**Exhibit 10.7**

 

**UNOVA,Inc.**

**2004 Long-TermPerformance Share Program**

 

**Agreementfor the Performance Period [        ]to [        ]**

 

This Performance Share UnitAgreement (the **“Agreement”**) ismade as of the        day of               ,        , between UNOVA, Inc., aDelaware corporation (the **“Company”**)and                             (the **“Participant”**).

 

**WHEREAS**, the UNOVA, Inc. 2004 Omnibus IncentiveCompensation Plan (the **“Plan”**) wasadopted by the Board of Directors of the Company on March 11, 2004, and wasapproved by the shareholders of the Company on May 6, 2004; and

 

**WHEREAS**, the Committee has adopted the 2004Long-Term Performance Share Program (the **“****Program”**) asa sub-plan of the Plan and authorized the Award represented by this Agreement;

 

**NOW, THEREFORE**, in consideration of the premises, themutual covenants hereinafter set forth, and other good and valuableconsideration, the Company and the Participant hereby agree as follows:

 

**Article 1.  Award**

 

The Participant is herebyawarded, as a matter of separate inducement and agreement, and not in lieu ofsalary or other compensation for services,          Performance Share Units(the **“Target Award”**), on the terms andconditions hereinafter set forth. The number of Performance Share Units (**“PSUs”**) that the Participant may earn under this Agreementshall range from 0% to 200% of the Target Award (the **“AwardedShares”**), as determined by the achievement of the performancemeasures set forth in Article 3 of this Agreement. The Awarded Shares may bepaid in either shares of the common stock, par value $.01 per share, of theCompany (the **“Common Stock”**) or cash, asdetermined by the Committee, as set forth in Article 6 of this Agreement. TheParticipant shall have no obligation to pay the Company additional considerationfor the Awarded Shares.

 

The Plan and the Program,copies of which have been made available to the Participant, are incorporatedherein by reference and made part of this Agreement as if fully set forthherein. Capitalized terms used in this Agreement that are not defined hereinshall have the meanings assigned to such terms in the Plan and the Program.This Agreement is subject to, and the Company and the Participant agree to bebound by, all of the terms and conditions of the Plan and the Program as thesame exist at the time this Agreement became effective. The Plan and theProgram shall control in the event there is any express conflict between theterms hereof and either the Plan or the Program and with respect to suchmatters as are not expressly covered in this Agreement. The Company herebyreserves the right to alter, amend, modify, restate, suspend or terminate thePlan, the Program and this Agreement in accordance with Section 12 of the Plan,but no such subsequent amendment, modification, restatement, or termination ofthe Plan, the Program or this Agreement shall adversely affect in any materialway the Participant’s rights under this Agreement without the Participant’swritten consent.  This Agreement shall besubject, without further action by the Company or the Participant, to suchamendment, modification, or restatement.

 

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**Article 2.  Performance Period**

 

For all purposes of this Agreement, **“****PerformancePeriod****”** means January 1,           through December 31,          .

 

## **Article 3.  Achievement of Performance Measures**

 

Thenumber of Awarded Shares to be earned under this Agreement shall be based uponthe achievement of the following Performance Measures set by theCommittee: (a) [Peformance Measure 1] and (b) [Performance Measure 2], in accordance with the following matrix:

 
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The number of Awarded Shares earned forachievement between the levels shown in the matrix will be calculated usinginterpolation.

 

**Article 4. Termination Provisions**

 

Except as provided below, aParticipant shall be eligible for payment of Awarded Shares, as determined inSection 3, only if the Participant’s employment with the Company continuesthrough the end of the Performance Period.

 

In the event of a Participant’sDisability or Retirement at age 65 or later during the Performance Period, apro rata payment will be made for the number of full months worked during thePerformance Period, based on achievement of the Performance Measures over theentire Performance Period.  In the caseof death, payment shall be calculated and paid as provided in the Program.

 

In the event of a Change ofControl (as defined in the Plan), all outstanding Awards will automaticallyvest and be paid out in cash at the Target Award level or the actualperformance level as of the Change of Control, whichever is higher.

 

## **Article5. Rights as a Shareholder**

 

During the Performance Period,the Participant shallhave no rights of a shareholder with respect to the PSUs or the Awarded Shares. Notwithstanding the foregoing, theParticipant shall be entitled to receive any dividend equivalents declared bythe Board, as provided in the Program.

 

## **Article 6. Form and Timingof Payment**

 

Payment of Awarded Sharesshall be made within ninety (90) calendar days following the close of thePerformance Period, subject to the following provisions.

 

For Participants who arecorporate officers and have met their minimum ownership levels under the Guidelines for Corporate Officers Trading inUNOVA, Inc. Securities (the **“****Guidelines”**), and for Participants who are not subject to theGuidelines, the Awarded Shares

 

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shall be paid in cash based on the average of the high and lowdaily sale prices of the Common Stock for the last 30 trading days of the Performance Period.

 

For Participants who arecorporate officers and have not met their minimum ownership levels under theGuidelines, the Awarded Shares shall be paid in Common Stock, in cash, or anycombination of Common Stock and cash, as determined by the Committee in itssole discretion.

 

## **Article7. Nontransferability**

 

PSUsmay not be sold, transferred, pledged, assigned, or otherwise alienated orhypothecated, other than by will or by the laws of descent and distribution.  The Participant’s rights under this Agreementshall be exercisable during the Participant’s lifetime only by the Participantor the Participant’s legal representative.

 

## **Article 8. Administration**

 

It isexpressly understood that the Committee is authorized to administer, construe,and make all determinations necessary or appropriate to the administration ofthe Plan, the Program and this Agreement, all of which shall be binding uponthe Participant.

 

**Article 9.  Withholding Taxes**

 

No later than the date as ofwhich an amount first becomes includable in the gross income of the Participantfor federal income tax purposes with respect to any Awarded Shares, the Participantshall pay to the Company, or make arrangements satisfactory to the Companyregarding the payment of, any federal, state, local, or foreign taxes of anykind required by law to be withheld by the Company with respect to such amount.Unless otherwise determined by the Committee, withholding obligations (up tothe minimum statutory amount required to be withheld by the Company) may besettled with shares of Common Stock, including the Awarded Shares that giverise to the withholding requirement or shares of Common Stock already owned bythe Participant for a period of at least six months. The obligations of theCompany under the Plan shall be conditional on such payment or arrangements,and the Company, and its Subsidiaries and its Affiliates shall, to the extentpermitted by law, have the right to deduct any such taxes from any paymentotherwise due to the Participant. Participant, therefore, herebyunconditionally and irrevocably elects, notwithstanding anything to thecontrary in this Article 9 or elsewhere in this Agreement, to satisfy any andall federal, state, local, and foreign taxes of any kind that may be withheldby the Company in connection with Participant’s Awarded Shares (the **“Withholding Taxes”**) by electing one of thefollowing options; *provided* thatin all cases, the Company shall have the right to receive not less than theminimum amount of the Withholding Taxes that the Company is required by law towithhold (the **“Mandatory Withholding Taxes”**);and *further provided* that an amount equal tothe Mandatory Withholding Taxes in respect of any cash payment to Participantshall be withheld from any such cash payment:

 

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**OPTION 1**:

 

o                        Authorizing and directing the Company todeduct from the total number of shares of Common Stock issued and deliverableto Participant pursuant to this Agreement the number of shares having a valueequal to the Mandatory Withholding Taxes.

 

**OPTION 2**:

 

o                        Tendering to the Company the number ofunrestricted shares of Common Stock owned by the Participant for a period of atleast six months prior to the date on which Withholding Taxes are due andhaving a value equal to the Mandatory Withholding Taxes.

 

**OPTION 3**:

 

o                        Paying to the Company in cash an amount up tothe Withholding Taxes but not less than the Mandatory Withholding Taxes.

 

**In the event that none of the payment options set forth aboveis specified, the Participant’s election shall be deemed to be Option 1, andthe Company shall proceed accordingly.**

 

## **Article 10. Miscellaneous**

 

A.        Participant understands and acknowledgesthat Participant is one of a limited number of employees of the Company and itsSubsidiaries and Affiliates who have been selected to receive grants of PSUsand that Participant’s Award is considered Company confidential information. Participanthereby covenants and agrees not to disclose the Award of PSUs pursuant to thisAgreement to any other person except (i) Participant’s immediate family andlegal or financial advisors who agree to maintain the confidentiality of thisAgreement, (ii) as required in connection with the administration of this Agreementand the Plan as it relates to this Award or under applicable law, and (iii) tothe extent the terms of this Award have been publicly disclosed.

 

B.        The grant of PSUs to the Participant in any year shall givethe Participant neither any right to similar grants in future years nor anyright to be retained in the employ of the Company or its Subsidiaries orAffiliates, such employment being terminable to the same extent as if the Programand this Agreement were not in effect. The right and power of the Company andits Subsidiaries and Affiliates to dismiss or discharge the Participant isspecifically and unqualifiedly unimpaired by this Agreement.

 

C.        Each notice relating to this Agreement shall be in writingand delivered in person or by mail to the Company at its office, 6001 36thAvenue West, Everett, WA 98203-1264, to the attention of the Company’sSecretary or at such other address as the Company may specify in writing to theParticipant by a notice delivered in accordance with this paragraph. All noticesto the Participant shall be delivered to the Participant at the Participant’saddress specified below or at such other address as the Participant may specifyin writing to the Secretary of the Company by a notice delivered in accordance withthis paragraph.

 

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D.        This Agreement, including the provisions of the Plan and theProgram incorporated by reference herein, comprises the whole Agreement betweenthe parties hereto with respect to the subject matter hereof, and shall begoverned by and construed in accordance with the laws of the State of Delaware,without reference to principles of conflicts of law.  This Agreement shall become effective when ithas been executed or accepted electronically by the Company and the Participant.

 

E.         This Agreement shall inure to the benefit of and be bindingupon each successor of the Company and, to the extent specifically providedherein and in the Plan and the Program, shall inure to the benefit of and shallbe binding upon the Participant’s heirs, legal representatives, and successors.

 

F.         If any provision of this Agreement shall be invalid orunenforceable, such invalidity or unenforceability shall not affect thevalidity and enforceability of the remaining provisions of this Agreement.

 

G.        This Agreement may be executed in separate counterparts, eachof which when so executed and delivered will be an original, but all of whichtogether will constitute one and the same instrument. In pleading or provingthis Agreement, it will not be necessary to produce or account for more thanone such counterpart.

 

**IN WITNESS WHEREOF**, thisAgreement is executed by the Participant and by the Company through its dulyauthorized officer as of the day and year first above written.

 
|   | **UNOVA, INC.**                                        |
|--------|--------------------------------------------------------|
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|   | By:                                                    |   |
|   | [Name]                                                 |
|   | [Title]                                                |
|   |                                                   |
|   | **PARTICIPANT:**                                       |
|   | *(One of  the boxes under Article 9 must be  checked)* |
|   | * *                                               |
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|   | Signature                                              |
|   |                                                   |
|   | Address                                                |
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|   | Social  Security Number                                |

 

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