**Exhibit 10.3**

 

UNOVA, Inc.

600136th Avenue West

Everett, WA 98203-1264

 

**UNOVA, INC.**

**2001 STOCK INCENTIVE PLAN**

**INCENTIVE STOCK OPTION AGREEMENT**

**(FOR OPTIONEES IN THE U.S.)**

 
| [Name and  address] | Option Number: |   |
|---------------------|----------------|--------|
|                | Option Plan:   | 2001   |
|                | Grant Date:    |   |
|                | Option Shares: |   |
|                | Option Price:  |   |

 

1.             **THISAGREEMENT** sets forth the terms of Stock Options granted to yousubject to the UNOVA, Inc. 2001 Stock Incentive Plan (the **“Plan”**).  As of theGrant Date indicated above, subject to your acceptance of the terms andconditions hereof, UNOVA, Inc. (the **“Company”**) hasgranted to you Stock Options to purchase [#Shares] shares of the Common Stockof the Company (**“Stock”**) at the purchase price of $xx.xxxper share.

 

Capitalizedterms that are not defined herein shall have the meanings assigned to suchterms in the Plan.  The Plan shallcontrol in the event there is any express conflict between the Plan and thisAgreement and with respect to such matters as are not expressly covered herein.

 

**In order for this grant to become effective, you must acceptit electronically or sign and return one copy of this Agreement to the Company’sSecretary no later than [Date].  In theevent you fail to do so, this Agreement shall be deemed canceled, null, andvoid.**

** **

**2.             The options granted by this Agreementare intended to be Incentive Stock Options, as that term is defined in Section 422of the Internal Revenue Code of 1986, as amended (the**“Code”); *provided, however,*that to the extent the terms of these options, or any action taken with respectthereto, fail to satisfy the requirements of Section 422, these optionsshall be Non-Qualified Stock Options, as that term is defined in the Plan.

** **

**3.             The options granted hereundershall, subject to the provisions of the Plan, become exercisable ininstallments on the dates set forth below and shall remain cumulativelyexercisable until the expiration date indicated:**

 
| **Number  of  Shares** | ** ** | **Date Options May  First Be Exercised** | ** ** | **Expiration Date  of Options** | ** ** |
|------------------------|------------|------------------------------------------|------------|---------------------------------|------------|
| ** **             | ** ** | ** **                               | ** ** | ** **                      | ** ** |
| **[#Shares/5]**        | ** ** | **[Grant Date + 1 year]**                | ** ** | **[Grant Date + 10 years]**     | ** ** |
| **[#Shares/5]**        | ** ** | **[Grant Date + 2 years]**               | ** ** | **[Grant Date + 10 years]**     | ** ** |
| **[#Shares/5]**        | ** ** | **[Grant Date + 3 years]**               | ** ** | **[Grant Date + 10 years]**     | ** ** |
| **[#Shares/5]**        | ** ** | **[Grant Date + 4 years]**               | ** ** | **[Grant Date + 10 years]**     | ** ** |
| **[#Shares/5]**        | ** ** | **[Grant Date + 5 years]**               | ** ** | **[Grant Date + 10 years]**     | ** ** |

 

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# 4.             You hereby acknowledge that the options granted herebyare subject to the terms and conditions of the Plan, which is incorporatedherein by reference, and you hereby acknowledge that you have received or have accessto a copy of the Plan.  You are alsoencouraged to review the Company’s most recent Form 10-K and proxystatement, which may be found at www.unova.com.

 

5.             (a)  Subject to the provisionsof this Section 5, vested Stock Options may be exercised, in whole or inpart, at any time during the option term by giving written notice of exerciseto the Company on the form furnished by the Company for that purpose specifyingthe number of shares of Stock subject to the Stock Option to be purchased.  Each exercise must encompass at least oneinstallment or 100 shares of Stock, whichever is less.

 

(b) The option price of Stock to be purchased upon exercise of any Stock Optionshall be paid in full in cash in United States dollars (by certified or bankcheck or such other instrument payable to the order of **“**UNOVA, Inc.**”** as the Company may accept).  The option price may also be paid in the formof unrestricted Stock already owned by you for a period of at least six monthsand based in any such instance on the average of the highest and lowest pershare sales prices of the Stock during normal trading hours on the New YorkStock Exchange (the **“Fair Market Value”**)on the date the Stock Option is exercised.

 

(c) In the discretion of the Committee, payment for any shares subject to a StockOption may also be made by delivering a properly executed exercise notice tothe Company, together with a copy of irrevocable instructions to a broker todeliver promptly to the Company the amount of sale or loan proceeds to pay thepurchase price, and, if requested by you or required by law to be withheld bythe Company, the amount of any federal, state, local and foreign withholdingtaxes.

 

(d) No shares of Stock shall be issued until full payment therefor has beenmade.  You shall have all of the rightsof a shareholder of the Company holding the Stock that is subject to such StockOption (including, if applicable, the right to vote the shares and the right toreceive dividends, if any) when you have given written notice of exercise andhave paid in full for such shares.

 

(e) If as a result of any adjustment to the shares or number of shares subject to thisAgreement made pursuant to Section 3 of the Plan, any fractional sharewould be issuable under this Agreement, such fractional share shall be canceledwithout the payment of any consideration to you.

 

6.             You may transfer any or allNon-Qualified Stock Options granted under the Plan by way of gift to any familymember, provided that any such transferee shall agree in writing with theoptionee and the Company, as a condition to such transfer, to be bound by theprovisions of all agreements and other instruments, including withoutlimitation, the Plan, and shall agree in writing to such other terms as theCompany may reasonably require to assure compliance with applicable federal andstate securities and other laws.  Forpurposes of the preceding sentence, “family member” shall include any child,stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,daughter-in-law, brother-in-law, or sister-in-law, including adoptiverelationship, any person sharing your household (other than a tenant oremployee), a trust in which these persons have more than 50 percent of thebeneficial interest, a foundation in which these persons (or the optionee)control the management of assets, and any other entity in which these persons(or the optionee) own more than 50 percent of the voting interests.  All Stock Options shall be

 

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exercisable, subject tothe terms of the Plan, only by you, your guardian or legal representative, orany person to whom such option is transferred pursuant to this paragraph, itbeing understood that the term “holder” and “optionee” include such guardian,legal representative and other trustee. If such transfer is made to a family member, there may be additional taxconsequences at the time of transfer, and the Company will not be responsiblefor such tax consequences.

 

7.             (a)  In the event of your Terminationof Employment due to death, any Stock Option held by you may thereafter beexercised for a period of one year from the date of such death or until theexpiration of the stated term of such Stock Option, whichever period is shorter,in accordance with the following schedule:

 

| **Time from Grant  Date to Death** | ** ** | **Stock Options  Exercisable by Estate** | ** ** |
|------------------------------------|------------|------------------------------------------|------------|
| ** **                         | ** ** | ** **                               | ** ** |
| Less than 1 year                   |       | 33                                       | %          |
| 1 year to 2 years                  |       | 67                                       | %          |
| More than 2 years                  |       | 100                                      | %          |

 

(b) In the event of your Termination of Employment due to death, if any portion ofthe Incentive Stock Options granted hereby is exercised after the expiration ofthe exercise periods that apply for purposes of Section 422 of the Code,such portion of Stock Options will thereafter be treated as Non-Qualified StockOptions.

 

**8.             Subject to the provisions ofsubparagraph 10(b) below, in the event of your Termination of Employmentby reason of Disability, any Stock Option held by you may thereafter beexercised by you, to the extent it was vested at the time of termination, for aperiod of three years from the date of such Termination of Employment or untilthe expiration of the stated term of such Stock Option, whichever period isshorter; provided, however, that if you die within such period, any unexercisedStock Option held by you shall, notwithstanding the expiration of such period,continue to be exercisable to the extent to which it was vested at the time ofdeath for a period of 12 months from the date of such death or until theexpiration of the stated term of such Stock Option, whichever period isshorter. **“Disability” means your permanent and total disability as morespecifically defined in the Plan.  In theevent of your Termination of Employment by reason of Disability, if any portionof the Incentive Stock Options granted hereby is exercised after the expirationof the exercise periods that apply for purposes of Section 422 of theCode, such portion of Stock Options will thereafter be treated as Non-QualifiedStock Options.

** **

9.             Subject to the provisions ofsubparagraph 10(b) below, in the event of your Termination of Employmentby reason of Retirement, any Stock Option held by you may thereafter beexercised by you (or your estate or personal representative), to the extent itwas vested at the time of such Retirement, until the expiration of the statedterm of such Stock Option or, if earlier, 12 months from the date of yourdeath.  **“Retirement”**means retirement from active employment with the Company or a Subsidiary (i) ator after age 65 or (ii) pursuant to the early retirement provisions of thebasic pension plan of the Company or a Subsidiary under which you may receiveretirement benefits.  In the event of yourTermination of Employment by reason of Retirement, if any portion of theIncentive Stock Options granted hereby is exercised after the expiration of theexercise periods that apply for purposes of Section 422 of the Code, suchportion of Stock Options will thereafter be treated as Non-Qualified StockOptions.

 

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10.           (a)  If you incur a Terminationof Employment for any reason other than death, Disability, or Retirement, anyStock Option held by you, to the extent it was vested at the time oftermination, may be exercised for the lesser of three months from the date ofsuch Termination of Employment or the balance of such Stock Option’s term; *provided, however,* that if you die within such three-monthperiod, any unexercised Stock Option held by you shall, notwithstanding theexpiration of such three-month period, continue to be exercisable to the extentto which it was vested at the time of death for a period of 12 months from thedate of such death or until the expiration of the stated term of such StockOption, whichever period is the shorter. Notwithstanding the foregoing, after a Change of Control, Stock Optionsshall remain exercisable following a Termination of Employment described inthis Section 10 for seven months following such termination or untilexpiration of the stated term of such Stock Option, whichever period isshorter.

 

(b) **“Termination of Employment”** means thetermination of your employment with the Company or any Subsidiary.  You shall also be deemed to incur aTermination of Employment if the Subsidiary ceases to be such a Subsidiary, andif you do not immediately thereafter become an employee of the Company oranother Subsidiary.  Temporary absencesfrom employment because of illness, vacation, or leave of absence and transfersamong the Company and its Subsidiaries shall not be considered Terminations ofEmployment.  If so determined by theCommittee, you shall be deemed not to have incurred a Termination of Employmentfollowing Retirement or Disability if you enter into a contract with the Companyor any Subsidiary providing for the rendering by you of consulting services tothe Company or such Subsidiary on terms approved by the Committee; however,your Termination of Employment shall be deemed to occur when such contractceases to be in effect.  In the event ofsuch Retirement or Disability and subsequent assumption by you of the status ofa consultant, any portion of the Incentive Stock Options granted hereby whichis exercised after the applicable period for purposes of Section 422 ofthe Code shall be treated as Non-Qualified Stock Options.

 

11.           No later than the date as of which anamount first becomes includable in your gross income for federal income taxpurposes with respect to any Stock Option granted by this Agreement, you shallpay to the Company, or make arrangements satisfactory to the Company regardingthe payment of, any federal, state or local, and foreign taxes of any kindrequired by law to be withheld by the Company with respect to such amount.  The minimum amount of statutory withholdingobligations may be settled with unrestricted Stock having a Fair Market Valueon the date of the exercise of the Stock Option equal to the amount of taxes requiredby law to be withheld, including Stock issuable upon exercise of a Stock Optionthat gives rise to the withholding requirement. Tax withholdings in excess of the statutory minimum amount may not besatisfied in Stock but may, if desired, be paid in cash.  The obligations of the Company under the Planshall be conditional on such payment or arrangements having been made, and theCompany and its Subsidiaries shall, to the extent permitted by law, have theright to deduct any such taxes from any payment otherwise due you.

 

12.           The Plan is established voluntarilyby the Company, it is discretionary in nature and it may be modified, amended,suspended or terminated by the Company at any time, unless otherwise providedin the Plan and this Agreement.  Grantsof Stock Options and other Stock awards under the Plan are made from time totime in the sole discretion of the Committee. The grant of a Stock Option or other award does not create anycontractual or other right to receive future grants of Stock Options, orbenefits in lieu of Stock Options, even if Stock Options have been granted repeatedlyin the past.  You acknowledge that futuregrants under the Plan, if any, will be at the sole discretion of the Committee,including the timing of any grant, the number of

 

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options, the vestingprovisions, and the exercise price. The grant of a Stock Option to you in anyyear shall give you neither any right to similar grants in future years nor anyright to be retained in the employ of the Company or its Subsidiaries, suchemployment being terminable to the same extent as if the Plan and thisAgreement were not in effect.  The rightand power of the Company and its Subsidiaries to dismiss or discharge you isspecifically and unqualifiedly unimpaired by this Agreement.

 

Youacknowledge that your participation in the Plan is voluntary and the value ofthe Stock Option is an extraordinary item that does not constitute compensationof any kind for services of any kind rendered to the Company or itsSubsidiaries, and which is outside the scope of any employment contract you mayhave, unless such contract specifically provides otherwise.  As such, you understand that any Stock Optionis not part of normal or expected compensation for purposes of calculating anyseverance, resignation, redundancy, end of service payments, bonuses, long-termservice awards, pension or retirement benefits, or similar payments and in noevent should be considered as compensation for, or relating in any way to, pastservices for the Company or its Subsidiaries.

 

13.           If employed by a Subsidiary of theCompany, you authorize and direct such Subsidiary or any agent of the Companyor such Subsidiary administering the Plan or providing plan recordkeepingservices to disclose to the Company or any of its Subsidiaries such informationand data as it shall request in order to facilitate the grant of Stock Optionsand the administration of the Plan, and you waive any data privacy rights youmay have with respect to such information. By accepting this Agreement, you authorize the Company and theSubsidiary by which you are employed, if applicable, to store and transmit suchinformation in electronic form.

 

14.           It is the present practice of theCompany to provide participants in the Plan, solely as a courtesy and not as aCompany policy, with written or oral notification of the imminent expiration ofany Stock Option having monetary value. You acknowledge that the Company and its Subsidiaries and agents shallhave no liability or responsibility in the event you should fail to receive anysuch “courtesy notice” and your Stock Option expires unexercised.  You acknowledge that the obligation tomonitor the schedule of exercisability and expiration of options awardedunder this Agreement, and to procure current quotations regarding the marketvalue of the Stock, is solely your obligation and not that of the Company orany Subsidiary by which you are employed or the agents of either of them.

 

15.           Each notice relatingto this Agreement shall be in writing and delivered in person or by mail to theCompany at its office, 6001 36th Avenue West, Everett, WA 98203-1264,to the attention of the Company’s Secretary, or at such other address as may befurnished to you in writing.  All noticesto you or other person or persons then entitled to exercise any right pursuantto this Agreement shall be delivered to you or such other person as you or suchother person may specify in writing to the Secretary of the Company by a noticedelivered in accordance with this paragraph.

 

16.           The Company may, inits sole discretion, decide to deliver any documents related to the StockOption granted under and participation in the Plan or future options (if any)that may be granted under the Plan by electronic means or to request yourconsent to participate in the Plan by electronic means.  You hereby consent to receive such documentsby electronic delivery and, if requested, to agree to participate in the Planthrough an on-line or electronic system established and maintained by theCompany or another third party designated by the Company.

 

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17.           The terms and conditions of thisAgreement and of the Plan incorporated by reference herein comprise the wholeterms and conditions between you and the Company with respect to the subjectmatter of this Agreement and shall be governed by and construed in accordancewith the laws of the State of Delaware, United States of America.  The Committee may amend the terms andconditions of this Agreement at any time, prospectively or retroactively, tothe extent permitted by Section 9 of the Plan.  The provisions of this Agreement are severableand if any one or more provisions are determined to be illegal or otherwiseunenforceable, in whole or in part, the remaining provisions shall neverthelessbe binding and enforceable.

 

18.           This Agreement shall inure to thebenefit of and be binding upon each successor of the Company and, to the extentspecifically provided therein and in the Plan, shall inure to the benefit ofand shall be binding upon your heirs, legal representatives, and successors andupon any person to whom a transfer of a Stock Option permitted by paragraph 6of this Agreement has been made.

 

INWITNESS WHEREOF, this Agreement has been executed by you and by the Companythrough its duly authorized officer, all as of the Grant Date indicated above.

 

 
| ** **                           | **UNOVA, Inc.**        | ** ** |
|--------------------------------------|-----------------------------|------------|
| ** **                           | ** **                  | ** ** | ** ** |
| ** **                           | ** **                  | ** ** | ** ** |
| ** **                           | **By:**                     | ** ** | ** ** |
| ** **                           | ** **                  | ** ** | ** ** |
| ** **                           | ** **                  | ** ** | ** ** |
| **IMPORTANT**                        | ** **                  | ** ** | ** ** |
| **PLEASE ACCEPT  ELECTRONICALLY OR** | ** **                  | ** ** | ** ** |
| **SIGN AND RETURN PROMPTLY**         | ** **                  | ** ** | ** ** |
| ** **                           | ** **                  | ** ** | ** ** |
| ** **                           | ** **                  | ** ** |
| ** **                           | **[Name: First, MI. Last]** | ** ** |

 

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