Exhibit 10.3

February 4, 2004

To:

     In accordance with Section 7(a)(ii) of the Corporation’s 2003 Directors
Stock Plan, as amended, and resolutions adopted at the February 4, 2004 meeting
of the Board, you have been granted today stock options to purchase 1,500 shares
of the Corporation’s Common Stock at a price per share of $30.22 and on the
other terms and conditions set forth in the attached Stock Option Terms and
Conditions (together with this letter, the Stock Option Agreement).

     Please confirm your acceptance of this grant, including the attached Stock
Option Terms and Conditions, by signing one copy at the place indicated below
and returning it to the Corporation’s Office of the Secretary in the enclosed
return envelope.

     
ROCKWELL AUTOMATION, INC.
   
 
   
 
   
William J. Calise, Jr.
Senior Vice President, General Counsel & Secretary
   
 
   
 
   
 
   
ACCEPTED AND AGREED TO:
   
 
   
 
   

--------------------------------------------------------------------------------

   
 
   
Date:                                       , 2004
   

 

--------------------------------------------------------------------------------

 

ROCKWELL AUTOMATION, INC.
2003 DIRECTORS STOCK PLAN, AS AMENDED
STOCK OPTION TERMS AND CONDITIONS

1.   Definitions

     As used in these Stock Option Terms and Conditions, the following words and
phrases shall have the respective meanings ascribed to them below unless the
context in which any of them is used clearly indicates a contrary meaning:

     (a) Change of Control: Change of Control shall have the same meaning as
such term has in Article III, Section 13(I)(1) of Rockwell Automation’s By-Laws.

     (b) Charles Schwab: Charles Schwab & Co., Inc., the Stock Option
Administrator whom Rockwell Automation has engaged to administer and process all
Option exercises.

     (c) Customer Service Center: Charles Schwab’s Customer Service Center that
is used to facilitate Option transactions. Contact Charles Schwab at
877.804.3529.

     (d) Director: A member of the Board of Directors of Rockwell Automation.

     (e) Exercise Request and Attestation Form: The form attached as Exhibit 1
or any other form accepted by Charles Schwab in connection with the use of
already-owned shares to pay all or part of the exercise price for the Option
Shares to be purchased on exercise of any of the Options.

     (f) Notice of Exercise Form: The form attached as Exhibit 2 or any other
form accepted by the Secretary of Rockwell Automation in his sole discretion.

     (g) Options: The stock option or stock options listed in the first
paragraph of the letter dated February 4, 2004 to which these Stock Option Terms
and Conditions are attached and which together with these Stock Option Terms and
Conditions constitute the Stock Option Agreement.

     (h) Option Shares: The shares of Rockwell Automation Common Stock issuable
or transferable on exercise of the Options.

     (i) Plan: Rockwell Automation, Inc. 2003 Directors Stock Plan, as amended,
and as such Plan may be amended and in effect at the relevant time.

     (j) Rockwell Automation: Rockwell Automation, Inc., a Delaware corporation.

     (k) Schwab Option Center: Charles Schwab’s stock option management website
which you can use to access your stock option account at
www.schwab.com/optioncenter.

     (l) Shares: Shares of Rockwell Automation Common Stock.

     (m) Stock Option Agreement: These Stock Option Terms and Conditions
together with the letter dated February 4, 2004 to which they are attached.

2

--------------------------------------------------------------------------------

 

2.   When Options May be Exercised

     The Options may be exercised, in whole or in part (but only for a whole
number of shares), and at one time or from time to time, as to one-third
(rounded to the nearest whole number) of the Option Shares during the period
beginning on February 4, 2005 and ending on February 4, 2014, as to an
additional one-third (rounded to the nearest whole number) of the Option Shares
during the period beginning on February 4, 2006 and ending on February 4, 2014
and as to the balance of the Option Shares during the period beginning on
February 4, 2007 and ending on February 4, 2014, and only during those periods,
provided that:

     (a) if you die while a Director, your estate, any person who acquires the
Options by bequest or inheritance, or any person to whom you have transferred
the Options during your lifetime as permitted by Section 4 herein may exercise
all the Options not theretofore exercised within (and only within) the period
beginning on your date of death (even if you die before you have become entitled
to exercise all or any part of the Options) and ending three years thereafter or
on February 4, 2014, if earlier even if the Options were not exercisable at the
date of death;

     (b) if you retire as a Director after reaching age 72 or before age 72 with
at least 10 years of service as a Director, you (or if you die after your
retirement date, your estate or any person who acquires the Options by bequest
or inheritance) or any person to whom you have transferred the Options during
your lifetime as permitted by Section 4 herein may thereafter exercise all the
Options not theretofore exercised within (and only within) the period beginning
on your retirement date (even if you retire before you have become entitled to
exercise all or any part of the Options) and ending five years thereafter or on
February 4, 2014, if earlier;

     (c) if your service as a Director terminates as a result of your disability
or as a result of your resignation for reasons of the antitrust laws, compliance
with Rockwell Automation’s conflict of interest policies or other circumstances
that the Board determines not to be adverse to the best interests of Rockwell
Automation, you (or if you die after termination of your service as a Director,
your estate or any person who acquires the Options by bequest or inheritance) or
any person to whom you have transferred the Options during your lifetime as
permitted by Section 4 herein, may thereafter exercise the Options not
theretofore exercised within (and only within) the period beginning on your
termination date and ending one year thereafter or on February 4, 2014, if
earlier, even if the Options were not exercisable at such termination date;

     (d) if your service as a Director terminates for any other reason, the
Options shall terminate forthwith on the date of termination of your service as
a Director and shall not be exercised thereafter; and

provided, further, that notwithstanding any other provision of the Stock Option
Agreement, if a Change of Control shall occur, then all Options then outstanding
shall become fully exercisable whether or not otherwise then exercisable and
shall be and remain exercisable for the applicable period hereinabove in this
Section 2 provided.

3.   Exercise Procedure

     (a) To exercise all or any part of the Options, you (or after your death,
your estate or any person who has acquired the Options by bequest or
inheritance) must submit a Notice of Exercise to Rockwell Automation’s Office of
the Secretary (Attention: Stock Option Administration; facsimile number
414.212.5297) or by other means acceptable to the Secretary of Rockwell
Automation, and then contact the Stock

3

--------------------------------------------------------------------------------

 

Option Administrator, Charles Schwab, by using the Customer Service Center as
follows:

     (i) contact the Customer Service Center by calling 877.804.3529, Monday
through Friday, 9:00 a.m. to 9:00 p.m. Eastern Time and follow the instructions
provided;

     (ii) confirm the Option transaction through the Customer Service Center;

     (iii) full payment of the exercise price for the Option Shares to be
purchased on exercise of the Options may be made:

  •   by check (wire) to your Charles Schwab account; or     •   in
already-owned Shares; or     •   in a combination of check (wire) to your
Charles Schwab account and Shares; or     •   by authorizing Charles Schwab or a
third party approved by Rockwell Automation to sell the Shares (or a sufficient
portion of the Shares) acquired upon exercise of the Option; and

     (iv) in the case of an exercise of the Options by any person other than you
seeking to exercise the Options, such documents as Charles Schwab or the
Secretary of Rockwell Automation shall require to establish to their
satisfaction that the person seeking to exercise the Options is entitled to do
so.

     (b) An exercise of the whole or any part of the Options shall be effective:

     (i) if you elect (or after your death, the person entitled to exercise the
Options elects) to pay the exercise price for the Option Shares entirely by
check (wire), (A) upon completion of your transaction by using the Customer
Service Center and full payment of the exercise price and withholding taxes (if
applicable) are received by Charles Schwab within three (3) business days
following the exercise; and (B) receipt of any documents required pursuant to
Section 3(a)(iv); and

     (ii) if you elect (or after your death, the person entitled to exercise the
Options elects) to pay the exercise price of the Option Shares in Shares or in a
combination of Shares and check (wire), (A) upon completion of your transaction
by using the Customer Service Center and full payment of the exercise price (as
defined in Section 3(d)) and withholding taxes (if applicable) are received by
Charles Schwab within three (3) business days following the exercise; and
(B) receipt of any documents required pursuant to Section 3(a)(iv).

     (c) If you choose (or after your death, the person entitled to exercise the
Options chooses) to pay the exercise price for the Option Shares to be purchased
on exercise of any of the Options entirely by check (wire), payment must be made
by:

  •   delivering to Charles Schwab a check (wire) in the full amount of the
exercise price for those Option Shares; or     •   arranging with a stockbroker,
bank or other financial institution to deliver to Charles Schwab full payment,
by check or (if prior

4

--------------------------------------------------------------------------------

 

arrangements are made with Charles Schwab) by wire transfer, of the exercise
price of those Option Shares.

     In either event, in accordance with Section 3(e) herein, full payment of
the exercise price for the Option Shares purchased must be made within three
(3) business days after the exercise has been completed through the Customer
Service Center.

     (d) (i) If you choose (or after your death, the person entitled to exercise
the Options chooses) to use already-owned Shares to pay all or part of the
exercise price for the Option Shares to be purchased on exercise of any of the
Options, you (or after your death, the person entitled to exercise the Options)
must deliver to Charles Schwab an Exercise Request and Attestation Form and cash
representing one share, per grant exercised, of Rockwell Automation Shares to
settle the rounding of the exercise costs. To perform such a stock swap
transaction or a partial swap transaction, the Exercise Request and Attestation
Form must be submitted via fax 720.785.8874 by 4:00 p.m., Eastern Time on the
date of exercise. Any questions concerning a stock swap transaction should be
referred to 877.636.7551 (Stock Option Administration Group Hotline). The
Exercise Request and Attestation Form must attest to your ownership of shares
representing:

  •   at least the number of Shares whose value, based on the Fair Market Value
(as defined in the Plan) on the day you have exercised your Options through the
Customer Service Center, equals the exercise price for the Option Shares; or    
•   any lesser number of Shares you desire (or after your death, the person
entitled to exercise the Options desires) to use to pay the exercise price for
those Option Shares and a check in the amount of such exercise price less the
value of the Shares to which you are attesting, based on their Fair Market Value
on the day you have exercised your Options through the Customer Service Center.

     (ii) If you choose (or after your death, the person entitled to exercise
the Options chooses) to use Shares acquired upon exercise of the Options to pay
all or part of the exercise price for the remaining Option Shares to be
purchased on exercise of any of the Options, you (or after your death, the
person entitled to exercise the Options) must contact the Customer Service
Center at 877.804.3529.

     (iii) Charles Schwab will advise you (or any other person who, being
entitled to do so, exercises the Options) of the exact number of Shares, valued
in accordance with Section 7(c) of the Plan at their Fair Market Value on the
date of exercise, and any funds required to pay in full the exercise price for
the Option Shares purchased. In accordance with Section 3(e), you (or such other
person) must pay, by check, in Shares or in a combination of check and Shares,
any balance required to pay in full the exercise price of the Option Shares
purchased within three (3) business days after the exercise has been completed
through the Customer Service Center.

     (iv) Notwithstanding any other provision of this Stock Option Agreement,
the Secretary of Rockwell Automation may limit the number, frequency or volume
of successive exercises of any of the Options in which payment is made, in whole
or in part, by delivery of Shares pursuant to this subparagraph (d) to prevent
unreasonable pyramiding of such exercises.

5

--------------------------------------------------------------------------------

 

     (e) An exercise completed through the Customer Service Center, whether or
not full payment of the exercise price for the Option Shares is received by
Charles Schwab, shall constitute a binding contractual obligation by you (or the
other person entitled to exercise the Options) to proceed with and conclude that
exercise of the Options (but only so long as you continue, or the other person
entitled to exercise the Options continues, to be entitled to exercise the
Options on that date). By your acceptance of this Stock Option Agreement, you
agree (for yourself and on behalf of any other person who becomes entitled to
exercise the Options) to deliver or cause to be delivered to Charles Schwab any
balance of the exercise price for the Option Shares to be purchased upon the
exercise pursuant to the transaction conducted through the Customer Service
Center required to pay in full the exercise price for those Option Shares, that
payment being by check, wire transfer, in Shares or in a combination of check
and Shares, on or before the later of the third business day after the date on
which you complete the exercise through the Customer Service Center. If such
payment is not made, you (for yourself and on behalf of any other person who
becomes entitled to exercise the Options) authorize the Corporation, in its
discretion, to set off against retainer payments or other amounts due or which
may become due you (or the other person entitled to exercise the Options) any
balance of the exercise price for those Option Shares remaining unpaid
thereafter.

     (f) An Exercise Confirmation representing the number of Option Shares
purchased will be issued the third business day (i) after Charles Schwab has
received full payment therefor or (ii) at Rockwell Automation’s or Charles
Schwab’s election in their sole discretion, after Rockwell Automation or Charles
Schwab has received (x) full payment of the exercise price of those Option
Shares and (y) any reimbursement in respect of withholding taxes due pursuant to
Section 5 herein.

4.   Transferability

     The Options are not transferable by you otherwise than (a) by will or by
the laws of descent and distribution; or (b) by gift to your spouse or natural,
adopted or step-children or grandchildren (Immediate Family Members) or to a
trust for the benefit of one or more of your Immediate Family Members, or to a
family charitable trust established by you or an Immediate Family Member;
provided, however, that no transfer pursuant to this clause (b) shall be
effective unless you have notified the Corporation’s Office of the Secretary
(Attention: Stock Option Administration) in writing specifying the Option or
Options transferred, the date of the gift and the name and Social Security or
other Taxpayer Identification Number of the transferee. During your lifetime,
only you are entitled to exercise the Options unless you have transferred any
Option in accordance with this paragraph to a member of an Immediate Family
Member or a trust for the benefit of one or more of your Immediate Family
Members, in which case only that transferee (or the legal representative of the
estate or the heirs or legatees of that transferee) shall be entitled to
exercise that Option.

5.   Withholding

     Rockwell Automation or Charles Schwab shall have the right, in connection
with the exercise of the Options, in whole or in part, to deduct from any
payment to be made by Rockwell Automation or Charles Schwab an amount equal to
the taxes required to be withheld by law with respect to such exercise or to
require you (or any other person entitled to exercise the Options) to pay to it
an amount sufficient to provide for any such taxes so required to be withheld.
By your acceptance of this Stock Option Agreement, you agree (for yourself and
on behalf of any other person who becomes entitled to exercise the Options) that
if Rockwell Automation or Charles Schwab elects to require you (or such other
person) to remit an amount sufficient to pay such withholding taxes, you (or
such

6

--------------------------------------------------------------------------------

 

other person) must remit that amount within three (3) business days after the
completion of the Option exercise. If such payment is not made, Rockwell
Automation, in its discretion, shall have the same right of set-off with respect
to payment of the withholding taxes as provided under Section 3(e) with respect
to payment of the exercise price for Option Shares.

6.   Headings

     The section headings contained in these Stock Option Terms and Conditions
are solely for the purpose of reference, are not part of the agreement of the
parties and shall in no way affect the meaning or interpretation of this Stock
Option Agreement.

7.   References

     All references in these Stock Option Terms and Conditions to Sections,
paragraphs, subparagraphs or clauses shall be deemed to be references to
Sections, paragraphs, subparagraphs and clauses of these Stock Option Terms and
Conditions unless otherwise specifically provided.

8.   Entire Agreement

     This Stock Option Agreement and the Plan embody the entire agreement and
understanding between Rockwell Automation and you with respect to the Options,
and there are no representations, promises, covenants, agreements or
understandings with respect to the Options other than those expressly set forth
in this Stock Option Agreement and the Plan.

9.   Applicable Laws and Regulations

     This Stock Option Agreement and Rockwell Automation’s obligation to issue
Option Shares hereunder are subject to applicable laws and regulations.

     
Exhibit 1
  Exercise Request and Attestation Form (for use with already-owned shares)
 
   
Exhibit 2
  Notice of Exercise Form

7