Exhibit 10-n-1
CHANGE OF CONTROL AGREEMENT
AGREEMENT
by and between Rockwell Collins, Inc., a Delaware corporation (the
“Company”) and ___ (the “Executive”), dated
as of the ___ day of ___, 2007.
The
Board of Directors of the Company (the “Board”), has
determined that it is in the best interests of the Company and its
shareowners to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive’s full attention
and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1.
Certain Definitions . (a) The “Effective
Date” shall mean the first date during the Change of Control
Period (as defined in Section 1(b)) on which a Change of
Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control
Event” (as defined under 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
regulation under Section 409A of the Internal Revenue Code, as
amended) (“409A Change of Control”) occurs and if the
Executive’s employment with the Company is terminated prior
to the date on which the 409A Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination
of employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a 409A Change of
Control or (ii) otherwise arose in connection with or
anticipation of a 409A Change of Control, then for all purposes of
this Agreement the “Effective Date” shall mean the date
immediately prior to the date of such termination of employment and
such termination of employment shall be hereinafter referred to as
“Pre-Change of Control Termination”.
(b) The
“Change of Control Period” shall mean the period
commencing on the date hereof and ending on the fourth anniversary
of the date hereof.
2.
Change of Control . For the purpose of this Agreement, a
“Change of Control” shall mean:
(a) The
acquisition by any individual, entity or group (within the meaning
of Section 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 (i) the then outstanding shares of common
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stock of
the Company (the “Outstanding Company Common Stock”) or
(ii) 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: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this
Section 2; or
(b) Individuals
who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
shareholders, 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; 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 corporation (a
“Business Combination”), in each case, unless,
following such Business Combination, (i) 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
Business Combination 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 Business
Combination (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 Business
Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business
Combination, or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination 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 Business Combination and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
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(d) Approval
by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
Notwithstanding any other provision of this Agreement to the
contrary, if the Executive incurs a Pre-Change of Control
Termination then, for purposes of determining whether a Change of
Control has occurred for purposes of the Executive’s
entitlement to payments and benefits provided pursuant to
Section 6 of this Agreement, the definition of 409A Change of
Control shall be substituted for the definition of Change of
Control set forth in this Section 2.
3.
Protected Period . The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions of
this Agreement, for the period commencing on the Effective Date and
ending on the third anniversary of such date (the “Protected
Period”).
4.
Terms of Employment . (a) Position and Duties
. (i) During the Protected Period, (A) the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the
most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Effective Date
and (B) the Executive’s services shall be performed at
the location where the Executive was employed immediately preceding
the Effective Date or any office or location less than 35 miles
from such location.
(ii) During
the Protected Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive’s reasonable best
efforts to perform faithfully and efficiently such
responsibilities. During the Protected Period it shall not be a
violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments,
so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s
responsibilities to the Company.
(b)
Compensation . (i) Base Salary . During the Protected
Period, the Executive shall receive an annual base salary
(“Annual Base Salary”), which shall be paid at a
monthly rate, at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has
been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Protected Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary
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shall
not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
As used in this Agreement, the term “affiliated
companies” shall include any company controlled by,
controlling or under common control with the Company.
(ii)
Annual Bonus . In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the
Protected Period, an annual bonus (the “Annual Bonus”)
in cash at the Executive’s target bonus percentage under the
Company’s annual incentive plans, or any comparable bonus
under any predecessor or successor plan, in effect prior to the
Change of Control, as adjusted based on actual Company performance
against goals established at the beginning of each fiscal year. The
actual bonus awarded to the Executive during the Protected Period
will be determined using the same criteria that apply to other peer
executives of the Company. Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded,
unless the Executive shall elect to defer the receipt of such
Annual Bonus pursuant to the terms and conditions of the
Company’s 2005 Deferred Compensation Plan.
(iii)
Incentive, Savings and Retirement Plans . During the
Protected Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
annual or long-term incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date
or if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv)
Welfare Benefit Plans . During the Protected Period, the
Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other
peer executives of the Company and its affiliated companies.
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(v)
Expenses . During the Protected Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vi)
Fringe Benefits . During the Protected Period, the Executive
shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, and, if
applicable, use of an automobile and payment of related expenses,
in accordance with the most favorable plans, practices, programs
and policies of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vii)
Office and Support Staff . During the Protected Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(viii)
Vacation . During the Protected Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5.
Termination of Employment . (a) Death or Disability .
The Executive’s employment shall terminate automatically upon
the Executive’s death during the Protected Period. If the
Company determines in good faith that the Disability of the
Executive has occurred during the Protected Period (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 12(b) of this
Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30th day after receipt
of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For purposes of this
Agreement, “Disability” shall mean the absence of the
Executive from the Executive’s duties with the Company on a
full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Executive or the
Executive’s legal representative.
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(b)
Cause . The Company may terminate the Executive’s
employment during the Protected Period for Cause. For purposes of
this Agreement, “Cause” shall mean:
(i) the
willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company or one
of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Executive by
the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not substantially
performed the Executive’s duties, or
(ii) the
willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company.
For
purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered “willful” unless
it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph
(i) or (ii) above, and specifying the particulars thereof
in detail.
(c)
Good Reason . The Executive’s employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, “Good Reason” shall mean:
(i) the
assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement,
or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(ii) any
failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent fail
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