Employee Benefits Agreement

EXHIBIT 10.32


EMPLOYEE BENEFITS AGREEMENT


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


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


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


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


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


Section 1. DEFINITIONS.


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


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


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


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


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


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


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


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


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


GROUP: the Western Atlas Group or the UNOVA Group.


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


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


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


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


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


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


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


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


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


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


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


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


UNOVA GROUP: UNOVA and the UNOVA Subsidiaries and Affiliates.


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


UNOVA OPTION PLAN: the UNOVA 1997 Stock Incentive Plan.


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


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


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


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


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


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


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


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


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


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


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


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


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Deferred Compensation Plan for Directors.


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


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


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


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


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


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


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from individuals against any such assertion.


(c) The UNOVA Group shall assume and be solely responsible for, and shall indemnify the Western Atlas Group against, all liabilities and obligations whatsoever in connection with claims made by or on behalf of UNOVA Employees or UNOVA Former Employees in respect of severance ...