Non-Qualified Stock Option Agreement

Woodward, Inc., a Delaware corporation (the “Company”), hereby grants Non-Qualified Stock Options (or NQs) to you (the “Grantee”) under the Company’s 2017 Omnibus Incentive Plan (the “Plan”) in the amount described in your E*TRADE account for this year’s grant, with reference to the following facts:







Now, Therefore, In Consideration of the foregoing facts, the Company hereby grants the following options:





Except as otherwise provided below, these options shall expire on the day before the tenth (10th) anniversary of the grant date.





Subject to the provisions of Section 3, Termination of Membership below, twenty-five percent (25%) of the shares granted will vest each year, beginning one year from the grant date. 



These options shall be exercised by delivery of written notice (or, if permitted by the Administrator, electronic notice) to the Company stating the number of shares with respect to which the options are being exercised, together with full payment of the purchase price therefor (including satisfaction of all Tax Obligations with respect to such exercise) and such other representations and/or agreements as may be required by the Administrator pursuant to the provisions of the Plan.  Payment must be made in cash

(including a bank cashier’s check or certified check) unless the Administrator determines to accept any other form or combination of forms permitted by the Plan as the Administrator shall advise the Grantee in writing.  If the Administrator so determines, the payment may be made in whole or in part by delivery of shares of Common Stock previously owned and held at least six months by the Grantee.  Shares of Common Stock used for payment shall be valued at their fair market value on the date of exercise as determined by the Administrator.





Termination for Reason Other Than Retirement, Death, Disability or Cause.



Vesting

If the Grantee’s membership is terminated for any reason other than Retirement, death, Disability or Cause, any portion of the options granted hereunder that are not vested and exercisable (according to Section 2, Exercise of Options above)  on the date of the Grantee’s termination of membership shall immediately terminate notwithstanding the expiration date described above (“lapse”). 



Exercise Period

Further, the vested options granted hereunder shall lapse to the extent unexercised on the earlier of the expiration date of the options or the date three (3) months following the date of such termination. 



For purposes of this Agreement, the term “membership” shall mean the Grantee’s service as an Employee, Director or Consultant, as applicable.



Termination for Retirement.    



Vesting and Exercise Period

If the Grantee’s membership is terminated on account of Retirement (as defined hereunder), the options granted hereunder shall (i) subject to both the Death of Grantee and Disability of Grantee paragraphs below,  continue to vest in accordance with the schedule set forth in Section 2, Exercise of Options above, and (ii) upon vesting, continue to be exercisable until the expiration date of the option. 



If the Grantee is an Employee, “Retirement” for purposes of this Agreement shall mean (without affecting in any way the “retirement” definition for all other purposes under the Company’s Member Guidebook) termination of employment by the Grantee after achieving any of the following: (a) the Grantee is at least age 55 with 10 years of service (as defined in the Company’s Member Guidebook as of the date of grant), (b) the Grantee is at least age 65 (with no minimum years of service requirement), or (c) the Grantee first becomes an Employee when he or she is age 55 or older and the Grantee thereafter achieves 2 or more years of service.  If the Grantee is a Director, “Retirement” shall mean the Grantee’s termination as a Director on or after attainment

of age 55.  “Retirement” shall not be applicable to any non-employee, non-Director grantees.



Death of Grantee.



Vesting

If the Grantee dies, whether while a member or after a termination due to Retirement, any portion of the options not yet vested and exercisable according to Section 2, Exercise of Options above, will become immediately vested and exercisable on the date of the Grantee’s death. 



Exercise Period

If the Grantee’s death occurs while a member but before becoming eligible for Retirement, the options granted hereunder shall lapse to the extent unexercised upon the earlier of (a) the expiration date of the options or (b) the date one (1) year following the date of the Grantee’s death.  If the Grantee’s death occurs while eligible for Retirement or after a termination due to Retirement, the options granted hereunder shall continue to be exercisable until the expiration date of the options and, for the avoidance of doubt, shall not lapse earlier on account of such death.



Disability of Grantee.



Vesting

If the Grantee’s membership is terminated by reason of Disability of the Grantee (as determined by the Administrator), or if the Grantee’s membership was initially terminated due to Retirement and the Grantee subsequently suffers a Disability (as determined by the Administrator),  any portion of the options not yet vested and exercisable according to Section 2, Exercise of Options above, will become immediately vested and exercisable on the date of the Grantee’s termination by reason of Disability or on the date of the Grantee’s Disability following Retirement, as the case may be.  



Exercise Period

If the Grantee’s membership is terminated by reason of Disability (as determined by the Administrator) while a member but before becoming eligible for Retirement, the options shall lapse on the earlier of (a) the expiration date of the options or (b) one year following the date of such termination by reason of Disability.  If the Grantee’s termination by reason of such Disability occurs at a time when the Grantee is eligible for Retirement, or after a termination due to Retirement, the options granted hereunder shall continue to be exercisable until the expiration date of the options and, for the avoidance of doubt, shall not lapse earlier on account of such Disability. 



Disability shall be determined by the Administrator with the advice of a physician acceptable to the Administrator with respect to the permanent and total disability of the Grantee. 







Termination for Cause.



If the Grantee’s membership is terminated for Cause, the options shall lapse upon the earlier of (a) the expiration date of the options or (b) upon the earlier of the receipt by the Grantee of notice of such termination of membership or the effective date of such termination of membership.  For purposes of this Agreement, “Cause” shall mean (i) termination for personal dishonesty, fraud or other malicious act against the Company, (ii) willful misconduct in performance of duties, or (iii) breach of fiduciary duty against the Company.  The Administrator (as may be delegated to the management of the Company) shall have the sole and exclusive right to determine whether the Grantee has been terminated for Cause for purposes of this Agreement and the Plan.



























By accepting this Agreement, you agree to all of the terms and conditions described above and in the Woodward, Inc. 2017 Omnibus Incentive Plan.