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**Exhibit 10.12**

**CHANGE OF CONTROL EMPLOYMENT AGREEMENT**

 

**AGREEMENT** by and between **UNOVA, Inc.,**a Delaware corporation (the “Company”), and[name], dated as of the [date].

The Board of Directors ofthe Company (the “Board”), has determined that it is in the best interests ofthe Company and its shareholders to assure that the Company will have thecontinued dedication of the Executive, notwithstanding the possibility, threator occurrence of a Change of Control (as defined below) of the Company.  The Board believes it is imperative todiminish the inevitable distraction of the Executive by virtue of the personaluncertainties and risks created by a pending or threatened Change of Controland to encourage the Executive’s full attention and dedication to the Companycurrently and in the event of any threatened or pending Change of Control, andto provide the Executive with compensation and benefits arrangements upon aChange of Control which ensure that the compensation and benefits expectationsof the Executive will be satisfied and which are competitive with those ofother corporations.  Therefore, in orderto accomplish these objectives, the Board has caused the Company to enter intothis Agreement.

**NOW, THEREFORE, IT IS HEREBYAGREED AS FOLLOWS:**

1.         Certain Definitions.

            (a)  The “EffectiveDate” shall mean the first date during the Change of Control Period (as definedin Section 1(b) on which a Change of Control (as defined in Section 2)occurs.  Anything in this Agreement tothe contrary notwith­standing, if a Change of Control occurs and if theExecutive’s employment with the Company is terminated prior to the date onwhich the Change of Control occurs, and if it is reasonably demonstrated by theExecutive that such termination of employment (i) was at the request of a thirdparty who has taken steps reasonably calculated to effect a Change of Controlor (ii) otherwise arose in connection with or anticipation of a Change ofControl, then for all purposes of this Agreement the “Effective Date” shallmean the date immediately prior to the date of such termination of employment.

(b)  The “Change of Control Period” shall mean theperiod commencing on the date hereof and ending on the fourth anniversary ofthe date hereof; provided, however, that commencing on the date two years afterthe date hereof, and on each second anniversary of such date (such date andeach such second anniversary thereof shall be hereinafter referred to as the “RenewalDate”), unless previously terminated, the Change of Control Period shall be automaticallyextended so as to terminate four years from such Renewal Date, unless at least60 days prior to the Renewal Date the Company shall give notice to theExecutive that the Change of Control Period shall not be so extended.

2.         Changeof Control.  For the purpose of thisAgreement, a “Change of Control” shall mean:

 

 

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(a)  An acquisition by any individual, entity, or group (within the meaning ofSection 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaningof Rule 13d-3 promulgated under the Exchange Act) of 30 percent  or more of either (i) the then outstandingshares of common stock of the Company (the “Outstanding Company Common Stock”)or (ii) the combined voting power of the then outstanding voting securities ofthe Company entitled to vote generally in the election of directors (the “OutstandingCompany Voting Securities”); excluding, however, the following acquisitions ofOutstanding Company Common Stock and Outstanding Company VotingSecurities:   (i) any acquisitiondirectly from the Company, other than an acquisition by virtue of the exerciseof a conversion privilege unless the security being so converted was itselfacquired directly from the Company, (ii) any acquisition by the Company, (iii)any acquisition by any employee benefit plan (or related trust) sponsored ormaintained by the Company or any corporation controlled by the Company, or (iv)any acquisition by any Person pursuant to a transaction which complies withclauses (i), (ii), and (iii) of subsection (c) of this Section 2; or

(b)  Individuals who, as of the effective datehereof, constitute the Board (the “Incumbent Board”) cease for any reason toconstitute at least a majority of the Board; provided, however, that anyindividual who becomes a member of the Board subsequent to such effective datehereof whose election, or nomination for election by the Company’sshareholders, was approved by a vote of at least a majority of the directorsthen comprising the Incumbent Board shall be considered as though suchindividual were a member of the Incumbent Board, but provided further,  that any such individual whose initialassumption of office occurs as a result of either an actual or threatenedelection contest (as such terms are used in Rule 14a-11 of Regulation 14Apromulgated under the Exchange Act)  orother actual or threatened solicitation of proxies or consents by or on behalfof a Person other than the Board shall not be so considered as a member of theIncumbent Board; or

(c)  Theapproval by the shareholders of the Company of a reorganization, merger, orconsolidation or sale or other disposition of all or substantially all of theassets of the Company (“Business Combination”) or if consummation of suchBusiness Combination is subject, at the time of such approval by shareholders,to the consent of any government or governmental agency, obtaining of suchconsent (either explicitly or implicitly by consummation); excluding, however,such a Business Combination pursuant to which (i) all or sub­stantially all ofthe individuals and entities who are the beneficial owners, respectively, ofthe Outstanding Company Common Stock and Outstanding Company Voting Securitiesimmediately prior to such Business Combination will beneficially own, directlyor indirectly, more than 60 percent of, respectively, the outstanding shares ofcommon stock and the combined voting power of the then outstanding votingsecurities entitled to vote generally in the election of directors, as the casemay be, of the corporation resulting from such Business Combination (including,without limitation, a corporation which as a result of such transaction ownsthe Company or all or substantially all of the Company’s assets either directlyor through one or more subsidiaries) in substantially the same proportions astheir ownership, immediately prior to such Business Combination of theOutstanding Company Common Stock and Outstanding Company Voting Securities, asthe case may be, (ii) no Person (other than any employee benefit plan (orrelated trust) sponsored or maintained by the Company or any corporationcontrolled by the Company or 

 

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such corporationresulting from such Business Combination) will beneficially own, directly orindirectly, 30 percent or more of, respectively, the outstanding shares ofcommon stock of the corporation resulting from such Business Combination or thecombined voting power of the outstanding voting securities of such corporationentitled to vote generally in the election of directors except to the extentthat such ownership existed prior to the Business Combination, and (iii) atleast a majority of the members of the board of directors of the corporationresulting from such Business Combination will have been members of theIncumbent Board at the time of the execution of the initial agreement, or ofthe action of the Board, providing for such Business Combination; or

(d)  The approval by the stockholders of theCompany of a complete liquidation or dissolution of the Company.

3.         Employment Period. The Company hereby agrees to continue the Executive in its employ, andthe Executive hereby agrees to remain in the employ of the Company subject to theterms and conditions of this Agreement, for the period commencing on theEffective Date and ending on the third anniversary of such date (the “EmploymentPeriod”).

4.         Terms of Employment.

            (a)  Positionand Duties.

(i)  During the Employment Period, (A) theExecutive’s position (including status, offices, titles, and reportingrequirements), authority, duties, and responsibilities shall be at leastcommensurate in all material respects with the most significant of those held,exercised, and assigned at any time during the 120-day period immediatelypreceding the Effective Date and (B) the Executive’s services shall beperformed at the location where the Executive was employed immediatelypreceding the Effective Date or any office or location less than 35 miles fromsuch location.

(ii)  During theEmployment Period, and excluding any periods of vacation and sick leave towhich the Executive is entitled, the Executive agrees to devote reasonableattention and time during normal business hours to the business and affairs ofthe Company and, to the extent necessary to discharge the responsibilitiesassigned to the Executive hereunder, to use the Executive’s reasonable bestefforts to perform faithfully and efficiently such responsibilities.  During the Employment Period it shall not bea viola­tion of this Agreement for the Executive to (A) serve on corporate,civic, or charitable boards or committees, (B) deliver lectures, fulfillspeaking engagements, or teach at educational institutions, and (C) managepersonal investments, so long as such activities do not significantly interferewith the performance of the Executive’s responsibilities as an employee of theCompany in accordance with this Agreement. It is expressly understood and agreed that to the extent that any suchactivities have been conducted by the Executive prior to the Effective Date,the continued conduct of such activities (or the conduct of activities similarin nature and scope thereto) subsequent to the Effective Date shall notthereafter be deemed to interfere with the performance of the Executive’sresponsibilities to the Company.

 

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(b)  Compensation.

(i)  Base Salary.  During the Employment Period, the Executiveshall receive an annual base salary (“Annual Base Salary”), which shall be paidat a monthly rate, at least equal to twelve times the highest monthly basesalary paid or payable, including any base salary which has been earned butdeferred, to the Executive by the Company and its affiliated companies inrespect of the twelve-month period immediately preceding the month in which theEffective Date occurs.  During theEmployment Period, the Annual Base Salary shall be reviewed no more than 12months after the last salary increase awarded to the Executive prior to theEffective Date and thereafter at least annually.  Any increase in Annual Base Salary shall notserve to limit or reduce any other obligation to the Executive under thisAgreement.  Annual Base Salary shall notbe reduced after any such increase and the term Annual Base Salary as utilizedin this Agreement shall refer to Annual Base Salary as so increased.  As used in this Agreement, the term “affiliatedcompanies” shall include any company controlled by, controlling, or under commoncontrol with the Company.

(ii) Annual Bonus.  In addition to Annual Base Salary, theExecutive shall be awarded, for each fiscal year ending during the EmploymentPeriod, an annual bonus in cash at least equal to the *higher of*(A) the Executive’s highest award or awards for any fiscal year under theUNOVA, Inc. Management Incentive Compensation Plan (effective for the 1999fiscal year and thereafter) or under any predecessor or successor plan or planswhich provide for the grant of annual cash bonuses or other short-term cashincentive awards during the last three full fiscal years prior to the EffectiveDate *or*(B) the Target Bonus (as that term isdefined in the UNOVA, Inc. Management Incentive Compensation Plan) applicableto the Executive for the fiscal year during which the Effective Date occurs, orif the Management Incentive Compensation Plan is not in effect for such fiscalyear, the target bonus or award which the Executive would earn for such yearunder any plan or arrangement in which the Executive participates or iseligible to participate assuming the attainment of any performance goals orsimilar criteria to the extent necessary for the Executive to qualify toreceive the target award thereunder.  Theamount which is the higher of the amounts described in clause (A) and clause(B) above is hereinafter called the “Annual Bonus.”

Notwithstandingthe foregoing, the following additional provisions shall be applicable to thedefinition of “award” or “awards” or “bonus” or “bonuses”  as those terms are used in the precedingparagraph:

                                            (1)       When made under the UNOVA, Inc.Management Incentive Compensation Plan or any other annual incentive plan whichprovides that a portion of an annual award shall be deposited in a so-called “BonusBank” and shall remain “at risk,”  theaward or bonus, in such case, shall (except as provided in clause (2) below ) comprise ONLY the portion ofthe annual award which is paid to the Executive on a current basis and shallNOT include any amount of the award required to be deposited to a BonusBank.  However, the award or bonus shallalso include any amount paid to the Executive as a periodic payment from theBonus Bank during the year with respect to which the amount was made (but shallnot include any payment from the Bonus Bank made solely as a result oftermination of employment);

 

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                                            (2)       The award or bonus for any fiscal year orportion thereof shall include any part of such bonus or award, the payment ofwhich is deferred to a subsequent fiscal year or years at the election of theExecutive; and

                                            (3)       In the case of any bonus or award madewith respect to a period other than a full fiscal year, the amount of suchbonus shall not be annualized, and the bonus or award, if it related to morethan one fiscal year, shall be prorated so that only the portion thereofattributable to a particular fiscal year shall be counted as part of the totalaward or bonus for that fiscal year.

AnyAnnual Bonus plus unpaid but due amounts from prior awards plus any amountspayable from a so called Bonus Bank shall be paid in accordance with theapplicable plan but in no event later than the last day of the EmploymentPeriod.  In no event shall the Executiveforfeit any balance in a Bonus Bank upon termination of employment for anyreason following a Change of Control.

(iii)  Incentive, Savings, and Retirement Plans.  During the Employment Period, the Executiveshall be entitled to participate in all incentive (including stock option orsimilar incentive plans), savings and retirement plans, practices, policies andprograms applicable generally to other peer executives of the Company and itsaffiliated companies, but in no event shall such plans, practices, policies,and programs provide the Executive with incentive opportunities (measured withrespect to both regular and special incentive opportunities, to the extent, ifany, that such distinction is applicable), savings opportunities and retirementbenefit opportunities, in each case, less favorable, in the aggregate, than themost favorable of those provided by the Company and its affiliated companiesfor the Executive under such plans, practices, policies, and programs as ineffect at any time during the 120-day period immediately preceding theEffective Date or if more favorable to the Executive, those provided generallyat any time after the Effective Date to other peer executives of the Companyand its affiliated companies.

(iv)      Welfare Benefit Plans.  During the Employment Period, the Executiveand/or the Executive’s family, as the case may be, shall be eligible forparticipation in and shall receive all benefits under welfare benefit plans,practices, policies, and programs provided by the Company and its affiliatedcompanies (including, without limitation, medical, prescription, dental,disability, salary continuance, employee life, group life, accidental death,and travel accident insurance plans and programs) to the extent applicablegenerally to other peer executives of the Company and its affiliated companies,but in no event shall such plans, practices, policies, and programs provide theExecutive with benefits which are less favorable, in the aggregate, than themost favorable of such plans, practices, policies, and programs in effect forthe Executive at any time during the 120-day period immediately preceding theEffective Date or, if more favorable to the Executive, those provided generallyat any time after the Effective Date to other peer executives of the Companyand its affiliated companies.

(v)  Expenses.  During the Employment Period, the Executiveshall be entitled to receive prompt reimbursement for all reasonable expensesincurred by the Executive in accordance with the most favorable policies,practices, and procedures of the Company and its

 

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affiliatedcompanies in effect for the Executive at any time during the 120-day periodimmediately preceding the Effective Date or, if more favorable to theExecutive, as in effect generally at any time thereafter with respect to otherpeer executives of the Company and its affiliated companies.

(vi)      Fringe Benefits.  During the Employment Period, the Executiveshall be entitled to fringe benefits, including, without limitation, if applicable,tax and financial planning services, use of an automobile and payment ofrelated expenses, in accordance with the most favorable plans, practices,programs, and policies of the Company and its affiliated companies in effectfor the Executive at any time during the 120-day period immediately precedingthe Effective Date or, if more favorable to the Executive, as in effectgenerally at any time thereafter with respect to other peer execu­tives of theCompany and its affiliated companies.

(vii)  Office and Support Staff.  During the Employment Period, the Executiveshall be entitled to an office or offices of a size and with furnishings andother appointments, and to exclusive personal secretarial and other assistance,at least equal to the most favorable of the foregoing provided to the Executiveby the Company and its affiliated companies at any time during the 120-dayperiod immediately preceding the Effective Date or, if more favorable to theExecu­tive, as provided generally at any time thereafter with respect to otherpeer executives of the Company and its affiliated companies.

(viii)  Vacation.  During the Employment Period, the Executiveshall be entitled to paid vacation in accordance with the most favorable plans,policies, programs, and practices of the Company and its affiliated companiesas in effect for the Executive at any time during the 120-day periodimmediately preceding the Effective Date or, if more favorable to theExecutive, as in effect generally at any time thereafter with respect to otherpeer executives of the Company and its affiliated companies.

5.         Termination of Employment.

            (a)  Death orDisability.  The Executive’semployment shall terminate automatically upon the Executive’s death during theEmployment Period.  If the Companydetermines in good faith that the Disability of the Executive has occurredduring the Employment Period (pursuant to the definition of Disability setforth below), it may give to the Executive written notice in accordance withSection 12(b) of this Agreement of its intention to terminate the Executive’semployment.  In such event, the Executive’semploy­ment with the Company shall terminate effective on the 30th day afterreceipt of such notice by the Executive (the “Disability Effective Date”),provided that, within the 30 days after such receipt, the Executive shall nothave returned to full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability”shall mean the absence of the Executive from the Executive’s duties with theCompany on a full-time basis for 180 consecutive business days as a result ofincapacity due to mental or physical illness which is determined to be totaland permanent by a physician selected by the Company or its insurers andacceptable to the Executive or the Executive’s legal representative.

(b)  Cause.  The Company may terminate the Executive’semployment during the Employment Period for Cause.  For purposes of this Agreement, “Cause” shallmean:

 

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(i)  the willful and continued failure of theExecutive to perform substantially the Executive’s duties with the Company orone of its affiliates (other than any such failure resulting from incapacitydue to physical or mental illness), after a written demand for substantialperformance is delivered to the Executive by the Board or the Chief ExecutiveOfficer of the Company which specifically identifies the manner in which theBoard or Chief Executive Officer believes that the Executive has notsubstantially performed the Executive’s duties, or

(ii)  the willful engaging by the Executive inillegal conduct or gross misconduct which is materi­ally and demonstrablyinjurious to the Company.

For purposes of thisprovision, no act or failure to act, on the part of the Executive, shall beconsidered “willful” unless it is done, or omitted to be done, by the Executivein bad faith or without reasonable belief that the Execu­tive’s action oromission was in the best interests of the Company.  Any act, or failure to act, based uponauthority given pursuant to a resolution duly adopted by the Board or upon theinstructions of the Chief Executive Officer or a senior officer of the Companyor based upon the advice of counsel for the Company shall be conclusivelypresumed to be done, or omitted to be done, by the Executive in good faith andin the best interests of the Company. The cessation of employment of the Executive shall not be deemed to befor Cause unless and until there shall have been delivered to the Executive a copyof a resolution duly adopted by the affirmative vote of not less thanthree-quarters of the entire membership of the Board at a meeting of the Boardcalled and held for such purpose (after reasonable notice is provided to theExecutive and the Executive is given an opportunity, together with counsel, tobe heard before the Board), finding that, in the good faith opinion of theBoard, the Executive is guilty of the conduct described in subparagraph (i) or(ii) above, and specifying the particulars thereof in detail.

(c)  Good Reason.  The Executive’s employment may be terminatedby the Executive for Good Reason.  Forpurposes of this Agreement, “Good Reason” shall mean:

(i)  theassignment to the Executive of any duties inconsistent in any respect with theExecutive’s position (including status, offices, titles, and reportingrequirements), authority, duties, or responsibilities as contemplated bySection 4(a) of this Agreement, or any other action by the Company whichresults in a diminution in such position, authority, duties, orresponsibilities, excluding for this purpose an isolated, insubstantial andinadvertent action not taken in bad faith and which is remedied by the Companypromptly after receipt of notice thereof given by the Executive;

 

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(ii)  any failure by the Company to comply with anyof the provisions of Section 4(b) of this Agreement, other than an isolated,insubstantial, and inadvertent failure not occurring in bad faith and which isremedied by the Company promptly after receipt of notice thereof given by theExecutive;

(iii)  the Company’s requiring the Executive to bebased at any office or location other than as provided in Section 4(a)(i)(B)hereof or the Company’s requiring the Executive to travel on Company businessto a substantially greater extent than required immediately prior to theEffective Date;

(iv)  any purported termination by the Com­pany ofthe Executive’s employment otherwise than as expressly permitted by thisAgreement; or

(v)  any failure by the Company to comply with andsatisfy Section 11(c) of this Agreement.

For purposes of thisSection 5(c), any good faith determination of “Good Reason” made by theExecutive shall be conclusive.   Anything in this Agreement to the contrary notwithstanding, if (A) aChange of Control has occurred and (B) in connection with, or as a result of,such Change of Control, prior to the first anniversary of the Effective Date,individuals who were members of the Board immediately prior to such Change ofControl cease to constitute a majority of the Board or a majority of the boardof directors of the corporation resulting from a Business Combination thatconstituted such Change of Control, then a termination by the Executive for anyreason during the Window Period (as defined in the following sentence) shall bedeemed to be a termination for Good Reason for all purposes of thisAgreement.  The “Window Period” shallmean the 30-day period commencing on the first anniversary of the later of (1)the Effective Date and (2) the date of the event described in clause (B) of thepreceding sentence.

(d)  Noticeof Termination.  Any termination bythe Company for Cause, or by the Executive for Good Reason, shall becommunicated by Notice of Termination to the other party hereto given inaccordance with Section 12(b) of this Agreement.  For purposes of this Agreement, a “Notice ofTermination” means a written notice which (i) indicates the specifictermination provision in this Agreement relied upon, (ii) to the extentapplicable, sets forth in reasonable detail the facts and circumstances claimedto provide a basis for termination of the Executive’s employment under theprovision so indicated, and (iii) if the Date of Termination (as defined below)is other than the date of receipt of such notice, specifies the terminationdate (which date shall be not more than thirty days after the giving of suchnotice).  The failure by the Executive orthe Company to set forth in the Notice of Termination any fact or circumstancewhich contributes to a showing of Good Reason or Cause shall not waive anyright of the Executive or the Company, respectively, hereunder or preclude theExecutive or the Company, respectively, from asserting such fact or circum­stancein enforcing the Executive’s or the Company’s rights hereunder.

 

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(e)  Date of Termination.  “Date of Termination” means (i) if theExecutive’s employment is terminated by the Company for Cause, or by theExecutive for Good Reason, the date of receipt of the Notice of Termination orany later date specified therein, as the case may be, (ii) if the Executive’semployment is terminated by the Company other than for Cause or Disability, theDate of Termination shall be the date on which the Company notifies theExecutive of such termination, and (iii) if the Executive’s employment isterminated by reason of death or Disability, the Date of Termination shall bethe date of death of the Executive or the Disability Effective Date, as thecase may be.

6.         Obligations of the Company UponTermination.

            (a) Good Reason; Other Than for Cause, Death or Disability.  If, during the Employment Period, the Companyshall termi­nate the Executive’s employment other than for Cause or Disabilityor the Executive shall terminate employment for Good Reason:

(i)  the Companyshall pay to the Executive in a lump sum in cash within 30 days after the Dateof Termination the aggregate of the following amounts:

        A.  the sum of (1) the Executive’s Annual BaseSalary through the Date of Termination to the extent not theretofore paid, (2)the product of (x) the Annual Bonus, and (y) a fraction, the numerator of whichis the number of days in the current fiscal year through the Date ofTermination, and the denominator of which is 365, and (3) any compensationpreviously deferred by the Executive (together with any accrued interest orearnings thereon), any awards under the Performance Award Plan or anycomparable or successor plan and any accrued vacation pay, in each case to theextent not theretofore paid (the sum of the amounts described in clauses (1),(2), and (3) shall be hereinafter referred to as the “Accrued Obligations”);and

        B.  the amount equal to the product of (1) threeand (2) the sum of (x) the Executive’s Annual Base Salary and (y) the AnnualBonus, or if higher, any bonus paid with respect to any fiscal year during theEmployment Period; and

        C.  utilizing actuarial assumptions no lessfavorable to the Executive than those in effect immediately prior to theEffective Date, an amount equal to the excess of (a) the actuarial equivalentof the benefit under the Company’s qualified defined benefit retirement plan(the “Retirement Plan”) and any excess or supplemental retirement plan in whichthe Executive participates (together, the “SERP”) which the Executive wouldreceive if the Executive’s employment continued for three years after the Dateof Termination assuming for this purpose that all accrued benefits are fullyvested, and, assuming that the Executive’s compensation in each of the threeyears is that required by Section 4(b)(i) and Section 4(b)(ii), over (b) theactuarial equivalent of the Executive’s actual benefit (paid or payable), ifany, under the Retirement Plan and the SERP as of the Date of Termination;

(ii)  for threeyears after the Executive’s Date of Termination, or such longer period as maybe provided by the terms of the appropriate plan, practice, policy, or program,the Company shall continue benefits to the Executive and/or the Executive’sfamily at least equal to those which would have been provided to them inaccordance with the plans, programs, practices, and policies described inSection 4(b)(iv) of this Agreement if the Executive’s

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employment had not been terminated or, if morefavorable to the Executive, as in effect generally at any time thereafter withrespect to other peer executives of the Company and its affili­ated companiesand their families, provided, however, that if the Executive becomes reemployedwith another employer and is eligible to receive medical or other welfarebenefits under another employer provided plan, the medical and other welfarebenefits described herein shall be secondary to those provided under such otherplan during such applicable period of eligibility.  For purposes of determining eligibility (butnot the time of commencement of benefits) of the Executive for retiree benefitspursuant to such plans, practices, programs, and policies, the Executive shallbe considered to have remained employed until three years after the Date ofTermination and to have retired on the last day of such period;

(iii)  theCompany shall, at its sole expense as incurred, provide the Executive withoutplacement services the scope and provider of which shall be selected by theExecutive in his or her sole discretion; and

(iv)  to theextent not theretofore paid or provided, the Company shall timely pay orprovide to the Executive any other amounts or benefits required to be paid orprovided or which the Executive is eligible to receive under any plan, program,policy, or practice or contract or agreement of the Company and its affiliatedcompanies (such other amounts and benefits shall be hereinafter referred to asthe “Other Benefits”).

(b)  Death. If the Executive’s employment is terminated by reason of the Executive’sdeath during the Employment Period, this Agreement shall terminate withoutfurther obligations to the Executive’s legal representatives under thisAgreement, other than for payment of Accrued Obligations and the timely paymentor provision of Other Benefits.  AccruedObligations shall be paid to the Executive’s estate or beneficiary, asapplicable, in a lump sum in cash within 30 days of the Date ofTermination.  With respect to theprovision of Other Benefits, the term Other Benefits as utilized in thisSection 6(b) shall include, without limitation, and the Executive’s estateand/or beneficiaries shall be entitled to receive, benefits at least equal tothe most favorable benefits provided by the Company and affiliated companies tothe estates and beneficiaries of peer executives of the Company and suchaffiliated companies under such plans, programs, practices, and policiesrelating to death benefits, if any, as in effect with respect to other peerexecutives and their beneficiaries at any time during the 120-day periodimmediately preceding the Effective Date or, if more favorable to the Executive’sestate and/or the Executive’s beneficiaries, as in effect on the date of theExecutive’s death with respect to other peer executives of the Company and itsaffiliated companies and their beneficiaries.

(c)  Disability.  If the Executive’s employment is terminatedby reason of the Executive’s Disability during the Employment Period, thisAgreement shall terminate with­out further obligations to the Executive, otherthan for payment of Accrued Obligations and the timely payment or provision ofOther Benefits.  Accrued Obligationsshall be paid to the Executive in a lump sum in cash within 30 days of the Dateof Termination.  With respect to theprovision of Other Benefits, the term Other Benefits as utilized in thisSection 6(c) shall include, and the Executive shall be entitled after theDisability Effective Date to receive, disability and other benefits at leastequal to the most favorable of those generally provided by the Company and itsaffiliated companies to disabled executives and/or their families in accordancewith such

 

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plans, programs,practices, and policies relating to disability, if any, as in effect generallywith respect to other peer executives and their families at any time during the120-day period immediately preceding the Effective Date or, if more favorableto the Executive and/or the Executive’s family, as in effect at any timethereafter generally with respect to other peer executives of the Company andits affiliated companies and their families.

(d)  Cause; Other than for Good Reason.  If the Executive’s employment shall beterminated for Cause during the Employment Period or if the Executive volun­tarilyterminates employment during the Employment Period, excluding a termination forGood Reason, this Agreement shall terminate without further obligations to theExecutive other than the obligation to pay to the Executive (x) his or herAnnual Base Salary through the Date of Termination, (y) the amount of anycompensation previously deferred by the Executive, and (z) Other Benefits, ineach case to the extent theretofore unpaid. In such case, all Accrued Obligations shall be paid to the Executive ina lump sum in cash within 30 days of the Date of Termination.

7.         Non-exclusivity of Rights.  Nothing in this Agreement shall prevent orlimit the Executive’s continuing or future participation in any plan, practice,policy, or program provided by the Company or any of its affiliated companiesand for which the Executive may qualify, nor, subject to Section 12(f), shallanything herein limit or otherwise affect such rights as the Executive may haveunder any contract or agreement with the Company or any of its affiliatedcompanies.  Amounts which are vestedbenefits or which the Executive is otherwise entitled to receive under anyplan, policy, practice, or program of or any contract or agreement with theCompany or any of its affiliated companies at or subsequent to the Date ofTermination shall be payable in accordance with such plan, practice, policy, orprogram or contract or agreement except as explicitly modified by thisAgreement.

8.         FullSettlement.  The Company’s obligationto make the payments provided for in this Agreement and otherwise to performits obligations hereunder shall not be affected by any set-off, counterclaim,recoupment, defense, or other claim, right, or action which the Company mayhave against the Executive or others.  Inno event shall the Executive be obligated to seek other employment or take anyother action by way of mitigation of the amounts payable to the Executive underany of the provisions of this Agreement and such amounts shall not be reducedwhether or not the Executive obtains other employment.  The Company agrees to pay as incurred, to thefull extent permitted by law, all legal fees and expenses which the Executivemay reasonably incur as a result of any contest (regardless of the outcomethereof) by the Company, the Executive or others of the validity orenforceability of, or liability under, any provision of this Agreement or anyguarantee of performance thereof (including as a result of any contest by theExecutive about the amount of any payment pursuant to this Agreement), plus ineach case interest on any delayed pay­ment at the applicable Federal rateprovided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, asamended (the “Code”).

 

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9.         Certain Additional Payments by the Company.

(a)  Anything in this Agreement to the contrarynotwithstanding and except as set forth below, in the event it shall bedetermined that any payment or distribution by the Company to or for thebenefit of the Executive (whether paid or payable or distributed ordistributable pursuant to the terms of this Agreement or otherwise, butdetermined without regard to any additional payments required under thisSection 9) (a “Payment”) would be subject to the excise tax imposed by Section4999 of the Code or any interest or penalties are incurred by the Executivewith respect to such excise tax (such excise tax, together with any suchinterest and penalties, are hereinafter collectively referred to as (the “ExciseTax”), then the Executive shall be entitled to receive an additional payment (a“Gross-Up Payment”) in an amount such that after payment by the Executive ofall taxes (including any interest or penalties imposed with respect to suchtaxes), including, without limitation, any income taxes (and any interest andpenalties imposed with respect thereto) and Excise Tax imposed upon theGross-Up Payment, the Executive retains an amount of the Gross-Up Payment equalto the Excise Tax imposed upon the Payments.

(b)  Subject to the provisions of Section 9(c),all determinations required to be made under this Section 9, including whetherand when a Gross-Up Payment is required and the amount of such Gross-Up Paymentand the assumptions to be utilized in arriving at such determination, shall bemade by Deloitte & Touche or such other certified public accounting firm asmay be designated by the Executive (the “Accounting Firm”) which shall providedetailed supporting calculations both to the Company and the Executive within15 business days of the receipt of notice from the Executive that there hasbeen a Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm isserving as accountant or auditor for the individual, entity, or group effectingthe Change of Control, the Executive shall appoint another nationallyrecognized accounting firm to make the determinations required hereunder (whichaccounting firm shall then be referred to as the Accounting Firmhereunder).  All fees and expenses of theAccounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as deter­mined pursuantto this Section 9, shall be paid by the Company to the Executive within fivedays of the receipt of the Accounting Firm’s determination.  Any determination by the Accounting Firmshall be binding upon the Company and the Executive.  As a result of the uncertainty in theapplication of Section 4999 of the Code at the time of the initial deter­minationby the Accounting Firm hereunder, it is possible that Gross-Up Payments whichwill not have been made by the Company should have been made (“Underpayment”),consistent with the calculations required to be made hereunder.  In the event that the Company exhausts itsremedies pursuant to Section 9(c) and the Executive thereafter is required tomake a payment of any Excise Tax, the Accounting Firm shall determine theamount of the Underpayment that has occurred and any such Underpayment shall bepromptly paid by the Company to or for the benefit of the Executive.

(c)  TheExecutive shall notify the Company in writing of any claim by the InternalRevenue Service that, if successful, would require the payment by the Companyof the Gross-Up Payment.  Suchnotification shall be given as soon as practicable but no later than tenbusiness days after the Executive is informed in writing of such claim andshall apprise the Company of the nature of such claim and the date on whichsuch claim is requested to be paid.  TheExecutive

 

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shall not pay such claimprior to the expiration of the 30-day period following the date on which itgives such notice to the Company (or such shorter period ending on the datethat any payment of taxes with respect to such claim is due).  If the Company notifies the Executive inwriting prior to the expiration of such period that it desires to contest suchclaim, the Executive shall:

(i)  give the Company any information reasonablyrequested by the Company relating to such claim,

(ii)  take such action in connection withcontesting such claim as the Company shall reasonably request in writing fromtime to time, including, without limitation, accepting legal representationwith respect to such claim by an attorney reasonably selected by the Company,

(iii)  cooperate with the Company in good faith inorder effectively to contest such claim, and

(iv)  permit theCompany to participate in any proceedings relating to such claim; provided,however, that the Company shall bear and pay directly all costs and expenses(including additional inter­est and penalties) incurred in connection with suchcontest and shall indemnify and hold the Executive harmless, on an after-taxbasis, for any Excise Tax or income tax (including interest and penalties withrespect thereto) imposed as a result of such representation and payment ofcosts and expenses.  Without limitationon the foregoing provisions of this Section 9(c), the Company shall control allproceedings taken in connection with such contest and, at its sole option, maypursue or forgo any and all adminis­trative appeals, proceedings, hearings andconferences with the taxing authority in respect of such claim and may, at itssole option, either direct the Executive to pay the tax claimed and sue for arefund or contest the claim in any permissible manner, and the Executive agreesto prosecute such contest to a determination before any administrative tribunal,in a court of initial jurisdiction and in one or more appellate courts, as theCompany shall determine; provided, however, that if the Company directs theExecutive to pay such claim and sue for a refund, the Company shall advance theamount of such payment to the Executive, on an interest-free basis and shallindemnify and hold the Executive harmless, on an after-tax basis, from anyExcise Tax or income tax (including interest or penalties with respect thereto)imposed with respect to such advance or with respect to any imputed income withrespect to such advance; and further provided that any extension of the statuteof limitations relating to payment of taxes for the taxable year of theExecutive with respect to which such contested amount is claimed to be due islimited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited toissues with respect to which a Gross-Up Payment would be payable hereunder andthe Executive shall be entitled to settle or contest, as the case may be, anyother issue raised by the Internal Revenue Service or any other taxingauthority.

 

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(d)  If, after the receipt by the Executive of anamount advanced by the Company pursuant to Section 9(c), the Executive becomesentitled to receive any refund with respect to such claim, the Executive shall(subject to the Company’s complying with the requirements of Section 9(c))promptly pay to the Company the amount of such refund (together with anyinterest paid or credited thereon after taxes applicable thereto).  If, after the receipt by the Executive of anamount advanced by the Company pursuant to Section 9(c), a determination ismade that the Executive shall not be entitled to any refund with respect tosuch claim and the Company does not notify the Executive in writing of itsintent to contest such denial of refund prior to the expiration of 30 daysafter such determination, then such advance shall be forgiven and shall not berequired to be repaid and the amount of such advance shall offset, to theextent thereof, the amount of Gross-Up Payment required to be paid.

                10.  Confidential Information.  The Executive shall hold in a fiduciarycapacity for the benefit of the Company all secret or confidential information,knowledge, or data relating to the Company or any of its affiliated companies,and their respective businesses, which shall have been obtained by theExecutive during the Executive’s employment by the Com­pany or any of its affiliatedcompanies and which shall not be or become public knowledge (other than by actsby the Executive or representatives of the Executive in violation of thisAgreement).  After termination of theExecutive’s employment with the Company, the Executive shall not, without theprior written consent of the Company or as may otherwise be required by law orlegal process, communicate or divulge any such information, knowledge, or datato anyone other than the Company and those designated by it.  In no event shall an asserted violation ofthe provisions of this Section 10 constitute a basis for deferring orwithholding any amounts otherwise payable to the Executive under thisAgreement.

11.       Successors.

            (a)  This Agreementis personal to the Executive and without the prior written consent of theCompany shall not be assignable by the Executive otherwise than by will or thelaws of descent and distribution.  ThisAgreement shall inure to the benefit of and be enforceable by the Executive’slegal representatives.

(b)  This Agreement shall inure to the benefit ofand be binding upon the Company and its successors and assigns.

(c)  The Companywill require any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise) to all or substantially all of the business and/orassets of the Company to assume expressly and agree to perform this Agreementin the same manner and to the same extent that the Company would be required toperform it if no such succession had taken place.  As used in this Agreement, “Company” shallmean the Company as hereinbefore defined and any successor to its businessand/or assets as aforesaid.

 

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12.       Miscellaneous.

            (a)  This Agreementshall be governed by and construed in accordance with the laws of the State ofDelaware, without reference to principles of conflict of laws.  The captions of this Agreement are not partof the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modifiedotherwise than by a written agreement executed by the parties hereto or theirrespective successors and legal representatives.

(b)  All notices and other communicationshereunder shall be in writing and shall be given by hand delivery to the otherparty or by registered or certified mail, return receipt requested, postageprepaid, addressed as follows:

If to theExecutive:

 

 

 

 
| If to the Company: |   | UNOVA, Inc.                 |
|--------------------|--------|-----------------------------|
|               |   | Attention:  General Counsel |
|               |   | 6001 36th  Avenue West      |
|               |   | Everett, WA  98203-1264     |

 

or to such other addressas either party shall have furnished to the other in writing in accordanceherewith.  Notice and communicationsshall be effective when actually received by the addressee.

(c)  The invalidity or unenforceability of anyprovision of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement.

(d)  The Company may withhold from any amountspayable under this Agreement such Federal, state, local, or foreign taxes asshall be required to be withheld pursuant to any applicable law or regulation.

(e)  The Executive’s or the Company’s failure toinsist upon strict compliance with any provision of this Agreement or thefailure to assert any right the Executive or the Company may have hereunder,including, without limitation, the right of the Executive to terminateemployment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement,shall not be deemed to be a waiver of such provision or right or any otherprovision or right of this Agreement.

(f)  TheExecutive and the Company acknowledge that, except as may otherwise be providedunder any other written agreement between the Executive and the Company, theemployment of the Executive by the Company is “at will” and, subject to Section1(a) hereof, prior to the Effective Date, the Executive’s employment and/orthis Agreement may be terminated by either the Executive or the Company at anytime prior to the Effective Date, in which case the Execu­tive shall have nofurther rights under this Agreement. From and after the

 

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Effective Date thisAgreement shall supersede any other agreement between the parties with respectto the subject matter hereof.

**IN WITNESS WHEREOF**, the Executive has hereunto set the Executive’shand and, pursuant to the authorization from its Board of Directors, theCompany has caused these presents to be executed in its name on its behalf, allas of the day and year first above written.

 
|       |       |            |   |
|------------|------------|-----------------|--------|
| ** ** | ** ** | ** **      |
| ** ** | ** ** | ** **      |
| ** ** | ** ** | **UNOVA, Inc.** |
|       |       |            |
|       |       |            |
|       |       |            |
|       |       | By              |   |   |
|            |            |                 |        |  |

 

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