<PAGE>
                                                                  Exhibit 10-c-7











JULY 31, 2001

TO:

IN ACCORDANCE WITH RESOLUTIONS ADOPTED AT THE JUNE 26, 2001 BOARD MEETING, YOU
WERE GRANTED STOCK OPTIONS TO PURCHASE 7,000 SHARES OF THE CORPORATION'S COMMON
STOCK AT A PRICE PER SHARE OF $16.05 AND ON TERMS SUBSTANTIALLY SIMILAR TO THE
TERMS OF STOCK OPTIONS GRANTED UNDER THIS CORPORATION'S DIRECTORS STOCK PLAN AS
IN EFFECT ON THE DATE HEREOF AND AS SET FORTH IN THE ATTACHED STOCK OPTION TERMS
AND CONDITIONS, WHICH COMPRISE A PART OF THIS STOCK OPTION AGREEMENT.

PLEASE CONFIRM YOUR ACCEPTANCE OF THIS GRANT, INCLUDING THE ATTACHED STOCK
OPTION TERMS AND CONDITIONS, BY SIGNING ONE COPY AT THE PLACE INDICATED AND
RETURNING IT TO THE CORPORATION'S OFFICE OF THE SECRETARY IN THE ENCLOSED RETURN
ENVELOPE.

ROCKWELL INTERNATIONAL CORPORATION

WILLIAM J. CALISE, JR.

SENIOR VICE PRESIDENT, GENERAL COUNSEL & SECRETARY

ACCEPTED AND AGREED TO:

-------------------------------

DATE:                     , 2001
     ---------------------
<PAGE>
                       ROCKWELL INTERNATIONAL CORPORATION
                        DIRECTORS STOCK OPTION AGREEMENT
                        STOCK OPTION TERMS AND CONDITIONS

1.       DEFINITIONS

         AS USED IN THESE STOCK OPTION TERMS AND CONDITIONS, THE FOLLOWING WORDS
         AND PHRASES SHALL HAVE THE RESPECTIVE MEANINGS ASCRIBED TO THEM BELOW
         UNLESS THE CONTEXT IN WHICH ANY OF THEM IS USED CLEARLY INDICATES A
         CONTRARY MEANING:

         (a)      CHANGE OF CONTROL: CHANGE OF CONTROL SHALL HAVE THE SAME
                  MEANING AS SUCH TERM HAS IN ARTICLE III, SECTION 13(I)(1) OF
                  ROCKWELL AUTOMATION'S BY-LAWS.

         (b)      CHARLES SCHWAB: CHARLES SCHWAB & CO., INC. IS THE STOCK OPTION
                  ADMINISTRATOR WHOM ROCKWELL AUTOMATION HAS ENGAGED TO
                  ADMINISTER AND PROCESS ALL OPTION EXERCISES.

         (c)      COMMITTEE: THE COMPENSATION AND MANAGEMENT DEVELOPMENT
                  COMMITTEE OF THE BOARD OF DIRECTORS OF ROCKWELL AUTOMATION.

         (d)      CUSTOMER SERVICE CENTER: CHARLES SCHWAB'S CUSTOMER SERVICE
                  CENTER THAT IS USED TO FACILITATE OPTION TRANSACTIONS. CONTACT
                  CHARLES SCHWAB AT (888) 852-2135.

         (e)      DIRECTOR: A MEMBER OF THE BOARD OF DIRECTORS OF ROCKWELL
                  AUTOMATION.

         (f)      NOTICE OF EXERCISE FORM: THE FORM ATTACHED AS EXHIBIT 1 OR ANY
                  OTHER FORM ACCEPTED BY THE SECRETARY OF ROCKWELL AUTOMATION IN
                  HIS SOLE DISCRETION.

         (g)      OPTIONS: THE STOCK OPTIONS LISTED IN THE FIRST PARAGRAPH OF
                  THE LETTER DATED JULY 31, 2001 TO WHICH THESE STOCK OPTION
                  TERMS AND CONDITIONS ARE ATTACHED AND WHICH TOGETHER WITH
                  THESE STOCK OPTION TERMS AND CONDITIONS CONSTITUTE THE STOCK
                  OPTION AGREEMENT.

         (h)      OPTION SHARES: THE SHARES OF ROCKWELL AUTOMATION COMMON STOCK
                  ISSUABLE OR TRANSFERABLE ON EXERCISE OF THE OPTIONS.

         (i)      PLAN: ROCKWELL AUTOMATION'S DIRECTORS STOCK PLAN, AS AMENDED,
                  AND AS SUCH PLAN MAY BE FURTHER AMENDED AND IN EFFECT AT THE
                  RELEVANT TIME.

<PAGE>
         (j)      ROCKWELL AUTOMATION: ROCKWELL INTERNATIONAL CORPORATION, A
                  DELAWARE CORPORATION.

         (k)      SHARES: SHARES OF ROCKWELL AUTOMATION COMMON STOCK.

         (l)      STOCK OPTION AGREEMENT: THESE STOCK OPTION TERMS AND
                  CONDITIONS TOGETHER WITH THE LETTER DATED JULY 31, 2001 TO
                  WHICH THEY ARE ATTACHED.

2.       WHEN OPTIONS MAY BE EXERCISED

         THE OPTIONS MAY BE EXERCISED, IN WHOLE OR IN PART (BUT ONLY FOR A WHOLE
         NUMBER OF SHARES) AND AT ONE TIME OR FROM TIME TO TIME, AS TO ONE-THIRD
         (ROUNDED TO THE NEAREST WHOLE NUMBER) OF THE OPTION SHARES DURING THE
         PERIOD BEGINNING ON JULY 31, 2002 AND ENDING ON JULY 31, 2011, AS TO AN
         ADDITIONAL ONE-THIRD (ROUNDED TO THE NEAREST WHOLE NUMBER) OF THE
         OPTION SHARES DURING THE PERIOD BEGINNING ON JULY 31, 2003 AND ENDING
         ON JULY 31, 2011 AND AS TO THE BALANCE OF THE OPTION SHARES DURING THE
         PERIOD BEGINNING ON JULY 31, 2004 AND ENDING ON JULY 31, 2011, AND ONLY
         DURING THOSE PERIODS, PROVIDED THAT:

         (a)      IF YOU DIE WHILE A DIRECTOR, YOUR ESTATE, ANY PERSON WHO
                  ACQUIRES THE OPTIONS BY BEQUEST OR INHERITANCE, OR ANY PERSON
                  TO WHOM YOU HAVE TRANSFERRED THE OPTIONS DURING YOUR LIFETIME
                  AS PERMITTED BY SECTION 4 MAY EXERCISE ALL THE OPTIONS NOT
                  THERETOFORE EXERCISED WITHIN (AND ONLY WITHIN) THE PERIOD
                  BEGINNING ON YOUR DATE OF DEATH (EVEN IF YOU DIE BEFORE YOU
                  HAVE BECOME ENTITLED TO EXERCISE ALL OR ANY PART OF THE
                  OPTIONS) AND ENDING THREE YEARS THEREAFTER OR ON JULY 31, 2011
                  IF EARLIER;

         (b)      IF YOU RETIRE AS A DIRECTOR AT OR AFTER AGE 72 OR AT AN
                  EARLIER AGE BUT AFTER COMPLETING AT LEAST 10 YEARS OF SERVICE
                  AS A DIRECTOR, YOU (OR IF YOU DIE AFTER YOUR RETIREMENT DATE,
                  YOUR ESTATE OR ANY PERSON WHO ACQUIRES THE OPTIONS BY BEQUEST
                  OR INHERITANCE) OR ANY PERSON TO WHOM YOU HAVE TRANSFERRED THE
                  OPTIONS DURING YOUR LIFETIME AS PERMITTED BY SECTION 4 MAY
                  THEREAFTER EXERCISE ALL THE OPTIONS NOT THERETOFORE EXERCISED
                  WITHIN (AND ONLY WITHIN) THE PERIOD BEGINNING ON YOUR
                  RETIREMENT DATE (EVEN IF YOU RETIRE BEFORE YOU HAVE BECOME
                  ENTITLED TO EXERCISE ALL OR ANY PART OF THE OPTIONS) AND
                  ENDING FIVE YEARS THEREAFTER OR ON JULY 31, 2011 IF EARLIER;

         (c)      IF YOUR SERVICE AS A DIRECTOR TERMINATES AS A RESULT OF
                  YOUR DISABILITY OR AS A RESULT OF YOUR RESIGNATION FOR REASONS
                  OF THE ANTITRUST LAWS, COMPLIANCE WITH ROCKWELL AUTOMATION'S
                  CONFLICT OF INTEREST POLICIES OR OTHER CIRCUMSTANCES THAT THE
                  COMMITTEE MAY DETERMINE AS


                                     - 2 -
<PAGE>
                  SERVING THE BEST INTERESTS OF ROCKWELL AUTOMATION, YOU (OR IF
                  YOU DIE AFTER TERMINATION OF YOUR SERVICE AS A DIRECTOR, YOUR
                  ESTATE OR ANY PERSON WHO ACQUIRES THE OPTIONS BY BEQUEST OR
                  INHERITANCE) OR ANY PERSON TO WHOM YOU HAVE TRANSFERRED THE
                  OPTIONS DURING YOUR LIFETIME AS PERMITTED BY SECTION 4 MAY
                  THEREAFTER EXERCISE THE OPTIONS NOT THERETOFORE EXERCISED THAT
                  ARE EXERCISABLE ON THE DATE YOUR SERVICE AS A DIRECTOR
                  TERMINATES WITHIN (AND ONLY WITHIN) SUCH PERIOD, IF ANY, AFTER
                  YOUR TERMINATION DATE AS THE COMMITTEE MAY DETERMINE BY ACTION
                  TAKEN NOT MORE THAN 60 DAYS AFTER YOUR TERMINATION DATE, WHICH
                  PERIOD SHALL IN NO EVENT END MORE THAN FIVE YEARS AFTER YOUR
                  TERMINATION DATE OR ON JULY 31, 2011, IF EARLIER;

         (d)      IF YOUR SERVICE AS A DIRECTOR TERMINATES FOR ANY OTHER
                  REASON, THE OPTIONS SHALL TERMINATE FORTHWITH ON THE DATE OF
                  TERMINATION OF YOUR SERVICE AS A DIRECTOR AND SHALL NOT BE
                  EXERCISED THEREAFTER; AND

         PROVIDED, FURTHER, THAT NOTWITHSTANDING ANY OTHER PROVISION OF THE
         STOCK OPTION AGREEMENT, IF A CHANGE OF CONTROL SHALL OCCUR, THEN ALL
         THE REMAINING OPTIONS SHALL BECOME FULLY EXERCISABLE WHETHER OR NOT
         OTHERWISE THEN EXERCISABLE AND SHALL BE AND REMAIN EXERCISABLE FOR THE
         APPLICABLE PERIOD HEREINABOVE IN THIS SECTION 2 PROVIDED.

3.       EXERCISE PROCEDURE

         (a)      TO EXERCISE ALL OR ANY PART OF THE OPTIONS, YOU (OR AFTER YOUR
                  DEATH, YOUR ESTATE OR ANY PERSON WHO HAS ACQUIRED THE OPTIONS
                  BY BEQUEST OR INHERITANCE) MUST SUBMIT A NOTICE OF EXERCISE TO
                  ROCKWELL AUTOMATION'S OFFICE OF THE SECRETARY (ATTENTION:
                  STOCK OPTION ADMINISTRATION; FACSIMILE NUMBER (414) 212-5297)
                  AND THEN CONTACT THE STOCK OPTION ADMINISTRATOR, CHARLES
                  SCHWAB, AS FOLLOWS:

                  (i)      CONTACT THE CUSTOMER SERVICE CENTER BY CALLING (888)
                           852-2135 MONDAY THROUGH FRIDAY, 9:00 A.M. TO 9:00
                           P.M. EASTERN TIME AND FOLLOW THE INSTRUCTIONS
                           PROVIDED;

                  (ii)     CONFIRM THE OPTION TRANSACTION THROUGH THE CUSTOMER
                           SERVICE CENTER BY RECEIVING A CONFIRMATION NUMBER;

                  (iii)    FULL PAYMENT OF THE EXERCISE PRICE FOR THE OPTION
                           SHARES TO BE PURCHASED ON EXERCISE OF THE OPTIONS MAY
                           BE MADE BY:

                           -        CHECK; OR

                           -        IN ALREADY-OWNED SHARES; OR

                           -        IN A COMBINATION OF CHECK AND SHARES; OR

                                     - 3 -
<PAGE>
                           -        BY AUTHORIZING A THIRD PARTY APPROVED BY
                                    ROCKWELL AUTOMATION TO SELL THE SHARES (OR A
                                    SUFFICIENT PORTION OF THE SHARES) ACQUIRED
                                    UPON EXERCISE OF THE OPTION; AND

                  (iv)     IN THE CASE OF AN EXERCISE OF THE OPTIONS BY ANY
                           PERSON OTHER THAN YOU SEEKING TO EXERCISE THE
                           OPTIONS, SUCH DOCUMENTS AS CHARLES SCHWAB OR THE
                           SECRETARY OF ROCKWELL AUTOMATION SHALL REQUIRE TO
                           ESTABLISH TO THEIR SATISFACTION THAT THE PERSON
                           SEEKING TO EXERCISE THE OPTIONS IS ENTITLED TO DO SO.

         (b)      AN EXERCISE OF THE WHOLE OR ANY PART OF THE OPTIONS SHALL BE
                  EFFECTIVE:

                  (i)      IF YOU ELECT (OR AFTER YOUR DEATH, THE PERSON
                           ENTITLED TO EXERCISE THE OPTIONS ELECTS) TO PAY THE
                           EXERCISE PRICE FOR THE OPTION SHARES ENTIRELY BY
                           CHECK, (A) UPON CONFIRMATION OF YOUR TRANSACTION BY
                           USING THE CUSTOMER SERVICE CENTER AND FULL PAYMENT OF
                           THE EXERCISE PRICE AND WITHHOLDING TAXES (IF
                           APPLICABLE) ARE RECEIVED BY CHARLES SCHWAB WITHIN
                           FIVE BUSINESS DAYS FOLLOWING THE CONFIRMATION; AND
                           (B) RECEIPT OF ANY DOCUMENTS REQUIRED PURSUANT TO
                           SECTION 3(a)(iv); AND

                  (ii)     IF YOU ELECT (OR AFTER YOUR DEATH, THE PERSON
                           ENTITLED TO EXERCISE THE OPTIONS ELECTS) TO PAY THE
                           EXERCISE PRICE OF THE OPTION SHARES IN SHARES OR IN A
                           COMBINATION OF SHARES AND CHECK, (A) UPON
                           CONFIRMATION OF YOUR TRANSACTION BY USING THE
                           CUSTOMER SERVICE CENTER AND FULL PAYMENT OF THE
                           EXERCISE PRICE (AS DEFINED IN SECTION 3(d)(i)) AND
                           WITHHOLDING TAXES (IF APPLICABLE) ARE RECEIVED BY
                           CHARLES SCHWAB WITHIN FIVE BUSINESS DAYS FOLLOWING
                           THE CONFIRMATION; AND (B) RECEIPT OF ANY DOCUMENTS
                           REQUIRED PURSUANT TO SECTION 3(a)(iv).

         (c)      IF YOU CHOOSE (OR AFTER YOUR DEATH, THE PERSON ENTITLED TO
                  EXERCISE THE OPTIONS CHOOSES) TO PAY THE EXERCISE PRICE FOR
                  THE OPTION SHARES TO BE PURCHASED ON EXERCISE OF ANY OF THE
                  OPTIONS ENTIRELY BY CHECK, PAYMENT MUST BE MADE BY:

                           -        DELIVERING TO CHARLES SCHWAB A CHECK IN THE
                                    FULL AMOUNT OF THE EXERCISE PRICE FOR THOSE
                                    OPTION SHARES; OR

                           -        ARRANGING WITH A STOCKBROKER, BANK OR OTHER
                                    FINANCIAL INSTITUTION TO DELIVER TO CHARLES
                                    SCHWAB FULL PAYMENT, BY CHECK OR (IF PRIOR
                                    ARRANGEMENTS ARE MADE WITH CHARLES SCHWAB)
                                    BY WIRE TRANSFER, OF THE EXERCISE PRICE OF
                                    THOSE OPTION SHARES.


                                     - 4 -
<PAGE>
                                    IN EITHER EVENT, IN ACCORDANCE WITH SECTION
                                    3(E), FULL PAYMENT OF THE EXERCISE PRICE FOR
                                    THE OPTION SHARES PURCHASED MUST BE MADE
                                    WITHIN FIVE BUSINESS DAYS AFTER THE EXERCISE
                                    HAS BEEN CONDUCTED AND CONFIRMED THROUGH THE
                                    CUSTOMER SERVICE CENTER.

         (d)      (i)      IF YOU CHOOSE (OR AFTER YOUR DEATH, THE PERSON
                           ENTITLED TO EXERCISE THE OPTIONS CHOOSES) TO USE
                           ALREADY-OWNED SHARES TO PAY ALL OR PART OF THE
                           EXERCISE PRICE FOR THE OPTION SHARES TO BE PURCHASED
                           ON EXERCISE OF ANY OF THE OPTIONS, YOU (OR AFTER YOUR
                           DEATH, THE PERSON ENTITLED TO EXERCISE THE OPTIONS)
                           MUST DELIVER TO CHARLES SCHWAB ONE OR MORE
                           CERTIFICATES (AND EXECUTED STOCK POWERS)
                           REPRESENTING:

                           -        AT LEAST THE NUMBER OF SHARES WHOSE VALUE,
                                    BASED ON THE CLOSING PRICE OF COMMON STOCK
                                    OF ROCKWELL AUTOMATION ON THE NEW YORK STOCK
                                    EXCHANGE -- COMPOSITE TRANSACTIONS ON THE
                                    DAY YOU HAVE EXERCISED YOUR OPTIONS THROUGH
                                    THE CUSTOMER SERVICE CENTER; OR

                           -        ANY LESSER NUMBER OF SHARES YOU DESIRE (OR
                                    AFTER YOUR DEATH, THE PERSON ENTITLED TO
                                    EXERCISE THE OPTIONS DESIRES) TO USE TO PAY
                                    THE EXERCISE PRICE FOR THOSE OPTION SHARES
                                    AND A CHECK IN THE AMOUNT OF SUCH EXERCISE
                                    PRICE LESS THE VALUE OF THE SHARES
                                    DELIVERED, BASED ON THE CLOSING PRICE OF
                                    COMMON STOCK OF ROCKWELL AUTOMATION ON THE
                                    NEW YORK STOCK EXCHANGE -- COMPOSITE
                                    TRANSACTIONS ON THE DAY YOU HAVE EXERCISED
                                    YOUR OPTIONS THROUGH THE CUSTOMER SERVICE
                                    CENTER.

                  (ii)     CHARLES SCHWAB WILL ADVISE YOU (OR ANY OTHER PERSON
                           WHO, BEING ENTITLED TO DO SO, EXERCISES THE OPTIONS)
                           OF THE EXACT NUMBER OF SHARES, AT THE CLOSING PRICE
                           ON THE NEW YORK STOCK EXCHANGE -- COMPOSITE
                           TRANSACTIONS ON THE EFFECTIVE DATE OF EXERCISE UNDER
                           SECTION 3(b)(ii), AND ANY FUNDS REQUIRED TO PAY IN
                           FULL THE EXERCISE PRICE FOR THE OPTION SHARES
                           PURCHASED. IN ACCORDANCE WITH SECTION 3(e), YOU (OR
                           SUCH OTHER PERSON) MUST PAY, BY CHECK, IN SHARES OR
                           IN A COMBINATION OF CHECK AND SHARES, ANY BALANCE
                           REQUIRED TO PAY IN FULL THE EXERCISE PRICE OF THE
                           OPTION SHARES PURCHASED WITHIN FIVE BUSINESS DAYS
                           FOLLOWING THE EFFECTIVE DATE OF SUCH EXERCISE OF THE
                           OPTIONS UNDER SECTION 3(b)(ii).

                  (iii)    NOTWITHSTANDING ANY OTHER PROVISION OF THIS STOCK
                           OPTION AGREEMENT, THE SECRETARY OF ROCKWELL
                           AUTOMATION MAY LIMIT THE NUMBER, FREQUENCY OR VOLUME
                           OF SUCCESSIVE EXERCISES OF ANY OF


                                     - 5 -
<PAGE>
                           THE OPTIONS IN WHICH PAYMENT IS MADE, IN WHOLE OR IN
                           PART, BY DELIVERY OF SHARES PURSUANT TO THIS
                           SUBPARAGRAPH (D) TO PREVENT UNREASONABLE PYRAMIDING
                           OF SUCH EXERCISES.

         (e)      AN EXERCISE CONDUCTED AND CONFIRMED THROUGH THE CUSTOMER
                  SERVICE CENTER, WHETHER OR NOT FULL PAYMENT OF THE EXERCISE
                  PRICE FOR THE OPTION SHARES IS RECEIVED BY CHARLES SCHWAB,
                  SHALL CONSTITUTE A BINDING CONTRACTUAL OBLIGATION BY YOU (OR
                  THE OTHER PERSON ENTITLED TO EXERCISE THE OPTIONS) TO PROCEED
                  WITH AND COMPLETE THAT EXERCISE OF THE OPTIONS (BUT ONLY SO
                  LONG AS YOU CONTINUE, OR THE OTHER PERSON ENTITLED TO EXERCISE
                  THE OPTIONS CONTINUES, TO BE ENTITLED TO EXERCISE THE OPTIONS
                  ON THAT DATE). BY YOUR ACCEPTANCE OF THIS STOCK OPTION
                  AGREEMENT, YOU AGREE (FOR YOURSELF AND ON BEHALF OF ANY OTHER
                  PERSON WHO BECOMES ENTITLED TO EXERCISE THE OPTIONS) TO
                  DELIVER OR CAUSE TO BE DELIVERED TO CHARLES SCHWAB ANY BALANCE
                  OF THE EXERCISE PRICE FOR THE OPTION SHARES TO BE PURCHASED
                  UPON THE EXERCISE PURSUANT TO THE TRANSACTION CONDUCTED
                  THROUGH THE CUSTOMER SERVICE CENTER REQUIRED TO PAY IN FULL
                  THE EXERCISE PRICE FOR THOSE OPTION SHARES, THAT PAYMENT BEING
                  BY CHECK, WIRE TRANSFER, IN SHARES OR IN A COMBINATION OF
                  CHECK AND SHARES, ON OR BEFORE THE LATER OF THE FIFTH BUSINESS
                  DAY AFTER THE DATE ON WHICH YOU CONFIRM THE TRANSACTION
                  THROUGH THE CUSTOMER SERVICE CENTER. IF SUCH PAYMENT IS NOT
                  MADE, YOU (FOR YOURSELF AND ON BEHALF OF ANY OTHER PERSON WHO
                  BECOMES ENTITLED TO EXERCISE THE OPTIONS) AUTHORIZE THE
                  CORPORATION, IN ITS DISCRETION, TO SET OFF AGAINST SALARY
                  PAYMENTS OR OTHER AMOUNTS DUE OR WHICH MAY BECOME DUE YOU (OR
                  THE OTHER PERSON ENTITLED TO EXERCISE THE OPTIONS) ANY BALANCE
                  OF THE EXERCISE PRICE FOR THOSE OPTION SHARES REMAINING UNPAID
                  THEREAFTER.

         (f)      A BOOK-ENTRY STATEMENT REPRESENTING THE NUMBER OF OPTION
                  SHARES PURCHASED WILL BE ISSUED AS SOON AS PRACTICABLE AFTER
                  CHARLES SCHWAB HAS RECEIVED FULL PAYMENT OF THE EXERCISE PRICE
                  OF THOSE OPTION SHARES.

4.       TRANSFERABILITY

         YOU ARE NOT ENTITLED TO TRANSFER THE OPTIONS EXCEPT (I) BY WILL OR BY
         THE LAWS OF DESCENT AND DISTRIBUTION; OR (II) BY GIFT TO ANY MEMBER OF
         YOUR IMMEDIATE FAMILY OR TO A TRUST FOR THE BENEFIT OF ONE OR MORE
         MEMBERS OF YOUR IMMEDIATE FAMILY; PROVIDED, HOWEVER, THAT NO TRANSFER
         PURSUANT TO THIS CLAUSE (II) SHALL BE EFFECTIVE UNLESS YOU HAVE
         NOTIFIED THE CORPORATION'S OFFICE OF THE SECRETARY (ATTENTION: STOCK
         OPTION ADMINISTRATION) IN WRITING SPECIFYING THE OPTION OR OPTIONS
         TRANSFERRED, THE DATE OF THE GIFT AND THE NAME AND SOCIAL SECURITY OR
         OTHER TAXPAYER IDENTIFICATION NUMBER OF THE TRANSFEREE. DURING YOUR
         LIFETIME, ONLY YOU ARE ENTITLED TO EXERCISE THE OPTIONS UNLESS YOU HAVE
         TRANSFERRED ANY OPTION IN ACCORDANCE WITH THIS PARAGRAPH TO A MEMBER OF

                                     - 6 -
<PAGE>
         YOUR IMMEDIATE FAMILY OR A TRUST FOR THE BENEFIT OF ONE OR MORE MEMBERS
         OF YOUR IMMEDIATE FAMILY, IN WHICH CASE ONLY THAT TRANSFEREE (OR THE
         LEGAL REPRESENTATIVE OF THE ESTATE OR THE HEIRS OR LEGATEES OF THAT
         TRANSFEREE) SHALL BE ENTITLED TO EXERCISE THAT OPTION. FOR PURPOSES OF
         THIS PARAGRAPH, YOUR "IMMEDIATE FAMILY" SHALL MEAN YOUR SPOUSE AND
         NATURAL, ADOPTED OR STEP- CHILDREN AND GRANDCHILDREN.

5.       WITHHOLDING

         ROCKWELL AUTOMATION OR CHARLES SCHWAB SHALL HAVE THE RIGHT, IN
         CONNECTION WITH THE EXERCISE OF THE OPTIONS, IN WHOLE OR IN PART, TO
         DEDUCT FROM ANY PAYMENT TO BE MADE BY ROCKWELL AUTOMATION OR CHARLES
         SCHWAB AN AMOUNT EQUAL TO THE TAXES REQUIRED TO BE WITHHELD BY LAW WITH
         RESPECT TO SUCH EXERCISE OR TO REQUIRE YOU (OR ANY OTHER PERSON
         ENTITLED TO EXERCISE THE OPTIONS) TO PAY TO IT AN AMOUNT SUFFICIENT TO
         PROVIDE FOR ANY SUCH TAXES SO REQUIRED TO BE WITHHELD. BY YOUR
         ACCEPTANCE OF THIS STOCK OPTION AGREEMENT, YOU AGREE (FOR YOURSELF AND
         ON BEHALF OF ANY OTHER PERSON WHO BECOMES ENTITLED TO EXERCISE THE
         OPTIONS) THAT IF ROCKWELL AUTOMATION OR CHARLES SCHWAB ELECTS TO
         REQUIRE YOU (OR SUCH OTHER PERSON) TO REMIT AN AMOUNT SUFFICIENT TO PAY
         SUCH WITHHOLDING TAXES, YOU (OR SUCH OTHER PERSON) MUST REMIT THAT
         AMOUNT WITHIN FIVE BUSINESS DAYS AFTER CONFIRMATION OF THE OPTION
         EXERCISE AS PROVIDED IN SECTION 3(a)(ii). IF SUCH PAYMENT IS NOT MADE,
         ROCKWELL AUTOMATION, IN ITS DISCRETION, SHALL HAVE THE SAME RIGHT OF
         SET-OFF AS PROVIDED UNDER SECTION 3(e) WITH RESPECT TO PAYMENT OF THE
         EXERCISE PRICE FOR OPTION SHARES.

6.       HEADINGS

         THE SECTION HEADINGS CONTAINED IN THESE STOCK OPTION TERMS AND
         CONDITIONS ARE SOLELY FOR THE PURPOSE OF REFERENCE, ARE NOT PART OF THE
         AGREEMENT OF THE PARTIES AND SHALL IN NO WAY AFFECT THE MEANING OR
         INTERPRETATION OF THIS STOCK OPTION AGREEMENT.

7.       REFERENCES

         ALL REFERENCES IN THESE STOCK OPTION TERMS AND CONDITIONS TO SECTIONS,
         PARAGRAPHS, SUBPARAGRAPHS OR CLAUSES SHALL BE DEEMED TO BE REFERENCES
         TO SECTIONS, PARAGRAPHS, SUBPARAGRAPHS AND CLAUSES OF THESE STOCK
         OPTION TERMS AND CONDITIONS UNLESS OTHERWISE SPECIFICALLY PROVIDED.

8.       ENTIRE AGREEMENT

         THIS STOCK OPTION AGREEMENT AND THE OTHER TERMS APPLICABLE TO STOCK
         OPTIONS GRANTED UNDER THE PLAN EMBODY THE ENTIRE AGREEMENT AND
         UNDERSTANDING BETWEEN ROCKWELL AUTOMATION AND YOU WITH RESPECT TO THE

                                     - 7 -
<PAGE>
         OPTIONS, AND THERE ARE NO REPRESENTATIONS, PROMISES, COVENANTS,
         AGREEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE OPTIONS OTHER THAN
         THOSE EXPRESSLY SET FORTH IN THIS STOCK OPTION AGREEMENT AND THE PLAN.

9.       APPLICABLE LAWS AND REGULATIONS

         THIS STOCK OPTION AGREEMENT AND ROCKWELL AUTOMATION'S OBLIGATION TO
         ISSUE OPTION SHARES HEREUNDER ARE SUBJECT TO APPLICABLE LAWS AND
         REGULATIONS.

EXHIBIT 1         - NOTICE OF EXERCISE FORM




                                     - 8 -
<PAGE>
EXHIBIT 1

                             NOTICE OF EXERCISE FORM
                           FOR NON-EMPLOYEE DIRECTORS

To:      Rockwell Automation
         Office of the Secretary (MW31)
         777 East Wisconsin Avenue, Suite 1400
         Milwaukee, WI  53202

         Fax No. (414) 212-5297



         1. OPTIONS EXERCISED: Subject to the terms and conditions of the Stock
Option Agreement dated July 31, 2001 with Rockwell International Corporation
(Rockwell Automation) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
          Date of             Number of              Exercise          Total
          Grant                Shares                Price             Purchase Price
          <S>                 <C>                    <C>               <C>

         ----------           ----------             $                 $

         ----------           ----------             $                 $

         ----------           ----------             $                 $
</TABLE>


         2. PAYMENT: The following must be received by Charles Schwab & Co.,
Inc. within five business days following the date of exercise:

         - A check payable to Rockwell International Employee Stock Option
         Program or a wire transfer to Charles Schwab & Co., Inc. for credit to
         the Rockwell International Employee Stock Option Program in the amount
         of the Total Purchase Price of the above-itemized stock option(s); OR

         - A number of shares of Rockwell Automation Common Stock surrendered or
         sold to pay the Total Purchase Price of the above-itemized stock
         option(s); AND


<PAGE>

                                                         Notice of Exercise Form
                                                 For Officers and Directors Only
                                                                          Page 2


                  If full payment of the Total Purchase Price of the stock
option(s) listed in Item 1 is not delivered within five (5) business days after
the exercise date, Rockwell Automation is authorized forthwith to set off the
balance due against any amounts due or which may become due me to satisfy my
obligation to pay the Total Purchase Price.

THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR AFTER
THE DATE OF SUCH RECEIPT.



-----------------------------------------------------
                  (Signature)


Printed Name
            -----------------------------------------

Dated: