UNIVERSAL ELECTRONICS INC
EXHIBIT 10.3
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>a67196ex10-3.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>

<PAGE>   1

                                                                EXHIBIT A (10.3)

                       NONQUALIFIED STOCK OPTION AGREEMENT


THIS NONQUALIFIED STOCK OPTION AGREEMENT is made as of the date set forth on the
signature page hereof by and between UNIVERSAL ELECTRONICS INC., a Delaware
corporation (the "Corporation") and CAMILLE K. JAYNE (the "Optionee"). As used
in this Agreement, the term "Corporation" shall include, where applicable, any
and all of its subsidiaries.


                                 R E C I T A L S


        A. The Board of Directors of the Corporation (the "Board") has approved
the Universal Electronics Inc. 1999A Non Qualified Stock Option Plan (the
"Plan").


        B. The Corporation desires to grant to the Optionee and option
("Option") to purchase shares of the Corporation's common stock, par value $0.01
per share (the "Stock"), upon the terms and conditions set forth in this
Agreement.


NOW, THEREFORE, the parties, intending to be legally bound, hereto agree as
follows:

        1. GRANT AND DESIGNATION OF OPTION. Upon the execution and delivery of
this Agreement and the related Stock Option Certificate of even date herewith
(the "Certificate"), the Corporation hereby grants to the Optionee the Option to
purchase the aggregate number of shares of Stock set forth on the Certificate at
the price per share ("Option Price") further set forth on the Certificate. The
Option granted hereunder shall not be treated as an incentive stock option
within the meaning of Section 422A of the Internal Revenue Code of 1986, as
amended.

        2. TERM AND EXERCISE OF OPTION. Subject to earlier termination,
acceleration or cancellation of the Option as provided herein, the term of the
Option shall be for that period of time also set forth on the Certificate (the
"Option Period") and, subject to the provisions of this Agreement, the Option
shall be exercisable at such times and as to such number of shares as determined
on the schedule set forth on the Certificate.

        3. METHOD OF EXERCISE. The Option may be exercised by written notice to
the Corporation (the "Exercise Notice") at its offices at 6101 Gateway Drive,
Cypress, California 90630 to the attention of the Secretary of the Corporation.
The Exercise Notice shall state (i) the election to exercise the Option, (ii)
the total number of full shares in respect to which it is being exercised, and
(iii) shall be signed by the person or persons exercising the Option. The
Exercise Notice shall be accompanied by the Certificate and a certified or
cashier's check for the full amount of the purchase price of such shares, or as
may be permitted by the Board, by certificates for shares of Stock which have
been owned by the Optionee for more than six (6) months prior to the date of
exercise and which have a fair market value of the date of exercise equal to the
purchase price, or by a combination of such



<PAGE>   2

methods of payment. Upon receipt of the foregoing, the Corporation shall issue
the shares of Stock as to which the Option has been duly exercised and shall
return the Certificate, duly endorsed to reflect such exercise, to the Optionee.

        4. OPTIONEE'S REPRESENTATIONS.

                (a) Optionee represents and warrants that any and all shares
acquired through the exercise of rights under the Option granted pursuant to
this Agreement will be acquired for Optionee's own account and not with a view
to, or present intention of, distribution thereof in violation of the Securities
Act of 1933, as amended and the rules and regulations promulgated thereunder
(the "1933 Act") and will not be disposed of in contravention of the 1933 Act.

                (b) Optionee acknowledges that Optionee is able to bear the
economic risk of the investment in any and all shares of Stock acquired through
the exercise of rights under the Option for an indefinite period of time because
the Stock may not be registered under the 1933 Act and, if not, cannot be sold
unless subsequently registered under the 1933 Act or an exemption from such
registration is available.

                (c) Optionee has reviewed this Agreement and has had an
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of Stock and has had full access to such other
information concerning the Corporation as Optionee has requested.

        5. RESTRICTION ON EXERCISE. This Option may not be exercised if the
issuance of such shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation. As a condition to the
exercise of this Option, the Corporation may require Optionee to make any
representation and warranty to the Corporation as may be required by any
applicable law or regulation. All exercises of the Option must be for full
shares of Stock only.

        6. EFFECT OF TERMINATION OF EMPLOYMENT. Except as set forth in
Paragraphs 7, 8 and 9 below, in the event that Optionee's employment with the
Corporation ceases for any reason, Optionee may (or Optionee's estate or
representative, in the event of Optionee's death during the applicable exercise
period as set forth in this Paragraph 6), during the earlier of (i) the 180 day
period following such cessation of employment or (ii) the remaining term of the
Option Period, exercise the Option to the extent such Option was exercisable on
the date such employment ceased and, on such date, that portion of the Option
which was not exercisable shall automatically terminate without further action
by the parties hereto and, in all events, to the extent not exercised, the
Option shall terminate in its entirety at the end of business on the applicable
exercise period as set forth in this Paragraph 6.

        7. EFFECT OF TERMINATION OF EMPLOYMENT WITHOUT CAUSE OR DUE TO
CONSTRUCTIVE TERMINATION.

                (a) If Optionee's employment with the Corporation is terminated
by the Corporation without "Cause" (as such term is defined in subparagraph 7(b)
below), by "Constructive Termination" (as such term is defined in subparagraph
7(c) below), or it terminates as the result of expiration of the



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term stated in her Executive Employment Agreement of even date, and, at such
time, Optionee is not then a member of Corporation's Board of Directors because
Optionee has not been nominated, or elected or re-elected, or appointed or
reappointed to the Board of Directors, or Optionee resigns her employment as a
result of not being nominated, or elected or re-elected, or appointed or
reappointed to the Board of Directors, Optionee shall become immediately fully
vested in the Option without further action by the parties hereto, and, to the
extent not previously exercised, the Option shall be exercisable in whole or in
part with respect to all remaining shares of Stock covered by the Option and may
be exercised by Optionee (or Optionee's estate or representative, in the event
of Optionee's death) at any time prior to the expiration of the Option Period.
If the Optionee's employment with the Corporation is terminated by the
Corporation without "Cause" (as such term is defined in subparagraph 7(b)
below), by "Constructive Termination" (as such term is defined in subparagraph
7(c) below), or it terminates as the result of expiration of the term stated in
her Executive Officer Employment Agreement of even date, and at such time
Optionee is a member of Board of Directors, the Option will continue to vest as
provided in the vesting schedule provided in the Stock Option Certificate
attached hereto, provided, however, at such time Optionee is no longer a member
of the Corporation's Board of Directors because she has not been nominated, or
elected or re-elected, or appointed or reappointed to the Board of Directors,
Optionee shall become immediately vested in the Option without further action by
the parties hereto, and, to the extent not previously exercised, the Option
shall be exercisable at any time prior to the expiration of the Option Period in
whole or in part with respect to all remaining shares of Stock.

                (b) For purposes of this Agreement, "Cause" shall mean (i) the
willful and continued failure by Optionee to substantially perform Optionee's
duties with the Corporation [other than a failure resulting from Optionee's
death or "Total Disability," as such term is defined in subparagraph 7(e) below]
after a demand for substantial performance is delivered to Optionee by the
Corporation which specifically identifies the manner in which it is believed
that Optionee has not substantially performed Optionee's duties; (ii) the
willful engaging by Optionee in gross misconduct materially and demonstrably
injurious to the property or business of the Corporation; or (iii) Optionee's
commission of fraud, misappropriation or a felony. For purposes of this
definition of "Cause", no act or failure to act on Optionee's part will be
considered "willful" unless done, or omitted to be done, by Optionee not in good
faith and without reasonable belief that Optionee's action or omission was in
the interests of the Corporation or not opposed to the interests of the
Corporation.

                (c) For purposes of this Agreement, "Constructive Termination"
shall occur on that date on which Optionee resigns from employment with the
Corporation, if such resignation occurs within eighteen (18) months after the
occurrence of (i) the failure of Optionee to be elected or re-elected or
appointed or reappointed to such office which Optionee holds (other than as a
result of a termination for "Cause") if Optionee is an officer of the
Corporation and the office which Optionee holds is one to which Optionee is
elected according to the Corporation's By-laws; (ii) a change in Optionee's
functions, duties, or responsibilities such that Optionee's position with the
Corporation becomes substantially less in responsibility, importance, or scope;
or (iii) a "Change in Control" (as such term is defined in subparagraph 7(d)
below).

                (d) For purposes of this Agreement, a "Change in Control" shall
be deemed to occur when (i) any "person" or "group" [as such terms are used in
Sections 3(a), 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder



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<PAGE>   4

(the "1934 Act")], other than (1) a trustee or other fiduciary holding
securities under any employee benefit plan of the Corporation or (2) a
corporation owned directly or indirectly by the stockholders of the Corporation
in substantially the same proportions as their ownership of Stock in the
Corporation immediately prior to any such occurrence, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of securities of the Corporation representing twenty percent (20%)
or more of the total voting power of the then outstanding securities of the
Corporation entitled to vote generally in the election of directors (the "Voting
Stock"); (ii) individuals who are members of the Board on the date of this
Agreement and any individual who becomes a member of the Board hereafter whose
nomination for election as a director was approved by the affirmative vote of a
majority of such Directors, cease to constitute a majority of the members of the
Board; (iii) there occurs a merger or consolidation of the Corporation with any
other corporation or entity, other than a merger or consolidation which would
result in the Voting Stock of the Corporation immediately outstanding prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least eighty
percent (80%) of the total voting power represented by the Voting Stock or the
voting securities of such surviving entity outstanding immediately after such
merger or consolidation; (iv) there occurs a sale or transfer or disposition of
all or substantially all of the Corporation's assets to any other corporation or
entity, other than a corporation owned directly or indirectly by the
stockholders of the Corporation in substantially the same proportions as their
ownership of Stock in the Corporation immediately prior to such sale, transfer
or disposition; or (v) the dissolution or liquidation of the Corporation.

        (e) For purposes of this Agreement, "Total Disability" shall mean an
event of illness or other incapacity of Optionee resulting in Optionee's failure
or inability to discharge Optionee's duties as an employee of the Corporation
for ninety (90) or more days during any period of one hundred and twenty (120)
days.

        8. EFFECT OF TERMINATION OF EMPLOYMENT DUE TO DEATH OR TOTAL DISABILITY.
In the event that Optionee's employment with the Corporation ceases or is
terminated due to Optionee's death or Total Disability, Optionee (or Optionee's
estate or representative, in the event of Optionee's death) may during the
earlier of (i) the one (1) year period following such cessation or termination
of employment or (ii) the remaining term of any Option Period, exercise the
Option to the extent such Option was exercisable on the date such employment
ceased or was terminated and, on such date, that portion of the Option which was
not exercisable shall automatically terminate without further action by the
parties hereto and, in all events, to the extent not exercised, the Option shall
terminate in its entirety at the end of business on the applicable exercise
period as set forth in this Paragraph 8; provided, however, the Board, in its
sole discretion, may approve the full vesting to Optionee (or Optionee's estate
or representative, in the event of Optionee's death) in the Option and, in such
event, to the extent not previously exercised, the Option shall be exercisable
in whole or in part with respect to all remaining shares of Stock covered by the
Option and may be exercised by Optionee (or Optionee's estate or representative,
in the event of Optionee's death) at any time prior to the expiration of the
Option Period.

        9. EFFECT OF TERMINATION OF EMPLOYMENT FOR CAUSE. In the event that
Optionee's employment with the Corporation is terminated by the Corporation for
Cause, the Option, to the extent not then exercised (and whether or not then
exercisable in whole or in part), shall automatically and immediately terminate
in its entirety as of the date of such termination of



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employment, without further action by Optionee or the Corporation, and Optionee
thereafter shall have no rights whatsoever with respect to the Option.

        10. RIGHT OF A STOCKHOLDER. Optionee shall not have any rights as a
stockholder with respect to any shares of Stock unless and until legended
certificates for such shares of such Stock are issued or unless the Optionee has
been granted additional applicable rights under the Plan.

        11. WITHHOLDING OF TAXES. Whenever the Corporation is required to issue
shares of Stock upon exercise hereunder, the Corporation shall have the right to
require the recipient to remit in cash (or with the consent of the Board, shares
of Stock previously owned by the recipient or issuable upon such exercise) to
the Corporation an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares of Stock.

        12. ADJUSTMENTS. In the event of any change in the outstanding shares of
Stock of the Corporation by reason of a stock dividend or distribution,
recapitalization, spin-off, merger, consolidation, split-up, combination,
exchange of shares or the like, the Board shall adjust the number of shares of
Stock which may be issued under the Plan and shall provide for an equitable
adjustment to (a) the number of shares of Stock subject to this Agreement and
(b) the option price of this Stock Option.

        13. COMPLIANCE WITH CERTAIN LAWS AND REGULATIONS. If the Board shall
determine, in its sole discretion, that the listing, registration or
qualification of the shares subject to the Option upon any securities exchange
or under any law or regulation, or that the consent or approval of any
governmental regulatory body is necessary or desirable in connection with the
granting of the Option or the acquisition of shares thereunder, the Optionee
shall supply the Board or the Corporation, as the case may be, with such
certificates, representations and information as the Board or the Corporation,
as the case may be, may request and shall otherwise cooperate with the
Corporation in obtaining any such listing, registration, qualification, consent
or approval.

        14. TRANSFERABILITY OF OPTION. The Option is not transferable by the
Optionee other than (i) by will or by the laws of descent and distribution or
(ii) by gift or domestic relations order to a family member of the Optionee (a
"Permitted Transferee"), and is exercisable, during the Optionee's lifetime,
only by a Permitted Transferee, the Optionee, or in the case of Optionee's legal
incompetency, by Optionee's guardian or legal representative.

        15. ADDITIONAL RESTRICTIONS ON TRANSFER. The certificates representing
the Stock purchased upon the exercise of the Option will bear the following
legend until such shares of Stock have been registered under an effective
registration statement under the 1933 Act:

                The securities represented by this certificate were originally
                issued on ____________, 2000, have not been registered under the
                Securities Act of 1933, as amended, or under the securities laws
                of any state or other jurisdiction (together, the "Securities
                Laws") and may not be offered for sale, sold or otherwise
                transferred or encumbered in the absence 0of compliance with
                such Securities Laws and until the issuer hereof shall



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                have received from counsel acceptable to issuer a written
                opinion reasonably satisfactory to issuer that the proposed
                transaction will not violate any applicable Securities Laws.

        16. NOTICES. Any notice or demand provided for in this Agreement must be
in writing and must be either personally delivered, delivered by overnight
courier, or mailed by first class mail, to the Optionee at Optionee's most
recent address on file in the records of the Corporation, to the Corporation at
the address set forth or established pursuant to Paragraph 3 or to such other
address or to the attention of such other person as the recipient party shall
have specified by prior written notice to the sending party. Any notice or
demand under this Agreement will be deemed to have been given when received.

        17. SEVERABILITY. This Agreement and each provision hereof shall be
valid and enforced to the fullest extent permitted by law. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision. Without limiting the
generality of the foregoing, if the scope of any provision contained in this
Agreement is too broad to permit enforcement to its fullest extent, such
provision shall be enforced to the maximum extent permitted by law, and the
parties hereby agree that such scope may be judicially modified accordingly.

        18. COMPLETE AGREEMENT; PRIOR STOCK OPTION AGREEMENTS. This Agreement
and those documents expressly referred to herein embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.

        19. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same agreement.

        20. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Optionee, the Corporation and their
respective permitted successors and assigns (including personal representatives
heirs and legatees), and is intended to bind all successors and assigns of the
respective parties, except that Optionee may not assign any of Optionee's rights
or obligations under this Agreement except to the extent and in the manner
expressly permitted hereby.

        21. REMEDIES. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may, in its sole discretion,
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement, without the necessity of posting
bond or any other security.



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        22. WAIVER OR MODIFICATION. Any waiver or modification of any of the
provisions of this Agreement shall not be valid unless made in writing and
signed by the parties hereto. A waiver by either party of any breach of this
Agreement shall not operate as a waiver of any subsequent breach.

        23. INCORPORATION OF RECITALS. The recitals hereinabove set forth are
hereby incorporated herein by this reference.


IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
24th day of August, 2000.

OPTIONEE                                    UNIVERSAL ELECTRONICS INC.


                                            By:
------------------------------------           ---------------------------------
Camille K. Jayne
                                               Its: President and Chief
                                                    Operating Officer



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Certificate Number:  001


                           UNIVERSAL ELECTRONICS INC.
                          1999A NONQUALIFIED STOCK PLAN
                            STOCK OPTION CERTIFICATE


THIS CERTIFIES THAT CAMILLE K. JAYNE has been awarded an OPTION to purchase
EIGHTY THOUSAND (80,000) shares of common stock, par value $0.01 per share, of
UNIVERSAL ELECTRONICS INC. ("Company") at a price per share of $20.1875. This
Certificate is issued in accordance with and is subject to the terms and
conditions of the related NonQualified Stock Option Agreement of even date
herewith (the "Agreement").

THIS OPTION is not transferable except in accordance with the terms and
conditions of the Agreement.

THIS OPTION shall expire [ten (10)] years from the date of this Certificate
("Option Period").

THIS OPTION shall be exercisable as to all or a portion of the umber of shares
set forth above as follows:

<TABLE>
<CAPTION>
  On and After the Following          Maximum Percentage Taking        Company Endorsement
Dates, But Prior To Expiration      Into Account Prior Exercises        Regarding Exercise
------------------------------      ----------------------------        ------------------
<S>                                 <C>                                <C>
        8/24/01                               25%

        8/24/02                               50%

        8/24/03                               75%

        8/24/04                              100%
</TABLE>


IN WITNESS WHEREOF, UNIVERSAL ELECTRONICS INC. has caused this Stock Option
Certificate to be signed by its duly authorized officer as of the 24th day of
August, 2000.


                                            UNIVERSAL ELECTRONICS INC.



                                            By:
                                               ---------------------------------
                                               Its:  President and Chief
                                                     Operating Officer


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