<PAGE>

                                                                   EXHIBIT 10.32

                           EMPLOYEE BENEFITS AGREEMENT

EMPLOYEE BENEFITS AGREEMENT (the "Agreement") dated as of October 31, 1997 by
and between WESTERN ATLAS Inc., a Delaware corporation ("WESTERN ATLAS") and
UNOVA, Inc., a Delaware corporation ("UNOVA"), which, as of the date hereof, is
a direct, wholly-owned subsidiary of WESTERN ATLAS.

WHEREAS, the Board of Directors of WESTERN ATLAS has decided to distribute all
of the stock of UNOVA to the shareholders of WESTERN ATLAS in a transaction
intended to qualify under Section 355 of the Code (the "Distribution");

WHEREAS, Western Atlas and UNOVA are entering into a Distribution and Indemnity
Agreement (the "Distribution Agreement") which, among other things, together
with the annexes to the Distribution Agreement, sets forth the principal
corporate transactions required to effect the Distribution and sets forth other
agreements that will govern certain other matters following the Distribution;
and

WHEREAS, in connection with the Distribution, Western Atlas and UNOVA desire to
provide for the allocation of assets and liabilities and other matters relating
to employee benefit plans and compensation arrangements;

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, Western Atlas and UNOVA agree as follows:

Section 1. DEFINITIONS.

Terms used but not defined in this Agreement shall have the meanings set forth
in the Distribution Agreement. As used in this Agreement the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the term defined):

AFFILIATE: with respect to a Person, any Person controlled by, controlling or
under common control with such Person.

BENEFIT PLAN: any Plan, existing on or prior to the Distribution Date

<PAGE>

                                                                          Page 2

which was established by any member of the Western Atlas Group or the UNOVA
Group, or any predecessor or Affiliate of any of the foregoing, to which any
member of the Western Atlas Group or the UNOVA Group contributes, has
contributed, is required to contribute or has been required to contribute, or
under which any employee, former employee, director or former director of any
member of the Western Atlas Group or the UNOVA Group or any beneficiary thereof
is covered, is eligible for coverage or has benefits rights.

CODE: the Internal Revenue Code of 1986, as amended.

CURRENT PLAN YEAR: the plan year during which the Distribution Date occurs.

DISTRIBUTION DATE: the date on which the Distribution is effected.

ERISA: the Employee Retirement Income Security Act of 1974, as amended.

EXISTING RETIREMENT PLANS: the Western Atlas Inc. Retirement Plan, the Landis
Tool Pension Plan and the Retirement Plan of the von Gal Operations of Western
Atlas Inc.

GROUP: the Western Atlas Group or the UNOVA Group.

LIABILITY: any debt, liability or obligation, whether absolute or contingent,
matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever arising, and whether or not the same would properly be
reflected on a balance sheet, and all costs and expenses related thereto.

NONQUALIFIED PLAN: any Plan that provides retirement benefits and is not
intended to qualify under Section 401(a) of the Code.

PERSON: an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization or a government or
any department or agency thereof.

PLAN: any bonus, incentive compensation, deferred compensation, pension, profit
sharing, retirement, stock option, stock purchase, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff, vacation, day or
dependent care, legal services, cafeteria, life, health (including medical,
dental and vision care), accident, disability, severance, pay in lieu of notice,
separation, workers' compensation, travel or other employee benefit

<PAGE>

                                                                          Page 3

plan, practice, policy or arrangement of any kind (including, but not limited
to, any "employee benefit plan" (within the meaning of Section 3(3) of ERISA)).

PRIOR PLAN YEAR: to the extent applicable with respect to any Plan, any plan
year that ended on or prior to the Distribution Date.

QUALIFIED PLAN: a Plan which is an employee benefit pension plan (within the
meaning of Section 3(2) of ERISA) and which is intended to qualify under Section
401(a) of the Code.

SUBSIDIARY: a corporation more than 50% of the voting power of whose outstanding
voting securities are owned directly or indirectly by another specified
corporation.

UNOVA COMMON STOCK: the Common Stock, par value $.01 per share, of UNOVA.

UNOVA-ONLY DIRECTOR: any director of UNOVA immediately after the Distribution
Date who was a director of Western Atlas immediately prior to the Distribution
Date, but who ceases to be a director of Western Atlas in connection with the
Distribution.

UNOVA EMPLOYEE: any individual who immediately after the Distribution Date is an
officer or employee of the UNOVA Group.

UNOVA FORMER EMPLOYEE: any terminated employee of Western Atlas who was, as of
such employee's termination of employment, principally employed (i) in the
business which will be conducted by the UNOVA Group, (ii) at the corporate
headquarters of Western Atlas or (iii) in one of the "UNOVA Discontinued
Operations" as such term is defined in Schedule B of the Distribution Agreement,
and any beneficiary or dependent of any such terminated employee.

UNOVA GROUP: UNOVA and the UNOVA Subsidiaries and Affiliates.

UNOVA INC. PENSION PLAN: the Western Atlas Inc. Retirement Plan assumed by UNOVA
on or prior to the Distribution Date and renamed the UNOVA Inc. Pension Plan.

UNOVA OPTION PLAN: the UNOVA 1997 Stock Incentive Plan.

UNOVA PARTICIPANT: any individual, with respect to a particular Plan maintained
by the UNOVA Group or the Western Atlas Group, who (i) is a UNOVA Employee and
who is eligible to participate in such Plan, (ii) at

<PAGE>

                                                                          Page 4

any time after the Distribution Date is or becomes an officer or employee of any
member of the UNOVA Group and is eligible to participate in such Plan or (iii)
is a beneficiary or dependent of any individual described in clause (i) or (ii).

UNOVA SUBSIDIARIES: any direct or indirect Subsidiary of UNOVA at or after the
Distribution.

WELFARE PLAN: any Plan, other than a Qualified Plan, which provides medical,
health, disability, accident, life insurance, death, dental or other welfare
benefits, including any post-employment benefits or retiree medical, life
insurance or other such benefits.

WESTERN ATLAS BONUS PLAN: the Western Atlas Inc. 1995 Incentive Compensation
Plan and the Western Atlas Inc. Individual Performance Award Plan, and any other
cash incentive plan in which both UNOVA Employees and Western Atlas Employees
participated.

WESTERN ATLAS EMPLOYEE: any individual who immediately after the Distribution
Date is an officer or employee of a member of the Western Atlas Group.

WESTERN ATLAS FORMER EMPLOYEE: any terminated employee of Western Atlas other
than a UNOVA Former Employee.

WESTERN ATLAS FSSP: the Western Atlas Financial Security and Savings Program.

WESTERN ATLAS GROUP: Western Atlas and the Subsidiaries and Affiliates of
Western Atlas, other than UNOVA and the UNOVA Subsidiaries and Affiliates.

WESTERN ATLAS INDEMNITEE: each member of the Western Atlas Group and each of
their respective directors, officers, employees and agents (but only in their
capacities as such) and each of the heirs, executors, successors and assigns of
any of the foregoing.

WESTERN ATLAS MISCELLANEOUS PLANS: any Benefit Plan, other than any Qualified
Plan, Nonqualified Plan, Welfare Plan, Western Atlas Bonus Plan or Western Atlas
Stock Option Plan.

WESTERN ATLAS NONQUALIFIED PLANS: the Supplemental Retirement Agreement between
Western Atlas Inc. and Alton J. Brann (dated March 17, 1994), the Western Atlas
Inc. Restoration Plan, the Western Atlas Inc. Supplemental Executive Retirement
Plan and the Western Atlas Inc.

<PAGE>

                                                                          Page 5

Deferred Compensation Plan for Directors.

WESTERN ATLAS OPTION: an option to purchase shares of Western Atlas Common Stock
granted pursuant to a Western Atlas Stock Option Plan or assumed by Western
Atlas under Plans of Norand Corporation.

WESTERN ATLAS PARTICIPANT: any individual who is a participant in any Benefit
Plan and is not a UNOVA Participant or UNOVA Former Employee, and any
beneficiary or dependent of such individual.

WESTERN ATLAS STOCK OPTION PLANS: the Western Atlas Inc. Director Stock Option
Plan and the Western Atlas Inc. 1993 Stock Incentive Plan.

Section 2. OFFERS OF EMPLOYMENT; ASSUMPTION OF EMPLOYMENT, SEVERANCE AND
CONSULTING AGREEMENTS.

(a) On or prior to the Distribution Date, the UNOVA Group shall offer to employ,
to the extent required in this Section 2(a), each employee employed by the
Western Atlas Group who is principally employed by Western Atlas in connection
with the Western Atlas industrial automation systems businesses which will be
conducted by the UNOVA Group following the Distribution and each Western Atlas
corporate headquarters employee, except as may otherwise be agreed upon by
Western Atlas and UNOVA with respect to any particular Western Atlas corporate
headquarters employees. The employees to be offered employment by the UNOVA
Group shall include all active and inactive employees of such businesses,
including all employees laid-off, disabled or on leave of absence, unless their
employment with the Western Atlas Group has been terminated. The UNOVA Group is
not obligated to employ any such employees of the Western Atlas Group who
decline employment with the UNOVA Group, and Western Atlas shall not be
obligated to continue the employment of such employees.

(b) Western Atlas and UNOVA agree that with respect to individuals who, in
connection with the Distribution, cease to be employees of the Western Atlas
Group and become employees of the UNOVA Group, such cessation shall not be
deemed a severance of employment from either Group for purposes of any Plan or
agreement that provides for the payment of severance, salary continuation or
similar benefits or stock repurchase rights and, in connection with the
Distribution, if and to the extent appropriate, Western Atlas and UNOVA shall
use their best efforts (without payment of monetary compensation) to obtain
waivers

<PAGE>

                                                                          Page 6

from individuals against any such assertion.

(c) The UNOVA Group shall assume and be solely responsible for, and shall
indemnify the Western Atlas Group against, all liabilities and obligations
whatsoever in connection with claims made by or on behalf of UNOVA Employees or
UNOVA Former Employees in respect of severance pay, salary continuation and
similar obligations relating to the termination or alleged termination of any
such person's employment either before, on or after the Distribution Date.

Section 3. CASH BONUS PLANS.

(a) Western Atlas shall be responsible for the payment of all Liabilities for
benefits due and payable but unpaid as of and through the Distribution Date
under each Western Atlas Bonus Plan with respect to any Prior Plan Year (other
than the Current Plan Year), other than with respect to benefits due and payable
to UNOVA Participants or UNOVA Former Employees.

(b) Except as provided in paragraph (c) below, under each Western Atlas Bonus
Plan, the UNOVA Group shall be responsible for the payment of all Liabilities
for benefits to UNOVA Participants and UNOVA Former Employees due and payable
after the Distribution Date or due and payable but unpaid as of and through the
Distribution Date, including the portions of awards made prior to the
Distribution Date which are not payable prior to the Distribution Date.

(c) Prior to the Distribution Date, Western Atlas shall determine 1997 annual
bonus awards under the Western Atlas Bonus Plans for UNOVA Employees who are
Western Atlas corporate headquarters employees. Such awards shall be pro rated
based upon the portion of the 1997 bonus year which had expired as of the
Distribution Date. Western Atlas shall pay a portion of the cash bonus prior to
the Distribution Date (the bonus amount that is up to 50% of the employee's base
salary earned for 1997 prior to the Distribution Date), and UNOVA shall pay the
balance of the bonus following the Distribution Date in installments pursuant to
the terms of the Western Atlas Bonus Plans.

(d) Following the end of 1997, UNOVA shall determine 1997 annual bonus awards
for UNOVA Employees who were not Western Atlas corporate headquarters employees,
and shall make such payments to such UNOVA Employees.

(e) For purposes of the Western Atlas Bonus Plans, individuals who, in

<PAGE>

                                                                          Page 7

connection with the Distribution, cease to be employees of Western Atlas and
become UNOVA Employees shall not be deemed to have terminated employment under
such Plans as a result of becoming UNOVA Employees for purposes of receiving
installments of prior year "Final Awards" under the Western Atlas Bonus Plans.
To the extent applicable, for purposes of receiving payments of installments of
prior year "Final Awards" under the Western Atlas Bonus Plans, UNOVA Employees
must at the time such payment is due (i) be in the active employ of UNOVA or a
Subsidiary or Affiliate of UNOVA, (ii) have terminated employment with UNOVA by
reason of death, or "Disability" or "Retirement" (as defined in the UNOVA Option
Plan) or (iii) be on an "Approved Leave of Absence" (as determined by the UNOVA
Compensation Committee or, prior to the Distribution, by the Western Atlas
Compensation Committee but including, without limitation, a leave of absence for
purposes of service in the Armed Services of the United States).

Section 4. STOCK OPTIONS.

Western Atlas shall take all action necessary to amend (if necessary), or
otherwise provide for adjustments of outstanding awards under, the Western Atlas
Stock Option Plan, so that each outstanding Western Atlas Option will be
adjusted by (i) multiplying the number of shares of Western Atlas Common Stock
subject to the option by the Adjustment Factor and (ii) dividing the exercise
price per share of the option by the Adjustment Factor. For these purposes, the
"Adjustment Factor" is defined as the quotient obtained by dividing (x) the
Average Market Price of the Western Atlas Common Stock plus the Average Market
Price of the UNOVA Common Stock by (y) the Average Market Price of the Western
Atlas Common Stock. The "Average Market Price" of Western Atlas Common Stock or
UNOVA Common Stock, as the case may be, is defined to be the average of the high
and low daily prices of such security as reported on the NYSE Composite Tape
(or, if not listed on such exchange, on any other national securities exchange
on which the Western Atlas Common Stock or the UNOVA Common Stock is listed or
on NASDAQ) on the sixth through tenth trading days, inclusive, following the
Distribution Date. Each Western Atlas Option held by a UNOVA Employee who, in
(a) connection with the Distribution, ceases to be a Western Atlas Employee and
becomes a UNOVA Employee, shall be amended to provide that (i) service with
UNOVA shall be deemed continuous service with Western Atlas for purposes of
vesting, exercisability and the duration of such Western Atlas Option and (ii)
to avoid the potential loss of the opportunity to exercise such Western Atlas
Option following a "Change in Control" of UNOVA (as defined in the UNOVA Option
Plan), such Western Atlas Option

<PAGE>

                                                                          Page 8

held by UNOVA Employees shall immediately vest and become exercisable upon a
Change in Control of UNOVA. Each Western Atlas Option held by a UNOVA-only
Director shall be vested and exercisable in full on the Distribution Date, and
each such Western Atlas Option shall remain exercisable until the later of (A)
ten years following the date of grant of such option by Western Atlas and (B)
three years following the first to occur of the date of retirement or
resignation of the UNOVA-only Director as a director of UNOVA (or the failure of
such UNOVA-only Director to be re-elected as a director of UNOVA), the
UNOVA-only Director's total or permanent disability or his death.

Section 5. QUALIFIED PLANS.

(a) Effective on or prior to the Distribution Date, UNOVA shall assume
sponsorship of the Existing Retirement Plans. The Western Atlas Inc. Retirement
Plan shall be renamed the UNOVA, Inc. Pension Plan. The other two Existing
Retirement Plans will remain as frozen plans with no further benefit accruals
thereunder. The UNOVA, Inc. Pension Plan shall continue to provide benefits for
all individuals who, immediately prior to the Distribution Date, were
participants in the Western Atlas Inc. Retirement Plan. UNOVA agrees that each
such participant shall be, to the extent applicable, entitled, for all purposes
under the UNOVA, Inc. Pension Plan (including, without limitation, eligibility,
vesting and benefit accrual), to be credited with the term of service credited
to such participant as of the Distribution Date under the terms of the Western
Atlas Inc. Retirement Plan as if such service had been rendered to UNOVA and had
originally been credited to such participant under the UNOVA, Inc. Pension Plan
and shall have the same accrued benefit under the UNOVA, Inc. Pension Plan
immediately following the Distribution Date as was accrued under the Western
Atlas Inc. Retirement Plan as of the Distribution Date. Western Atlas shall, as
soon as practicable after the Distribution Date, provide UNOVA with such
additional information (in the possession of the Western Atlas Group and not
already in the possession of the UNOVA Group) as may be reasonably requested by
UNOVA and necessary in order for the UNOVA Group to establish and administer
effectively the Existing Retirement Plans assumed by UNOVA.

(b) Effective on or prior to the Distribution Date, UNOVA shall assume
sponsorship of the Western Atlas FSSP and the Western Atlas FSSP shall be
renamed the UNOVA, Inc. Financial Security and Savings Program (the "UNOVA
FSSP"). UNOVA agrees that all service credited under the Western Atlas FSSP as
of the Distribution Date with respect to Western Atlas FSSP participants shall
be credited under the UNOVA FSSP for all

<PAGE>

                                                                          Page 9

Plan purposes, including eligibility and vesting.

(c) From and after the Distribution Date, the Western Atlas Group shall cease to
have any Liability whatsoever with respect to participants under the Western
Atlas Inc. Retirement Plan or the Western Atlas FSSP, and UNOVA and the UNOVA,
Inc. Pension Plan and the UNOVA FSSP, as the case may be, shall assume or retain
sole responsibility for, and shall indemnify the Western Atlas Indemnitees with
respect to, all Liabilities of either Group with respect to participants under
the UNOVA, Inc. Pension Plan and the UNOVA FSSP.

Section 6. NONQUALIFIED RETIREMENT PLANS.

Effective as of the Distribution Date, UNOVA shall assume, and shall indemnify
the Western Atlas Indemnitees from and against, all Liabilities with respect to
(i) the Supplemental Retirement Agreement between Western Atlas Inc. and Alton
J. Brann (dated March 17, 1994) and all participants under the Western Atlas
Inc. Restoration Plan, (ii) UNOVA Participants and UNOVA Former Employees under
the Western Atlas Inc. Supplemental Executive Retirement Plan and (iii)
UNOVA-only Directors under the Western Atlas Inc. Deferred Compensation Plan for
Directors.

UNOVA represents that it has established plans on substantially the same terms
as the Western Atlas Nonqualified Plans pursuant to which each participant for
whom UNOVA has assumed Liabilities will be credited with the term of service
credited to such participant as of the Distribution Date under the Western Atlas
Nonqualified Plans, as if such service had been rendered to UNOVA.

Section 7. DEFERRED COMPENSATION.

Effective as of the Distribution Date, UNOVA shall assume and indemnify the
Western Atlas Indemnitees from and against all Liabilities with respect to UNOVA
Participants and UNOVA Former Employees in connection with any deferred
compensation plans.

Section 8. WELFARE PLANS.

(a) Effective on or prior to the Distribution Date, UNOVA shall assume the
Western Atlas Inc. Employees Welfare Benefit Trust, and such trust shall be
renamed the UNOVA, Inc. Employees Welfare Benefit Trust (the "UNOVA Trust").
Effective as of the Distribution Date, UNOVA shall be responsible for and shall
indemnify the Western Atlas Indemnitees from and against all Liabilities arising
under any Welfare Plan with respect

<PAGE>

                                                                         Page 10

to claims by UNOVA Participants or UNOVA Former Employees for benefits incurred
prior to or after the Distribution Date pursuant to the terms of the applicable
Plan.

(b) Effective on or prior to the Distribution Date, UNOVA shall assume
sponsorship of the Welfare Plans maintained by Western Atlas in which UNOVA
Employees participate. In connection with the foregoing, Western Atlas agrees to
provide UNOVA or its designated insurance representative with such information
(in the possession of the Western Atlas Group and not already in the possession
of the UNOVA Group) as may be reasonably requested by UNOVA and necessary for
the UNOVA Group to assume or establish any such Welfare Plan, and UNOVA agrees
to provide Western Atlas or its designated insurance representative with similar
information. Split-dollar insurance policies noted on Exhibit A as UNOVA
policies shall be assumed by UNOVA, and split-dollar insurance policies noted on
Exhibit A as Western Atlas policies shall remain with Western Atlas.

Section 9. WESTERN ATLAS MISCELLANEOUS PLANS; POST-DISTRIBUTION LIABILITIES.

(a) The Western Atlas Group shall be solely responsible for the payment of all
Liabilities whatsoever with respect to any Western Atlas Participant or Western
Atlas Former Employee unpaid as of and through the Distribution Date under any
Western Atlas Miscellaneous Plan and the UNOVA Group shall assume and be solely
responsible for the payment of all Liabilities with respect to any UNOVA
Participant or UNOVA Former Employee unpaid as of and through the Distribution
Date under any Western Atlas Miscellaneous Plan.

(b) Except as otherwise expressly provided herein, the Western Atlas Group shall
be solely responsible for the payment of all Liabilities whatsoever arising with
respect to any Western Atlas Employee or Western Atlas Former Employee and
attributable to any period subsequent to the Distribution Date and the UNOVA
Group shall be solely responsible for the payment of all Liabilities whatsoever
arising with respect to any UNOVA Employee or UNOVA Former Employee and
attributable to any period subsequent to the Distribution Date.

Section 10. PRESERVATION OF RIGHTS TO AMEND OR TERMINATE PLANS.

No provisions of this Agreement, including the agreement or representation of
Western Atlas or UNOVA that it, or any member of the Western Atlas Group or the
UNOVA Group, will make or has made a contribution or payment to or under any
Plan herein referred to for any

<PAGE>

                                                                         Page 11

period, shall be construed as a limitation on the right of Western Atlas or
UNOVA or any member of the Western Atlas Group or the UNOVA Group to amend such
Plan or terminate its participation therein which Western Atlas or UNOVA or any
member of the Western Atlas Group or the UNOVA Group would otherwise have under
the terms of such Plan or otherwise, and no provision of this Agreement shall be
construed to create a right in any employee or former employee or beneficiary of
such employee or former employee under a Plan which such employee or former
employee or beneficiary would not otherwise have under the terms of the Plan
itself.

Section 11. REIMBURSEMENT; INDEMNIFICATION.

Each of the parties hereto acknowledges that the Western Atlas Group, on the one
hand, and the UNOVA Group, on the other hand, may incur costs and expenses
(including contributions to Plans and the payment of insurance premiums) arising
from or related to any of the Plans which are, as set forth in this Agreement,
the responsibility of the other party hereto. Accordingly, Western Atlas and
UNOVA agree to reimburse each other, as soon as practicable but in any event
within 30 days of receipt from the other party of appropriate verification, for
all such costs and expenses.

Section 12. TRANSFER OF RESERVES.

To the extent that any Liability assumed by any member of the UNOVA Group
hereunder is secured by a reserve on the books of Western Atlas, such reserve
shall be transferred from Western Atlas to the books of UNOVA as soon as
practicable on or following the Distribution Date.

Section 13. FURTHER TRANSFERS.

Western Atlas and UNOVA recognize that there may be UNOVA Employees who will,
after the Distribution Date, become employed by Western Atlas and there may be
Western Atlas Employees who become employed, after the Distribution Date, by
UNOVA and there may be UNOVA Former Employees or Western Atlas Former Employees
who are hired by Western Atlas or UNOVA, respectively. If Western Atlas and
UNOVA so agree with respect to any such individuals, the assets and liabilities
with respect to such employees which are associated with the plans and programs
described in this Agreement may be transferred and assumed in a manner
consistent with this Agreement and such employees will be treated as Western
Atlas Employees or UNOVA Employees, as the case may be. Any such transfers

<PAGE>

                                                                         Page 12

or assumptions and treatment of employees will be considered to be governed by
the terms of this Agreement and shall not require the agreement of Western Atlas
and UNOVA if they occur within 3 months following the Distribution Date.

Section 14. OFFICERS AND EMPLOYEES.

Except as otherwise agreed by the parties hereto, effective as of the
Distribution Date, all officers or employees of the UNOVA Group who are acting
as directors or officers of the Western Atlas Group and are UNOVA Employees
shall resign from such positions with the Western Atlas Group.

Section 15. OTHER LIABILITIES; GUARANTEE OF OBLIGATIONS.

(a) As of the Distribution Date, UNOVA shall assume and be solely responsible
for all Liabilities whatsoever of the Western Atlas Group with respect to claims
made by the UNOVA Employees or UNOVA Former Employees relating to any Liability
not otherwise expressly provided for in this Agreement, including earned salary,
wages, bonus, incentive or severance payments or other compensation and accrued
sick, holiday, vacation, health, dental or retirement benefits, regardless of
whether such Liability was incurred before or after the Distribution Date. In
the event of any claim pursuant to which UNOVA may be required to indemnify
Western Atlas with respect to any such Liability, UNOVA shall have all of the
rights and obligations of an "Indemnifying Party" that are provided under
Section 4.4 of the Distribution Agreement and Western Atlas shall have all of
the rights and obligations of an Indemnified Party that are provided under
Section 4.4 of the Distribution Agreement.

(b) As of the Distribution Date, Western Atlas shall assume and be solely
responsible for all Liabilities whatsoever of the UNOVA Group with respect to
claims made by the Western Atlas Employees or Western Atlas Former Employees
relating to any Liability not otherwise expressly provided for in this
Agreement, including earned salary, wages, bonus, incentive or severance
payments or other compensation and accrued sick, holiday, vacation, health,
dental or retirement benefits, regardless of whether such Liability was incurred
before or after the Distribution Date. In the event of any claim pursuant to
which Western Atlas may be required to indemnify UNOVA with respect to any such
Liability, Western Atlas shall have all of the rights and obligations of an
"Indemnifying Party" that are provided under Section 4.4 of the Distribution
Agreement and UNOVA shall have all of the rights and obligations of an
Indemnified Party that are provided under Section 4.4

<PAGE>

                                                                         Page 13

of the Distribution Agreement.

(c) Effective immediately after the Distribution, and in connection with the
assumption by UNOVA of obligations with respect to employees of the UNOVA
Subsidiaries, UNOVA shall cause each corporation which will become a UNOVA
Subsidiary, to perform, and guarantees the performance of, each and every
obligation of such UNOVA Subsidiaries with respect to the provisions of this
Agreement.

Section 16. COMPLIANCE.

Notwithstanding anything to the contrary in this Agreement, to the extent any
actions of the parties contemplated in this Agreement are determined prior to
the Distribution Date to violate law or result in unintended tax liability for
Western Atlas Participants or Western Atlas Former Employees or UNOVA
Participants or UNOVA Former Employees, such action may be modified to avoid
such violation of law or unintended tax liability.

SECTION 17. TERMINATION OF PARTICIPATION.

Except as otherwise expressly provided herein, the participation of UNOVA
Participants in any Benefit Plan sponsored or maintained by Western Atlas shall
cease as of the Distribution Date.

Section 18. COMPLETE AGREEMENT.

This Agreement, together with the Distribution Agreement, and the Annexes and
Schedules thereto, shall constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.

Section 19. GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware (other than the laws regarding choice of laws and
conflicts of laws) as to all matters, including matters of validity,
construction, effect, performance and remedies.

Section 20. NOTICES.

All notices, requests, claims, demands and other communications hereunder
(collectively, "Notices") shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by

<PAGE>

                                                                         Page 14

delivery in person, by cable, telegram, telex, telecopy or other standard form
of telecommunications, or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:

         If to Western Atlas:
              Western Atlas Inc.
              10205 Westheimer Road
              Houston, Texas 77042

              Attention: General Counsel

         If to UNOVA:
              UNOVA, Inc.
              360 North Crescent Drive
              Beverly Hills, California 90210

              Attention: General Counsel

or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 20.

Section 21. AMENDMENT AND MODIFICATION.

This Agreement may be amended, modified or supplemented only by a written
agreement signed by Western Atlas and UNOVA, Inc.

Section 22. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.

This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties hereto and their successors and permitted assigns,
but neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior written
consent of each of the other parties (which consent shall not be unreasonably
withheld). This Agreement is solely for the benefit of the parties hereto and
their Subsidiaries and is not intended to confer upon any other Persons any
rights or remedies hereunder.

Section 23. COUNTERPARTS.

This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

<PAGE>

                                                                         Page 15

Section 24. INTERPRETATION.

The Section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties hereto and shall not in
any way affect the meaning or interpretation of this Agreement.

Section 25. TERMINATION.

Notwithstanding any provision hereof, this Agreement may be terminated at any
time prior to the Distribution Date. Any termination of the Distribution
Agreement shall result in the termination of this Agreement. In the event of
such termination, no party hereto shall have any Liability to any Person by
reason of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

                            WESTERN ATLAS INC.

                            By: /s/ Michael E. Keane

                            UNOVA, INC.

                            By: /s/ Charles A. Cusumano

DCN: 97719887

LOAD-DATE: November 27, 1997