**UNOVA,
        INC.**
  **2001
        STOCK INCENTIVE PLAN**
  **SECTION
        1:**  **Purpose;
        Definitions**
  The
        purpose of the Plan is to give the Company a competitive advantage in
        attracting, retaining and motivating officers and other employees and to
        provide
        the Company and its Subsidiaries with a stock plan providing incentives directly
        linked to the profitability of the Company's businesses and increases in
        shareholder value.
 
 For
        purposes of the Plan, the following terms are defined as set forth
        below:
 
 ***a.***
            ***"Award"***means a Stock Appreciation Right, Stock Option, or Restricted
                Stock.  ***b.***
            ***"Board"***means the Board of Directors of the
                Company.  ***c.***
            ***"Change
                of Control"***and***"Change
                of Control Price"***have the meanings set forth in Sections 8(b) and 8(c),
                respectively.  ***d.***
            ***"Code"***means the Internal Revenue Code of 1986, as amended from time to
                time, and
                any successor thereto.  ***e.***
            ***"Commission"***means the Securities and Exchange Commission or any successor
                agency.  ***f.***
            ***"Committee"***means the Committee referred to in
                Section 2.  ***g.***
            ***"Common
                Stock"***means common stock, par value $.01 per share, of the
                Company.  ***h.***
            ***"Company"***means UNOVA, Inc., a Delaware
                corporation.  ***i.***
            ***"Covered
                Employee"***means a participant designated prior to the grant of Restricted Stock
                by
                the Committee who is or may be a "covered employee" within the meaning
                of
                Section 162(m)(3) of the Code in the year in which Restricted Stock
                is
                expected to be taxable to such
                participant.  ***j.***
            ***"Disability"***means permanent and total disability as determined for purposes of
                the
                Company's Long Term Disability Plan for the staff of the Company's
                corporate headquarters.  ***k.***
            ***"Early
                Retirement"***means retirement from employment with the Company or a Subsidiary
                in
                circumstances in which the employee would be entitled to receive
                retirement benefits under the pension plan of the Company or a Subsidiary
                under which such employee is covered.  ***l.***
            ***"Eligible
                Individuals"***means officers or other employees of the Company or any of its
                Subsidiaries and prospective employees who have accepted offers of
                employment from the Company or its Subsidiaries who are or will be
                responsible for or contribute to the management, growth or profitability
                of the business of the Company or its
                Subsidiaries.  ***m.***
            ***"Exchange
                Act"***means the Securities Exchange Act of 1934, as amended from time to
                time,
                and any successor thereto.   
  
  ***n.***
            ***"Fair
                Market Value"***means, as of any given date, the average of the highest and lowest
                per
                share sales prices for the Common Stock during normal business hours
                on
                the New York Stock Exchange for such date, or if the Common Stock
                is not
                traded on the New York Stock Exchange on such date, then on the next
                preceding date on which the Common Stock was traded, all as reported
                by
                such source as the Committee may select, or, if the Common Stock
                is not
                listed on the New York Stock Exchange, on any other national securities
                exchange on which the Common Stock is listed or on
                NASDAQ.  ***o.***
            ***"Incentive
                Stock Option"***means any Stock Option designated as, and intended to qualify as,
                an
                "incentive stock option" within the meaning of Section 422 of the
                Code.  ***p.***
            ***"Non-Qualified
                Stock Option"***means any Stock Option that is not an Incentive Stock
                Option.  ***q.***
            ***"Normal
                Retirement"***means retirement from active employment with the Company or a Subsidiary
                at or after age 65.  ***r.***
            ***"Performance
                Goals"***means the performance goals established by the Committee in connection
                with the grant of Restricted Stock. In the case of Qualified
                Performance-Based Awards, (i) such goals shall be based on the
                attainment of specified levels of one or more of the following measures:
                business operating profit ("BOP"), cash flow ("CF"), cash value added
                ("CVA"), revenue growth ("RG"), return on assets ("ROA"), return
                on
                capital ("ROC"), return on capital utilized ("ROCU"), return on equity
                ("ROE"), return on revenue ("ROR") or return on tangible equity ("ROTE")
                of the Company or of any business unit thereof within which the
                participant is primarily employed, or that are based on the attainment
                of
                specified levels of Basic Earnings per Share ("BEPS") or Diluted
                Earnings
                per Share ("DEPS") of the Company or that are based, in whole or
                in part,
                on a level or levels of increase in the Fair Market Value of the
                Stock,
                and that are intended to qualify under Section 162(m)(4)(c) of the
                Code,
                and (ii) such Performance Goals shall be set by the Committee within
                the
                time period prescribed by Section 162(m) of the Code and related
                regulations. For purposes of the Plan, BOP, CF, CVA, RG, ROA, ROC,
                ROR,
                ROCU, ROE, ROTE, BEPS and DEPS shall have the meanings set forth
                in Annex
                A hereto.  ***s.***
            ***"Plan"***means the UNOVA, Inc. 2001 Stock Incentive Plan, as set forth herein
                and
                as hereinafter amended from time to time.  ***t.***
            ***"Qualified
                Performance-Based Award"***means an Award of Restricted Stock designated as such by the Committee
                at
                the time of grant, based upon a determination that (i) the recipient
                is or may be a "covered employee" within the meaning of Section 162(m)(3)
                of the Code in the year in which the Company would expect to be able
                to
                claim a tax deduction with respect to such Restricted Stock and
                (ii) the Committee wishes such Award to qualify for the Section
                162(m) Exemption.  ***u.***
            ***"Restricted
                Stock"***means an Award granted under
                Section 7.  ***v.***
            ***"Retirement"***means Normal or Early Retirement.  ***w.***
            ***"Rule
                16b-3"***means Rule 16b-3 as promulgated by the Commission under Section 16(b)
                of
                the Exchange Act, as amended from time to
                time.  ***x.***
            ***"Section
                162(m) Exemption"***means the exemption from the limitation on deductibility imposed
                by
                Section 162(m) of the Code that is set forth in Section 162(m)(4)(C)
                of
                the Code.  ***y.***
            ***"Stock
                Appreciation Right"***means an Award granted under Section 6.   
  
  ***z.***
            ***"Stock
                Option"***means an Award granted under Section 5.  ***aa.***
            ***"Subsidiary"*****means
                any corporation, partnership, joint venture or other entity during
                any
                period in which at least a majority voting interest in such entity
                is
                owned, directly or indirectly, by the Company or any successor to
                the
                Company.  ***bb.***
            ***"Termination
                of Employment"***means the termination of the participant's employment with the Company
                and
                any of its Subsidiaries. A participant employed by a Subsidiary shall
                also
                be deemed to incur a Termination of Employment if the Subsidiary
                ceases to
                be such a Subsidiary, and the participant does not immediately thereafter
                become an employee of the Company or another Subsidiary. Temporary
                absences from employment because of illness, vacation or leave of
                absence
                and transfers among the Company and its Subsidiaries shall not be
                considered Terminations of Employment. If so determined by the Committee,
                a participant shall be deemed not to have incurred a Termination
                of
                Employment if the participant enters into a contract with the Company
                or a
                subsidiary providing for the rendering by the participant of consulting
                services to the Company or such subsidiary on terms approved by the
                Committee; however, Termination of Employment of the participant
                shall
                occur when such contract ceases to be in
                effect.  In
        addition, certain other terms used herein have definitions given to them
        in the
        first place in which they are used.
 
 **SECTION
        2:**  **Administration**
 
 The
        Plan
        shall be administered by the Compensation Committee or such other committee
        of
        the Board as the Board may from time to time designate (the "Committee"),
        which
        shall be composed of not less than two directors, and shall be appointed
        by and
        serve at the pleasure of the Board.
 
 The
        Committee shall have plenary authority to grant Awards pursuant to the terms
        of
        the Plan to Eligible Individuals.
 
 Among
        other things, the Committee shall have the authority, subject to its power
        to
        delegate its authority as described below and subject to the other terms
        of the
        Plan:
 
 (a)  To
        select
        the Eligible Individuals to whom Awards may from time to time be
        granted;
 
 (b)  To
        determine whether and to what extent Incentive Stock Options, Non-Qualified
        Stock Options, Stock Appreciation Rights, and Restricted Stock or any
        combination thereof are to be granted hereunder;
 
 (c)  To
        determine the number of shares of Common Stock to be covered by each Award
        granted hereunder;
 
 (d)  To
        determine the terms and conditions of any Award granted hereunder (including,
        but not limited to, the option price (subject to Section 5(a)), any vesting
        condition, restriction or limitation (which may be related to the performance
        of
        the participant, the Company or any Subsidiary) and any vesting acceleration
        or
        forfeiture waiver regarding any Award and the shares of Common Stock relating
        thereto, based on such factors as the Committee shall
        determine;
  
  
 (e)  To
        modify, amend or adjust the terms and conditions of any Award, at any time
        or
        from time to time, including but not limited to Performance Goals; *provided,
        however,* that the
        Committee may not adjust upwards the amount payable with respect to a Qualified
        Performance-Based Award or waive or alter the Performance Goals associated
        therewith or cause such Restricted Stock to vest earlier than permitted by
        Section 7(c)(vii):
 
 (f)  To
        determine to what extent and under what circumstances Common Stock and other
        amounts payable with respect to an Award shall be deferred; and
 
 (g)  To
        determine under what circumstances an Award may be settled in cash or Common
        Stock under Sections 5(j) and 6(b)(ii).
 
 The
        Committee shall have the authority to adopt, alter and repeal such
        administrative rules, guidelines and practices governing the Plan as it shall
        from time to time deem advisable, to interpret the terms and provisions of
        the
        Plan and any Award issued under the Plan (and any agreement relating thereto)
        and to otherwise supervise the administration of the Plan.
 
 The
        Committee may act only by a majority of its members then in office, except
        that
        the Committee may, except to the extent prohibited by applicable law or
        regulation or the applicable rules of a stock exchange, allocate all or any
        portion of its responsibilities and powers to any one or more of its members
        and
        may delegate all or any part of its responsibilities and powers to any person
        or
        persons selected by it; *provided* that no
        such delegation may be made that would cause Awards or other transactions
        under
        the Plan to cease to be exempt from Section 16(b) of the Exchange Act or
        cause
        an Award designated as a Qualified Performance-Based Award not to qualify
        for,
        or to cease to qualify for, the Section 162(m) Exemption. Any such allocation
        or
        delegation may be revoked by the Committee at any time.
 
 Any
        determination made by the Committee or pursuant to delegated authority pursuant
        to the provisions of the Plan with respect to any Award shall be made in
        the
        sole discretion of the Committee or such delegate at the time of the grant
        of
        the Award or, unless in contravention of any express term of the Plan, at
        any
        time thereafter. All decisions made by the Committee or any appropriately
        delegated officer pursuant to the provisions of the Plan shall be final and
        binding on all persons, including the Company and Plan
        participants.
 
 Any
        authority granted to the Committee may also be exercised by the full Board,
        except to the extent that the grant or exercise of such authority would cause
        any Award or transaction to become subject to (or lose an exemption under)
        the
        short-swing profit recovery provisions of Section 16 of the Exchange Act
        or
        cause an Award designated as a Qualified Performance-Based Award not to qualify
        for, or to cease to qualify for, the Section 162(m) Exemption. To the extent
        that any permitted action taken by the Board conflicts with action taken
        by the
        Committee, the Board action shall control.
 
 **SECTION
        3:**  **Common
        Stock Subject to Plan**
 
 The
        maximum number of shares of Common Stock that may be issued to participants
        and
        their beneficiaries under the Plan shall be one million (1,000,000). No
        participant may be granted Awards covering in excess of 250,000 shares of
        Common
        Stock in any calendar year during which the Plan is in existence. Shares
        subject
        to an Award under the Plan may be authorized and unissued shares or may be
        treasury shares. No more than 30 percent of the shares of Common Stock available
        for grant under the Plan as of the first day of any calendar year in which
        the
        Plan is in effect shall be utilized in that fiscal year for the grant of
        Awards
        in the form of Restricted Stock.
  
  
 If
        any
        Award is forfeited, or if any Stock Option (and related Stock Appreciation
        Right, if any) terminates, expires or lapses without being exercised, or
        if any
        Stock Appreciation Right is exercised for cash, shares of Common Stock subject
        to such Awards shall again be available for distribution in connection with
        Awards under the Plan. If the option price of any Stock Option granted under
        the
        Plan is satisfied by delivering shares of Common Stock to the Company (by
        either
        actual delivery or by attestation), only the number of shares of Common Stock
        issued net of the shares of Common Stock delivered or attested to shall be
        deemed issued for purposes of determining the maximum number of shares of
        Common
        Stock available for issuance under the Plan. To the extent any shares of
        Common
        Stock subject to an Award are not delivered to a participant because such
        shares
        are used to satisfy an applicable tax-withholding obligation, such shares
        shall
        not be deemed to have been issued for purposes of determining the maximum
        number
        of shares of Common Stock available for issuance under the Plan.
 
 In
        the
        event of any change in corporate capitalization (including, but not limited
        to,
        a change in the number of shares of Common Stock outstanding), such as a
        stock
        split or a corporate transaction, any merger, consolidation, separation,
        including a spin-off, or other distribution of stock or property of the Company,
        any reorganization (whether or not such reorganization comes within the
        definition of such term in Section 368 of the Code) or any partial or complete
        liquidation of the Company, the Committee or Board may make such substitution
        or
        adjustments in the aggregate number and kind of shares reserved for issuance
        under the Plan, and the maximum limitation upon Stock Options and Stock
        Appreciation Rights to be granted to any participant, in the number, kind
        and
        option price of shares subject to outstanding Stock Options and Stock
        Appreciation Rights, in the number and kind of shares subject to other
        outstanding Awards granted under the Plan and/or such other equitable
        substitution or adjustments as it may determine to be appropriate in its
        sole
        discretion; *provided,
        however,* that the
        number of shares subject to any Award shall always be a whole number. Such
        adjusted option price shall also be used to determine the amount payable
        by the
        Company upon the exercise of any Stock Appreciation Right associated with
        any
        Stock Option.
 
 **SECTION
        4:**  **Eligibility**
 
 Awards
        may be granted under the Plan to Eligible Individuals. No grant shall be
        made
        under this Plan to a director who is not an officer or a salaried employee
        of
        the Company or its Subsidiaries.
 
 **SECTION
        5:**  **Stock
        Options**
 
 Stock
        Options may be granted alone or in addition to other Awards granted under
        the
        Plan and may be of two types: Incentive Stock Options and Non-Qualified Stock
        Options. Any Stock Option granted under the Plan shall be in such form as
        the
        Committee may from time to time approve.
 
 The
        Committee shall have the authority to grant any optionee Incentive Stock
        Options, Non-Qualified Stock Options or both types of Stock Options (in each
        case with or without Stock Appreciation Rights); *provided,
        however,* that
        grants hereunder are subject to the aggregate limit on grants to individual
        participants set forth in Section 3. Incentive Stock Options may be granted
        only
        to employees of the Company and its subsidiaries or parent corporation (within
        the meaning of Section 424(f) of the Code). To the extent that any Stock
        Option
        is not designated as an Incentive Stock Option or even if so designated does
        not
        qualify as an Incentive Stock Option on or subsequent to its grant date,
        it
        shall constitute a Non-Qualified Stock Option.
 
  
  Stock
        Options shall be evidenced by option agreements, the terms and provisions
        of
        which may differ. An option agreement shall indicate on its face whether
        it is
        intended to be an agreement for an Incentive Stock Option or a Non-Qualified
        Stock Option. The grant of a Stock Option shall occur on the date the Committee
        (or any other person to whom such power has been delegated by the Committee)
        selects an Eligible Individual to receive a grant of a Stock Option, determines
        the number of shares of Common Stock to be subject to such Stock Option to
        be
        granted to such Eligible Individual and specifies the terms and provisions
        of
        the Stock Option. The Company shall notify an Eligible Individual of any
        grant
        of a Stock Option, and a written option agreement or agreements shall be
        duly
        executed and delivered by the Company to the participant. Such agreement
        or
        agreements shall become effective upon execution by the Company and the Eligible
        Individual.
 
 Stock
        Options granted under the Plan shall be subject to the following terms and
        conditions and shall contain such additional terms and conditions as the
        Committee shall deem desirable:
 
 (a)  *Option
        Price* .
        The
        option price per share of Common Stock purchasable under a Stock Option shall
        be
        determined by the Committee and set forth in the option agreement, and shall
        not
        be less than the Fair Market Value of the Common Stock subject to the Stock
        Option on the date of grant.
 
 (b)  *Option
        Term* .
        The
        term of each Stock Option shall be fixed by the Committee, but no Incentive
        Stock Option shall be exercisable more than 10 years after the date the Stock
        Option is granted.
 
 (c)  *Exercisability* .
        Except
        as otherwise provided herein, Stock Options shall be exercisable at such
        time or
        times and subject to such terms and conditions as shall be determined by
        the
        Committee. If the Committee provides that any Stock Option is exercisable
        only
        in installments, the Committee may at any time waive such installment exercise
        provisions, in whole or in part, based on such factors as the Committee may
        determine. In addition, the Committee may at any time accelerate the
        exercisability of any Stock Option.
 
 (d)  *Method
        of Exercise; Issuance of Stock* .
        Subject
        to the provisions of this Section 5, Stock Options may be exercised, in whole
        or
        in part, at any time during the option term by giving written notice of exercise
        to the Company specifying the number of shares of Common Stock subject to
        the
        Stock Option **** to
        be
        purchased.
 
 Such
        notice shall be accompanied by payment in full of the purchase price by
        certified or bank check or such other instrument as the Company may accept.
        If
        approved by the Committee, payment, in full or in part, may also be made
        in the
        form of unrestricted Common Stock (by delivery of such shares or by attestation
        based on the Fair Market Value of the Common Stock on the date the Stock
        Option
        is exercised) already owned by the optionee for at least six months or purchased
        on the open market; *provided,
        however,* that, in
        the case of an Incentive Stock Option, the right to make a payment in the
        form
        of already owned shares of Common Stock may be authorized only at the time
        the
        Stock Option is granted.
 
 If
        approved by the Committee, payment in full or in part may also be made by
        delivering a properly executed exercise notice to the Company, together with
        a
        copy of irrevocable instructions to a broker to deliver promptly to the Company
        the amount of sale or loan proceeds necessary to pay the purchase price,
        and, if
        requested, the amount of any federal, state, local or foreign withholding
        taxes.
        To facilitate the foregoing, the Company may enter into agreements for
        coordinated procedures with one or more brokerage firms.
 
  
  No
        shares
        of Common Stock shall be issued until full payment therefor has been made.
        Except as otherwise provided in Section 5(l) below, an optionee shall have
        all
        of the rights of a shareholder of the Company holding the class or series
        of
        Common Stock that is subject to such Stock Option (including, if applicable,
        the
        right to vote the shares and the right to receive dividends), when the optionee
        has given written notice of exercise, has paid in full for such shares and,
        if
        requested, has given the representation described in Section 11(a).
 
 (e)  *Nontransferability
        of Stock Options* .
        No
        Stock Options may be transferred other than by will or by operation of the
        laws
        of descent and distribution. In addition, the optionee may transfer any or
        all
        Non-Qualified Stock Options granted under this Plan by way of gift to any
        family
        member; provided that any such transferee shall agree in writing with the
        optionee and the Company, as a condition to such transfer, to be bound by
        the
        provisions of all agreements and other instruments, including without
        limitation, the underlying plans under which such Stock Options were granted,
        and shall agree in writing to such other terms as the Company may reasonably
        require to assure compliance with applicable federal and state securities
        and
        other laws. For purposes of the preceding sentence, "family member" shall
        include any child, stepchild, grandchild, parent, stepparent, grandparent,
        spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
        son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
        adoptive relationship, any person sharing the optionee's household (other
        than a
        tenant or employee), a trust in which these persons have more than 50 percent
        of
        the beneficial interest, a foundation in which these persons (or the optionee)
        control the management of assets, and any other entity in which these persons
        (or the optionee) own more than 50 percent of the voting interests. All Stock
        Options shall be exercisable, subject to the terms of this Plan, only by
        the
        optionee, the guardian or legal representative of the optionee, or any person
        to
        whom such option is transferred pursuant to this paragraph, it being understood
        that the term "holder" and "optionee" include such guardian, legal
        representative and other transferee.
 
 (f)  *Termination
        by Death* .
        Unless
        otherwise determined by the Committee, if an optionee incurs a Termination
        of
        Employment by reason of death, any Stock Option held by such optionee may
        thereafter be exercised, to the extent then exercisable, or on such accelerated
        basis as the Committee may determine, for a period of one year (or such other
        period as the Committee may specify in the option agreement) from the date
        of
        such death or until the expiration of the stated term of such Stock Option,
        whichever period is the shorter.
 
 (g)  *Termination
        by Reason of Disability* .
        Unless
        otherwise determined by the Committee, if an optionee incurs a Termination
        of
        Employment by reason of Disability, any Stock Option held by such optionee
        may
        thereafter be exercised by the optionee, to the extent it was exercisable
        at the
        time of termination, or on such accelerated basis as the Committee may
        determine, for a period of three years (or such other period as the Committee
        may specify in the option agreement) from the date of such Termination of
        Employment or until the expiration of the stated term of such Stock Option,
        whichever period is the shorter; *provided,
        however,* that if
        the optionee dies within such period, any unexercised Stock Option held by
        such
        optionee shall, notwithstanding the expiration of such period, continue to
        be
        exercisable to the extent to which it was exercisable at the time of death
        for a
        period of 12 months from the date of such death or until the expiration of
        the
        stated term of such Stock Option, whichever period is the shorter. In the
        event
        of Termination of Employment by reason of Disability, if an Incentive Stock
        Option is exercised after the expiration of the exercise periods that apply
        for
        purposes of Section 422 of the Code, such Stock Option will thereafter be
        treated as a Non-Qualified Stock Option.
  
  
 (h)  *Termination
        by Reason of Retirement* .
        Unless
        otherwise determined by the Committee, if an optionee incurs a Termination
        of
        Employment by reason of Retirement, any Stock Option held by such optionee
        may
        thereafter be exercised by the optionee, to the extent it was exercisable
        at the
        time of such Retirement, or on such accelerated basis as the Committee may
        determine, until the expiration of the stated term of such Stock Option; *provided,
        however,* that if
        the optionee dies within such period any unexercised Stock Option held by
        such
        optionee shall, notwithstanding the expiration of such period, continue to
        be
        exercisable to the extent to which it was exercisable at the time of death
        for a
        period of 12 months from the date of such death or until the expiration of
        the
        stated term of such Stock Option, whichever period is the shorter. In the
        event
        of Termination of Employment by reason of Retirement, if an Incentive Stock
        Option is exercised after the expiration of the exercise periods that apply
        for
        purposes of Section 422 of the Code, such Stock Option will thereafter be
        treated as a Non-Qualified Stock Option.
 
 (i)  *Other
        Termination* .
        Unless
        otherwise determined by the Committee, if an optionee incurs a Termination
        of
        Employment for any reason other than death, Disability, or Retirement, any
        Stock
        Option held by such optionee, to the extent then exercisable, or on such
        accelerated basis as the Committee may determine, may be exercised for the
        lesser of three months from the date of such Termination of Employment or
        the
        balance of such Stock Option; *provided,
        however,* that if
        the optionee dies within such three-month period, any unexercised Stock Option
        held by such optionee shall, notwithstanding the expiration of such three-month
        period, continue to be exercisable to the extent to which it was exercisable
        at
        the time of death for a period of 12 months from the date of such death or
        until
        the expiration of the stated term of such Stock Option, whichever period
        is the
        shorter. If an Incentive Stock Option is exercised after the expiration of
        the
        post-termination exercise periods that apply for purposes of Section 422
        of the
        Code, such Stock Option will thereafter be treated as a Non-Qualified Stock
        Option.
 
 (j)  *Cashing
        Out of Stock Option* .
        On
        receipt of written notice of exercise, the Committee may elect to cash out
        all
        or part of the portion of the shares of Common Stock for which a Stock Option
        is
        being exercised by paying the optionee an amount, in cash or Common Stock,
        equal
        to the excess of the Fair Market Value of the Common Stock over the option
        price
        times the number of shares of Common Stock for which the Option is being
        exercised on the effective date of such cash-out.
 
 (k)  *Change
        of Control Cash-Out.* Notwithstanding any other provision of the Plan, during the 60-day period
        from
        and after a Change of Control (the "Exercise Period"), if the Committee shall
        determine at the time of grant or thereafter, an optionee shall have the
        right,
        whether or not the Stock Option is fully exercisable and in lieu of the payment
        of the option price for the shares of Common Stock being purchased under
        the
        Stock Option and by giving notice to the Company, to elect (within the Exercise
        Period) to surrender all or part of the Stock Option to the Company and to
        receive cash, within 30 days of such election, in an amount equal to the
        amount
        by which the Change of Control Price per share of Common Stock on the date
        of
        such election shall exceed the exercise price per share of Common Stock under
        the Stock Option (the "Spread") multiplied by the number of shares of Common
        Stock granted under the Stock Option as to which the right granted under
        this
        Section 5(k) shall have been exercised. Notwithstanding the foregoing, if
        any
        right granted pursuant to this Section 5(k) would make a Change of Control
        transaction ineligible for pooling-of-interests accounting under APB No. 16
        that but for the nature of such grant would otherwise be eligible for such
        accounting treatment, the Committee shall have the ability to substitute
        for the
        cash payable pursuant to such right Common Stock with a Fair Market Value
        (as of
        the date of delivery of such stock) equal to the cash that would otherwise
        be
        payable hereunder or, if necessary to preserve such accounting treatment,
        otherwise modify or eliminate such right.
  
  
 (l)  *Deferral
        of Option Shares* .
        The
        Committee may from time to time establish procedures pursuant to which an
        optionee may elect to defer, until a time or times later than the exercise
        of an
        Option, receipt of all or a portion of the shares of Common Stock subject
        to
        such Option and/or to receive cash at such later time or times in lieu of
        such
        deferred shares, all on such terms and conditions as the Committee shall
        determine. If any such deferrals are permitted, then notwithstanding Section
        5(d) above, an optionee who elects such deferral shall not have any rights
        as a
        stockholder with respect to such deferred shares unless and until shares
        are
        actually delivered to the optionee with respect thereto, except to the extent
        otherwise determined by the Committee.
 
 **SECTION
        6:**  **Stock
        Appreciation Rights**
 
 (a)  *Grant
        and Exercise* .
        Stock
        Appreciation Rights may be granted in conjunction with all or part of any
        Stock
        Option granted under the Plan. In the case of a Non-Qualified Stock Option,
        such
        rights may be granted either at or after the time of grant of such Stock
        Option.
        In the case of an Incentive Stock Option, such rights may be granted only
        at the
        time of grant of such Stock Option. A Stock Appreciation Right shall terminate
        and no longer be exercisable upon the termination or exercise of the related
        Stock Option.
 
 A
        Stock
        Appreciation Right may be exercised by an optionee in accordance with Section
        6(b) by surrendering the applicable portion of the related Stock Option in
        accordance with procedures established by the Committee. Upon such exercise
        and
        surrender, the optionee shall be entitled to receive an amount determined
        in the
        manner prescribed in Section 6(b). Stock Options which have been so surrendered
        shall no longer be exercisable to the extent the related Stock Appreciation
        Rights have been exercised.
 
 (b)  *Terms
        and Conditions* .
        Stock
        Appreciation Rights shall be subject to such terms and conditions as shall
        be
        determined by the Committee, including the following:
 
 (i)  Stock
        Appreciation Rights shall be exercisable only at such time or times and to
        the
        extent that the Stock Options to which they relate are exercisable in accordance
        with the provisions of Section 5 and this Section 6.
 
 (ii)  Upon
        the
        exercise of a Stock Appreciation Right, an optionee shall be entitled to
        receive
        an amount in cash, shares of Common Stock or both, in value equal to the
        excess
        of the Fair Market Value of one share of Common Stock over the option price
        per
        share specified in the related Stock Option multiplied by the number of shares
        in respect of which the Stock Appreciation Right shall have been exercised,
        with
        the Committee having the right to determine the form of payment.
 
 (iii)  Stock
        Appreciation Rights shall be transferable only to permitted transferees of
        the
        underlying Stock Option in accordance with Section 5(e).
 
 (iv)  Upon
        the
        exercise of a Stock Appreciation Right, the Stock Option or part thereof
        to
        which such Stock Appreciation Right is related shall be deemed to have been
        exercised for the purpose of the limitation set forth in Section 3 on the
        number of shares of Common Stock to be issued under the Plan, but only to
        the
        extent of the number of shares covered by the Stock Appreciation Right at
        the
        time of exercise based on the value of the Stock Appreciation Right at such
        time.
 
 **SECTION
        7:**  **Restricted
        Stock**
  
  
 (a)  *Administration* .
        Shares
        of Restricted Stock may be awarded either alone or in addition to other Awards
        granted under the Plan. The Committee shall determine the Eligible Individuals
        to whom and the time or times at which grants of Restricted Stock will be
        awarded, the number of shares to be awarded to any Eligible Individual, the
        conditions for vesting, the time or times within which such Awards may be
        subject to forfeiture and any other terms and conditions of the Awards, in
        addition to those contained in Section 7(c).
 
 (b)  *Awards
        and Certificates* .
        Shares
        of Restricted Stock shall be evidenced in such manner as the Committee may
        deem
        appropriate, including book-entry registration or issuance of one or more
        stock
        certificates. Any certificate issued in respect of shares of Restricted Stock
        shall be registered in the name of such Eligible Individual and shall bear
        an
        appropriate legend referring to the terms, conditions, and restrictions
        applicable to such Award, substantially in the following form:
 
 "The
        transferability of this certificate and the shares of stock represented hereby
        are subject to the terms and conditions (including forfeiture) of the UNOVA,
        Inc. 2001 Stock Incentive Plan and a Restricted Stock Agreement. Copies of
        such
        Plan and Agreement are on file at the offices of UNOVA, Inc., 21900 Burbank
        Boulevard, Woodland Hills, California 91367."
  The
        Committee may require that the certificates evidencing such shares be held
        in
        custody by the Company until the restrictions thereon shall have lapsed and
        that, as a condition of any Award of Restricted Stock, the participant shall
        have delivered a stock power, endorsed in blank, relating to the Common Stock
        covered by such Award.
  (c)
            *Terms
                and Conditions*.
                Shares of Restricted Stock shall be subject to the following terms
                and
                conditions: 
 (i)  The
        Committee may, prior to or at the time of grant, designate an Award of
        Restricted Stock as a Qualified Performance-Based Award, in which event it
        shall
        condition the grant or vesting, as applicable, of such Restricted Stock upon
        the
        attainment of Performance Goals. If the Committee does not designate an Award
        of
        Restricted Stock as a Qualified Performance-Based Award, it may also condition
        the grant or vesting thereof upon the attainment of Performance Goals.
        Regardless of whether an Award of Restricted Stock is a Qualified
        Performance-Based Award, the Committee may also condition the grant or vesting
        thereof upon the continued service of the participant. The conditions for
        grant
        or vesting and the other provisions of Restricted Stock Awards (including
        without limitation any applicable Performance Goals) need not be the same
        with
        respect to each recipient. The Committee may at any time, in its sole
        discretion, accelerate or waive, in whole or in part, any of the foregoing
        restrictions; *provided,
        however,* that in
        the case of Restricted Stock that is a Qualified Performance-Based Award,
        the
        applicable Performance Goals have been satisfied.
 
 (ii)  Subject
        to the provisions of the Plan and the Restricted Stock Agreement referred
        to in
        Section 7(c)(vi), during the period, if any, set by the Committee, commencing
        with the date of such Award for which such participant's continued service
        is
        required (the "Restriction Period"), and until the later of (i) the expiration
        of the Restriction Period and (ii) the date the applicable Performance Goals
        (if
        any) are satisfied, the participant shall not be permitted to sell, assign,
        transfer, pledge or otherwise encumber shares of Restricted Stock; *provided* that the
        foregoing shall not prevent a participant from pledging Restricted Stock
        as
        security for a loan, the sole purpose of which is to provide funds to pay
        the
        option price for Stock Options.
  
  
 (iii)  Except
        as
        provided in this paragraph (iii) and Sections 7(c)(i) and 7(c)(ii) and the
        Restricted Stock Agreement, the participant shall have, with respect to the
        shares of Restricted Stock, all of the rights of a stockholder of the Company
        holding the class or series of Common Stock that is the subject of the
        Restricted Stock, including, if applicable, the right to vote the shares
        and the
        right to receive any cash dividends. If so determined by the Committee in
        the
        applicable Restricted Stock Agreement, (A) cash dividends on the class or
        series
        of Common Stock that is the subject of the Restricted Stock Award shall be
        automatically deferred and reinvested in additional Restricted Stock, held
        subject to the vesting of the underlying Restricted Stock, or held subject
        to
        meeting Performance Goals applicable only to dividends, and (B) dividends
        payable in Common Stock shall be paid in the form of Restricted Stock of
        the
        same class as the Common Stock with which such dividend was paid, held subject
        to the vesting of the underlying Restricted Stock, or held subject to meeting
        Performance Goals applicable only to dividends.
 
 (iv)  Except
        to
        the extent otherwise provided in the applicable Restricted Stock Agreement
        or
        Section 7(c)(i), 7(c)(ii), 7(c)(v) or 8(a)(ii), upon a participant's Termination
        of Employment for any reason during the Restriction Period or before the
        applicable Performance Goals are satisfied, all shares still subject to
        restriction shall be forfeited by the participant.
 
 (v)  Except
        to
        the extent otherwise provided in Section 8(a)(ii), in the event that a
        participant retires or such participant's employment is involuntarily
        terminated, the Committee shall have the discretion to waive, in whole or
        in
        part, any or all remaining restrictions (other than, in the case of Restricted
        Stock with respect to which a participant is a Covered Employee, satisfaction
        of
        the applicable Performance Goals unless the participant's employment is
        terminated by reason of death or Disability) with respect to any or all of
        such
        participant's shares of Restricted Stock.
 
 (vi)  If
        and
        when any applicable Performance Goals are satisfied and the Restriction Period
        expires without a prior forfeiture of the Restricted Stock, unlegended
        certificates for such shares shall be delivered to the participant upon
        surrender of the legended certificates.
 
 (vii)  Each
        Award shall be confirmed by, and be subject to, the terms of a Restricted
        Stock
        Agreement.
 
 (viii)  Notwithstanding
        the foregoing, but subject to the provisions of Section 8 hereof, no Award
        in
        the form of Restricted Stock, the vesting of which is conditioned only upon
        the
        continued service of the participant, shall vest earlier than the first,
        second
        and third anniversaries of the date of grant thereof, on each of which dates
        a
        maximum of one-third of the shares of Common Stock subject to the Award may
        vest, and no award in the form of Restricted Stock, the vesting of which
        is
        conditioned upon the attainment of a specified Performance Goal or Goals,
        shall
        vest earlier than the first anniversary of the date of grant
        thereof.
 
 **SECTION
        8:**  **Change
        of Control Provisions**
 
 (a)  *Impact
        of Event* .
        Notwithstanding any other provision of the Plan to the contrary, in the event
        of
        a Change of Control:
 
 (i)  Any
        Stock
        Options and Stock Appreciation Rights outstanding as of the date such Change
        of
        Control is determined to have occurred, and which are not then exercisable
        and
        vested, shall become fully exercisable and vested to the full extent of the
        original grant.
  
  
 (ii)  The
        restrictions and deferral limitations applicable to any Restricted Stock
        shall
        lapse, and such Restricted Stock shall become free of all restrictions and
        become fully vested and transferable to the full extent of the original
        grant.
 
 (iii)  The
        Committee may also make additional adjustments and/or settlements of outstanding
        Awards as it deems appropriate and consistent with the Plan’s purposes.
 
 (b)  *Definition
        of Change of Control* .
        For
        purposes of the Plan, a "Change of Control" shall mean the happening of any
        of
        the following events:
 
 (i)  An
        acquisition by any individual, entity or group (within the meaning of Section
        13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership
        (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
        30% or
        more of either (1) the then outstanding shares of common stock of the Company
        (the "Outstanding Company Common Stock") or (2) the combined voting power
        of the
        then outstanding voting securities of the Company entitled to vote generally
        in
        the election of directors (the "Outstanding Company Voting Securities");
        excluding, however, the following: (1) Any acquisition directly from the
        Company, other than an acquisition by virtue of the exercise of a conversion
        privilege unless the security being so converted was itself acquired directly
        from the Company, (2) Any acquisition by the Company, (3) Any acquisition
        by any
        employee benefit plan (or related trust) sponsored or maintained by the Company
        or any entity controlled by the Company, or (4) Any acquisition pursuant
        to a
        transaction which complies with clauses (1), (2) and (3) of subsection (iii)
        of
        this Section 8(b); or
 
 (ii)  Individuals
        who, as of the effective date of the Plan, constitute the Board (the "Incumbent
        Board") cease for any reason to constitute at least a majority of the Board; *provided,
        however,* that any
        individual who becomes a member of the Board subsequent to such effective
        date
        of the Plan, whose election, or nomination for election by the Company's
        shareholders, was approved by a vote of at least a majority of directors
        then
        comprising the Incumbent Board shall be considered as though such individual
        were a member of the Incumbent Board; but, *provided
        further,* that any
        such individual whose initial assumption of office occurs as a result of
        either
        an actual or threatened election contest (as such terms are used in Rule
        14a-11
        of Regulation 14A promulgated under the Exchange Act) or other actual or
        threatened solicitation of proxies or consents by or on behalf of a Person
        other
        than the Board shall not be so considered as a member of the Incumbent Board;
        or
 
 (iii)  The
        consummation of a reorganization, merger or consolidation or sale or other
        disposition of all or substantially all of the assets of the Company ("Business
        Combination"); excluding, however, such a Business Combination pursuant to
        which
        (1) all or substantially all of the individuals and entities who are the
        beneficial owners, respectively, of the Outstanding Company Common Stock
        and
        Outstanding Company Voting Securities immediately prior to such Business
        Combination will beneficially own, directly or indirectly, more than 60%
        of,
        respectively, the outstanding shares of common stock, and the combined voting
        power of the outstanding voting securities entitled to vote generally in
        the
        election of directors, as the case may be, of the corporation resulting from
        such Business Combination (including, without limitation, a corporation which
        as
        a result of such transaction owns the Company or all or substantially all
        of the
        Company's assets either directly or through one or more subsidiaries) in
        substantially the same proportions as their ownership, immediately prior
        to such
        Business Combination, of the Outstanding Company Common Stock and Outstanding
        Company Voting Securities, as the case may be, (2) no Person (other than
        any
        employee benefit plan (or related trust) sponsored or maintained by the Company
        or any entity controlled by the Company or such corporation resulting from
        such
        Business Combination) will beneficially own, directly or indirectly, 30%
        or more
        of, respectively, the outstanding shares of common stock of the corporation
        resulting from such Business Combination or the combined voting power of
        the
        outstanding voting securities of such corporation entitled to vote generally
        in
        the election of directors except to the extent that such ownership existed
        with
        respect to the Company prior to the Business Combination and (3) at least
        a
        majority of the members of the board of directors of the
  
  corporation
        resulting from such Business Combination will have been members of the Incumbent
        Board at the time of the execution of the initial agreement, or of the action
        of
        the Board, providing for such Business Combination; or
 
 (iv)  The
        consummation of a complete liquidation or dissolution of the
        Company.
 
 (c)  *Change
        of Control Price* .
        For
        purposes of the Plan, "Change of Control Price" means the higher of (i) the
        highest reported sales price, regular way, of a share of Common Stock in
        any
        transaction reported on the New York Stock Exchange Composite Tape or other
        national exchange on which such shares are listed or on NASDAQ during the
        60-day
        period prior to and including the date of a Change of Control or (ii) if
        the
        Change of Control is the result of a tender or exchange offer or a Business
        Combination, the highest price of a share of Stock paid in such tender or
        exchange offer or Business Combination; *provided,
        however,* that in
        the case of Incentive Stock Options and Stock Appreciation Rights relating
        to
        Incentive Stock Options, the Change of Control Price shall be in all cases
        the
        Fair Market Value of the Stock on the date such Incentive Stock Option or
        Stock
        Appreciation Right is exercised. To the extent that the consideration paid
        in
        any such transaction described above consists all or in part of securities
        or
        other noncash consideration, the value of such securities or other noncash
        consideration shall be determined in the sole discretion of the
        Board.
 
 **SECTION
        9:**  **Term,
        Amendment and Termination**
 
 The
        Plan
        will terminate on the tenth anniversary of the effective date of the Plan.
        Under
        the Plan, Awards outstanding as of such date shall not be affected or impaired
        by the termination of the Plan.
 
 The
        Board
        may amend, alter, or discontinue the Plan, but no amendment, alteration,
        or
        discontinuation shall be made which would impair the rights of an optionee
        under
        a Stock Option or a recipient of a Stock Appreciation Right, or Restricted
        Stock
        Award, theretofore granted without the optionee's or recipient's consent,
        except
        such an amendment made to comply with applicable law, stock exchange rules
        or
        accounting rules. In addition, no such amendment shall be made without the
        approval of the Company's stockholders to the extent such approval is required
        by applicable law or stock exchange rules and no such amendment may (1)
        increase, other than by operation of the antidilution clauses contained in
        Section 3 of the Plan, the number of shares of Common Stock available for
        the
        grant of Awards under the Plan or to alter the maximum number of shares
        available for the grant of Awards in the form of Restricted Stock or of
        Incentive Stock Options; (2) modify the criteria for eligibility to participate
        in the Plan or the nature of the Awards which may be granted under the Plan;
        (3)
        alter the provision requiring that all Stock Options be granted at an exercise
        price not less than the Fair Market Value of the Common Stock on the date
        of
        grant; (4) alter the provisions of the Plan which preclude the lowering of
        the
        exercise price of Stock Options (other than pursuant to the antidilution
        provisions contained in Section 3 of the Plan) or substituting for outstanding
        options new options having a lower exercise price; and (5) alter the provisions
        set forth in Section 7(c)(vii) of the Plan with respect to minimum vesting
        schedules relating to Awards in the form of Restricted Stock.
 
 The
        Committee may amend the terms of any Stock Option or other Award theretofore
        granted, prospectively or retroactively, but no such amendment shall cause
        a
        Qualified Performance-Based Award to cease to qualify for the Section 162(m)
        Exemption or impair the rights of any holder without the holder's consent
        except
        such an amendment made to cause the Plan or Award to comply with applicable
        law,
        or regulation, stock exchange rules, or accounting rules; provided, however,
        that such power of the Committee shall not extend to the reduction of the
        exercise price of a previously granted Stock Option, except as provided in
        Section 3 hereof, nor may the Committee substitute new Stock Options for
        previously granted Stock Options having higher option prices.
  
  
 Subject
        to the above provisions, the Board shall have authority to amend the Plan
        to
        take into account changes in law and tax and accounting rules as well as
        other
        developments, and to grant Awards which qualify for beneficial treatment
        under
        such rules without stockholder approval.
 
 **SECTION
        10:**  **Unfunded
        Status of Plan**
 
 It
        is
        presently intended that the Plan constitute an "unfunded" plan for incentive
        and
        deferred compensation. The Committee may authorize the creation of trusts
        or
        other arrangements to meet the obligations created under the Plan to deliver
        Common Stock or make payments; *provided,
        however,* that
        unless the Committee otherwise determines, the existence of such trusts or
        other
        arrangements is consistent with the "unfunded" status of the Plan.
 
 **SECTION
        11:**  **General
        Provisions**
 
 (a)  The
        Committee may require each person purchasing or receiving shares pursuant
        to an
        Award to represent to and agree with the Company in writing that such person
        is
        acquiring the shares without a view to the distribution thereof. The
        certificates for such shares may include any legend which the Committee deems
        appropriate to reflect any restrictions on transfer.
 
 (i)  Notwithstanding
        any other provision of the Plan or agreements made pursuant thereto, the
        Company
        shall not be required to issue or deliver any certificate or certificates
        for
        shares of Common Stock under the Plan prior to fulfillment of all of the
        following conditions:
 
 (ii)  Listing
        or approval for listing upon notice of issuance, of such shares on the New
        York
        Stock Exchange, Inc., or such other securities exchange as may at the time
        be
        the principal market for the Common Stock;
 
 (iii)  Any
        registration or other qualification of such shares of the Company under any
        state or federal law or regulation, or the maintaining in effect of any such
        registration or other qualification which the Committee shall, in its absolute
        discretion upon the advice of counsel, deem necessary or advisable;
        and
 
 **(iv)**  Obtaining
        any other consent, approval, or permit from any state or federal governmental
        agency which the Committee shall, in its absolute discretion after receiving
        the
        advice of counsel, determine **** to
        be
        necessary or advisable.
 
 (b)  Nothing **** contained
        in the Plan shall prevent the Company or any Subsidiary from adopting other
        or
        additional compensation arrangements for its employees.
 
 (c)  The
        Plan
        shall not constitute a contract of employment, and adoption of the Plan shall
        not confer upon any employee any right to continued employment, nor shall
        it
        interfere in any way with the right of the Company or any Subsidiary to
        terminate the employment of any employee at any time.
  
  
 (d)  No
        later
        than the date as of which an amount first becomes includible in the gross
        income
        of the participant for federal income tax purposes with respect to any Award
        under the Plan, the participant shall pay to the Company, or make arrangements
        satisfactory to the Company regarding the payment of, any federal, state,
        local
        or foreign taxes of any kind required by law to be withheld with respect
        to such
        amount. Withholding obligations may be settled with Common Stock, including
        Common Stock that is part of the Award that gives rise to the withholding
        requirement; provided, that not more than the legally required minimum
        withholding may be settled with Common Stock. The obligations of the Company
        under the Plan shall be conditional on such payment or arrangements, and
        the
        Company and its Affiliates shall, to the extent permitted by law, have the
        right
        to deduct any such taxes from any payment otherwise due to the participant.
        The
        Committee may establish such procedures as it deems appropriate, including
        making irrevocable elections, for the settlement of withholding obligations
        with
        Common Stock.
 
 (e)  The
        Committee shall establish such procedures as it deems appropriate for a
        participant to designate a beneficiary to whom any amounts payable in the
        event
        of the participant's death are to be paid or by whom any rights of the
        participant, after the participant's death, may be exercised.
 
 (f)  In
        the
        case of a grant of an Award to any employee of a Subsidiary of the Company,
        the
        Company may, if the Committee so directs, issue or transfer the shares of
        Common
        Stock, if any, covered by the Award to the Subsidiary, for such lawful
        consideration as the Committee may specify, upon the condition or understanding
        that the Subsidiary will transfer the shares of Common Stock to the employee
        in
        accordance with the terms of the Award specified by the Committee pursuant
        to
        the provisions of the Plan. All shares of Common Stock underlying Awards
        that
        are forfeited or canceled shall revert to the Company.
 
 (g)  The
        Plan
        and all Awards made and actions taken thereunder shall be governed by and
        construed in accordance with the laws of the State of Delaware, without
        reference to principles of conflict of laws.
 
 (h)  In
        the
        event an Award is granted to an Eligible Individual who is employed or providing
        services outside the United States and who is not compensated from a payroll
        maintained in the United States, the Committee may, in its sole discretion,
        modify the provisions of the Plan as they pertain to such individual to comply
        with applicable foreign law.
 
 **SECTION
        12:**  **Effective
        Date of Plan**
 
 The
        Plan
        shall be effective as of the date it is approved by the shareholders of the
        Company.
 
 
  **DEFINITIONS**
 **Basic
        Earnings Per Share (BEPS)**
 Income
        available to common stockholders of the Company excluding the cumulative
        effect
        on prior years of an accounting change net of income taxes and the after
        tax
        charges that may result from the acquisition of research and development
        associated with acquiring a business entity, a line of business, or a
        technology, divided by the weighted-average number of common shares of the
        Company outstanding during the applicable period. Shares issued during the
        applicable period and shares reacquired during the applicable period shall
        be
        weighted for the portion of the period that they were outstanding.
 
 **Business
        Operating Profit (BOP)**
 Total
        Sales less Total Cost of Sales less Marketing expense less General and
        Administrative Expenses plus Other Income or minus Other Expense.
 
 **Capital**
 The
        sum
        of all interest-bearing debt, including debt with imputed interest, and total
        equity.
 
 **Capital
        Charge Percentage**
 Represents
        the risk adjusted cost of capital charge expressed as a percentage established
        for the Company and each business unit as determined by the Holt Associates,
        Inc. model.
 
 **Capital
        Utilized**
 Total
        equity, plus Notes Payable, plus Current Portion of Long-Term Debt plus
        Long-Term Debt, plus Advances from Corporate (less if net Advances are to
        Corporate), less Investments in Consolidated Subsidiaries.
 
 **Cash
        Flow (CF)**
 The
        sum
        of Net Income plus depreciation and amortization.
 
 **Cash
        Value Added (CVA)**
 Gross
        Cash Flow minus the product of Gross Investment times Capital Charge Percentage,
        plus any amounts borrowed from CVA Bank, less any amounts repaid to the CVA
        Bank.
 
 **CVA
        Bank**
 ANNEX
          A
 CVA
        Bank
        means, with respect to each approved project or approved acquisition, a
        bookkeeping record of an account used to defer negative CVA generation to
        later
        fiscal periods. All deferred negative CVA amounts will incur an annual capital
        charge of the respective business unit. For purposes of this definition,
        an
        "approved acquisition" shall be any acquisition of the stock or assets of
        another entity which has been approved by the Company's Board of Directors,
        and
        an "approved project" shall be one which has been designated as eligible
        for CVA
        Bank treatment by the Compensation Committee during the first 90 days of
        the
        fiscal year in which such deferral account is established.
 
 **Diluted
        Earnings Per Share (DEPS)**
 DEPS
        is
        computed in the same manner as BEPS; however, the weighted-average number
        of
        common shares of the Company outstanding during the applicable period is
        increased to include the number of additional common shares that would have
        been
        outstanding if the dilutive potential common shares resulting from stock
        options
        or other common stock equivalents had been issued.
 
 **Gross
        Cash Flow**
 Annual
        BOP plus depreciation, amortization, rental expense, and research and
        development expense, less taxes paid, plus increases in or less decrease
        in
        non-operating accrued other expenses, plus net decrease in pension asset,
        less
        net increase in pension asset.
  
  
 **Gross
        Investment**
 Average
        Capital Utilized plus accumulated depreciation, capitalization of research
        and
        development expense for the most recent five fiscal years and rental expense,
        less deferred tax assets, less pension assets, plus fixed asset inflation
        adjustment, plus non-operating accrued other expenses.
 
 **Net
        Income**
 Net
        Income (Loss) shall include income (loss) from continuing operations before
        provision for income taxes; provision for income taxes; income from discontinued
        operations net of applicable income taxes; and effect on income from
        extraordinary items net of applicable income taxes. Net income shall not
        include
        the cumulative effect on prior years of an accounting change net of income
        taxes
        and the after tax charges that may result from the acquisition of research
        and
        development associated with acquiring a business entity, a line of business,
        or
        a technology.
 
 **Net
        Revenue (NR)**
 Total
        net
        sales and service revenue after adjustments for all discounts, returns, and
        allowances.
 
 **Return
        on Assets (ROA)**
 BOP
        divided by average assets (computed on a monthly basis).
 
 **Return
        on Capital (ROC)**
 Income
        before interest and taxes divided by average annual capital (computed on
        a
        monthly basis).
 
 **Return
        on Capital Utilized (ROCU)**
 BOP
        divided by average Capital Utilized (computed on a monthly basis).
 
 **Return
        on Equity (ROE)**
 Net
        Income divided by beginning equity.
 
 **Return
        on Revenue (ROR)**
 BOP
        divided by total Net Revenue expressed as a percent.
 
 **Return
        on Tangible Equity (ROTE)**
 New
        Income divided by beginning tangible equity.
 
 **Revenue
        (RV)**
 Revenue
        as reported on the Company's annual financial statements.
 
 **Revenue
        Growth (RG)**
 The
        increase in revenue for the current fiscal year, expressed as a percent,
        above a
        specified base line period.