Exhibit 10-q-3
For Persons With a Change of
Control Agreement
ROCKWELL COLLINS, INC.
PERFORMANCE AWARDS
AGREEMENT
[Date]
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Target Cash Performance Unit:
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__________
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Target Performance Shares:
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shares of Company Common
Stock
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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 the following two performance awards
(collectively, the “Performance Awards”) pursuant to
this agreement (this “Agreement”) and under the
Rockwell Collins 2006 Long-Term Incentives Plan, as amended (the
“Plan”):
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Performance
Unit denominated in cash
and based on the target cash amount stated above
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Performance
Shares denominated in
shares of Common Stock of the Company and based on the target
shares stated above
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Any payout of your Performance
Awards 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 Awards 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.
1
2. Amount Payable Pursuant to
Awards . Subject to the provisions of this Agreement, the cash
and/or share amounts payable to you pursuant to your Performance
Awards 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).
(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 Shareowners 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 16, the amount payable to
you pursuant to the Performance Awards with respect to the
Performance Period shall be paid in a lump sum of cash and/or
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 14, but in no event later than the
March 15th immediately following the end of the Performance
Period. The Performance Awards represent the Company’s
unfunded and unsecured promise to pay cash and/or 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
Awards 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 (or a stock certificate is issued), you shall not
have, with respect to the Performance Awards, rights to vote or
receive dividends or any other rights as a shareowner.
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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 Net Income and Sales of acquisitions and
divestitures that involve at least 1% of Sales but less than 10% of
Sales, however, such definitions and measures will include
post-acquisition growth related to these acquisitions. With respect
to acquisitions that involve at least 1% of Sales but less than 10%
of Sales, Net Income will also be adjusted for “fair
value” expenses of the acquisition 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 11 below to
make necessary or appropriate adjustments to the definitions and
measures or otherwise for acquisitions, divestitures and other
matters referenced in paragraph 11.
“Shareowners 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 14, 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 11.
4. Payment of Performance Unit
Award Denominated in Cash . The Performance Unit denominated in
cash is payable in cash and/or in Common Stock of the Company. The
Committee will determine whether payment will be made in Common
Stock and whether such payment in Common Stock will be automatic or
elected at the discretion of each recipient. The number of shares
of Common Stock of the Company to be issued pursuant to the payment
made in the form of Common Stock for this Performance Unit
denominated in cash is to be determined by dividing (1) the
payment amount, net of income tax withholdings (which withholdings
are to be paid in cash), to be paid in the form of Common Stock of
the Company by (2) the Fair Market Value (as defined in the
Plan) of the Common Stock of the Company on the day immediately
preceding the payout date for the Performance Unit.
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5. 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 Awards. 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.
6. Transferability of Award .
The Performance Awards shall not be transferable by you except by
will or by the laws of descent and distribution.
7. 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 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.
8. Termination of Employment for
Other Reasons . Except as otherwise provided in paragraphs 10
through 13, 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.
9. Forfeiture of Award for
Detrimental Activity . If you engage in detrimental activity
(as defined in this paragraph 9) 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 Awards under this Agreement. For purposes of
this paragraph 9, “detrimental activity” shall mean
willful, reckless or grossly negligent activity that is determined
by the Committee to be detrimental to or destructive of the
business or property of the Company. Any such determin
