Prepared by MERRILL CORPORATION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H/Tptq+tKemCUgBzIvF1FTYxZgWv+VngA80TzY3o0KzFrRuX37Yf/enZnGzSoGu4 lCuJaHM+KHKnOG9/CM0UYA== 0000912057-01-539737.txt : 20020410 0000912057-01-539737.hdr.sgml : 20020410 ACCESSION NUMBER: 0000912057-01-539737 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNOVA INC CENTRAL INDEX KEY: 0001044590 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY (NO METALWORKING MACHINERY) [3550] IRS NUMBER: 954647021 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13279 FILM NUMBER: 1789812 BUSINESS ADDRESS: STREET 1: 21900 BURBANK BLVD CITY: WOODLAND HILLS STATE: CA ZIP: 91367-7418 BUSINESS PHONE: 3108882500 MAIL ADDRESS: STREET 1: 21900 BURBANK BLVD CITY: WOODLAND HILLS STATE: CA ZIP: 91367-7418 10-Q 1 a2062882z10-q.htm 10-Q Prepared by MERRILL CORPORATION
QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

/x/	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

/ /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-13279

UNOVA, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		95-4647021 (I.R.S. Employer Identification No.)
21900 Burbank Boulevard Woodland Hills, California www.unova.com (Address of principal executive offices and internet site)		91367-7418 (Zip Code)

Registrant's telephone number, including area code: (818) 992-3000

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

On October 31, 2001 there were 57,766,747 shares of Common Stock outstanding, exclusive of treasury shares.

UNOVA, INC.

INDEX

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2001

			Page Number
PART I. FINANCIAL INFORMATION
	ITEM 1.	Financial Statements
		Consolidated Statements of Operations Nine Months Ended September 30, 2001 and 2000 (unaudited)	1
		Consolidated Statements of Operations Three Months Ended September 30, 2001 and 2000 (unaudited)	2
		Consolidated Balance Sheets September 30, 2001 and December 31, 2000 (unaudited)	3
		Consolidated Statements of Cash Flows Nine Months Ended September 30, 2001 and 2000 (unaudited)	4
		Notes to Consolidated Financial Statements (unaudited)	5
	ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	19
PART II. OTHER INFORMATION
	ITEM 6.	Exhibits and Reports on Form 8-K	20
Signature			21

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNOVA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands of dollars, except per share amounts)
(unaudited)

			Nine Months Ended September 30,
			2001			2000
Sales and Service Revenues			$	1,173,803		$	1,404,519

Costs and Expenses
	Cost of sales and service			858,827			1,065,295
	Selling, general and administrative			272,218			313,602
	Depreciation and amortization			46,884			50,966
	Interest, net			23,838			22,498

		Total Costs and Expenses		1,201,767			1,452,361

Goodwill Impairment and Special Charges				(293,250	)

Other Income				75,104			44,686

Loss before Income Taxes				(246,110	)		(3,156	)
Benefit (Provision) for Income Taxes				(17,355	)		11,648

Net Earnings (Loss)			$	(263,465	)	$	8,492

Basic and Diluted Earnings (Loss) per Share			$	(4.64	)	$	0.15

Shares Used in Computing Basic Earnings (Loss) per Share				56,727,476			55,659,915
Shares Used in Computing Diluted Earnings (Loss) per Share				56,727,476			55,758,433

See accompanying notes to consolidated financial statements.

UNOVA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands of dollars, except per share amounts)
(unaudited)

			Three Months Ended September 30,
			2001			2000
Sales and Service Revenues			$	358,900		$	439,460

Costs and Expenses
	Cost of sales and service			261,296			332,024
	Selling, general and administrative			82,038			104,698
	Depreciation and amortization			14,744			16,134
	Interest, net			6,448			6,717

		Total Costs and Expenses		364,526			459,573

Goodwill Impairment and Special Charges				(257,655	)

Loss before Income Taxes				(263,281	)		(20,113	)
Benefit for Income Taxes				12,570			12,835

Net Loss			$	(250,711	)	$	(7,278	)

Basic and Diluted Loss per Share			$	(4.39	)	$	(0.13	)

Shares Used in Computing Basic Loss per Share				57,167,152			55,866,622
Shares Used in Computing Diluted Loss per Share				57,167,152			55,866,622

See accompanying notes to consolidated financial statements.

UNOVA, INC.
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
(unaudited)

			September 30, 2001			December 31, 2000
ASSETS
Current Assets
	Cash and cash equivalents		$	56,474		$	106,836
	Accounts receivable, net			455,425			453,734
	Inventories, net of progress billings			219,566			237,487
	Deferred tax assets			68,253			79,845
	Other current assets			14,917			17,202

		Total Current Assets		814,635			895,104
Property, Plant and Equipment, at Cost				431,813			452,032
Less Accumulated Depreciation				(239,499	)		(223,790	)

	Property, Plant and Equipment, Net			192,314			228,242
Goodwill and Other Intangibles, Net				88,570			369,949
Deferred Tax Assets				92,250			87,698
Other Assets				95,960			139,685

Total Assets			$	1,283,729		$	1,720,678

LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
	Accounts payable and accrued expenses		$	337,238		$	396,506
	Payroll and related expenses			86,580			85,340
	Notes payable and current portion of long-term obligations						235,372

		Total Current Liabilities		423,818			717,218
Long-term Obligations				328,500			213,503

Other Long-term Liabilities				104,015			102,173

Commitments and Contingencies
Shareholders' Investment
	Common stock			575			568
	Additional paid-in capital			667,306			660,132
	Retained earnings (deficit)			(212,007	)		51,458
	Accumulated other comprehensive loss—cumulative currency translation adjustment			(28,478	)		(24,374	)

		Total Shareholders' Investment		427,396			687,784

Total Liabilities and Shareholders' Investment			$	1,283,729		$	1,720,678

See accompanying notes to consolidated financial statements.

UNOVA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
(unaudited)

				Nine Months Ended September, 30
				2001			2000
Cash and Cash Equivalents at Beginning of Period				$	106,836		$	25,239

Cash Flows from Operating Activities:
	Net earnings (loss)				(263,465	)		8,492
	Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
		Decrease in accounts receivable sold			(90,500	)		(9,500	)
		Reversion of pension plan assets, net of gain			46,919
		Gain on sale of business						(44,686	)
		Long-lived asset impairment			287,035
		Depreciation and amortization			46,884			50,966
		Change in prepaid pension costs, net			(15,554	)		(12,626	)
		Deferred taxes			7,247			(19,659	)
		Changes in operating assets and liabilities:
			Accounts receivable		86,827			79,622
			Inventories		17,100			30,534
			Other current assets		2,611			1,259
			Accounts payable and accrued expenses		(43,604	)		(168,947	)
			Payroll and related expenses		(1,587	)		(1,834	)
		Other operating activities			(3,805	)		(8,604	)

			Net Cash Provided by (Used in) Operating Activities		76,108			(94,983	)

Cash Flows from Investing Activities:
	Sale of business							88,000
	Capital expenditures				(12,294	)		(27,298	)
	Sale of property, plant and equipment				6,714			8,897
	Other investing activities				3,821			4,455

			Net Cash Provided by (Used in) Investing Activities		(1,759	)		74,054

Cash Flows from Financing Activities:
	Net increase (decrease) in notes payable and revolving facilities				(193,683	)		4,042
	Proceeds from issuance of Term Loan				75,000
	Other financing activities				(6,028	)		3,357

			Net Cash Provided by (Used in) Financing Activities		(124,711	)		7,399

Resulting Decrease in Cash and Cash Equivalents					(50,362	)		(13,530	)

Cash and Cash Equivalents at End of Period				$	56,474		$	11,709

Supplemental disclosure of cash flow information:
	Interest paid			$	28,470		$	27,286
	Income taxes paid			$	4,730		$	9,412

See accompanying notes to consolidated financial statements.

UNOVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation

UNOVA, Inc. and subsidiaries ("UNOVA" or the "Company") is a leading global supplier of mobile computing and wireless network products for non-office applications and of manufacturing systems technologies primarily for the automotive and aerospace industries. The Company is headquartered in Woodland Hills, California and incorporated in the state of Delaware.

The amounts included in this report are unaudited; however in the opinion of management, all adjustments necessary for a fair presentation of results of operations, financial position and cash flows for the stated periods have been included. These adjustments are of a normal recurring nature. It is suggested that these consolidated financial statements are read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. The results of operations for the interim periods presented are not necessarily indicative of operating results for the entire year.

2. Inventories, Net of Progress Billings

Inventories, net of progress billings consisted of the following (thousands of dollars):

	September 30, 2001			December 31, 2000
Raw materials and work in process	$	215,490		$	241,506
Finished goods		32,522			21,966
Less progress billings		(28,446	)		(25,985	)

Inventories, net of progress billings	$	219,566		$	237,487

3. Debt

The Revolving Facility, maintained with a syndicate of lenders, matures on July 11, 2004. Borrowing availability is subject to a Borrowing Base calculation, as defined in the agreement, based on eligible levels of accounts receivable and inventory. The Revolving Facility is secured by a junior lien on the real estate, machinery and equipment of the Company and its domestic subsidiaries and a senior lien on substantially all of the other assets of the Company and its domestic subsidiaries, subject to certain limitations on liens contained in the indenture governing the Company's outstanding senior notes in the principal amount of $200 million. The Company may borrow at the Base Rate or the LIBOR Rate, each as defined in the agreement, plus an applicable margin. The Revolving Facility places restrictions on the Company and its subsidiaries, including limits on capital expenditures, liens, investments, sale or pledge of assets, prepayment of debt, sale and leaseback transactions, dividend payments, and incurrence of debt or guarantees. Financial covenants include minimum levels of domestic EBITDA, Fixed Charge Coverage Ratio and Tangible Net Worth, each as defined in the agreement.

The Term Loan is maintained with a syndicate of lenders and is secured by a senior lien on the real estate, machinery and equipment of the Company and its domestic subsidiaries and a junior lien

on substantially all of the other assets of the Company and its domestic subsidiaries, subject to certain limitations on liens contained in the indenture governing the Company's outstanding senior notes in the principal amount of $200 million. Monthly interest payments are based on the LIBOR Rate plus an applicable margin, as defined in the agreement. The principal matures on July 11, 2004. Net proceeds from the sale of real estate, machinery and equipment of the Company and its domestic subsidiaries must be applied to the reduction of the Term Loan principal, subject to certain exceptions as defined in the agreement. Other restrictions and financial covenants contained in the Term Loan are consistent with those in the Revolving Facility.

In connection with the Term Loan, various subsidiaries of Unitrin, Inc., a significant shareholder of the Company, owning approximately 22% of the Company's outstanding common shares, have entered into assignment and acceptance agreements with the lenders of the Term Loan, with interests totaling $31.5 million.

On September 13, 2001, certain of the Company's U.K. subsidiaries (collectively, the "Borrower") entered into a secured revolving credit facility and related secured overdraft facility (collectively, the "UK Facility") with a bank. The UK Facility matures on September 13, 2003 and may be extended in one-year increments at the discretion of the bank. The UK Facility has committed capacity of up to £15.0 million and is secured by substantially all the assets of the Borrower. Borrowing availability, as defined in the agreement, is based on property and eligible levels of accounts receivable. The Company may borrow at the LIBOR rate, as defined in the agreement, plus an applicable margin. The UK Facility places restrictions on the Borrower, including limits on liens, investments, sale or pledge of assets, dividend payments, and incurrence of debt or guarantees. Net proceeds from the sale of real estate, machinery and equipment of the Borrower must be applied to the reduction of any outstanding loan balance. The UK Facility includes cross default provisions to the financial covenants included in the Company's Revolving Facility.

As of September 30, 2001, $75 million was outstanding under the Term Loan at an annual interest rate of 13.00%, $40 million was outstanding under the Revolving Facility at an annual interest rate of 6.59% and no borrowings were outstanding under the UK Facility.

4. Interest, Net

Interest, net was composed of the following (thousands of dollars):

	Nine Months Ended September 30,						Three Months Ended September 30,
	2001			2000			2001			2000
Interest expense	$	26,252		$	24,540		$	6,967		$	7,563
Interest income		(2,414	)		(2,042	)		(519	)		(846	)

Interest, net	$	23,838		$	22,498		$	6,448		$	6,717

5. Earnings (Loss) per Share and Shareholders' Investment

Basic earnings (loss) per share is calculated using the weighted average number of common shares outstanding and issuable for the applicable period. Diluted earnings (loss) per share is computed using basic weighted average shares plus the dilutive effect of unvested restricted stock and outstanding stock options using the "treasury stock" method.

Shares used for basic and diluted earnings (loss) per share were computed as follows:

	Nine Months Ended September 30,		Three Months Ended September 30,
	2001	2000	2001	2000
Weighted average common shares—Basic	56,727,476	55,659,915	57,167,152	55,866,622
Dilutive effect of unvested restricted shares and stock options		98,518

Weighted average shares—Diluted	56,727,476	55,758,433	57,167,152	55,866,622

At September 30, 2001 and 2000, Company employees and directors held options to purchase 5,629,821 and 5,396,500 shares, respectively, of Company common stock that were antidilutive to the diluted earnings (loss) per share computation. These options could become dilutive in future periods if the average market price of the Company's common stock exceeds the exercise price of the outstanding options and the Company reports net earnings. For the nine and three month periods ended September 30, 2001, diluted weighted average shares exclude 368,707 and 368,710 weighted average unvested restricted shares due to the Company reporting a net loss. For the three month period ended September 30, 2000, diluted weighted average shares exclude 294,796 weighted average unvested restricted shares due to the Company reporting a net loss.

In August 2001, the Company extended to its employees a tender offer to exchange on a four-for-one basis certain outstanding stock options granted during the period June 1, 1999 through May 31, 2000 for restricted shares of the Company's common stock. On the exchange date, October 8, 2001, options to purchase 1,271,500 shares were tendered by employees and canceled and 317,884 shares of restricted stock were issued under the Company's stock incentive plans. The restricted shares vest over a three year period, with one third of the restricted shares vesting on each of the first three anniversaries of the exchange date.

6. Comprehensive Loss

The Company's comprehensive loss amounts were computed as follows (thousands of dollars):

	Nine Months Ended September 30,						Three Months Ended September 30,
	2001			2000			2001			2000
Net earnings (loss)	$	(263,465	)	$	8,492		$	(250,711	)	$	(7,278	)
Change in equity due to foreign currency translation adjustments		(4,104	)		(15,169	)		6,800			(6,876	)

Comprehensive loss	$	(267,569	)	$	(6,677	)	$	(243,911	)	$	(14,154	)

7. Segment Reporting

The Company has three reportable segments, Automated Data Systems ("ADS"), Integrated Production Systems ("IPS") and Advanced Manufacturing Equipment ("AME"). Segments are determined principally on the basis of their products and service. The ADS segment is comprised of the Company's wholly owned subsidiary Intermec Technologies Corporation. The IPS segment includes Lamb Machining Systems division, Lamb Body & Assembly Systems division and Landis Grinding Systems division. The AME segment represents the Cincinnati Machine division. For evaluation purposes, the Company further aggregates the IPS and AME reportable segments into the Industrial

Automation Systems ("IAS") business. The Company uses operating profit or loss, which is computed by adding net interest expense to earnings or loss before taxes on income, to evaluate performance.

Corporate and other amounts include corporate operating costs and currency transaction gains and losses. Accounting policies for the segments are the same as those for the Company. Intrasegment transactions have been eliminated and there are no material intersegment transactions.

Operations by Business Segment
(millions of dollars)

					Industrial Automation Systems
		Automated Data Systems(a)			Integrated Production Systems			Advanced Manufacturing Equipment			Corporate And Other Amounts			Total
Nine Months Ended September 30:
Sales and service revenues	2001	$	502.5		$	510.5		$	160.8					$	1,173.8
	2000		560.9			643.3			200.3						1,404.5
Operating profit (loss)	2001		(238.8	)(b)		2.5	(d)		(32.6	)(e)	$	46.6	(f)		(222.3	)
	2000		0.5	(c)		40.1			2.2			(23.5	)		19.3
Three Months Ended September 30:
Sales and service revenues	2001		143.0			167.5			48.4						358.9
	2000		161.9			213.7			63.9						439.5
Operating profit (loss)	2001		(242.0	)(b)		16.9	(g)		(27.0	)(e)		(4.8	)		(256.9	)
	2000		(21.9	)		16.6			(1.2	)		(6.9	)		(13.4	)

(a): includes Amtech through June 2000 (See Note 9)
(b): includes special charges of $230.6 million (See Note 8)
(c): includes other income of $44.7 million (See Note 9)
(d): includes special charges of $37.2 million (See Note 8)
(e): includes special charges of $25.4 million (See Note 8)
(f): includes other income of $75.1 million (See Note 9)
(g): includes special charges of $1.6 million (See Note 8)

8. Goodwill Impairment and Special Charges

Goodwill impairment and special charges is composed of the following (thousands of dollars):

		Nine Months Ended September 30, 2001			Three Months Ended September 30, 2001
Goodwill and long-lived asset impairment:
	ADS Goodwill	$	(222,042	)	$	(222,042	)
	ADS Property, plant and equipment		(8,584	)		(8,584	)
	AME Goodwill		(15,649	)		(15,649	)
	AME Property, plant and equipment		(9,760	)		(9,760	)
IPS facilities consolidations:
	Goodwill impairment		(31,000	)
	Severance and plant closure costs		(6,215	)		(1,620	)

Goodwill impairment and special charges		$	(293,250	)	$	(257,655	)

Goodwill and Long-Lived Asset Impairment: In the third quarter 2001, growing evidence of a recessionary environment, intensified by the September 11 attacks, caused the Company to have a less favorable revenue outlook and accordingly the Company assessed its goodwill and long-lived assets for impairment. Due primarily to this poor market outlook and uncertainty as to its impact on the Company's results, the Company recorded non-cash charges to write off remaining goodwill associated with its ADS and AME segments of $222.0 million and $15.6 million, respectively. Additional non-cash charges of $8.6 million and $9.8 million were recorded to reduce the book value of ADS and AME property, plant and equipment, respectively, to their estimated fair values. The estimated fair value of these long-lived assets including goodwill was computed based on discounted expected future cash flows from the related operations.

IPS Facilities Consolidations: During the second quarter 2001, the IPS segment initiated closure of two underutilized U.S. facilities and consolidation of these operations into other IPS units, resulting in the accrual of severance costs for 217 employees totaling $3.0 million and other plant closure costs of $1.6 million. A significant portion of these exit activities occurred in the third quarter and the severance accrual was reduced to $0.4 million at September 30, 2001. The exit activities are expected to be substantially complete during the fourth quarter of 2001. In connection with this action, the Company reviewed for impairment the related long-lived assets, including goodwill. As a result, the Company recorded in the second quarter non-cash goodwill impairment of $31.0 million. The estimated fair value of these long-lived assets including goodwill was computed based on discounted expected future cash flows from these operations. During the third quarter of 2001, the IPS segment initiated closure of an additional facility and consolidation of its operations into other IPS units. This action, which is expected to be substantially completed during the fourth quarter of 2001, resulted in the accrual of severance costs for 88 employees totaling $1.2 million and other plant closure costs of $0.4 million.

9. Other Income

Reversion of Pension Plan Assets: In June of 2001, the Company completed a partial settlement of its defined benefit pension plan obligations through the purchase of nonparticipating annuity contracts. In connection with the settlement, surplus plan assets were reverted to the Company. The Company received net cash of $122.0 million and real estate with a fair value of $15.3 million. The settlement resulted in a net pre-income tax book gain of $75.1 million after excise taxes totaling $34.9 million. The Company also reduced the related prepaid pension asset in accordance with Statement of Financial

Accounting Standards No. 88 "Employer's Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination of Benefits."

Gain on Sale of Business: In June 2000, the Company sold the ADS segment's Amtech transportation systems operations ("Amtech") and received cash proceeds of approximately $88.0 million. The one-time gain from the sale of Amtech was $44.7 million. The net assets and results of operations of Amtech are not material to the Company's consolidated financial statements.

10. Benefit (Provision) for Income Taxes

The provision for income taxes for the nine months ended September 30, 2001 reflects the impact of nondeductible goodwill impairment and nondeductible excise taxes relating to the second quarter reversion of surplus pension plan assets. The benefit for income taxes for the three months ended September 30, 2001 reflects the impact of nondeductible goodwill impairment.

11. Related Party Transactions

The Company leased executive offices that are located in a building that was owned by the UNOVA Master Trust, an entity which holds the assets of the Company's primary U.S. pension plans. In conjunction with the reversion of surplus pension plan assets in June 2001, ownership of the building was transferred to the Company and the lease agreement was terminated. Rental expense under the provisions of this lease for the nine months ended September 30, 2001 was $0.4 million, incurred prior to the June transfer. Rental expense under the provisions of this lease for the nine and three months ended September 30, 2000 was $0.8 million and $0.3 million, respectively.

Unitrin, Inc., a significant shareholder of the Company, holds an interest of $31.5 million in the Term Loan (See Note 3).

12. Derivative Instruments and Hedging Activities

On January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").

Due to its global operations, the Company's cash flows and earnings are exposed to foreign exchange rate risk resulting principally from the sale of certain of its inventory in U.S. dollars to its foreign subsidiaries and other external foreign sales. The Company's use of derivatives is limited to foreign currency exchange contracts entered into to limit this exposure to foreign currency exchange rate fluctuations. The Company enters into these contracts with major financial institutions to minimize its risk of credit loss. The Company's policies do not permit active trading of or speculation in derivative financial instruments. The Company's policy is to hedge major foreign currency cash flow exposures through foreign exchange forward contracts at amounts up to 100% of such cash flows. The Company designates certain of these foreign currency contracts as cash flow hedging instruments under SFAS 133.

The Company had outstanding foreign exchange contracts with aggregate U.S. dollar notional amounts of $75.8 million and $224.7 million as of January 1, 2001 and September 30, 2001, respectively, with average durations of less than three months. The fair value of such contracts at both January 1, 2001 and September 30, 2001 was not material. The amount of hedge ineffectiveness for the three and nine month periods ended September 30, 2001 was not material. Accordingly, the adoption of SFAS 133 did not have a material impact on the Company's consolidated financial statements.

13. Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141") and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141 discontinues the pooling-of-interests method for business combinations effective July 1, 2001 and establishes new criteria for distinguishing goodwill and other intangibles acquired. SFAS 142, which becomes effective for the Company January 1, 2002, provides guidance on post-acquisition accounting for goodwill and intangibles, including the discontinuance of goodwill amortization, in favor of periodic impairment testing. The Company's operating results for the nine months ended September 2001 include $9.1 million of amortization related to goodwill written off in the second and third quarters of 2001. Amortization on the remaining goodwill for the nine months ended September 30, 2001 was $2.2 million. In accordance with SFAS 142, the Company will cease amortization on its remaining goodwill balances on January 1, 2002.

In June 2001, the FASB issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated asset retirement costs. The statement becomes effective for the Company on January 1, 2003. The Company does not believe that the adoption of this standard will have a material impact on its consolidated financial statements.

In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which supersedes Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The statement becomes effective for the Company on January 1, 2002. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The Company has three reportable segments, Automated Data Systems ("ADS"), Integrated Production Systems ("IPS") and Advanced Manufacturing Equipment ("AME"). Segments are determined principally on the basis of their products and service. The ADS segment is comprised of the Company's wholly owned subsidiary Intermec Technologies Corporation ("Intermec"). The IPS segment includes Lamb Machining Systems division, Lamb Body & Assembly Systems division and Landis Grinding Systems division. The AME segment represents the Cincinnati Machine division. For evaluation purposes, the Company further aggregates the IPS and AME reportable segments into the Industrial Automation Systems ("IAS") business. Sales and service revenues and segment operating profit (loss) for the nine and three months ended September 30, 2001 and 2000 were as follows (thousands of dollars):

		Nine Months Ended September 30,						Three Months Ended September 30,
		2001			2000			2001			2000
Sales and Service Revenues
Automated Data Systems		$	502,472		$	560,881	(a)	$	142,944		$	161,863
Industrial Automation Systems:
	Integrated Production Systems		510,527			643,351			167,571			213,665
	Advanced Manufacturing Equipment		160,804			200,287			48,385			63,932

Total Sales and Service Revenues		$	1,173,803		$	1,404,519		$	358,900		$	439,460

Segment Operating Profit (Loss)
Automated Data Systems		$	(8,127	)(b)	$	(44,193	)(a,c)	$	(11,295	)(b)	$	(21,905	)
Industrial Automation Systems:
	Integrated Production Systems		39,707	(d)		40,064			18,492	(e)		16,639
	Advanced Manufacturing Equipment		(7,239	)(f)		2,257			(1,621	)(f)		(1,253	)

Total Segment Operating Profit		$	24,341		$	(1,872	)	$	5,576		$	(6,519	)

(a): includes Amtech through June 2000
(b): excludes special charges of $230,626
(c): excludes net other income of $44,686
(d): excludes special charges of $37,215
(e): excludes special charges of $1,620
(f): excludes special charges of $25,409

Sales and Service Revenues and Segment Operating Profit (Loss)

Total sales and service revenues for the nine months ended September 30, 2001 decreased $230.7 million, or 16%, compared with the corresponding prior year period. Total segment operating profit was $24.3 million for the nine months ended September 30, 2001, compared to a segment operating loss of $1.9 million for the corresponding prior year period.

For the three months ended September 30, 2001, total sales and service revenues decreased $80.6 million, or 18%, compared with the corresponding prior year period. Total segment operating

profit was $5.6 million for the three months ended September 30, 2001, compared to a segment operating loss of $6.5 million for the corresponding prior year period.

Results for the nine months ended September 30, 2000 include the ADS segment's Amtech transportation systems operations ("Amtech") which were sold in June 2000.

Automated Data Systems: ADS segment revenues for the nine and three month periods ended September 30, 2001 were $502.5 million and $142.9 million, respectively. This compares to ADS segment revenues of $560.9 million, which include Amtech revenues of $41.4 million, for the nine month period ended September 30, 2000 and $161.9 million for the three month period ended September 30, 2000. Excluding Amtech, ADS revenues decreased 3% and 12% for the nine and three month periods ended September 30, 2001, respectively, compared to the corresponding prior year periods. The decline in revenues is due to weakness in the ADS segment's markets with 90% of the third quarter 2001 decline attributed to North America. By product line, the largest decrease occurred for printer & media products, followed by systems & solutions products, and service. During the second quarter 2001, the Company settled a dispute with Compaq Computer Corporation regarding the Company's battery power-management patents. The specific terms of the settlement are confidential. Accordingly, ADS revenues for the nine months ended September 31, 2001 include significant royalty income.

For the nine and three month periods ended September 30, 2001, ADS reported operating losses of $8.1 million and $11.3 million, respectively, before goodwill impairment and special charges of $230.6 million. This compares to operating losses of $44.2 million and $21.9 million in the corresponding prior year periods. The improvement in operating profit reflects significant reductions in selling, general and administrative expenses and higher product and service gross margin percentages, offset partially by the impact on gross margin due to the lower revenue level. On a year-to-date basis product and service gross margins have improved more than one point largely as a result of efficiencies within the service organization. The 2001 year-to-date results reflect significant gross margin contributed by royalties.

During the quarter ended September 30, 2001, the ADS segment recorded non-cash goodwill and other long-lived assets impairments of $230.6 million. These amounts are reported as goodwill impairment and special charges. See discussion under the heading "Goodwill Impairment and Special Charges" below. The Company does not expect near-term improvement in the ADS revenue trend. Additional actions that are anticipated to reduce costs and headcount are expected during the fourth quarter of 2001.

Integrated Production Systems: IPS segment revenues decreased $132.8 million, or 21%, and $46.1 million, or 22%, for the nine and three month periods ended September 30, 2001, respectively, compared with the corresponding prior year periods. Related operating profit decreased $0.4 million, or 1%, for the nine months ended September 30, 2001, and increased $1.9 million, or 11%, for the three months ended September 30, 2001, compared with the corresponding prior year periods. The decrease in revenues reflects a global decline in capital spending primarily by the North American automotive industry. Despite the revenue declines, operating profit as a percentage of sales increased to 7.8% and 11.0% for the nine and three month periods ended September 30, 2001, respectively, compared to 6.2% and 7.8% for the corresponding prior year periods. This improvement reflects better overall contract margins and an improved balance of business between the segment's U.S. and U.K. operations. IAS experiences lower profit margins in the early stages of long-term contracts until development risks have been mitigated. The third quarter 2001 operating profit benefited from improved performance on contracts in their final phases of manufacturing, delivery and installation.

Backlog for the IPS segment was $328.8 million at September 30, 2001 compared to $448.0 million at December 31, 2000. Weakness in the automotive markets has resulted in a trend of declining IPS backlog. This trend was intensified by poor macroeconomic conditions in the third quarter of 2001 and the tragic events of September 11^th. The Company does not expect near term improvement, indicating projected lower IPS revenue performance for at least the first half of 2002.

Revenue declines have necessitated cost reduction actions. For the nine months ended September 30, 2001, the IPS segment has recorded severance and facility consolidation costs of $6.2 million and non-cash goodwill impairment of $31.0 million. These amounts are reported as goodwill impairment and special charges. See discussion under the heading "Goodwill Impairment and Special Charges" below. Inventory writedowns of $2.0 million and receivable allowances of $5.0 million relating to these operations are included in the IPS operating profit for the nine months ended September 30, 2001. Additional actions that are anticipated to reduce costs and headcount are expected during the fourth quarter of 2001.

Advanced Manufacturing Equipment: AME segment revenues decreased $39.5 million, or 20%, and $15.5 million, or 24%, for the nine and three months ended September 30, 2001, respectively, compared with the corresponding prior year periods. Before goodwill impairment and special charges of $25.4 million, AME incurred operating losses of $7.2 million and $1.6 million for the nine and three months ended September 30, 2001, respectively, compared with operating profit of $2.3 million and operating loss of $1.3 million in the corresponding prior year periods. AME revenues continue a trend of decline. Weak domestic machine tool markets, and particularly the aerospace related component, were further impacted by macroeconomic conditions during the third quarter 2001. Revenue declines and the related reduction in contributed gross margin have resulted in increased operating losses in 2001. AME backlog was $64.8 million at September 30, 2001 compared to $66.9 million at December 31, 2000.

During the quarter ended September 30, 2001, the AME segment recorded non-cash goodwill and other long-lived assets impairments of $25.4 million. These amounts are reported as goodwill impairment and special charges. See discussion under the heading "Goodwill Impairment and Special Charges" below. The Company does not expect near-term improvement in the AME revenue trend. Additional actions that are anticipated to reduce costs and headcount are expected during the fourth quarter of 2001.

Costs and Expenses

Cost of sales decreased $206.5 million from $1,065.3 million for the nine months ended September 30, 2000 to $858.8 million for the nine months ended September 30, 2001 and decreased $70.7 million from $332.0 million for the three months ended September 30, 2000 to $261.3 million for the three months ended September 30, 2001. The decrease in cost of sales reflects the lower sales volume in 2001 and improved gross margins for both the ADS and IPS segments. For the nine months ended September 30, 2001, cost of sales includes second quarter inventory writedowns of $5.0 million and $2.0 million at the ADS and IPS segments, respectively. Cost of sales as a percentage of sales decreased from 76% for the nine months ended September 30, 2000 to 73% for the nine months ended September 30, 2001, and decreased from 76% for the three months ended September 30, 2000 to 73% for the three months ended September 30, 2001.

Selling, general and administrative ("SG&A") expenses were $272.2 million and $82.0 million for the nine and three months ended September 30, 2001, respectively, compared with SG&A expenses of $313.6 million and $104.7 million for the respective nine and three months ended September 30, 2000.

The 2001 reductions in SG&A are principally the result of lower Intermec spending and the sale of Amtech, offset partially by costs associated with the Company's refinancing activities during the first half of 2001.

The decrease in depreciation and amortization expense to $46.9 million for the nine months ended September 30, 2001 from $51.0 for nine months ended September 30, 2000 reflects the sale of Amtech in June 2000. The decrease in depreciation and amortization expense to $14.7 million for the three months ended September 30, 2001 from $16.1 million for the three months ended September 30, 2000 reflects facilities consolidation in the ADS segment, as well as reduced amortization in the IPS segment, due to the aforementioned second quarter impairment of goodwill.

Net interest expense was $23.8 million and $22.5 million for the nine months ended September 30, 2001 and 2000, respectively. The increased interest expense is attributable to higher average interest rates on the Company's borrowings for the first nine months of 2001 compared to the same period in 2000. Net interest expense was $6.4 million and $6.7 million for the three months ended September 30, 2001 and 2000, respectively. The decrease is due to reduced levels of debt during the third quarter of 2001 compared to the same period in 2000, partially offset by the effect of higher average interest rates.

Goodwill Impairment and Special Charges

In the third quarter 2001, growing evidence of a recessionary environment, intensified by the September 11 attacks, caused the Company to have a less favorable revenue outlook and accordingly the Company assessed its goodwill and long-lived assets for impairment. Due primarily to this poor market outlook and uncertainty as to its impact on the Company's results, the Company recorded non-cash charges to write off remaining goodwill associated with its ADS and AME segments of $222.0 million and $15.6 million, respectively. Additional non-cash charges of $8.6 million and $9.8 million were recorded to reduce the book value of ADS and AME property, plant and equipment, respectively, to their estimated fair values. The estimated fair value of these long-lived assets including goodwill was computed based on discounted expected future cash flows from the related operations.

During the second quarter 2001, the IPS segment initiated closure of two underutilized U.S. facilities and consolidation of these operations into other IPS units, resulting in the accrual of severance costs for 217 employees totaling $3.0 million and other plant closure costs of $1.6 million. A significant portion of these exit activities occurred in the third quarter and the severance accrual was reduced to $0.4 million at September 30, 2001. The exit activities are expected to be substantially complete during the fourth quarter of 2001. In connection with this action, the Company reviewed for impairment the related long-lived assets, including goodwill. As a result, the Company recorded in the second quarter non-cash goodwill impairment of $31.0 million. The estimated fair value of these long-lived assets including goodwill was computed based on discounted expected future cash flows from these operations. During the third quarter of 2001, the IPS segment initiated closure of an additional facility and consolidation of its operations into other IPS units. This action, which is expected to be substantially completed during the fourth quarter of 2001, resulted in the accrual of severance costs for 88 employees totaling $1.2 million and other plant closure costs of $0.4 million.

Other Income

Other income for the nine months ended September 30, 2001 represents the second quarter gain of $75.1 million related to the reversion of surplus pension plan assets (see discussion under the heading "Liquidity and Capital Resources"). Other income for the nine months ended

September 30, 2000 of $44.7 million represents the gain from the sale of the ADS segment's Amtech transportation systems operations.

Benefit (Provision) for Income Taxes

Liquidity and Capital Resources

Cash and marketable securities decreased from $106.8 million at December 31, 2000 to $56.5 million at September 30, 2001. Total debt decreased from $448.9 million at December 31, 2000 to $328.50 million at September 30, 2001. Net debt, defined as total debt less cash and cash equivalents, decreased $70.1 million to $272.0 million at September 30, 2001 compared to $342.1 million at December 31, 2000. The decrease in net debt reflects $122.0 million cash received from the reversion of surplus pension plan assets and $38.6 million of cash flow generated from normal operations, offset by the $90.5 million impact of terminating the Company's accounts receivable securitization agreements.

The Revolving Facility is maintained with a syndicate of lenders and matures on July 11, 2004. Borrowing availability is subject to a Borrowing Base calculation, as defined in the agreement, based on eligible levels of accounts receivable and inventory. The Revolving Facility is secured by a junior lien on the real estate, machinery and equipment of the Company and its domestic subsidiaries and a senior lien on substantially all of the other assets of the Company and its domestic subsidiaries, subject to certain limitations on liens contained in the indenture governing the Company's outstanding senior notes in the principal amount of $200 million. The Company may borrow at the Base Rate or the LIBOR Rate, each as defined in the agreement, plus an applicable margin. The Revolving Facility places restrictions on the Company and its subsidiaries, including limits on capital expenditures, liens, investments, sale or pledge of assets, prepayment of debt, sale and leaseback transactions, dividend payments, and incurrence of debt or guarantees. Financial covenants include minimum levels of domestic EBITDA, Fixed Charge Coverage Ratio and Tangible Net Worth, each as defined in the agreement.

The Term Loan was obtained from a syndicate of lenders and is secured by a senior lien on the real estate, machinery and equipment of the Company and its domestic subsidiaries and a junior lien on substantially all of the other assets of the Company and its domestic subsidiaries, subject to certain limitations on liens contained in the indenture governing the Company's outstanding senior notes in the principal amount of $200 million. Monthly interest payments are based on the LIBOR Rate plus an applicable margin, as defined in the agreement. The principal matures on July 11, 2004. Net proceeds from the sale of real estate, machinery and equipment of the Company and its domestic subsidiaries must be applied to the reduction of the Term Loan principal, subject to certain exceptions as defined in the agreement. Other restrictions and financial covenants contained in the Term Loan are consistent with those in the Revolving Facility.

As of September 30, 2001, $75.0 million was outstanding under the Term Loan at an annual interest rate of 13.00%, $40.0 million was outstanding under the Revolving Facility at an annual interest rate of 6.59%, and no borrowings were outstanding under the UK Facility. As of September 30, 2001, the Company had additional availability of $31.4 million under the Revolving Facility and availability of £15.0 million under the UK Facility.

In June of 2001, the Company completed a partial settlement of its defined benefit pension plan obligations through the purchase of nonparticipating annuity contracts. In connection with the settlement, surplus plan assets were reverted to the Company. The Company received net cash of $122.0 million and real estate with a fair value of $15.3 million. The settlement resulted in a net pre-income tax book gain of $75.1 million after excise taxes totaling $34.9 million. The Company also reduced the related prepaid pension asset in accordance with Statement of Financial Accounting Standards No. 88 "Employer's Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination of Benefits."

For the period from June 30, 1999 to February 8, 2001, the Company sold interests in a revolving pool of its trade accounts receivable to a financial institution which issues short-term debt backed by receivables acquired in similar transactions. In connection with the Company's refinancing activities, on February 8, 2001 these arrangements were terminated and the Company repurchased the financial institution's interest in the pool of trade receivables for approximately $90.5 million in cash.

The Company is currently in compliance with its debt covenants. Macroeconomic uncertainties combined with expected restructuring activities in the fourth quarter 2001 present an additional challenge to maintaining these covenants over the next several quarters. However, due to the expected positive impact of contemplated restructuring activities, combined with the over collateralized nature of our financing agreements and our demonstrated ability to generate liquidity, management believes that the Company can maintain access to adequate funding to meet its expected working capital and capital expenditure requirements for the next year.

Recent Accounting Pronouncements

impairment testing. The Company's operating results for the nine months ended September 2001 include $9.1 million of amortization related to goodwill written off in the second and third quarters of 2001. Amortization on the remaining goodwill for the nine months ended September 30, 2001 was $2.2 million. In accordance with SFAS 142, the Company will cease amortization on its remaining goodwill balances on January 1, 2002.

In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes Statement of Financial Accounting Standards No.121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The statement becomes effective for the Company on January 1, 2002. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.

Forward-Looking Statements and Risk Factors

The Company cautions readers that included in this quarterly report are certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on management's beliefs as well as on assumptions made by and information currently available to management. They include, but are not limited to, statements about demand for the Company's products and services, market outlook, the effectiveness of cost cutting actions, and the Company's ability to meet its debt covenants and its working capital and capital expenditure requirements. Such forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which could cause the Company's future results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Such risk factors include, but are not limited to: fluctuations in the strength of the automotive and aerospace markets; technological changes and developments; the presence of competitors with greater financial and other resources; the availability and cost of materials and supplies; relations with the Company's employees; the Company's ability to manage its operating costs; worldwide political stability and economic conditions; regulatory uncertainties; and operating risks associated with international operations. Any forward-looking statements should be considered in light of these factors, many of which are beyond the Company's ability to control or predict. Readers are cautioned not to place undue reliance on forward-looking statements. The Company disclaims any obligation to update publicly any forward-looking statements, whether as a result of new information, future events for otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to interest rate risk primarily from its short-term and long-term borrowings and to foreign exchange rate risk with respect to its foreign operations and from foreign currency transactions.

Interest Rates:

On July 12, 2001, the Company entered into two secured long-term credit facilities with aggregate committed capacity of up to $275 million: a $200 million asset-based revolving credit facility (the "Revolving Facility") and a $75 million secured term loan (the "Term Loan"), both with variable interest rates. In conjunction with the new facilities, the Company refinanced and terminated its existing secured credit facility and related agreements. As of September 30, 2001, $75 million was outstanding under the Term Loan, at an annual interest rate of 13.00%, and $40 million was outstanding under the Revolving Facility at annual interest rate of 6.59% See discussion of the Company's credit facilities under the heading "Liquidity and Capital Resources" in Item 2 of this quarterly report.

The information presented below summarizes the Company's cash flows for its borrowings as of September 30, 2001, reflecting the impact of the refinancing activities discussed above. Variable interest rates disclosed represent the weighted-average rates of the borrowings at September 30, 2001. Fair values for fixed rate borrowings have been determined based on recent market trade values. The fair values for variable rate borrowings approximate their carrying value.

Debt	2001	2004			2005			Thereafter			Total		Fair Value
	(millions of dollars)
Fixed Rate					$	100.0		$	100.0		$	200.0	$	121.8
Average Interest Rate						6.88	%		7.00	%
Variable Rate		$	115.0		$	13.5					$	128.5	$	128.5
Average Interest Rate			10.77	%		5.35	%

Foreign Exchange Rates:

There have been no significant changes to the Company's policies regarding the use of short-term foreign exchange contracts to limit exposure to foreign currency exchange rate fluctuations, or the accounting thereof, as discussed in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000. At September 30, 2000 the Company held short-term contracts foreign exchange contracts with an aggregate notional amount of $224.7 million.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a): See Exhibit Index included herein on page E-1.
(b): Reports on Form 8-K:

On a Current Report on Form 8-K, filed July 26, 2001, the Company reported entering into two secured long-term credit facilities: a $200 million asset-based revolving credit facility and the $75 million secured term loan. In conjunction with the new facilities, the Company refinanced and terminated its existing $400 million secured credit facility and related agreements. See a more detailed discussion of the Company's credit facilities under Item 2 of this quarterly report.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		UNOVA, INC. (Registrant)
		By:	/s/ MICHAEL E. KEANE Michael E. Keane Senior Vice President and Chief Financial Officer

November 14, 2001

UNOVA, INC.

INDEX TO EXHIBITS

Exhibit No.		Description of Exhibit
3.1		Certificate of Incorporation of UNOVA, Inc., filed on October 22, 1997 as Exhibit 3A to Amendment No. 2 to the Company's Registration Statement on Form 10 No. 001-13279, and incorporated herein by reference.
3.2		By-laws of UNOVA, Inc., as amended on February 5, 1999, filed as Exhibit 3.2 to the Company's 1998 Annual Report on Form 10-K, and incorporated herein by reference.
4.1		Credit Agreement dated as of July 12, 2001, among the Financial Institutions named therein, Bank of America N.A., as Administrative Agent, Heller Financial, Inc., as Syndication Agent, and UNOVA, Inc. and its subsidiaries party thereto, as Borrowers, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated Jul 12, 2001, and incorporated herein by reference.
4.2		Security Agreement dated as of July 12, 2001 among UNOVA, Inc., UNOVA Industrial Automation Systems Inc., Intermec Technologies Corporation, R & B Machine Tool Company, J.S. McNamara Company, M M & E, Inc., Intermec IP Corp., and UNOVA IP Corp., as Grantors, and Bank of America, N.A., as Administrative Agent, filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated July 12, 2001, and incorporated herein by reference.
4.3		Stock Pledge Agreement dated as of July 12, 2001, among UNOVA, Inc., UNOVA Industrial Automation Systems, Inc., and Intermec Technologies Corporation, as Pledgors, and Bank of America, N.A., as Agent, filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated July 12, 2001, and incorporated herein by reference.
4.4		Postclosing Agreement dated as of July 12, 2001 among UNOVA, Inc., and certain of its subsidiaries, as Borrowers, collectively, and Bank of America, N.A., as Agent, filed as Exhibit 10.4 to the Company's Current Report on Form 8-K dated July 12, 2001, and incorporated herein by reference.
4.5		Loan Agreement dated as of July 12, 2001, among the Lenders named therein, and Special Value Investment Management, LLC as Agent, and UNOVA, Inc. and its subsidiaries party thereto, as Borrowers (the "Term Loan"), filed as Exhibit 10.5 to the Company's Current Report on Form 8-K dated July 12, 2001, and incorporated herein by reference.
4.6		First Amendment to the Term Loan, dated as of August 15, 2001.
4.7		Security Agreement dated as of July 12, 2001, among UNOVA, Inc., UNOVA Industrial Automation Systems Inc., Intermec Technologies Corporation, R & B Machine Tool Company, J.S. McNamara Company, M M & E, Inc., Intermec IP Corp., and UNOVA IP Corp, as Grantors, and Special Value Investment Management, LLC, as Administrative Agent, filed as Exhibit 10.6 to the Company's Current Report on Form 8-K dated July 12, 2001, and incorporated herein by reference.
4.8		Stock Pledge Agreement dated as of July 12, 2001, among UNOVA, Inc., UNOVA Industrial Automation Systems Inc. and Intermec Technologies Corporation, as Pledgors, and Special Value Investment Management, LLC, as Agent, filed as Exhibit 10.7 to the Company's Current Report on Form 8-K dated July 12, 2001, and incorporated herein by reference.

E–1

4.9		Credit agreement dated September 13, 2001 among Barclays Bank PLC and UNOVA U.K. Limited, Cincinnati Machine U.K. Limited, and Intermec Technologies U.K. Limited, as Borrowers. *
4.10		$400,000,000 Credit Agreement dated September 24, 1997, among UNOVA, Inc., the Banks listed therein, and Morgan Guaranty Trust Company of New York, as Agent (the "$400,000,000 Credit Agreement"), filed on October 1, 1997 as Exhibit 10M to Amendment No. 1 to the Company's Registration Statement on Form 10 No. 001-13279, and incorporated herein by reference.
4.11		Amendment No. 1 to the $400,000,000 Credit Agreement, dated January 15, 1998, filed as Exhibit 4.4 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference.
4.12		Amendment No. 2 to the $400,000,000 Credit Agreement, dated May 15, 1998, filed as Exhibit 4.7 to the Company's June 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.13		Amendment No. 3 to the $400,000,000 Credit Agreement, dated September 24, 1998, filed as Exhibit 4.8 to the Company's September 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.14		Amendment No. 4 and Waiver to the $400,000,000 Credit Agreement dated November 24, 1999, filed as Exhibit 4.5 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
4.15		Amendment No. 5 and Waiver to the $400,000,000 Credit Agreement dated October 20, 2000, filed as Exhibit 4.6 to the Company's September 30, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.16		Amendment No. 6 and Waiver to the $400,000,000 Credit Agreement dated November 13, 2000, filed as Exhibit 1 to the Company's Current Report on Form 8-K dated November 13, 2000, and incorporated herein by reference.
4.17		Extension of Waiver to the $400,000,000 Credit Agreement dated January 31, 2001, filed as Exhibit 4.8 to the Company's 2000 Annual Report on Form 10-K, and incorporated herein by reference.
4.18		$400,000,000 Amended and Restated Credit Agreement dated as of February 8, 2001, among UNOVA, Inc., the Banks listed therein, and Morgan Guaranty Trust Company of New York, as Agent, filed as Exhibit 1 to the Company's Current Report on Form 8-K dated February 8, 2001, and incorporated herein by reference.
4.19		Rights Agreement dated September 24, 1997, between UNOVA, Inc. and The Chase Manhattan Bank, as Rights Agent, to which is annexed the form of Right Certificate as Exhibit A, filed on October 22, 1997, as Exhibit 3C to Amendment No. 2 to the Company's Registration Statement on Form 10 No. 001-13279, and incorporated herein by reference.
4.20		Indenture dated as of March 11, 1998, between the Company and The First National Bank of Chicago, Trustee, providing for the issuance of securities in series, filed as Exhibit 4.5 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference.

E–2

4.21		Form of 6.875% Notes due March 15, 2005, issued by the Company under such indenture, filed as Exhibit 4.6 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference.
4.22		Form of 7.00% Notes due March 15, 2008, issued by the Company under such indenture, filed as Exhibit 4.7 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference.
		Instruments defining the rights of holders of other long-term debt of the Company are not filed as exhibits because the amount of debt authorized under any such instrument does not exceed 10% of the total assets of the Company and its consolidated subsidiaries. The Company hereby undertakes to furnish a copy of any such instrument to the Commission upon request.
4.23		Transfer and Administration Agreement dated June 18, 1999, among Enterprise Funding Corporation, as Company, KCH Funding, L.L.C., as Transferor, UNOVA, Inc., Individually and as Servicer, and Nationsbank, N.A., as Lead Arranger, Agent and Bank Investor (the "Transfer and Administration Agreement"), filed as Exhibit 4.10 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.24		Amendment No. 1 to the Transfer and Administration Agreement dated September 15, 1999, filed as Exhibit 4.13 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
4.25		Amendment No. 2 to the Transfer and Administration Agreement dated December 15, 1999, filed as Exhibit 4.14 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
4.26		Amendment No. 3 to the Transfer and Administration Agreement dated June 16, 2000, filed as Exhibit 4.15 to the Company's June 30, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.27		Amendment No. 4 and Waiver to the Transfer and Administration Agreement dated August 30, 2000, filed as Exhibit 4.17 to the Company's September 30, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.28		Amendment No. 5 and Waiver to the Transfer and Administration Agreement dated October 20, 2000, filed as Exhibit 4.18 to the Company's September 30, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.29		Amendment No. 6 and Waiver to the Transfer and Administration Agreement dated December 4, 2000, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated February 8, 2001, and incorporated herein by reference.
4.30		Amendment No. 7 and Waiver to the Transfer and Administration Agreement dated January 31, 2001, filed as Exhibit 5 to the Company's Current Report on Form 8-K dated February 8, 2001, and incorporated herein by reference.
4.31		Reconveyance and Release Agreement dated February 8, 2001, filed as Exhibit 4.24 to the Company's March 31, 2001 Quarterly Report on Form 10-Q, and incorporated herein by reference.

E–3

4.32		Receivables Purchase Agreement dated June 18, 1999, between UNOVA, Inc., as Seller, and KCH Funding, L.L.C., as Purchaser (the "Receivables Purchase Agreement"), filed as Exhibit 4.11 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.33		Amendment No. 1 to the Receivable Purchase Agreement dated December 15, 1999, filed as exhibit 4.16 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
4.34		Originator Receivables Purchase Agreement dated June 18, 1999, among UNOVA Industrial Automation Systems, Inc. and Intermec Technologies Corporation, as Sellers, and UNOVA, Inc., as Purchaser, filed as Exhibit 4.12 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference.
4.35		Guarantee and Security Agreement dated as of November 13, 2000 among UNOVA, Inc., various subsidiaries of UNOVA, Inc. as guarantors and Morgan Guaranty Trust Company of New York, as collateral Agent, filed as Exhibit 2 to the Company's Current Report on Form 8-K dated November 13, 2000, and incorporated herein by reference.
4.36		Amended and Restated Guarantee and Security Agreement dated as of February 8, 2001, between UNOVA, Inc., the Guarantors party hereto and Morgan Guaranty Trust Company of New York, as Collateral Agent, filed as Exhibit 2 to the Company's Current Report on Form 8-K dated February 8, 2001, and incorporated herein by reference.
4.37		Pledge Agreement dated November 13, 2000, between UNOVA, Inc. and Morgan Guaranty Trust company of New York, as collateral Agent, filed as Exhibit 3 to the Company's Current Report on Form 8-K dated November 13, 2000, and incorporated herein by reference.
4.38		Amended and Restated Pledge Agreement dated as of February 8, 2001, between UNOVA, Inc., the Subsidiaries listed on the signature pages hereof and Morgan Guaranty Trust Company of New York, as Collateral Agent, filed as Exhibit 3 to the Company's Current Report on Form 8-K dated February 8, 2001, and incorporated herein by reference.
10.1		Distribution and Indemnity Agreement dated October 31, 1997, between Western Atlas Inc. and UNOVA, Inc, filed as Exhibit 10.1 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.2		Tax Sharing Agreement dated October 31, 1997, between Western Atlas Inc., and UNOVA, Inc., filed as Exhibit 10.2 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.3		Intellectual Property Agreement dated October 31, 1997, between Western Atlas Inc., and UNOVA, Inc., filed as Exhibit 10.4 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.4		UNOVA, Inc. Director Stock Option and Fee Plan, filed as Exhibit 10.7 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.5		Amendment No. 1 to the UNOVA, Inc. Director Stock Option and Fee Plan filed as Exhibit 10.13 to the Company's September 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference.

E–4

10.6		Employee Benefits Agreement dated October 31, 1997, between Western Atlas Inc., and UNOVA, Inc., filed as Exhibit 10.3 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.7		Form of Change of Control Employment Agreements with Daniel S. Bishop, Larry D. Brady, James A. Herrman, Michael E. Keane and certain other officers of the Company, filed as Exhibit 10.5 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.8		Amendment to the Form of Change of Control Employment Agreements with Larry D. Brady, Michael E. Keane and certain other officers of the Company, filed as Exhibit 10.6 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
10.9		Form of Change of Control Employment Agreement with certain officers of the Company, filed as Exhibit 10.7 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
10.10		UNOVA, Inc. Restoration Plan, filed on August 18, 1997 as Exhibit 10.I to the Company's Registration Statement on Form 10 No. 001-13279 and incorporated herein by reference.
10.11		UNOVA, Inc. Supplemental Executive Retirement Plan, filed on October 1, 1997 as Exhibit 10.H to Amendment No. 1 to the Company's Registration Statement on Form 10 No. 001-13279, and incorporated herein by reference.
10.12		Amendment No. 1 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated September 23, 1998, filed as Exhibit 10.22 to the Company's September 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.13		Amendment No. 2 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated March 11, 1999, filed as Exhibit 10.15 to the Company's 1998 Annual Report on Form 10-K, and incorporated herein by reference.
10.14		Amendment No. 3 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated March 15, 2000, filed as Exhibit 10.20 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
10.15		Amendment No. 4 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated July 11, 2000, filed as Exhibit 10.15 to the Company's June 30, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.16		Supplemental Executive Retirement Agreement between UNOVA, Inc. and Alton J. Brann, filed on October 1, 1997 as Exhibit 10.L to Amendment No. 1 to the Company's Registration Statement on Form 10 No. 001-13279 and incorporated herein by reference.
10.17		Amendment No. 1 to Supplemental Executive Retirement Agreement between UNOVA, Inc. and Alton J. Brann, dated September 23, 1998, filed as Exhibit 10.21 to the Company's September 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.18		Amendment No. 2 to Supplemental Executive Retirement Agreement between UNOVA, Inc. and Alton J. Brann, dated March 11, 1999, filed as Exhibit 10.18 to the Company's 1998 Annual Report on Form 10-K, and incorporated herein by reference.

E–5

10.19		Amendment No. 3 to Supplemental Executive Retirement Agreement between UNOVA, Inc. and Alton J. Brann, dated March 15, 2000, filed as Exhibit 10.24 to the Company's March 31, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.20		Supplemental Executive Retirement Agreement between UNOVA, Inc. and Larry D. Brady dated March 15, 2000, filed as Exhibit 10.25 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
10.21		UNOVA, Inc. Executive Severance Plan (As Amended November 18, 1999), filed as Exhibit 10.31 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
10.22		Board resolution dated July 25, 2000 amending the UNOVA, Inc. Executive Severance Plan, filed as Exhibit 10.23 to the Company's June 30, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.23		Form of Promissory Notes in favor of the Company given by certain officers and key employees, filed as Exhibit 10.14 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.24		Board resolution dated September 24, 1997 establishing the UNOVA, Inc. Incentive Loan Program, filed as Exhibit 10.15 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.25		UNOVA, Inc. Executive Survivor Benefit Plan, filed as Exhibit 10.17 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference.
10.26		UNOVA, Inc. 1997 Stock Incentive Plan, filed as Exhibit 10.12 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.27		UNOVA, Inc. 1999 Stock Incentive Plan, filed as Annex A to the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders held on May 7, 1999 (the "1999 Proxy Statement"), and incorporated herein by reference.
10.28		UNOVA, Inc. 2001 Stock Incentive Plan, filed as Exhibit B to the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders held on May 8, 2001 (the "2001 Proxy Statement"), and incorporated herein by reference.
10.29		UNOVA, Inc. Management Incentive Compensation Plan, filed as Annex B to the Company's 1999 Proxy Statement, and incorporated herein by reference.
10.30		UNOVA, Inc. Group Executive Medical Benefit Plan, filed as Exhibit 10.37 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
10.31		Letter Offering Employment to Larry D. Brady as President and Chief Operating Officer of UNOVA, Inc., as accepted by Mr. Brady on June 16, 1999 ("Brady Employment Offer"), filed as Exhibit 10.32 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference.
10.32		Agreement of Amendment dated June 22, 2000, to Brady Employment Offer, filed as Exhibit 10.31 to the Company's June 30, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference.

*: Copies of these exhibits are included in this Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.

E–6

QuickLinks

UNOVA, INC. INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2001
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNOVA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (thousands of dollars, except per share amounts) (unaudited)
UNOVA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (thousands of dollars, except per share amounts) (unaudited)
UNOVA, INC. CONSOLIDATED BALANCE SHEETS (thousands of dollars) (unaudited)
UNOVA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of dollars) (unaudited)
UNOVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

SIGNATURE
INDEX TO EXHIBITS
EX-4.6 3 a2062882zex-4_6.htm EXHIBIT 4.6 Prepared by MERRILL CORPORATION
QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 4.6

FIRST AMENDMENT TO LOAN AGREEMENT

This FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") is dated as of August 15, 2001 and entered into by and among UNOVA, INC., a Delaware corporation (the "Parent"), UNOVA INDUSTRIAL AUTOMATION SYSTEMS, INC., a Delaware corporation, INTERMEC TECHNOLOGIES CORPORATION, a Washington corporation, R&B MACHINE TOOL COMPANY, a Michigan corporation, J.S. MCNAMARA COMPANY, a Michigan corporation, M M & E, INC., a Nevada corporation, INTERMEC IP CORP., a Delaware corporation, and UNOVA IP CORP., a Delaware corporation (each individually, a "Borrower," and collectively, the "Borrowers") and the Lenders listed on the signature pages hereof (collectively, the "Lenders").

WHEREAS, the Borrowers, the Lenders, and Special Value Investment Management, LLC, as administrative and collateral agent for the Lenders (in its capacity as administrative and collateral agent, the "Agent") entered into that certain Loan Agreement, dated as of July 12, 2001 (the "Loan Agreement"; capitalized terms used in this Amendment without definition shall have the meanings given such terms in the Loan Agreement);

WHEREAS, the Borrowers have requested certain amendments to the Loan Agreement; and

WHEREAS, the Majority Lenders have consented to such request, all on the terms set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein, the Borrowers and the Majority Lenders agree as follows:

1. Amendments to Loan Agreement.

Subject to the terms set forth in this Amendment and in reliance on the representations and warranties of the Borrowers set forth in this Amendment, the Loan Agreement is hereby amended as follows:

(a) Section 3.1(b)(i) of the Loan Agreement is hereby amended by inserting after the words "Designated Collateral" the following clause: ", except for sales in accordance with Section 7.9(b) to the extent that the Net Cash Proceeds received by the Borrowers in the then current Fiscal Year after giving effect to the subject sale are less than $5,000,000 (the "Excluded Net Cash Proceeds") and so long as the Excluded Net Cash Proceeds are used within 270 days after the sale of such Designated Collateral to acquire Equipment or to repair or restore existing Equipment, in each case, in the ordinary course of business".

(b) Section 3.1(b)(iii) of the Loan Agreement is hereby amended by inserting after the words "Designated Collateral" the following clause: "to the extent such Net Cash Proceeds are not used to rebuild, reconstruct, or replace the affected Designated Collateral in accordance with the terms of the applicable Mortgage".

2. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. In order to induce the Agent and the Majority Lenders to enter into this Amendment, the Borrowers represent and warrant to each Lender and the Agent that the following statements are true, correct and complete:

(a) Each Borrower has the power and authority to execute, deliver and perform this Amendment. Each Borrower has taken all necessary action (including obtaining approval of its stockholders if necessary) to authorize its execution, delivery, and performance of this Amendment. This Amendment has been duly executed and delivered by each Borrower, and constitutes the legal, valid and binding obligation of such Borrower, enforceable against it in accordance with their respective terms (subject to

the effects of bankruptcy, insolvency, reorganization, moratoriums or other similar loans affecting the rights and remedies of creditors generally). The execution, delivery, and performance of this Amendment by each Borrower do not and will not conflict with, or constitute a violation or breach of, or result in the imposition of any Lien upon the property of such Borrower or any of its Subsidiaries, by reason of the terms of (i) any material mortgage, lease, indenture, contract, agreement or instrument to which such Borrower is a party or which is binding upon it, (ii) any Requirement of Law applicable to such Borrower, or (iii) the certificate or articles of incorporation or by-laws or the limited liability company or limited partnership agreement of any Borrower.

(b) After giving effect to this Amendment, no event has occurred and is continuing or will result from the execution and delivery of this Amendment that would constitute a Default or an Event of Default.

3. EFFECT OF AMENDMENT. From and after the date first above written, all references in the Loan Documents to the Loan Agreement shall mean the Loan Agreement as amended hereby. Except as expressly amended hereby, the Loan Agreement shall remain in full force and effect and is hereby ratified and confirmed.

4. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

5. COUNTERPARTS. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (including by telecopy) all of which taken together shall constitute but one and the same instrument.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by a duly authorized officer as of the date first above written.

"PARENT"
UNOVA, INC., a Delaware corporation
By:	/s/ ELMER C. HULL JR.
Name:	Elmer C. Hull Jr.
Title:	VP & Treasurer
"BORROWERS"
UNOVA, INC., a Delaware corporation		J.S. MCNAMARA COMPANY, a Michigan corporation
By:	/s/ ELMER C. HULL JR.	By:	/s/ ELMER C. HULL JR.
Name:	Elmer C. Hull Jr.	Name:	Elmer C. Hull Jr.
Title:	VP & Treasurer	Title:	VP & Treasurer
UNOVA INDUSTRIAL AUTOMATION SYSTEMS, INC., a Delaware corporation		M M & E, INC., a Nevada corporation
By:	/s/ ELMER C. HULL JR.	By:	/s/ ELMER C. HULL JR.
Name:	Elmer C. Hull Jr.	Name:	Elmer C. Hull Jr.
Title:	VP & Treasurer	Title:	VP & Treasurer
INTERMEC IP CORP., a Delaware corporation		INTERMEC TECHNOLOGIES CORPORATION, a Washington corporation
By:	/s/ ELMER C. HULL JR.	By:	/s/ ELMER C. HULL JR.
Name:	Elmer C. Hull Jr.	Name:	Elmer C. Hull Jr.
Title:	VP & Treasurer	Title:	VP & Treasurer
R & B MACHINE TOOL COMPANY, a Michigan corporation
By:	/s/ ELMER C. HULL JR.
Name:	Elmer C. Hull Jr.
Title:	VP & Treasurer

UNOVA IP CORP., a Delaware corporation
By:	/s/ ELMER C. HULL JR.
Name:	Elmer C. Hull Jr.
Title:	VP & Treasurer
		"LENDERS"
		SPECIAL VALUE BOND FUND, LLC
		By:	/s/ MARK K. HOLDSWORTH
		Name:	Mark K. Holdsworth
		Title:	Member
		SPECIAL VALUE BOND FUND II, LLC
		By:	/s/ MARK K. HOLDSWORTH
		Name:	Mark K. Holdsworth
		Title:	Member
		"LENDERS"
		MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
		By:	David L. Babson & Company Inc., as Investment Adviser
		By:	/s/ MICHAEL L. KLOFAS
		Name:	Michael L. Klofas
		Title:	Managing Director
		MASSMUTUAL HIGH YIELD PARTNERS II LLC
		By:	HYP Management, Inc. as Managing Member
		By:	/s/ MICHAEL L. KLOFAS
		Name:	Michael L. Klofas
		Title:	Managing Director

			"LENDERS"
			TRINITY UNIVERSAL INSURANCE COMPANY
			By:	/s/ ERIC J. DRANT
			Name:	Eric J. Drant
			Title:	Assistant Vice President
			UNITED INSURANCE COMPANY OF AMERICA
			By:	/s/ ERIC J. DRANT
			Name:	Eric J. Drant
			Title:	Assistant Vice President
			THE RELIABLE LIFE INSURANCE COMPANY
			By:	/s/ ERIC J. DRANT
			Name:	Eric J. Drant
			Title:	Assistant Vice President

QuickLinks

EXHIBIT 4.6

FIRST AMENDMENT TO LOAN AGREEMENT
EX-4.9 4 a2062882zex-4_9.htm EXHIBIT 4.9 Prepared by MERRILL CORPORATION

EXHIBIT 4.9

The Directors
UNOVA U.K. Limited
Cincinnati Machine U.K. Limited
Intermec Technologies U.K. Limited
UNOVA, Inc.
2nd Floor Sovereign House
Vastern Road
Reading
RG1 8BT

13 September 2001

Dear Sirs

Barclays Bank PLC (the "Bank") is pleased to offer to provide in aggregate short term facilities of up to £14,000,000 (fourteen million pounds sterling) to UNOVA U.K. Limited, Cincinnati Machine U.K. Limited and Intermec Technologies U.K. Limited (together the "Borrowers" and each a "Borrower") subject to the terms and conditions set out below.

Capitalised words used below shall have the meanings given to them in clause 17 and elsewhere in this Facility Letter.

The Schedules attached hereto form part of the terms and conditions of this Facility Letter.

Subject to satisfaction of the conditions set out in clause 18 below, the Facility will be available for utilisation by the Borrowers, subject to the following terms and conditions:

1. Options Available Within and Utilisation of the Facility

1.1 The Facility may be utilised by way of the following options and in accordance with the provisions of the Schedules related thereto:

sterling and/or currency money market loans (the "Sterling/Currency MML") (see Schedule A) and/or bonds, guarantees and indemnities (the "Ancillary Facility") (see Schedule B).

Within the Facility, the aggregate of the liabilities due, owing or incurred thereunder shall not at any time exceed £14,000,000 (or its currency equivalent). Within the Ancillary Facility, the aggregate of the bonds, guarantees and indemnities issued thereunder shall not at any time exceed £6,000,000 (or its currency equivalent).

1.2 The sterling equivalent of the currency or currencies utilised or available to be utilised under the Facility may be calculated by the Bank at any time by reference to the Bank's spot rate of exchange in the London Foreign Exchange Market for the sale of the relevant currency or currencies for sterling.

2. Availability

If on the day of utilisation:

(a) no Event of Default or Potential Event of Default has occurred and is continuing; and

(b) the representations and warranties detailed within clause 9 below are true on such day,

then the Facility is available for utilisation until the second anniversary of the date of acceptance of this letter (the "Expiry Date") and no liability or liabilities may extend more than three months beyond the Expiry Date.

Shortly before the first anniversary of the acceptance of this offer and annually thereafter the Bank agrees to consider in its absolute discretion an extension of the Expiry Date by a further year if requested in writing by the Borrowers. The Bank's agreement to any extension and/or change in any terms and conditions will be notified in writing to the Borrowers.

3. Security and Guarantees

3.1 All indebtedness owing by the Borrowers to the Bank is to be (i) guaranteed by the cross guarantees which are to have been executed in the Bank's standard form (with such amendments thereto as the Bank and the Borrowers may agree) by each Borrower and UNOVA, Inc. (together the "Guarantors" and each a "Guarantor") and (ii) secured by (a) the debentures which are to have been executed in the Bank's standard form (with such amendments thereto as the Bank and the Borrowers may agree) by each Borrower and (b) legal charges over the Properties which are to have been executed in the Bank's standard form (with such amendments thereto as the Bank and the Borrowers may agree) by UNOVA U.K. Limited and Cincinnati Machine U.K. Limited.

3.2 The Bank may from time to time require the Properties and the Trade Debtors to be professionally valued. The Borrower will pay the costs of one such valuation per Property per annum together with the costs of any such valuation of the Properties and the Trade Debtors carried out where the Bank suspects that a Potential Event of Default has occurred and is continuing.

Mandatory Prepayment

Each Borrower and UNOVA, Inc. undertakes that within 3 Business Days of receipt of the Disposal Proceeds, it shall (a) apply, or procure the application, in repayment of outstanding liabilities under the Sterling/Currency MML, an amount equal to the Disposal Proceeds by such amount and (b) reduce and cancel the Sterling/Currency MML by an amount equal to the aggregate open market value of each of the Properties disposed of (whether by asset sale or by sale of shares in an entity owning any such Properties) in connection with a disposal referred to in sub-paragraph (b) of the definition of "Permitted Disposal".

Following a cancellation of the Sterling/Currency MML by the amount referred to in clause 4.1, the Borrowers may request that a portion of the cancelled amount of the Sterling/Currency MML become available for redrawing. Upon receipt of such request the Bank will enter into discussions with the Borrowers and may in its absolute discretion agree that such portion will become available for redrawing.

5. Cancellation

Any undrawn part of the Facility may be cancelled by the Borrowers in minimum amounts of £500,000 and multiples of £50,000 subject to the Borrowers:

(a) giving the Bank not less than seven Business Days' notice in writing (such notice, once given, shall be irrevocable); and

(b) paying to the Bank a cancellation fee of 1% of the amounts cancelled together with any accrued non-utilisation fee thereon if such cancellation arises as a result of the Borrowers obtaining a replacement facility for this Facility from a bank or financial institution which is not part of the group comprising the Bank and its subsidiary undertakings.

The non-utilisation fee will then cease to accrue on such cancelled amounts. Amounts which are cancelled will no longer be available for utilisation.

6. Change of Circumstances

6.1 In the event of:

(a) any change in applicable law, regulation or practice resulting in the Bank being subjected to any new or additional tax, levy, duty, charge, penalty, deduction or withholding of any nature (other than tax on the Bank's overall net profits and gains), or

(b) any existing requirements of any central bank, governmental, fiscal, monetary, regulatory or other authority in any applicable jurisdiction affecting the conduct of the Bank's business being changed or any new requirements being imposed (whether or not having the force of law), including, without limitation, any resulting from the introduction or operation of the euro and a request or requirement which affects the manner in which the Bank allocates capital resources to its commitments, including its obligations under this Facility Letter,

and the result is in the sole opinion of the Bank (directly or indirectly) to increase the cost to the Bank of funding, making available or maintaining the Facility or to reduce the amount of any payment received or receivable by the Bank or to reduce the effective return to the Bank, then the Borrowers shall pay to the Bank on demand such sum as may be certified in writing by the Bank to the Borrowers as necessary to compensate the Bank for such increased cost or such reduction.

6.2 The Borrowers may, at any time within six weeks after the date of certification from the Bank under clause 6.1, prepay all amounts outstanding under the Facility without penalty and without incurring any cancellation fee (subject to clause 16.3(iv)), by giving not less than five Business Days' irrevocable notice to the Bank to that effect specifying the prepayment date. The Borrowers shall be obliged to prepay to the Bank all amounts outstanding under the Facility on such date, together with all interest accrued to the date of actual payment and all other sums due to the Bank hereunder. Unless prepayment is made within such period of six weeks, an amount equal to such increased cost or such reduction will be payable by the Borrowers under the preceding sub-clause from the date of such certification.

6.3 Reference to the cost of funds/sterling deposits and to the London Interbank Market shall, if such cost ceases to be market practice/ordinarily used by the Bank for the purpose of calculating interest on facilities of this kind or such market no longer exists in comparable form, be construed as meaning the appropriate and reasonable alternative cost or source of funds as the case may be, as determined by the Bank.

7. Fees

7.1 An arrangement fee of £70,000 will be payable by the Borrowers to the Bank on acceptance of this offer.

7.2 A non-utilisation fee at the rate of 0.5% per annum calculated on a daily basis from the date of the Borrowers' acceptance of this offer on the undrawn portion of the Facility, will be payable to the Bank quarterly in arrears and on the Expiry Date.

7.3 A renewal fee at the rate of 0.25% on the available amount of the Facility will be payable by the Borrowers to the Bank annually in advance with effect from the first anniversary of the Borrowers' acceptance of this offer.

7.4 Any fee referred to in clauses 7.1, 7.2 or 7.3 is exclusive of any VAT which might be chargeable in connection with that fee. If any VAT is so chargeable, it shall be paid by the Borrowers to the Bank at the same time as it pays the relevant fee.

8. Legal, Valuation and other Expenses

Any legal and valuation fees and expenses (including documentation fees) (including any applicable VAT) and other out of pocket expenses (including any applicable VAT) incurred by the Bank in connection with the preparation, execution and implementation of this Facility Letter (and the

documents referred to herein) and the enforcement and preservation by the Bank of its rights under this Facility Letter or such documents will be reimbursed by the Borrowers on demand by the Bank on a full indemnity basis (whether or not the Facility is drawn down) and may be debited to the Borrowers' account with the Bank without further authority from the Borrowers. Other than in connection with enforcement or preservation, the Bank will consult with the Borrowers prior to incurring such fees and expenses and shall provide estimates to the Borrowers.

9. Representations and Warranties

9.1 By accepting this Facility Letter, each Borrower makes the representations and warranties contained in (a) to (g) below, and each Guarantor makes the representations and warranties contained in (h) below:

(a) it has the necessary corporate power and authority to borrow the full amount of the Facility on the terms and conditions set out in this Facility Letter and to perform and observe its obligations under this Facility Letter and it has obtained all necessary approvals, authorisations, consents or clearances of all governmental, judicial or regulatory bodies and authorities required in connection with the execution, delivery and performance hereof and the carrying out of the transactions contemplated in this Facility Letter;

(b) there is no law, decree or similar enactment binding on it and no provision in any corporate document, mortgage, indenture, trust deed, contract or agreement binding on it or affecting its property which would conflict with or prevent it from borrowing under the Facility, or which would prevent it from observing any of its obligations in this Facility Letter;

(c) neither its acceptance of this offer nor the performance by it of its obligations or the exercise of any of its rights under the terms of this Facility Letter will result in the existence of, or oblige such Borrower to create, any security interest in favour of any third party (other than the Bank) over the whole or any part of the undertaking or assets, present or future, of such Borrower and there are no subsisting mortgages, charges or other encumbrances affecting any of the undertaking, property assets or revenues of such Borrower other than those detailed within clause 10.1(a) below;

(d) it is not in breach of any of the limits or restrictions or obligations imposed by any other agreement or instrument and no Event of Default has occurred and is continuing;

(e) to the best of its knowledge, information and belief, having made all reasonable enquiries, there are no legal or other proceedings pending or threatened before any court, tribunal, commission or other regulatory authority involving it which are likely to be adversely determined against it and which, if adversely determined, could reasonably be expected to have a Material Adverse Effect;

(f) all factual or financial information provided by or on its behalf to the Bank for the purpose of obtaining the Facility was true, complete and accurate in all material respects at the time it was provided and all forecasts and opinions provided to the Bank for such purpose were honestly made on reasonable grounds after careful enquiry by such Borrower and the most recent accounts provided by the Borrower pursuant to clause 11.1(a) below were prepared in accordance with the laws of its jurisdiction of incorporation and give a true and fair view of the state of its affairs and disclose all liabilities and unrealised or expected losses required to be disclosed under generally accepted accounting practices;

(g) no event has occurred between the date to which its latest audited consolidated accounts available to the Bank were prepared and the date on which this warranty is given or deemed to be given which could reasonably be expected to have a Material Adverse Effect; and

(h) each Guarantor has the necessary corporate power and authority to execute and observe its respective obligations under the guarantees and the security referred to in clause 3 above which constitute that Guarantor's valid and binding obligations and no Guarantor is or would be in breach of

any enactment or contractual document of whatsoever nature by reason of such execution and observance and the representations set out in (d), (e), (f) and (g) of this clause 9.1 would remain true if reference therein to each Borrower included reference to each Guarantor.

9.2 Each Borrower and Guarantor shall be deemed to repeat the representations and warranties contained in this clause 9 on the day of each utilisation (and in any event at intervals not exceeding six months) by reference to the circumstances then existing.

10. Covenants

10.1 By accepting this Facility Letter, each Borrower undertakes for so long as any liability remains outstanding hereunder that, save with the prior written consent of the Bank:

(a) no Borrower nor any UK Subsidiary will create or agree to create or permit to subsist (other than to the Bank) any Encumbrance on the whole or any part of its undertaking, property, assets or revenues, present or future, including uncalled capital, save that this restriction will not be breached by any of the following:

(i) the continuance of existing Encumbrances full details of which have been disclosed to the Bank in writing prior to the date of this Facility Letter, provided that the maximum principal amount outstanding and secured by any such Encumbrance is not at any time increased; or

(ii) the acquisition, after the date of this Facility Letter, of companies and/or properties having or being subject to existing secured borrowings, provided that the maximum principal amount for which such Encumbrance was originally given is not at any time increased and such Encumbrance is discharged or released within 180 days after the date of such acquisition;

(iii) any Encumbrance over plant, machinery or equipment granted solely in connection with financing or operating leasing arrangements permitted under paragraph (c) of the definition of Permitted Disposal;

(b) no Borrower nor any UK Subsidiary will give any guarantee, bond or indemnity, or make available any new loan or financial accommodation to any person or increase the amount or extend the duration or otherwise alter in any material respect the terms of any such existing loans or financial accommodation, except that this clause 10.1(b) shall not apply to any Permitted Loan;

(c) no Borrower nor any UK Subsidiary will sell, transfer or otherwise dispose of the whole or any part of its undertaking, property, assets or revenues, whether by a single transaction or a number of transactions relating to assets the value of which, when aggregated with the value of all other sales, transfers or disposals of assets made by each Borrower and its UK Subsidiaries in the same accounting reference period, would exceed £3,000,000, calculated at the higher of market value or net book value (such aggregate figure being proportionately reduced or increased for any such period which is less than 360 days or more than 370 days), except that this clause 10.1(c) shall not apply to any Permitted Disposal;

(d) no Borrower nor any UK Subsidiary will make any material investment in shares, securities or debentures (whether secured or unsecured) of a company or in a business. For the purpose of this clause 10.1(d) "material" shall mean an amount in excess of £1,000,000 (gross cost), or the equivalent in other currencies, in the case of a single transaction or an amount which, when aggregated with all other investments made by each Borrower and its UK Subsidiaries in the same accounting reference period, exceeds £1,000,000 (gross cost), or the equivalent in other currencies (such figure being proportionately reduced or increased for any such period which is less than 360 days or more than 370 days);

(e) each Borrower shall maintain and procure that each of its Subsidiaries maintains adequate insurance on and in relation to its business and assets with reputable underwriters or insurance

companies which are financially sound and having a rating of at least A+ or better by Best Rating Guide against such risks to the extent usual for persons carrying on a business such as that carried on by such Borrower or (as the case may be) such Subsidiary;

(f) each Borrower will forthwith, upon becoming aware of it, inform the Bank of any litigation, arbitration or administration proceeding pending or, to the best of its knowledge, information and belief, threatened against any Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect;

(g) each Borrower will forthwith, upon becoming aware of it, inform the Bank of the occurrence of any Event of Default or Potential Event of Default and also inform the Bank of any steps taken or proposed to be taken to remedy or mitigate the effect of any such event;

(h) no Borrower will declare or pay any dividend or make any distribution to its shareholders in respect of any accounting reference period without the Bank's prior written consent, which shall not be unreasonably withheld or delayed if (i) at the times that such dividend is both declared and paid, or such distribution is made, there are no outstanding drawings under the Sterling/Currency MML and (ii) the Operating Cashflow of such Borrower is positive for such accounting reference period;

(i) (other than Permitted Loans) no Borrower will make any loans or advances to, or enter into any management, consultancy, sale or other agreement of whatever kind with its Parent or any other Subsidiary of its Parent except on arms' length terms for good commercial reasons or in the ordinary course of business and no material amendment shall be made to any such loan, advance or agreement existing at the date hereof which would cause such loan, advance or agreement to infringe this clause 10.1(i);

(j) each Borrower's obligations under this Facility Letter shall at all times rank at least pari passu with all other present and future unsecured and unsubordinated indebtedness of such Borrower, except for any liabilities which would be accorded preferential ranking by statute in a winding-up;

(k) the claims of the Bank against each Borrower under this Facility Letter shall at all times rank prior to the claims of all other Borrowers and Subsidiaries against such Borrower; and

(l) no Borrower will make, and or procure that any of its Subsidiaries will make, any material change in the scope or nature of its business which would constitute a material change in the business of the Borrowers taken as a whole.

10.2 By accepting this Facility Letter, each Borrower undertakes for so long as any liability remains outstanding hereunder that, save with the prior written consent of the Bank, the amount of outstanding drawings hereunder shall not at any time exceed:

70% of the value of the Properties; or

66% of the face value of the Eligible Trade Debtors of Landis Lund (a division of UNOVA U.K. Limited); or

(d) a percentage of the face value of the Eligible Trade Debtors of Cincinnati Machine U.K. Limited to be determined by the Bank; or

(e) a percentage of the face value of the Eligible Trade Debtors of Intermec Technologies U.K. Limited to be determined by the Bank.

In the case of the Properties such value shall be determined from time to time on an open market value basis by professional valuers acceptable to the Bank.

11. Information

11.1 Each Borrower undertakes to provide to the Bank:

copies of its audited consolidated accounts (including profit and loss account and balance sheet) as soon as they are available and not later than 180 days from the end of each accounting reference period together with its quarterly unaudited management accounts as soon as available and within 60 days of the end of each financial quarter except the final quarter which is to be received within 90 days;

(b) copies of its monthly aged trade debtor analysis as soon as available and within 30 days of the end of each calendar month;

(c) copies of any circular issued to its shareholders or holders of loan capital at the same time as received by its shareholders or holders of loan capital; and

within 7 days following request (unless otherwise agreed by the Bank), any other information which the Bank may reasonably request from time to time.

11.2 UNOVA, Inc. undertakes to provide to the Bank:

copies of its audited consolidated accounts (including profit and loss account and balance sheet) as soon as they are available and not later than 90 days from the end of each accounting reference period together with its quarterly unaudited management accounts as soon as available and within 60 days of the end of each financial quarter except the final quarter which is to be received within 90 days;

a copy of each covenants compliance certificate delivered to Co-Agents under Section 5.2(d) of the US Facility Agreement, at the same time as delivered to such Co-Agents; and

(c) within 7 days following request (unless otherwise agreed by the Bank), any other information which the Bank may reasonably request from time to time.

11.3 In the event of any Borrower adopting any proposed change in accounting principles for the purposes of its audited consolidated accounts from those on the basis of which its most recent audited consolidated accounts as at the date of this Facility Letter were prepared, then, if the Bank is of the opinion that any such change materially affects any of the financial covenants detailed in clause 10.2 above, it shall be entitled to require such financial covenants to be amended in such manner as it may deem appropriate to reflect such change (but so as to place no more onerous obligation on the Borrowers than the existing financial covenants as if no such change in accounting principles had occurred).

12. Payments

12.1 All payments by each Borrower, whether of principal, interest or otherwise, shall be made to the Bank (or such other bank as the Bank may specify from time to time) for value on the due date by such times and in such funds as the Bank may specify as being customary at the time for settlement of transactions in the relevant currency in the place for payment, without set-off or counterclaim and free of any deduction or withholding for or on account of tax unless such Borrower is compelled by law to make such a payment subject to the deduction or withholding of tax.

12.2 If a Borrower is compelled by law to make any such deduction or withholding, or the Bank is compelled by law to make any payment in respect of tax (other than tax on overall net income), in each case from or in respect of any amount payable or paid by such Borrower hereunder, such Borrower will pay to the Bank such additional amount as is required to ensure that the Bank receives and retains (free from any liability in respect of any such deduction or withholding) a net amount equal to the full amount which it would have received if no such deduction, withholding or payment had been made.

12.3 All taxes required by law to be deducted or withheld by a Borrower from any amounts payable or paid hereunder shall be paid by such Borrower to the appropriate authority within the time allowed for such payment under applicable law and such Borrower shall, within 30 days of the payment being made, deliver to the Bank evidence reasonably satisfactory to the Bank (including all relevant tax receipts) that the payment has been duly remitted to the appropriate authority.

12.4 The Bank shall be entitled to adjust the dates for the making of payments under the Facility, and the duration of interest periods, where in the Bank's opinion it is necessary to do so in order to comply with the practice from time to time prevailing in the London Interbank Market or any other financial market relevant for the purposes of the Facility.

13. Events of Default

In the event of:

(a) failure by any Borrower to make any repayment of principal, or payment of interest or other money, under this Facility Letter on its due date unless such failure is caused solely by technical or administrative delays and repayment or payment is made within three Business Days of the due date; or

(b) (i) a breach by any Borrower in the performance of any of its obligations under clauses 9, 10.1 (other than under (e) or (f) thereof) or 11; or

(ii) a breach by any Borrower in the performance of any of its obligations under clause 10.2, if such breach (if sufficient funds are available for drawing under the US Facility or are otherwise available to UNOVA, Inc. and/or its Subsidiaries to remedy such breach) shall continue unremedied for three Business Days; or

(iii) a breach by any Borrower in the performance of its obligations under clauses 10.1 (e) or (f), of this Facility Letter if such breach (if capable of remedy) shall continue unremedied for 7 days; or

(iv) a breach by any Borrower or any Guarantor in the performance of any other obligations, covenants or undertakings under this Facility Letter or any guarantee and/or security held by the Bank for the Facility and such breach (if capable of remedy) shall continue unremedied for 21 days; or

(c) any approval, authorisation, consent or clearance which is required either to ensure that this Facility Letter and the security and the guarantees referred to in clause 3 above are valid, binding and enforceable or to enable the obligations thereby created to be duly performed, ceasing to be in full force and effect or it becoming unlawful for the Borrower or any other person to perform all or any of its obligations under this Facility Letter or under any security or guarantee referred to in clause 3 above, or any such document not being or ceasing to be legal, valid and binding on it; or

(d) a petition being presented, an order being made or a meeting being convened or an effective resolution being passed, for winding up any Borrower or UNOVA, Inc. (or any Subsidiary where such action could reasonably be expected to have a Material Adverse Effect) (except for the purpose of a reconstruction or amalgamation while solvent on terms previously approved in writing by the Bank), or a petition being presented or an order being made for the administration of any Borrower or UNOVA, Inc. (or any Subsidiary where such action could reasonably be expected to have a Material Adverse Effect); or

(e) an encumbrancer taking possession or an administrator, liquidator, provisional liquidator, receiver, manager, trustee, sequestrator or similar officer being appointed of all or any of the assets of any Borrower or UNOVA, Inc. (or any Subsidiary where such action could reasonably be expected to have a Material Adverse Effect); or

(f) a distress, execution, attachment or other legal process being levied, enforced or sued out against any of the assets of any Borrower or UNOVA, Inc. (or any Subsidiary where such action could reasonably be expected to have a Material Adverse Effect) and not being discharged or paid in full within five Business Days; or

(g) any Borrower or UNOVA, Inc. (or any Subsidiary where such action could reasonably be expected to have a Material Adverse Effect) suspending payment of its debts or being unable to pay its debts as they fall due, or being deemed, under Section 123 of the Insolvency Act 1986, to be unable to pay its debts; or

(h) any Borrower or UNOVA, Inc. (or any Subsidiary where such action could reasonably be expected to have a Material Adverse Effect) proposing or entering into a voluntary arrangement (within the meaning of Section 1 of the Insolvency Act 1986) or taking or being subjected to any proceedings under any law, or commencing negotiations with one or more of its creditors, for the readjustment, rescheduling or deferment of its debts generally, or proposing or entering into any general assignment or composition with or for the benefit of its creditors; or

(i) control of any Borrower or UNOVA, Inc. passing or having passed, whether by virtue of any agreement, offer, scheme or otherwise, to any person or persons (including institutions or companies), either acting individually or in concert, without the prior written consent of the Bank, ("control" having the meaning ascribed to it in relation to a body corporate by Section 840 of the Income and Corporation Taxes Act 1988) provided that an intra-group re-organisation will not give rise to a breach of this clause 13(i) so long as each Borrower remains a wholly-owned Subsidiary of UNOVA, Inc. (whether directly or indirectly); or

(j) any Borrower, UNOVA, Inc. or any Subsidiary ceasing or threatening to cease to carry on all or a substantial part of its business or operations, or selling, transferring or otherwise disposing of the whole or a substantial part of its undertaking or assets, whether by a single transaction or a number of transactions, where such cessation could reasonably be expected to have a Material Adverse Effect, without the prior written consent of the Bank; or

(k) any default shall occur under any agreement or instrument under or pursuant to which any other financial indebtedness of UNOVA, Inc. or any of the Borrowers (A) the individual outstanding principal amount of which exceeds $5,000,000 (or its currency equivalent) or (B) the aggregate principal amount of which exceeds $5,000,000 (or its currency equivalent), and such default shall continue for more than the period of grace (if any) therein specified, if the effect thereof (with or without the giving of notice or lapse of time or both) is:-

(X) to accelerate, or to permit the holders of any such financial indebtedness to accelerate, the maturity of any such financial indebtedness; or

(Y) to result in any such financial indebtedness being declared due and payable or be required to be prepaid (other than by regularly scheduled required prepayments) prior to the stated maturity thereof;

(provided always that for the purposes of this clause 13(k), the making of a demand for repayment under the Overdraft Facility Letter shall not constitute a breach of this clause 13(k), nor an Event of Default or Potential Event of Default hereunder, if such demand is satisfied in full within 7 days of the making thereof, whether by the making of a utilisation under this Facility Letter or otherwise); or

(l) there occurs an event having a Material Adverse Effect; or

(m) the cessation for any reason of any consent, authorisation, licence and/or exemption which is required to enable any Borrower, Subsidiary or any Guarantor to carry on all or any material part of its business, or the taking by any governmental, regulatory or other authority of any action in relation to

any Borrower, Subsidiary or any Guarantor (whether or not having the force of law) which, in any such case, could reasonably be expected to have a Material Adverse Effect; or

(n) any Guarantor giving or purporting to give notice to determine its liability under any guarantee referred to in clause 3 above; or

(o) any event occurring in relation to any Borrower under the laws of any other applicable jurisdiction which has an effect substantially similar to any of the events specified in this clause 13; or

(p) any representation or warranty made by any Borrower or UNOVA, Inc. under this Facility Letter or for the purpose of obtaining the Facility, being incorrect in any material respect as at the date on which it is made or deemed to be made,

then whilst any such Event of Default is continuing, all moneys owing under the Facility shall become repayable forthwith upon written demand by the Bank at any time and no further utilisation may be made under the Facility. The Bank may, at any time after such demand call for payment of full cash cover for all outstanding liabilities under the Ancillary Facility. At any time whilst an Event of Default is continuing the Bank may enforce its rights to appoint an administrative receiver or other enforcement rights under any security provided by the Borrowers in connection with this Facility and may make demand of any Guarantor.

The Bank reserves the right, at any time following a demand under this clause, to purchase with sterling any currency necessary to convert any amounts outstanding under the Facility together with interest accrued thereon, to sterling whereupon the Borrowers shall then become liable to pay the Bank forthwith the relevant sterling amounts, together with all costs and expenses incurred by the Bank.

14. Interest on an Overdue Amount

14.1 Any money payable under this Facility Letter which is not paid when due by the Borrowers shall bear interest on a daily basis from the due date to the date of actual payment. Such interest shall be calculated by reference to successive default interest periods of such duration as the Bank may from time to time select, except that the first such period relating to any overdue amount in respect of the Sterling/Currency MML shall be such as to mature at the end of the interest period current at the time when such amount became due.

14.2 Interest shall be charged at the rate per annum determined by the Bank to be equal to 1% above the rate which would otherwise have been applicable to such overdue amount under the provisions of the relevant Schedule if such amount had been non-overdue principal (except that in the case of any amount that does not have an applicable interest rate hereunder the rate charged shall be 3% per annum over the Bank's Base Rate current from time to time). Interest so accrued shall be due on demand or (in the absence of demand) on the last day of the default interest period in which it accrued and, if unpaid, shall be compounded on the last day of that and each successive interest period. Interest shall be charged and compounded on this basis both before and after any judgement obtained under this Facility Letter.

15. Assignment and Transfer

15.1 No Borrower may assign or transfer any of its rights or obligations under or in respect of this Facility Letter.

The Bank may, at any time, assign and/or transfer all or any of its rights, benefits and/or obligations in respect of the Facility, in whole or in part, to any person or persons and may, subject to obtaining customary undertakings protecting the confidentiality of such information, disclose to any actual or prospective assignee or transferee (or to any other person (i) in connection with an actual or proposed securitisation of all or any part of the Bank's loan assets from time to time or (ii) who may otherwise enter or propose to enter into contractual relations with the Bank in relation hereto) any

information relevant to the Facility in the Bank's possession relating to the Borrowers and the Subsidiaries and any related security or guarantee. Other than in connection with an actual or prospective securitisation referred to in (i), the Bank shall obtain the Borrowers' prior written consent to any assignment or transfer (such consent not to be unreasonably withheld or delayed).

16. Miscellaneous

16.1 All notifications or determinations given or made by the Bank under this Facility Letter shall be conclusive and binding on each Borrower, except in any case of manifest error.

16.2 No delay or omission by the Bank in exercising any right or power under this Facility Letter shall impair such right or power, and any single or partial exercise of it shall not preclude any other right or power. The rights and remedies of the Bank under this Facility Letter are cumulative and not exclusive of any right or remedy provided by law.

16.3 Each Borrower shall indemnify the Bank on demand (without prejudice to the Bank's other rights) for any expense, loss or liability incurred by the Bank in consequence of (i) any failure by any Borrower to borrow in accordance with a notice of drawing given by it to the Bank, or (ii) any default or delay by any Borrower in the payment of any amount when due under this Facility Letter, or (iii) the occurrence or continuance of any event referred to in clause 13 above, or (iv) all or part of the Facility being prepaid or repaid for any reason otherwise than on the maturity of the then current interest period including, without limitation, any loss (other than loss of margin), expense or liability sustained or incurred by the Bank in any such event in liquidating or re-deploying funds acquired or committed to fund, make available or maintain the Facility (or any part of it).

16.4 Any sum of money at any time standing to the credit of any Borrower with the Bank in any currency upon any account or otherwise may be applied by the Bank, at any time after the occurrence of an Event of Default (without notice to the Borrower), in or towards the payment or discharge of any indebtedness now or subsequently owing to the Bank by such Borrower and the Bank may use any such money to purchase any currency or currencies required to effect such application.

16.5 If, for any reason, any amount payable under this Facility Letter is paid or is recovered in a currency (the "other currency") other than that in which it is required to be paid (the "contractual currency"), then, to the extent that the payment to the Bank (when converted at the then applicable rate of exchange) falls short of the amount unpaid under this Facility Letter, the Borrower shall, as a separate and independent obligation, fully indemnify the Bank on demand against the amount of the shortfall. For the purposes of this clause the expression "rate of exchange" means the rate at which the Bank is able as soon as practicable after receipt to purchase the contractual currency in London with the other currency.

16.6 If the UK moves to the third stage of EMU, the Bank shall be entitled to make such changes to this Facility Letter as it reasonably considers are necessary to reflect the changeover to the euro (including, without limitation, the rounding (up or down) of fixed monetary amounts to convenient fixed amounts in the euro and amending any provisions to reflect the market conventions for a facility of the kind contemplated in this Facility Letter).

17. Interpretation

17.1 In this Facility Letter, unless the context otherwise requires:

"Best Rating Guide" means the rating guide published in the US under the name "Best Rating Guide";

"Business Day" means a day on which the relevant London financial markets and the Bank are ordinarily open to effect transactions of the kind contemplated in this Facility Letter and, if a payment falls due under this Facility Letter, also a day on which banks in the principal financial centre for the

relevant currency (as determined by the Bank) are open for dealings in such currency and if a payment is to be made in euros, on which such payment system as the Bank chooses is operating for the transfer of funds for the same day value;

"Co- Agents" has the meaning given to it in the US Facility Agreement;

"Disposal Proceeds" means the gross proceeds received in respect of a disposal referred to in sub-paragraph (b) of the definition of "Permitted Disposal" less the amount of any present and future taxes payable with respect to any gain resulting from such disposal, and all third party costs, fees and expenses properly incurred in arranging and effecting such disposal;

"Eligible Trade Debtors" means, at any time in respect of any Borrower or any division of any Borrower, the unencumbered book debts of such Borrower as appearing in its books at such time but excluding:

(a) each debt due to such Borrower from any of its Subsidiaries,

(b) each debt which has not been paid within 90 days (unless otherwise agreed by the Bank) after the date of the original invoice relating thereto,

(c) each debt which is not (i) due from a debtor incorporated in the European Union, Switzerland, Norway, The United States of America or Canada, or (ii) due from a wholly owned Subsidiary (wherever situate, subject to compliance by the Bank with applicable laws, regulations and the Bank's internal compliance policies) of, BMW AG, Daimler-Chrysler AG, Fiat S.p.A., Ford Motor Company, General Motors Corporation, Renault S.A., Peugeot S.A. or Volkswagen AG in each case subject to periodic review by the Bank, or (iii) guaranteed or insured by the Export Credits Guarantee Department or other UK Government department or agency,

each debt due from Cyltec LLC, and

(e) each debt in respect of retention monies due (forming all or part of any invoiced amount);

"EMU" means Economic and Monetary Union as contemplated in the Treaty establishing the European Community, as amended from time to time;

"Encumbrance" includes any mortgage, charge, pledge, lien (other than a lien arising solely by operation of law in the ordinary course of business and securing amounts not more than 90 days overdue for payment), assignment by way of security, hypothecation, security interest or other agreement or arrangement which results in (or has substantially the same commercial effect as) the creation of security (but excluding title retention agreements or arrangements entered into in the ordinary course of trading and not otherwise falling within this definition) and any rigt

"Event of Default" means any event or circumstance referred to in clause 13;

"Expiry Date" has the meaning given to it in clause 2;

"Facility" means the facility made available under this Facility Letter (as reduced from time to time in accordance with its provisions);

"financial indebtedness" means, without duplication, all liabilities, obligations and indebtedness of any Borrower, of any kind or nature, now or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct, contingent, fixed or otherwise, consisting of indebtedness for borrowed money or the deferred purchase price of property, excluding trade payables but including (a) all obligations and liabilities of any person secured by any Encumbrance on any Borrower's or Guarantor's property, even though such Borrower or Guarantor shall not have assumed or become liable for the payment thereof; provided, however, that all such obligations and liabilities which are limited in recourse to such property shall be included in financial indebtedness only to the extent of the book value of such property as would be shown on a balance

sheet of such Borrower or Guarantor prepared in accordance with either UK or US generally accepted accounting standards (as applicable to the entity in question); (b) all obligations or liabilities created or arising under any finance lease or conditional sale or other title retention agreement with respect to property used or acquired by any Borrower or Guarantor, even if the rights and remedies of the lessor, seller or lender thereunder are limited to repossession of such property; provided, however, that all such obligations and liabilities which are limited in recourse to such property shall be included in financial indebtedness only to the extent of the book value of such property as would be shown on a balance sheet of such Borrower or Guarantor prepared in accordance with either UK or US generally accepted accounting standards (as applicable to the entity in question); (c) all obligations and liabilities under guarantees; and (d) the present value (discounted at the greater of Bank of America N.A.'s "prime rate" or 0.50% above US Federal Funds Rate) of lease payments due under synthetic leases;

"indebtedness" includes any obligation for the payment or repayment of money, whether actual or contingent, present or future, secured or unsecured, and whether incurred as principal or surety or otherwise;

"Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties or condition (financial or otherwise) of the Borrowers and Guarantors taken as a whole; (b) a material impairment of the ability of the Borrowers and the Guarantors taken as a whole to perform under the Facility Letter and any guarantee or security provided in connection with the Facility Letter; or (c) a material adverse effect on the legality, validity, binding effect or enforceability against any Borrower or any Guarantor of this Facility Letter or any such guarantee or security;

"month" means a period starting on one day in a calendar month and ending on the corresponding day in the next calendar month or, if that is not a Business Day, on the next Business Day unless that falls in another calendar month in which case it shall end on the preceding Business Day, save that where a period starts on the last Business Day in a month or there is no corresponding day in the month in which the period ends, that period shall end on the last Business Day in the later month;

"Operating Cashflow" means, in relation to any accounting reference period of any Borrower, such Borrower's Total Operating Profit plus amounts charged to depreciation and amortisation, capital receipts from the disposals of assets and funds received from equity subscription and capital issues minus corporation tax paid and capital expenditure plus or minus movements in working capital (each as shown in such Borrower's audited financial statements delivered to the Bank in accordance with clause 11.1 for such accounting reference period);

"Overdraft Facility Letter" means the facility letter dated 7 August 2001 (as amended or extended or replaced from time to time) from the Bank to the Borrowers providing for an overdraft facility of up to £1,000,000;

"Parent" means a parent undertaking of a Borrower within the meaning of Section 258 of the Companies Act 1985;

"Permitted Disposal" means (a) any sale of current assets in the ordinary course of trading by any Borrower or any Subsidiary, (b) a disposal which is referred to in the letter from UNOVA, Inc. to the Bank dated no later than the date hereof and is made in accordance with the terms of that letter, (c) any disposal to which the Bank has consented (such consent not to be unreasonably withheld or delayed) of plant, machinery or equipment made solely in connection with a Borrower entering into operating or finance leasing arrangements or (d) any other disposal by any Borrower or any Subsidiary agreed in writing from time to time between the Borrowers and the Bank;

"Permitted Loan" means any guarantee, bond, indemnity, loan or financial accommodation which either:

forms trade credit in the normal course of business, or

(b) is made to any direct or indirect Subsidiary of UNOVA Inc. incorporated in Germany or Sweden, (each an "Approved Affiliate") either (i) from the proceeds of any utilisation under the Sterling/Currency MML and does not exceed £5,000,000 when aggregated with all other loans or financial accommodation made by each Borrower and each UK Subsidiary to an Approved Affiliate from the proceeds of any utilisation under the Sterling/Currency MML or (ii) not from the proceeds of any utilisation under the Sterling/Currency MML;

"person" shall be construed as a reference to any person, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing;

"Potential Event of Default" means any event or circumstance which, with the giving of notice, lapse of time or fulfilment of any other condition, would be an Event of Default;

"Properties" means the leasehold and freehold industrial units and offices at (i) Hampstead Avenue, Mildenhall, Suffolk (described and demised by a conveyance dated 14 April 1988 between Lamb-Sceptre Engineering Limited (1) and Litton U.K. Limited (2)), (ii) Eastburn Works, Skipton Road, Cross Hills, Keighly, West Yorkshire (title no. WYK393531), (iii) Kingsbury Road, Erdington, Birmingham (title no's WM542569, WM542383, WM711536, WM542336, WM645192).

"$" means the lawful currency of the US;

"Sterling" and "£" means the lawful currency for the time being of the UK;

"Subsidiary" means a subsidiary undertaking of a Borrower within the meaning of Section 258 of the Companies Act 1985;

"Total Operating Profit" means, in relation to any accounting reference period of any Borrower, such Borrower's total operating profit for continuing operations, acquisitions (as a component of continuing operations) and discontinued operations (as set out in Financial Reporting Standard No. 3) but ignoring any exceptional items (each as shown in such Borrower's audited financial statements delivered to the Bank in accordance with clause 11.1 for such accounting reference period);

"Trade Debtors" means the value of the Eligible Trade Debtors of each of Cincinnati Machine U.K. Limited, Intermec Technologies U.K. Limited, Lamb Technicon (a division of UNOVA U.K. Limited) and Landis Lund (a division of UNOVA U.K. Limited);

"UK" means the United Kingdom of Great Britain and Northern Ireland;

"UK Subsidiary" means any Subsidiary of the Borrower which is incorporated in the United Kingdom;

"US" means the United States of America;

"US Facility" means the facility made available under the US Facility Agreement;

"US Facility Agreement" means a syndicated facility agreement dated 12 July 2001 between (inter alia) UNOVA, Inc. and others as borrowers, Bank of America N.A. and Heller Financial, Inc. and others as lenders and/or agents (as amended, restated, extended or supplemented from time to time); and

"VAT" means value added tax or any similar tax substituted for it from time to time.

17.2 References to any statutory provision includes any amended or re-enacted version of such provision with effect from the date on which it comes into force.

17.3 Save where the context otherwise requires, any expression in this Facility Letter importing the singular shall include the plural and vice versa.

17.4 References to a time of the day are references to the time in London.

17.5 It is expressly stipulated that in the event of any conflict or inconsistency between the terms of any guarantee or security required to be delivered in connection with the Facility Letter pursuant to clause 18.3 below, and the terms of this Facility Letter (as amended, replaced or extended from time to time) the terms of the Facility Letter (as so amended, replaced or extended) shall prevail. It is also agreed, that no demand under the Overdraft Facility Letter shall (unless at the time of, or subsequent to, such demand an Event of Default is continuing) give the Bank the right to make demand on any Guarantor or enforce the Encumbrances created under the said security if such demand is satisfied in full within 7 days of the making thereof.

17.6 So long as any amount remains outstanding under this Facility, it is expessly stipulated that clause 6(b) of the Bank's standard form of debenture referred to in clause 3.1 of this Facility Letter shall be deemed to have been deleted, clause 6(d) thereof shall be deemed amended by the insertion of "which are necessary and useful in the conduct of its business" after "thereof" on the second line and by the insertion of the words "(ordinary wear and tear excepted)" at the end of clause 6(d) and that clause 14 of the Bank's standard form of Guarantee referred to in clause 3.1 of this Facility Letter shall be deemed amended by the insertion of the words "(which shall be exercised in good faith using its reasonable credit judgement)" after the word "discretion"on the 18th line thereof and by the deletion of the word "absolute" on such line.

18. Conditions Precedent

The Facility will become available to the Borrowers for drawing only upon receipt by the Bank of the following in form and substance satisfactory to the Bank:

(a) this Facility Letter as required under clause 21 below;

(b) a certified true copy of a resolution of each Borrower's Board of Directors and the Board of Directors of UNOVA, Inc:

(i) accepting the Facility and this offer on the terms and conditions stated within this Facility Letter;

(ii) authorising a specified person, or persons, to countersign and return to the Bank the enclosed duplicate of this Facility Letter;

(iii) authorising the Bank to accept instructions and confirmations in connection with the Facility signed in accordance with the Bank's signing mandate current from time to time, and to accept instructions in connection with drawings under the Sterling/Currency MML and, by telephone from any person specifically authorised to give such telephone instructions; and

(iv) containing confirmed specimens of the signatures of those officers referred to in (ii) and (iii) above, if not already known to the Bank; and

(c) the debentures, legal charges and guarantees referred to in clause 3 above duly executed by the chargors and guarantors specified in such clause together with such other documents relating thereto as the Bank may require and shall have specified prior to the date of this letter including (i) a board resolution from each of the Guarantors approving the execution, delivery and performance of the guarantees and security referred to in clause 3.1 to which it is a party and the terms and conditions thereof, authorising a specified person or persons to sign any documents to be delivered by it in

relation thereto, (ii) confirmed specimen signatures of such authorised persons and (iii) a legal opinion from the U.S. legal counsel to UNOVA, Inc.

19. Governing Law and Jurisdiction

19.1 This Facility Letter shall be governed by and construed in accordance with English law.

Each Borrower and UNOVA, Inc. hereby irrevocably submit, for the exclusive benefit of the Bank, to the jurisdiction of the High Court of Justice in England (but without prejudice to the right of the Bank to commence proceedings against the Borrower in any other jurisdiction) and irrevocably waives any objections on the ground of venue or forum non conveniens or any similar grounds.

Without prejudice to any other mode of service allowed under any relevant law,

UNOVA, Inc. irrevocably appoints UNOVA U.K. Limited as its agent for service of process in relation to any proceedings before the English courts in connection with this Facility Letter; and

agrees that the failure by a process agent to notify UNOVA, Inc. of the process will not invalidate the proceedings concerned.

20. Notices

Every notice, request or other communication shall:

(a) be in writing delivered personally or by prepaid first class letter or facsimile transmission;

(b) be deemed to have been received by the Borrowers and UNOVA, Inc., in the case of a letter when delivered personally or 48 hours after it has been sent by first class post or, in the case of facsimile transmission, at the time of transmission with a facsimile transmission report or other appropriate evidence (provided that if the date of transmission is not a Business Day it shall be deemed to have been received at the opening of business on the next Business Day); and

(c) be sent (i) to the Borrowers and UNOVA, Inc. at the address stated at the beginning of this Facility Letter and (ii) to the Bank at the address stated at the beginning of this Facility Letter, or to such other address in England as may be notified in writing by the relevant party to the other.

All communications by the Borrowers and UNOVA, Inc. shall be effective only on actual receipt by the Bank.

21. Acceptance

If each of the Borrowers and UNOVA, Inc. wish to accept this offer, this Facility Letter and the enclosed duplicate should be signed below by an authorised officer on its behalf and the signed duplicate returned to the Bank. This offer will remain available until 30 September 2001, after which it will lapse if not accepted.

Yours faithfully
for and on behalf of
BARCLAYS BANK PLC

JOHN DAVEY
RELATIONSHIP DIRECTOR

Accepted on the terms and conditions stated herein,

For and on behalf of

UNOVA U.K. Limited

by /s/ Michael E. Keane

Date September 13, 2001

Cincinnati Machine U.K. Limited

by /s/ Michael E. Keane

Date September 13, 2001

Intermec Technologies U.K. Limited

by /s/ Michael E. Keane

Date September 13, 2001

UNOVA, Inc.

by /s/ Elmer C Hull Jr.

Date September 13, 2001

SCHEDULE A

Sterling/Currency MML

The Sterling/Currency MML includes the option not only to draw by way of short term loans in sterling, but also for the Borrowers to draw by way of short term loans in US Dollars and euro if freely transferable and convertible into sterling and available to the Bank in the relevant amount for the relevant period in the normal course of business in the London Interbank Market. The Bank shall be the sole arbiter of the availability of such currencies.

The Sterling/Currency MML may be drawn in one or more amounts each drawing to be a minimum amount of £500,000 (or the equivalent thereof in other currencies) and multiples of £50,000 (or the equivalent thereof in other currencies) thereafter for periods of a minimum seven days up to a maximum of 12 months at the Borrower's option or other mutually agreed period but no drawing should be made for an interest period with a maturity date of more than three months beyond the Expiry Date.

When wishing to draw under the Sterling/Currency MML, the Borrower should telephone the Bank's dealers at Global Treasury Services ("GTS") on 0345-231160 on or shortly before the Business Day on which funds are required, stating the currency and the amount of the drawing, the period required and giving instructions for payment of the funds. In the event these instructions do not stipulate that the funds must be credited to the Borrower's current account with the Bank's branch at 210 High Street, Hounslow, Middlesex TW3 1DL (the "Branch") such instructions must be confirmed by letter to the Branch at the earliest opportunity.

Unless otherwise agreed between the Borrower and GTS, the interest rate on each drawing will be the aggregate of the Bank's margin of 3% per annum plus LIBOR (to be conclusively determined by the Bank and dependent upon the conditions prevailing in the London financial markets) and any mandatory costs to compensate the Bank for the cost resulting from the imposition from time to time under the Bank of England Act 1998 and/or by the Bank of England and/or the Financial Services Authority (the "FSA") (or other United Kingdom governmental authorities or agencies) of a requirement to place non-interest bearing cash ratio deposits or Special Deposits (whether interest bearing or not) with the Bank of England and/or pay fees to the FSA calculated by reference to liabilities used to fund the sum) for the period of drawing.

Interest will be payable without deduction at the maturity of each drawing, and calculated on the basis of actual days elapsed over a 365 day year for sterling drawings and a 360 day year for currency drawings (or if market practice differs, in accordance with the normal market practice for the relevant currency).

Each drawing, together with interest thereon, will be repaid on its maturity date in the currency in which such drawing is outstanding in accordance with the provisions of clause 12 of this Facility Letter.

SCHEDULE B

Guarantees, Bonds and Indemnities

The Bank is prepared to consider issuing guarantees, bonds and indemnities on behalf of any Borrower in respect of normally accepted and commercial transactions, up to a limit of £6,000,000 (six million pounds) subject to prior agreement with the Bank and receipt of the necessary counter indemnities.

Commission at the rate of 1% per annum of the principal amount of each outstanding guarantee, bond and indemnity will be payable by the relevant Borrower to the Bank, quarterly in advance.

The outstanding guarantees in an amount of up to £4,500,000 issued by the Bank prior to the date hereof on behalf of UNOVA U.K. Limited shall be deemed not to be issued under this Ancillary Facility provided that such guarantee remains fully cash collateralised at all times.

-----END PRIVACY-ENHANCED MESSAGE-----