Exhibit 10-q-6
For
Persons Not With a Change of Control Agreement
ROCKWELL COLLINS, INC.
PERFORMANCE SHARE AGREEMENT
[Date]
Target Performance
Shares:
shares of Company Common Stock
PERSONAL AND CONFIDENTIAL
[Name]
Personnel Number:
Dear
:
We are
pleased to confirm that, as a key employee of Rockwell Collins,
Inc. and its subsidiaries (“Rockwell Collins” or the
“Company”), you have been granted performance shares
denominated in shares of Common Stock of the Company and based on
the target shares stated above (the “Performance
Shares”) pursuant to this agreement (this
“Agreement”) and under the Rockwell Collins 2006
Long-Term Incentives Plan, as amended (the
“Plan”).
Any
payout of your Performance Shares is based on the achievement by
Rockwell Collins of the goals for Cumulative Sales and Return on
Sales for its fiscal years of
through
[covering three fiscal years] (the “Performance
Period”) as set forth in the matrix attached as
Exhibit A (the “Matrix”). Any payout based on
performance pursuant to the Matrix is to be further adjusted based
on Shareowners Return as specified below. The terms and conditions
of these Performance Shares are as set forth in more detail
below.
1.
Confirmation of Award . Together with any letter
transmitting this document to you, this Agreement confirms your
award in accordance with the terms as set forth herein.
2.
Amount Payable Pursuant to Awards . Subject to the
provisions of this Agreement, the share amounts payable to you
pursuant to your Performance Shares shall be determined as
follows:
(a) The percentage of target awards
earned will be the percentage found at the intersection in the
Matrix of the final results achieved for Cumulative Sales and for
Return on Sales for the Performance Period (as determined pursuant
to paragraph 3).
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(b) If the final results achieved for
the Performance Period fall between the levels of performance
specified in the Matrix, the percentage of target awards payable
will be interpolated consistent with the range in which the
Cumulative Sales and Return on Sales falls as conclusively
determined by the Committee (as defined below).
(c) No amount shall be payable for
the Performance Period if the Cumulative Sales or Return on Sales
(as determined pursuant to paragraph 3) for the Performance Period
is less than the minimum level for the Performance Period as
indicated in the Matrix.
(d) The payments as determined for
achievement against goals for Cumulative Sales and for Return on
Sales for the Performance Period will be further adjusted for the
Company’s Total Shareowner Return (TSR) performance (as
determined pursuant to paragraph 3) relative to the 10 peer
companies listed on Exhibit B. If relative performance is
among the top 3 of the peer companies, the payments will be
adjusted upward by 20%. If relative performance is among the lowest
3 of the peer companies, the payments will be reduced by 20%. If
the relative performance is not one of the top 3 companies or one
of the lowest 3 companies, it will be deemed to be in the middle
group of companies and there will be no adjustment.
Subject
to the provisions of this Agreement, including your ability to
defer payment under this Agreement in accordance with paragraph 15,
the amount payable to you pursuant to the Performance Shares with
respect to the Performance Period shall be paid in Common Stock,
less applicable taxes, by Rockwell Collins as soon as practicable
after the end of the Performance Period and after receipt of the
accountant’s letter for the Performance Period pursuant to
paragraph 13, and in any event within the calendar year within
which the Performance Period ends. The Performance Shares represent
the Company’s unfunded and unsecured promise to issue shares
of Common Stock at a future date, subject to the terms of this
Agreement and the Plan. You have no rights under the Performance
Shares or this Agreement other than the rights of a general
unsecured creditor of the Company. Until the distribution of any
Common Stock after vesting is evidenced in book entry form at the
transfer agent, is placed into a brokerage account or a stock
certificate is issued, you shall not have, with respect to the
Performance Shares, rights to vote or receive dividends or any
other rights as a shareowner.
3.
Definitions and Determination of Financial Performance .
“Cumulative Sales” means, for the Performance Period,
the total Sales as reported by the Company in its audited financial
statements. “Return on Sales” means, for the
Performance Period, the rate determined by dividing Net Income by
Sales. Both Net Income and Sales will be the three year cumulative
values as reported in the Company’s audited financial
statements after adjusting for extraordinary income and expense
items. The foregoing definitions and measures will exclude the base
sales and net income for all divestitures and for acquisitions with
sales for the acquired business’ last twelve completed months
that comprise up to 10% of Rockwell Collins base sales for its last
twelve completed months at the time of acquisition. Such
definitions and measures will
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include
post-acquisition growth related to these acquisitions. With respect
to acquisitions with sales that comprise up to 10% of total
Rockwell Collins’ base sales revenue at the time of
divestiture or acquisition, Net Income will also be adjusted for
“fair value” expenses of the transaction including
investment banker charges, amortization of intangibles, physical
property step-ups, and imputed interest on the acquisition value.
The Committee reserves its discretion pursuant to paragraph 10
below to make necessary or appropriate adjustments to the
definitions and measures or otherwise for acquisitions,
divestitures and other matters referenced in paragraph 10.
“Total Shareowner Return”
or “TSR” is measured by adding (i) the total stock
price growth for the Performance Period, measured by comparing the
average stock price during October
[the first year of the Performance Period] to the average stock
price during September
[the last year of the Performance Period], and (ii) dividends
paid, measured as if reinvested in stock at the payment date. In
the event of substantial changes causing an inability to calculate
Shareowners Return for one or more of the peer companies listed on
Exhibit B (or in the event of spinoffs or similar transactions
causing a peer company to split into two or more peer companies),
the list of peer companies shall be adjusted accordingly to take
such events into account and the new group of peer companies shall
for purposes of paragraph 2(d) be divided into a top, middle and
lowest third; provided, however, that if such new group of peer
companies is not equally divisible into three parts, then the
excess number of peer companies shall be assigned to the middle
third.
In connection with the receipt of the
accountant’s letter for the Performance Period pursuant to
paragraph 13, the committee of the Board of Directors of Rockwell
Collins administering the Plan (which committee is herein called
the “Committee” and which, on the date hereof, is the
Compensation Committee) shall determine the Cumulative Sales,
Return on Sales and the Shareowners Return results and ranking for
the Performance Period after taking into account any adjustment as
contemplated in paragraph 10.
4.
Payment of Performance Shares Denominated in Shares of Common
Stock . The Performance Shares denominated in shares of Common
Stock are payable in shares of the Company’s Common Stock;
provided, however, that the Committee may, in its sole discretion,
make a cash payment equal to the Fair Market Value of shares of
Common Stock otherwise required to be issued. The Company may issue
shares of Common Stock in book entry form in connection with the
payout of Performance Shares. In lieu of fractional shares the
Company may determine, in its sole discretion, to pay cash or to
round such shares to the closest whole number. The future value of
the shares of Common Stock underlying the Performance Award is
unknown and cannot be predicted with certainty.
5.
Transferability of Award . The Performance Shares shall not
be transferable by you except by will or by the laws of descent and
distribution.
6.
Termination of Employment for Death or Disability . If your
employment by the Company terminates during the Performance Period
by reason of your death, disability or retirement under a
retirement plan of the Company, you will continue to be
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eligible
to receive a payment, if any, that would otherwise be payable
pursuant to paragraph 2, but any such amount shall be pro rated for
the portion of the Performance Period that elapsed prior to this
termination of employment and shall be paid at the time such amount
would otherwise be payable as specified in Section 2.
7.
Termination of Employment for Other Reasons . Except as
otherwise provided in paragraphs 9 through 12, if your employment
by the Company terminates during the Performance Period other than
by reason of your death, disability, or retirement under a
retirement plan of the Company, you will not be entitled to any
payment pursuant to paragraph 2 with respect to the Performance
Period.
8.
Forfeiture of Award for Detrimental Activity . If you engage
in detrimental activity (as defined in this paragraph 8) at any
time (whether before or after termination of your employment), you
will not be entitled to any payment hereunder and you will forfeit
all rights with respect to the Performance Shares under this
Agreement. For purposes of this paragraph 8, “detrimental
activity” shall mean willful, reckless or grossly negligent
activity that is determined by the Committee to be
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