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Exhibit 10.12

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

 

AGREEMENT by and between UNOVA, Inc., a Delaware corporation (the “Company”),
and[name], dated as of the [date].

The Board of Directors of the Company (the “Board”), has determined that it is
in the best interests of the Company and its shareholders 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 occurs and if the Executive’s
employment with the Company is terminated prior to the date on which the 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 Change of Control or (ii)
otherwise arose in connection with or anticipation of a 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.

(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; provided,
however, that commencing on the date two years after the date hereof, and on
each second anniversary of such date (such date and each such second anniversary
thereof shall be hereinafter referred to as the “Renewal Date”), unless
previously terminated, the Change of Control Period shall be automatically
extended so as to terminate four years from such Renewal Date, unless at least
60 days prior to the Renewal Date the Company shall give notice to the Executive
that the Change of Control Period shall not be so extended.

2.         Change of Control.  For the purpose of this Agreement, a “Change of
Control” shall mean:

 

 

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(a)  An  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 30 percent  or more of
either (i) the then outstanding shares of common 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”);
excluding, however, the following acquisitions of Outstanding Company Common
Stock and Outstanding Company Voting Securities:   (i) any acquisition directly
from the Company, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself acquired
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 Person 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 effective 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 who becomes a member of the Board
subsequent to such effective 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
provided further,  that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act)  or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered as a member
of the Incumbent Board; or

(c)  The approval by the shareholders of the Company of a reorganization,
merger, or consolidation or sale or other disposition of all or substantially
all of the assets of the Company (“Business Combination”) or if consummation of
such Business Combination is subject, at the time of such approval by
shareholders, to the consent of any government or governmental agency, obtaining
of such consent (either explicitly or implicitly by consummation); excluding,
however, such a Business Combination pursuant to which (i) all or sub­stantially
all of the individuals and entities who are the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination will beneficially own,
directly or indirectly, more than 60 percent of, respectively, the 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 (other than any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or

 

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such corporation resulting from such Business Combination) will beneficially
own, directly or indirectly, 30 percent or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
directors 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 will have
been 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

(d)  The approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.

3.         Employment 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 “Employment Period”).

4.         Terms of Employment.

            (a)  Position and Duties.

(i)  During the Employment 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 Employment 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 Employment 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.

 

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(b)  Compensation.

(i)  Base Salary.  During the Employment 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 Employment 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 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 Employment Period, an annual
bonus in cash at least equal to the higher of (A) the Executive’s highest award
or awards for any fiscal year under the UNOVA, Inc. Management Incentive
Compensation Plan (effective for the 1999 fiscal year and thereafter) or under
any predecessor or successor plan or plans which provide for the grant of annual
cash bonuses or other short-term cash incentive awards during the last three
full fiscal years prior to the Effective Date or (B) the Target Bonus (as that
term is defined in the UNOVA, Inc. Management Incentive Compensation Plan)
applicable to the Executive for the fiscal year during which the Effective Date
occurs, or if the Management Incentive Compensation Plan is not in effect for
such fiscal year, the target bonus or award which the Executive would earn for
such year under any plan or arrangement in which the Executive participates or
is eligible to participate assuming the attainment of any performance goals or
similar criteria to the extent necessary for the Executive to qualify to receive
the target award thereunder.  The amount which is the higher of the amounts
described in clause (A) and clause (B) above is hereinafter called the “Annual
Bonus.”

Notwithstanding the foregoing, the following additional provisions shall be
applicable to the definition of “award” or “awards” or “bonus” or “bonuses”  as
those terms are used in the preceding paragraph:

                                            (1)       When made under the UNOVA,
Inc. Management Incentive Compensation Plan or any other annual incentive plan
which provides that a portion of an annual award shall be deposited in a
so-called “Bonus Bank” and shall remain “at risk,”  the award or bonus, in such
case, shall  (except as provided in clause (2) below ) comprise ONLY the portion
of the annual award which is paid to the Executive on a current basis and shall
NOT include any amount of the award required to be deposited to a Bonus Bank. 
However, the award or bonus shall also include any amount paid to the Executive
as a periodic payment from the Bonus Bank during the year with respect to which
the amount was made (but shall not include any payment from the Bonus Bank made
solely as a result of termination of employment);

 

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                                            (2)       The award or bonus for any
fiscal year or portion thereof shall include any part of such bonus or award,
the payment of which is deferred to a subsequent fiscal year or years at the
election of the Executive; and

                                            (3)       In the case of any bonus
or award made with respect to a period other than a full fiscal year, the amount
of such bonus shall not be annualized, and the bonus or award, if it related to
more than one fiscal year, shall be prorated so that only the portion thereof
attributable to a particular fiscal year shall be counted as part of the total
award or bonus for that fiscal year.

Any Annual Bonus plus unpaid but due amounts from prior awards plus any amounts
payable from a so called Bonus Bank shall be paid in accordance with the
applicable plan but in no event later than the last day of the Employment
Period.  In no event shall the Executive forfeit any balance in a Bonus Bank
upon termination of employment for any reason following a Change of Control.

(iii)  Incentive, Savings, and Retirement Plans.  During the Employment Period,
the Executive shall be entitled to participate in all incentive (including stock
option or similar incentive plans), 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 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 Employment 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, salary continuance, 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.

(v)  Expenses.  During the Employment 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

 

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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 Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, if applicable, tax
and financial planning services, 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 Employment 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 Employment 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 Employment
Period.  If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment 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.

(b)  Cause.  The Company may terminate the Executive’s employment during the
Employment Period for Cause.  For purposes of this Agreement, “Cause” shall
mean:

 

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(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;

 

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(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
failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;

(iii)  the Company’s requiring the Executive to be based at any office or
location other than as provided in Section 4(a)(i)(B) hereof or the Company’s
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;

(iv)  any purported termination by the Com­pany of the Executive’s employment
otherwise than as expressly permitted by this Agreement; or

(v)  any failure by the Company to comply with and satisfy Section 11(c) of this
Agreement.

For purposes of this Section 5(c), any good faith determination of “Good Reason”
made by the Executive shall be conclusive.    Anything in this Agreement to the
contrary notwithstanding, if (A) a Change of Control has occurred and (B) in
connection with, or as a result of, such Change of Control, prior to the first
anniversary of the Effective Date, individuals who were members of the Board
immediately prior to such Change of Control cease to constitute a majority of
the Board or a majority of the board of directors of the corporation resulting
from a Business Combination that constituted such Change of Control, then a
termination by the Executive for any reason during the Window Period (as defined
in the following sentence) shall be deemed to be a termination for Good Reason
for all purposes of this Agreement.  The “Window Period” shall mean the 30-day
period commencing on the first anniversary of the later of (1) the Effective
Date and (2) the date of the event described in clause (B) of the preceding
sentence.

(d)  Notice of Termination.  Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 12(b) of this Agreement. 
For purposes of this Agreement, a “Notice of Termination” means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than thirty days
after the giving of such notice).  The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circum­stance in
enforcing the Executive’s or the Company’s rights hereunder.

 

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(e)  Date of Termination.  “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive’s employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination, and (iii) if the Executive’s employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.

6.         Obligations of the Company Upon Termination.

            (a)  Good Reason; Other Than for Cause, Death or Disability.  If,
during the Employment Period, the Company shall termi­nate the Executive’s
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:

(i)  the Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following amounts:

        A.  the sum of (1) the Executive’s Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (2) the product of (x) the
Annual Bonus, and (y) a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination, and the denominator
of which is 365, and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), any awards under the
Performance Award Plan or any comparable or successor plan and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter referred to
as the “Accrued Obligations”); and

        B.  the amount equal to the product of (1) three and (2) the sum of (x)
the Executive’s Annual Base Salary and (y) the Annual Bonus, or if higher, any
bonus paid with respect to any fiscal year during the Employment Period; and

        C.  utilizing actuarial assumptions no less favorable to the Executive
than those in effect immediately prior to the Effective Date, an amount equal to
the excess of (a) the actuarial equivalent of the benefit under the Company’s
qualified defined benefit retirement plan (the “Retirement Plan”) and any excess
or supplemental retirement plan in which the Executive participates (together,
the “SERP”) which the Executive would receive if the Executive’s employment
continued for three years after the Date of Termination assuming for this
purpose that all accrued benefits are fully vested, and, assuming that the
Executive’s compensation in each of the three years is that required by Section
4(b)(i) and Section 4(b)(ii), over (b) the actuarial equivalent of the
Executive’s actual benefit (paid or payable), if any, under the Retirement Plan
and the SERP as of the Date of Termination;

(ii)  for three years after the Executive’s Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, practice,
policy, or program, the Company shall continue benefits to the Executive and/or
the Executive’s family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices, and policies described
in Section 4(b)(iv) of this Agreement if the Executive’s

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employment had not been terminated 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 and their families, provided, however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility.  For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs, and policies, the Executive shall be considered to
have remained employed until three years after the Date of Termination and to
have retired on the last day of such period;

(iii)  the Company shall, at its sole expense as incurred, provide the Executive
with outplacement services the scope and provider of which shall be selected by
the Executive in his or her sole discretion; and

(iv)  to the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to be
paid or provided or which the Executive is eligible to receive under any plan,
program, policy, or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”).

(b)  Death.  If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits.  Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination.  With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices, and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death
with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.

(c)  Disability.  If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall
terminate with­out further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits. 
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.  With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such

 

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plans, programs, practices, and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive and/or the Executive’s family, as in effect at
any time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.

(d)  Cause; Other than for Good Reason.  If the Executive’s employment shall be
terminated for Cause during the Employment Period or if the Executive
volun­tarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
(x) his or her Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive, and (z) Other
Benefits, in each case to the extent theretofore unpaid.  In such case, all
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.

7.         Non-exclusivity of Rights.  Nothing in this Agreement shall prevent
or limit the Executive’s continuing or future participation in any plan,
practice, policy, or program provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice, or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, practice, policy, or program or contract
or agreement except as explicitly modified by this Agreement.

8.         Full Settlement.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right, or action which the Company may have against the
Executive or others.  In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.  The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed pay­ment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the “Code”).

 

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9.         Certain Additional Payments by the Company.

(a)  Anything in this Agreement to the contrary notwithstanding and except as
set forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as
(the “Excise Tax”), then the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

(b)  Subject to the provisions of Section 9(c), all determinations required to
be made under this Section 9, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Deloitte & Touche
or such other certified public accounting firm as may be designated by the
Executive (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company.  In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity, or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). 
All fees and expenses of the Accounting Firm shall be borne solely by the
Company.  Any Gross-Up Payment, as deter­mined pursuant to this Section 9, shall
be paid by the Company to the Executive within five days of the receipt of the
Accounting Firm’s determination.  Any determination by the Accounting Firm shall
be binding upon the Company and the Executive.  As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
deter­mination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

(c)  The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.  The Executive

 

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shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due).  If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:

(i)  give the Company any information reasonably requested by the Company
relating to such claim,

(ii)  take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,

(iii)  cooperate with the Company in good faith in order effectively to contest
such claim, and

(iv)  permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional inter­est and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.  Without limitation on the
foregoing provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all adminis­trative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount.  Furthermore, the Company’s control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

 

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(d)  If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto).  If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

                10.  Confidential Information.  The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge, or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive’s employment by the Com­pany or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement).  After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge, or data to anyone other than the
Company and those designated by it.  In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.

11.       Successors.

            (a)  This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by the Executive’s legal
representatives.

(b)  This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

(c)  The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.  As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid.

 

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12.       Miscellaneous.

            (a)  This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference to principles of
conflict of laws.  The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.

(b)  All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

 

 

 

 

If to the Company:

 

UNOVA, Inc.

 

 

Attention: General Counsel

 

 

6001 36th Avenue West

 

 

Everett, WA 98203-1264

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.

(c)  The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.

(d)  The Company may withhold from any amounts payable under this Agreement such
Federal, state, local, or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

(e)  The Executive’s or the Company’s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.

(f)  The Executive and the Company acknowledge that, except as may otherwise be
provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company is “at will” and,
subject to Section 1(a) hereof, prior to the Effective Date, the Executive’s
employment and/or this Agreement may be terminated by either the Executive or
the Company at any time prior to the Effective Date, in which case the
Execu­tive shall have no further rights under this Agreement.  From and after
the

 

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Effective Date this Agreement shall supersede any other agreement between the
parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

 

 

 

 

 

 

 

 

 

 

 

 

 

UNOVA, Inc.

 

 

 

 

 

 

 

 

 

 

 

By

 

 

 

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