EXHIBIT 10.3

ITERIS, INC.

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the “Option”) to purchase
shares of the Common Stock of Iteris, Inc. (the “Corporation”):

Participant:

   

Grant Date:

Vesting Commencement Date:

Exercise Price:

$

per share

Number of Option Shares:

shares

Expiration Date:

Type of Option:

Incentive Option

Non-Statutory Option

Exercise Schedule:

[To be specified in individual agreements]

In no event shall the Option become exercisable for any additional Option Shares
after the Participant’s termination of Service, except to the extent (if any)
specifically authorized by the Plan Administrator in its sole discretion
pursuant to an express written agreement with the Participant.

The Participant understands and agrees that the Option is granted subject to and
in accordance with the terms of the Iteris, Inc. 2016 Omnibus Incentive Plan (as
amended from time to time, the “Plan”).  The Participant further agrees to be
bound by the terms of the Plan and the terms of the Option as set forth in the
Stock Option Agreement attached hereto as Exhibit A.  The Participant hereby
acknowledges the receipt of a copy of the prospectus for the Plan.  A copy of
the Plan is available upon request made to the Corporate Secretary at the
Corporation’s principal offices.

Employment at Will.  Nothing in this Notice or in the attached Stock Option
Agreement or in the Plan shall confer upon the Participant any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining the Participant) or of the Participant, which rights are
hereby expressly reserved by each, to terminate the Participant’s Service at any
time for any reason, with or without cause.

Definitions.  All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the attached Stock Option Agreement.

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ITERIS, INC.

By:

Print Name:

Title:

Date:

PARTICIPANT

Date:

ATTACHMENT
Exhibit A - Stock Option Agreement

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EXHIBIT A

ITERIS, INC.

STOCK OPTION AGREEMENT

RECITALS

A.The Board has adopted the Iteris, Inc. 2016 Omnibus Incentive Plan (as amended
from time to time, the “Plan”) for the purpose of retaining the services of
selected Employees, non-employee members of the Board or the board of directors
of any Parent or Subsidiary and consultants and other independent advisors in
the service of the Corporation (or any Parent or Subsidiary).

B.The Participant is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation’s grant
of an option to the Participant.

C.All capitalized terms in this Agreement shall have the meaning assigned to
them in Paragraph 18.

NOW, THEREFORE, it is hereby agreed as follows:

1.Grant of Option.  The Corporation hereby grants to the Participant, as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant Notice.  The Option Shares shall be purchasable from time to time
during the option term specified in Paragraph 2 at the Exercise Price.

2.Option Term.  This option shall have a term of ten (10) years measured from
the Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

3.Limited Transferability.  This option, together with the Option Shares during
the period prior to exercise, shall be neither transferable nor assignable by
the Participant other than by will or the laws of inheritance following the
Participant’s death and may be exercised, during the Participant’s lifetime,
only by the Participant.

4.Dates of Exercise.

(a)Subject to any accelerated vesting as provided in Paragraph 4(b) below or
Paragraph 6 below, this option shall become exercisable for the Option Shares in
one or more installments in accordance with the Exercise Schedule set forth in
the Grant Notice.  As the option becomes exercisable for such installments,
those installments shall accumulate, and the option shall remain exercisable for
the accumulated installments until the Expiration Date or sooner termination of
the option term under Paragraph 5 or 6.

(b)In the event of Participant’s cessation of Service due to death or Permanent
Disability, the number of Option Shares which shall be exercisable shall be
equal to the Option

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Shares already vested and exercisable at the time of such cessation of Service
(the “Already Vested Options”) plus any additional Option Shares (the
“Additional Vested Option Shares”) which may vest as described in this Paragraph
4(b).  The Additional Vested Option Shares which shall vest and become
exercisable under this Paragraph 4(b) shall be calculated as of the date of
Participant’s cessation of Service as the product of (1) and (2) and reduced by
(3), where (1) is the total number of Option Shares originally subject to this
option and (2) is a fraction, the numerator of which is the number of calendar
days from the Vesting Commencement Date through the date of Participant’s
cessation of Service and the denominator is the number of calendar days in the
full vesting period set forth in the Grant Notice (e.g., the period of time
following the Vesting Commencement Date that would be required to elapse in
order for the Option Shares to be fully vested absent Participant’s intervening
cessation of Service), and (3) is equal to the Already Vested Options.

5.Cessation of Service.  The option term specified in Paragraph 2 shall
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

(a)Subject to Paragraph 6(f) below, Should the Participant cease to remain in
Service for any reason (other than death, Permanent Disability or Misconduct)
while this option is outstanding, then the Participant shall have a period of
three (3) months (commencing with the date of such cessation of Service) during
which to exercise this option, but in no event shall this option be exercisable
at any time after the Expiration Date.

(b)Should the Participant die while this option is outstanding, then the
personal representative of the Participant’s estate or the person or persons to
whom the option is transferred pursuant to the Participant’s will or the laws of
inheritance following the Participant’s death shall have the right to exercise
the portion of this option that is vested as of the date of death (after giving
effect to any accelerated vesting pursuant to Paragraph 4 above).  Any such
right to exercise this option shall lapse, and this option shall cease to be
outstanding, upon the earlier of (i) the expiration of the twelve (12)-month
period measured from the date of the Participant’s death or (ii) the Expiration
Date.

(c)Should the Participant cease to remain in Service by reason of Permanent
Disability while this option is outstanding, then the Participant shall have a
period of twelve (12) months (commencing with the date of such cessation of
Service) during which to exercise the portion of this option that is vested as
of the date of such cessation of Service (after giving effect to any accelerated
vesting pursuant to Paragraph 4 above).  In no event shall this option be
exercisable at any time after the Expiration Date.

(d)During the limited period of post-Service exercisability, this option may not
be exercised in the aggregate for more than the number of Option Shares for
which this option is, at the time of the Participant’s cessation of Service,
exercisable pursuant to the Exercise Schedule specified in the Grant Notice or
the special vesting acceleration provisions of Paragraphs 4(b) or 6.  This
option shall not become exercisable for any additional Option Shares, whether
pursuant to the normal Exercise Schedule specified in the Grant Notice or the
special vesting acceleration provisions of Paragraphs 4(b) or 6, following the
Participant’s cessation of Service, except to the extent (if any) specifically
authorized by the Plan Administrator pursuant to an

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express written agreement with the Participant.  Upon the expiration of such
limited exercise period or (if earlier) upon the Expiration Date, this option
shall terminate and cease to be outstanding for any Option Shares for which the
option has not been exercised.

(e)Should the Participant’s Service be terminated for Misconduct or should the
Participant otherwise engage in Misconduct while this option is outstanding,
then this option shall terminate immediately and cease to remain outstanding.

6.Change in Control.

(a)Should a Change in Control occur during the Participant’s period of Service,
then this option may, as determined by the Plan Administrator in its sole
discretion, be (i) assumed by the successor corporation (or parent thereof),
(ii) canceled and substituted with an award granted by the successor corporation
(or parent thereof), (iii) otherwise continued in full force and effect pursuant
to the terms of the Change in Control transaction or (iv) replaced with a cash
retention program of the Corporation or any successor corporation (or parent
thereof) which preserves the spread existing on the Option Shares for which this
option is not exercisable at the time of the Change in Control (the excess of
the Fair Market Value of those shares over the aggregate Exercise Price payable
for such shares) and provides for subsequent payout of that spread in accordance
with the same Exercise Schedule applicable to those Option Shares.
 Notwithstanding the foregoing, no such cash retention program shall be
established for this option (or any other option granted to the Participant
under the Plan) to the extent such program would otherwise be deemed to
constitute a deferred compensation arrangement subject to the requirements of
Code Section 409A and the Treasury Regulations thereunder.

(b)To the extent this option is not assumed, substituted, continued or replaced
in accordance with Paragraph 6(a), this option shall automatically vest in full
so that this option shall, immediately prior to the effective date of the Change
in Control, become exercisable for all of the Option Shares at the time subject
to this option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock, unless such accelerated vesting is
otherwise precluded pursuant to the provisions of Paragraph 5(d) above.  The
Plan Administrator in its sole discretion shall have the authority to provide
that to the extent this option, as so accelerated, remains unexercised and
outstanding on the effective date of the Change in Control, this option shall
terminate and cease to be outstanding and in consideration thereof the
Participant shall become entitled to receive, upon consummation of the Change in
Control and subject to subsection (c), a lump sum cash payment in an amount
equal to the product of (i) number of shares of Common Stock subject to this
option and (ii) the excess of (A) the Fair Market Value per share of Common
Stock on the date of the Change in Control over (B) the per share Exercise
Price.  However, this option shall be subject to cancellation and termination,
without cash payment or other consideration due the Participant, if the Fair
Market Value per share of Common Stock on the date of such Change in Control is
less than the per share Exercise Price.

(c)The Plan Administrator shall have the authority to provide that any escrow,
holdback, earn-out or similar provisions in the definitive agreement effecting
the Change in Control shall apply to any cash payment made under subsection (a)
or (b) above to the same extent and in the same manner as such provisions apply
to a holder of a share of Common Stock.

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(d)Immediately following the consummation of the Change in Control, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control transaction.

(e)If this option is assumed in connection with a Change in Control or otherwise
continued in effect, then this option shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number and class of
securities which would have been issuable to the Participant in consummation of
such Change in Control, had the option been exercised immediately prior to such
Change in Control, and appropriate adjustments shall also be made to the
Exercise Price, provided the aggregate Exercise Price shall remain the same.  To
the extent that the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control, the successor corporation (or parent thereof) may in connection with
the assumption or continuation of this option and subject to the Plan
Administrator’s approval, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Change in Control, provided such common stock is readily
traded on an established U.S. securities market.

(f)If this option is assumed, substituted for, continued or replaced in
connection with a Change in Control in accordance with Paragraph 6(a), and if
the Participant incurs an involuntary termination by the Corporation or its
successor other than as a result of Participant’s Misconduct, or the Participant
voluntarily terminates employment for Good Reason, in each case within eighteen
(18) months following the effective date of a Change in Control of the
Corporation, then such additional number of Option Shares shall vest as of the
date of termination as is equal to the number of the Option Shares as would have
vested during the two (2) year period following the date of termination had
Participant remained in Service with the Corporation or its successor during
such period.  In addition, notwithstanding anything to the contrary contained in
Paragraph 5 above, Participant shall have the right to exercise the vested
Option Shares until the earlier of (i) the expiration of the twelve (12)-month
period measured from the date of the Change in Control or (ii) the Expiration
Date.

(g)This Agreement shall not in any way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

7.Adjustment to Option Shares.  Should any change be made to the outstanding
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, spin-off transaction or other change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration, or should the value of outstanding shares of Common
Stock be substantially reduced as a result of a spin-off transaction or an
extraordinary dividend or distribution, or should there occur any merger,
consolidation, reincorporation or other reorganization, then equitable
adjustments shall be made to (a) the total number and/or class of securities
subject to this option and (b) the Exercise Price.  The adjustments shall be
made by the Plan Administrator in such manner as the Plan Administrator deems
appropriate in order to reflect such change, and those adjustments shall be
final, binding and conclusive.

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8.Stockholder Rights.  The holder of this option shall not have any stockholder
rights with respect to the Option Shares until such person shall have exercised
the option, paid the Exercise Price and become the record holder of the
purchased shares.

9.Manner of Exercising Option.

(a)In order to exercise this option with respect to all or any part of the
Option Shares, the Participant (or any other person or persons exercising the
option) must take the following actions:

(i)Execute and deliver to the Corporation a Notice of Exercise, or comply with
such procedures as the Corporation may establish for notifying the Corporation
of the exercise of the option, for the Option Shares for which the option is
exercised.

(ii)Pay the aggregate Exercise Price for the purchased shares in one or more of
the following forms:

(A)cash or check made payable to the Corporation;

(B)in shares of Common Stock valued at Fair Market Value on the Exercise Date
and held for the period (if any) necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes; or

(C)subject to compliance with applicable law and the Corporation’s insider
trading policies, through a special sale and remittance procedure pursuant to
which the Participant shall concurrently provide instructions (A) to a brokerage
firm (with such brokerage firm reasonably satisfactory to the Corporation for
purposes of administering such procedure in compliance with the Corporation’s
pre-clearance or pre-notification policies) to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the  purchased shares plus all applicable income and
employment taxes required to be withheld by the Corporation by reason of such
exercise and (B) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm on the settlement date in order
to complete the sale.

Except to the extent the sale and remittance procedure is utilized in connection
with the option exercise, payment of the Exercise Price must accompany the
Notice of Exercise delivered to the Corporation in connection with the option
exercise.

(iii)Furnish to the Corporation appropriate documentation that the person or
persons exercising the option (if other than the Participant) have the right to
exercise this option.

(iv)Make appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining the Participant) for the satisfaction of all applicable
tax withholding requirements applicable to the option exercise.

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(v)As soon as practical after the Exercise Date, the Corporation shall issue to
or on behalf of the Participant (or any other person or persons exercising this
option) a certificate for the purchased Option Shares, with the appropriate
legends affixed thereto.

(b)In no event may this option be exercised for any fractional shares.

10.Compliance with Laws and Regulations.

(a)The exercise of this option and the issuance of the Option Shares upon such
exercise shall be subject to compliance by the Corporation and the Participant
with all applicable requirements of law relating thereto and with all applicable
regulations of any Stock Exchange on which the Common Stock may be listed for
trading at the time of such exercise and issuance.

(b)The inability of the Corporation to obtain approval from any regulatory body
having authority deemed by the Corporation to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the
Corporation of any liability with respect to the non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained.  The
Corporation, however, shall use its best efforts to obtain all such approvals.

11.Successors and Assigns.  Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and the
Participant, the Participant’s assigns and the legal representatives, heirs and
legatees of the Participant’s estate.

12.Notices.  Any notice required to be given or delivered to the Corporation
under the terms of this Agreement shall be in writing and addressed to the
Corporation at its principal corporate offices.  Any notice required to be given
or delivered to the Participant shall be in writing and addressed to the
Participant at the address indicated in the Corporation’s personnel records.
 All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.

13.Construction.  This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the terms of the Plan.  All decisions of the Plan Administrator with respect to
any question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in this option.

14.Governing Law.  The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware without resort
to that state’s conflict-of-laws rules.

15.Stockholder Approval.  If the Option Shares covered by this Agreement exceed,
as of the Grant Date, the number of shares of Common Stock which may be issued
under the Plan as last approved by the stockholders, then this option shall be
void with respect to such excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of

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shares of Common Stock issuable under the Plan is obtained in accordance with
the provisions of the Plan.

16.Additional Terms Applicable to an Incentive Option.  In the event this option
is designated an Incentive Option in the Grant Notice, the following terms and
conditions shall also apply to the grant:

(a)This option shall cease to qualify for favorable tax treatment as an
Incentive Option if (and to the extent) this option is exercised for one or more
Option Shares:  (i) more than three (3) months after the date the Participant
ceases to be an Employee for any reason other than death or Permanent Disability
or (ii) more than twelve (12) months after the date the Participant ceases to be
an Employee by reason of Permanent Disability.

(b)No installment under this option shall qualify for favorable tax treatment as
an Incentive Option if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which such installment
first becomes exercisable hereunder would, when added to the aggregate value
(determined as of the respective date or dates of grant) of the Common Stock or
other securities for which this option or any other Incentive Options granted to
the Participant prior to the Grant Date (whether under the Plan or any other
option plan of the Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate.  Should such One Hundred Thousand Dollar ($100,000)
limitation be exceeded in any calendar year, this option shall nevertheless
become exercisable for the excess shares in such calendar year as a
Non-Statutory Option.

(c)Should the Participant hold, in addition to this option, one or more other
options to purchase Common Stock which become exercisable for the first time in
the same calendar year as this option, then for purposes of the foregoing
limitations on the exercisability of such options as Incentive Options, this
option and each of those other options shall be deemed to become first
exercisable in that calendar year on the basis of the chronological order in
which they were granted, except to the extent otherwise provided under
applicable law or regulation.

17.Employment at Will.  Nothing in this Agreement or in the Plan shall confer
upon the Participant any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining the Participant)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate the Participant’s Service at any time for any reason, with or without
cause.

18.Definitions.  Defined terms used herein without definition shall have the
meanings given to such terms in the Plan or the Grant Notice.  In addition, the
following definitions shall be in effect under the Agreement:

(a)Agreement shall mean this Stock Option Agreement.

(b)Exercise Date shall mean the date on which the Option shall have been
exercised in accordance with Paragraph 9 of the Agreement.

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(c)Exercise Price shall mean the exercise price payable per Option Share as
specified in the Grant Notice.

(d)Exercise Schedule shall mean the schedule set forth in the Grant Notice
pursuant to which the option is to become exercisable for the Option Shares in
one or more installments over the Participant’s period of Service.

(e)Expiration Date shall mean the date on which the option expires as specified
in the Grant Notice.

(f)Good Reason shall mean (unless otherwise defined in an employment or other
agreement between the Corporation and the Participant): Participant’s voluntary
resignation from the Corporation upon any of the following events without
Participant’s written consent: [(i) a material reduction in the Participant’s
authority, duties or responsibilities (and not simply a change in title or
reporting relationships); (ii) a material reduction in the Participant’s base
salary (for the avoidance of doubt, a greater than ten (10%) percent reduction
in the level of base salary shall constitute a material reduction in the
Participant’s compensation, unless the reduction is part of a Corporation-wide
reduction that affects all similarly situated employees in substantially the
same proportion; (iii) a relocation of the Participant’s principal place of work
to a location that would increase the Participant’s one-way commute from his or
her personal residence to the new principal place of work by more than fifty
(50) miles; or (iv) any breach by the Corporation of its obligations under any
employment agreement with Participant that results in a material negative change
to Participant.]1 / [(i) a material reduction in the Participant’s base salary
(for the avoidance of doubt, a greater than ten (10%) percent reduction in the
level of base salary shall constitute a material reduction in the Participant’s
compensation, unless the reduction is part of a Corporation-wide reduction that
affects all similarly situated employees in substantially the same proportion;
or (ii) a relocation of the Participant’s principal place of work to a location
that would increase the Participant’s one-way commute from his or her personal
residence to the new principal place of work by more than fifty (50) miles.]2
Notwithstanding the foregoing, “Good Reason” shall only be found to exist if the
Participant provides written notice (each, a “Good Reason Notice”) to the
Corporation identifying and describing the event resulting in Good Reason within
ninety (90) days of the initial existence of such event, the Corporation does
not cure such event within thirty (30) days following receipt of the Good Reason
Notice from the Participant and the Participant terminates his or her employment
during the ninety (90)-day period after the Participant’s delivery of the Good
Reason Notice. If the Participant does not terminate his or her employment for
Good Reason within 90 days after delivery of the Good Reason Notice, then the
Participant will be deemed to have waived his or her right to terminate for Good
Reason with respect to such grounds.

(g)Grant Date shall mean the date of grant of the option as specified in the
Grant Notice.

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1

First alternative to apply for employees who are participants in executive
severance plans.

2

Second alternative to apply for all other employees.

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(h)Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which the Participant has been informed of the basic
terms of the option evidenced hereby.

(i)Notwithstanding any contrary definition of “Misconduct” set forth in the
Plan, Misconduct for purposes of this Agreement shall mean (unless otherwise
defined in an employment or other agreement between the Corporation and the
Participant): (i) Participant’s misappropriation of the Corporation’s funds or
property, or any attempt by Participant to secure any personal profit related to
the business or business opportunities of the Corporation without the informed,
written approval of the Audit Committee of the Board; (ii) any unauthorized use
or disclosure by Participant of confidential information or trade secrets of the
Corporation (or any parent of the Corporation); (iii) Participant’s gross
negligence or reckless misconduct in the performance of Participant’s duties;
(iv) Participant’s willful failure to comply with any valid and legal directive
of the Board or the person to whom Participant reports; (v) Participant’s
conviction of, or plea of nolo contendre to, any felony or misdemeanor involving
moral turpitude or fraud, or of any other crime involving material harm to the
standing or reputation of the Corporation; (vi) any other willful misconduct by
Participant that the Board determines in good faith has had a material adverse
effect upon the business or reputation of the Corporation; or (vii) any other
material breach or violation by the Participant of any employment agreement with
the Corporation or any other material written policy of the Corporation;
provided, however, that the Corporation shall have provided the Participant with
written notice that such breach or violation has occurred, and the Participant
has been afforded at least ten (10) business days to cure such breach or
violation.  Notwithstanding the foregoing, (A) the cure period shall not apply
to violations of the Corporation’s code of conduct, code of ethics or
prohibition against unlawful harassment, and (B) such cure period shall only
apply to breaches, violations, failures or neglect that in the Board’s sole
judgment are capable of or amenable to such cure. Notwithstanding the foregoing,
prong (ii) of this definition is not intended to, and shall be interpreted in a
manner that does not, limit or restrict a Participant from exercising any
legally protected whistleblower rights (including pursuant to Rule 21F under the
1934 Act).

(j)Notice of Exercise shall mean the notice of exercise in such form as provided
by the Corporation.

(k)Option Shares shall mean the number of shares of Common Stock subject to the
option.

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