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Exhibit 10.6

SECURITY AGREEMENT

    SECURITY AGREEMENT, dated as of July 12, 2001, by and among UNOVA, Inc., a
Delaware corporation (the "Parent"), UNOVA Industrial Automation Systems, Inc.,
a Delaware corporation, Intermec Technologies Corporation, a Washington
corporation, R & B Machine Tool Company, a Michigan corporation, J.S. McNamara
Company, a Michigan corporation, M M & E, Inc., a Nevada corporation, Intermec
IP Corp., a Delaware corporation and UNOVA IP Corp., a Delaware corporation (the
Parent and each such corporation is individually hereinafter referred to as a
"Grantor" and the Parent together with all such corporations are hereinafter
collectively referred to as the "Grantors"), and Special Value Investment
Management, LLC, as Administrative Agent ("Agent"), in its capacity as Agent for
Lenders.

W I T N E S S E T H:

    WHEREAS, pursuant to that certain Loan Agreement dated as of the date hereof
by and among Lenders, Agent, and Grantors (including all annexes, exhibits and
schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the "Loan Agreement"), Lenders have agreed to make the Term
Loan;

    WHEREAS, in order to induce Agent and Lenders to enter into the Loan
Agreement and the other Loan Documents and to induce Lenders to make the Term
Loan, each Grantor has agreed to grant a continuing Lien on the Collateral (as
hereinafter defined) to secure the Obligations;

    WHEREAS, the amount of the Obligations secured by the Restricted Collateral
described herein shall not exceed $110,000,000, which amount was determined by
UNOVA, Inc. to be the amount of Debt (as defined in the Indenture) secured by
Restricted Collateral that is, on the date hereof, available to be incurred
under Section 1008 of the Indenture without requiring UNOVA, Inc. or its
domestic Subsidiaries to grant to the holders of the Existing Senior Notes (as
defined in the Loan Agreement) equal and ratable liens in the Restricted
Collateral; and

    NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

    1.  DEFINED TERMS.  The following terms shall have the following respective
meanings:

    "Accounts" means, with respect to a Person, any of such Person's now owned
or hereafter acquired or arising accounts, as defined in the UCC, including any
rights to payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance, and all medical
receivables.

    "Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, five percent (5%) or more of
the outstanding equity interest of such Person, except with respect to a Person
owning an equity interest in Parent, in which case such Person shall be deemed
to be an Affiliate only if owns more than fifteen percent (15%) or more of the
ownership equity interest in Parent. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by contract, or
otherwise.

    "Chattel Paper" means, as to any Person, all of such Person's now owned or
hereafter acquired chattel paper, as defined in the UCC, including electronic
chattel paper.

    "Documents" means, as to any Person, all documents as such term is defined
in the UCC, including bills of lading, warehouse receipts or other documents of
title, now owned or hereafter acquired by such Person.

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    "Enforcement Action" means, with respect to any Collateral of any Lender,
repossessing, selling, leasing or otherwise disposing of all or any part of such
Collateral, or exercising notification or collection rights with respect to all
or any portion thereof, or attempting or agreeing to do so; commencing the
enforcement with respect to such Collateral of any of the default remedies under
any of the applicable agreements or documents of such Lender, the UCC or other
applicable laws; commencing a lawsuit or an involuntary bankruptcy proceeding
against a Grantor; any Grantor's commencing a voluntary bankruptcy proceeding;
or appropriating, setting off or applying any part or all of such Collateral in
the possession of, or coming into the possession of, such Lender or its agent or
bailee, to such Lender's claim.

    "Equipment" means with respect to a Person, all of such Person's now owned
and hereafter acquired machinery, equipment, furniture, furnishings, fixtures,
and other tangible personal property (except Inventory), including embedded
software, motor vehicles with respect to which a certificate of title has been
issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all
of such types of property leased by such Person and all of such Person's rights
and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future additions
and accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.

    "General Intangibles" means, with respect to a Person, all of such Person's
now owned or hereafter acquired general intangibles, choses in action and causes
of action and all other intangible personal property of such Person of every
kind and nature (other than Accounts), including, without limitation, all
contract rights, payment intangibles, Proprietary Rights, corporate or other
business records, inventions, designs, blueprints, plans, specifications,
patents, patent applications, trademarks, service marks, trade names, trade
secrets, goodwill, copyrights, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, any funds which may become due to such
Person in connection with the termination of any employee benefit plan or any
rights thereto and any other amounts payable to such Person from any employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which such Person is
beneficiary, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Person.

    "Indenture" means the Indenture dated as of March 11, 1998 between
UNOVA, Inc. and The First National Bank of Chicago, as trustee.

    "Instruments" means, with respect to a Person, all instruments as such term
is defined in the UCC, now owned or hereafter acquired by such Person.

    "Inventory" means, with respect to a Person, all of such Person's now owned
and hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all returned
goods, raw materials, work-in-process, finished goods (including embedded
software), other materials and supplies of any kind, nature or description which
are used or consumed in the such Person's business or used in connection with
the packing, shipping, advertising, selling or finishing of such goods,
merchandise, and all documents of title or other Documents representing them.

    "Investment Property" means, with respect to a Person, all of such Person's
right, title and interest in and to any and all: (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.

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    "Lorig" shall have the meaning ascribed to that term in the Lorig Agreement.

    "Lorig Agreement" means that certain Contingent Fee Agreement by and between
Parent and Frederick A. Lorig dated as of January 27, 1999.

    "Payment Account" means each bank account established pursuant to this
Security Agreement, to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of the Agent or any
of the Grantors, as the Agent may determine, on terms acceptable to the Agent.

    "Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.

    "Proprietary Rights" means, with respect to a Person, all of such Person's
now owned and hereafter arising or acquired: licenses, franchises, permits,
patents, patent rights, copyrights, works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service mark applications, and all licenses and rights related to
any of the foregoing, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing.

    "Restricted Collateral" means (1) all capital stock issued by a Restricted
Subsidiary and pledged to the Agent, and all Debt (as defined in the Indenture)
of a Restricted Subsidiary owned by Parent or a Restricted Subsidiary, and all
of the rights and privileges of any Grantor with respect thereto, and all income
and profits thereon, and all interest, dividends and other payments and
distributions with respect thereto, (2) any Operating Property (as defined in
the Indenture) included in the Collateral and (3) all proceeds of the foregoing.

    "Restricted Intellectual Property" means those Proprietary Rights, including
the Smart Battery and Removable Hard Disc Drive Technology, each of which is of
material importance or necessary to the conduct of the business of any Grantor
or which has material economic value by virtue of existing or prospective
revenues from the licensing thereof and/or prosecution of claims for the
infringement thereof, and all accessions, products and proceeds related thereto
or arising in connection therewith, a listing of which is attached hereto as
Schedule III, as updated from time to time pursuant to the provisions of
Section 6.3 of the Loan Agreement.

    "Restricted Subsidiary" has the meaning set forth in the Indenture.

    "Smart Battery and Removable Disc Drive Technology" means the Proprietary
Rights described on Schedule IV hereto and all accessions, products and proceeds
related thereto or arising in connection therewith.

    "Supporting Obligations" means all supporting obligations as such term is
defined in the UCC.

    "Unrestricted Intellectual Property" means those Proprietary Rights that are
owned by Grantors, but are not included in the definition of Restricted
Intellectual Property, and all accessions, products and proceeds related thereto
or arising in connection therewith.

    "UCC" means the Uniform Commercial Code, as in effect from time to time, of
the State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the issue of perfection of
security interests.

    All other capitalized terms used but not otherwise defined herein have the
meanings given to them in the Loan Agreement or in Annex A thereto. All other
undefined terms contained in this Security Agreement, unless the context
indicates otherwise, have the meanings provided for by the UCC to the extent the
same are used or defined therein. This Agreement, and the rights of Agent and
Bank of

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America (as hereinafter defined), are subject to the terms of an Intercreditor
Agreement, dated as of the date hereof, between Agent and Bank of America.

    2.  GRANT OF LIEN.  

    (a) As security for all Obligations, each Grantor hereby grants to the
Agent, for the benefit of the Agent and the Lenders, a continuing security
interest in, lien on, assignment of and right of set-off against, all of the
following property and assets of such Grantor, whether now owned or existing or
hereafter acquired or arising, regardless of where located:

     (i) all Accounts;

    (ii) all Inventory;

    (iii) all contract rights;

    (iv) all Chattel Paper;

    (v) all Documents;

    (vi) all Instruments;

   (vii) all Supporting Obligations;

   (viii) all General Intangibles;

    (ix) all Equipment;

    (x) all Investment Property;

    (xi) all money, cash, cash equivalents, securities and other property of any
kind of such Grantor held directly or indirectly by the Agent or any Lender;

   (xii) all of such Grantor's deposit accounts, credits, and balances with and
other claims against the Agent or any Lender or any of their Affiliates or any
other financial institution with which such Grantor maintains deposits,
including any Payment Accounts;

   (xiii) all books, records and other property related to or referring to any
of the foregoing, including books, records, account ledgers, data processing
records, computer software and other property and General Intangibles at any
time evidencing or relating to any of the foregoing;

   (xiv) all accessions to, substitutions for and replacements, products and
proceeds of any of the foregoing, including, but not limited to, proceeds of any
insurance policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the foregoing; and

   (xv) the stock of all such Grantor's domestic Subsidiaries.

    All of the foregoing, together with the Real Estate covered by the
Mortgage(s), all equity interests in Subsidiaries pledged to the Agent and all
other property of each Grantor in which the Agent or any Lender may at any time
be granted a Lien as collateral for the Obligations, is herein collectively
referred to as the "Total Collateral". That portion of the Total Collateral
consisting of Equipment and the Real Estate covered by the Mortgages and
products and proceeds of the foregoing is herein collectively referred to as the
"Equipment and Real Estate Collateral". The Total Collateral other than the
Equipment and Real Estate Collateral together with the stock that may be pledged
to Agent pursuant to Section 3 below and any other collateral now or hereafter
pledged to Agent for the benefit of Lenders is herein collectively referred to
as the "Collateral".

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    (b) Notwithstanding the foregoing, the Collateral shall not include:

     (i) motor vehicles, the perfection of a security interest in which is
excluded from the UCC in the relevant jurisdiction;

    (ii) any asset subject to any of the following Liens to the extent the
document granting or governing such Lien validly prohibits the granting of
another Lien on such asset: (A) a Lien described in clause (c) or (i) of the
definition of Permitted Lien in the Loan Agreement; (B) a Lien described on
Schedule 6.9 of the Loan Agreement to the extent identified by the Grantors as
containing a Limitation on junior Lien's; or (C) a Lien permitted under
Subsections 7.18(c) and 7.18(e) of the Loan Agreement.

    (iii) cash and cash equivalents pledged to secure obligations, other than
the Obligations, as contemplated and permitted under the provisions of
Section 7.18 and subpart (h) of the definition of Permitted Liens in the Loan
Agreement; and

    (iv) the stock of Factory Power Company, an Ohio corporation.

    (c) Notwithstanding Section 2(a) above or any contrary provision of this
Agreement, the aggregate amount of Obligations secured by Restricted Collateral
shall not at any time exceed the result of (a) $110,000,000, minus (b) the
amount of proceeds theretofore received by the Agent as a result of the taking
of any Enforcement Action by Agent with respect to Restricted Collateral and
applied to reduce the aggregate amount of the Obligations outstanding.

    (d) The Smart Battery and Removable Hard Disc Drive Technology shall be
subject to a junior security interest as set forth herein in favor of Agent. The
Equipment and Real Estate Collateral shall be subject to a security interest
senior to the Liens in favor of Bank of America as set forth in the
Intercreditor Agreement in favor of Agent. All other of the Obligations shall be
secured by a junior security interest in the Collateral.

    3.  FOREIGN STOCK PLEDGE.  As provided in Section 7.29 of the Loan
Agreement, within sixty (60) days of the Closing Date, sixty-five percent (65%)
of the equity ownership interest of the Parent and the other Grantors in their
direct foreign Subsidiaries shall be pledged to the Agent, for the benefit of
the Agent and the Lenders, in form and substance acceptable to Agent. If the
Credit Facility of the Foreign Subsidiaries is in effect, a pledge of the stock
of the foreign Subsidiaries is required thereunder, and no Foreign Subsidiary
Credit Facility Guaranty is then in effect or required in connection with the
Credit Facility of the Foreign Subsidiaries, the Agent, at the request of the
Parent, shall be authorized to release the pledge of equity ownership interests
of the Parent and the other Borrowers in their foreign Subsidiaries.

    4.  PERFECTION AND PROTECTION OF SECURITY INTEREST.  

    (a) Each Grantor shall, at its expense, perform all steps requested by the
Agent at any time to perfect, maintain, protect, and enforce the Agent's Liens,
including: (i) executing, delivering and/or filing and recording of the
Mortgage(s), the Copyright Security Agreements, the Patent and Trademark
Agreements with respect to the Restricted Intellectual Property, applicable
stock pledge agreements and executing and filing financing or continuation
statements, and amendments thereof, in form and substance reasonably
satisfactory to the Agent with respect to the Collateral; (ii) delivering to
Bank of America, N.A. (together with its successor agents, "Bank of America"),
for the benefit of the lenders under the Revolving Credit Agreement and (for so
long as any portion of the Total Facility (as defined in the Revolving Credit
Agreement) shall remain in place) the Lenders the originals of all material
Instruments, Documents, and Chattel Paper, and all other material Collateral of
which Bank of America determines it should have physical possession in order to
perfect and protect Bank of America's security interest therein, duly pledged,
endorsed or assigned to Bank of America without restriction; (iii) delivering to
Bank of America warehouse

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receipts covering any material portion of the Collateral located in warehouses
and for which warehouse receipts are issued and certificates of title covering
any material portion of the Collateral for which certificates of title have been
issued; (iv) when an Event of Default has occurred and is continuing,
transferring Inventory to warehouses or other locations designated by Bank of
America; (v) placing notations on such Grantor's books and records to disclose
the Agent's security interest; (vi) obtaining control agreements from securities
intermediaries with respect to financial assets in the possession of securities
intermediaries; (vii) assigning and delivering to Bank of America all Supporting
Obligations, including letters of credit on which such Grantor is named
beneficiary with the written consent of the issuer thereof; and (viii) taking
such other steps as reasonably are deemed necessary or desirable by the Agent to
maintain and protect the Agent's Liens; provided, however, that any action
required to be taken, or any right afforded, in clauses (ii), (iii), (iv),
(vi) and (vii) above in favor of Bank of America shall, in the event that any of
the obligations (other than contingent obligations) of the Grantors under the
Loan Agreement shall remain outstanding after such time as the Total Facility
(as defined in the Revolving Credit Agreement) shall cease to be in effect, be
taken or afforded, as the case may be, in favor of the Agent. To the extent
permitted by applicable law, the Agent may file, without any Grantor's
signature, one or more financing statements disclosing the Agent's Liens. Each
Grantor agrees that a carbon, photographic, photostatic, or other reproduction
of this Security Agreement or of a financing statement is sufficient as a
financing statement.

    (b) If any material portion of the Collateral is at any time in the
possession or control of any warehouseman, bailee or any of such Grantor's
agents or processors, then such Grantor shall notify the Agent thereof and shall
use its best efforts to obtain a bailee letter within sixty (60) days of the
Closing Date, unless notified to the contrary by Agent, acknowledged by the
bailee that notifies such Person of the Agent's security interest in such
Collateral and instructs such Person to hold all such Collateral for the Agent's
account subject to the Agent's instructions. If at any time any material portion
of the Collateral is located in any operating facility of a Grantor that is
leased by such Grantor, then such Grantor shall use its best efforts to obtain
written landlord lien waivers or subordinations within sixty (60) days of the
Closing Date, unless notified to the contrary by Agent, in form and substance
reasonably satisfactory to the Agent, that waive or subordinate all present and
future Liens which the owner or lessor of such premises may be entitled to
assert against the Collateral. Pending receipt of such bailee letters and
landlord waivers or subordinations, Agent may establish such reserves relating
to the Collateral as Agent shall deem appropriate.

    (c) From time to time, each Grantor shall, upon the Agent's request, execute
and deliver confirmatory written instruments pledging to the Agent, for the
ratable benefit of the Agent and the Lenders, the Collateral and the Equipment,
but such Grantor's failure to do so shall not affect or limit any security
interest or any other rights of the Agent or any Lender in and to the Collateral
and the Equipment with respect to such Grantor. So long as the Loan Agreement is
in effect and until all Obligations have been fully satisfied, the Agent's Liens
shall continue in full force and effect in all Collateral.

    5.  LOCATION OF COLLATERAL.  Each Grantor represents and warrants to the
Agent and the Lenders that: (A) Schedule I is a correct and complete list of
each Grantor's chief executive office, the location of its books and records,
the locations of the Collateral and the Equipment and the locations of all of
its other places of business; and (B) Schedule I, as updated from time to time
in accordance with the updating provisions relating to schedules as described in
Section 6.3 of the Loan Agreement, correctly identifies any of such facilities
and locations that are not owned by each Grantor and sets forth the names of the
owners and lessors or sublessors of such facilities and locations. Each Grantor
covenants and agrees that it will not (a) maintain any material portion of its
Collateral or Equipment at any location other than those locations listed for
such Grantor on Schedule I, as updated from time

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to time in accordance with the updating provisions relating to schedules as
described in Section 6.3 of the Loan Agreement, or other locations provided
Agent shall have a perfected security interest in the Collateral or Equipment
located therein, or (b) change the location of its chief executive office from
the location identified in Schedule I, as updated from time to time in
accordance with the updating provisions relating to schedules as described in
Section 6.3 of the Loan Agreement, unless it gives the Agent at least thirty
(30) days' prior written notice thereof and executes any and all financing
statements and other documents that the Agent reasonably requests in connection
therewith. Without limiting the foregoing, subject to Section 4(b), each Grantor
represents that all material portions of its Inventory (other than Inventory in
transit) is, and covenants that all of its Inventory will be, located either
(a) on premises owned by such Grantor, (b) on premises leased by such Grantor,
provided that the Agent has received an executed landlord waiver from the
landlord of such premises in form and substance reasonably satisfactory to the
Agent, or (c) in a warehouse or with a bailee, provided that the Agent has
received an executed bailee letter from the applicable Person in form and
substance reasonably satisfactory to the Agent. Each Grantor further covenants
and agrees that it will not move any material portion of its Collateral or
Equipment to any location other than those locations listed for such Grantor on
Schedule I, as updated from time to time in accordance with the updating
provisions relating to schedules as described in Section 6.3 of the Loan
Agreement unless such Grantor shall first: (a) provide reasonable notice to
Agent, to include a detailed description of the location and Collateral or
Equipment to be moved, and (b) execute such financing statements and other
documents for such other actions as Agent reasonably requests to perfect its
security interest therein.

    6.  JURISDICTION OF ORGANIZATION.  Schedule II hereto identifies the
jurisdiction in which each Grantor is incorporated or organized.

    7.  TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL.  Each Grantor
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of the Collateral and Equipment is and will
continue to be owned by such Grantor free and clear of all Liens whatsoever,
except for Permitted Liens and other Liens permitted under Section 7.18 of the
Credit Agreement and in the case of the Smart Battery and Disc Drive Technology,
rights in favor of Lorig currently set forth in the Lorig Agreement and any
Liens that are now or hereafter granted to Lorig in the Smart Battery and Disc
Drive Technology to secure such rights; (b) the Agent's Liens in the Collateral
and Equipment will not be subject to any prior Lien except for those Liens
identified in clauses (a), (c), (d), (f), (g), and (i) of the definition of
Permitted Liens, Liens identified as superior to those of the Agent on
Schedule 6.9 to the Loan Agreement, Liens permitted to be superior to Liens of
the Agent pursuant to Section 7.18(c) and 7.18(e) of the Loan Agreement and
Liens in favor of Lorig to the extent described in clause (a) above; and
(c) such Grantor will use, store, and maintain the Collateral and Equipment with
all reasonable care and will use such Collateral and Equipment for lawful
purposes only.

    8.  APPRAISALS.  Whenever a Default or Event of Default exists, and at such
other times as set forth in the Loan Agreement, each Grantor shall, at its
expense and upon the Agent's request, provide the Agent with appraisals or
updates thereof of any or all of the Collateral and Equipment from an appraiser,
and prepared on a basis, satisfactory to the Agent, such appraisals and updates
to include, without limitation, information required by applicable law and
regulation and by the internal policies of the Lenders.

    9.  ACCESS AND EXAMINATION.  The Agent, accompanied by any Lender which so
elects, may upon reasonable notice and at all reasonable times during regular
business hours (and without notice at any time when a Default or Event of
Default exists and is continuing) have access to, examine, audit, make extracts
from or copies of and inspect any or all of Grantors' records, files, and books
of account and the Collateral and Equipment, and discuss the Grantors' affairs
with the Grantors' officers and management. The Grantors will deliver to the
Agent any instrument necessary for the Agent to obtain records from any service
bureau maintaining records for the Grantors. The

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Agent may, and at the direction of the Majority Lenders shall, at any time when
a Default or Event of Default exists, and at the Grantors' expense, make copies
of all of the Grantors' books and records, or require the Grantors to deliver
such copies to the Agent. The Agent may, without expense to the Agent, use such
of the Grantors' respective personnel, supplies, and Real Estate as may be
reasonably necessary for maintaining or enforcing the Agent's Liens. The Agent
shall have the right, at any reasonable time, in the Agent's name or in the name
of a nominee of the Agent, to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or
otherwise.

    10.  COLLATERAL REPORTING.  The Grantors shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) at the times specified in Section 5.2(l) of the Loan Agreement, or more
frequently if requested by the Agent, copies of all appraisals of any portion of
the Collateral; (b) upon request, copies of invoices in connection with each
Grantor's Accounts, customer statements, credit memos, remittance advices and
reports, deposit slips, shipping and delivery documents in connection with such
Grantor's Accounts and for Inventory and Equipment acquired by each Grantor,
purchase orders and invoices; (c) upon request, a statement of the balance of
each of the Intercompany Accounts; (d) such other reports as to the Collateral
of each Grantor as the Agent shall reasonably request from time to time; and
(e) with the delivery of each of the foregoing, a certificate of the Grantors
executed by an officer of the Parent on behalf of all of the Grantors certifying
as to the accuracy and completeness of the foregoing. If any of the Grantors'
records or reports of the Collateral are prepared by an accounting service or
other agent, each such Grantor hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent, for
distribution to the Lenders.

    11.  ACCOUNTS.  

    (a) Each Grantor hereby represents and warrants to the Agent and the
Lenders, with respect to such Grantor's Accounts, that: (i) each existing
Account represents, and each future Account will represent, a bona fide sale or
lease and delivery of goods by such Grantor, or rendition of services by such
Grantor, in the ordinary course of such Grantor's business (except with respect
to progress payments received in connection with certain long term contractual
agreements that such Grantor has entered into in the ordinary course of
business, but in each such case, such Grantor shall identify for the benefit of
Agent all material facts relevant to any such progress payments and contract,
all in such detail as Agent shall reasonably require); (ii) each existing
Account is, and each future Account will be, for a liquidated amount payable by
the Account Debtor thereon on the terms set forth in the invoice therefor or in
the schedule thereof delivered to the Agent, without any offset, deduction,
defense, or counterclaim except those known to such Grantor and disclosed to the
Agent and the Lenders pursuant to this Security Agreement; (iii) no payment will
be received with respect to any Account, and no credit, discount, or extension,
or agreement therefor will be granted on any Account, except as reported to the
Agent and the Lenders in accordance with this Security Agreement; (iv) each copy
of an invoice delivered to the Agent by such Grantor will be a genuine copy of
the original invoice sent to the Account Debtor named therein; and (v) all goods
described in any invoice representing a sale of goods will have been delivered
to the Account Debtor and all services of such Grantor described in each invoice
will have been performed.

    (b) None of the Grantors shall re-date any invoice or sale or make sales on
extended dating beyond that customary in such Grantor's business or extend or
modify any Account. If any Grantor becomes aware of any matter materially
adversely affecting the collectibility of any Account or the Account Debtor
therefor involving an amount greater than $1,000,000, including information
regarding the Account Debtor's creditworthiness, such Grantor will promptly so
advise the Agent.

    (c) None of the Grantors shall accept any note or other instrument (except a
check or other instrument for the immediate payment of money) with respect to
any Account without the Agent's written consent other than in the ordinary
course of business and only then if the principal balance

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of such note or other instrument, together with all other such notes and
instruments, does not exceed in the aggregate $5,000,000. If the Agent consents
to the acceptance of any such instrument, it shall be considered as evidence of
the Account and not payment thereof and such Grantor will promptly deliver such
instrument to Bank of America for the benefit of the lenders under the Revolving
Credit Agreement and (for so long as any portion of the Total Facility shall
remain in place) the Lenders, endorsed by such Grantor to Bank of America in a
manner satisfactory in form and substance to Bank of America; provided however,
that in the event that any of the obligations (other than contingent
obligations) of the Grantors under the Loan Agreement shall be outstanding after
such time as the Total Facility shall cease to be in effect, such Grantor shall
deliver such instrument to the Agent for the benefit of the Lenders and shall
endorse such instrument in a manner satisfactory to the Agent. Regardless of the
form of presentment, demand, notice of protest with respect thereto, such
Grantor shall remain liable thereon until such instrument is paid in full.

    (d) Each Grantor shall notify the Agent promptly of all disputes and claims
in excess of $1,000,000, with any Account Debtor, and agrees to settle, contest,
or adjust such dispute or claim at no expense to the Agent or any Lender. No
discount, credit or allowance shall be granted to any such Account Debtor
without the Agent's prior written consent, except for discounts, credits and
allowances made or given in the ordinary course of such Grantor's business when
no Event of Default then exists hereunder. Each Grantor shall send the Agent a
copy of each credit memorandum (other than any credit memorandum that arises as
a result of a routine internal billing error or other typographical or
administrative error) in excess of $1,000,000, as soon as issued. The Agent may
at all times when an Event of Default exists hereunder, settle or adjust
disputes and claims directly with Account Debtors for amounts and upon terms
which the Agent or the Majority Lenders, as applicable, shall consider advisable
and, in all cases, the Agent will deposit in the Grantors' account the net
amounts received by the Agent in payment of any Accounts.

    (e) If an Account Debtor returns any Inventory to any Grantor when no Event
of Default exists, then such Grantor shall promptly determine the reason for
such return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount in accordance with the Grantor's customary procedures. Each
Grantor shall immediately report to the Agent any return involving an amount in
excess of $1,000,000. Each such report shall indicate the reasons for the
returns and the locations and condition of the returned Inventory. In the event
any Account Debtor returns Inventory to any Grantor when an Event of Default
exists, such Grantor, upon the request of the Agent or Bank of America,
whichever entity holds the senior Lien with respect to such Inventory at the
time of return (the party in such position the "Senior Agent"), shall: (i) hold
such returned Inventory in trust for the Senior Agent; (ii) segregate all
returned Inventory from all of its other property; (iii) dispose of such
returned Inventory solely according to the Senior Agent's written instructions;
and (iv) not issue any credits or allowances with respect thereto without the
Senior Agent's prior written consent. All returned Inventory shall be subject to
the Agent's Liens thereon. Whenever any Inventory is returned, the related
Account shall be deemed ineligible to the extent of the amount owing by the
Account Debtor with respect to such returned Inventory and such returned
Inventory shall not be Eligible Inventory.

    12.  COLLECTION OF ACCOUNTS; PAYMENTS.  

    Pursuant to that certain Security Agreement dated the date hereof by and
among Bank of America and the Grantors (the "Bank Security Agreement"), the
Grantors have agreed, among other things, to make collection of all Accounts and
other Collateral for Bank of America, to receive all payments as Bank of
America's trustee, and immediately to deliver all payments in their original
form duly endorsed in blank into a Payment Account established for the account
of such Grantor at a Clearing Bank acceptable to Bank of America, subject to a
Blocked Account Agreement (as defined in the Revolving Credit Documents). In the
event that any of the obligations (other than contingent obligations) of the

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Grantors under the Loan Agreement shall remain outstanding after such time as
the Total Facility shall cease to be in effect, the Grantors shall instruct all
Account Debtors to make all payments directly to the address established for
such service by the Agent and the Agent shall succeed to all rights and
privileges of Bank of America relating to the Accounts pursuant to Section 12 of
the Bank Security Agreement.

    13.  INVENTORY; PERPETUAL INVENTORY.  

    Each Grantor represents and warrants to the Agent and the Lenders and agrees
with the Agent and the Lenders that all material portions of the Inventory owned
by such Grantor is and will be held for sale or lease, or to be furnished in
connection with the rendition of services, in the ordinary course of such
Grantor's business, and is and will be fit in all material respects for such
purposes. Each Grantor will keep its Inventory in good and marketable condition,
except for damaged or defective goods arising in the ordinary course of such
Grantor's business. No Grantor will, without the prior written consent of the
Agent, acquire or accept any Inventory on consignment or approval. Each Grantor
agrees that all Inventory produced by such Grantor in the United States of
America will be produced in accordance with the Federal Fair Labor Standards Act
of 1938, as amended, and all rules, regulations, and orders thereunder. Each
Grantor will conduct a physical count of the Inventory at least once per Fiscal
Year, and after and during the continuation of an Event of Default, at such
other times as the Agent requests. Each Grantor will maintain a perpetual
inventory reporting system at all times. No Grantor will, without the Agent's
written consent, sell any Inventory on a bill-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis
except in the ordinary course of each Grantor's business.

    14.  EQUIPMENT.  

    (a) Each Grantor represents and warrants to the Agent and the Lenders and
agrees with the Agent and the Lenders that all or substantially all of the
Equipment owned by such Grantor is and will be used or held for use in such
Grantor's business, and, except as otherwise contemplated or permitted herein or
in the Loan Agreement, is and will be fit in all material respects for such
purposes. Each Grantor shall keep and maintain its Equipment in good operating
condition and repair (ordinary wear and tear excepted) and shall make all
necessary replacements thereof.

    (b) No Grantor shall permit any Equipment to become a fixture with respect
to real property or to become an accession with respect to other personal
property with respect to which real or personal property the Agent does not have
a Lien. No Grantor will, without the Agent's prior written consent, alter or
remove any identifying symbol or number on any of such Grantor's Equipment
constituting Collateral.

    (c) Except as set forth in the Loan Agreement, no Grantor shall, without the
Agent's prior written consent, sell, lease as a lessor, or otherwise dispose of
any of such Grantor's Equipment.

    15.  DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER.  Each Grantor represents and
warrants to the Agent and the Lenders that (a) all Documents, Instruments, and
Chattel Paper describing, evidencing, or constituting Collateral and Equipment,
and, to the knowledge of each Grantor, all signatures and endorsements thereon
by any of the Parent or its Subsidiaries, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such Documents, Instruments, and Chattel
Paper are and will be owned by such Grantor, free and clear of all Liens other
than Permitted Liens and other Liens not prohibited by the Loan Agreement.

    16.  RIGHT TO CURE.  The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of any
Grantor hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral and Equipment or
the Agent's Liens therein, and which such Grantor fails to pay or do, including
payment of any judgment against such Grantor, any insurance premium, any
warehouse charge, any finishing or processing charge, any landlord's or bailee's
claim, and any other Lien upon or with respect to the

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Collateral and Equipment. All payments that the Agent makes under this
Section 16 and all out-of-pocket costs and expenses that the Agent pays or
incurs in connection with any action taken by it hereunder shall be paid by the
Grantors within two (2) Business Days following demand therefor by the Agent or
the applicable Lender. Any payment made or other action taken by the Agent under
this Section 16 shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed thereafter as herein provided.

    17.  POWER OF ATTORNEY.  Each Grantor as to itself, hereby appoints the
Agent and the Agent's designee as such Grantor's attorney, with power: (a) to
endorse such Grantor's name on any checks, notes, acceptances, money orders, or
other forms of payment or security that come into the Agent's or any Lender's
possession; (b) to sign such Grantor's name on any invoice, bill of lading,
warehouse receipt or other negotiable or non-negotiable Document constituting
Collateral, on drafts against customers, on assignments of Accounts, on notices
of assignment, financing statements and other public records and to file any
such financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) so long as any
Event of Default has occurred and is continuing, to notify the post office
authorities to change the address for delivery of such Grantor's mail to an
address designated by the Agent and to receive, open and dispose of all mail
addressed to such Grantor; (d) to send requests for verification of Accounts to
customers or Account Debtors; (e) subject to the provisions of the Intercreditor
Agreement to complete in such Grantor's name or the Agent's name, any order,
sale or transaction, obtain the necessary Documents in connection therewith, and
collect the proceeds thereof; (f) to clear Inventory through customs in such
Grantor's name, the Agent's name or the name of the Agent's designee, and to
sign and deliver to customs officials powers of attorney in such Grantor's name
for such purpose; and (g) to do all things necessary to carry out the Loan
Agreement and this Security Agreement. Each Grantor ratifies and approves all
acts of such attorney. None of the Lenders or the Agent nor their attorneys will
be liable for any acts or omissions or for any error of judgment or mistake of
fact or law except for their gross negligence or willful misconduct. This power,
being coupled with an interest, is irrevocable until the Loan Agreement has been
terminated and the Obligations have been fully satisfied.

    18.  THE AGENT'S AND LENDER'S RIGHTS, DUTIES AND LIABILITIES.  

    (a) Each Grantor assumes all responsibility and liability arising from or
relating to the use, sale or other disposition of the Collateral, except for
such liability resulting from the gross negligence or willful misconduct of the
Agent or any Lender. The Obligations shall not be affected by any failure of the
Agent or any Lender to take any steps to perfect the Agent's Liens or to collect
or realize upon the Collateral, nor shall loss of or damage to the Collateral or
Equipment release any Grantor from any of the Obligations. Following the
occurrence and during the continuation of an Event of Default, the Agent may
(but shall not be required to), and at the direction of the Majority Lenders
shall, without notice to or consent from any Grantor, sue upon or otherwise
collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and take or omit
to take any other action with respect to the Collateral and Equipment, any
security therefor, any agreement relating thereto, any insurance applicable
thereto, or any Person liable directly or indirectly in connection with any of
the foregoing, without discharging or otherwise affecting the liability of any
Grantor for the Obligations or under the Loan Agreement or any other agreement
now or hereafter existing between the Agent and/or any Lender and any Grantor.

    (b) It is expressly agreed by each Grantor that, anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of its
contracts and each of its licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Neither Agent nor any
Lender shall have any obligation or liability under any contract or license by
reason of or arising out of this Security Agreement or the granting herein of a
Lien thereon or the receipt by Agent or any Lender of any payment relating to
any contract or

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license pursuant hereto. Neither Agent nor any Lender shall be required or
obligated in any manner to perform or fulfill any of the obligations of any
Grantor under or pursuant to any contract or license, or to make any payment, or
to make any inquiry as to the nature or the sufficiency of any payment received
by it or the sufficiency of any performance by any party under any contract or
license, or to present or file any claims, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

    (c) Bank of America or Agent, whichever shall hold the senior Lien with
respect to any Collateral at any time after a Default or Event of Default (the
entity in such position the "Senior Lienholder"), may at any time after a
Default or Event of Default shall have occurred and be continuing, without prior
notice to any Grantor, notify Account Debtors, parties to the Contracts and
obligors in respect of Instruments and Chattel Paper, that the Accounts and the
right, title and interest of each Grantor in and under such Contracts,
Instruments and Chattel Paper have been assigned to Senior Lienholder, and that
payments shall be made directly to Senior Lienholder, for itself and the benefit
of Lenders or the lenders under the Revolving Credit Agreement, as applicable.
Upon the request of Senior Lienholder during the existence of an Event of
Default, each Grantor shall so notify Account Debtors, parties to Contracts and
obligors in respect of Instruments and Chattel Paper.

    (d) Agent may at any time in Agent's own name or in the name of any Grantor
communicate with Account Debtors, parties to Contracts, obligors in respect of
Instruments and obligors in respect of Chattel Paper to verify with such
Persons, to Agent's satisfaction, the existence, amount and terms of any such
Accounts, Contracts, Instruments or Chattel Paper. If a Default or Event of
Default shall have occurred and be continuing, each Grantor, at its own expense,
shall cause the independent certified public accountants then engaged by such
Grantor to prepare and deliver to Agent and each Lender at any time and from
time to time promptly upon Agent's request the following reports with respect to
such Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as
Agent may request. Each Grantor, at its own expense, shall deliver to Agent the
results of each physical verification, if any, which such Grantor may in its
discretion have made, or caused any other Person to have made on its behalf, of
all or any portion of its Inventory.

    19.  PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.  

    (a) To the best knowledge of such Grantor, no Grantor has any interest in,
or title to, any Patent, Trademark or Copyright except as set forth in
Schedule 6.12 to the Loan Agreement, as updated from time to time. This Security
Agreement is effective to create a valid and continuing Lien on and, upon filing
of the Copyright Security Agreement with the United States Copyright Office and
filing of the Patent and Trademark Agreements with the United States Patent and
Trademark Office, perfected Liens in favor of Agent on all of each Grantor's
patents, trademarks and copyrights listed thereon and such perfected Liens are
enforceable as such as against any and all creditors of and purchasers from such
Grantor. Upon filing of the Copyright Security Agreements with the United States
Copyright Office and filing of the Patent and Trademark Agreements with the
United States Patent and Trademark Office and the filing of appropriate
financing statements, all action necessary or desirable to protect and perfect
Agent's Lien on any Grantor's patents, trademarks or copyrights shall have been
duly taken, except for the Unrestricted Intellectual Property.

    (b) Each Grantor shall notify Agent promptly after any Responsible Officer
becomes aware or has reason to know that any application or registration
relating to any patent, trademark or copyright (now or hereafter existing),
other than with respect to the Unrestricted Intellectual Property, may become
abandoned or dedicated, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court)

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regarding such Grantor's ownership of any patent, trademark or copyright, its
right to register the same, or to keep and maintain the same, other than with
respect to the Unrestricted Intellectual Property.

    (c) In no event shall any Grantor, either directly or through any agent,
employee, licensee or designee, file an application for the registration of any
patent, trademark or copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any instance in which a Responsible Officer is aware of such application filing
without giving Agent notice at Agent's request thereof, and, upon request of
Agent, such Grantor shall execute and deliver any and all Patent Security
Agreements, Copyright Security Agreements or Trademark Security Agreements as
Agent may request to evidence Agent's Lien on such patent, trademark or
copyright, and the General Intangibles of such Grantor relating thereto or
represented thereby.

    (d) Each Grantor shall take all reasonable actions necessary or requested by
Agent to maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of the patents, trademarks
and copyrights (now or hereafter existing), other than with respect to the
Unrestricted Intellectual Property, including the filing of applications for
renewal, affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings, except with respect to the
Unrestricted Intellectual Property, which Grantors may, in their discretion to
the extent consistent with commercially reasonable business practices and while
no Default or Event of Default exists, abandon or cancel or allow to lapse or
terminate.

    20.  INDEMNIFICATION.  In any suit, proceeding or action brought by Agent or
any Lender relating to any Account, Chattel Paper, Contract, Document, General
Intangible or Instrument for any sum owing thereunder or to enforce any
provision of any Account, Chattel Paper, Contract, Document, General Intangible
or Instrument, each Grantor will save, indemnify and keep Agent and Lenders
harmless from and against any loss or damage (including reasonable attorneys'
fees and the reasonable allocated costs of internal counsel) suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder and arising out of a breach by any Grantor
of any obligation thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to, or in favor of, such obligor or its
successors from any Grantor, except in the case of Agent or any Lender, to the
extent such expense, loss, or damage is attributable solely to the gross
negligence or willful misconduct of Agent or such Lender as finally determined
by a court of competent jurisdiction. For purposes of this Security Agreement,
reasonable attorneys' fees incurred after the Closing Date and while no Default
or Event of Default exists shall mean reasonable fees and expenses of one law
firm acting on behalf of the Agent. At any other time after the Closing Date and
while a Default or an Event of Default exists, reasonable attorneys' fees for
purposes of this paragraph shall mean reasonable fees and expenses of one law
firm acting on behalf of the Agent. All such obligations of any Grantor shall be
and remain enforceable against and only against such Grantor and shall not be
enforceable against Agent or any Lender.

    21.  JOINT AND SEVERAL STATUS.  Each grant of a security interest, lien,
agreement, consent, warranty, representation or obligation of the Grantors
herein shall be deemed to be made or to have been made by the Grantors on a
joint and several basis.

    22.  ADDITIONAL RIGHTS OF CONTRIBUTION.  Each Grantor hereby agrees that to
the extent that any individual Grantor or entity obligated hereunder shall have
paid an amount hereunder, granted a security interest hereunder in the
Collateral or in the Equipment pursuant to this Agreement which would, but for
this provision, result in rendering such Grantor or entity insolvent for
purposes of state or federal fraudulent conveyance laws, such Grantor shall be
entitled to seek and receive contribution from and against any other Grantor
hereunder to the extent such contribution would not render such other Grantor
insolvent under such state or federal fraudulent conveyance laws. The provisions
of this Section 22 shall in no respect limit the obligations and liabilities of
any Grantor to

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any of Agent and Lenders and each Grantor shall remain liable to Agent and
Lenders for the full amount of such Grantor's Obligations hereunder

    23.  LIMITATION ON LIENS ON COLLATERAL.  No Grantor will create, permit or
suffer to exist, and will defend the Collateral and Equipment against, and take
such other action as is necessary to remove, any Lien on the Collateral and
Equipment except Permitted Liens and other Liens not prohibited by the Loan
Agreement, and will defend the right, title and interest of Agent and Lenders in
and to any of such Grantor's rights under the Collateral and Equipment against
the claims and demands of all Persons whomsoever, except Permitted Liens and
other Liens not prohibited by the Loan Agreement.

    24.  NOTICE REGARDING COLLATERAL. Each Grantor will advise Agent promptly
after any Responsible Officer becomes aware, in reasonable detail, (i) of any
Lien (other than Permitted Liens) or claim made or asserted against any of the
Collateral and Equipment, and (ii) of the occurrence of any other event which
could reasonably be expected to have a Material Adverse Effect.

    25.  REMEDIES; RIGHTS UPON DEFAULT.  

    (a) In addition to all other rights and remedies granted to it under this
Security Agreement, the Loan Agreement, the other Loan Documents and under any
other instrument or agreement securing, evidencing or relating to any of the
Obligations, and subject to the terms of the Intercreditor Agreement, if any
Event of Default shall have occurred and be continuing, Agent may exercise all
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, each Grantor expressly agrees that in any such
event Agent, without demand of performance or other demand, advertisement or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon such Grantor or any other Person (all and
each of which demands, advertisements and notices are hereby expressly waived to
the maximum extent permitted by the UCC and other applicable law), may forthwith
enter upon the premises of such Grantor where any Collateral or Equipment is
located through self-help, without judicial process, without first obtaining a
final judgment or giving such Grantor or any other Person notice and opportunity
for a hearing on Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral and Equipment, or any part
thereof, and may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral or
Equipment (or contract to do so), or any part thereof, in one or more parcels at
a public or private sale or sales, at any exchange at such prices as it may deem
acceptable, for cash or on credit or for future delivery without assumption of
any credit risk. Agent or any Lender shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase for the benefit of Agent and Lenders, the whole or any part
of said Collateral or Equipment so sold, free of any right or equity of
redemption, which equity of redemption each Grantor hereby releases. Such sales
may be adjourned and continued from time to time with or without notice. Agent
shall have the right to conduct such sales on any Grantor's premises or
elsewhere and shall have the right to use any Grantor's premises without charge
for such time or times as Agent deems necessary or advisable.

    (b) Each Grantor further agrees, at Agent's request in connection with the
Agent's exercise of its remedies hereunder, to assemble the Collateral and
Equipment and make it available to Agent at places which Agent shall select,
whether at such Grantor's premises or elsewhere. Until Agent is able to effect a
sale, lease, or other disposition of Collateral or Equipment in connection with
Agent's exercise of its remedies hereunder, Agent shall have the right to hold
or use Collateral and Equipment, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral and Equipment or its
value or for any other purpose deemed appropriate by Agent. Agent shall have no
obligation to any Grantor to maintain or preserve the rights of such Grantor as
against third parties with respect to Collateral and Equipment while Collateral
and Equipment is in the possession of Agent. Agent may, if it so elects, seek
the appointment of a receiver or keeper to take possession of Collateral and
Equipment and to

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enforce any of Agent's remedies (for the benefit of Agent and Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment. Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Obligations as
provided in the Loan Agreement, and only after so paying over such net proceeds,
and after the payment by Agent of any other amount required by any provision of
law, shall Agent account for the surplus, if any, to the Grantors. To the
maximum extent permitted by applicable law, each Grantor waives all claims,
damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral or Equipment except such as
arise solely out of the gross negligence or willful misconduct of Agent or such
Lender as finally determined by a court of competent jurisdiction. Each Grantor
agrees that ten (10) days prior notice by Agent of the time and place of any
public sale or of the time after which a private sale may take place is
reasonable notification of such matters. Each Grantor shall remain jointly and
severally liable for any deficiency if the proceeds of any sale or disposition
of the Collateral or Equipment are insufficient to pay all Obligations,
including any attorneys' fees or other expenses incurred by Agent or any Lender
to collect such deficiency.

    (c) Except as otherwise specifically provided herein, each Grantor hereby
waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral or Equipment.

    26.  GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.  For the purpose of
enabling Agent to exercise rights and remedies under Section 25 hereof
(including, without limiting the terms of Section 25 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral or Equipment) at such time as
Agent shall be lawfully entitled to exercise such rights and remedies during the
continuance of an Event of Default, each Grantor hereby grants to Agent, for the
benefit of Agent and Lenders, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use,
license or sublicense any Proprietary Rights now owned or hereafter acquired by
such Grantor, and wherever the same may be located, and including in such
license access to all media in which any of the licensed items may be recorded
or stored and to all computer software and programs used for the compilation or
printout thereof, in each case, to the extent not prohibited by licenses,
contracts and other agreements related thereto that are known to Agent in
advance based on receipt of notice from Grantors (it being understood and agreed
specifically that Agent shall be deemed to be aware of customary limitations
existing on commercial software and programs, Grantors shall advise Agent if any
non-customary limitations exist prior to the Closing Date and no Grantor shall
enter into any such limiting license, contract or other agreement without the
consent of the Agent other than customary limitations on commercial software and
programs. Any license, sale or other disposition of any Proprietary Rights by
Agent in full or partial satisfaction of the Obligations shall either be on
commercially reasonable terms or on terms permitted by the provisions of the UCC
or other statutes governing such license, sale or disposition. Agent shall apply
the net proceeds of any such license, sale or other disposition to the
Obligations as provided herein and in the Loan Agreement or, if applicable, the
Intercreditor Agreement, and only thereafter and after paying any other amount
required by any applicable provision of law, shall Agent account for the
surplus, if any, to the Grantors.

    27.  LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL AND
EQUIPMENT.  Agent and each Lender shall use reasonable care with respect to the
Collateral and Equipment in its possession or under its control. Neither Agent
nor any Lender shall have any other duty as to any Collateral or Equipment in
its possession or control or in the possession or control of any agent or
nominee of Agent or such Lender, or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto.

    28.  MISCELLANEOUS.  

    (a)  Reinstatement.  This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Grantor for liquidation or

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reorganization, should any Grantor become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

    (b)  Notices.  Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give and serve upon any
other party any communication with respect to this Security Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be given in the manner, and deemed received, as
provided for in the Loan Agreement.

    (c)  Severability.  Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Loan Agreement and the other Loan Documents which, taken together, set
forth the complete understanding and agreement of Agent, Lenders and each
Grantor with respect to the matters referred to herein and therein.

    (d)  No Waiver; Cumulative Remedies.  Neither Agent nor any Lender shall by
any act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder, and no waiver shall be valid unless in writing, signed by
Agent and then only to the extent therein set forth. A waiver by Agent of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Agent would otherwise have had on any future occasion.
No failure to exercise nor any delay in exercising on the part of Agent or any
Lender, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly executed by Agent and each
Grantor.

    (e)  Limitation by Law.  All rights, remedies and powers provided in this
Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Security Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.

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    (f)  Termination of this Security Agreement.  Subject to Section 28(a)
hereof, this Security Agreement shall terminate upon the payment in full of all
other Obligations (other than indemnification Obligations as to which no claim
has been asserted).

    (g)  Successors and Assigns.  This Security Agreement and all obligations of
each Grantor hereunder shall be binding upon the successors and assigns of each
Grantor (including any debtor-in-possession on behalf of each Grantor) and
shall, together with the rights and remedies of Agent, for the benefit of Agent
and Lenders, hereunder, inure to the benefit of Agent and Lenders, all future
holders of any instrument evidencing any of the Obligations and their respective
successors and assigns. No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Obligations or any portion thereof or interest therein shall in
any manner affect the Lien granted to Agent, for the benefit of Agent and
Lenders, hereunder. No Grantor may assign, sell, hypothecate or otherwise
transfer any interest in or obligation under this Security Agreement.

    (h)  Counterparts.  This Security Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one and the same agreement.

    (i)  Governing Law.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE,
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH GRANTOR HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN LOS ANGELES
COUNTY, CITY OF LOS ANGELES, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTORS, AGENT AND LENDERS PERTAINING
TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF LOS
ANGELES COUNTY, CITY OF LOS ANGELES, AND, PROVIDED, FURTHER, NOTHING IN THIS
SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH
IN SECTION 13.8 OF THE LOAN AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF

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ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.

    (j)  Waiver of Jury Trial.  BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND
GRANTORS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

    (k)  Section Titles.  The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

    (l)  No Strict Construction.  The parties hereto have participated jointly
in the negotiation and drafting of this Security Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.

    (m)  Advice of Counsel.  Each of the parties represents to each other party
hereto that it has discussed this Security Agreement and, specifically, the
provisions of Section 28(i) and Section 28(j), with its counsel.

    (n)  Benefit of Lenders.  All Liens granted or contemplated hereby shall be
for the benefit of Agent and Lenders, and all proceeds or payments realized from
Collateral or Equipment in accordance herewith shall be applied to the
Obligations in accordance with the terms of the Loan Agreement.

(SIGNATURE PAGE FOLLOWS)

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    IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.

    GRANTORS:
 
 
UNOVA, INC.
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer
 
 
UNOVA INDUSTRIAL
AUTOMATION SYSTEMS, INC.
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer
 
 
INTERMEC TECHNOLOGIES CORPORATION
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer
 
 
R & B MACHINE TOOL COMPANY
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer
 
 
J.S. MCNAMARA COMPANY
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer

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M M & E, INC.
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer
 
 
INTERMEC IP CORP.
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer
 
 
UNOVA IP CORP.
 
 
By:
 
/s/ ELMER C. HULL, JR.   

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Elmer C. Hull, Jr.
Vice President and Treasurer
 
 
AGENT:
 
 
SPECIAL VALUE INVESTMENT MANAGEMENT, LLC
 
 
By:
 
/s/ MARK HOLDSWORTH           

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    Name:   Mark Holdsworth        

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    Title:   Member        

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SECURITY AGREEMENT
W I T N E S S E T H
(SIGNATURE PAGE FOLLOWS)