Document:

Exhibit 4.2

 

SECURITY AGREEMENT—BORROWERS

 

SECURITY AGREEMENT, dated as of September 30, 2004 (this “Agreement”),
among each of UNOVA, INC., a Delaware
corporation, UNOVA INDUSTRIAL AUTOMATION SYSTEMS, INC.,
a Delaware corporation, INTERMEC TECHNOLOGIES CORPORATION,
a Washington corporation, INTERMEC INTERNATIONAL
INC., a Washington corporation, 
INTERMEC TECHNOLOGIES MANUFACTURING, LLC,
a Washington limited liability company, INTERMEC IP CORP.,
a Delaware corporation and UNOVA IP CORP.,
a Delaware corporation (together, the “Borrowers”), and KEYBANK NATIONAL ASSOCIATION (“KeyBank”), as
Administrative Agent (the “Administrative Agent”) for the benefit of the
Secured Parties (each as defined below).

 

RECITALS

 

WHEREAS, the Borrowers, various
financial institutions (the “Lenders”) and KeyBank, as Administrative
Agent and as LC Issuer (together with the Lenders, the “Secured Parties”)
are parties to a Credit Agreement dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
pursuant to which the Lenders will extend credit by means of making Loans and
the LC Issuer will issue  Letters of
Credit to or for the account of the Borrowers or other Letter of Credit
Obligors;

 

WHEREAS, it is a condition precedent to the
effectiveness of the Credit Agreement that the Borrowers enter into this
Agreement;

 

NOW,
THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

Section 1.              Definitions.

 

(a)           Unless otherwise indicated, terms defined in the Credit
Agreement are used herein as defined therein to the extent so defined.  All other terms contained in this Agreement,
unless the context indicates otherwise or unless otherwise defined herein,
shall have the meanings provided for in the UCC.

 

(b)           As used in this Agreement and all other Loan Documents,
the following UCC terms shall have the meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined) ascribed
to such terms in the UCC: “Account”, “Account Debtor”, “Certificated Security”,
“Chattel Paper”, “Deposit Account”, “Document”, “Commodity Account”, “Commodity
Contract”, “Commodity Customer”, “Commodity Intermediary”, “Entitlement Holder”,
“Equipment”, “Financial Asset”, “Fixture”, “General Intangible”, “Instrument”, “Inventory”,
“Issuer”, “Investment Property”, “Letter of Credit Rights”, “Motor Vehicles”, “Proceeds”,
“Secured Party”, “Securities Account”, “Securities Act”, “Securities
Intermediary”, “Security”, “Security Agreement”, “Security Certificate”, “Security
Entitlement”, “Security Interest”, “Supporting Obligations” and “Uncertificated
Security”.

 

(c)           In addition, as used herein:

 

“Additional Pledged
Collateral” means all shares of, limited and /or general partnership
interest in, and limited liability company interests in, and all securities
convertible into, and warrants, options and other rights to purchase or
otherwise acquire, stock of, either (i) any Person that, after the Closing
Date, as a result of any occurrence, becomes a Subsidiary of a Borrower, or
(ii) any issuer of Pledged Stock, any entity that is acquired by such
Borrower after the Closing Date; all certificates or other instruments
representing any of the foregoing; all Security Entitlements of such Borrower
in respect

 

 

of any of the foregoing; all additional Indebtedness from time to time
owed to such Borrower by any obligor on the Pledged Notes and the instruments
evidencing such Indebtedness; and all interest, cash, instruments and other
property or Proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the foregoing.  Additional Pledged Collateral may be General
Intangibles or Investment Property; provided that that in no
event shall any Borrower be required to pledge more than 65% of the capital
stock of a Subsidiary that is not a Domestic Subsidiary; and provided
further that in no event shall any Borrower be required to cause the pledge
of any capital stock of any direct or indirect Subsidiary of any direct Foreign
Subsidiary of a Borrower.

 

“Assignee Deposit Account”
has the meaning assigned to such term in Section 4.

 

“Collateral” has
the meaning assigned to such term in Section 3.

 

“Credit Agreement”
has the meaning assigned to such term in the recitals of this Agreement.

 

“Excluded Property”
means:

 

(a)           any permit, lease,
license, contract or other agreement held by a Borrower or any Subsidiary
Guarantor that validly prohibits the creation by such Borrower or such
Subsidiary Guarantor of a security interest therein, or in the case of
licenses, the assignment thereof;

 

(b)           Equipment or
Fixtures owned by a Borrower or any Subsidiary Guarantor on the Closing Date
that is subject to a purchase money Lien or a Capitalized Lease (in each case
as otherwise permitted by the Credit Agreement) if the contract or other
agreement in which such Lien is granted (or in the documentation providing for
such Capitalized Lease) validly prohibits the creation of any other Lien on
such Equipment or Fixtures;

 

(c)           Motor Vehicles owned
by a Borrower  or
a Subsidiary Guarantor;

 

(d)           cash and cash
equivalents permitted to be subject to Liens pursuant to Sections 5.3(d)(A),
(B) and (O) of the Credit Agreement;

 

(e)           deposits and cash
pledges securing only workers’ compensation, unemployment insurance or similar
obligations  in the ordinary course of
business; and

 

(f)            the
capital stock of The Factory Power Company, an Ohio corporation,

 

and, in each case,
only to the extent, and for so long as, such permit, lease, license, contract
or other agreement, validly prohibits the creation of a Lien in such property
in favor of the Administrative Agent and, upon the termination of such
prohibition (howsoever occurring), such permit, lease, license, contract, other
agreement or Equipment shall cease to be “Excluded Property”.

 

“Foreign Subsidiary” means a Subsidiary
of a Borrower that is not a Domestic Subsidiary.

 

“Issuers” means, collectively, the
respective corporations, partnerships or other entities identified as such on Annex
3, and each other Subsidiary of any Borrower formed

 

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or
acquired after the date hereof and required to be added as an “Issuer” under
this Agreement.

 

“Lockbox” means a post office box of a Borrower or a
Subsidiary Guarantor, as to which a lockbox bank has access, and into which the
collections on such Borrower’s or Subsidiary Guarantor’s Accounts are delivered
by Account Debtors.

 

“Material Copyrights” means all Copyrights of a Borrower having a
material value or otherwise necessary for, or material to, the operation of the
business of such Borrower as presently conducted, as determined by such
Borrower in good faith after due inquiry. 
The Material Patent and Trademark Listing contains
a list of all of the Borrowers’ Material Copyrights as of the Closing Date.

 

“Material Copyright Collateral” means, with respect to a Borrower, all of
such Borrower’s (i) Material Copyrights (and all future Material
Copyrights pledged hereunder pursuant to Section 5.06(b)), (ii) the right to sue or otherwise
recover for any and all past, present and future infringement,
misappropriation, or improper, unlawful or unfair use of any of the foregoing,
and all damages and payments for past and future infringements and
misappropriations thereof, and (iv) the rights of such Borrower under all
commitments, understandings, instruments, leases, licenses, pledges, mortgages,
indentures, notes, purchase or sale orders, promises and similar arrangements
evidencing or creating any obligation, whether written or oral, related to any
of the foregoing, including any royalties and income.

 

“Material Intellectual Property” means, with respect to any Borrower, all
Material Copyrights, Material Patents and Material Trademarks of such Borrower.

 

“Material Intellectual Property Collateral” means
the Material Patent Collateral, the Material Trademark Collateral and the
Material Copyright Collateral.

 

“Material Patents” means all Patents of a Borrower having a
material value or otherwise necessary for, or material to, the operation of the
business of such Borrower as presently conducted, as determined by such
Borrower in good faith after due inquiry. 
The Material Patent and Trademark Listing contains
a list of all of the Borrowers’ Material Patents as of the Closing Date.

 

“Material Patent Collateral” means, with respect to a Borrower, all of
such Borrower’s (i) Material Patents (and all future Material Patents
pledged hereunder pursuant to Section 5.06(b)), (ii) all inventions, improvements and designs described and
claimed in any Material Patent and the right to make, use, sell and advertise
for sale the same, (iii) the right to sue or otherwise recover for any and
all past, present and future infringement, misappropriation, or improper,
unlawful or unfair use of any of the foregoing, and all damages and payments
for past and future infringements and misappropriations thereof and
(iv) the rights of such Borrower under all commitments, understandings,
instruments, leases, licenses, pledges, mortgages, indentures, notes, purchase
or sale orders, promises and similar arrangements evidencing or creating any
obligation, whether written or oral, related to any of the foregoing, including
any royalties and income.

 

“Material Trademarks” means all Trademarks of a Borrower having a
material value or otherwise necessary for, or material to, the operation of the
business of such Borrower as presently conducted, as determined by such
Borrower in good faith after due inquiry. The Material Patent and Trademark
Listing contains a list of all of the Borrowers’
Material Trademarks as of the Closing Date.

 

3

 

“Material Trademark Collateral” means, with respect to a Borrower, all of
such Borrower’s (i) Material Trademarks (and all future Material
Trademarks pledged hereunder pursuant to Section 5.06(b)), (ii) all
goodwill connected with the use of, and symbolized by, each Material Trademark;
(iii) the right to sue or otherwise recover for any and all past, present
and future infringement, misappropriation, or improper, unlawful or unfair use
of any of the foregoing, and all damages and payments therefor and
(iv) the rights of such Borrower under all commitments, understandings,
instruments, leases, licenses, pledges,
mortgages, indentures, notes, purchase or sale orders, promises and similar
arrangements evidencing or creating any obligation, whether written or oral,
related to any of the foregoing, including any royalties and income.

 

“Obligations”
means all “Obligations” as defined in the Credit Agreement and all other
obligations of each Borrower and all other amounts whatsoever now or hereafter
arising from time to time owing to the Lenders, the LC Issuer or the Administrative
Agent under this Agreement and the other Loan Documents (including, without
limitation, principal, premium (if any), interest (including interest accruing
on or after the filing of any petition in bankruptcy or for reorganization
relating to such Borrower whether or not a claim for post-filing interest is
allowed in such proceedings), fees, charges, expenses, indemnities,
reimbursement obligations, guarantees and all other amounts payable thereunder
or in respect thereof).

 

“Pledged Collateral”
means, collectively, the Pledged Notes, the Pledged Stock, the Pledged
Partnership Interests, the Pledged LLC Interests, any other Investment Property
of the Borrowers, all certificates or other instruments representing any of the
foregoing, all Security Entitlements of the Borrowers in respect of any of the
foregoing, all dividends, interest distributions, cash, warrants, rights,
instruments and other property or Proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing.  Pledged Collateral may
be General Intangibles or Investment Property.

 

“Pledged LLC Interests”
means all of each Borrower’s right, title and interest as a member of any
limited liability company and all of such Borrower’s right, title and interest
in, to and under any operating or limited liability company agreement to which
it is a party, provided that “Pledged LLC Interests” shall be
deemed to only include 65% of the membership or unit interest of a Subsidiary that
is not a Domestic Subsidiary.  For the avoidance of doubt, Pledged LLC
Interests shall not include the membership interest of a direct or indirect
Subsidiary of any direct Foreign Subsidiary of a Borrower.

 

“Pledged Notes”
means all right, title and interest of each Borrower in the Instruments
evidencing all Indebtedness owed to such Borrower, issued by the obligors named
therein, and all interest, cash, Instruments and other property or Proceeds
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such Indebtedness.

 

“Pledged Partnership
Interests” shall mean all of each Borrower’s right, title and
interest as a limited and/or general partner in all partnerships (including
limited partnerships) and all of such Borrower’s right, title and interest in,
to and under any related partnership agreements to which it is a party; provided
that “Pledged Partnership Interests” shall be deemed to only include 65%
of the partnership interests of a Subsidiary that is not a Domestic Subsidiary.  For
the avoidance of doubt, Pledged Partnership Interests shall not include the
partnership interest of a direct or indirect Subsidiary of any direct Foreign
Subsidiary of a Borrower.

 

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“Pledged Stock”
means the shares of capital stock of an Issuer owned by each Borrower; provided,
however, that with respect to a Foreign Subsidiary, only up to 65% of each
class of the capital stock of such Foreign Subsidiary shall be deemed to be
pledged hereunder.  For the avoidance of
doubt, Pledged Stock shall not include the capital stock of any direct or
indirect Subsidiary of any direct Foreign Subsidiary of a Borrower.

 

“Secured Parties”
means the Lenders, the LC Issuer, any Designated Hedge Creditor, the
Administrative Agent and all other holders of Obligations.

 

 “UCC” means the Uniform Commercial Code as in effect from
time to time in the State of New York.

 

Section 2.              Representations and Warranties.  Each Borrower represents and warrants that:

 

(a)           Title and Priority.  Each Borrower is the sole beneficial owner of
and has the legal and valid right to use and grant a security interest in the
Collateral in which it purports to grant a security interest pursuant to Section
3 and no Lien exists or will exist upon such Collateral at any time, except
for Liens not prohibited by the Credit Agreement.  The security interest created hereunder
constitutes a valid and, once appropriate financing statements are duly filed
in the central UCC filing office of the jurisdiction of organization of each
Borrower, perfected security interest under the UCC in the Collateral with
respect to which a security interest may be perfected by such filing and in
which such Borrower purports to grant a security interest pursuant to Section
3, subject to no equal or prior Lien except as expressly permitted by
Section 5.3(d) of the Credit Agreement.

 

(b)           Names, Locations.   The full and correct legal name, type
of organization, jurisdiction of organization, organizational identification
number (if applicable) and mailing address of such Borrower are correctly set
forth in Annex 1.  Annex 1
also correctly specifies (A) the location of such Borrower’s registered
office and all domestic locations of its respective operations and whether such
locations are owned or leased (and if such Borrower has more than one place of
business, such description shall also designate such Borrower’s chief executive
office), including, an indication of any such location in which such Borrower
has an interest in the related real property with a fair market value in excess
of One Million Dollars ($1,000,000), (B) each domestic location (not
already set forth in clause (A)) above where the Goods (other than Motor
Vehicles constituting Equipment and Goods in transit) of such Borrower are
located, (C) the domestic location and name of any warehouseman, bailee,
processor or consignee at which Collateral having a value in excess of Five
Thousand Dollars ($5,000) is located and a good faith estimate of the fair
market value of the Collateral located at each such location, (D) each domestic
location owned or leased by such Borrower where the Borrowers have Fixtures
used in the Borrowers’ business operations (for avoidance of doubt, excluding
any Fixtures used in connection with the Borrowers’ operation of real property
or physical improvements to real property) (and an indication of each such
leased site where the total aggregate value of such Fixtures, as determined by
such Borrower’s good faith estimate, such estimate not to be less than such
Fixtures’s aggregate book value, is greater than $500,000),  (E) each domestic location where such
Borrower keeps records concerning its Accounts and General Intangibles and  (F) all former legal names and tradenames
used by such Borrower during the five year period prior to the Closing Date.

 

5

 

(c)           Changes in Circumstances.  Except as specified in Annex 1, such
Borrower has not (i) within the period of four months prior to the date
hereof, changed its location (as defined in Section 9-307 of the UCC) and
(ii) within the period of five years prior to the date hereof, changed its
legal name or used any trade name.

 

(d)           Accounts.  Annex 2 lists all Deposit Accounts,
Securities Accounts and Commodity Accounts and Lockboxes of such Borrower in
existence on the Closing Date.

 

(e)           Pledged Stock; Pledged
Notes.  The Pledged Stock
identified under the name of such Borrower in Annex 3 is, and all other
Pledged Stock in which such Borrower shall hereafter deliver to the
Administrative Agent pursuant to Section 3 will be, duly authorized,
validly existing, fully paid and non-assessable and none of such Pledged Stock
is or will be subject to any contractual restriction, or any restriction under
the charter or by-laws of the respective Issuer of such Pledged Stock (except
for any such restriction contained herein or in the Credit Agreement).  The Pledged Stock identified under the name
of such Borrower in Annex 3 constitutes all of the issued and
outstanding shares of capital stock of any class of the Issuers beneficially
owned by such Borrower (whether or not registered in the name of such Borrower)
and Annex 3 correctly identifies, as at the date hereof, the respective
Issuers of such Pledged Stock, the respective class and par value of the shares
constituting such Pledged Stock and the respective number of shares (and
registered owners thereof) represented by each such certificate.  Each Pledged Note issued to such Borrower and
pledged by such Borrower hereunder has been duly authorized, authenticated or
issued and delivered, is the legal, valid and binding obligation of the obligor
thereunder, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other Laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.  None of the Pledged
Partnership Interests nor the Pledged LLC Interests
exist in certificated form.

 

(f)            Fair Labor Standards Act.  Any Goods now or hereafter produced by such
Borrower or any of its Subsidiaries included in the Collateral have been and
will be produced in all material respects in compliance with the requirements
of the Fair Labor Standards Act, as amended.

 

(g)           Intellectual Property.

 

(1)           All
of the issued patents, trademark registrations and copyright registrations
among the Material Intellectual Property are currently in compliance with
formal legal requirements in all material respects (including payment of
filing, examination and maintenance fees) and valid and enforceable in all
material respects.  No Material
Intellectual Property has been or is now involved in any interference, reissue,
reexamination, opposition or cancellation proceeding, and, other than certain “Smart
Battery” and “Removable Hard Drive” patents, no Material Intellectual Property
has been or is infringed or has been or is challenged or threatened in any way.

 

(2)           Each Borrower is not aware that it
has failed to take all reasonably necessary steps to use consistent standards
of quality in the distribution and sale of all products sold and the provision
of all services provided under or in connection with any of the Material
Trademark Collateral or has failed to take all necessary steps to ensure that
all licensed users of any of the Material Trademark Collateral adhere to such
consistent standards of quality.

 

Section 3.              Collateral.  To secure the prompt payment and performance
of the Obligations, each Borrower hereby grants to the Administrative Agent,
for itself in its capacity as Administrative Agent hereunder and for the
benefit of the Secured Parties, a continuing security

 

6

 

interest
in and a pledge of all of the tangible and intangible personal property and
assets of such Borrower (including all Intellectual Property), whether now
owned or existing or hereafter acquired or arising and wheresoever located
(together, the “Collateral”), including, without limitation, all such
Borrower’s:

 

(a)           Accounts,

 

(b)           Inventory,

 

(c)           Equipment and Fixtures,

 

(d)           General Intangibles,

 

(e)           Investment Property,

 

(f)            Deposit Accounts and any and all monies credited by or
due from the Lenders or any other depository to such Borrower,

 

(g)           Pledged Collateral and any Additional Pledged Collateral
(arising after the date hereof),

 

(h)           Material Intellectual Property Collateral,

 

(i)            All Supporting Obligations and Letter of Credit Rights,

 

(j)            Instruments, Documents, documents of title, policies and
certificates of insurance, securities, goods, choses in action, Chattel Paper,
cash or other property, to the extent owned by such Borrower or in which such
Borrower has an interest, and

 

(k)           property which now or hereafter is at any time in the possession
or control of any of the Secured Parties or in transit by mail or carrier to or
from any of the Secured Parties or in the possession of any Person acting on a
Secured Party’s behalf, without regard to whether such Secured Party received
the same in pledge, for safekeeping, as agent for collection or transmission or
otherwise or whether such Secured Party had conditionally released the same,
and any and all balances, sums, Proceeds and credits of such Borrower with such
Secured Party,

 

and, (A) all
accessions to, substitutions for, and all replacements, products and Proceeds
of the foregoing including, but not limited to, Proceeds of insurance policies
insuring such property, and Proceeds of any insurance, indemnity, warranty or
guaranty payable to such Borrower and (B) all books, records, and other
property (including, but not limited to, credit files, programs, printouts,
computer software, and disks, magnetic tape and other magnetic media, and other
materials and records) of such Borrower pertaining to any such above-referenced
property; provided, however, that the foregoing grant of a
security interest and pledge shall not include a security interest in or pledge
of Excluded Property (but, notwithstanding anything set forth herein to the
contrary, the Administrative Agent will be deemed to have, and at all times
from and after the date hereof to have had, a security interest in and pledge
of the Proceeds of such Excluded Property to the extent such Proceeds do not
constitute Excluded Property).

 

Anything herein to the contrary
notwithstanding, (a) each Borrower shall remain liable under the contracts
and agreements included in such Borrower’s Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same extent
as if this Agreement had not been executed, (b) the exercise by the
Administrative Agent of any of the rights hereunder shall not release such
Borrower from any of its duties or obligations under the

 

7

 

contracts and agreements
included in the Collateral and (c) no Secured Party shall have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement or any other agreement, nor shall any
Secured Party be obligated to perform any of the obligations or duties of such
Borrower thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder

 

Section 4.              Collections. At all times other than during the occurrence and continuance
of an Event of Default, each Borrower (a) may, in the ordinary course of its
business, at its own expense, sell, lease or furnish under contracts of service
any of the Inventory normally held by such Borrower for such purpose, use and
consume, in the ordinary course of its business, any raw materials, work in
process or materials normally held by such Borrower for such purpose, and use,
in the ordinary course of its business (but subject to the terms of the Credit
Agreement), the cash Proceeds of Collateral and other money which constitutes
Collateral, (b) will, at its own expense, endeavor to collect, as and when due,
all amounts due under any of the Collateral, as such Borrower may deem
advisable, and (c) may grant, in the ordinary course of business, to any
Account Debtor, any rebate, refund or allowance to which such Account Debtor
may be lawfully entitled, and may accept, in connection therewith, the return
of Goods, the sale or lease of which shall have given rise to any related
Account.  The Administrative Agent,
however, may, at any time that an Event of Default exists, whether before or
after any revocation of such power and authority or the maturity of any of the
Obligations, notify any such Account Debtors to make payment to the
Administrative Agent of any amounts due or to become due under such Accounts
and enforce collection of any Collateral by suit or otherwise and surrender,
release or exchange all or any part thereof, or compromise or extend or renew
for any period (whether or not longer than the original period) any
Indebtedness thereunder or evidence thereby. 
Upon request of the Administrative Agent during the existence of an
Event of  Default,
each Borrower will, at its own expense, notify any parties obligated on any of
the Collateral to make payment to the Administrative Agent of any amounts due
or to become due thereunder.

 

Upon request by
the Administrative Agent during the existence of an Event of Default, each
Borrower will forthwith, upon receipt, transmit and deliver to the Administrative
Agent, in the form received, all cash, checks, drafts and other instruments or
writings for the payment of money (properly endorsed, where required, so that
such items may be collected by the Administrative Agent) which may be received
by such Borrower at any time in full or partial payment or otherwise as
Proceeds of any of the Collateral. 
Except as the Administrative Agent may otherwise consent in writing, any
such items which may be so received by such Borrower during the existence of an
Event of Default will not be commingled with any other of its funds or
property, but will be held separate and apart from its own funds or property
and upon express trust for the Administrative Agent until delivery is made to
the Administrative Agent.  such Borrower will comply with the terms and conditions of
any consent given by the Administrative Agent pursuant to the foregoing
sentence.

 

During the
existence of an Event of Default, all items or amounts which are delivered by
each Borrower to the Administrative Agent on account of partial or full payment
or otherwise as Proceeds of any of the Collateral shall be deposited to the
credit of a Deposit Account (each an “Assignee Deposit Account”) of such
Borrower maintained with the Administrative Agent, as security for payment of
the Obligations.  A Borrower shall not
have any right to withdraw any funds deposited in the applicable Assignee
Deposit Account.   The Administrative
Agent may, during the existence of an Event of Default, (i) exercise its right
to exclusive control over any Deposit Account or Securities Account subject to
a Deposit Account Control Letter or a Securities Account Control Letter,
respectively, and (ii) require each Borrower to (and require such Borrower to
cause each of its Subsidiaries (other than Foreign Subsidiaries and Excluded
Subsidiaries) to) enter into the necessary agreements (including, without
limitation, Deposit Account Control Letters and Securities Account Control
Letters, if applicable) allowing for the Administrative Agent to have exclusive
“control” (as such term is

 

8

 

defined
in the UCC) over each Deposit Account, Securities Account, Commodity Account or
Lockbox of such Borrower or such Subsidiary. 
During the existence of an Event of Default, all items or amounts which
are delivered and/or deposited to any such controlled Deposit Account,
Securities Account, Commodity Account or Lockbox shall be promptly transferred
by the Administrative Agent to the Assignee Deposit Account.  The Administrative Agent may, from time to
time, in its discretion, during the existence of an Event of Default, and shall
upon request of the applicable Borrower made not more than once in any week,
apply all or any of the then balance, representing collected funds, in the
Assignee Deposit Account, toward payment of the Obligations, whether or not
then due, in such order of application as provided in Section 7.4(d) of the
Credit Agreement, and the Administrative Agent may, from time to time, in its
discretion, to the extent permitted under the Credit Agreement, release all or
any of such balance to such Borrower.

 

During the
existence of an Event of Default, the Administrative Agent is authorized to
endorse, in the name of any Borrower, any item, howsoever received by the
Administrative Agent, representing any payment on or other Proceeds of any of
the Collateral.

 

Section 5.              Collateral Provisions; Remedies; Further Assurances; Termination. 
In furtherance of the grant of the pledge and security interest pursuant
to Section 3, each Borrower hereby agrees with the Administrative Agent
and each other Secured Party as follows:

 

5.01        Perfection.  Each
Borrower hereby (i) authorizes the Administrative Agent, at any time and from
time to time, to file financing statements, continuation statements, and
amendments thereto that describe the Collateral as “all assets” or “all
personal property and assets” of such Borrower, or words of similar effect, and
which otherwise comply with and contain any other information required by the
UCC for the sufficiency of filing office acceptance of any such financing
statement, continuation statement, or amendment, (ii) authorizes the
Administrative Agent, at any time and from time to time, to file financing
statements, continuation statements, and amendments thereto, relating to any
part of the Material Intellectual Property Collateral without the signature of
such Borrower, with the United States Patent and Trademark Office (or any
successor thereto),  (iii) agrees to use
commercially reasonable efforts to obtain an acknowledgment, in form and
substance reasonably satisfactory to the Administrative Agent, of any bailee, warehouseman or consignee in the
United States having possession of Collateral with a fair market value greater
than $1,000,000, stating that such Person holds such Collateral for the benefit
of the Administrative Agent as
secured party, (iv) agrees to use commercially reasonable efforts to obtain a
landlord waiver, in form and substance reasonably satisfactory to the
Administrative Agent, of the landlord of any domestic property leased by
such Borrower containing Collateral with a
fair market value greater than $1,000,000, and (v) otherwise agrees to
take such other action and execute such assignments or other instruments or
documents, in each case as the Administrative Agent may reasonably request, to
evidence, perfect, or record the Administrative Agent’s security interest in
the Collateral, now existing or hereafter arising, or to enable the
Administrative Agent to exercise and enforce its rights and remedies under this
Agreement with respect to any Collateral; provided that, no action shall
be required or taken to perfect any security interest in any non-U.S.
jurisdictions except, with respect to 65% of the capital stock of the Issuers
that are Foreign Subsidiaries that are first-tier Foreign Subsidiaries of a
Borrower and not Excluded Foreign Subsidiaries granted hereunder, in which
case, the Borrowers shall only be required to execute and deliver foreign law
documents (including, without limitation, security pledge agreements or
instruments (as applicable)) and make any necessary filings to fully perfect
such pledge in the appropriate foreign jurisdictions (but such proviso shall
not limit the Borrowers’ obligations with respect to creation, perfection or
other security interest matters under the law of the United States).  Any such
financing statement, continuation statement, or amendment may be filed by the Administrative
Agent or its agents on behalf of such Borrower.

 

9

 

Each Borrower
hereby authorizes the Administrative Agent, at
any time and from time to time, with respect to each domestic location owned by
such Borrower, to file “fixture” financing statements, continuation statements
and amendments thereto as necessary to perfect the Administrative Agent’s
security interest over such Borrower’s Fixtures.  With respect to each domestic location leased
by such Borrower, where the Borrowers have Fixtures used in the Borrowers’
business operations (for
avoidance of doubt, excluding any Fixtures used in connection with the
Borrowers’ operation of real property or physical improvements to real
property) where the total aggregate value of such Fixtures, as
determined by such Borrower’s good faith estimate (such estimate not to be less
than such Fixtures’ aggregate book value) is at least $500,000, then to the
extent that (i) the applicable lease with respect to such location does not
permit such Borrower to remove all of the Borrower’s Fixtures upon the
termination of such lease (for any reason) or (ii) such Borrower does not have
a landlord waiver in effect, in form and
substance reasonably satisfactory to the Administrative Agent, from the
landlord of such location, then, to the extent permitted by such Borrower’s
lease or applicable law, the Administrative Agent, at any time and from time to time, may file “fixture”
financing statements, continuation statements, and amendments thereto as
necessary to perfect the Administrative Agent’s security interest over such
Borrower’s Fixtures at such location (and to the extent that the applicable
landlord’s consent is required under the terms of the underlying lease to
authorize such filing, such Borrower will use its commercially reasonable
efforts to obtain such consent).

 

Each Borrower shall, at any time and from time to time,
take such steps as the Administrative Agent may reasonably request for the Administrative Agent: (i) to obtain a perfected security interest in
any Pledged Collateral existing on the date hereof or any Additional Pledged
Collateral hereafter arising and (ii) otherwise to assure the continued
perfection and priority of the Administrative Agent’s security interest in any of the Collateral and
of the preservation of its rights therein. 
If any Borrower shall at any time acquire a Commercial Tort Claim in
excess of Five Million Dollars ($5,000,000), such Borrower shall promptly
notify the Administrative Agent
thereof in a writing, therein providing a reasonable description and summary
thereof (which shall include the amount thereof), and upon delivery thereof to
the Administrative Agent, such
Borrower shall be deemed to thereby grant to the Administrative Agent (and such Borrower hereby grants to the Administrative
Agent) a security interest and Lien in and
to such Commercial Tort Claim and all proceeds thereof, all upon the terms of
and governed by this Agreement, and such Borrower shall enter into a supplement
to this Agreement confirming the grant of such security interest and Lien.

 

5.02        Other Financing Statements
and Liens.  Except as
otherwise permitted under the Credit Agreement (including under Section 5.3(d)
thereof), without the prior written consent of the Administrative Agent, no
Borrower shall (a) file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to any of the Collateral in which the Administrative
Agent is not named as the sole secured party for the benefit of the Secured
Parties or (b) cause or permit any Person other than the Administrative
Agent to have “control” (as defined in Section 9-104, 9-105, 9-106 or
9-107 of the UCC) of any Deposit Account, Electronic Chattel Paper, Investment
Property or Letter-of-Credit Right constituting part of the Collateral.

 

5.03        Preservation
of Rights.  Neither the
Administrative Agent nor any other Secured Party shall be required to take
steps necessary to preserve any rights against prior parties to any of the Collateral.

 

10

 

5.04        Special
Provisions Relating to Pledged Collateral.

 

(a)           Each Borrower will cause the Pledged Collateral to
constitute at all times (i) except as provided in clause (ii) below, 100% of the
total number of shares of each class of capital stock (or in the case of any
entity other than a corporation, the total membership, partnership or other
equity interests) of each Issuer then outstanding and owned by such Borrower
and (ii) in the case of any Foreign Subsidiary which is an Issuer hereunder,
65% of the total number of shares of each class of capital stock (or in the
case of any entity other than a corporation, 65% of the total membership,
partnership or other equity interests) of such Foreign Subsidiary.

 

(b)           So long as no Event of Default shall have occurred and be
continuing, each Borrower shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Pledged Collateral
for all purposes, provided that such Borrower agrees that it will not
vote the Pledged Collateral in any manner that is inconsistent with the terms
of this Agreement, the Credit Agreement or any other Loan Document; and the
Administrative Agent shall execute and deliver to such Borrower or cause to be
executed and delivered to such Borrower all such proxies, powers of attorney,
dividend and other orders, and all such instruments, without recourse, as such
Borrower may reasonably request for the purpose of enabling such Borrower to exercise
the rights and powers that it is entitled to exercise pursuant to this Section 5.04(b).

 

(c)           Unless and until an Event of Default has occurred and is
continuing, the Borrowers shall be entitled to receive and retain any
dividends, distributions and interest on the Pledged Collateral.

 

(d)           If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the Administrative
Agent or any other Secured Party exercises any available right to declare any Obligation
due and payable or seeks or pursues any other relief or remedy available to it
under applicable Law or under this Agreement, the Credit Agreement or any other
Loan Document, all dividends and other distributions on the Pledged Collateral
shall be paid directly to the Administrative Agent and retained by it in the
Assignee Deposit Account as part of the Pledged Collateral, subject to the
terms of this Agreement, and, if the Administrative Agent shall so request in
writing, each Borrower agrees to execute and deliver to the Administrative
Agent appropriate additional dividend, distribution and other orders and
documents to that end, provided that if such Event of Default is cured
or waived, any cash dividend or distribution theretofore paid to the Administrative
Agent shall, upon request of a Borrower (except to the extent theretofore
applied to the Obligations), be returned by the Administrative Agent to such
Borrower without undue delay.

 

5.05        Special
Provisions Relating to Accounts.  

 

(a)           Other than those Deposit Accounts, Securities Accounts and
Commodity Accounts and Lockboxes disclosed on Annex  2 (together with such Deposit Accounts,
Securities Accounts, Commodity Accounts, Lockboxes and similar operating
accounts as have been consented to by the Administrative Agent from time to
time, which consent shall not be unreasonably withheld), no Borrower shall
maintain, nor or permit any other Person to maintain on behalf of such Borrower
or any Subsidiary Guarantor, any Deposit Account, any Securities Account, any
Commodity Account or any Lockbox over which the Administrative Agent does not
have “control” (as defined in the Uniform Commercial Code), with agreements establishing control to be in
form and substance reasonably satisfactory to the Administrative Agent; provided
that such Borrower or such Subsidiary Guarantor may maintain zero balance
accounts, payroll accounts or any other Deposit Account which does not carry a
balance greater than $500,000 for a period of more than twenty (20) consecutive
days at any time; provided, further, that the total

 

11

 

aggregate
daily balances of all such excluded Deposit Accounts shall not exceed
$2,000,000.  

 

(b)           On or before the Closing Date, the Borrowers shall establish
(a) a Deposit Account at KeyBank and a Securities Account at McDonald
Investments Inc. solely for the purpose of holding Secured Bond Assets and (b)
a Deposit Account at KeyBank and a Securities Account at McDonald Investments
Inc. solely for the purpose of holding Secured Loan Assets.  Notwithstanding the proviso in clause (a)
above, the Borrowers shall at all times maintain the Administrative Agent’s
perfected security interest in all Secured Bond Assets and Secured Loan Assets
and will not close such Deposit Accounts or such Securities Accounts (or
terminate the related Deposit Account Control Letters and Securities Account
Control Agreements executed in connection therewith) without the prior written
consent of the Administrative Agent, except, in connection with the Secured
Bond Assets, upon the early tender, redemption, repurchase or other prepayment
in full of the Fixed Rate Bonds due in 2005 to the extent permitted by the
Credit Agreement.

 

5.06        Special
Provisions Relating to Material Intellectual Property Collateral.

 

(a)           Each Borrower shall from time to time (but not more than
once per Fiscal Quarter), furnish to the Administrative Agent, statements and
schedules further identifying and describing any new Material Intellectual
Property Collateral pledged pursuant to clause (b) below and such other reports
in connection with the Material Intellectual Property Collateral, as the
Administrative Agent may reasonably request to the extent necessary to perfect
its security interest therein, all in reasonable detail.

 

(b)           Each Borrower agrees that, should it obtain an ownership
interest in any new Material Trademark, Material Patent or Material Copyright,
including any issued patent or patent application, or any trademark or
copyright registration or application, which is not now scheduled as a part of
the Material Intellectual Property Collateral, any such new Material
Intellectual Property Collateral (along with the related rights thereto
described in clauses (ii) through (iv) of the definition of Material Patent
Collateral and Material Trademark Collateral, and clauses (ii) through (iii) of
the definition of Material Copyright Collateral, as applicable) will
automatically become part of the Material Intellectual Property Collateral.  Each Borrower authorizes the Administrative
Agent to modify Exhibit A to any Collateral Assignment of Security Interest in
Patents and Patent Applications, Collateral Assignment of Security Interest in
Trademarks and Licenses or Collateral Assignment of Security Interest in
Copyrights executed by such Borrower (and shall cooperate with the
Administrative Agent in effecting any such amendment) to include any issued
patent or patent application and any trademark or copyright registration or
application which becomes part of the Material Intellectual Property
Collateral.

 

(c)           No Borrower shall discontinue use of, fail to maintain or
otherwise abandon any issued patent or patent application or any trademark or
copyright registration or application now or hereafter included in the Material
Intellectual Property Collateral except in the exercise such Borrower’s
reasonable business judgment.

 

(d)           Each Borrower shall take all reasonable steps which it
deems appropriate under the circumstances to preserve and protect the Material
Trademark Collateral, including, without limitation, maintaining the quality of
any and all products or services used or provided in connection with any of the
Material Trademark Collateral, consistent with the quality of the products and
services as of the date hereof, and taking all steps reasonably necessary to
ensure that all licensed users of any of the Material Trademark Collateral use
such consistent standards of quality.

 

12

 

(e)           Each Borrower agrees to notify the Administrative Agent
promptly and in writing if it learns (i) that any Material Intellectual
Property Collateral has been determined to have become abandoned, or dedicated
to the public, (ii) of the institution of any proceeding (including, without
limitation, the institution of any proceeding in the United States Patent and
Trademark Office or any court) regarding any Material Intellectual Property
Collateral or (iii) of any adverse determination with respect to the
validity or enforceability in any material respect of any Material Intellectual
Property Collateral.

 

(f)            In the event that a Borrower makes a determination in its
reasonable business judgment that any Material Intellectual Property Collateral
has been infringed or misappropriated by a third party, such Borrower shall
promptly notify the Administrative Agent and will take such actions as such
Borrower deems appropriate in its reasonable business judgment under the
circumstances to protect such Material Intellectual Property Collateral.

 

5.07        Remedies
upon Event of Default. 
During the period during which an Event of Default shall have occurred
and be continuing:

 

(a)           each Borrower shall, at the
request of the Administrative Agent, assemble the Collateral owned by it at
such place or places, reasonably convenient to both the Administrative Agent
and such Borrower, designated in its request;

 

(b)           the Administrative Agent may make
any reasonable compromise or settlement deemed desirable with respect to any of
the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the Collateral;

 

(c)           the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the UCC (whether
or not such UCC is in effect in the jurisdiction where the rights and remedies
are asserted) and such additional rights and remedies to which a secured party
is entitled under the Laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the right,
to the maximum extent permitted by Law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the Administrative
Agent were the sole and absolute owner thereof (and each Borrower agrees to
take all such action as may be appropriate to give effect to such right);

 

(d)           the Administrative Agent in its discretion may, in its
name or in the name of any Borrower or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of
or in exchange for any of the Collateral, but shall be under no obligation to
do so; and

 

(e)           the Administrative Agent may, upon ten Business Days’
prior written notice to the applicable Borrower of the time and place, with
respect to the Collateral or any part thereof that shall then be or shall
thereafter come into the possession, custody or control of the Administrative
Agent, the other Secured Parties or any of their respective agents, sell,
lease, assign or otherwise dispose of all or any part of such Collateral, at
such place or places as the Administrative Agent deems best, and for cash or
for credit or for future delivery (without thereby assuming any credit risk),
at public or private sale, without demand of performance or notice of intention
to effect any such disposition or of the time or place thereof (except such
notice as is required above or by applicable statute and cannot be waived), and
the Administrative Agent or any other Secured Party or anyone else may be the
purchaser, lessee, assignee or recipient of any or all of the

 

13

 

Collateral
so disposed of at any public sale (or, to the extent permitted by Law, at any
private sale) and thereafter hold the same absolutely, free from any claim or
right of whatsoever kind, including any right or equity of redemption
(statutory or otherwise), of such Borrower, any such demand, notice and right
or equity being hereby expressly waived and released.  The Administrative Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be
so adjourned.

 

Each Borrower
recognizes that, by reason of certain prohibitions contained in the Securities
Act of 1933, as amended, and applicable state securities Laws, the
Administrative Agent may be compelled, with respect to any sale of all or any
part of the Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to the distribution or resale thereof.  Each Borrower acknowledges that any such
private sales may be at prices and on terms less favorable to the
Administrative Agent than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agree that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that the Administrative Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Collateral for the period of
time necessary to permit the respective Issuer or issuer thereof to register it
for public sale.

 

5.08        Deficiency.  If the Proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.07 are
insufficient to cover the costs and expenses of such realization and the
payment in full of the Obligations, each Borrower shall remain liable for any
deficiency to the extent such Borrower is obligated under this Agreement.

 

5.09        Private
Sale.  Neither the
Administrative Agent nor any other Secured Party shall incur any liability as a
result of the sale of the Collateral, or any part thereof, at any private sale
pursuant to Section 5.07 conducted in a commercially reasonable
manner.  Each Borrower hereby waives any
claims against the Administrative Agent or any other Secured Party arising by
reason of the fact that the price at which the Collateral may have been sold at
such a private sale was less than the price that might have been obtained at a
public sale or was less than the aggregate amount of the Obligations, even if
the Administrative Agent accepts the first offer received and does not offer
the Collateral to more than one offeree.

 

5.10        Application
of Proceeds.  The
Proceeds of any collection, sale or other realization of all or any part of the
Collateral pursuant hereto, and any other cash at the time held by the
Administrative Agent under Section 4 or this Section 5, shall be
applied by the Administrative Agent as it shall determine in its reasonable
discretion in accordance with the terms of the Credit Agreement.

 

5.11        Attorney-in-Fact.  The Administrative Agent shall hereby have
the right, and each Borrower hereby irrevocably makes, constitutes, and
appoints the Administrative Agent (and all officers, employees, or agents
designated by the Administrative Agent) as its true and lawful attorney-in-fact
and agent, with full power of substitution, from time to time following the
occurrence of an Event of Default which is continuing and without assent by
such Borrower: (a) to effectuate, in such Borrower’s name, such Borrower’s
obligations under this Agreement, (b) in such Borrower’s or Administrative
Agent’s name: (i) to demand payment of the Accounts, (ii) to enforce
payment of the Accounts, by legal proceedings or otherwise, (iii) to
exercise all of such Borrower’s rights and remedies with respect to the
collection of the Accounts and any other Collateral, (iv) to settle,
adjust, compromise, extend, or renew the Accounts, (v) to settle, adjust,
or compromise any legal proceedings brought to collect the Accounts,
(vi) if permitted by applicable Law, to sell or assign the Accounts and
other Collateral, (vii) to take control, in any

 

14

 

manner, of any item of
payment or Proceeds relating to any Collateral, (viii) to prepare, file,
and sign such Borrower’s name on a proof of claim in a bankruptcy against any
Account Debtor or on any notice of Lien, assignment, or satisfaction of Lien in
connection with any Accounts, (ix) to do all acts and things reasonably
necessary, in the Administrative Agent’s good faith discretion, to fulfill such
Borrower’s obligations under this Agreement, (x) to endorse the name of
such Borrower upon any of the items of payment or Proceeds relating to any
Collateral and deposit the same to any deposit account over which the
Administrative Agent has control, (xi) to endorse the name of such
Borrower upon any Chattel Paper, document, Instrument, invoice, freight bill,
bill of lading, or similar document or agreement relating to the Accounts,
Inventory and any other Collateral, (xii) to use such Borrower’s
stationery and sign the name of such Borrower to verifications of the Accounts
and notices thereof to Account Debtors, (xiii) to use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts, Inventory, and any other Collateral to
which such Borrower has access, (xiv) to make and adjust claims under such
policies of insurance insuring the Collateral, receive and endorse the name of
such Borrower on any check, draft, instrument or other item of payment for the
proceeds of such policies, and make all determinations with respect to such
policies, and (xv) to notify post office authorities to change the address
for delivery of such Borrower’s mail to an address designated by the
Administrative Agent, receive and open all mail addressed to such Borrower,
and, after removing all collections of the Accounts, forward the mail to such
Borrower, (c) to pay or discharge taxes or Liens levied against the
Collateral; (d) to the extent not inconsistent with the applicable Lockbox
Agreement and Deposit Account Agreement, and Deposit Account Control Letter to
take all action necessary to grant the Administrative Agent sole access to any
lockbox or Deposit Account of such Borrower or any other Borrower, (e) to
contact Account Debtors to pay any collections of Accounts to the Lockbox,
(f) upon notice to the Borrower Representative, to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral and to enforce any other right in
respect of any Collateral; (g) upon notice to the Borrower Representative,
to defend any suit, action or proceeding brought against a Borrower with
respect to any Collateral; (h) upon notice to the Borrower Representative,
to settle, compromise or adjust any such suit, action or proceeding;
(i) to sell, transfer, pledge, or make any agreement with respect to the
Collateral; and (j) to do, at the Administrative Agent’s option and the
Borrowers’ expense, at any time, or from time to time, all acts and things
which the Administrative Agent reasonably deems necessary to protect, preserve
or realize upon the Collateral.

 

5.12        Locations,
Etc.  Without at least
30 days’ prior written notice to the Administrative Agent, no Borrower shall
change its location (as defined in Section 9-307 of the UCC) or change its
legal name from the name shown as its current legal name on Annex 1.

 

5.13        Further
Assurances; Post-Closing Items.

 

(a)           Post-Closing  Foreign Pledge Agreements. 
Each applicable Borrower agrees that, within 60 days of the Closing Date
(or such longer period as reasonably agreed by the Administrative Agent), such
Borrower will execute an applicable foreign law pledge agreement or instrument
(and any required filings or notices), in form and substance reasonably
satisfactory to the Administrative Agent, to perfect under such applicable
foreign law, the Administrative Agent’s security interest purported to be
granted hereunder in the Borrowers’ stock and other ownership interest of each
of Intermec International B.V., a Netherlands corporation, Intermec
Technologies GmbH, a German corporation, Intermec Technologies S.r.l., an
Italian corporation, Intermec Technologies U.K. Limited, a U.K. corporation,
Intermec Technologies S.A.S., a French corporation and Intermec Technologies,
S.A., a Spanish corporation.

 

(b)           Liquidation of Foreign
Subsidiary; Merger of Foreign Subsidiary with and into an Excluded Foreign
Subsidiary.  Upon the
liquidation of any Foreign Subsidiary

 

15

 

(other than an Excluded
Foreign Subsidiary) or the merger or consolidation of any Foreign Subsidiary
(other than an Excluded Foreign Subsidiary) with and into any Excluded Foreign
Subsidiary, to the extent that the Administrative Agent reasonably determines
that such liquidation, merger or consolidation negatively affects (other than
in a de minimis manner) the interest of the Administrative Agent or the Lenders
under the Loan Documents or in the Collateral, the Borrowers will take any and
all reasonable actions, in form and substance satisfactory to the
Administrative Agent, as may be required, at the Borrowers’ option, (i) to fully
perfect the Administrative Agent’s security interest (which shall secure an
equal or greater economic value than the security interest in existence prior
to such liquidation, merger or consolidation) in the ownership interest of any
successor entity, which may include, without limitation, U.S. and foreign law
stock pledges, filings and assignments; provided that the Borrowers shall not
be required to pledge any equity interest in any Subsidiary of their first-tier
Foreign Subsidiaries or more than 65% of their ownership interest in any
Foreign Subsidiary) or (ii) to provide the Administrative Agent with a first
priority perfected security interest in substitute Collateral of at least equal
or greater economic value (as determined by the Administrative Agent in its
reasonable discretion).

 

(c)           General.  Each Borrower agrees that, from time to time
upon the reasonable written request of the Administrative Agent, such Borrower
will execute and deliver such further documents and do such other acts and
things as the Administrative Agent may reasonably request in order fully to
effect the purposes of this Agreement (as may be limited by the proviso in  Section 5.01 hereof) and to enforce its
rights and remedies hereunder and any security interest granted pursuant to any
other Loan Document (including, without limitation, with respect to the
Material  Intellectual Property
Collateral).

 

5.14        Termination.  When all Obligations shall have been paid in
full and the Commitments and all LC Exposure under the Credit Agreement shall
have expired or been terminated, this Agreement shall terminate, and the
Administrative Agent shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or on the order of the respective Borrower. 
The Administrative Agent shall also execute and deliver to the
respective Borrower, at such Borrower’s expense upon such termination such UCC
termination statements, certificates and such other documentation as shall be
reasonably requested by the respective Obligor to effect the termination and
release of the Liens on the Collateral.

 

5.15        Reinstatement.  This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of
any Borrower’s assets, and shall continue to be effective or be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable Law, rescinded or reduced in
amount, or must otherwise be restored or returned for any obligee of the
Obligations, whether as a voidable preference, fraudulent conveyance, or
otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

Section 6.              Miscellaneous.

 

6.01        Notices.  All notices, requests, consents and demands
hereunder shall be in delivered and construed in accordance with the terms of
the Credit Agreement.  However, any
notice required hereunder to be delivered by a Borrower may be delivered on
such Borrower’s behalf by the Borrower Representative.

 

16

 

6.02        No
Waiver.  No failure on
the part of the Administrative Agent or any other Secured Party to exercise,
and no course of dealing with respect to, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise by the Administrative Agent or any other Secured
Party of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.  The remedies herein are cumulative and are
not exclusive of any remedies provided by Law.

 

6.03        Amendments, Etc.  The terms of this Agreement may be waived,
altered or amended only in a writing duly executed by the Borrowers and the
Administrative Agent (with the consent of the Required Lenders or as otherwise
required pursuant to Section 13.1 of the Credit Agreement).  Any such amendment or waiver shall be binding
upon the Administrative Agent, each other Secured Party and each holder of any
of the Obligations and the Borrowers.

 

6.04        Expenses.  Each Borrower agrees to reimburse the
Administrative Agent (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent and including
internal counsel) for all reasonable costs and expenses incurred by them in
connection with (i) any Event of Default or Potential Default and any
enforcement or collection proceeding resulting therefrom, including, without
limitation, all manner of participation in or other involvement with
(w) performance by the Administrative Agent of any obligations of such
Borrower in respect of the Collateral that such Borrower has failed or refused
to perform, (x) bankruptcy, insolvency, receivership, foreclosure, winding
up or liquidation proceedings, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any
of the Collateral, and for the care of the Collateral and defending or
asserting rights and claims of the Administrative Agent in respect thereof, by
litigation or otherwise, including expenses of insurance, (y) judicial or
regulatory proceedings and (z) workout, restructuring or other negotiations
or proceedings (whether or not the workout, restructuring or transaction
contemplated thereby is consummated) and (ii) the enforcement of this Section 6.04,
and all such costs and expenses shall be Obligations.

 

6.05        Successors
and Assigns.  This
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of each Borrower, the Administrative Agent, the other
Secured Parties and each holder of any of the Obligations (provided, however,
that no Borrower shall assign or transfer its rights or obligations hereunder
without the prior written consent of the Administrative Agent).

 

6.06        Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

 

6.07        Governing Law.   This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.

 

6.08        Captions.  The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.

 

6.09        Agents and Attorneys-in-Fact.  The Administrative Agent may employ agents
and attorneys-in-fact in connection herewith and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it in good faith.

 

6.10        Severability.  If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
Law, (a) the other provisions hereof shall

 

17

 

remain in full force and
effect in such jurisdiction and shall be liberally construed in favor of the
Administrative Agent and the other Secured Parties in order to carry out the
intentions of the parties hereto as nearly as may be possible and (b) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.

 

[Signatures Follow]

 

18

 

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

 

	
   

  	
  UNOVA, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Michael E. Keane

  
	
   

  	
  By

  	
   

  	
  Michael
  E. Keane

  
	
   

  	
  Title:

  	
   

  	
  Senior
  Vice President and CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Kenneth L. Cohen

  
	
   

  	
  By

  	
   

  	
  Kenneth
  L. Cohen

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UNOVA INDUSTRIAL AUTOMATION

  SYSTEMS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Michael E. Keane

  
	
   

  	
  By

  	
   

  	
  Michael
  E. Keane

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Kenneth L. Cohen

  
	
   

  	
  By

  	
   

  	
  Kenneth
  L. Cohen

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INTERMEC TECHNOLOGIES

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Michael E. Keane

  
	
   

  	
  By

  	
   

  	
  Michael
  E. Keane

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Kenneth L. Cohen

  
	
   

  	
  By

  	
   

  	
  Kenneth
  L. Cohen

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INTERMEC INTERNATIONAL INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Michael E. Keane

  
	
   

  	
  By

  	
   

  	
  Michael
  E. Keane

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Kenneth L. Cohen

  
	
   

  	
  By

  	
   

  	
  Kenneth
  L. Cohen

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and Treasurer

  

 

19

 

	
   

  	
  INTERMEC TECHNOLOGIES

  MANUFACTURING, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Michael E. Keane

  
	
   

  	
  By

  	
   

  	
  Michael
  E. Keane

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Kenneth L. Cohen

  
	
   

  	
  By

  	
   

  	
  Kenneth
  L. Cohen

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INTERMEC IP CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Michael E. Keane

  
	
   

  	
  By

  	
   

  	
  Michael
  E. Keane

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Kenneth L. Cohen

  
	
   

  	
  By

  	
   

  	
  Kenneth
  L. Cohen

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UNOVA IP CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Michael E. Keane

  
	
   

  	
  By

  	
   

  	
  Michael
  E. Keane

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Kenneth L. Cohen

  
	
   

  	
  By

  	
   

  	
  Kenneth
  L. Cohen

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL ASSOCIATION,

  as Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  	
  Marianne T. Meil

  
	
   

  	
  By

  	
   

  	
  Marianne
  T. Meil

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  

 

20Exhibit 10.1

 

UNOVA, Inc. 

2004 Long-Term Performance Share Program

 

	
  Name of Program

  	
   

  	
  The
  program will be called the UNOVA, Inc. 2004 Long-Term Performance Share
  Program, and will be considered a “sub-plan” under the 2004 Omnibus Incentive
  Compensation Plan (the “Plan”).

  
	
   

  	
   

  	
   

  
	
  Purpose

  	
   

  	
  The primary purposes of the program are to: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •

  	
  Reward officers for the overall success of UNOVA as
  reflected through the Company’s financial performance and stock price;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •

  	
  Provide for cash payouts that can replace cash flow
  that could be impacted by future changes to the Company’s Annual Bonus Plan;
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •

  	
  Provide a competitive long-term incentive program.

  
	
   

  	
   

  	
   

  
	
  Effective Date

  	
   

  	
  The
  effective date of the program is May 6, 2004. The program will remain in
  effect until terminated by the Compensation Committee (the “Committee”) of
  the Board.

  
	
   

  	
   

  	
   

  
	
  Performance Period

  	
   

  	
  The
  performance period under the program is three years, with the first
  performance period running from January 1, 2004 to December 31, 2006.

  
	
   

  	
   

  	
   

  
	
  Grant Frequency

  	
   

  	
  A
  new three-year performance period will begin annually, which will create
  overlapping performance periods.

  
	
   

  	
   

  	
   

  
	
  Size of Awards

  	
   

  	
  Target
  awards will be established for each participant, denominated in shares.
  Target award levels will be approved annually by the Committee.

  
	
   

  	
   

  	
   

  
	
  Program Structure

  	
   

  	
  Participants
  can earn from 0 percent to 200 percent of their target shares based
  on Company financial performance.

  
	
   

  	
   

  	
   

  
	
  Performance Measure(s)

  	
   

  	
  Before
  the commencement of each performance period, the Committee shall select
  performance measures from those set forth in Section 10(a) of the Plan. The
  Committee may choose to include or exclude any of the events set forth in
  Section 10(b) of the Plan to the evaluation of performance for such period.

  

 

1

 

	
  Dividends

  	
   

  	
  If
  dividends are declared on the Company’s common stock during a performance
  period, the Committee, in its sole discretion, may recommend to the Board
  that dividend equivalents on the target award be accrued in the form of
  additional performance share units.

  
	
   

  	
   

  	
   

  
	
  Form and Timing of Payout

  	
   

  	
  For
  participants that have met their minimum ownership level under the stock
  ownership guidelines, all payouts from this program will be made in cash. For
  participants that have not met their minimum ownership level, payouts will be
  in cash or stock (or a mix), at the discretion of the Committee.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash
  payouts will be calculated based on the average of the high and low daily
  stock price for the last 30 trading days of the performance period. All
  payouts will be made as soon as practicable following the end of the
  performance period.

  
	
   

  	
   

  	
   

  
	
  Certain Terminations of Employment

  	
   

  	
  In
  the event of a participant’s death, disability, or retirement at age 65 or
  later, pro rata awards based on the number of full months worked during the
  performance period will be calculated. Such awards will be based on goal
  achievement over the entire performance period. Awards in these situations
  will be calculated and paid after the end of the performance period. In the
  case of death, however, the performance during the next-ending performance
  period after death will be calculated as the performance for all open
  performance periods.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amounts
  paid on account of death will be paid to a beneficiary designated by the
  participant. If no beneficiary has been designated, amounts will be paid to
  the participant’s estate.

  
	
   

  	
   

  	
   

  
	
  Other Terminations of Employment

  	
   

  	
  In
  the event of a termination of employment not constituting a disability,
  death, or retirement, as discussed above, the participant will forfeit any
  right to any payout for all performance periods in progress under the
  program.

  
	
   

  	
   

  	
   

  
	
  Tax Withholding

  	
   

  	
  The
  Company has the right to deduct any taxes or statutory deductions required by
  law to be withheld from all payments under the program.

  
	
   

  	
   

  	
   

  
	
  Change in Capitalization

  	
   

  	
  Any
  change in capitalization which results in a material change in the value of
  UNOVA common stock (e.g., special dividend, spin-off) will result in an
  adjustment in the number of shares earned at target to reflect the
  recapitalization. While individual recapitalization “events” will be assessed
  by the Committee on a case-by-case basis, the overriding objective will be to
  avoid rewarding or penalizing participants specifically as a function of the
  event.

  

 

2

 

	
  Change of Control

  	
   

  	
  If a
  change of control occurs (as defined in the Plan), then all outstanding award
  cycles will automatically vest and be paid out (in cash) at the target level
  or the actual performance level as of the change of control, whichever is
  higher.

  
	
   

  	
   

  	
   

  
	
  Accounting Considerations

  	
   

  	
  The
  employer must recognize an expense for compensation over the performance
  period. An estimated expense is accrued by amortizing the initial value of
  the awards and any subsequent appreciation over the performance period based
  upon preestablished goals. The approach to expensing may
  change.

  
	
   

  	
   

  	
   

  
	
  Tax Considerations

  	
   

  	
  The
  Company will receive a tax deduction in the year in which the actual payout
  is determinable. The employee must report taxable income in the year the
  award is paid.

  

 

3

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