Document:

Exhibit 10.4

    UNOVA,
      INC.

    1997
      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 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.
      "Affiliate"
      means a
      corporation or other entity controlled by the Company and designated by the
      Committee from time to time as such. 

    

    b.
      "Award"
      means a
      Stock Appreciation Right, Stock Option, or Restricted Stock. 

    

    c.
      "Board"
      means
      the Board of Directors of the Company. 

    

    d.
      "Change
      in Control"
      and
      "Change in Control Price" have the meanings set forth in Sections 8(b) and
      (c),
      respectively. 

    

    e.
      "Code"
      means
      the Internal Revenue Code of 1986, as amended from time to time, and any
      successor thereto. 

    

    f.
      "Commission"
      means
      the Securities and Exchange Commission or any successor agency. 

    

    g.
      "Committee"
      means
      the Committee referred to in Section 2. 

    

    h.
      "Company"
      means
      UNOVA, Inc., a Delaware corporation. 

    

    i.
      "Covered
      Employee"
      means a
      participant designated prior to the grant of shares 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 Com-pany's
      Long
      Term Disability Plan for the staff of the Company's corporate headquarters.
      

    

    k.
      "Early
      Retirement"
      means
      retirement from active employment with the Company, a subsidi-ary or an
      Affiliate pursuant to the early retirement provisions of the applicable pension
      plan of such employer. 

    

    l.
      "Exchange
      Act"
      means
      the Securities Exchange Act of 1934, as amended from time to time, and any
      successor thereto. 

    

    m.
      "Fair
      Market Value"
      means,
      as of any given date, the mean between the highest and lowest reported sales
      prices of the Stock on the New York Stock Exchange Composite Tape or, if not
      listed on such exchange, on any other national securities exchange on which
      the
      Stock is listed or on NASDAQ. If there is no regular public trading market
      for
      such Stock, the Fair Market Value of the Stock shall be determined by the
      Committee in good faith. 

    

    n.
      "Incentive
      Stock Option"
      means
      any Stock Option designated as, and qualified as, an "incentive stock option"
      within the meaning of Section 422 of the Code. 

    

    o.
      "Non-Employee
      Director"
      means a
      member of the Board who qualifies as a Non-Employee Director as defined in
      Rule 16b-3(b)(3), as promulgated by the Commission under the Exchange Act,
      or any successor definition adopted by the Commission. 

    

    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, a subsidiary or an Affiliate
      at or after age 65. 

    

    r.
      "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. 

    

    s.
      "Performance
      Goals"
      means
      the performance goals established by the Committee in connection with the grant
      of an Award. In the case of Qualified Performance-Based Awards, (i) such
      Performance Goals shall be based on the attainment of specified levels of one
      or
      more of the following measures: return on capital utilized ("ROCU"), return
      on
      tangible equity ("ROTE"), return on equity ("ROE"), return on assets ("ROA"),
      return on capital ("ROC"), cash flow ("CF"), revenue growth ("RG") or return
      on
      revenue ("ROR") 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, ROCU, ROTE, ROE, ROA, ROC, CF, RG, ROR, BEPS and DEPS shall have
      the meanings set forth in Exhibit A hereto. 

    

    t.
      "Plan"
      means
      the UNOVA, Inc. 1997 Stock Incentive Plan, as set forth herein and as
      hereinafter amended from time to time. 

    

    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"
      means
      the common stock, par value $.01 per share, of the Company. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    z.
      "Stock
      Appreciation Right"
      means a
      right granted under Section 6. 

    

    aa.
      "Stock
      Option"
      means an
      option granted under Section 5. 

    

    bb.
      "Termination
      of Employment"
      means
      the termination of the participant's employment with the Company and any
      subsidiary or Affiliate. A participant employed by a subsidiary or an Affiliate
      shall also be deemed to incur a Termination of Employment if the subsidiary
      or
      Affiliate ceases to be such a subsidiary or an Affiliate, as the case may be,
      and the participant does not immediately thereafter become an employee of the
      Company or another subsidiary or Affiliate. Temporary absences from employment
      because of illness, vacation or leave of absence and transfers among the Company
      and its subsidiaries and Affiliates 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 Non-Employee Directors, each of whom
      shall be an "outside director" for purposes of Section 162(m)(4) of the
      Code 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 officers and employees of the Company and its subsidiaries and
      Affiliates. 

    

    Among
      other things, the Committee shall have the authority, subject to the terms
      of
      the Plan: 

    

    (a)
      To
      select the officers and employees 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, Restricted Stock or any combination
      thereof are to be granted hereunder; 

    

    (c)
      To
      determine the number of shares of 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 or Affiliate) and any vesting
      acceleration or forfeiture waiver regarding any Award and the shares of 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; 

    

    (f)
      To
      determine to what extent and under what circumstances 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 Stock
      under Sections 5(j), 5(k) and 6(b)(ii), except as otherwise therein provided.
      

    

    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. 

    

    Any
      determination made by the Committee pursuant to the provisions of the Plan
      with
      respect to any Award shall be made in the sole discretion of the Committee
      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
      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. 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. Stock Subject to Plan

    

    Subject
      to adjustment as provided herein, the total number of shares of Stock available
      for grant under the Plan shall be five million five hundred thousand (5,500,000)
      plus (i) a number of shares of Stock equal to one percent of the total
      number of shares of Stock outstanding as of the first day of each calendar
      year
      beginning after December 31, 1998 for which the Plan is in effect--provided
      that any shares available for grant in a particular calendar year which are
      not,
      in fact, granted in such year shall be added to the shares available for grant
      in any subsequent calendar year. However, no more than five million (5,000,000)
      shares of Stock shall be cumulatively available for grant of Incentive Stock
      Options over the life of the Plan, and no more than 30 percent of the shares
      of
      Stock available for grant under the Plan as of the first day of any calendar
      year during which the Plan is in effect shall be utilized in that fiscal year
      for the grant of Awards in the form of Restricted Stock. No participant may
      be
      granted Awards covering more than one million (1,000,000) shares of 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.
      

    

    If
      any
      shares of Restricted Stock are forfeited, or if any Stock Option (and related
      Stock Appreciation Right, if any) terminates without being exercised, or if
      any
      Stock Appreciation Right is exercised for cash, shares subject to such Awards
      shall again be available for distribution in connection with Awards under the
      Plan. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    In
      the
      event of any change in corporate capitalization, such as a stock split or any
      corporate transaction (such as any merger, consolidation or separation
      (including a spin-off)), any 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, in the individual limits on Awards under the Plan, in the
      number, kind and exercise price of shares subject to outstanding Stock Options
      and Stock Appreciation Rights, in the number and kind of shares subject to
      outstanding Awards in the form of Restricted Stock 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 exercise 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

    

    Officers
      and employees of the Company, its subsidiaries and Affiliates who are
      responsible for or contribute to the management, growth and profitability of
      the
      business of the Company, its subsidiaries and Affiliates are eligible to be
      granted Awards under the Plan. No grant shall be made under this Plan to a
      director who is not an officer or a salaried employee of the Company, its
      subsidiaries or Affiliates. 

    

    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 annual 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 (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, 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
      selects an individual to be a participant in any grant of a Stock Option,
      determines the number of shares of Stock to be subject to such Stock Option
      to
      be granted to such individual and specifies the terms and provisions of the
      Stock Option. The Company shall notify a participant 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 participant.

    

    Anything
      in the Plan to the contrary notwithstanding, no term of the Plan relating to
      Incentive Stock Options shall be interpreted, amended or altered nor shall
      any
      discretion or authority granted under the Plan be exercised so as to disqualify
      the Plan under Section 422 of the Code. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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 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 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. The exercisability of a Stock Option may be conditional upon the
      attainment of Performance Goals, which need not be the same for all optionees.
      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 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.
      Payment, in full or in part, may also be made in the form of unrestricted Stock
      already owned by the optionee for a period of at least six months prior to
      the
      date of exercise (based on the Fair Market Value of the Stock on the date the
      Stock Option is exercised). 

    

    In
      the
      discretion of the Committee, payment for any shares subject to a Stock Option
      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 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 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). Upon exercise of a Stock
      Option, a participant shall be entitled (unless the participant has given a
      broker the irrevocable instructions referred to in the preceding paragraph)
      to
      receive a certificate representing the Stock issuable upon exercise of the
      Stock
      Option or such other evidence of ownership as the Company may then generally
      provide to its shareholders of record. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (e)
      Nontransferability
      of Stock Options. No
      Stock
      Option shall be transferable by the optionee other than (i) by will or by
      the laws of descent and distribution; or (ii) in the case of a Non-
      Qualified Stock Option, as otherwise expressly permitted under the applicable
      option agreement including, if so permitted, pursuant to a gift to such
      optionee's family, whether directly or indirectly or by means of a trust or
      partnership or otherwise. 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
      the preceding sentence, 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's employment terminates
      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's employment terminates
      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 shorter 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's employment terminates
      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 the term 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. In the event of Termination of Employment, 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. 

    

    (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 Stock for which a Stock Option is being
      exercised by paying the optionee an amount, in cash or Stock, equal to the
      excess of the Fair Market Value of the Stock over the option price times the
      number of shares of Stock for which the Option is being exercised on the
      effective date of such cash-out. 

    

    (k)
      Change
      in Control Cash-Out. Notwithstanding
      any other provision of the Plan, during the 60-day period from and after a
      Change in Control (the "Exercise Period"), unless the Committee shall determine
      otherwise at the time of grant, an optionee shall have the right, whether or
      not
      the Stock Option is fully exercisable and in lieu of the payment of the exercise
      price for the shares of 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 notice, in an amount equal to the amount by which the Change in
      Control Price per share of Stock on the date of such election shall exceed
      the
      exercise price per share of Stock under the Stock Option (the "Spread")
      multiplied by the number of shares of 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 in 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
      Stock with a Fair Market Value equal to the cash that would otherwise be payable
      hereunder. 

    

    (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 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 Stock or both, in value equal to the excess
      of the Fair Market Value of one share of 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 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 officers and employees
      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 participant (subject to
      the
      annual limit on grants to individual participants set forth in Section 3),
      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 or other evidence of ownership issued in respect
      of shares of Restricted Stock shall be registered in the name of such
      participant 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 the shares of stock represented hereby [referred to herein]
      are subject to the terms and conditions (including forfeiture) of the UNOVA,
      Inc. 1997 Stock Incentive Plan and a Restricted Stock Agreement. Copies of
      such
      Plan and Agreement are on file at the offices of UNOVA, Inc., 360 North Crescent
      Drive, Beverly Hills, California 90210." 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    The
      Committee may require that any 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 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 shall 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 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 and subject to Section
      11(e) of the Plan, (A) cash dividends on the class or series of 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 Stock shall be paid
      in the form of Restricted Stock of the same class as the 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 and Sections 7(c)(i), 7(c)(ii), 7(c)(v) and 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 or other evidence of ownership for such shares shall be delivered
      to the participant upon surrender of the legended certificates or other evidence
      of ownership. 

    

    (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 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 in Control Provisions

    

    (a)
      Impact
      of Event. Notwithstanding
      any other provision of the Plan to the contrary, in the event of a Change in
      Control: 

    

    (i)
      Any
      Stock Options and Stock Appreciation Rights outstanding as of the date such
      Change in 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.
      

    

    (b)
      Definition
      of Change in Control. For
      purposes of the Plan, a "Change in 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 percent 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
      acquisitions of Outstanding Company Common Stock and Outstanding Company Voting
      Securities: (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 corporation controlled by the Company, or (4) any acquisition by any
      Person 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 percent
      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 percent 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
      in Control Price. For
      purposes of the Plan, "Change in 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 in Control or (ii) if
      the Change in 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 in 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 10 years after 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 cause the Plan to qualify for any exemption provided
      by Rule 16b-3. In addition, no such amendment shall be made without the
      approval of the Company's shareholders to the extent such approval is required
      by law or agreement. 

    

    The
      Committee may amend the terms of any Stock Option or other Award theretofore
      granted, prospectively or retroactively, but no such amendment shall impair
      the
      rights of any holder without the holder's consent except such an amendment
      made
      to cause the Plan or Award to qualify for any exemption provided by
      Rule 16b-3; 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
      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 or evidence of ownership for such shares may include any legend
      which the Committee deems appropriate to reflect any restrictions on transfer.
      

    

    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 Stock under the Plan prior to fulfillment of all of the following
      conditions: 

    

    (1)
      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 Stock; 

    

    (2)
      Any
      registration or other qualification of such shares of Stock 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 

    

    (3)
      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 or
      Affiliate from adopting other or additional compensation arrangements for its
      employees. 

    

    (c)
      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 or Affiliate to terminate the employment of any employee at
      any
      time. 

    

    (d)
      No
      later than the date as of which an amount first becomes includable 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. Unless otherwise determined by the Company, withholding
      obligations may be settled with Stock, including Stock that is part of the
      Award
      that gives rise to the withholding requirement. 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 for the
      settlement of withholding obligations with Stock. 

    

    (e)
      Reinvestment of dividends in additional Restricted Stock at the time of any
      dividend payment shall only be permissible if sufficient shares of Stock are
      available under Section 3 for such reinvestment (taking into account then
      outstanding Stock Options and other Awards). 

    

    (f)
      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. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (g)
      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
      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 Stock to the employee in
      accordance with the terms of the Award specified by the Committee pursuant
      to
      the provisions of the Plan. 

    

    (h)
      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. 

    

    SECTION
      12. Effective Date of Plan

    

    The
      Plan
      shall be effective as of the date it is approved by the sole stockholder of
      the
      Company.Exhibit 10.5

     

     

    

       

      UNOVA.
        INC. RESTORATION PLAN

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    UNOVA,
      INC. RESTORATION PLAN

     

    TABLE
      OF CONTENTS

     

    

      
        	 	 	 	 	
                Page

              
	
                Section
                  1

              	 	
                General

              	 	
                1

              
	 	 	 	 	 
	
                1.1

              	 	
                Purpose

              	 	
                1

              
	
                1.2

              	 	
                Coverage

              	 	
                1

              
	 	 	 	 	 
	
                Section
                  2

              	 	
                Participating
                  Divisions and Subsidiaries

              	 	
                1

              
	 	 	 	 	 
	
                2.1

              	 	
                Participating
                  Divisions and Subsidiaries

              	 	
                1

              
	 	 	 	 	 
	
                Section
                  3

              	 	
                Definitions

              	 	
                2

              
	 	 	 	 	 
	
                3.1

              	 	
                Actuarial
                  Equivalent

              	 	
                 2

              
	
                3.2

              	 	
                Affected
                  Employee

              	 	 

                2

              
	
                3.3

              	 	
                Affiliate
                  Company

              	 	
                2

              
	
                3.4

              	 	
                Annual
                  Benefit

              	 	
                2

              
	
                3.5

              	 	
                Annual
                  Benefit Statement

              	 	
                2

              
	
                3.6

              	 	
                Annual
                  Compensation

              	 	
                2

              
	
                3.7

              	 	
                Board

              	 	
                2

              
	
                3.8

              	 	
                Break
                  in Credited Service

              	 	
                2

              
	
                3.9

              	 	
                Change
                  of Control

              	 	
                 3

              
	
                3.10

              	 	
                Code

              	 	
                4

              
	
                3.11

              	 	
                Committee

              	 	
                 4

              
	
                3.12

              	 	
                Coverage
                  Date

              	 	
                 4

              
	
                3.13

              	 	
                Credited
                  Service

              	 	
                 4

              
	
                3.14

              	 	
                Designated
                  Foreign Corporation

              	 	
                 4

              
	
                3.15

              	 	
                Distribution
                  Date

              	 	
                 4

              
	
                3.16

              	 	
                FSSP

              	 	
                 4

              
	
                3.17

              	 	
                Interest

              	 	
                 4

              
	
                3.18

              	 	
                Litton

              	 	
                 5

              
	
                3.19

              	 	
                Litton
                  Restoration Plan Benefit

              	 	
                 5

              
	
                3.20

              	 	
                Part
                  I Restricted Amount

              	 	
                 5

              
	
                3.21

              	 	
                Part
                  II Restricted Amount

              	 	
                 5

              
	
                3.22

              	 	
                Plan

              	 	
                 5

              
	
                3.23

              	 	
                Plan
                  Administrator

              	 	
                 5

              
	
                3.24

              	 	
                Plan
                  Year

              	 	
                 5

              
	
                3.25

              	 	
                Restricted
                  Amount

              	 	
                 5

              
	
                3.26

              	 	
                Retirement

              	 	
                 5

              
	
                3.27

              	 	
                Spouse

              	 	
                 5

              
	
                3.28

              	 	
                Termination
                  of Employment

              	 	
                 5

              
	
                3.29

              	 	
                Western
                  Atlas

              	 	
                 5

              
	
                3.30

              	 	
                Western
                  Atlas Inc. Restoration Plan Benefit

              	 	
                
                  
                     6

                  

                

              
	 	 	 	 	 
	
                Section
                  4

              	 	
                Participation

              	 	
                 6

              
	 	 	 	 	 
	
                4.1

              	 	
                Participation

              	 	
                 6

              
	 	 	 	 	 
	
                Section
                  5

              	 	
                Retirement
                  Dates

              	 	
                 6

              
	 	 	 	 	 
	
                5.1

              	 	
                Normal
                  Retirement Date

              	 	
                  6

              
	
                5.2

              	 	
                Early
                  Retirement Date

              	 	
                 6

              
	
                5.3

              	 	
                Disability
                  Retirement Date

              	 	
                 6

              
	 	 	 	 	 
	
                Section
                  6

              	 	
                Amount
                  of Retirement Income

              	 	
                 7

              
	 	 	 	 	 
	
                6.1

              	 	
                Normal
                  Retirement Benefit

              	 	
                 7

              
	
                6.2

              	 	
                Early
                  Retirement Benefit

              	 	
                 8

              
	
                6.3

              	 	
                Disability
                  Retirement Benefit

              	 	
                 8

              
	
                6.4

              	 	
                Vesting
                  Schedule

              	 	
                 8

              
	
                6.5

              	 	
                Initial
                  and Subsequent Payment Dates

              	 	
                 9

              
	 	 	 	 	 
	
                Section
                  7

              	 	
                Death
                  Benefits

              	 	
                
                   9

                

              
	 	 	 	 	 
	
                7.1

              	 	
                Pre-Retirement
                  Spouse Benefit

              	 	
                 9

              
	
                7.2

              	 	
                Death
                  After Retirement

              	 	
                 9

              
	 	 	 	 	 
	
                Section
                  8

              	 	
                Termination
                  of Employment

              	 	
                 9

              
	 	 	 	 	 
	
                8.1

              	 	
                Rights
                  of Affected Employees

              	 	
                 9

              
	
                8.2

              	 	
                Transfer
                  of Employment

              	 	
                 9

              
	 	 	 	 	 
	
                Section
                  9

              	 	
                Forms
                  of Retirement Income

              	 	
                 9

              
	 	 	 	 	 
	
                9.1

              	 	
                Joint
                  and Survivor Income Annuity

              	 	
                 9

              
	
                9.2

              	 	
                Straight
                  Life Annuity

              	 	
                 9

              
	
                9.3

              	 	
                Form
                  of Benefit on Change of Control

              	 	
                 9

              
	 	 	 	 	 
	
                Section
                  10

              	 	
                Miscellaneous

              	 	
                 10

              
	 	 	 	 	 
	
                10.1

              	 	
                Receipt
                  and Release for Payments

              	 	
                 10

              
	
                10.2

              	 	
                Dispute
                  as to Benefit Payments

              	 	
                 10

              
	
                10.3

              	 	
                No
                  Contract of Employment

              	 	
                 10

              
	
                10.4

              	 	
                Commutation
                  of Benefit

              	 	
                 10

              
	
                10.5

              	 	
                Assignment

              	 	
                 10

              
	
                10.6

              	 	
                Applicable
                  Laws

              	 	
                 10

              
	
                10.7

              	 	
                Terms

              	 	
                 10

              
	
                10.8

              	 	
                Waiver

              	 	
                 11

              
	
                10.9

              	 	
                Severability

              	 	
                 11

              
	
                10.10

              	 	
                Unfunded
                  Top Hat Plan

              	 	
                  11

              
	 	 	 	 	 
	
                Section
                  11

              	 	
                Amendment
                  or Discontinuance, Assumption of Liabilities and Coordination of
                  Benefits

              	 	
                  11

              
	 	 	 	 	 
	
                11.1

              	 	
                Amendment
                  of Plan

              	 	
                 11

              
	
                11.2

              	 	
                Freezing
                  Plan Benefits

              	 	
                 11

              
	
                11.3

              	 	
                Termination
                  of Plan

              	 	
                 12

              
	
                11.4

              	 	
                Merger
                  or Consolidation

              	 	
                 12

              
	
                11.5

              	 	
                Assumption
                  of Liabilities

              	 	
                 12

              
	
                11.6

              	 	
                Coordination
                  of Benefits

              	 	
                 12

              
	 	 	 	 	
                 

              
	
                Section
                  12

              	 	
                Plan
                  Administrator

              	 	
                 12

              
	 	 	 	 	
                 

              
	
                12.1

              	 	
                Plan
                  Administrator

              	 	
                 12

              

      

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      

       

      Section
        1 - General

       

      
        	 	
                1.1

              	
                Purpose
                  -
                  UNOVA, Inc. establishes this Plan effective as of the Distribution
Date.
                  The purpose of the Plan is to provide for Annual Benefits to the
                  Affected
                  Employees of the Participating Divisions of UNOVA, Inc., a Delaware
                  corporation, and any unit thereof, enumerated in Section 2 and
                  hereinafter
                  referred to collectively as the "Company." An additional purpose
                  of
                  the Plan is to provide for the satisfaction of any Western Atlas
                  Inc.
                  Restoration
                  Plan Benefit and Litton Restoration Plan Benefit previously earned
                  by an
                  employee under the Litton Restoration Plan and the Western Atlas
                  Inc. Restoration Plan, to the extent the obligation for payment
                  of such
                  benefit
                  has been transferred to and assumed by UNOVA, Inc. The Plan is
                  intended to
                  provide benefits solely for a select group of management or highly
                  compensated employees within the meaning of Sections 201(2), 301(a)(3)
                  and 401(a)(I) of Title I of the Employee Retirement Income Security
                  Act of 1974, as amended ("ERISA"). Payments under the Plan shall
                  be made
                  either from general assets of the Company or from the assets of
                  a
                  trust
                  which may be established hereunder. It is intended that the Plan
                  remain
                  at
                  all times an unfunded plan for purposes of ERJSA and that the trust,
                  if
                  established,
                  shall constitute a grantor trust under Sections 671 through 679
                  of
                  the
                  Code.

              

      

       

      1.2
        Coverage

       

      	A.  	
              Unless
                otherwise provided, the provisions of the Plan shall apply to any
                Affected
                Employee who incurs a Termination of Employment on or after
                the Distribution Date.

            

       

      	B.  	
              Any
                subsequent amendment to this Plan shall apply only to an Affected
                Employee
                who incurs a Termination of Employment on or after the effective
                date of
                said amendment, unless said amendment provides
                otherwise.

            

       

      Section
        2 - Participating Divisions and Subsidiaries 

       

      
        	 	
                2.1

              	
                Participating
                  Divisions or Subsidiaries -
                  The Participating Divisions and Subsidiaries
                  and their respective participation dates are as set forth in the
                  FSSP.
                  When the name or status of a Participating, Division or Subsidiary
                  is
                  changed, such change shall also be effective for Plan
                  purposes.

              

      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      Section
        3 - Definitions

       

       

      As
        used
        in the Plan, the following terms shall have the meanings defined
        below:

       

      
        	 	
                3.1

              	
                Actuarial
                  Equivalent - The definition of such term under the UNOVA, Inc.
                  Retirement Plan, as amended.

              

      

       

      
        	 	
                3.2

              	
                Affected
                  Employee - An Affected Employee, for any particular Plan Year, is
                  an
                  individual employed as a common law employee by the Company (except
                  that
                  the Chief Executive Officer of the Company for such Plan Year shall,
                  notwithstanding any other provision of the Plan, be deemed to have
                  a Part
                  I Restricted Amount of zero for such Plan Year) 8% of whose Annual
                  Compensation for that particular Plan Year exceeds the maximum
                  amount of
                  elective deferrals available to such Affected Employee under a
                  Code
                  section 401(k) plan for such Plan Year and who was a participant
                  in the
                  FSSP, as amended from time to time, for such Plan Year and who
                  contributed
                  his or her legally permissible maximum amount to the FSSP for such
                  Plan
                  Year.

              

      

       

      
        	 	
                3.3

              	
                Affiliate
                  Company - Each company fifty percent (50%) or more of whose voting
                  stock is owned directly or indirectly by UNOVA, Inc., its successors
                  or
                  assigns, and which company is not a Participating Division or Subsidiary
                  of the Company participating in the
                  Plan.

              

      

       

      
        	 	
                3.4

              	
                Annual
                  Benefit - The portion of the total annual retirement benefit that
                  an
                  Affected Employee is entitled to with respect to a particular Plan
                  Year,
                  determined in accordance with Section 6.1, Section 6.2, or Section
                  6.3,
                  whichever is applicable.

              

      

       

      
        	 	
                3.5

              	
                Annual
                  Benefit Statement - The statement given to an Affected Employee for
                  each Plan Year such Affected Employee is entitled to an Annual
                  Benefit
                  under the Plan. All such Annual Benefit Statements shall be in
                  the form
                  prescribed by the Plan Administrator.
                   

                

              

      

       

      
        	 	
                3.6

              	
                Annual
                  Compensation - An Affected Employee's wages paid by the Company
                  (limited, however, to wages paid by the Company on or after the
                  date the
                  Participating Division by which the Affected Employee is employed
                  became a
                  Participating Division), as determined under section 3121 of the
                  Code
                  without regard to the dollar limitation of section 3121(a)(1) of
                  the Code,
                  plus any amounts treated as excluded from gross income by reason
                  of Code
                  sections 125 and 401(k), excluding therefrom any amount so paid
                  which
                  represents (a) reimbursed expenses, (b) wages not paid in cash,
                  (c) cash
                  received pursuant to the exercise of a stock option or a stock
                  appreciation right, or (d) certain other wage items as may be agreed
                  to
                  from time to time between the Company and one or more Affected
                  Employees;
                  provided, however, that for the Plan Year ending December 31, 1997,
                  wages
                  paid by Western Atlas Inc. shall be taken into account for all
                  purposes
                  under the Plan.

              

      

       

       

      
        	
              	3.7	
                Board
                  - The Board of Directors of UNOVA, Inc., a Delaware
                  corporation.

              

      

       

      
        	3.8	
                Break
                  in Credited Service - The definition of such term under the
                  UNOVA,
                  Inc. Retirement Plan, as amended from time to
                  time.

              

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      
        	 	 3.9	
                 Change
                  of Control -

                (a)
                  An acquisition by any individual, entity or group (within the meaning
                  of
                  Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
                  1934, as
                  amended [the "Exchange Act"] (a "Person") of beneficial ownership
                  (within
                  the meaning of Rule 13d-3 promulgated under the Exchange Act) of
                  30
                  percent 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 acquisitions of Outstanding Company Common Stock and
                  Outstanding
                  Company Voting Securities: (A) 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; (B) any acquisition by the Company;
                  (C) any
                  acquisition by any employee benefit plan (or related trust) sponsored
                  or
                  maintained by the Company or any corporation controlled by the
                  Company; or
                  (D) any acquisition by any Person pursuant to a transaction which
                  complies
                  with clauses (1), (2), and (3) of paragraph (c) below of this Section
                  3.9;
                  or

                 

                (b)
                  Individuals who, as of the effective date hereof, 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 the effective date hereof whose
                  election, or nomination for election by the Company's shareholders,
                  was
                  approved by a vote of at least a majority of the 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 

                 

                (c)
                  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 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 percent of, respectively, the outstanding
                  shares
                  of common stock and the combined voting power of the then 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 percent 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 

                 

                (d)
                  Consummation of a complete liquidation or dissolution of the
                  Company.

              

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
      

      
        	 	
                3.10

              	
                Code
                  - The Internal Revenue Code of 1986, as
                  amended.

              

      

       

      
        	 	
                3.11

              	
                Committee
                  - The Compensation Committee of the Board, unless at the time no
                  Compensation Committee has been constituted, in which case the
                  Committee
                  shall mean the Board.

              

      

       

      
        	 	
                3.12

              	
                Coverage
                  Date - The Distribution Date, or the date an employee of the Company
                  first becomes an Affected Employee, if
                  later.

              

      

       

      
        	 	
                3.13

              	
                Credited
                  Service - The definition of such term under the UNOVA, Inc. Retirement
                  Plan, as amended.

              

      

       

      
        	 	
                3.14

              	
                Designated
                  Foreign Corporation - An entity: (a) created under the laws of a
                  country other than the United States; (b) of which a majority of
                  the
                  voting shares are owned directly or indirectly by UNOVA, Inc.,
                  and (c)
                  with respect to which the Company has entered into an agreement
                  under
                  section 3121(1) of the Code, and has satisfied the provisions of
                  section
                  406 of the Code.

              

      

       

      
        	 	
                3.15
                  

              	
                Distribution
                  Date - The date determined by the Board of Directors of Western
                  Atlas
                  on which the shares of UNOVA, Inc. are distributed by Western Atlas
                  to the
                  holders of Western Atlas common
                  stock.

              

      

       

      
        	 	
                3.16

              	
                FSSP
                  - The UNOVA, Inc. Financial Security and Savings Program, as amended,
                  or
                  the Western Atlas Inc. Financial Security and Savings Program,
                  prior to
                  The Distribution Date.

              

      

       

      
        	 	
                3.17

              	
                Interest
                  - The amount of interest (based on a stated rate of interest, compounded
                  annually, as determined by the Board or its delegate) with respect
                  to the
                  Parts I and II Restricted Amounts of all Affected Employees for
                  a
                  particular Plan Year with such rate of interest to be fixed for
                  both of
                  such Restricted Amounts and to commence on the first day of the
                  Plan Year
                  succeeding such particular Plan Year and to continue for all Plan
                  Years
                  thereafter; but such interest shall cease with respect to the Part
                  I and
                  Part II Restricted Amounts of any particular Affected Employee
                  upon the
                  later of: (i) the last day of the month such Affected Employee
                  is
                  projected to attain his or her Normal Retirement Date for purposes
                  of
                  determining the amount of such Affected Employee's annual retirement
                  benefit pursuant to Section 6.1; or (ii) if such Affected Employee
                  attains
                  Retirement after his or her Normal Retirement Date, the last day
                  of the
                  month such Affected Employee attains
                  Retirement.

              

      

      
 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

       

      
        	 	
                3.18

              	
                Litton
                  - Litton Industries, Inc., a Delaware
                  corporation.

              

      

       

      
        	 	
                3.19

              	
                Litton
                  Restoration Plan Benefit - The annual benefit earned by an Affected
                  Employee while a participant in the Litton Industries, Inc. Restoration
                  Plan, the obligation for payment of which was assumed by Western
                  Atlas
                  Inc. and, if it has been assumed by UNOVA, Inc., then for purposes
                  of this
                  Plan it shall be treated as a Western Atlas Restoration Plan
                  Benefit.

              

      

       

      
        	 	
                3.20

              	
                Part
                  I Restricted Amount - As applied for any particular Plan Year to a
                  particular Affected Employee, the Part I Restricted Amount, if
                  any, shall
                  be that portion of such Affected Employee's Restricted Amount for
                  such
                  Plan Year which is equal to the excess, if any, of 4% of such Affected
                  Employee's Annual Compensation for such Plan Year over the maximum
                  amount
                  of elective deferrals available to such Affected Employee under
                  Part I of
                  the FSSP for such Plan Year.

              

      

       

      
        	 	
                3.21

              	
                Part
                  II Restricted Amount - As applied for any particular Plan Year to a
                  particular Affected Employee, the Part II Restricted Amount of
                  such
                  Affected Employee shall be equal to 2% of such Affected Employee's
                  Annual
                  Compensation for such Plan Year reduced by one-half (1/2) of the
                  actual
                  amount of elective deferrals made by such Affected Employee to
                  Part II of
                  the FSSP for such Plan Year.

              

      

       

      
        	 	
                3.22

              	
                Plan
                  - UNOVA, Inc. Restoration Plan.

              

      

       

      
        	 	
                3.23

              	
                Plan
                  Administrator - The person appointed to administer the Plan pursuant
                  to Section 12.

              

      

       

      
        	 	
                3.24

              	
                Plan
                  Year - The Distribution Date to December 31, 1997 and each calendar
                  year thereafter.

              

      

       

      
        	 	
                3.25

              	
                Restricted
                  Amount - As applied for any particular Plan Year to a particular
                  Affected Employee, the Restricted Amount of such Affected Employee
                  shall
                  be the amount, if any, by which 8% of such Affected Employee's
                  Annual
                  Compensation for the particular Plan Year under consideration exceeds
                  the
                  maximum amount of elective deferrals available to such Affected
                  Employee
                  under a Code section 401(k) plan for such Plan
                  Year.

              

      

       

      
        	 	
                3.26

              	
                Retirement
                  - An Affected Employee who incurs a Termination of Employment attains
                  Retirement under the Plan when he or she is eligible to and elects
                  to
                  receive his or her annual retirement benefit under the Plan except
                  that
                  any Affected Employee who continues to be employed by the Company
                  after
                  his or her Normal Retirement Date shall attain Retirement immediately
                  upon
                  his or her Termination of
                  Employment.

              

      

       

      
        	 	
                3.27

              	
                Spouse
                  - A person who has been married to the Affected Employee throughout
                  the
                  one-year period ending on the earlier of the date the Affected
                  Employee's
                  annual retirement benefit commences under the Plan, or the date
                  of the
                  Affected Employee's death.

              

      

       

      
        	 	
                3.28

              	
                Termination
                  of Employment - When an Affected Employee is discharged or quits from
                  the Company; provided, however, that such term shall not include
                  an
                  authorized leave of absence from the
                  Company.

              

      

       

      
        	 	
                3.29

              	
                Western
                  Atlas - Western Atlas Inc., a Delaware
                  corporation.

              

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

      
        	 	
                3.30

              	
                Western
                  Atlas Inc. Restoration Plan Benefit - The benefit earned by an
                  employee of the Company while a participant in the Western Atlas
                  Inc.
                  Restoration Plan prior to the Distribution Date, the obligation
                  for
                  payment of which has been assumed by UNOVA, Inc. Provided, however,
                  that
                  such benefit shall be taken into account only if the individual
                  who earned
                  the benefit becomes an employee of the Company on or before 90
                  days
                  following the Distribution Date and had not retired, become disabled
                  or
                  terminated employment pursuant to the Western Atlas Restoration
                  Plan prior
                  to the Distribution Date.

              

      

       

      Section
        4 - Participation

       

      
        	
              	
                4.1

              	
                Participation
                  -
                  Effective as of the Distribution Date, each Affected Employee
                  of the Company shall be a participant in the
                  Plan.

              

      

       

      Section
        5 - Retirement Dates 

       

      
        	 	
                5.1

              	 	
                Normal
                  Retirement Date -
                  An Affected Employee's sixty-fifth (65th) birthday or the completion
                  of
                  five (5) years of Credited Service, if
                  later.

              

      

       

      
        	 	
                5.2

              	 	
                Early
                  Retirement Date -
                  The date that an eligible Affected Employee elects to retire and
                  receive
                  an early retirement benefit prior to his or her Normal Retirement
                  Date.
                  Except as otherwise provided in the following sentence with respect
                  to the
                  surviving Spouse of a deceased Affected Employee,
                  an Affected Employee may not elect to receive an early retirement
                  benefit unless he or she is age sixty-two (62) or older and is
                  one
                  hundred
                  percent (100%) vested pursuant to Section 6.4. In the case of determining
                  whether a Pre-Retirement Spouse benefit is payable in accordance
                  with Section 7.1 of the Plan, the Early Retirement Date of the
                  deceased
                  Affected Employee shall be the date on which such Affected Employee
                  would have attained age fifty-five (55) or older had he or she
                  lived.

              

      

       

      
        	 	
                5.3

              	 	
                Disability
                  Retirement Date -
                  The date that an eligible Affected Employee elects to retire and
                  receive a
                  disability retirement benefit prior to his or her Normal
                  Retirement Date. An Affected Employee may not elect to receive
                  a
                  disability retirement benefit unless he or she is an Affected Employee
                  who
                  becomes totally and permanently disabled while employed by the
                  Company and
                  who has attained age fifty-five (55). An Affected Employee shall
                  be deemed totally and permanently disabled for the purpose of the
                  Plan
                  only when he or she will be in the opinion of a qualified physician
                  permanently,
                  continuously and wholly prevented by bodily injuries or disease
                  for life from engaging in any occupation or employment for wage
                  or
                  profit, as long as he or she is also entitled to disability benefits
                  under
                  the
                  Federal Social Security Act or any comparable foreign law that
                  is
                  applicable
                  to such Affected Employee.

              

      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      Section
        6 - Amount of Retirement Income

       

      
        
          	
                	6.1	
                  Normal
                    Retirement Benefit

                

        

         

        
          	(a)	
                  Any
                    employee of the Company who was an Affected Employee with respect
                    to one or more Plan Years and who attains Retirement on or after
                    his or
                    her Normal Retirement Date and/or who is entitled to a Western
                    Atlas Restoration Plan Benefit, shall be entitled to receive
                    an
                    annual
                    retirement benefit, payable by the Company, which will be equal
                    to ([(i) plus (ii)] multiplied by (iii)), wherein: (i) is equal
                    to the
                    aggregate
                    amount of such Affected Employee's Annual Benefit amounts
                    with respect to all Plan Years during which such Affected Employee
                    was an
                    Affected Employee with each such amount being computed for each
                    such Plan
                    Year in accordance with paragraphs (b) below;
                    wherein (ii) is equal to the aggregate Western Atlas Restoration
                    Plan Benefit, if any, of such employee; and wherein (iii) is
                    equal to the vested percentage of such Affected Employee, determined
                    in accordance with Section 6.4, in his or her annual retirement
                    benefit.

                

        

         

        
          	
                	(b)(1)	
                  For
                    any particular Plan Year, an Affected Employee's Annual Benefit
                    attributable
                    to his or her Part I Restricted Amount, if any, for such Plan
                    Year shall be equal to eighty-five percent (85%) of the Part
                    I
                    Restricted
                    Amount of such Affected Employee for such Plan Year reduced
                    by ([the sum of (i) plus (ii)] multiplied by (iii)), wherein:
                    (i)
                    is
                    equal to the Part I Restricted Amount of such Affected Employee
                    for
                    such Plan Year; wherein (ii) is equal to the amount of Interest
                    with
                    respect to (1) above; and wherein (iii) is equal to either: (a)
                    the
                    Actuarial Equivalent factor for such Plan Year, applicable under
                    the
                    UNOVA,
                    Inc. Retirement Plan, as amended, with respect to such Affected
                    Employee's projected age at his or her Normal Retirement Date,
                    or (b) if such Affected Employee attains Retirement after his
                    or
                    her
                    Normal Retirement Date, the Actuarial Equivalent factor for such
                    Plan
                    Year, under the UNOVA, Inc. Retirement Plan, as amended, with
                    respect to such Affected Employee's age when he or she attains
                    Retirement.

                

        

         

        
          	(2)	
                  For
                    any particular
                    Plan Year, an Affected Employee's Annual Benefit attributable
                    to his or her Part II Restricted Amount shall be equal to ([the
                    sum of (i) plus (ii)] multiplied by (iii)), wherein: (i) is equal
                    to the
                    Part II Restricted Amount of such Affected Employee for such
                    Plan Year;
                    wherein (ii) is equal to the amount of Interest with respect
to
                    (i) above; and wherein (iii) is equal to either: (a) the Actuarial
                    Equivalent
                    factor for such Plan Year, applicable under the UNOVA, Inc.
                    Retirement Plan, as amended, with respect to such Affected Employee's
                    projected age at his or her Normal Retirement Date, or (b)
                    if such Affected Employee attains Retirement after his or her
                    Normal
                    Retirement Date, the Actuarial Equivalent factor for such Plan
                    Year, under
                    the UNOVA, Inc. Retirement Plan, as amended, with
                    respect to such Affected Employee's age when he or she attains
                    Retirement.

                

        

         

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

       

      
        	(3)	
                With
                  respect to the Plan Year ending December 31, 1997, the Annual Benefit
                  of
                  an Affected Employee who was a participant in the Western Atlas
                  Restoration Plan shall not exceed the benefit to which the Affected
                  Employee would have been entitled under the Western Atlas Restoration
                  Plan
                  for such year had such Affected Employee been a participant in
                  such plan
                  until the earlier of his Retirement, death, Termination of Employment
                  or
                  December 31, 1997, offset by the amount actually payable to such
                  Affected
                  Employee under the Western Atlas Inc. Restoration Plan for such
                  Plan
                  Year.

              

      

       

       

      
        	
              	6.2	
                Early
                  Retirement Benefit - At his or her Early Retirement Date an Affected
                  Employee who attains Retirement, or his or her surviving spouse
                  if a
                  benefit is payable pursuant to Section 7.1 of the Plan, shall be
                  entitled
                  to an annual early retirement benefit which will be equal to the
                  annual
                  retirement benefit amount calculated pursuant to Section 6.1(a)
                  above for
                  such Affected Employee reduced by one-half percent (1/2%) for each
                  full
                  month by which his or her Early Retirement Date precedes his or
                  her Normal
                  Retirement Date.

              

      

       

       

      
        	
              	6.3	
                Disability
                  Retirement Benefit - At his or her Disability Retirement Date an
                  Affected
                  Employee who attains Retirement, shall be entitled to an annual
                  disability
                  retirement benefit which will be equal to the normal retirement
                  benefit
                  amount calculated pursuant to Section 6.1(a) above for such Affected
                  Employee reduced by one-half percent (1/2%) for each full month
                  by which
                  his or her Disability Retirement Date precedes his or her Normal
                  Retirement Date.

              

      

      
 

      
        	
              	6.4	
                Vesting
                  Schedule - An Affected Employee shall be vested in his or her
                  annual
                  retirement benefit under the Plan according to the Company-purchased
                  retirement benefit vesting schedule under the UNOVA, Inc. Retirement
                  Plan,
                  as amended from time to time, except that: (i) for purposes of
                  this Plan
                  only, on the Disability Retirement Date of any Affected Employee,
                  such
                  Affected Employee shall become one hundred percent (100%) vested
                  in his or
                  her annual disability retirement benefit, notwithstanding his actual
                  number of years of Credited Service; (ii) for purposes of this
                  Plan only,
                  if an Affected Employee should die prior to incurring a Termination
                  of
                  Employment, such Affected Employee's Spouse, if any, shall become
                  one
                  hundred percent (100%) vested in his or her annual retirement benefit,
                  notwithstanding, such Affected Employee’s actual number of years of
                  Credited Service at the time of his or her death; (iii) for purposes
                  of
                  this Plan only, upon Change of Control, unless the Committee decides
                  otherwise prior to said Change of Control, such Affected Employee
                  shall
                  become one hundred percent (100%) vested in his or her annual retirement
                  benefit.

              

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      

      
        	 	
                6.5

              	
                Initial
                  and Subsequent Payment
                  Dates -
                  An Affected Employee's annual retirement
                  benefit shall be payable in twelve (12) equal monthly installments
                  commencing effective the first of the month following the month
                  the Affected Employee attains Retirement and the first payment
                  shall be
                  made no later than sixty (60) days following the end of the Plan
                  Year
                  in which the Affected Employee attains Retirement, except that
                  no
                  payment
                  shall be made until the date that an Affected Employee files with
                  the
                  Company a request for payment of an annual retirement benefit on
                  a
                  form
                  prescribed by the Plan
                  Administrator.

              

      

      
      

       

      Section
        7 - Death Benefits

       

      
        	 	
                7.1

              	
                Pre-Retirement
                  Spouse Benefit -
                  If a married Affected Employee dies after becoming either wholly
                  or
                  partially vested under this Plan and before commencing
                  to receive an annual retirement benefit, his or her surviving Spouse
                  shall be entitled to receive an annual benefit, payable by the
                  Company,
                  commencing on the first day of the month following the later of
                  the
                  date of death of the Affected Employee or the date the Affected
                  Employee
                  would have attained his or her Early Retirement Date, and terminating
                  with the last monthly payment preceding the surviving Spouse's
                  death. In the case of an Affected Employee who dies before commencing
                  to receive an annual retirement benefit, but after he or she has
                  attained his or her Early Retirement Date, the amount of annual
                  benefit
                  to
                  which such Affected Employee's surviving Spouse shall be entitled
                  shall
                  be equal to the amount which would have been payable to the surviving
                  Spouse had the Affected Employee commenced receiving an annual
                  retirement benefit pursuant to Section 6.1 or Section 6.2, whichever
                  is
                  applicable, on the day before his or her death, in the form of
                  a joint and
                  survivor
                  income annuity computed in accordance with Section 9.1. In the
                  case
                  of an Affected Employee who dies before commencing to receive an
                  annual
                  retirement benefit and before he or she has attained his or her
                  Early
                  Retirement
                  Date, the amount of such annual benefit to which such Affected
                  Employee's surviving Spouse shall be entitled shall be equal to
                  the
                  amount which would have been payable had the Affected Employee
                  incurred
                  a Termination of Employment on the date of his or her death, (or
                  the
                  date of his or her actual Termination of Employment, if earlier)
                  survived
                  to his or her Normal Retirement Date under Section 5.1 or to his
                  or
                  her Early Retirement Date under Section 5.2, if applicable, and
                  commenced
                  receiving his or her annual retirement benefit in the form of a
                  joint and
                  survivor income annuity computed in accordance with Section 9.1
                  on his or
                  her Normal Retirement Date or his or her Early Retirement Date,
                  whichever
                  is applicable, and died immediately
                  thereafter.

              

      

       

      
        	 	
                7.2

              	
                Death
                  after Retirement - Upon the death of an Affected Employee after he or
                  she has attained Retirement, his or her surviving Spouse shall
                  be entitled
                  to an annual benefit, payable by the Company, and determined in
                  accordance
                  with Section 9.1.

              

      

       

      Section
        8 - Termination of Employment

       

      
        	 	
                8.1

              	
                Rights
                  of
                  Affected Employees -
                  In the event that an Affected Employee incurs a Termination of
                  Employment,
                  any part of his or her accrued benefit
                  which is not then vested in accordance with Section 6.4 shall be
                  forfeited.
                  Such amount forfeited shall not be restored unless such Affected
                  Employee is reemployed by the Company and has not incurred a Break
                  in Credited Service prior to such reemployment by the
                  Company.

              

      

       

      
        	 	
                8.2

              	
                Transfer
                  of Employment -
                  If an Affected Employee transfers from a category of employment
                  covered by
                  the Plan to a category
                  of employment not
                  covered by the Plan but who continues to be employed either with
                  UNOVA,
                  Inc., with any Affiliate Company or with a Designated Foreign Corporation,
                  said Affected Employee shall not be deemed to have incurred a Termination
                  of Employment.

              

      

       

      Section
        9 - Forms of Retirement Income

       

      
        	 	
                9.1

              	
                Joint
                  and Survivor Income Annuity -
                  The annual retirement benefit of an Affected Employee who is married
                  at
                  the time he or she attains Retirement shall
                  be payable by the Company, to the Affected Employee in twelve (12)
                  equal
                  monthly payments commencing with the first calendar month after
                  the
                  Affected Employee attains Retirement and shall be payable for his
                  or
                  her
                  life, and shall continue to be payable monthly to his or her surviving
                  Spouse, following the death of the Affected Employee, for the life
                  of the
                  surviving
                  Spouse. Payments will cease with the last payment made prior to
                  the date of the death of the surviving Spouse. Such annual retirement
                  benefit
                  shall be the Actuarial Equivalent of a straight life annuity computed
                  in accordance with Section 6.1, Section 6.2, or Section 6.3, whichever
                  is applicable, payable for the life of the Affected Employee. Any
                  such survivor benefit shall be equal to one hundred percent (100%)
                  of
                  the
                  annual retirement benefit payable during the joint lives of the
                  Affected
                  Employee
                  and his or her surviving
                  Spouse.

              

      

       

      
        	 	
                9.2

              	
                Straight
                  Life Annuity -
                  If an Affected Employee does not have a Spouse at the time he or
                  she
                  attains Retirement, his or her annual retirement benefit shall
                  be payable by the Company, in the form of a straight life annuity
                  for
                  the
                  life of the Affected Employee and shall be payable in twelve (12)
                  equal
                  monthly payments commencing with the first calendar month after
                  the
                  Affected Employee attains Retirement. Payments will cease with
                  the
                  last
                  payment made prior to the date of death of the Affected Employee.
                  The
                  amount of the annual retirement benefit will be computed in accordance
                  with Section 6.1, Section 6.2, or Section 6.3, whichever is applicable.

              

      

       

      
        	
              	9.3	
                Form
                  of Benefit on Change of Control -
                  Notwithstanding the other provisions
                  of this Section, upon a Change of Control, benefits payable to
                  an
                  Affected Employee who remains employed by the Company, shall be
                  paid
                  in a lump sum payment equal to the Actuarial Equivalent at the
                  age of
                  the
                  Affected Employee as of the date of Change of Control of a single
                  life
                  annuity
                  payable at the later of age 65 or, if the Affected Employee had
                  remained
                  in continuous employment with the Company after attaining age 65,
                  the age of the Affected Employee at the date of Change of Control
                  or at
                  the date Affected Employee's employment terminated, whichever is
                  earlier,
                  unless the Committee decides otherwise prior to said Change of
                  Control.

              

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      Section
        10 - Miscellaneous

       

      
        	 	
                10.1

              	
                Receipt
                  and Release for Payments
                  -
                  Any payment to any Affected Employee,
                  his or her surviving Spouse or to his or her legal representative
                  or
                  to any committee appointed for such Affected Employee or surviving
                  Spouse
                  in accordance with the provisions of this Plan shall, to the extent
                  thereof, be in full satisfaction of such benefit claim under the
                  Plan. As
                  a condition precedent to the payment, such Affected Employee, surviving
                  Spouse, legal representative or committee may be required to execute
                  a
                  receipt
                  and release therefor in such form as shall be determined by the
                  Plan
                  Administrator.

              

      

       

      
        	 	
                10.2

              	
                Dispute
                  as to Benefit Payments -
                  Upon written notice to the Plan Administrator that there is a dispute
                  as
                  to the proper recipient of any benefits not yet distributed under
                  the
                  Plan, the Plan Administrator may in his or her sole discretion
                  enter into
                  any arrangement necessary to prevent the benefits from being paid
                  to the
                  wrong party until the dispute shall have been
                  determined by a court of competent jurisdiction or settled by the
                  claimants
                  concerned.

              

      

       

      
        	 	
                10.3

              	
                No
                  Contract of Employment -
                  Nothing herein contained shall be construed as giving any Affected
                  Employee the right to be retained in the service of the
                  Company, nor upon dismissal or upon his or her voluntary Termination
                  of Employment, to have any right or interest in this Plan other
                  than as
                  provided
                  herein.

              

      

       

      
        	 	
                10.4

              	
                Commutation
                  of Benefit -
                  If the amount of the annual retirement benefit payable hereunder
                  to any
                  Affected Employee or to his or her surviving Spouse
                  is less than one hundred dollars ($100.00) per month, payment of
                  the
                  Actuarial Equivalent of such payments may be made in a lump sum
                  in
                  full
                  settlement of all sums payable
                  hereunder.

              

      

       

      
        	 	
                10.5

              	
                Assignment
                  -
                  The benefits payable under the Plan may not be assigned or
                  alienated.

              

      

       

      
        	 	
                10.6

              	
                Applicable
                  Law -
                  The Plan shall be governed by the laws of
                  Delaware.

              

      

       

      
        	 	
                10.7

              	
                Terms
                  -
                  Except as required otherwise by the context, capitalized terms
                  that are
                  used in the Plan shall have the meaning assigned to them in Article
                  II or
                  elsewhere in the Plan. Feminine or neuter pronouns shall be substituted
                  for
                  those of the masculine form and the plural shall be substituted
                  for the
                  singular,
                  in any place or places herein where the context may require such
                  substitution
                  or substitutions. The title and headings of the Sections of this
                  Plan
                  are for convenience only, and are not intended to be a part of
                  or to
                  affect
                  the meaning or interpretation of the
                  Plan.

              

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      

       

      
        	 	
                10.8

              	
                Waiver
                  -
                  Any waiver of or failure to enforce any provision of this Plan
                  inany instance shall not be deemed a waiver
                  of such
                  provision as to any other
                  or subsequent instance.

              

      

       

      
        	
              	10.9	
                Severability
                  -
                  In the event that any provision of this Plan shall be declared
                  illegal
                  or invalid for any reason, said illegality or invalidity shall
                  not affect
                  the remaining provisions of this Plan but shall be fully severable,
                  and
                  this Plan
                  shall be construed and enforced as if said illegal or invalid provision
                  had
                  never been inserted herein.

              

      

       

      
        	
              	                 
                10.10	
                Unfunded
                  Top Hat Plan -
                  It is the Company's intention that this Plan be a Top
                  Hat Plan, defined as an unfunded plan maintained primarily for
                  the
                  purpose
                  of providing deferred compensation for a select group of management
                  or highly compensated employees, as provided in Sections 201(2),
                  301(a)(3), and 401(a)(1) of the Employee Retirement Income Security
                  Act of 1974, as amended from time to time. The Company may establish
                  and fund one or more trusts for the purpose of paying some or all
                  of
                  the benefits promised to Affected Employees under the Plan; provided,
                  however,
                  that (i) any such trust(s) shall at all times be subject to the
                  claims
                  of
                  the Company's general creditors in
                  the
                  event of the insolvency or bankruptcy of the Company, and (ii)
                  notwithstanding the creation or funding
                  of any such trust(s), the Company shall remain primarily liable
                  for
                  any
                  obligation hereunder. Notwithstanding the establishment of any
                  such
                  trust(s),
                  the Affected Employees shall have no preferred claim on, or any
                  beneficial
                  ownership interest in, any assets of any such trust or of the Company.

              

      

       

      Section
        11 - Amendment or Discontinuance, Assumption of Liabilities and Coordination
        of
Benefits
        

       

      
        	
              	                    11.1	
                Amendment
                  of Plan -
                  Unless otherwise stated in a particular amendment, UNOVA, Inc.,
                  or its
                  corporate successor, is designated the agent for the Company
                  to alter, amend or change the Plan on behalf of all the Participating
                  Divisions enumerated in Section 2; and each Participating Division
                  agrees,
                  so long as it shall
                  be a Participating Division under the Plan,
                  to be governed by the resolutions of the agent acting on behalf
                  of the
                  Participating
                  Divisions. The Company may amend the Plan in its sole discretion
                  in any manner or at any time. No amendment to the Plan shall retroactively
                  adversely affect benefits to which the Affected Employees are
                  entitled.

              

      

       

      
        	
              	                    11.2	
                Freezing
                  Plan Benefits - The Company intends and expects to continue the
                  Plan
                  indefinitely, but necessarily reserves the right at any time to
                  discontinue, in whole or part, future benefits under the Plan.
                  No Affected
                  Employee shall have any rights to benefits beyond the freeze date.
                  Solely
                  for purposes of computing the Affected Employee's vesting under
                  Section
                  6.4, Credited Service, if any, with the Company after the freeze
                  date
                  shall be taken into account.

              

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      

       

      
        	               
                11.3	
                Termination
                  of Plan - The Company intends and expects to continue the Plan
                  indefinitely, but necessarily reserves the right at any time or
                  times to
                  terminate the Plan (including the partial termination of the Plan).
                  If the
                  Plan is so terminated and is not continued by a successor employer
                  or
                  merged into another plan of the Company or a successor employer,
                  each
                  Affected Employee who is employed by the Company at such time shall
                  be
                  vested one hundred percent (100%) in his or her annual retirement
                  benefit,
                  notwithstanding the actual number of his or her years of Credited
                       Service.

              

      

       

      
        	               
                11.4	
                Merger
                  or Consolidation - In the event of any merger or consolidation of
                  the
                  Plan with any other plan of deferred compensation maintained or
                  to be
                  established for the benefit of all or some of the Affected Employees
                  of
                  this Plan, each Affected Employee shall (if either this Plan or
                  the other
                  Plan then terminated) receive a benefit immediately after the merger,
                  consolidation or transfer which is equal to or greater than the
                  benefit he
                  or she would have been entitled to receive immediately before the
                  merger,
                  consolidation or transfer (if the Plan had then
                  terminated).

              

      

       

      
        	               
                11.5	
                Assumption
                  of Liabilities - If as a result of the spin-off of the Company
                  from
                  Western Atlas, the parties agree that the Company will assume the
                  benefit
                  obligations under the Western Atlas Inc. Restoration Plan with
                  respect to
                  certain individuals who are on pay status under the Western Atlas
                  Inc.
                  Restoration Plan, such benefit obligations shall be provided hereunder
                  as
                  if such benefit accrued under the Plan, as amended from time to
                  time.

              

      

       

      
        	               
                11.6	
                Coordination
                  of Benefits - In the event an Affected Employee is or was also
                  a participant in a similar restoration plan for highly compensated
                  employees within the meaning of Section 201(2), 301(a) and 401(a)
                  of the
                  Title I of ERISA and maintained by the Company or Western Atlas
                  (a
                  “Subsidiary Plan”), the Plan Administrator shall have the power and
                  authority to reduce or modify the benefits payable under this Plan
                  in
                  order to integrate the benefits with the benefits payable under
                  the
                  Subsidiary Plan.

              

      

       

      Section
        12 - Plan Administration

       

      
        	12.1	
                Plan
                  Administrator

              

      

       

      	A.  	
              General
                -
                A
                Plan Administrator appointed by and serving at the pleasure
                of the Board of Directors of the Company shall be responsible for
                the
                supervision and control of the operation and administration
                of the Plan. The Plan Administrator shall not have the
                right to alter or change any terms of the Plan, such right being
                retained
                solely by the Board of Directors of the Company and any Committee
                thereof to which the Board of Directors may have delegated
                such right.

            

       

      	B.  	
              Specific
                Powers and Duties -
                The Plan Administrator shall have all powers and duties, express
                and
                implied, necessary to carry out the supervision and control of the
                Plan,
                as provided above, which shall include,
                but not by way of limitation, the
                following:

            

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      

       

      	(1)  	
              To
                interpret the Plan and to decide any and all matters arising hereunder;
                including the right to remedy possible ambiguities, inconsistencies
                or
                omissions; provided, however, that all such interpretations
                and decisions shall be applied in a uniform manner to all
                Affected Employees similarly situated;

            

       

      	(2)  	
              To
                compute the amount of retirement benefit which shall be payable
                to
                any Affected Employee or Spouse in accordance with the provisions
                of the
                Plan;

            

       

      
        	
              	                                    
                (3)	
                To
                  authorize payments under the Plan;
                  and

              

      

       

      	(4)  	
              To
                establish a claims procedure to provide each Affected Employee
                or
                Spouse a full and fair review of any denial, in whole or part, of
                a claim
                for benefits.

            

       

       

      IN
        WITNESS WHEREOF, the
        Company has caused this Plan to be executed by its duly
        authorized officers as of the 18th
        day of
        August, 1997.

       

      UNOVA,
        INC.

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      
        
          	
                  WITNESS:
                    /s/
                    Brenda Brock

                	 	
                  By:

                   

                  By:

                	
                  /s/
                    Michael E. Keane

                
	 	 	 
	
                  WITNESS:
                    /s/
                    Brenda Brock

                	 	
                   

                   

                   

                  /s/
                    Charles A. Cusumano

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