**Exhibit 10.3**

 

UNOVA, Inc.

6001 36th Avenue West

Everett, WA 98203-1264

 

**UNOVA,INC.**

**2001STOCK INCENTIVE PLAN**

**NON-QUALIFIEDSTOCK OPTION AGREEMENT**

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

 

1.         **THIS AGREEMENT**sets forth the terms of Stock Options granted to you subject to the UNOVA, Inc.2001 Stock Incentive Plan (the **“Plan”**).  As of the Grant Date indicated above, subjectto your acceptance of the terms and conditions hereof, UNOVA, Inc. (the **“Company”**) has granted to you Stock Options to purchase              shares of the Common Stock of the Company (the **“Stock”**)at the purchase price of $             per share.

 

Capitalized terms thatare not defined herein shall have the meanings assigned to such terms in thePlan.  The Plan shall control in theevent there is any express conflict between the Plan and this Agreement andwith respect to such matters as are not expressly covered herein.

 

**In orderfor this grant to become effective, you must sign and return to the Company’sSecretary one copy of this Agreement [or accept it electronically asinstructed] within 30 days following the date at the end of thisAgreement.  In the event you fail to doso, this Agreement shall be deemed canceled, null, and void.**

 

2.         The options granted by this Agreementare intended to be Non-Qualified Stock Options, as that term is defined in thePlan.

 

3.         The options granted hereunder shall,subject to the provisions of the Plan, become exercisable in installments onthe dates set forth below and shall remain cumulatively exercisable until theexpiration date indicated:

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

 

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4.         You hereby acknowledge that the optionsgranted hereby are subject to the terms and conditions of the Plan, which isincorporated herein by reference, and you hereby acknowledge that you havereceived or have access to a copy of the Plan. You are also encouraged to review the Company’s most recent Form 10-Kand proxy statement, which may be found at www.unova.com.

 

5.         (a)  Subject to the provisions of this Section 5,Stock Options then exercisable may be exercised, in whole or in part, at anytime during the option term by giving written notice of exercise to the Companyon the form furnished by the Company for that purpose specifying the number ofshares of Stock subject to the Stock Option to be purchased.  Eachexercise must encompass at least one installment or 100 shares of Stock,whichever is less.

 

(b)  The option price of Stock to be purchasedupon exercise of any Stock Option shall be paid in full in cash in UnitedStates dollars (by certified or bank check or such other instrument payable tothe order of “UNOVA, Inc.” as the Company may accept) or may also be paid inthe form of unrestricted Stock already owned by you for a period of at leastsix months and based in any such instance on the Fair Market Value of the Stockon the date the Stock Option is exercised.

 

(c)  In the discretion of the Committee, paymentfor any shares subject to a Stock Option may also be made by delivering aproperly executed exercise notice to the Company, together with a copy ofirrevocable instructions to a broker to deliver promptly to the Company theamount of sale or loan proceeds to pay the purchase price, and, if requested byyou or required by law to be withheld by the Company, the amount of anyfederal, state, local and foreign withholding taxes.

 

(d)  No shares of Stock shall be issued until fullpayment therefor has been made.  Youshall have all of the rights of a shareholder of the Company holding the Stockthat is subject to such Stock Option (including, if applicable, the right tovote the shares and the right to receive dividends, if any) when you have givenwritten notice of exercise and have paid in full for such shares.

 

(e)  If as a result of any adjustment to theshares or number of shares subject to this Agreement made pursuant to Section 3of the Plan, any fractional share would be issuable under this Agreement or anyinstallment thereof, such fractional share shall be canceled without thepayment of any consideration to you.

 

6.         You may transfer any or all Non-Qualified Stock Optionsgranted under the Plan by way of gift to any family member, *provided* that any such transferee shall agree in writingwith the optionee and the Company, as a condition to such transfer, to be boundby the provisions 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.

 

7.         In the event of your Termination of Employment due to death,any Stock Option held by you may thereafter be exercised for a period of oneyear from the date of such death or until the expiration of the stated term ofsuch Stock Option, whichever period is the shorter, in accordance with thefollowing 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%                                     |       |

 

8.         Subject to the provisions of subparagraph 10(b) below, inthe event of your Termination of Employment by reason of Disability, any StockOption held by you may thereafter be exercised by you, to the extent it wasexercisable at the time of termination, for a period of three years from thedate of such Termination of Employment or until the expiration of the statedterm of such Stock Option, whichever period is the shorter; provided, however,that if you die within such period, any unexercised Stock Option held by youshall, notwithstanding the expiration of such period, continue to beexercisable to the extent to which it was exercisable at the time of death fora period of 12 months from the date of such death or until the expiration ofthe stated term of such Stock Option, whichever period is the shorter.  **“Disability”**means your permanent and total disability as more specifically defined in thePlan.

 

9.         Subject to the provisions of subparagraph 10(b) below, inthe event of your Termination of Employment by reason of Retirement, any StockOption held by you may thereafter be exercised by you (or your estate orpersonal representative), to the extent it was exercisable at the time of suchRetirement, until the expiration of the stated term of such Stock Option or, ifearlier, 12 months from the date of your death. **“Retirement”** means retirement from activeemployment with the Company or a Subsidiary (i) at or after age 65 or (ii)pursuant to the early retirement provisions of the basic pension plan of theCompany or a Subsidiary under which you may receive retirement benefits.

 

10.     (a) If you incur a Termination of Employment for any reason other thandeath, Disability, or Retirement, any Stock Option held by you, to the extentit was exercisable at the time of termination, may be exercised for the lesserof three months from the date of such Termination of Employment or the balanceof such Stock Option’s term; *provided, however,*that if you die within such three-month period, any unexercised Stock Optionheld by you shall, notwithstanding the expiration of such three-month period,continue to be exercisable to the extent to which it was exercisable at thetime of death for a period of 12 months from the date of such death or untilthe expiration of the stated term of such Stock Option, whichever period is theshorter.  Notwithstanding the foregoing,after a Change in Control, Stock Options shall remain exercisable following aTermination of Employment described in this Section 10 for seven monthsfollowing such termination or until expiration of the stated term of such StockOption, whichever period is shorter.

 

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(b)  **“Termination of Employment”**means the termination of your employment with the Company and anySubsidiary.  You shall also be deemed toincur a Termination of Employment if the Subsidiary ceases to be such aSubsidiary, and if you do not immediately thereafter become an employee of theCompany or another Subsidiary.  Temporaryabsences from employment because of illness, vacation, or leave of absence andtransfers among the Company and its Subsidiaries shall not be consideredTerminations of Employment.  If sodetermined by the Committee, you shall be deemed not to have incurred aTermination of Employment following Retirement or Disability if you enter intoa contract with the Company or any Subsidiary providing for the rendering by youof consulting services to the Company or such Subsidiary on terms approved bythe Committee; however, your Termination of Employment shall be deemed to occurwhen such contract ceases to be in effect.

 

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 taxesrequired by law to be withheld, including Stock issuable upon exercise of aStock Option that gives rise to the withholding requirement.  Tax withholdings in excess of the statutoryminimum amount may not be satisfied in Stock but may, if desired, be paid incash.  The obligations of the Companyunder the Plan shall be conditional on such payment or arrangements having beenmade, and the Company and its Subsidiaries shall, to the extent permitted bylaw, have the right to deduct any such taxes from any payment otherwise dueyou.

 

12.       The grant of Stock Options and otherStock awards under the Plan are made from time to time in the sole discretionof the Committee.  The grant of a StockOption or other award does not assure an additional award at any futuretime.  You acknowledge that future grantsunder the Plan, if any, will be at the sole discretion of the Committee,including the timing of any grant, the number of options, the vesting provisions,and the exercise price. The grant of a Stock Option to you in any year shallgive you neither any right to similar grants in future years nor any right tobe retained in the employ of the Company or its Subsidiaries, such employmentbeing terminable to the same extent as if the Plan and this Agreement were notin effect.  The right and power of theCompany and its Subsidiaries to dismiss or discharge you is specifically andunqualifiedly unimpaired by this Agreement.

 

You acknowledge that yourparticipation in the Plan is voluntary and the value of the Stock Option is anextraordinary item of compensation outside the scope of any employment contractyou may have, 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.

 

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

 

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by which you areemployed, if applicable, to store and transmit such information in electronicform.

 

14.       It is the present practice of the Companyto provide participants in the Plan, solely as a courtesy and not as a Companypolicy, with written or oral notification of the imminent expiration of anyStock Option having monetary value.  Youacknowledge that the Company and its Subsidiaries and agents shall have noliability or responsibility in the event you should fail to receive any such “courtesynotice” and your Stock Option expires unexercised.  You acknowledge that the obligation tomonitor the schedule of exercisability and expiration of options awarded under thisAgreement, and to procure current quotations regarding the market value of theStock, is solely your obligation and not that of the Company or any Subsidiaryby which you are employed or the agents of either of them.

 

15.       Each notice relating to this Agreementshall be in writing and delivered in person or by mail to the Company at itsoffice, 6001 36th Avenue West, Everett, WA 98203-1264, to theattention 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 termsand conditions of this Agreement and of the Plan incorporated by referenceherein comprise the whole terms and conditions between you and the Company withrespect to the subject matter of this Agreement and shall be governed by andconstrued in accordance with the laws of the State of Delaware, United Statesof America.  The Committee may amend theterms and conditions of this Agreement at any time, prospectively orretroactively, to the extent permitted by Section 9 of the Plan.

 

17.       This Agreement shall inure to the benefitof 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 andby the Company through its duly authorized officer, all as of the Grant Dateindicated above.

 

DATE:

 
|                                | UNOVA, Inc. |
|-------------------------------------|-------------|
|                                |        |
|                                |        |
|                                | By:         |   |   |
|                                |        |
| **IMPORTANT**                       |        |
| **PLEASE ACCEPT ELECTRONICALLY OR** |        |
| **SIGN AND RETURN PROMPTLY**        |        |
| ** **                          |        |
| ** **                          |        |
| ** **                          |        |   |

 

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