Exhibit 10.1

 

UNOVA, Inc.
2004 Long-Term Performance Share Program

 

Name of Program

 

The program will be called the UNOVA, Inc. 2004 Long-Term Performance Share
Program, and will be considered a “sub-plan” under the 2004 Omnibus Incentive
Compensation Plan (the “Plan”).

 

 

 

Purpose

 

The primary purposes of the program are to:

 

 

 

 

 

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Reward officers for the overall success of UNOVA as reflected through the
Company’s financial performance and stock price;

 

 

 

 

 

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Provide for cash payouts that can replace cash flow that could be impacted by
future changes to the Company’s Annual Bonus Plan; and

 

 

 

 

 

•

Provide a competitive long-term incentive program.

 

 

 

Effective Date

 

The effective date of the program is May 6, 2004. The program will remain in
effect until terminated by the Compensation Committee (the “Committee”) of the
Board.

 

 

 

Performance Period

 

The performance period under the program is three years, with the first
performance period running from January 1, 2004 to December 31, 2006.

 

 

 

Grant Frequency

 

A new three-year performance period will begin annually, which will create
overlapping performance periods.

 

 

 

Size of Awards

 

Target awards will be established for each participant, denominated in shares.
Target award levels will be approved annually by the Committee.

 

 

 

Program Structure

 

Participants can earn from 0 percent to 200 percent of their target shares based
on Company financial performance.

 

 

 

Performance Measure(s)

 

Before the commencement of each performance period, the Committee shall select
performance measures from those set forth in Section 10(a) of the Plan. The
Committee may choose to include or exclude any of the events set forth in
Section 10(b) of the Plan to the evaluation of performance for such period.

 

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Dividends

 

If dividends are declared on the Company’s common stock during a performance
period, the Committee, in its sole discretion, may recommend to the Board that
dividend equivalents on the target award be accrued in the form of additional
performance share units.

 

 

 

Form and Timing of Payout

 

For participants that have met their minimum ownership level under the stock
ownership guidelines, all payouts from this program will be made in cash. For
participants that have not met their minimum ownership level, payouts will be in
cash or stock (or a mix), at the discretion of the Committee.

 

 

 

 

 

Cash payouts will be calculated based on the average of the high and low daily
stock price for the last 30 trading days of the performance period. All payouts
will be made as soon as practicable following the end of the performance period.

 

 

 

Certain Terminations of Employment

 

In the event of a participant’s death, disability, or retirement at age 65 or
later, pro rata awards based on the number of full months worked during the
performance period will be calculated. Such awards will be based on goal
achievement over the entire performance period. Awards in these situations will
be calculated and paid after the end of the performance period. In the case of
death, however, the performance during the next-ending performance period after
death will be calculated as the performance for all open performance periods.

 

 

 

 

 

Amounts paid on account of death will be paid to a beneficiary designated by the
participant. If no beneficiary has been designated, amounts will be paid to the
participant’s estate.

 

 

 

Other Terminations of Employment

 

In the event of a termination of employment not constituting a disability,
death, or retirement, as discussed above, the participant will forfeit any right
to any payout for all performance periods in progress under the program.

 

 

 

Tax Withholding

 

The Company has the right to deduct any taxes or statutory deductions required
by law to be withheld from all payments under the program.

 

 

 

Change in Capitalization

 

Any change in capitalization which results in a material change in the value of
UNOVA common stock (e.g., special dividend, spin-off) will result in an
adjustment in the number of shares earned at target to reflect the
recapitalization. While individual recapitalization “events” will be assessed by
the Committee on a case-by-case basis, the overriding objective will be to avoid
rewarding or penalizing participants specifically as a function of the event.

 

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Change of Control

 

If a change of control occurs (as defined in the Plan), then all outstanding
award cycles will automatically vest and be paid out (in cash) at the target
level or the actual performance level as of the change of control, whichever is
higher.

 

 

 

Accounting Considerations

 

The employer must recognize an expense for compensation over the performance
period. An estimated expense is accrued by amortizing the initial value of the
awards and any subsequent appreciation over the performance period based upon
preestablished goals. The approach to expensing may change.

 

 

 

Tax Considerations

 

The Company will receive a tax deduction in the year in which the actual payout
is determinable. The employee must report taxable income in the year the award
is paid.

 

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