AND WITHDRAWALS
5.010 Short-Term Payouts . In connection with each election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive a future Short-Term Payout from the Plan with respect to such Annual Deferral Amount.
(a)   Subject to the Deduction Limitation, the said Short-Term Payout will be a lump sum payment in an amount that is equal to the Annual Deferral Amount, as adjusted for amounts credited or debited in the manner provided in Section 4.020 on that amount, determined at the time that the Short-Term Payout becomes payable (rather than at the date of a Termination of Employment).
 
(b)   Subject to the Deduction Limitation and the other terms and conditions of this Plan, each Short-Term Payout elected will be paid out during a sixty (60) day period commencing immediately after the last day of any Plan Year designated by the Participant that is at least three Plan Years after the Plan Year in which the Annual Deferral Amount is actually deferred. By way of example, if a three-year Short-Term Payout is elected for Annual Deferral Amounts that are deferred in the Plan Year commencing January 1, 2001, the three-year Short-Term Payout would become payable during a sixty (60) day period commencing January 1, 2005.
 
(c)   Should an event occur that triggers a benefit under Article VI or VII, any Annual Deferral Amount, plus amounts credited or debited thereon, that is subject to a Short-Term Payout election under this Section will not be paid in accordance with this Section, but will instead be paid in accordance with the other applicable Article.

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(d)   Notwithstanding any other provision in this Plan to the contrary, the Short-Term Payout described in this Section will only be available with respect to Annual Deferral Amounts which are deferred after the Effective Date and will specifically not be available to amounts which were deferred by a Participant pursuant to the provisions of a Predecessor Plan.
5.020 Withdrawal for Unforeseeable Financial Emergencies . In the event that any Participant should encounter an Unforeseeable Financial Emergency, such Participant may:
(a)   petition the Committee or its delegate to suspend any deferrals required to be made on his behalf, and/or
 
(b)   petition the Committee or its delegate to permit him to receive a partial or full payout from the Plan. Such a payout will not exceed the lesser of —
  (1)   the Participant’s Account Balance, calculated as if the Participant were receiving a Termination Benefit, or
 
  (2)   the amount reasonably needed to satisfy the Unforeseeable Financial Emergency.
If, subject to the sole discretion of the Committee or its delegate, the petition for a suspension and/or payout is approved, suspension will take effect on the date of approval and any payout will be made within sixty (60) days of the date of approval. The payment of any amount under this Section will not be subject to the Deduction Limitation.
5.030 Withdrawal Election . A Participant (or, after a Participant’s death, the Participant’s Beneficiary) may elect, at any time, to withdraw some or all of the Participant’s Account Balance, even though the Participant (or the Participant’s Beneficiary) has not encountered an Unforeseeable Financial Emergency at the time of such withdrawal, but the withdrawal will be subject to the provisions of this Section.
(a)   The amount of the withdrawal will be subject to imposition of a withdrawal penalty equal to ten percent (10%) of such amount (the net amount being referred to in this Section as the “Withdrawal Amount”).
 
(b)   Such an election may be made at any time, before or after the Participant’s Retirement, Disability, death or Termination of Employment, and whether or not the Participant (or Beneficiary) is in the process of being paid pursuant to an installment payment schedule.
The Participant (or his Beneficiary) will be required to make this election by giving the Committee or its delegate advance written notice of the election in a form determined from time to time by the Committee or its delegate. The Participant (or his Beneficiary) will be paid the Withdrawal Amount within sixty (60) days of his election. Once a Withdrawal Amount has been paid, the Participant’s participation in the Plan will be suspended and the Participant will not be eligible to elect Base Annual Salary Deferrals and Incentive Compensation Deferrals, nor will he be eligible to have Annual Company Match Amounts credited to his Company Match Account,

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during the three-year period immediately following payment of the Withdrawal amount; provided, however, that such Participant will be eligible to have a pro rata portion of the Company Match Amount attributable to the portion of the Plan Year immediately prior to such a withdrawal credited to his Company Match Account. The payment of this Withdrawal Amount will not be subject to the Deduction Limitation.
ARTICLE VI: RETIREMENT BENEFITS
6.010 Retirement Benefit . Subject to the Deduction Limitation, a Participant who Retires will receive, as a Retirement Benefit, his Account Balance.
6.020 Payment of Retirement Benefit . A Participant, in connection with his commencement of participation in the Plan, may elect to receive the Retirement Benefit in a lump sum or pursuant to an Annual Installment Method of periods of from two (2) through fifteen (15) years. The Participant may change any election he has previously made to a different payout period permitted hereunder, but only one such a change may be made with respect to any single election. Such change will be accomplished by the Participant notifying the Committee or its delegate in writing or electronically, but such change will not be valid, unless it has been submitted by the Participant and accepted by the Committee or its delegate (in the Committee’s or delegate’s discretion) at least one (1) year prior to the Participant’s Retirement. The election most recently accepted by the Committee or its delegate shall govern the payout of the Retirement Benefit. If a Participant does not make any election with respect to the payment of the Retirement Benefit, then such benefit shall be payable in a lump sum. The lump sum payment shall be made, or installment payments shall commence, no later than sixty (60) days after the last day of the Plan Year in which the Participant Retires. Any payment made shall be subject to the Deduction Limitation.
6.030 Death Prior to Completion of Retirement Benefit . If a Participant dies after Retirement but before the Retirement Benefit is paid in full, the Participant’s unpaid Retirement Benefit payments shall continue and shall be paid to the Participant’s Beneficiary:
(a)   over the remaining number of years and in the same amounts as that benefit would have been paid to the Participant had the Participant survived, or
 
(b)   in a lump sum, if requested by the Beneficiary and allowed in the sole discretion of the Committee or its delegate, which is equal to the Participant’s unpaid remaining Account Balance.
ARTICLE VII: PRE-RETIREMENT SURVIVOR BENEFIT
7.010 Pre-Retirement Survivor Benefit . Subject to the Deduction Limitation, the Participant’s Beneficiary shall receive a Pre-Retirement Survivor Benefit equal to the Participant’s Account Balance if the Participant dies before he Retires, experiences a Termination of Employment or suffers a Disability.
7.020 Payment of Pre-Retirement Survivor Benefit . A Participant, in connection with his commencement of participation in the Plan, may elect, on a written or electronic form approved

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by and filed with the Committee or its delegate, whether the Pre-Retirement Survivor Benefit should be received by his Beneficiary in a lump sum or pursuant to an Annual Installment Method of periods of from 2 through 15 years. The Participant may annually change this election to an allowable alternative payout period by submitting a new written or electronic election form with the Committee or its delegate. The Beneficiary Designation Form most recently filed with the Committee or its delegate prior to the Participant’s death will govern the payout of the Participant’s Pre-Retirement Survivor Benefit. If a Participant does not make any election with respect to the payment of the Pre-Retirement Survivor Benefit, then such benefit will be paid in a lump sum. Despite the foregoing, if the Participant’s Account Balance at the time of his death is less than $25,000, payment of the Pre-Retirement Survivor Benefit may be made, in the sole discretion of the Committee or its delegate, in a lump sum or pursuant to an Annual Installment Method of not more than five (5) years. The lump sum payment will be made, or installment payments will commence, no later than sixty (60) days after the last day of the Plan Year in which the Committee or its delegate is provided with proof that is satisfactory to the Committee or its delegate of the Participant’s death. Any payment made will be subject to the Deduction Limitation.
ARTICLE VIII: TERMINATION BENEFIT
8.010 Termination Benefit . Subject to the Deduction Limitation, the Participant will receive a Termination Benefit, which will be equal to the Participant’s Account Balance if a Participant experiences a Termination of Employment prior to his Retirement or death.
8.020 Payment of Termination Benefit . The form of payment of a Participant’s Account Balance, if such payment is due to the Participant’s Termination of Employment, will in all cases be a lump sum in cash. Payment of such Termination Benefit will be paid within the first sixty (60) days of the calendar year immediately following the Plan Year which includes the date of the Participant’s Termination of employment.
ARTICLE IX: DISABILITY WAIVER AND BENEFIT
9.010 Disability Waiver .
(a)   Waiver of Deferral . A Participant who is determined by the Committee or its delegate to be suffering from a Disability will be excused from fulfilling that portion of the Annual Deferral Amount commitment that would otherwise have been withheld from his Base Annual Salary and/or Incentive Compensation for the Plan Year during which he first suffers a Disability. During the period of Disability, such Participant will not be permitted to make any additional deferral elections, but will continue to be considered a Participant for all other purposes of this Plan.
 
(b)   Return to Work . If a Participant returns to employment after a Disability ceases, the Participant may elect to defer an Annual Deferral Amount for the Plan Year following his return to employment or service and for every Plan Year thereafter while he is a Participant in the Plan.

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9.020 Continued Eligibility; Disability Benefit . A Participant suffering a Disability will, for benefit purposes under this Plan, continue to be considered to be employed and will be eligible for the benefits provided for hereunder. Notwithstanding the above, the Committee or its delegate will have the right to, in its sole and absolute discretion and for purposes of this Plan only, and must in the case of a Participant who is otherwise eligible to Retire, deem the Participant to have experienced a Termination of Employment, or in the case of a Participant who is eligible to Retire, to have Retired, at any time (or in the case of a Participant who is eligible to Retire, as soon as practicable) after such Participant is determined to be suffering a Disability, in which case the Participant will receive a Disability Benefit equal to his Account Balance at the time of the Committee’s or its delegate’s determination; provided, however, that should the Participant otherwise have been eligible to Retire, he or she will be paid in accordance with Article VI. The Disability Benefit will be paid in a lump sum within sixty (60) days of the Committee’s or its delegate’s exercise of such right. Any payment made will be subject to the Deduction Limitation.
ARTICLE X: BENEFICIARY DESIGNATION
10.010 Beneficiary . Each Participant will have the right, at any time, to designate his Beneficiary or Beneficiaries (both primary and contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.
10.020 Beneficiary Designation or Change of Designation . A Participant will be permitted to designate his Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its delegate. A Participant will have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee’s or its delegate’s rules and procedures, as in effect from time to time. Upon the acceptance by the Committee or its delegate of a new Beneficiary Designation Form, all Beneficiary designations previously filed will be canceled. The Committee or its delegate will be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee or its delegate prior to the Participant’s death.
10.030 Spousal Consent Required . If a Participant names someone other than his spouse as a Beneficiary, a spousal consent, in the form designated by the Committee or its delegate, must be signed by that Participant’s spouse and returned to the Committee or its delegate.
10.040 Acknowledgment . No designation or change in designation of a Beneficiary will be effective until received and acknowledged in writing by the Committee or its delegate.

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10.050 Absence of Valid Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in the preceding Sections or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s designated Beneficiary will be deemed to be his surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary will be payable to the executor or personal representative of the Participant’s estate.
10.060 Doubt as to Beneficiary . If the Committee or its delegate has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee or its delegate will have the right, exercisable in its discretion, to withhold such payments until this matter is resolved to the Committee’s or the delegate’s satisfaction.
10.070 Discharge of Obligations . The payment of benefits under the Plan to a Beneficiary will fully and completely discharge the Company and all of its Affiliates and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant’s participation in this Plan will terminate upon such full payment of benefits.
ARTICLE XI: LEAVE OF ABSENCE
11.010 Paid Leave of Absence . If a Participant is authorized by the Company or the Affiliate employing the Participant for any reason to take a paid leave of absence, the Participant will continue to be considered to be an Employee and the Annual Deferral Amount will continue to be withheld during such paid leave of absence.
11.020 Unpaid Leave of Absence . If a Participant is authorized by the Company or the Affiliate employing the Participant to take an unpaid leave of absence, the Participant will continue to be considered to be an Employee and the Participant will be excused from making deferrals until the earlier of the date the leave of absence expires or the Participant returns to a paid employment status. Upon such expiration or return, deferrals will resume for the remaining portion of the Plan Year in which the expiration or return occurs, based on the deferral election, if any, made for that Plan Year. If no election was made for that Plan Year, no deferral will be withheld.
ARTICLE XII: TERMINATION, AMENDMENT OR MODIFICATION
12.010 Termination . Although the Company and each Affiliate anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that the Company or any such Affiliate will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, the Company reserves the right to discontinue sponsorship of the Plan and/or to terminate the Plan at any time with respect to any or all of its participating Employees, by action of the Board of Directors. Upon the termination of the Plan, the participation of affected Participants will terminate and their Account Balances, determined as if they had experienced a Termination of Employment on the date of Plan termination or, if Plan termination occurs after the date upon which a Participant was eligible to Retire, then with respect to that Participant as if he had Retired on the date of Plan termination, will be paid to the Participants as follows:

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Prior to a Change of Control, if the Plan is terminated with respect to all of its Participants, the Company will have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay such benefits in a lump sum or pursuant to an Annual Installment Method of up to 15 years, with amounts credited and debited during the installment period as provided herein. If the Plan is terminated with respect to less than all of its Participants, the Company or the Affiliate employing an affected Participant will be required to pay such benefits in a lump sum.
12.020 Amendment . The Company may, at any time, amend or modify the Plan in whole or in part by action of the Board of Directors; provided, however, that:
(a)   no amendment or modification shall be effective to decrease or restrict the value of a Participant’s Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Termination of Employment as of the effective date of the amendment or modification or, if the amendment or modification occurs after the date upon which the Participant was eligible to Retire, the Participant had Retired as of the effective date of the amendment or modification;
 
(b)   no amendment or modification of this Section 12.020 Plan shall be effective; and
 
(c)   the amendment or modification of the Plan shall not affect any Participant or Beneficiary who has become entitled to the payment of benefits under the Plan as of the date of the amendment or modification
12.030 Amendment of Individual Participation Agreement Forms . Despite the provisions of Sections 12.010 and 12.020, if a Participant’s Participation Agreement Form contains benefits or limitations that are not contained in this Plan document, the Company or Affiliate may only amend or terminate such provisions with the consent of the Participant.
12.040 Effect of Payment . The full payment of all applicable benefits hereunder shall completely discharge all obligations to a Participant and his Beneficiaries under this Plan.
ARTICLE XIII: ADMINISTRATION
13.010 Committee Duties . Except as otherwise provided in this Article, this Plan will be administered by the Committee and its delegates. Members of the Committee may be Participants under this Plan. The Committee will also have the discretion and authority to:
(a)   make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan, and
 
(b)   decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan.
Any individual serving on the Committee who is a Participant will not be permitted to vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Committee will be entitled to rely on information furnished by a Participant or the Company.

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13.020 Administration Upon Change of Control . Notwithstanding any other provision of this Plan to the contrary, upon and after the occurrence of a Change of Control, the Plan will be administered by the Third-Party Administrator. The Third-Party Administrator so selected will have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited, to benefit entitlement determinations; provided, however, upon and after the occurrence of a Change of Control, such administrator will have no power to direct the investment of Plan or Trust assets or select any investment manager or custodial firm for the Plan or Trust.
Upon and after the occurrence of a Change of Control, the Company will be required to:
(a)   pay all reasonable administrative expenses and fees of the Third-Party Administrator;
 
(b)   indemnify the Third-Party Administrator against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of such administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the said administrator or its employees or agents; and
 
(c)   supply full and timely information to the Third-Party Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account Balances of the Participants, the date of circumstances of the Retirement, Disability, death or Termination of Employment of the Participants, and such other pertinent information as the Third-Party Administrator may reasonably require.
Upon and after a Change of Control, the Third-Party Administrator may not be terminated by the Company and may only be terminated (and a replacement appointed) by the Trustee, but only with the approval of the Ex-CEO.
13.030 Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to any Employer. The Company’s Vice President, Compensation will at all times, unless otherwise determined by the Committee, be deemed to be and shall be specifically referred to herein as the Committee’s delegate for all purposes herein.
13.040 Binding Effect of Decisions . The decision or action of the Committee or its delegate with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder will be final and conclusive and binding upon all persons having any interest in the Plan.
13.050 Indemnity of Committee . The Company and its Affiliates shall indemnify and hold harmless the members of the Committee, any Employee to whom the duties of the Committee may be delegated, and the Committee or its delegate against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members, or such Employee.

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13.060 Employer Information . To enable the Committee and its delegates to perform their functions, the Company will supply full and timely information to the Committee and delegates on all matters relating to the compensation of its Participants, the date and circumstances of the Retirement, Disability, death or circumstances of the Retirement, Disability, death or Termination of Employment of its Participants, and such other pertinent information as the Committee or its delegate may reasonably require.
ARTICLE XIV: OTHER BENEFITS AND AGREEMENTS
14.010 Coordination with Other Benefits . The benefits provided for a Participant and Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Company and its Affiliates. The Plan will supplement and will not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.
ARTICLE XV: CLAIMS PROCEDURE
15.010 Presentation of Claim . Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee or its delegate a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant. All other claims must be made within one hundred and eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.
15.020 Notification of Decision . The Committee or its delegate will consider a Claimant’s claim within a reasonable time, and will notify the Claimant in writing:
(a)   that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or
 
(b)   that the Committee or its delegate has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant;
 
(c)   the specific reason(s) for the denial of the claim, or any part of it;
  (1)   specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
 
  (2)   a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and
 
  (3)   an explanation of the claim review procedure set forth in Section 15.030 below.

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15.030 Review of a Denied Claim . Within sixty (60) days after receiving a notice from the Committee or its delegate that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee or its delegate a written request for a review of the denial of the claim. Thereafter, but not later than thirty (30) days after the review procedure began, the Claimant (or the Claimant’s duly authorized representative):
(a)   may review pertinent documents;
 
(b)   may submit written comments or other documents; and/or
 
(c)   may request a hearing, which the Committee or its delegate, in its sole discretion, may grant.
15.040 Decision on Review . The Committee or its delegate will render any decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee’s or its delegate’s decision must be rendered within one hundred and twenty (120) days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:
(a)   specific reasons for the decision;
 
(b)   specific reference(s) to the pertinent Plan provisions upon which the decision was based; and
 
(c)   such other matters as the Committee or its delegate deems relevant.
15.050 Legal Action . A Claimant’s compliance with the foregoing provisions of this Article XV is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan.
ARTICLE XVI: TRUST
16.010 Establishment of the Trust . The Company shall establish the Trust (which may be referred to herein as a “Rabbi Trust”). The Trust shall become irrevocable upon a Change of Control (to the extent not then irrevocable). After the Trust has become irrevocable with respect to the Plan, except as otherwise provided in Section 12 of the Trust, the Trust shall remain irrevocable with respect to the Plan until all benefits due under the Plan and benefits and account balances due to participants and beneficiaries under any other plan covered by the Trust have been paid in full. Upon establishment of the Trust, the Company shall provide for funding of the Trust in accordance with the terms of the Trust.
16.020 Interrelationship of the Plan and the Trust . The provisions of the Plan and each Participant’s Participation Agreement Form will govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust will govern the rights of the Company and its Affiliates, Participants and the creditors of the Company and its Affiliates to the assets transferred to the Trust. The Company and each of its Affiliates employing any Participant will at all times remain liable to carry out their obligations under the Plan.

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16.030 Distributions From the Trust . The Company’s and each of its Affiliate’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution will reduce their obligations under this Plan.
16.040 Rabbi Trust . The Rabbi Trust shall:
(a)   be a non-qualified grantor trust which satisfies in all material respects the requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable authority);
 
(b)   become irrevocable upon a Change of Control (to the extent not then irrevocable); and
 
(c)   provide that any successor trustee shall be a bank trust department or other party that may be granted corporate trustee powers under state law.
ARTICLE XVII: MISCELLANEOUS
17.010 Status of Plan . The Plan is intended to be a plan that is not qualified within the meaning of Code §401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employee” within the meaning of ERISA §§201(2), 301(a)(3) and 401(a)(1). The Plan will be administered and interpreted to the extent possible in a manner consistent with that intent.
17.020 Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Company or its Affiliates. For purposes of the payment of benefits under this Plan, any and all of the Company’s or Affiliate’s assets shall be, and remain, the general, unpledged unrestricted assets of the Company or Affiliate. The Company or Affiliate’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
17.030 Company Liability . The Company’s or an Affiliate’s liability for the payment of benefits will be defined only by the Plan and the Participant’s specific Participation Agreement Form. The Company and its Affiliates will have no obligation to a Participant under the Plan, except as expressly provided in the Plan and the Participant’s Participation Agreement Form.
17.040 Nonassignability . Neither a Participant nor any other person will have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable will, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

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17.050 Not a Contract of Employment . The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Company or any of its Affiliates and the Participant. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any the Company or an Affiliate or to interfere with the right of the Company or an Affiliate to discipline or discharge the Participant at any time.
17.060 Furnishing Information . A Participant or his Beneficiary will cooperate with the Committee or its delegate by furnishing any and all information requested by the Committee or its delegate and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee or its delegate may deem necessary .
17.070 Terms . Whenever any words are used herein in the masculine, they should be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they should be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
17.080 Captions . The captions of the articles, sections and paragraphs of this Plan are for convenience only and do not control or affect the meaning or construction of any of its provisions.
17.090 Governing Law . Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the laws of the State of Iowa.
17.100 Notice . Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:
Vice President, Compensation
Rockwell Collins, Inc.
400 Rockwell Collins Road NE
Cedar Rapids, Iowa 52498
Such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.

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17.110 Successors . The provisions of this Plan shall bind and inure to the benefit of the Company and its successors and assigns and the Participant and the Participant’s designated Beneficiaries.
17.120 Spouse’s Interest . The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant will automatically pass to the Participant and will not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor will such interest pass under the laws of intestate succession.
17.130 Validity . In case any provision of this Plan should be found to be illegal or invalid for any reason, said illegality or invalidity will not affect the remaining parts hereof, but this Plan should be construed and enforced as if such illegal or invalid provision had never been inserted herein.
17.140 Minors, Incompetent Persons, etc . If the Committee or its delegate determines that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Committee or its delegate may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee or its delegate may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and will be a complete discharge of any liability under the Plan for such payment amount.
17.150 Court Order . The Committee or its delegate is authorized to make any payments directed by court order in any action in which the Plan or the Committee has been named as a party. In addition, if a court determines that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under the Plan in connection with a property settlement or otherwise, the Committee or its delegate, in its sole discretion, will have the right, notwithstanding any election made by a Participant, to immediately distribute the spouse’s or former spouse’s interest in the Participant’s benefits under the Plan to that spouse or former spouse.
17.160 Distribution in the Event of Taxation .
(a)   In General . If, for any reason, all or any portion of a Participant’s benefits under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Committee or its delegate before a Change of Control, or the Trustee of the Trust after a Change of Control, for a distribution of that portion of his benefit that has become taxable. Upon the grant of such a petition, which grant should not be unreasonably withheld (and, after a Change of Control, must be granted), the Company or, as applicable, its Affiliate will distribute to the Participant immediately available funds in an amount equal to the taxable portion of his benefit (which amount will not exceed a Participant’s unpaid Account Balance under the Plan). If the petition is granted, the tax liability distribution will be made within 90 days of the date when the Participant’s petition is granted. Such a distribution will affect and reduce the benefits to be paid under this Plan.

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(b)   Trust . If the Trust terminates in accordance with provisions thereof and benefits are distributed from the Trust to a Participant in accordance therewith, the Participant’s benefits under this Plan will be reduced to the extent of such distributions.
17.170 Insurance . The Company, on its own behalf or on behalf of the trustee of the Trust, and, in its discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Trust may choose. The Company or the trustee of the Trust, as the case may be, will be the sole owner and beneficiary of any such insurance. The Participant will have no interest whatsoever in any such policy or policies, and at the request of the Company will submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to which the Company has applied for insurance.
17.180 Legal Fees To Enforce Rights After Change of Control . The Company is aware that upon the occurrence of a Change of Control, the Board of Directors (which might then be composed of new members) or a shareholder of the Company or of any successor corporation might then cause or attempt to cause the Company, an Affiliate or such successor to refuse to comply with its obligations under the Plan and might cause or attempt to cause the Company or the Affiliate to institute, or may institute, litigation seeking to deny Participants the benefits intended under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change of Control, it should appear to any Participant that the Company, an Affiliate of the Company or any successor corporation has failed to comply with any of its obligations under the Plan or any agreement thereunder or, if the Company, such Affiliate or any other person takes any action to declare the Plan void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant the benefits intended to be provided, then the Company irrevocably authorizes such Participant to retain counsel of his choice at the expense of the Company to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company, one or more of its Affiliates or any director, officer, shareholder or other person affiliated with the Company, any such Affiliate any successor thereto in any jurisdiction.
17.190 Requirement for Release . Any payment to any Participant or a Participant’s present, future or former spouse or Beneficiary in accordance with the provisions of this Plan will, to the extent thereof, be in full satisfaction of all claims against the Plan, the Trustee and the Company, and the Trustee may require such Participant or Beneficiary, as a condition precedent to such payment to execute a receipt and release to such effect.

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ARTICLE XVIII: SECTION 409A
Effective as of January 1, 2005, for purposes of retaining “grandfathered” status under Section 409A, this Plan is limited to account balances that were earned and vested as of December 31, 2004 (and any earnings deemed credited thereon). Effective as of January 1, 2005, any account balances under the Plan that were earned and vested after December 31, 2004 (and any earnings deemed credited thereon) will be credited under, and all liabilities related thereto will be transferred to, the 2005 Plan.

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Appendix A
PREDECESSOR PLAN PROVISIONS
The following provisions shall apply with respect to the Participants, as applicable, in the Allen Bradley and Rockwell Predecessor Plans.
I. Accounts.
With respect to a Participant’s incentive compensation deferrals under one of the Predecessor Plans for periods prior to the Effective Date, the value of any such Participant’s account will be determined as of the last day of a calendar year quarter (the “Determination Date”) and will be equal to the total of the Participant’s Lump Sum Payment and Installment Payment Sub-Accounts.
The value of each such Sub-Account will consist of:
  (1)   the balance of such Sub-Account as of the last preceding Determination Date, plus
 
  (2)   any Deferred Compensation credited to such Sub-Account since the last preceding Determination date, plus
 
  (3)   the sum of the three (3) monthly amounts determined by multiplying the average daily balance of such Sub-Account during each of the three calendar months since the last preceding Determination Date by the Interest Rate applicable to such month, minus
 
  (4)   the amount of all Plan Benefits, if any, paid during the period since the last preceding Determination Date.
Interest, determined as provided in (3) above, will be credited to each such Sub-Account as of the Determination Date as of which such Sub-Account is valued.
II.   Retirement Distributions and Withdrawals of Predecessor Plan Accounts.
 
(a)   With respect to the provisions of the Predecessor Plans which were in effect immediately prior to the Effective Date of this Plan as they regard benefits payable at retirement or employment termination to a Participant, or at the time of a Participant’s death, to his Beneficiary, such provisions shall remain in effect hereunder, but only with respect to amounts deferred prior to the Effective Date of this Plan (and earnings thereon pursuant to the preceding Section of this Appendix).
 
(b)   No Plan Benefit shall be payable prior to a Participant in one of the Predecessor Plans prior to his termination of employment, except that, in the case of the Rockwell Predecessor Plan, the Committee or its delegate may permit a Participant or, after a Participant’s death, a Participant’s Beneficiary or other person or entity entitled to receive such Predecessor Plan benefit to withdraw from his Account prior to his termination of employment:

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  (1)   an amount necessary to meet a financial hardship, or
 
  (2)   his entire Account balance
Either type of withdrawal shall be requested by written notice to the Committee or its delegate and the amount of the withdrawal shall be paid within forty-five (45) days after receipt of the written notice.
III. Funding of Rabbi Trust for Account Balances upon Change of Control.
The Company shall fund the Trust in immediately available funds for the benefit of each Participant, surviving spouse, joint annuitant or beneficiary with respect to Accounts under the Predecessor Plans in accordance with the terms of the Trust. Such Trust, as it regards such Predecessor Plan amounts, shall:
(a)   be a non-qualified grantor trust which satisfies in all material respects the requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable authority);
 
(b)   become irrevocable upon change of Control (to the extent not then irrevocable); and
 
(c)   provide that any successor trustee shall be a bank trust department or other party that may be granted corporate trustee powers under state law.

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Appendix B
MEASUREMENT FUNDS
Measurement Funds (and their underlying benchmark mutual funds) are listed below in alphabetical order:
  Balanced Fund
Fidelity Puritan Fund
The objective of this balanced mutual fund is to obtain income and capital growth consistent with reasonable risk.
This fund invests approximately 60% of its assets in stocks and other equity securities and the remainder in investment grade bonds and other investment grade debt securities, including medium and high quality debt securities. The fund will invest at least 25% of total assets in fixed-income senior securities (including debt securities and preferred stock). The fund may invest in domestic and foreign issuers.
  Blue Chip Growth Fund
Fidelity Blue Chip Growth Fund
The objective of this growth mutual fund is to increase the value of investments over the long term through capital growth.
The fund invests primarily in common stocks of well-known and established companies. Normally at least 65% of the fund’s total assets are invested in blue chip companies. The fund may also invest in companies with above-average growth potential that the fund’s manager believes are positioned to become the blue chips of the future.
  Capital & Income Fund
Fidelity Capital & Income Fund
The objective of this income mutual fund is to obtain a combination of current income and capital growth.
This fund invests in equity and debt securities, including defaulted securities, with an emphasis on lower-quality debt securities. The fund may also invest in securities of domestic and foreign issuers. This fund carries a “short-term trading fee” which is charged to discourage short-term buying and selling of fund shares. If shares are sold after being held for less than 365 days, the fund will deduct a short-term trading fee equal to 1.5% of the value of the shares sold.

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  Diversified International Fund
Fidelity Diversified International Fund
The objective of this growth mutual fund, which invests overseas, is to increase the value of investments over the long term through capital growth.
This fund normally invests at least 65% of total assets in foreign securities. In selecting securities the fund employs computer-aided quantitative analysis supported by fundamental research. This fund will carry a “short-term trading fee” which will be charged to discourage short-term buying and selling of fund shares. If shares are sold after being held for less than 30 days, the fund will deduct a short-term trading fee from your account equal to 1.0% of the value of the shares sold.
  Equity Income Fund
Fidelity Equity Income Fund
The objective of this growth and income mutual fund is to obtain reasonable income to while considering the potential for capital appreciation. It seeks to provide a yield that exceeds the yield of the securities in the Standard & Poors 500 Index.
The fund normally invests at least 65% of total assets in income-producing equity securities, which tend to lead to investments in large cap stocks. The fund potentially invests in other types of equity and debt securities, including lower-quality debt securities. The fund may invest in securities of domestic and foreign issuers.
  Fidelity Fund
Fidelity Fund
This growth and income mutual fund strives to obtain long-term capital growth.
The fund invests primarily in common stocks. It potentially invests a portion of its assets in bonds, including lower-quality debt securities. The fund invests in domestic and foreign issuers.
  Investment Grade Bond Fund
Fidelity Investment Grade Bond Fund
The objective of this income mutual fund is to obtain high current income.
This fund normally invests in U.S. dollar-denominated investment-grade bonds (those of medium and high quality). The fund is managed to have similar overall interest rate risk to the Lehman Brothers Aggregate Bond Index. Assets are allocated across different market sectors and maturities.

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  Market Index Fund
Spartan Ò 500 Market Index Fund
This mutual fund seeks to obtain investment results that correspond to the total return (i.e. the combination of capital changes and income) of common stocks publicly traded in the United States, as represented by the Standard & Poors 500 Index (S&P 500 Ò ), while keeping transaction costs and other expenses low.
The fund normally invests at least 80% of its assets in common stock included in the
S&P 500. The fund may lend securities to earn income for the fund. This fund carries a “short-term trading fee” which is charged to discourage short-term buying and selling of fund shares. If shares are sold after being held for less than 90 days, the fund will deduct a short-term trading fee from your account equal to 0.50% of the value of the shares sold.
  Mid-Cap Stock Fund
Fidelity Mid-Cap Stock Fund
The objective of this growth mutual fund is to increase the value of investments over the long term through capital growth.
The fund normally invests at least 65% of total assets in common stocks of companies with medium market capitalizations (those with market capitalizations similar to companies in the S&P MidCap 400). The fund may invest in companies with smaller or larger market capitalizations. The fund may also invest in domestic and foreign issuers.
  Small Cap Fund
Fidelity Small Cap Selector
This mutual fund seeks to obtain capital appreciation.
This fund normally invests at least 65% of total assets in securities of companies with small market capitalizations (those with market capitalizations similar to companies in the Russell 2000 ® Index). The fund will primarily invest in common stock. The fund may also invest in domestic and foreign issuers. This fund carries a “short-term trading fee” which is charged to discourage short-term buying and selling of fund shares. If shares are sold after being held for less than 90 days, the fund will deduct a short-term trading fee from your account equal to 1.5% of the value of the shares sold.

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  US Govt. Money Market Fund
Spartan US Government Money Market Fund
The objective of this fund is to obtain as high a level of current income as is consistent with preservation of capital and liquidity.
This fund invests in U.S. Government securities and repurchase agreements for those securities, and enters reverse repurchase agreements. The fund invests in compliance with industry-standard requirements for money market funds for the quality, maturity and diversification of investments.

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Exhibit 10-f-3
ROCKWELL COLLINS 2005
DEFERRED COMPENSATION PLAN
The purpose of this Plan is to provide certain specified benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of Rockwell Collins, Inc. and its affiliates. This Plan is unfunded for tax purposes and for purposes of Title I of ERISA.
This Plan is established effective as of January 1, 2005 for deferred compensation that was earned and vested after December 31, 2004 under the Rockwell Collins Deferred Compensation Plan and for compensation deferred for the period subsequent to the date this Plan is established.
ARTICLE I: DEFINITIONS
1.010   Account means one of the accounts established for the purpose of measuring and determining a Participant’s interest in this Plan, such accounts being the Participant’s Salary Deferral Account, Company Match Account, Incentive Compensation Deferral Account, and Performance Award Account.
 
1.020   Account Balance means, with respect to each Participant, an account in the records of the Company equal to the sum of the Participant’s:
  (a)   Salary Deferral Account balance;
 
  (b)   Company Match Account balance;
 
  (c)   Incentive Compensation Deferral Account balance; and
 
  (d)   Performance Award Account balance.
      The Account Balance (and each underlying balance making up such Account Balance) is a bookkeeping entry only and will be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his designated Beneficiary, pursuant to this Plan.
1.030   Affiliate means:
  (a)   any corporation incorporated under the laws of one of the United States of America of which the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty

 


 

      percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of Code Section 1563);
  (b)   any partnership or other business entity organized under such laws, of which the Company owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of Code Section 414(c)); and
 
  (c)   any other company deemed to be an Affiliate by the Company’s Board of Directors.
1.040   Annual Company Match Amount for any Plan Year means the amount determined in accordance with Section 3.030.
 
1.050   Annual Deferral Amount means that portion of a Participant’s Base Annual Salary, Incentive Compensation, and/or Performance Award which a Participant elects to have deferred, in accordance with Article III, for any one Plan Year. In the event of a Participant’s Retirement, Disability (if deferrals cease in accordance with Section 9.010), death or a Separation from Service prior to the end of a Plan Year, such year’s Annual Deferral Amount will be the actual amount withheld prior to such event.
 
1.060   Annual Installment Method means a benefit payment method involving a series of annual installment payments over the number of years selected by the Participant in accordance with this Plan, which will be calculated in the manner set forth in this Section. The Account Balance of the Participant will be determined as of the close of business on the last business day of the calendar year. The annual installment will be calculated by multiplying this balance by a fraction, the numerator of which is one (1), and the denominator of which is the remaining number of annual payments due the Participant. (By way of example, if a Participant were to elect a 10-year payment under the Annual Installment Method, the first payment would be one-tenth (1/10) of the Account Balance, calculated as described in this definition. The following year, the payment would be one-ninth (1/9) of the Account Balance, calculated as described in this definition.) Each annual installment will be paid within the first sixty (60) days of the calendar year following the applicable year.
 
1.070   Base Annual Salary means the Employee’s annualized salary rate for services performed by such Employee on behalf of the Company or an Affiliate, whether or not paid to him in such calendar year or included on the Federal Income Tax Form W-2 for such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, stock appreciation rights, restricted stock, restricted stock units, relocation expenses, incentive payments, Performance Awards, non-monetary awards, directors fees and other fees, automobile and other allowances (whether or not such allowances are included in the Employee’s gross income) paid to a Participant for employment services rendered. Base Annual Salary will be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Company or any Affiliate and will be calculated to include amounts not otherwise included in the Participant’s gross income under Code Section

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    125, 402(e)(3), 402(h), or 403(b), pursuant to plans established by the Company or an Affiliate; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Participant.
1.080   Beneficiary means one or more persons, trusts, estates or other entities, designated in accordance with Article XI who or which are entitled to receive benefits under this Plan upon the death of a Participant.
 
1.090   Beneficiary Designation Form means the written or electronic form established from time to time by the Committee or its delegate that a Participant completes, signs and returns to the Committee or its delegate, in order to designate one or more Beneficiaries.
 
1.100   Board of Directors means the Company’s Board of Directors.
 
1.110   Change of Control means any of the following:
  (a)   The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (z) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this Section 1.110; or
 
  (b)   Individuals who, as of the date hereof, constitute the Board of Directors of the Company (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 Company’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

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  (c)   Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Company Transaction”), in each case, unless, following such Company Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company 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 Company Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Company Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Company Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Company 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 Company Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Company 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 Company Transaction; or
 
  (d)   Approval by the Company’s shareowners of a complete liquidation or dissolution of the Company.
1.120   Code means the Internal Revenue Code of 1986, as from time to time amended.
 
1.130   Committee means the Compensation Committee of the Board of Directors.
 
1.140   Company means Rockwell Collins, Inc., a Delaware corporation.
 
1.150   Company Match Account means:
  (a)   the sum of all of a Participant’s Annual Company Match Amounts,
 
  (b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Company Match Account, and

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  (c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Company Match Account.
1.160   Deduction Limitation means the following described limitation on a benefit that may otherwise be distributable pursuant to the provisions of this Plan. Except as otherwise provided, this limitation will be applied to all distributions that are “subject to the Deduction Limitation” under this Plan. If the Company determines in good faith prior to a Change of Control that it is reasonably anticipated that any compensation paid to a Participant for a taxable year of the Company would not be deductible by the Company solely by reason of the limitation under Code Section 162(m), then, to the extent deemed necessary by the Company to ensure that the entire amount of any distribution to the Participant pursuant to this Plan prior to the Change of Control is deductible, the Company may defer all or any portion of a distribution under this Plan. Any amounts deferred pursuant to this limitation will continue to be credited/debited with additional amounts in accordance with Section 4.020(b), even if such amount is being paid out in installments. The amounts so deferred and amounts credited thereon will be distributed to the Participant or his Beneficiary (in the event of the Participant’s death) at the earlier of (a) the earliest possible date in the calendar year, as determined in good faith by the Company, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Company during which the distribution is made will not be limited by Section 162(m), or (b) the Participant’s Separation from Service or Retirement. Notwithstanding anything to the contrary in this Plan, the Deduction Limitation will not apply to any distributions made after a Change of Control.
 
1.170   Deferral Election means a written or electronic election made pursuant to Article III by a Participant to defer receipt of a part of his Base Annual Salary, or to defer receipt of all or a part of his Incentive Compensation, including without limitation any Performance Award.
 
1.180   Deferral Election Form means the form established from time to time by the Committee or its delegate that a Participant completes, signs and returns to the Committee or its delegate to make a Deferral Election pursuant to Article III, in order to defer receipt of a part of his Base Annual Salary or to defer receipt of all or a part of his Incentive Compensation, including without limitation any Performance Award.
 
1.190   Disability has the meanings set forth in Section 409A. Specifically, for purposes of this Plan and Section 409A, a Participant will be considered to have incurred a Disability if the Participant is:
  (a)   unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or
 
  (b)   by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of less than twelve (12) months, receiving income replacement benefits for

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      a period of not less than three (3) months under an accident or health plan covering employees of the Company or any Affiliate.
1.200   Effective Date means January 1, 2005.
 
1.210   Eligible Employee means:
  (a)   For the Plan Year commencing January 1, 2005, any Employee who is employed in the United States by the Company or any Affiliate whose Base Annual Salary for 2005 is greater than or equal to $110,000.
 
  (b)   For the Plan Year commencing January 1, 2006, any Employee who is employed in the United States by the Company or any Affiliate whose Base Annual Salary for 2006 is greater than or equal to $120,000.
 
  (c)   For Plan Years commencing on or after January 1, 2007, any Employee who is employed in the United States by the Company or an Affiliate whose Pay Grade on or after January 1, 2007 is equal to D5, E6, M0, or M5 through M9 before July 23, 2007, or is equal to D5, E6, M0, M1, or M6 through M9 on or after July 23, 2007.
1.220   Employee means any person who is employed by the Company or by an Affiliate.
 
1.230   ERISA means the Employee Retirement Income Security Act of 1974, as from time to time amended.
 
1.240   Exchange Act means the Securities Exchange Act of 1934, as amended.
 
1.245   409A Change of Control means a “Change of Control Event” as defined in Treasury Regulation Section 1.409A-3(i)(5)(i) and set forth in Treasury Regulation Section 1.409A-3(i)(5)(v)-(vii), applying the default rules and percentages set forth in such Treasury Regulation.
 
1.250   Incentive Compensation means any award payable to a Participant under an incentive compensation plan sponsored by the Company or an Affiliate which, but for a Deferral Election under the Plan, would be paid to the Participant and considered to be “wages” for purposes of United States federal income tax withholding, including without limitation any incentive compensation payable pursuant to the Company’s incentive payment plan(s) and annual incentive compensation plan(s) for Senior Executives, and any change of control agreement entered into between the Company and a Participant.
 
1.260   Incentive Compensation Deferral means a deferral by a Participant of part or all of his Incentive Compensation otherwise payable to him with respect to a particular fiscal year of the Company.
 
1.270   Incentive Compensation Deferral Account means:
  (a)   the sum of all of a Participant’s Incentive Compensation Deferrals,

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  (b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b) which are related to such Incentive Compensation Deferral Account, and
 
  (c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Incentive Compensation Deferral Account.
1.280   Measurement Funds means the investment vehicles offered under this Plan which are identified and described in communication materials made available to Participants by the Company, each of whose purpose is to mirror, to the greatest extent reasonably possible, the investment performance of a particular benchmark mutual fund sponsored and offered by Fidelity Investments.
 
1.290   Named Fiduciary means the Committee, its delegates, the Trustee and, following the occurrence of a Change of Control, the third-party fiduciary described in Section 14.020 of this Plan.
 
1.300   Non-Qualified Savings Plan means the Rockwell Collins 2005 Non-Qualified Retirement Savings Plan, as amended from time to time.
 
1.310   Participant means any Eligible Employee:
  (a)   who is an employee of Rockwell Collins, Inc. (or one of its Affiliates);
 
  (b)   who elects to participate in the Plan;
 
  (c)   who completes a Participation Agreement and a Beneficiary Designation Form;
 
  (d)   whose completed Participation Agreement and Beneficiary Designation Form are accepted by the Committee or its delegate;
 
  (e)   who commences participation in the Plan; and
 
  (f)   who has not elected to terminate participation in the Plan.
      A spouse or former spouse of a Participant will not be treated as a Participant in the Plan or have an Account Balance under the Plan, even if the spouse or former spouse has an interest in the Participant’s benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.
 
      Notwithstanding any other provision of this Plan to the contrary, no Eligible Employee or any other person, individual or entity shall become a Participant in this Plan on or after the day on which a Change of Control occurs.
1.320   Participation Agreement means a written or electronic agreement, as may be amended from time to time, which is provided to an Eligible Employee or Participant by the Committee or its delegate. Each such Participation Agreement will describe the benefits

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    to which such Participant is entitled under the Plan. The Participation Agreement bearing the latest date by the Committee or its delegate will supersede all previous such Participation Agreements in their entirety and will govern the Eligible Employee’s or Participant’s entitlement to benefits hereunder. The terms of any such Participation Agreement may be different for a particular Participant.
1.325   Performance Award means any Performance Share or Performance Unit awarded under (and as defined in) the Company’s 2001 Long-Term Incentives Plan or 2006 Long-Term Incentives Plan.
 
1.326   Performance Award Deferral means any deferral of a Performance Award made pursuant to and in accordance with the terms of this Plan.
 
1.328   Performance Award Account means:
  (a)   the sum of all of a Participant’s Performance Award Deferrals;
 
  (b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Performance Award Account; and
 
  (c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Performance Award Account.
1.330   Plan means this Rockwell Collins 2005 Deferred Compensation Plan, which is evidenced by this instrument and by the forms associated with the said instrument, as they may be amended from time to time.
 
1.340   Plan Year means each twelve-month period ending on the last day of December.
 
1.350   Pre-Retirement Survivor Benefit means the benefit set forth in Article VII.
 
1.360   Qualified Savings Plan means the Rockwell Collins Retirement Savings Plan, as amended from time to time.
 
1.370   Retirement , Retire(s) or Retired means, with respect to an Employee, “separation from service” with the Company and all of its Affiliates, within the meaning of Section 409A, on or after the attainment of age 55, other than for reasons of Disability or death.
 
1.380   Retirement Benefit means the benefit set forth in Article VI.
 
1.390   Salary Deferral Account means:
  (a)   the sum of all of a Participant’s Base Annual Salary deferral amounts,

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  (b)   adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Salary Deferral Account, and
 
  (c)   reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Salary Deferral Account.
1.400   Section 409A means Section 409A of the Code and any regulations or other guidance issued thereunder.
 
1.410   Separation from Service means a “separation from service” from the Company and all of its Affiliates, within the meaning of Section 409A, other than for reasons of Retirement or death.
 
1.420   Short-Term Payout means the payout set forth in Section 5.010 of the Plan.
 
1.430   Specified Employee has the meaning set forth in Section 409A, as determined each year in accordance with procedures established by the Company.
 
1.440   Termination Benefit means the benefit set forth in Article VIII.
 
1.450   Third-Party Administrator means an independent third party selected by the Trustee and approved by the individual who, immediately prior to a Change of Control, was the Company’s Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the “Ex-CEO”).
 
1.460   Trust means the master trust established by agreement between the Company and the Trustee, which will be a grantor trust.
 
1.470   Trustee means Wells Fargo Bank N.A., or any successor trustee of the Trust described in Section 1.460 of this Plan.
 
1.480   Unforeseeable Financial Emergency has the meaning set forth in Section 409A. Specifically, for purposes of this Plan and Section 409A, an Unforeseeable Financial Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary or unforeseeable circumstances arising as a result of events beyond the control of the Participant. The requirements of this Section 1.480 are met only if, as determined under the Section 409A regulations, the amount distributed with respect to the emergency does not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship may be relieved through reimbursement or compensation by insurance or otherwise by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

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ARTICLE II: PARTICIPATION
2.010   Select Group Defined . Since participation in the Plan is intended to be limited to a select group of management and highly compensated Employees, the Plan is only available to Eligible Employees of the Company and its Affiliates.
 
2.020   Commencement of Participation . As a condition to initial participation in this Plan, each Eligible Employee who wishes to participate in the Plan will be required to complete, execute and return to the Committee or its delegate a written or electronic Deferral Election Form.
 
    In the case of such an Eligible Employee’s initial election to become a Participant in a particular Plan Year (after taking into account the plan aggregation rules of Section 409A), such documentation must be provided by the Eligible Employee to the Committee or its delegate within thirty (30) days following his first becoming an Eligible Employee.
 
    If an Eligible Employee has met all enrollment requirements set forth in this Plan and required by the Committee or its delegate (including returning all required documents to the Committee or its delegate) in the time frames described in the above subsections, that the Eligible Employee will become a Plan Participant as soon as administratively practicable after he completes all such enrollment requirements, except that, if an individual becomes an Eligible Employee during the last three months of a calendar year, that Eligible Employee will become a Plan Participant on the first day of the next calendar year.
 
    If an Eligible Employee fails to meet all such requirements within the period required under this Section 2.020 that Eligible Employee will not be entitled to participate in the Plan until the first day of a subsequent Plan Year following the delivery to and acceptance by the Committee or its delegate of the required documents. In addition, the Committee or its delegate will establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.
 
2.030   Termination of Participation and/or Deferrals . If the Committee or its delegate determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with ERISA Sections 201(2), 301(a)(3) and 401(a)(1), the Committee will have the right, in its sole discretion, to prevent the Participant from making future deferral elections.
ARTICLE III: DEFERRAL AND COMPANY MATCH CREDITS
3.010   Base Annual Salary Deferral . Each Plan Participant will be permitted to make an irrevocable election to defer (such Deferral Election to be made in whole percentages) receipt of an amount equal to one percent (1%) through fifty percent (50%) of his Base Annual Salary.

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  (a)   For each Plan Year, a Participant, will be permitted, in his sole discretion, to make an irrevocable election to defer Base Annual Salary for the following Plan Year and must deliver such Deferral Election to the Company or an Affiliate on a new Deferral Election Form before December 31 st of the Plan Year immediately preceding the Plan Year for which the deferral is intended. If no such Deferral Election Form is timely delivered for a Plan Year, the Annual Deferral Amount will be zero for that Plan Year.
 
  (b)   Notwithstanding the foregoing, any Participant who first becomes eligible to participate in the Plan (taking into account the aggregation rules set forth in Section 409A) within the first nine months of a Plan Year may, within thirty (30) days after first becoming eligible to participate in the Plan (taking into account the plan aggregation rules set forth in Section 409A), make an irrevocable election to defer Base Annual Salary for the Plan Year commencing as soon as administratively practicable following the delivery of such written or electronic Deferral Election notice to the Company or an Affiliate.
 
  (c)   During each Plan Year, the Base Annual Salary Deferral Amount will be withheld from each regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Annual Salary.
3.020   Incentive Compensation Deferral . In addition to the Base Annual Salary deferral described in the preceding Section, each Participant will be permitted to irrevocably elect to defer receipt of an amount equal to one percent (1%) through one hundred percent (100%), such Deferral Election to be made in whole percentages, of the amount of any Incentive Compensation which he might be awarded.
  (a)   In general, such Deferral Election will be made on a Deferral Election Form and will apply to Incentive Compensation to which the Participant might be entitled for the fiscal year commencing immediately following such Deferral Election.
 
  (b)   Except as otherwise permitted by Section 409A, any election made pursuant to this Section 3.020 must be made by December 31st of the calendar year immediately preceding the calendar year in which the fiscal year to which such Incentive Compensation relates commences. Notwithstanding the foregoing, if the Company in its sole discretion determines that any Incentive Compensation meets the requirements for “performance-based compensation” within the meaning of Section 409A, such election may be made no later than the last day of the six (6) month period following the commencement of the fiscal year to which such Incentive Compensation relates.
 
      The Incentive Compensation Deferral Amount will be withheld at the time the said Incentive Compensation are or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself.
3.030   Annual Company Match Amount . A Participant’s Annual Company Match Amount for any Plan Year prior to the Plan Year commencing on January 1, 2006, will be equal to

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      the amount that the Company would have contributed to the Participant’s account in the Qualified Savings Plan as a matching contribution or other employer contribution to that Plan or would have credited such Participant’s account in the Non-Qualified Savings Plan as a matching credit or other similar credit, but for the fact that the Participant elected to defer Base Annual Salary pursuant to the provisions of Section 3.010 of this Plan. The Annual Company Match Amount which is attributable to a Participant’s Annual Salary Deferral Amount for a particular Plan Year will be calculated in the first month of the immediately succeeding Plan Year and will be credited to the Participant’s Company Match Account no later than January 31st of such succeeding Plan Year; provided, however, that such Annual Company Match Amounts shall be discontinued and shall no longer be in credited after such Amount is credited in January 2006.
 
      Subject to the provisions of the preceding paragraph of this Section:
  (a)   In the event of a Participant’s Retirement or death, the Participant’s Company Match Account will be credited with the Annual Company Match Amount for the Plan Year in which he retires or dies; and
 
  (b)   if a Participant is not employed by the Company or an Affiliate as of the last day of a Plan Year for any reason other than the Participant’s Retirement or death, the Annual Company Match for such Plan Year will be zero.
ARTICLE IV: PLAN ACCOUNTS
4.010   Vesting .
  (a)   A Participant will have a one hundred percent (100%) vested interest in his Account Balance.
 
  (b)   Notwithstanding anything to the contrary contained in this Plan, in the event of a Change of Control, a Participant’s Account Balance and any other interest of his under this Plan at the time of the occurrence of the Change of Control will remain one hundred percent (100%) vested, if such interest is already 100% vested at that time and, if such interest is not one hundred percent (100%) vested at that time, will immediately become one hundred (100%) vested.
4.020   Crediting/Debiting of Account Balances . In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee or its delegate, in its sole discretion, amounts will be credited or debited to a Participant’s Account Balance in the manner set forth in the provisions of this Section.
  (a)   Allocation to Measurement Funds . A Participant, in connection with his initial Deferral Election in accordance with Section 3.010 or 3.020 above, will be permitted to also elect to have one or more Measurement Funds used to determine the amounts to be credited to his Account Balance and his election will continue to be in effect thereafter, unless it should be changed in accordance with subsection (c). If it is determined by the Committee or its delegate that an

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      investment election made by a Participant is invalid or defective, the Participant’s election, until duly corrected by him, will be deemed to have been made in favor of the Fidelity Puritan ® Fund.
  (b)   Crediting or Debiting Method . The performance (either positive or negative) of each elected Measurement Fund will be determined by the Committee or its delegate, based on the performance of the Measurement Funds themselves. A Participant’s Account Balance will be credited or debited on a daily basis based on the performance of each Measurement Fund selected by the Participant, as determined by the Committee or its delegate in its sole discretion, as though:
  (1)   a Participant’s Account Balance were actually invested in the Measurement Fund(s) selected by the Participant as of the close of business on any business day, at the closing price on that day;
 
  (2)   the portion of the Annual Deferral Amount that was actually deferred during any pay period was invested in the Measurement Fund(s) selected by the Participant, in the percentages applicable on such day, no later than the close of business on the first business day after the day on which such amounts are actually deferred from the Participant’s Base Annual Salary through reductions in his payroll, at the closing price on such date; and
 
  (3)   any distribution made to a Participant that decreases such Participant’s Account Balance ceased being invested in the Measurement Fund(s), in the applicable percentages, no earlier than one business day prior to the distribution, at the closing price on such date.
  (c)   Transfers among Measurement Funds . The Participant will be permitted to change, on a daily basis, any previous Measurement Fund election or elections he has made with regard to his Account Balance. The elections and changes to such elections which a Participant makes pursuant to this subsection will be made by means of any method (including any available telephonic or electronic method which is acceptable to the Committee or its delegate at the time the election or change is made by the Participant), and may be made at any time and will be effective as of the New York Stock Exchange closing immediately following the making of that election or change; provided, however, if it is determined by the Committee or its delegate that an investment election made by a Participant is invalid or defective, the Participant’s election, until duly corrected by him, will be deemed to have been made in favor of whatever short-term, money market vehicle is available under the Plan at that time.
 
  (d)   No Actual Investment . Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation to his Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account Balance will not be considered or construed in any manner

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      as an actual investment of his Account Balance in any such Measurement Fund. In the event that the Company or the Trustee, in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant will have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Account Balance will at all times be a bookkeeping entry only and will not represent any investment made on his behalf by the Company or the Trust. The Participant will at all times remain an unsecured creditor of the Company.
  (e)   Company Reservation of Rights . Consistent with the preceding sentence, nothing to the contrary in this Plan or any of its forms or communication material, nor in any document associated with the Trust, should be interpreted or understood to provide Participants or their Beneficiaries with any current, direct rights with respect to the assets held by the Trustee in the Trust.
4.030   FICA and Other Taxes .
  (a)   Annual Deferral Amounts . For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Company or any Affiliate employing the Participant will withhold from that portion of the Participant’s Base Annual Salary, Incentive Compensation, or Performance Award which is being deferred the Participant’s share of FICA and other employment taxes on such Annual Deferral Amount.
 
  (b)   Annual Company Match Amounts . For each Plan Year in which Company Match Amount is credited to the Participant, the Company or any Affiliate employing the Participant will withhold the Participant’s share of FICA and other employment taxes on the amount credited to such Company Match Account.
 
  (c)   Distributions . The Company or any Affiliate employing the Participant, or the Trustee of the Trust, will withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Company and the trustee of the Trust.

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ARTICLE V: SHORT-TERM PAYOUTS, IN-SERVICE WITHDRAWALS
AND 409A CHANGE OF CONTROL PAYMENTS
5.010   Short-Term Payouts . In connection with each election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive a future Short-Term Payout from the Plan with respect to such Salary Deferral Account, Company Match Account, Incentive Compensation Deferral Account, and Performance Award Account. Any such election must be made no later than December 31st of the Plan Year immediately preceding the Plan Year to which such Annual Deferral Amount relates.
  (a)   Subject to the Deduction Limitation, the said Short-Term Payout will be a lump sum payment in an amount that is equal to the Annual Deferral Amount and Annual Company Match Amount, as adjusted for amounts credited or debited in the manner provided in Section 4.020 on that amount.
 
  (b)   Subject to the Deduction Limitation and the other terms and conditions of this Plan, each Short-Term Payout elected will be paid out during a sixty (60) day period commencing immediately after the last day of any Plan Year designated by the Participant that is at least three Plan Years after the Plan Year in which the Annual Deferral Amount is actually deferred. By way of example, if a three-year Short-Term Payout is elected for Annual Deferral Amounts that are deferred in the Plan Year commencing January 1, 2008, the three-year Short-Term Payout would become payable during a sixty (60) day period commencing January 1, 2012.
 
  (c)   Should an event occur that triggers a benefit under Article VI or VII, any Annual Deferral Amount, plus amounts credited or debited thereon, that is subject to a Short-Term Payout election under this Section will not be paid in accordance with this Section, but will instead be paid in accordance with the other applicable Article.
5.020   Withdrawal for Unforeseeable Financial Emergencies . In the event that any Participant should encounter an Unforeseeable Financial Emergency, such Participant may:
  (a)   petition the Committee or its delegate to suspend any deferrals required to be made on his behalf, and/or
 
  (b)   petition the Committee or its delegate to permit him to receive a partial or full payout from the Plan. Such a payout will not exceed the lesser of:
  (1)   the Participant’s Account Balance, calculated as if the Participant were receiving a Termination Benefit; and
 
  (2)   the amount reasonably needed to satisfy the Unforeseeable Financial Emergency.

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    If, subject to the sole discretion of the Committee or its delegate, the petition for a suspension and/or payout is approved, suspension will take effect on the date of approval and any payout will be made within sixty (60) days of the date of approval. The payment of any amount under this Section will not be subject to the Deduction Limitation.
5.030   409A Change of Control Payments . Notwithstanding any other provision of this Plan to the contrary, a Participant may elect to have his interest in and to Accounts hereunder paid in a lump sum, in the event of the occurrence of a 409A Change of Control, subject to the following:
  (a)   To be effective, the election of a Participant pursuant to this Section 5.030 must be made in writing and filed with the Committee or filed electronically on or before December 31st of the calendar year immediately preceding the Plan Year in which such Base Annual Salary, Incentive Compensation Base Contribution Deferrals, Performance Award or Annual Company Match Amounts were deferred. Once an election is made pursuant to this Section 5.030 it shall remain in effect for all future years unless an election is made before December 31st of the calendar year immediately preceding such future Plan Year. Except as otherwise provided in Section 10.020, such election shall become irrevocable. Notwithstanding the foregoing, a Participant may elect to make the election described in this Section 5.030 with respect to his interest in and to Accounts hereunder that were earned prior to January 1, 2009 no later than December 31, 2008 (or such other date as is permitted under Section 409A and approved by the Senior Vice President, Human Resources of the Company).
 
  (b)   Any lump sum payments which are to be made on account of the occurrence of a 409A Change of Control shall be made within forty-five (45) days following such 409A Change of Control.
 
  (c)   Notwithstanding the foregoing, if the Participant does not file a timely written or electronic election in accordance with Section 5.030(a) to receive or not receive his or her Accounts under the Plan in a lump sum upon a 409A Change of Control, then such Participant’s Accounts under the Plan will automatically be paid in a lump sum upon a 409A Change of Control.
ARTICLE VI: RETIREMENT BENEFITS
6.010   Retirement Benefit . Subject to the Deduction Limitation, a Participant who Retires will receive, as a Retirement Benefit, his Account Balance.
 
6.020   Payment of Retirement Benefit . A Participant, in connection with his commencement of participation in the Plan, may elect to receive the Retirement Benefit in a lump sum or pursuant to an Annual Installment Method of periods of from two (2) through fifteen (15) years. The Participant may change any election he has previously made to a different payout period permitted hereunder, but only one such a change may be made with respect to any single election. Such change will be accomplished by the Participant notifying the Committee or its delegate, but such change will not be valid, unless it has been

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    submitted by the Participant and accepted by the Committee or its delegate (in the Committee’s or delegate’s discretion) in accordance with the rules set forth in Section 10.020. The Participant’s most recent election accepted by the Committee or its delegate shall govern the payout of the Retirement Benefit. If a Participant does not make any election with respect to the payment of the Retirement Benefit, then such benefit shall be payable in a lump sum. The lump sum payment shall be made, or installment payments shall commence, within the first sixty (60) days following the Plan Year in which the Participant Retires. Any payment made shall be subject to the Deduction Limitation.
6.030   Death Prior to Completion of Retirement Benefit . If a Participant dies after Retirement distributions commence but before the Retirement Benefit is paid in full, the Participant’s unpaid Retirement Benefit payments shall continue and shall be paid to the Participant’s Beneficiary over the remaining number of years and in the same amounts and form and time of payment as that benefit would have been paid to the Participant had the Participant survived.
ARTICLE VII: PRE-RETIREMENT SURVIVOR BENEFIT
7.010   Pre-Retirement Survivor Benefit . Subject to the Deduction Limitation, the Participant’s Beneficiary shall receive a Pre-Retirement Survivor Benefit equal to the Participant’s Account Balance if the Participant dies before he Retires or experiences a Separation from Service.
 
7.020   Payment of Pre-Retirement Survivor Benefit . Any Pre-Retirement Survivor Benefit payable pursuant to Section 7.010 will be paid in a lump sum within the first sixty days of the calendar year following the year which includes the Participant’s death. Such lump sum payment will be paid to the Participant’s beneficiary as designated on the Beneficiary Designation Form most recently filed in writing or electronically with the Committee or its delegate prior to the Participant’s death. Any such payment made will be subject to the Deduction Limitation.
ARTICLE VIII: SEPARATION FROM SERVICE BENEFIT
8.010   Separation from Service Benefit . Subject to the Deduction Limitation, the Participant will receive a Separation from Service Benefit, which will be equal to the Participant’s Account Balance if a Participant experiences a Separation from Service prior to his Retirement or death.
 
8.020   Payment of Separation from Service Benefit . The form of payment of a Participant’s Account Balance, if such payment is due to the Participant’s Separation from Service, will in all cases be a lump sum in cash. Payment of such Separation from Service Benefit will be paid within the first sixty (60) days of the calendar year immediately following the Plan Year which includes the Participant’s Separation from Service.
ARTICLE IX: DISABILITY WAIVER AND BENEFIT
9.010   Disability Waiver .

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  (a)   Waiver of Deferral . A Participant who is determined by the Committee or its delegate to be suffering from a Disability will be excused from fulfilling that portion of the Annual Deferral Amount commitment that would otherwise have been withheld from his Base Annual Salary, Incentive Compensation or Performance Awards for the Plan Year during which he first suffers a Disability. During the period of Disability, such Participant will continue to be considered a Participant for all other purposes of this Plan.
 
  (b)   Return to Work . If a Participant returns to employment after a Disability ceases, subject to Section 409A, the Participant may continue to defer an Annual Deferral Amount for the remainder of the Plan Year and for every Plan Year thereafter while he is a Participant in the Plan.
ARTICLE X: SECTION 409A
10.010   Section 409A Generally . This Plan is intended to comply with Section 409A. Notwithstanding any other provision of this Plan to the contrary, the Company makes no representation that this Plan or any amounts payable or benefits provided under this Plan will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to this Plan.
 
10.020   Changes in Elections . Notwithstanding any other provision of this Plan to the contrary, once an election is made pursuant to this Plan it shall be irrevocable unless all of the following conditions are met:
  (a)   the election to change the time or form of payment will not become effective until the date that is one year after the date on which the election to make the change is made;
 
  (b)   except with respect to any payment to be made upon the death of a Participant, the form of payment, as changed, will defer payment for the Plan Year until five (5) years later than the date that payment of such Participant’s Account Balances would otherwise have been made under this Plan; and
 
  (c)   with respect to a payment that is to be made upon a fixed date or schedule of dates, the election to change the form of payment is made no less than twelve (12) months before the date that payment of the Account Balances for that Plan Year was otherwise scheduled to be paid.
    For purposes of Section 10.020(b) and (c), all payments scheduled to be made in the form of installments attributable to a particular Plan Year will be treated as scheduled to be made on the date that the first installment of such series of payments is otherwise scheduled to be made (that is, the installments will be treated as an entitlement to a single payment for purposes of Section 409A).
 
    Once a change in election is made and recorded pursuant to the Plan, such election will be irrevocable unless all of the conditions of this Section 10.020 are met.

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    Notwithstanding any other provision of this Plan to the contrary, a Participant will be permitted to make only one change in election pursuant to this Section 10.020 with respect to the Account Balances to which such election relates.
10.030   Six Month Wait for Specified Employees . Notwithstanding any other provision of this Plan to the contrary, to the extent that any Account payable under the Plan constitute an amount payable upon Separation from Service or Retirement to any Participant under the Plan who is deemed to be a Specified Employee, then such amount will not be paid during the six (6) month period following such Separation from Service or Retirement. If the provisions of this Section 10.030 apply to a Participant who incurs a Separation from Service or Retirement, within the first six (6) months of the calendar year, then such amount will be paid within the first sixty (60) days following the close of the calendar year which includes the Participant’s Separation from Service or Retirement. If the provisions of this Section 10.030 apply to a Participant who incurs a Separation from Service or Retirement within the last six (6) months of the calendar year, then such amount will be paid within the first sixty (60) days after June 30th of the calendar year following the year in which includes the Participant’s Separation from Service or Retirement.
ARTICLE XI: BENEFICIARY DESIGNATION
11.010   Beneficiary . Each Participant will have the right, at any time, to designate his Beneficiary or Beneficiaries (both primary and contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.
 
11.020   Beneficiary Designation or Change of Designation . A Participant will be permitted to designate his Beneficiary by completing and signing a written or electronic Beneficiary Designation Form, and returning it to the Committee or its delegate. A Participant will have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the written or electronic Beneficiary Designation Form and the Committee’s or its delegate’s rules and procedures, as in effect from time to time. Upon the acceptance by the Committee or its delegate of a new written or electronic Beneficiary Designation Form, all Beneficiary designations previously filed will be canceled. The Committee or its delegate will be entitled to rely on the last written or electronic Beneficiary Designation Form filed by the Participant and accepted by the Committee or its delegate prior to the Participant’s death.
 
11.030   Spousal Consent Required . If a Participant names someone other than his spouse as a Beneficiary, a spousal consent, in the written or electronic form designated by the Committee or its delegate, must be signed by that Participant’s spouse and returned to the Committee or its delegate.
 
11.040   Acknowledgment . No designation or change in designation of a Beneficiary will be effective until received and acknowledged by the Committee or its delegate.

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11.050     Absence of Valid Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in the preceding Sections or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s designated Beneficiary will be deemed to be his surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary will be payable to the executor or personal representative of the Participant’s estate.
 
11.060   Doubt as to Beneficiary . Subject to and in accordance with Section 409A, if the Committee or its delegate has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee or its delegate will have the right, exercisable in its discretion, to withhold such payments until this matter is resolved to the Committee’s or the delegate’s satisfaction.
 
11.070   Discharge of Obligations . The payment of benefits under the Plan to a Beneficiary will fully and completely discharge the Company and all of its Affiliates and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant’s participation in this Plan will terminate upon such full payment of benefits.
ARTICLE XII: LEAVE OF ABSENCE
12.010   Paid Leave of Absence . Subject to Section 409A, if a Participant is authorized by the Company or the Affiliate employing the Participant for any reason to take a company-paid leave of absence, the Participant will continue to be considered to be an Eligible Employee and the Annual Deferral Amount will continue to be withheld during such paid leave of absence. Notwithstanding the foregoing, such withholding will cease on the date such paid leave of absence is deemed to be a Separation from Service for purposes of Section 409A.
 
12.020   Unpaid Leave of Absence . Subject to Section 409A, if a Participant is authorized by the Company or the Affiliate employing the Participant to take an unpaid leave of absence, the Participant will continue to be considered an Eligible Employee and the Participant will not be permitted to make deferrals until the Participant returns to a paid employment status. Upon such return, deferrals will resume for the remaining portion of the Plan Year in which the return occurs, based on the deferral election, if any, made for that Plan Year. If no election was made for that Plan Year, no deferral will be withheld.
ARTICLE XIII: TERMINATION, AMENDMENT OR MODIFICATION
13.010   Termination . Although the Company and each Affiliate anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that the Company or any such Affiliate will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, the Company reserves the right to discontinue sponsorship of the Plan and/or to terminate the Plan at any time with respect to any or all of its participating Employees, by action of the Board of Directors. Notwithstanding the foregoing, except as otherwise permitted by Section 409A, in the event of any termination of the Plan, any

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    amounts payable under the Plan shall continue to be paid in accordance with the terms of the Plan in effect on the date of Plan termination.
13.020   Amendment . The Company may, at any time, amend or modify the Plan in whole or in part by action of the Board of Directors; provided, however, that:
  (a)   no amendment or modification shall be effective to decrease or restrict the value of a Participant’s Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Separation from Service as of the effective date of the amendment or modification or, if the amendment or modification occurs after the date upon which the Participant was eligible to Retire, the Participant had Retired as of the effective date of the amendment or modification;
 
  (b)   no amendment or modification of this Section 13.020 Plan shall be effective; and
 
  (c)   the amendment or modification of the Plan shall not affect any Participant or Beneficiary who has become entitled to the payment of benefits under the Plan as of the date of the amendment or modification.
13.030   Effect of Payment . The full payment of all applicable benefits hereunder shall completely discharge all obligations to a Participant and his Beneficiaries under this Plan.
ARTICLE XIV: ADMINISTRATION
14.010   Committee Duties . Except as otherwise provided in this Article, this Plan will be administered by the Committee and its delegates. Members of the Committee may be Participants under this Plan. The Committee will also have the discretion and authority to:
  (a)   make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan, and
 
  (b)   decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan.
 
  Any individual serving on the Committee who is a Participant will not be permitted to vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Committee will be entitled to rely on information furnished by a Participant or the Company.
14.020   Administration Upon Change of Control . Notwithstanding any other provision of this Plan to the contrary, upon and after the occurrence of a Change of Control, the Plan will be administered by the Third-Party Administrator. The Third-Party Administrator so selected will have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to, benefit entitlement determinations; provided, however, upon

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    and after the occurrence of a Change of Control, such administrator will have no power to direct the investment of Plan or Trust assets or select any investment manager or custodial firm for the Plan or Trust.
    Upon and after the occurrence of a Change of Control, the Company will be required to:
  (a)   pay all reasonable administrative expenses and fees of the Third-Party Administrator;
 
  (b)   indemnify the Third-Party Administrator against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of such administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the said administrator or its employees or agents; and
 
  (c)   supply full and timely information to the Third-Party Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account Balances of the Participants, the date of circumstances of the Retirement, Disability, death or Separation from Service of the Participants, and such other pertinent information as the Third-Party Administrator may reasonably require.
    Upon and after a Change of Control, the Third-Party Administrator may not be terminated by the Company and may only be terminated (and a replacement appointed) by the Trustee, but only with the approval of the Ex-CEO.
14.030   Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to the Company or any Affiliate. The Company’s Vice President, Compensation and Benefits will at all times, unless otherwise determined by the Committee, be deemed to be and shall be specifically referred to herein as the Committee’s delegate for all purposes herein.
 
14.040   Binding Effect of Decisions . The decision or action of the Committee or its delegate with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder will be final and conclusive and binding upon all persons having any interest in the Plan.
 
14.050   Indemnity of Committee . The Company and its Affiliates shall indemnify and hold harmless the members of the Committee, any Employee to whom the duties of the Committee may be delegated, and the Committee or its delegate against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members, or such Employee.

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14.060   Employer Information . To enable the Committee and its delegates to perform their functions, the Company will supply full and timely information to the Committee and delegates on all matters relating to the compensation of its Participants, the date and circumstances of the Retirement, Disability, death or circumstances of the Retirement, Disability, death or Separation from Service of its Participants, and such other pertinent information as the Committee or its delegate may reasonably require.
ARTICLE XV: OTHER BENEFITS AND AGREEMENTS
15.10   Coordination with Other Benefits . The benefits provided for a Participant and Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Company and its Affiliates. The Plan will supplement and will not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.
ARTICLE XVI: CLAIMS PROCEDURE
16.010   Presentation of Claim . Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee or its delegate a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant. All other claims must be made within one hundred and eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.
 
16.020   Notification of Decision . The Committee or its delegate will consider a Claimant’s claim within a reasonable time, and will notify the Claimant in writing:
  (a)   that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or
 
  (b)   that the Committee or its delegate has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant;
 
  (c)   the specific reason(s) for the denial of the claim, or any part of it;
  (1)   specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
 
  (2)   a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and
 
  (3)   an explanation of the claim review procedure set forth in Section 16.030 below.

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16.030   Review of a Denied Claim . Within sixty (60) days after receiving a notice from the Committee or its delegate that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee or its delegate a written request for a review of the denial of the claim. Thereafter, but not later than thirty (30) days after the review procedure began, the Claimant (or the Claimant’s duly authorized representative):
  (a)   may review pertinent documents;
 
  (b)   may submit written comments or other documents; and/or
 
  (c)   may request a hearing, which the Committee or its delegate, in its sole discretion, may grant.
16.040   Decision on Review . The Committee or its delegate will render any decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee’s or its delegate’s decision must be rendered within one hundred and twenty (120) days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:
  (a)   specific reasons for the decision;
 
  (b)   specific reference(s) to the pertinent Plan provisions upon which the decision was based; and
 
  (c)   such other matters as the Committee or its delegate deems relevant.
16.050   Legal Action . A Claimant’s compliance with the foregoing provisions of this Article XVI is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan.
ARTICLE XVII: TRUST
17.010   Establishment of the Trust . The Company shall establish the Trust (which may be referred to herein as a “Rabbi Trust”). The Trust shall become irrevocable upon a Change of Control (to the extent not then irrevocable). Notwithstanding any other provision of this Plan to the contrary, the Trust shall not become irrevocable or funded with respect to this Plan upon the occurrence of an event described in Section 1.110(d). After the Trust has become irrevocable with respect to the Plan, except as otherwise provided in Section 12 of the Trust, the Trust shall remain irrevocable with respect to the Plan until all benefits due under the Plan and benefits and account balances due to participants and beneficiaries under any other plan covered by the Trust have been paid in full. Upon establishment of the Trust, the Company shall provide for funding of the Trust in accordance with the terms of the Trust.

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17.020   Interrelationship of the Plan and the Trust . The provisions of the Plan and each Participant’s Participation Agreement will govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust will govern the rights of the Company and its Affiliates, Participants and the creditors of the Company and its Affiliates to the assets transferred to the Trust. The Company and each of its Affiliates employing any Participant will at all times remain liable to carry out their obligations under the Plan.
 
17.030   Distributions From the Trust . The Company’s and each of its Affiliate’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution will reduce their obligations under this Plan.
 
17.040   Rabbi Trust . The Rabbi Trust shall:
  (a)   be a non-qualified grantor trust which satisfies in all material respects the requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable authority);
 
  (b)   become irrevocable upon a Change of Control, to the extent not then irrevocable (other than an event described in Section 1.110(d)); and
 
  (c)   provide that any successor trustee shall be a bank trust department or other party that may be granted corporate trustee powers under state law.
ARTICLE XVIII: MISCELLANEOUS
18.010   Status of Plan . The Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Section 201(2), 301(a)(3) and 401(a)(1). The Plan will be administered and interpreted to the extent possible in a manner consistent with that intent.
 
18.020   Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Company or its Affiliates. For purposes of the payment of benefits under this Plan, any and all of the Company’s or Affiliate’s assets shall be, and remain, the general, unpledged unrestricted assets of the Company or Affiliate. The Company or Affiliate’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
 
18.030   Company Liability . The Company’s or an Affiliate’s liability for the payment of benefits will be defined only by the Plan and the Participant’s specific Participation Agreement. The Company and its Affiliates will have no obligation to a Participant under the Plan, except as expressly provided in the Plan and the Participant’s Participation Agreement.

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18.040   Nonassignability . Neither a Participant nor any other person will have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable will, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.
 
18.050   Not a Contract of Employment . The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Company or any of its Affiliates and the Participant. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Company or an Affiliate or to interfere with the right of the Company or an Affiliate to discipline or discharge the Participant at any time.
 
18.060   Furnishing Information . A Participant or his Beneficiary will cooperate with the Committee or its delegate by furnishing any and all information requested by the Committee or its delegate and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder.
 
18.070   Terms . Whenever any words are used herein in the masculine, they should be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they should be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
 
18.080   Captions . The captions of the articles, sections and paragraphs of this Plan are for convenience only and do not control or affect the meaning or construction of any of its provisions.
 
18.090   Governing Law . Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the laws of the State of Iowa.
 
18.100   Notice . Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:
Vice President, Compensation and Benefits
Rockwell Collins, Inc.
400 Rockwell Collins Road NE
Cedar Rapids, Iowa 52498

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    Such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
 
    Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.
18.110   Successors . The provisions of this Plan shall bind and inure to the benefit of the Company and its successors and assigns and the Participant and the Participant’s designated Beneficiaries.
 
18.120   Spouse’s Interest . The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant will automatically pass to the Participant and will not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor will such interest pass under the laws of intestate succession.
 
18.130   Validity . In case any provision of this Plan should be found to be illegal or invalid for any reason, said illegality or invalidity will not affect the remaining parts hereof, but this Plan should be construed and enforced as if such illegal or invalid provision had never been inserted herein.
 
18.140   Minors, Incompetent Persons, etc . If the Committee or its delegate determines that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Committee or its delegate may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee or its delegate may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and will be a complete discharge of any liability under the Plan for such payment amount.
 
18.150   Qualified Domestic Relations Order . The Committee or its delegate is authorized to make any payments directed by court order that qualifies as a “qualified domestic relations order” under Section 414(p) in any action in which the Plan or the Committee has been named as a party.
 
18.160   Distribution in the Event of Taxation .
  (a)   In General . Subject to and in accordance with Section 409A, if, for any reason, all or any portion of a Participant’s benefits under this Plan becomes taxable to the Participant under Section 409A prior to receipt, a Participant may petition the Committee or its delegate before a Change of Control, or the Trustee of the Trust after a Change of Control, for a distribution of that portion of his benefit that has become taxable under Section 409A. Upon the grant of such a petition, which grant should not be unreasonably withheld (and, after a Change of Control, must be granted), the Company or, as applicable, its Affiliate will distribute to the

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      Participant immediately available funds in an amount equal to the taxable portion of his benefit (which amount will not exceed a Participant’s unpaid Account Balance under the Plan). If the petition is granted, the tax liability distribution will be made within 90 days of the date when the Participant’s petition is granted. Such a distribution will affect and reduce the benefits to be paid under this Plan.
  (b)   Trust . If the Trust terminates in accordance with provisions thereof and benefits are distributed from the Trust to a Participant in accordance therewith, the Participant’s benefits under this Plan will be reduced to the extent of such distributions.
18.170   Insurance . The Company, on its own behalf or on behalf of the trustee of the Trust, and, in its discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Trust may choose. The Company or the trustee of the Trust, as the case may be, will be the sole owner and beneficiary of any such insurance. The Participant will have no interest whatsoever in any such policy or policies, and at the request of the Company will submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to which the Company has applied for insurance.
18.180   Requirement for Release . Any payment to any Participant or a Participant’s present, future or former spouse or Beneficiary in accordance with the provisions of this Plan will, to the extent thereof, be in full satisfaction of all claims against the Plan, the Trustee and the Company, and the Trustee may require such Participant or Beneficiary, as a condition precedent to such payment to execute a receipt and release to such effect.

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Exhibit 10-g-2
ROCKWELL COLLINS
NON-QUALIFIED SAVINGS PLAN
This Plan is a continuation of the Rockwell International Corporation Non-Qualified Savings Plan. Effective as of June 29, 2001, Rockwell Collins, Inc. assumed such plan and all liabilities thereunder with respect to the Rockwell Collins Participants (as defined in the Employee Matters Agreement) and such plan has been renamed as the Rockwell Collins Non-Qualified Savings Plan. For purposes of retaining “grandfathered” status under Section 409A of the Internal Revenue Code of 1986, as amended, the Plan was amended effective as of January 1, 2005 to limit the Plan to account balances that were earned and vested as of December 31, 2004 (and any earnings deemed credited thereon).
ARTICLE I
DEFINITIONS
1.010 Account means the account or accounts established for a Participant pursuant to Article II hereof.
1.020 Affiliate means:
  (a)   any corporation incorporated under the laws of one of the United States of America of which the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of Code §1563);
 
  (b)   any partnership or other business entity organized under such laws, of which the Company owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of Code §414(c)); and
 
  (c)   any other company deemed to be an Affiliate by the Board of Directors.
1.030 Annual Addition Limitation means the limitation on the annual additions to the account of a participant in the Qualified Savings Plan imposed by §415(c) of the Code.
1.040 Base Compensation means Base Compensation, as that term is defined in the Qualified Savings Plan.
1.050 Base Compensation Deferral means the difference between:
  (a)   the amount which, but for application of the Compensation Limit or the Annual Addition Limitation, a Participant would have contributed as a Participant Contribution to the Qualified Savings Plan with respect to each payroll period, pursuant to his then existing election under that Plan; and

 


 

  (b)   the Participant’s actual Participant Contribution to the Qualified Savings Plan with respect to such payroll period as a result of imposition of the Compensation Limit or the Annual Addition Limitation.
1.060 Board of Directors means the Company’s Board of Directors.
1.070 Change of Control means any of the following occurring at any time after June 29, 2001:
  (a)   The acquisition by any individual, entity or group (within the meaning of §13(d)(3) or §14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company, Rockwell or any corporation controlled by the Company or Rockwell or (z) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this Section 1.070; or
 
  (b)   Individuals who, as of June 29, 2001, constitute the Board of Directors of the Company (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 Company’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
 
  (c)   Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Company Transaction”), in each case, unless, following such Company Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company 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 Company Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior

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      to such Company Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of the Company, of Rockwell or of such corporation resulting from such Company Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Company 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 Company Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Company 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 Company Transaction; or
 
  (d)   Approval by the Company’s shareowners of a complete liquidation or dissolution of the Company.
1.080 Code means the Internal Revenue Code of 1986, as amended.
1.090 Committee means the Compensation Committee of the Board of Directors.
1.100 Company means Rockwell Collins, Inc., a Delaware corporation, and its predecessor, Rockwell International Corporation.
1.110 Compensation Limit means the limitation imposed by §401(a)(17) of the Code on the amount of Base Compensation which can be considered in determining the amount of an individual’s Participant Contributions to the Qualified Savings Plan.
1.120 Employee means any person who is employed by the Company or by an Affiliate, including, to the extent permitted by §406 of the Code, any United States citizen regularly employed by a foreign Affiliate of the Company.
1.130 Employee Matters Agreement means the Employee Matters Agreement dated as of June 29, 2001 by and among Rockwell International Corporation, New Rockwell Collins, Inc. and Rockwell Scientific Company LLC.
1.140 ERISA means the Employee Retirement Income Security Act of 1974, as amended.
1.150 Matching Credit means an amount to be credited to the Plan by the Company, which shall be equal to the applicable Matching Company Contribution percentage applied to a Participant’s Participant Contribution under the Qualified Savings Plan.
1.160 Participant means an individual who is a participant in the Qualified Savings Plan who is a Rockwell Collins Participant (as defined in the Employee Matters Agreement) and whose Participant Contributions to that Plan are restricted by the Compensation Limit or the Annual Addition Limitation and who has elected in the Plan Year immediately preceding the current Plan Year to have one or more Base Compensation Deferrals credited to his Account pursuant to Article II; provided, however, that in the case of this Plan’s initial Plan Year, such election shall be made prior to the pay period in which such a restriction comes into effect. Notwithstanding

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any other provision of this Plan or the Qualified Savings Plan to the contrary, no Employee or any other person, individual or entity shall become a Participant in this Plan on or after the day on which a Change of Control occurs.
1.170 Plan means this Rockwell Collins Non-Qualified Savings Plan and its predecessor, the Rockwell International Corporation Non-Qualified Savings Plan.
1.180 Plan Administrator means the person from time to time so designated by name or corporate office by the Board of Directors.
1.190 Plan Year means each twelve-month period ending on the last day of December.
1.200 Qualified Savings Plan means the Rockwell Collins Salaried Savings Plan.
1.210 Securities Exchange Act means the Securities Exchange Act of 1934, as amended.
1.215 Section 409A means Section 409A of the Code and any regulations and other guidance issued thereunder.
1.220 Sub-Account refers to one of this Plan’s investment vehicles (corresponding to the Qualified Savings Plan Investment Funds) to which a Participant’s Base Compensation Deferrals and the Company’s Matching Credits are assigned.
1.230 Third-Party Administrator means an independent third party selected by the Trustee and approved by the individual who, immediately prior to a Change of Control, was the Company’s Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the “Ex-CEO”).
1.240 Trust means the master trust established by agreement between the Company and the Trustee, which trust will be a grantor trust.
1.250 Trustee means Wells Fargo Bank, N.A., or any successor trustee of the Trust described in Section 1.240 of this Plan.
1.260 2005 Plan means the Rockwell Collins 2005 Non-Qualified Retirement Savings Plan.
Terms which are not otherwise defined in this Article I shall have the meanings set forth in the Qualified Savings Plan document.
ARTICLE II
CREDITING, VALUATION AND DISTRIBUTION OF ACCOUNTS
2.010 The Company will establish on its books a Non-Qualified Savings Plan Account for each Participant who elects a Base Compensation Deferral.
  (a)   The amount of such Base Compensation Deferral shall be credited to such Account and allocated to one or more of this Plan’s Sub-Accounts in the manner set forth in this Section.

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  (1)   Each such credit shall be made to such Account no later than the date on which the corresponding contribution to the Qualified Savings Plan is made or would have been made, but for imposition of the Compensation Limit or the Annual Addition Limitation; provided, however, that any such credits made as a result of any retroactive amendment to the Plan shall be made upon adoption thereof, but in amounts which reflect the value such credits would have had if that amendment had been in effect on its effective date and such contributions had been made on the respective dates of the corresponding contributions to the Qualified Savings Plan.
 
  (2)   The Base Compensation Deferral shall, in increments of one percent (1%) and with the total of the percentage increments equaling one hundred percent (100%), be allocated to the Sub-Account or Sub-Accounts under this Plan pursuant to separate Participant elections made in a method identical to the method in which the Participant’s elections are made among Investment Funds under the Qualified Savings Plan.
 
  (3)   A Participant may change any previous election he has made regarding investment of his Base Compensation Deferrals under this Plan in the same manner as he may change his previous elections regarding investment of his Participant Contributions in the Qualified Savings Plan.
  (b)   At the time each Base Compensation Deferral is credited to a Participant’s Account, a Matching Credit shall also be made to such Account. Such Matching Credit shall be allocated to the Sub-Accounts under this Plan in the same manner in which Matching Contributions are allocated under the Qualified Savings Plan.
2.020 With respect to Base Compensation Deferrals, a Participant may elect to make the Sub-Account transfers in the same manner as is described in the Qualified Savings Plan and, in such case, the value of the Participant’s interest in the Sub-Accounts hereunder shall be similarly transferred to one or more of the other Sub-Accounts.
2.030 Each of a Participant’s Sub-Accounts shall be accounted for in the manner and valued at the times and pursuant to the method provided in the Qualified Savings Plan for the Qualified Savings Plan Investment Fund corresponding to such Sub-Account. A Participant’s rights in and to his Sub-Accounts shall be governed by the provisions of the Qualified Savings Plan which are applicable to the Investment Fund corresponding to such Sub-Account.
2.040 The distribution and withdrawal provisions of the Qualified Savings Plan shall have no application to this Plan. Distribution to a Participant of his Sub-Accounts hereunder shall only be made upon the Participant’s termination of employment or retirement. All such distributions to Participants, as well as distributions made to beneficiaries here under, shall be made in the form of lump sum payments, subject to the following:
A Participant may make a one-time, irrevocable election to have the value of such interest paid in no more than ten (10) annual installments, such installments to be equal to the value of the Participant’s Sub-Accounts divided by the number of installments remaining at the time of distribution; provided, however, that such election must be made by the Participant at least one (1) year prior to the Participant’s retirement or termination of employment.

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2.050 A Participant or beneficiary who is currently receiving installment payments from this Plan may elect to have his interest in and to Sub-Accounts hereunder paid in a lump sum, in the event of the occurrence of a Change of Control, subject to the following:
  (a)   To be effective, the election of a Participant or beneficiary pursuant to this Section must be made in writing and filed with the Committee prior to the occurrence of a Change of Control.
 
  (b)   Such election shall be revocable by the Participant or his beneficiary until such time as a Change of Control shall have occurred at which point the said election shall be irrevocable.
 
  (c)   Notwithstanding any provision of this Plan to the contrary, such election may only be made by a Participant or beneficiary of a Participant who first became eligible to participate in the Rockwell International Corporation Non-Qualified Savings Plan prior to June 29, 2001.
2.060 With respect to distributions which are payable to a Participant or, in the event of the Participant’s death, to his beneficiary:
  (a)   Subject to subsection (c), lump sum payments shall be paid no later than within sixty (60) days following the close of the calendar year which includes the Participant’s retirement, termination of employment or, if applicable, death.
 
  (b)   Subject to subsection (c), each annual installment payable shall be paid within sixty (60) days following the close of each calendar year during the payment period, commencing with the calendar year following the year which includes the Participant’s retirement, termination of employment or, if applicable, death.
 
  (c)   Lump sum payments which are to be made on account of the occurrence of a Change of Control shall be made within forty-five (45) days following a Change of Control.
All distributions from the Stock Fund Sub-Accounts, whether in the form of lump sum or installment payments, shall be made in cash.
2.070 A Participant shall have the right, at any time, to designate any person or persons as his beneficiary or beneficiaries (both principal as well as contingent) to whom distribution under this Plan shall be made in the event of his death prior to distribution of his Account. In the absence of such designation, the beneficiary designation filed by him under the Qualified Savings Plan shall be controlling, except that if the Participant has a spouse and his beneficiary designation under the Qualified Savings Plan specifies a beneficiary other than such spouse, such designation, to the extent permitted by applicable law, shall be effective under this Plan notwithstanding the fact that such spouse may not have consented to such designation as required by the Qualified Savings Plan.
2.080 Each Participant shall receive a statement of his Account at the times and in the form in which his Qualified Savings Plan statement is provided.

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ARTICLE III
CLAIMS PROCEDURE
3.010 Any person claiming a right to participate in this Plan, claiming a benefit under this Plan or requesting information under this Plan shall present the claim or request in writing to the Committee, who shall respond in writing within ninety (90) days following his receipt of the request.
3.020 If the claim or request is denied, the written notice of denial shall state:
  (a)   the reasons for denial;
 
  (b)   a description of any additional material or information required and an explanation of why it is necessary; and
 
  (c)   an explanation of this Plan’s claim review procedure.
3.030 Any person whose claim or request is denied may make a request for review by notice given in writing to the Committee.
3.040 A decision on a request for review shall normally be made within ninety (90) days after the date of such request. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be extended by an additional sixty (60) days from the date of such request. The decision shall be in writing and shall be final and binding on all parties concerned.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.010 The Board of Directors shall have the power to amend, suspend or terminate this Plan at any time, except that no such action shall adversely affect rights with respect to any Account without the consent of the person affected.
4.020 This Plan shall be interpreted and administered by the Committee; provided, that interpretations by the Plan Administrator of those provisions of the Qualified Savings Plan which are also applicable to this Plan shall be binding on the Committee.
Notwithstanding any other provision of this Plan to the contrary, upon and after the occurrence of a Change of Control, the Plan will be administered by the Third-Party Administrator. The Third-Party Administrator will have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited, to Account balance determinations; provided, however, upon and after the occurrence of a Change of Control, such administrator will have no power to direct the investment of Plan or Trust assets or select any investment manager or custodial firm for the Plan or Trust.
Upon and after the occurrence of a Change of Control, the Company will be required to:
  (a)   pay all reasonable administrative expenses and fees of the Third-Party Administrator;

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  (b)   indemnify the Third-Party Administrator against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of such administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the said administrator or its employees or agents; and
 
  (c)   supply full and timely information to the Third-Party Administrator on all matters relating to the Plan, the Trust, the Participants and their beneficiaries, the Account balances of the Participants, the date of circumstances of the retirement, disability, death or termination of employment of the Participants, and such other pertinent information as the Third-Party Administrator may reasonably require.
 
  (d)   Upon and after a Change of Control, the Third-Party Administrator may not be terminated by the Company and may only be terminated (and a replacement appointed) by the Trustee, but only with the approval of the Ex-CEO (as defined in Section 1.230).
4.030 This Plan is an unfunded employee benefit plan primarily for providing deferred compensation to an identified group of management or highly compensated employees of the Company and is also an excess benefit plan (as defined by §3(36) of ERISA). This Plan is intended to be unfunded for tax purposes and for purposes of Title I of ERISA. Participants and their beneficiaries, estates, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Company or any of its Affiliates. Any and all of the assets of the Company and its Affiliates shall be, and remain, the general, unpledged, unrestricted assets of the Company and its Affiliates. The Company’s and any Affiliate’s sole obligation under this Plan shall be merely that of an unfunded and unsecured promise of the Company or such Affiliate to pay money in the future.
4.040 Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of actual receipt, any interest in an Account. Each Account and all rights therein are and shall be nonassignable and nontransferable prior to actual distribution as provided by this Plan. Any such attempted assignment or transfer shall be ineffective with respect to the Company and with respect to any Affiliate, and the Company’s and any Affiliate’s sole obligation shall be to distribute Accounts to Participants, their beneficiaries or estates as appropriate. No part of any Account shall, prior to actual payment as provided by this Plan, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any Account be transferable by operation of law in the event of a Participant’s or any other persons bankruptcy or insolvency, except as otherwise required by law.
4.050 This Plan shall not be deemed to constitute a contract of employment between the Company or any of its Affiliates and any Participant, and no Participant, beneficiary or estate shall have any right or claim against the Company or any of its Affiliates under this Plan except as may otherwise be specifically provided in this Plan. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Company or any Affiliate or to interfere with the right of the Company or any Affiliate to discipline, discharge or change the status of a Participant at any time.

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4.060 A Participant will cooperate with the Committee by furnishing any and all information requested by the Committee or its delegates in order to facilitate the distribution of his Accounts under this Plan and by taking such other action as may be reasonably requested by the Committee or its delegates.
4.070 Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the laws of the State of Iowa. In the event that any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of this Plan, which shall be construed and enforced as if such illegal or invalid provision were not included in this Plan. The provisions of this Plan shall bind and obligate the Company and its Affiliates and their successors, including, but not limited to, any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company or its Affiliates and the successors of any such company or other business entity.
4.080 The Company shall bear all expenses and costs in connection with the operation and administration of this Plan. The Company, its Affiliates, the Committee and any employee of the Company or any of its Affiliates shall be fully protected in relying in good faith on the computations and reports made pursuant to or in connection with this Plan by the independent certified public accountants who audit the Company’s accounts.
4.090 All words used in this Plan in the masculine gender shall be construed as if used in the feminine gender where appropriate. All words used in this Plan in the singular or plural shall be construed as if used in the plural or singular where appropriate.
ARTICLE V
TRUST
5.010 Establishment of the Trust . The Company shall establish the Trust (which may be referred to herein as a “Rabbi Trust”). The Trust shall become irrevocable upon a Change of Control (to the extent not then irrevocable). After the Trust has become irrevocable with respect to the Plan, except as otherwise provided in Section 12 of the Trust, the Trust shall remain irrevocable with respect to the Plan until all the Account balances due under this Plan and all benefits and/or account balances due to the participants (and their beneficiaries) in any other plan covered by the Trust have been paid in full. Upon establishment of the Trust, the Company shall provide for funding of the Trust in accordance with the terms of the Trust.
5.020 Interrelationship of the Plan and the Trust. The provisions of the Plan and any Participants Participation Agreement Form will govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust will govern the rights of the Company and its Affiliates, Participants and the creditors of the Company and its Affiliates to the assets transferred to the Trust. The Company and each of its Affiliates employing any Participant will at all times remain liable to carry out their obligations under the Plan.
5.030 Distributions From the Trust . The Company’s and each of its Affiliate’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution will reduce their obligations under this Plan.

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5.040 Rabbi Trust . The Rabbi Trust shall:
  (a)   be a non-qualified grantor trust which satisfies in all material respects the requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable authority);
 
  (b)   be irrevocable upon a Change of Control (to the extent not then irrevocable); and
 
  (c)   provide that any successor trustee shall be a bank trust department or other party that may be granted corporate trustee powers under state law.
ARTICLE VI
SECTION 409A
Effective as of January 1, 2005, for purposes of retaining “grandfathered” status under Section 409A, this Plan is limited to account balances that were earned and vested as of December 31, 2004 (and any earnings deemed credited thereon). Effective as of January 1, 2005, any account balances under the Plan that were earned and vested after December 31, 2004 (and any earnings deemed credited thereon) will be credited under, and all liabilities related thereto will be transferred to, the 2005 Plan.

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Exhibit 10-g-3
ROCKWELL COLLINS 2005
NON-QUALIFIED RETIREMENT SAVINGS PLAN
The purpose of this Plan is to provide benefits in excess of the Annual Additions Limitation (as defined below) to a group of employees and to provide benefits in excess of the Compensation Limit (as defined below) to a select group of management or highly compensated employees of Rockwell Collins, Inc. and its affiliates. This Plan is unfunded for tax purposes and for purposes of Title I of ERISA.
This Plan is established effective as of January 1, 2005 for account balances that were earned and vested after December 31, 2004 under the Rockwell Collins Non-Qualified Retirement Savings Plan and for new account balances subsequent to the date this Plan is established.
ARTICLE I
DEFINITIONS
1.010 Account means the account or accounts established for a Participant pursuant to Article II hereof.
1.020 Affiliate means:
  (a)   any corporation incorporated under the laws of one of the United States of America of which the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of Code Section 1563);
 
  (b)   any partnership or other business entity organized under such laws, of which the Company owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of Code Section 414(c)); and
 
  (c)   any other company deemed to be an Affiliate by the Board of Directors.
1.030 Annual Additions Limitation means the limitation on the annual additions to the account of a participant in the Qualified Retirement Savings Plan imposed by Section 415(c) of the Code.
1.040 Base Compensation means Base Compensation, as that term is defined in the Qualified Retirement Savings Plan.
1.050 Base Compensation Deferral means the difference between:
  (a)   the amount which, but for application of the Compensation Limit or the Annual Additions Limitation, a Participant would have contributed as a Participant Contribution to the Qualified Retirement Savings Plan with respect to each payroll period, pursuant to his existing election under that Plan as of December 31st of the immediately preceding year; and

 


 

  (b)   the Participant’s actual Participant Contribution to the Qualified Retirement Savings Plan with respect to such payroll period as a result of imposition of the Compensation Limit or the Annual Additions Limitation.
1.060 Board of Directors means the Company’s Board of Directors.
1.070 Change of Control means any of the following:
  (a)   The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (z) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this Section 1.070; or
 
  (b)   Individuals who, as of the date hereof, constitute the Board of Directors of the Company (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 Company’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
 
  (c)   Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Company Transaction”), in each case, unless, following such Company Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company Transaction beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares

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      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 Company Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Company Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Company Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Company 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 Company Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Company 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 Company Transaction; or
  (d)   Approval by the Company’s shareowners of a complete liquidation or dissolution of the Company.
1.080   Code means the Internal Revenue Code of 1986, as amended.
 
1.090   Committee means the Compensation Committee of the Board of Directors.
 
1.100   Company means Rockwell Collins, Inc., a Delaware corporation.
1.110   Company Matching Contribution Credits means an amount to be credited to the Plan by the Company, which shall be equal to the applicable Company Matching Contribution percentage applied to a Particiant’s contribution under the Qualified Retirement Savings Plan.
1.120   Company Retirement Contribution Credits means an amount to be credited to the Plan by the Company, which shall be equal to the applicable Company Retirement Contribution percentage applied to a Participant’s Eligible Compensation under the Qualified Retirement Savings Plan.
1.130   Compensation Limit means the limitation imposed by Section 401(a)(17) of the Code on the amount of compensation which can be considered in determining the amount of contributions to the Qualified Retirement Savings Plan.
1.140   Employee means any person who is employed by the Company or by an Affiliate, including, to the extent permitted by Section 406 of the Code, any United States citizen regularly employed by a foreign Affiliate of the Company.
1.150   ERISA means the Employee Retirement Income Security Act of 1974, as amended.

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1.160   409A Change of Control means a “Change of Control Event” as defined in Treasury Regulation Section 1.409A-3(i)(5)(i) and set forth in Treasury Regulation Section 1.409A-3(i)(5)(v)-(vii), applying the default rules and percentages set forth in such Treasury Regulation.
1.170   Participant means an individual who is a participant in the Qualified Retirement Savings Plan and whose Participant Contributions to that Plan are restricted by the Compensation Limit or the Annual Additions Limitation and who has elected in the Plan Year immediately preceding the current Plan Year to have one or more Base Compensation Deferrals credited to his Account pursuant to Article II. Notwithstanding any other provision of this Plan or the Qualified Retirement Savings Plan to the contrary, no Employee or any other person, individual or entity shall become a Participant in this Plan on or after the day on which a Change of Control occurs.
1.180   Plan means this Rockwell Collins 2005 Non-Qualified Retirement Savings Plan.
1.190   Plan Administrator means the person from time to time so designated by name or corporate office by the Board of Directors.
 
1.200   Plan Year means each twelve-month period ending December 31st.
 
1.210   Pre-2005 Plan means the Rockwell Collins Non-Qualified Savings Plan.
1.220   Retirement means “separation from service” from the Company and all of its Affiliates, within the meaning of Section 409A, on or after attainment of age 55 other than for reason of death.
1.230   Qualified Retirement Savings Plan means the Rockwell Collins Retirement Savings Plan.
1.240   Section 409A means Section 409A of the Code and any regulations and other guidance issued thereunder.
 
1.250   Securities Exchange Act means the Securities Exchange Act of 1934, as amended.
1.260   Separation from Service means a “separation from service” from the Company and all of its Affiliates, within the meaning of Section 409A, other than for reasons of Retirement or death.
1.270   Specified Employee has the meaning set forth in Section 409A, as determined each year in accordance with procedures established by the Company.
1.280   Sub-Accounts refers to one of this Plan’s investment vehicles (corresponding to the Qualified Retirement Savings Plan investment funds) to which a Participant’s Base Compensation Deferrals, Company’s Matching Contribution Credits, and Company Retirement Contribution Credits are assigned.
1.290   Third-Party Administrator means an independent third party selected by the Trustee and approved by the individual who, immediately prior to a Change of Control, was the Company’s Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the “Ex-CEO”).

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1.300   Trust means the master trust established by agreement between the Company and the Trustee, which trust will be a grantor trust.
1.310   Trustee means Wells Fargo Bank, N.A., or any successor trustee of the Trust described in Section 1.300 of this Plan.
Terms which are not otherwise defined in this Article I shall have the meanings set forth in the Qualified Retirement Savings Plan document.
ARTICLE II
CREDITING, VALUATION AND DISTRIBUTION OF ACCOUNTS
2.010   The Company will establish on its books a Non-Qualified Retirement Savings Plan Account for each Participant who elects a Base Compensation Deferral.
  (a)   The amount of such Base Compensation Deferral shall be credited to such Account and allocated to one or more of this Plan’s Sub-Accounts in the manner set forth in this Section.
  (1)   Each such credit shall be made to such Account no later than the date on which the corresponding contribution to the Qualified Retirement Savings Plan is made or would have been made, but for imposition of the Compensation Limit or the Annual Additions Limitation; provided, however, that any such credits made as a result of any retroactive amendment to the Plan shall be made upon adoption thereof, but in amounts which reflect the value such credits would have had if that amendment had been in effect on its effective date and such contributions had been made on the respective dates of the corresponding contributions to the Qualified Retirement Savings Plan.
 
  (2)   The Base Compensation Deferral shall, in increments of one percent (1%) and with the total of the percentage increments equaling one hundred percent (100%), be allocated to the Sub-Account or Sub-Accounts under this Plan pursuant to separate Participant elections made in a method identical to the method in which the Participant’s elections are made among Investment Funds under the Qualified Retirement Savings Plan.
 
  (3)   A Participant may change any previous election he has made regarding deemed investment of his Base Compensation Deferrals under this Plan in the same manner as he may change his previous elections regarding investment of his Participant Contributions in the Qualified Retirement Savings Plan.
 
  (4)   If a Participant fails to make a deemed investment election with respect to his Base Compensation Deferrals under this Plan, the Participant will be deemed to have elected to have his Base Compensation Deferrals under this Plan invested in accordance with the default investment fund option under the Qualified Retirement Savings Plan.

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  (5)   Notwithstanding any other provision of this Plan to the contrary, any deemed investment elections made by the Participant with respect to Sub-Accounts under this Plan shall be considered recommendations as to the investment of such Sub-Accounts and the Company reserves the right in it sole discretion to choose whether to honor such deemed investment elections.
  (b)   At the time each Base Compensation Deferral is credited to a Participant’s Account, a Company Matching Contribution Credit shall also be made to such Account. Such Company Matching Contribution Credit shall be allocated to the Sub-Accounts under this Plan in the same manner in which Company Matching Contributions are allocated under the Qualified Retirement Savings Plan.
 
  (c)   Notwithstanding any other provision of this Plan to the contrary, this Plan is limited to Base Compensation Deferrals and Company Matching Contribution Credits that were earned and vested after December 31, 2004 (and any earnings deemed credited thereon), and Company Retirement Contribution Credits earned after October 1, 2006. Upon the establishment of this Plan, any Accounts under the Pre-2005 Plan that were not earned and vested as of December 31, 2004, and all liabilities associated therewith, were transferred to Accounts under this Plan. No Base Compensation Deferrals or Company Matching Contribution Credits that were earned and vested as of December 31, 2004 (or any earnings deemed credited thereon) shall be credited to any Account under this Plan.
 
  (d)   Notwithstanding any other provision of this Plan to the contrary, for purposes of determining any Base Compensation Deferrals or Company Matching Contribution Credits with respect to any Participant for any Plan Year, the Participant’s written or electronic election to make Participant Contributions to the Qualified Retirement Savings Plan in effect on December 31st of the year immediately preceding such Plan Year shall be deemed to be fixed and shall be deemed to be the election to defer compensation under this Plan for purposes of Section 409A. Effective for Plan Years beginning on and after January 1, 2008, no change to the Participant’s written or electronic election to make Participant Contributions to the Qualified Retirement Savings Plan during such Plan Year shall be effective for purposes of determining Base Compensation Deferrals or Company Matching Contribution Credits under this Plan for such Plan Year. For Plan Years beginning on and after January 1, 2005 and before January 1, 2008, for purposes of determining any Base Compensation Deferrals or Company Matching Contribution Credits with respect to a Participant for such Plan Year, the Participant’s written or electronic election to make Participant Contributions to the Qualified Retirement Savings Plan in effect on December 31st of the year immediately preceding such Plan Year shall be deemed to be fixed and irrevocable except for decreases permitted in accordance with good faith operational compliance with Section 409A and shall be deemed to be the election to defer compensation under this Plan for purposes of Section 409A.

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  (e)   Notwithstanding any other provision of this Plan to the contrary, each Participant who first becomes eligible to participate in the Plan during a Plan Year (taking into account the plan aggregation rules set forth in Section 409A) may make a one-time election to have Base Compensation Deferrals deferred to this Plan effective for the period after the date such election is made. For purposes of this Section 2.010(e), the Participant’s election to the Qualified Retirement Savings Plan in effect on the date that such Participant submits the written or electronic enrollment forms for the Qualified Retirement Savings Plan shall be deemed to be the election for deferrals to this Plan for the remainder of such calendar year. No change to such new Participant’s election to make Participant Contributions to the Qualified Retirement Savings Plan after the date of such deemed election shall be effective for purposes of determining Base Compensation Deferrals or Company Matching Contribution Credits under this Plan for such Plan Year.
 
      Effective October 1, 2006, for each pay period that the employee is a Participant in this Plan, the Company will make a Company Retirement Contribution Credit in accordance with the Company Retirement Contribution the employee would have received in the Qualified Retirement Savings Plan. Subject to Section 2.010(a)(5), such contributions shall be allocated to the Sub-Account or Sub-Accounts under this Plan pursuant to separate deemed Participant elections made in the same manner in which the Participant’s elections are made among Investment Funds under the Qualified Retirement Savings Plan.
2.020   With respect to Base Compensation Deferrals, a Participant may elect to make the Sub-Account deemed investment transfers in the same manner as is described in the Qualified Retirement Savings Plan and, in such case, the value of the Participant’s interest in the Sub-Accounts hereunder shall be similarly transferred (in one percent (1%) increments, in number of units or in specified dollar amounts) to one or more of the other Sub-Accounts.
2.030   Each of a Participant’s Sub-Accounts shall be accounted for in the manner and valued at the times and pursuant to the method provided in the Qualified Retirement Savings Plan for the Qualified Retirement Savings Plan Investment Fund corresponding to such Sub-Account. A Participant’s rights in and to his Sub-Accounts shall be governed by the provisions of the Qualified Retirement Savings Plan which are applicable to the Investment Fund corresponding to such Sub-Account.
2.040   The distribution and withdrawal provisions of the Qualified Retirement Savings Plan shall have no application to this Plan. Distribution to a Participant of his Sub-Accounts hereunder shall only be made upon the Participant’s Separation from Service, Retirement, death or, subject to the terms and conditions set forth in Section 2.050, 409A Change of Control. All such distributions to Participants, as well as distributions made to beneficiaries hereunder, shall be made in the form of lump sum payments, subject to the following:
  (a)   Effective for Plan Years beginning on or after January 1, 2008, except as otherwise provided in Section 2.040(b) below, a Participant may make a one-time, irrevocable election to have the value of such interest paid in no more than

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      ten (10) annual installments commencing upon Retirement, such installments to be equal to the value of the Participant’s Sub-Accounts divided by the number of installments remaining at the time of distribution; provided, however, that such election must be made by the Participant no later than December 31st of the calendar year immediately preceding the Plan Year to which such Base Compensation Deferrals, Company Matching Contribution Credits, and Company Retirement Contribution Credits relate. Except as otherwise provided in Section 6.020, such election shall be irrevocable.
 
  (b)   Notwithstanding the foregoing, effective for Plan Years beginning on or after January 1, 2008, any Accounts deferred on behalf of the Participant for the first Plan Year in which a Participant becomes eligible to participate in the Plan (taking into account the plan aggregation rules set forth in Section 409A) will be paid in a lump sum, unless the Participant has made a distribution election (either in writing or filed electronically) on or before December 31 of the calendar year immediately preceding the Plan Year to which such Base Compensation Deferrals, Company Matching Contribution Credits, and Company Retirement Contribution Credits relate.
2.050   A Participant may elect to have his Accounts hereunder paid in a lump sum, in the event of the occurrence of a 409A Change of Control, subject to the following:
  (a)   To be effective, the election of a Participant pursuant to this Section 2.050 must be made in writing and filed with the Committee or filed electronically on or before December 31st of the calendar year immediately preceding the Plan Year in which such Base Contribution Deferrals, Company Matching Contribution Credits, and Company Retirement Contribution Credits relating to such installment payment were earned. Once an election is made pursuant to this Section 2.050 it shall remain in effect for all future years unless an election is made before December 31st of the calendar year immediately preceding such future Plan Year. Except as otherwise provided in Section 6.020, such election shall become irrevocable. Notwithstanding the foregoing, a Participant may elect to make the election described in this Section 2.050 with respect to his interest in and to Sub-Accounts hereunder that were earned prior to January 1, 2009 no later than December 31, 2008 (or such other date as is permitted under Section 409A and approved by the Senior Vice President, Human Resources of Rockwell Collins).
 
  (b)   Notwithstanding the foregoing, if the Participant does not file a timely written or electronic election in accordance with Section 2.050(a) to receive or not receive his or her Accounts under the Plan in a lump sum upon a 409A Change of Control, then such Participant’s Accounts under the Plan will automatically be paid in a lump sum upon a 409A Change of Control.

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2.060   With respect to distributions which are payable to a Participant or, in the event of the Participant’s death, to his beneficiary:
  (a)   Subject to Section 6.030, any lump sum payments shall be paid within the sixty (60) day period following the close of the calendar year which includes the Participant’s Separation from Service, Retirement or, if applicable, death.
 
  (b)   Subject to Section 6.030, each annual installment payable shall be paid within the sixty (60) day period following the close of each calendar year during the payment period, commencing with the calendar year following the year which includes the Participant’s Retirement or, if applicable, death.
 
  (c)   Any lump sum payments which are to be made on account of the occurrence of a 409A Change of Control shall be made within forty-five (45) days following such 409A Change of Control.
 
  (d)   All distributions from the Stock Fund Sub-Accounts, whether in the form of lump sum or installment payments, shall be made in cash.
2.070   A Participant shall have the right, at any time, to designate any person or persons as his beneficiary or beneficiaries (both principal as well as contingent) to whom distribution under this Plan shall be made in the event of his death prior to distribution of his Account. In the absence of such designation, the beneficiary designation filed by him under the Qualified Retirement Savings Plan shall be controlling, except that if the Participant has a spouse and his beneficiary designation under the Qualified Retirement Savings Plan specifies a beneficiary other than such spouse, such designation, to the extent permitted by applicable law, shall be effective under this Plan notwithstanding the fact that such spouse may not have consented to such designation as required by the Qualified Retirement Savings Plan.
2.080   Each Participant shall receive a statement of his Account at the times and in the form in which his Qualified Retirement Savings Plan statement is provided.
2.090   Notwithstanding any other provision of this Plan to the contrary, if a Participant dies prior to commencement of distribution of his Accounts under the Plan, such Accounts will be paid in a lump sum to his designated beneficiary within the sixty (60) day period following the close of the calendar year which includes the Participant’s death.
2.100   Notwithstanding any other provision of this Plan to the contrary, if a Participant dies after the commencement of distribution of his Accounts under the Plan, such Accounts will be paid in the form elected by the Participant pursuant to Section 2.040.
ARTICLE III
CLAIMS PROCEDURE
3.010   Any person claiming a right to participate in this Plan, claiming a benefit under this Plan or requesting information under this Plan shall present the claim or request in writing to the Committee or the person or entity designated by the Committee, who shall respond in writing within ninety (90) days following receipt of such request.

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3.020   If the claim or request is denied, the written notice of denial shall state:
  (a)   the reasons for denial;
 
  (b)   a description of any additional material or information required and an explanation of why it is necessary; and
 
  (c)   an explanation of this Plan’s claim review procedure.
3.030   Any person whose claim or request is denied may make a request for review by notice given in writing to the Committee.
3.040   A decision on a request for review shall normally be made within ninety (90) days after the date of such request. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be extended by an additional sixty (60) days from the date of such request. The decision shall be in writing and shall be final and binding on all parties concerned.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.010   The Board of Directors shall have the power to amend, suspend or terminate this Plan at any time, except that no such action shall adversely affect rights with respect to any Account without the consent of the person affected. Notwithstanding the foregoing, except as otherwise permitted by Section 409A, in the event of any termination of the Plan, any amounts payable under the Plan shall continue to be paid in accordance with the terms of the Plan in effect on the date of Plan termination.
4.020   This Plan shall be interpreted and administered by the Committee; provided, that interpretations by the Plan Administrator of those provisions of the Qualified Retirement Savings Plan which are also applicable to this Plan shall be binding on the Committee.
 
    Notwithstanding any other provision of this Plan to the contrary, upon and after the occurrence of a Change of Control, the Plan will be administered by the Third-Party Administrator. The Third-Party Administrator will have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited, to Account balance determinations; provided, however, upon and after the occurrence of a Change of Control, such administrator will have no power to direct the investment of Plan or Trust assets or select any investment manager or custodial firm for the Plan or Trust.
 
    Upon and after the occurrence of a Change of Control, the Company will be required to:
  (a)   pay all reasonable administrative expenses and fees of the Third-Party Administrator;
 
  (b)   indemnify the Third-Party Administrator against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of such administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the said administrator or its employees or agents; and

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  (c)   supply full and timely information to the Third-Party Administrator on all matters relating to the Plan, the Trust, the Participants and their beneficiaries, the Account balances of the Participants, the date of circumstances of the Separation from Service, Retirement or death of the Participants, and such other pertinent information as the Third-Party Administrator may reasonably require.
 
  (d)   Upon and after a Change of Control, the Third-Party Administrator may not be terminated by the Company and may only be terminated (and a replacement appointed) by the Trustee, but only with the approval of the Ex-CEO (as defined in Section 1.290).
4.030   This Plan is an unfunded employee benefit plan primarily for providing deferred compensation to a select group of management or highly compensated employees of the Company pursuant to the Compensation Limitation and is also an excess benefit plan (as defined by Section 3(36) of ERISA) with respect to the Annual Additions Limitation. This Plan is intended to be unfunded for tax purposes and for purposes of Title I of ERISA. Participants and their beneficiaries, estates, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Company or any of its Affiliates. Any and all of the assets of the Company and its Affiliates shall be, and remain, the general, unpledged, unrestricted assets of the Company and its Affiliates. The Company’s and any Affiliate’s sole obligation under this Plan shall be merely that of an unfunded and unsecured promise of the Company or such Affiliate to pay money in the future.
4.040   Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of actual receipt, any interest in an Account. Each Account and all rights therein are and shall be nonassignable and nontransferable prior to actual distribution as provided by this Plan. Any such attempted assignment or transfer shall be ineffective with respect to the Company and with respect to any Affiliate, and the Company’s and any Affiliate’s sole obligation shall be to distribute Accounts to Participants, their beneficiaries or estates as appropriate. No part of any Account shall, prior to actual payment as provided by this Plan, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any Account be transferable by operation of law in the event of a Participant’s or any other persons bankruptcy or insolvency, except as otherwise required by law.
4.050   This Plan shall not be deemed to constitute a contract of employment between the Company or any of its Affiliates and any Participant, and no Participant, beneficiary or estate shall have any right or claim against the Company or any of its Affiliates under this Plan except as may otherwise be specifically provided in this Plan. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Company or any Affiliate or to interfere with the right of the Company or any Affiliate to discipline, discharge or change the status of a Participant at any time.
4.060   A Participant will cooperate with the Committee by furnishing any and all information requested by the Committee or its delegates in order to facilitate the distribution of his Accounts under this Plan and by taking such other action as may be reasonably requested by the Committee or its delegates.

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4.070   Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the laws of the State of Iowa. In the event that any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of this Plan, which shall be construed and enforced as if such illegal or invalid provision were not included in this Plan. The provisions of this Plan shall bind and obligate the Company and its Affiliates and their successors, including, but not limited to, any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company or its Affiliates and the successors of any such company or other business entity.
4.080   The Company shall bear all expenses and costs in connection with the operation and administration of this Plan. The Company, its Affiliates, the Committee and any employee of the Company or any of its Affiliates shall be fully protected in relying in good faith on the computations and reports made pursuant to or in connection with this Plan by the independent certified public accountants who audit the Company’s accounts.
4.090   All words used in this Plan in the masculine gender shall be construed as if used in the feminine gender where appropriate. All words used in this Plan in the singular or plural shall be construed as if used in the plural or singular where appropriate.
ARTICLE V
TRUST
5.010   Establishment of the Trust . The Company shall establish the Trust (which may be referred to herein as a “Rabbi Trust”). The Trust shall become irrevocable upon a Change of Control (to the extent not then irrevocable). Notwithstanding any other provision of this Plan to the contrary, the Trust shall not become irrevocable or funded with respect to this Plan upon the occurrence of an event described in Section 1.070(d). After the Trust has become irrevocable with respect to the Plan, except as otherwise provided in Section 12 of the Trust, the Trust shall remain irrevocable with respect to the Plan until all the Account balances due under this Plan and all benefits and/or account balances due to the participants (and their beneficiaries) in any other plan covered by the Trust have been paid in full. Upon establishment of the Trust, the Company shall provide for funding of the Trust in accordance with the terms of the Trust.
5.020   Interrelationship of the Plan and the Trust . The provisions of the Plan will govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust will govern the rights of the Company and its Affiliates, Participants and the creditors of the Company and its Affiliates to the assets transferred to the Trust. The Company and each of its Affiliates employing any Participant will at all times remain liable to carry out their obligations under the Plan.

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5.030   Distributions From the Trust . The Company’s and each of its Affiliate’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution will reduce their obligations under this Plan.
 
5.040   Rabbi Trust . The Rabbi Trust shall:
  (a)   be a non-qualified grantor trust which satisfies in all material respects the requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable authority);
 
  (b)   be irrevocable upon a Change of Control, to the extent not then irrevocable (other than an event described in Section 1.070(d)); and
 
  (c)   provide that any successor trustee shall be a bank trust department or other party that may be granted corporate trustee powers under state law.

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ARTICLE VI
SECTION 409A
6.010   Section 409A Generally . This Plan is intended to comply with Section 409A. Notwithstanding any other provision of this Plan to the contrary, the Company makes no representation that this Plan or any amounts payable or benefits provided under this Plan will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to this Plan.
6.020   Changes in Elections . Notwithstanding any other provision of this Plan to the contrary, once an election is made pursuant to this Plan it shall be irrevocable unless all of the following conditions are met:
  (a)   the election to change the time or form of payment will not become effective until the date that is one year after the date on which the election to make the change is made;
 
  (b)   except with respect to any payment to be made upon the death of a Participant, the form of payment, as changed, will defer payment of the Participant’s Account Balances until five (5) years later than the date that payment of such Participant’s Accounts would otherwise have been made under this Plan; and
 
  (c)   with respect to a payment that is to be made upon a fixed date or schedule of dates, the election to change the form of payment is made no less than twelve (12) months before the date that payment of the Accounts was otherwise scheduled to be paid.
    For purposes of Section 6.020(b) and (c), all payments scheduled to be made in the form of installments that are attributable to a particular Plan Year will be treated as scheduled to be made on the date that the first installment of such series of payments is otherwise scheduled to be made (that is, the installments will be treated as an entitlement to a single payment for purposes of Section 409A).
 
    Once a change in election is made and recorded pursuant to the Plan, such election will be irrevocable unless all of the conditions of this Section 6.020 are met. Notwithstanding any other provision of this Plan to the contrary, a Participant will be permitted to make only one change in election pursuant to this Section 6.020 with respect to the Accounts to which such election relates.
6.030   Six Month Wait for Specified Employees . Notwithstanding any other provision of this Plan to the contrary, to the extent that any Accounts payable under the Plan constitute an amount payable upon Separation from Service or Retirement to any Participant under the Plan who is deemed to be a Specified Employee, then such amount will not be paid during the six (6) month period following such Separation from Service or Retirement. If the provisions of this Section 6.030 apply to a Participant who incurs a Separation from Service or Retirement, within the first six (6) months of the calendar year, then such amount will be paid within the first sixty (60) days following the close of the calendar year which includes the Participant’s Separation from Service or Retirement. If the

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    provisions of this Section 6.030 apply to a Participant who incurs a Separation from Service or Retirement within the last six (6) months of the calendar year, then such amount will be paid within the first sixty (60) days after June 30th of the calendar year following the year in which includes the Participant’s Separation from Service or Retirement.

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Exhibit 10-h-3
ROCKWELL COLLINS
NON-QUALIFIED PENSION PLAN
This Plan is a continuation of the Rockwell International Corporation Non-Qualified Pension Plan. Effective as of June 29, 2001, Rockwell Collins, Inc. assumed such plan and all liabilities thereunder with respect to the Rockwell Collins Participants (as defined in the Employee Matters Agreement). Such plan has been renamed as the Rockwell Collins Non-Qualified Pension Plan.
On November 4, 2003, the Board of Directors of Rockwell Collins approved a freezing of the Plan. The said freezing of the Plan, which is effective as of the close of business on September 30, 2006 (the “Freeze Date”), has the effect of terminating further accrual of benefits under the Plan as of that Date and closing Plan participation off for new employees after that Freeze Date.
ARTICLE I
DEFINITIONS
1.005 Affiliate means:
(a)   any company incorporated under the laws of one of the United States of America of which the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of Code §1563);
(b)   any partnership or other business entity organized under such laws, of which the Company owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of Code §414(c)); and
(c)   any other company deemed to be an Affiliate by the Board of Directors.
1.010 Benefit Limitation means the limitations on benefits payable from Defined Benefit Plans which are imposed by §415 of the Code.
1.020 Board of Directors means the Company’s Board of Directors.
1.030 Change of Control means any of the following occurring at any time after June 29, 2001:
(a) The acquisition by any individual, entity or group (within the meaning of §13(d)(3) or §14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (1) the then outstanding shares of common stock of the

 


 

Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company, Rockwell or any corporation controlled by the Company or Rockwell or (z) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this Section 1.030; or
(b) Individuals who, as of June 29, 2001, constitute the Board of Directors of the Company (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 Company’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
(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Company Transaction”), in each case, unless, following such Company Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company 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 Company Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Company Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of the Company, of Rockwell or of such corporation resulting from such Company Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Company 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 Company Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Company 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 Company Transaction; or
(d) Approval by the Company’s shareowners of a complete liquidation or dissolution of the Company.

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1.040 Code means the Internal Revenue Code of 1986, as amended.
1.050 Committee means the Compensation and Management Development Committee of the Board of Directors.
1.060 Company means Rockwell Collins, Inc., a Delaware corporation and its predecessor, Rockwell International Corporation.
1.070 Company Pension Plan means the Rockwell Collins Pension Plan.
1.080 Compensation Limit means the limitation imposed by §401(a)(17) of the Code on the amount of compensation which can be considered in determining the amount of a participant’s benefit under the Company Pension Plan.
1.090 Defined Benefit Plan has the same meaning given that term in §3(35) of ERISA.
1.100 Employee means any person who is employed by the Company or by an Affiliate, including, to the extent permitted by §406 of the Code, any United States citizen regularly employed by a foreign Affiliate of the Company.
1.110 Employee Matters Agreement means the Employee Matters Agreement dated as of June 29, 2001 by and among Rockwell International Corporation, New Rockwell Collins, Inc. and Rockwell Scientific Company LLC.
1.120 ERISA means the Employee Retirement Income Security Act of 1974, as amended.
1.130 Highly Compensated Employee means a participant in or retiree under the Company Pension Plan whose compensation would otherwise be considered under either such Plan in determining his benefits thereunder in excess of the Compensation Limit.
1.140 Participant means any participant in the Company Pension Plan who is a Rockwell Collins Participant as defined in the Employee Matters Agreement whose benefits payable therefrom are restricted by the Benefit Limitation or the Compensation Limit. Notwithstanding any other provision of this Plan or the Company Pension Plan to the contrary, no Employee or any other person, individual or entity shall become a Participant in this Plan on or after the day on which a Change of Control occurs.
1.150 Plan means this Rockwell Collins Non-Qualified Pension Plan and its predecessor, the Rockwell International Corporation Non-Qualified Pension Plan.
1.160 Plan Administrator means the person from time to time so designated by name or corporate office by the Board of Directors.
1.170 Securities Exchange Act means the Securities Exchange Act of 1934, as amended.

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1.180 Third Party Administrator means an independent third party selected by the Trustee and approved by the individual who, immediately prior to a Change of Control, was the Company’s Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the “Ex-CEO”).
1.190 Trust means the master trust established by agreement between the Company and the Trustee, which will be a grantor trust.
1.200 Trustee means Wells Fargo Bank, N.A., or any successor trustee of the Trust described in Section 1.190 of this Plan.
ARTICLE II
DETERMINATION OF BENEFITS
2.005 Effective as of the close of business on September 30, 2006 (the “Freeze Date”), and notwithstanding any other provision in this Plan (or in the Rockwell Collins Pension Plan) to the contrary, accrual of additional benefits under this Plan (as well as under the Rockwell Collins Pension Plan) will no longer be possible for current Plan Participants and individuals who first become Employees on or after the said Freeze Date will not be eligible to become Participants in this Plan after the said Freeze Date.
2.010 This Plan has been established by the Company as a non-qualified pension plan for those employees of the Company and its Affiliates whose retirement benefits under the Company Pension Plan are, in the determination of those benefits, reduced by reason of application of the Compensation Limit and/or the Benefit Limitation.
2.020 If the monthly benefit for which a Participant would have been otherwise eligible at retirement under the Company Pension Plan is reduced because of application of the Compensation Limit or the Benefit Limitation, the Company will pay from its general assets or from the Trust, as the case maybe, to each Participant, or to the surviving spouse or joint annuitant of the Participant, a benefit which is equal to the amount of such reduction. For purposes of determining the benefit payable under this Plan, a Participant’s Average Earnings, as otherwise defined in Section 1.140 of the Company Pension Plan shall mean the highest amount that can be determined by averaging the Participant’s Earnings (as defined in the said Section) for any five (5) calendar years within the ten (10) calendar years (or lesser period, if applicable) of active employment which immediately precede the earliest of the dates on which the Participant retires, dies, his employment terminates or his approved absence for disability commences in accordance with Section 4.040 of the Company Pension Plan. In determining Average Annual Earnings (as defined in the Company Pension Plan), any calendar year in which the Participant has less than a full year of Credited Service (as defined in the Company Pension Plan) may be disregarded. In addition, in determining the benefit payable to a Participant under this Plan, amounts awarded to the Participant under the Company’s incentive compensation plan (including both the amount of cash and the value of Employer stock awarded thereunder) will be included as compensation to be considered hereunder.

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2.025 In the case of a Participant who first becomes an Employee on or after January 1, 1993 and, prior to his retirement from the Company, either:
(a)   becomes a Company Officer, or
(b)   is an employee who attains Salary Grade 21 or higher and is approved in writing by the Company’s Chief Executive Officer (authority for which approval can be delegated by him to the Company’s Senior Vice President, Human Resources) for the enhanced benefit treatment set forth in this Section,
the monthly benefit payable to such Participant from this Plan shall be calculated pursuant to the same formula as is set forth in Section 5.010(a) of the Company Pension Plan for participants in that Plan who were first employed by the Company prior to January 1, 1993.
2.030 Subject to the provisions of Section 2.040, any benefit payable under this Plan shall be paid to or in respect of the Participant in the same manner and at the same times that benefits become payable under the Company Pension Plan.
2.040 A Participant (including, for purposes of this Section 2.040, a retiree who is currently receiving benefits under this Plan) or his surviving spouse or joint annuitant may elect to have the present value of the benefits due hereunder (such present value to be based upon the interest and mortality assumptions in effect for the Company Retirement Plan at the time of the Participant’s retirement or death, as applicable) paid in a lump sum in the event of the occurrence of a Change of Control, subject to the following:
(a)   To be effective, the election of a Participant or his surviving spouse or joint annuitant pursuant to this Section must be made in writing and filed with the Committee prior to the occurrence of a Change of Control.
(b)   An election made hereunder shall be revocable by the Participant or his surviving spouse or joint annuitant until such time as a Change of Control shall have occurred at which point the said election shall be irrevocable.
(c)   Lump sum payments to be made under this Section 2.040 to Participants or, in the case of the Participant’s death, to the Participant’s surviving spouse or joint annuitant shall be made within forty-five (45) days following the Participant’s retirement, termination of employment or death; provided, however, that lump sum payments which are to be made under this Section to Participants, surviving spouses or joint annuitants who are currently receiving benefits at the time of a Change of Control shall be made within forty-five (45) days following the Change of Control.
Notwithstanding any provision of this Plan to the contrary, such election may only be made by a Participant or beneficiary of a Participant who first became eligible to participate in the Rockwell International Corporation Non-Qualified Pension Plan prior to June 29, 2001.

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ARTICLE III
CLAIMS PROCEDURE
3.010 Any person claiming a right to participate in this Plan, claiming a benefit under this Plan or requesting information under this Plan shall present the claim or request in writing to the Committee, who shall respond in writing within ninety (90) days following his receipt of the request.
3.020 If the claim or request is denied, the written notice of denial shall state:
(a)   the reasons for denial;
(b)   a description of any additional material or information required and an explanation of why it is necessary; and
(c)   an explanation of this Plan’s claim review procedure.
3.030 Any person whose claim or request is denied may make a request for review by notice given in writing to the Committee.
3.040 A decision on a request for review shall normally be made within ninety (90) days after the date of such request. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be extended by an additional sixty (60) days from the date of such request. The decision shall be in writing and shall be final and binding on all parties concerned.
ARTICLE IV
AMENDMENT AND TERMINATION; MISCELLANEOUS PROVISIONS
4.010 The Board of Directors shall have the power to amend, suspend or terminate this Plan at any time, except that no such action shall adversely affect rights with respect to any benefit without the consent of the person affected.
4.020 This Plan shall be interpreted and administered by the Committee; provided, that interpretations by the Plan Administrator of those provisions of the Company Pension Plan which are also applicable to this Plan shall be binding on the Committee.
Notwithstanding any other provision of this Plan to the contrary, upon and after the occurrence of a Change of Control, the Plan will be administered by the Third-Party Administrator. The Third-Party Administrator will have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited, to benefit entitlement determinations; provided, however, upon and after the occurrence of a Change of Control, such administrator will have no power to direct the investment of Plan or Trust assets or select any investment manager or custodial firm for the Plan or Trust.

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Upon and after the occurrence of a Change of Control, the Company will be required to:
(a)   pay all reasonable administrative expenses and fees of the Third-Party Administrator;
(b)   indemnify the Third-Party Administrator against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of such administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the said administrator or its employees or agents; and
(c)   supply full and timely information to the Third-Party Administrator on all matters relating to the Plan, the Trust, the Participants and any surviving spouses and contingent annuitants, the benefits of the Participants, the date of circumstances of the retirement, disability, death or termination of employment of the Participants, and such other pertinent information as the Third-Party Administrator may reasonably require.
(d)   upon and after a Change of Control, the Third-Party Administrator may not be terminated by the Company and may only be terminated (and a replacement appointed) by the Trustee, but only with the approval of the Ex-CEO (as defined in Section 1.180).
4.030 This Plan is an unfunded employee benefit plan primarily for providing deferred compensation to an identified group of management or highly compensated employees of the Company and is also an excess benefit plan (as defined by §3(36) of ERISA). This Plan is intended to be unfunded for tax purposes and for purposes of Title I of ERISA. Participants and their beneficiaries, estates, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Company or its Affiliates. Any and all of the assets of the Company and its Affiliates shall be, and remain, the general, unpledged, unrestricted assets of the Company and its Affiliates. The Company’s and any Affiliate’s sole obligation under this Plan shall be merely that of an unfunded and unsecured promise of the Company or such Affiliate to pay money in the future.
4.040 Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of actual receipt, any interest he may have hereunder. A Participant’s rights to benefits described herein are and shall be nonassignable and nontransferable prior to actual distribution as provided by this Plan. Any such attempted assignment or transfer shall be ineffective with respect to the Company and with respect to any Affiliate, and the Company’s and any Affiliate’s sole obligation shall be to distribute benefits to Participants, their beneficiaries or estates as appropriate. No part of any Participant’s benefits hereunder shall, prior to actual payment as provided by this Plan, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any such benefits be transferable by operation of law in the event of a Participant’s or any other persons bankruptcy or insolvency, except as otherwise required by law.
4.050 This Plan shall not be deemed to constitute a contract of employment between the Company or any of its Affiliates and any Participant, and no Participant, beneficiary or estate shall have any right or claim against the Company or any of its Affiliate under this Plan except

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as may otherwise be specifically provided in this Plan. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Company or any Affiliate or to interfere with the right of the Company or any Affiliate to discipline, discharge or change the status of a Participant at any time.
4.060 A Participant will cooperate with the Committee by furnishing any and all information requested by the Committee or its delegates in order to facilitate proper administration (including distributions to and in respect of Participants) of this Plan and by taking such other action as may be reasonably requested by the Committee or its delegate.
4.070 Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the laws of the State of California. In the event that any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of this Plan, which shall be construed and enforced as if such illegal or invalid provision were not included in this Plan. The provisions of this Plan shall bind and obligate the Company and its Affiliates and their successors, including, but not limited to, any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company or its Affiliates and their successors of any such company or other business entity.
4.080 All words used in this Plan in the masculine gender shall be construed as if used in the feminine gender where appropriate. All words used in this Plan in the singular or plural shall be construed as if used in the plural or singular where appropriate.
ARTICLE V
TRUST
5.010 Establishment of the Trust . The Company shall establish the Trust (which may be referred to herein as a “Rabbi Trust”). The Trust shall become irrevocable upon a Change of Control (to the extent not then irrevocable). After the Trust has become irrevocable with respect to the Plan, except as otherwise provided in Section 12 of the Trust, the Trust shall remain irrevocable with respect to the Plan until all benefits due under this Plan and benefits and account balances due to any participants and beneficiaries under any other plan covered by the Trust have been paid in full. Upon establishment of the Trust, the Company shall provide for funding of the Trust in accordance with the terms of the Trust.
5.020 Interrelationship of the Plan and the Trust. The provisions of the Plan and any Participant’s Participation Agreement Form will govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust will govern the rights of the Company and its Affiliates, Participants and the creditors of the Company and its Affiliates to the assets transferred to the Trust. The Company and each of its Affiliates employing any Participant will at all times remain liable to carry out their obligations under the Plan.

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5.030 Distributions From the Trust . The Company’s and each of its Affiliate’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution will reduce their obligations under this Plan.
5.040 Rabbi Trust . The Rabbi Trust shall:
(a)   be a non-qualified grantor trust which satisfies in all material respects the requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable authority);
(b)   be irrevocable upon a Change of Control (to the extent not then irrevocable); and
(c)   provide that any successor trustee shall be a bank trust department or other party that may be granted corporate trustee powers under state law.

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Exhibit 10-h-4
ROCKWELL COLLINS 2005
NON-QUALIFIED PENSION PLAN
The purpose of this Plan is to provide benefits in excess of the Benefit Limitation (as defined below) to a group of employees and to provide benefits in excess of the Compensation Limit (as defined below) to a select group of management and highly compensated employees of Rockwell Collins, Inc. and its affiliates. This Plan also provides benefits in excess of the benefits provided under the Company Pension Plan (as defined below) to a select group of highly compensated employees consisting of Corporate Pilots and to a select group of management or highly compensated employees who deferred compensation under the Rockwell Collins Deferred Compensation Plan prior to 2005. This Plan is unfunded for tax purposes and for purposes of Title I of ERISA.
This Plan is established effective as of January 1, 2005 for accrued benefits that were earned and vested after December 31, 2004 under the Rockwell Collins Non-Qualified Pension Plan (“Pre-2005 Plan”) through September 30, 2006, the date the Pre-2005 Plan was frozen.
ARTICLE I
DEFINITIONS
1.005   Affiliate means:
  (a)   any company incorporated under the laws of one of the United States of America of which the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of Code Section 1563);
 
  (b)   any partnership or other business entity organized under such laws, of which the Company owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of Code Section 414(c)); and
 
  (c)   any other company deemed to be an Affiliate by the Board of Directors.
1.010   Benefit Limitation means the limitations on benefits payable from Defined Benefit Plans which are imposed by Section 415 of the Code.
1.020   Board of Directors means the Company’s Board of Directors.
1.030   Change of Control means any of the following:

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  (a)   The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (z) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this Section 1.030; or
 
  (b)   Individuals who, as of the date hereof, constitute the Board of Directors of the Company (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 Company’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
 
  (c)   Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Company Transaction”), in each case, unless, following such Company Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company 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 Company Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Company Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of the

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Company or of such corporation resulting from such Company Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Company 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 Company Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Company 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 Company Transaction; or
  (d)   Approval by the Company’s shareowners of a complete liquidation or dissolution of the Company.
1.040   Code means the Internal Revenue Code of 1986, as amended.
 
1.050   Committee means the Compensation Committee of the Board of Directors.
 
1.060   Company means Rockwell Collins, Inc., a Delaware corporation.
 
1.070   Company Officer means an employee who, effective July 23, 2007 attains a Salary Grade of M0 or M1, or who prior to July 23, 2007 but after June 30, 2006 attained a Salary Grade of M9 or M0 or who prior to July 1, 2006 attained a Salary Grade of 23 or higher.
 
1.080   Company Pension Plan means the Rockwell Collins Pension Plan.
 
1.090   Compensation Limit means the limitation imposed by Section 401(a)(17) of the Code on the amount of compensation which can be considered in determining the amount of a participant’s benefit under the Company Pension Plan.
 
1.095   Corporate Pilot means any Participant in the Company Pension Plan whose principal duty as an employee is the operation of aircraft as a pilot or co-pilot for at least one year immediately preceding Retirement.
 
1.100   Defined Benefit Plan has the same meaning given that term in Section 3(35) of ERISA.
 
1.150   Delinkage Date means January 1, 2009 or such other date as is permitted under Section 409A and is approved by the Chief Executive Officer, Chief Financial Officer, Senior Vice President, Human Resources or General Counsel of the Company.
 
1.110   Employee means any person who is employed by the Company or by an Affiliate, including, to the extent permitted by Section 406 of the Code, any United States citizen regularly employed by a foreign Affiliate of the Company.
 
1.120   ERISA means the Employee Retirement Income Security Act of 1974, as amended.
 
1.130   409A Change of Control means a “Change of Control Event” as defined in Treasury Regulation Section 1.409A-3(i)(5)(i) and as set forth in Treasury Regulation Section 1.409A-3(i)(5)(v)-(vii), applying the default rules and percentages set forth in such Treasury Regulations.

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1.140   Highly Compensated Employee means a participant in or retiree under the Company Pension Plan whose compensation would otherwise be considered under such Plan in determining his benefits thereunder in excess of the Compensation Limit.
 
1.150   Interest Rate means the average 30-Year Treasury Rate as published by the Internal Revenue Service in the October preceding the year of the Participant’s annuity starting date.
 
1.160   Mortality Assumptions means the FAS 87 mortality assumptions used for the Company’s Net Periodic Benefit Costs in the year of the Participant’s annuity starting date.
 
1.170   Participant means any participant in the Company Pension Plan whose benefits payable therefrom are restricted by the Benefit Limitation or the Compensation Limit. Employees who were hired on or before September 30, 2006 who (1) are Corporate Pilots, (2) are Company Officers hired on or after January 1, 1993 but eligible for the pre-1993 formula under the Company Pension Plan, or (3) are participants in the Company Pension Plan who deferred compensation under the Rockwell Collins Deferred Compensation Plan and attained 85 points under the Rule of 85 after December 31, 2004, are also eligible to participate in this Plan. Notwithstanding any other provision of this Plan or the Company Pension Plan to the contrary, no Employee or other person, individual or entity shall become a Participant in this Plan after the earlier of (a) September 30, 2006 or (b) the day on which a Change of Control occurs.
 
1.180   Plan means this Rockwell Collins 2005 Non-Qualified Pension Plan.
 
1.190   Plan Administrator means the person from time to time so designated by name or corporate office by the Board of Directors.
 
1.200   Pre-2005 Plan means the Rockwell Collins Non-Qualified Pension Plan and its predecessor, the Rockwell International Corporation Non-Qualified Pension Plan.
 
1.210   Retirement means “separation from service” from the Company and all of its Affiliates, within the meaning of Section 409A, on or after attainment of age 55 other than for reason of death.
 
1.220   Rule of 85 means, with respect to a Participant in the Collins Salaried Employees’ or Certain Salaried Employees’ sub-plans of the Company Pension Plan attainment of at least age 55 but not more than age 62 with a sum of age (in years and months) and Credited Service (as defined in the Company Pension Plan) (in years and months) total 85 or more on or before the date of Separation from Service or Retirement. For purposes of determining eligibility, years and months of service with the Company after September 30, 2006 shall also be considered.

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1.230   Section 409A means Section 409A of the Code and any regulations or other guidance issued thereunder.
 
1.240   Securities Exchange Act means the Securities Exchange Act of 1934, as amended.
 
1.250   Separation from Service means a “separation from service” from the Company and all of its Affiliates, within the meaning of Section 409A, other than for reasons of Retirement or death.
 
1.260   Specified Employee has the meaning set forth in Section 409A, as determined each year in accordance with procedures established by the Company.
 
1.270   Third Party Administrator means an independent third party selected by the Trustee and approved by the individual who, immediately prior to a Change of Control, was the Company’s Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the “Ex-CEO”).
 
1.280   Trust means the master trust established by agreement between the Company and the Trustee, which will be a grantor trust.
 
1.290   Trustee means Wells Fargo Bank,