Document:

exv10w1

 

EXHIBIT 10.1

EXECUTIVE TRANSITION AND RELEASE AGREEMENT

     This Executive Transition and Release Agreement (this “Agreement”) is entered into between H.
Raymond Bingham (“Executive”) and Cadence Design Systems, Inc., a Delaware corporation (“Cadence”
or the “Company”).

     1. EFFECTIVE DATE OF RETIREMENT. As of July 8, 2005 (the “Transition Date”), Executive has
resigned from his position as Executive Chairman of the Board (“Executive Chairman”) and
acknowledges and agrees that he has relinquished all of the authority and responsibilities of such
position. Executive also resigned from the Board of Directors of the Company (the “Board”), and
his positions with any and all of the Company’s subsidiaries and affiliates, as well as any trade
associations and similar memberships, effective as of the Transition Date; provided, however, that
Executive shall remain an employee of Cadence until 11:59 p.m., California time, on July 31, 2005
(the “Termination Date”). On or after the Termination Date, Executive will (a) be paid promptly
any earned but unpaid base salary, less applicable tax deductions and withholding; (b) not later
than on or about August 18, 2005, be paid a bonus of 40% of Executive’s annual target bonus under
Cadence’s Senior Executive Bonus Plan with respect to performance for the first half of 2005, to be
calculated using the Company Performance Multiplier achieved by Cadence for the first half of 2005
and an Individual Performance Multiplier of 1.0, less applicable tax deductions and withholding;
(c) have submitted, on or before September 1, 2005, any requests for expense reimbursement, which
requests shall be processed and paid in accordance with the Company’s applicable expense
reimbursement policy as currently in effect; and (d) be paid other unpaid vested amounts or
benefits under the compensation, incentive and benefit plans of the Company in which Executive
participates or for which Executive is eligible, whether as an employee of the Company or as a
member of the Board, or under the Employment Agreement (as defined in Section 2(g) hereof), in each
case in accordance with the terms of such compensation, incentive and benefit plans or the
Employment Agreement. The payment of the foregoing amounts shall in any event be made to Executive
on or before the date required by applicable law.

     As of the first day of the month following the Termination Date, except as otherwise expressly
provided herein, Executive will no longer participate in Cadence’s employee benefit plans and will
not be eligible for a bonus for any services rendered after that date, except as expressly provided
herein.

     2. NONCOMPETITION AND SOLICITATION.

     a. Except as otherwise provided in Section 2(b) of this Agreement, Executive’s obligations
hereunder will not preclude Executive from accepting and holding full-time employment or providing
his personal services elsewhere.

     b. As a member of Cadence’s Board, as well as other positions Executive has held with
Cadence, Executive has obtained extensive and valuable knowledge and information concerning
Cadence’s business (including confidential information relating to Cadence and its operations,
intellectual property, assets, contracts, customers, suppliers, personnel, plans, marketing plans,
research and development plans and prospects). Executive acknowledges and agrees that it

 

 

would be virtually impossible for Executive to work as an employee, consultant or advisor in those
businesses in the electronic design automation industry that compete most directly with Cadence
without inevitably disclosing confidential and proprietary information belonging to Cadence.
Accordingly, for a period of 12 months following the Termination Date, Executive will not, directly
or indirectly, provide services, whether as an employee, consultant, independent contractor, agent,
sole proprietor, partner, joint venturer, corporate officer or director, on behalf of Synopsys,
Inc., Magma Design Automation, Inc., Mentor Graphics Corporation, or PDF Solutions, Inc. Executive
may, however, provide such services to any other business without violating this Section 2(b), as
long as such services comply with the Employee Proprietary Information and Inventions Agreement (as
defined in Section 8 below).

     c. For a period of 24 months following the Termination Date, Executive will be prohibited, to
the fullest extent allowed by applicable law, and except with the advance written approval of the
then Chief Executive Officer (“CEO”) or General Counsel of Cadence, from voluntarily or
involuntarily, for any reason whatsoever, directly or indirectly, individually or on behalf of
persons or entities not now parties to this Agreement, encouraging, inducing or attempting to
induce, soliciting or attempting to solicit for employment, contractor or consulting opportunities
anyone who is employed at the Termination Date, or was employed during the previous one year, by
Cadence or any Cadence affiliate.

     d. For a period of 12 months following the Termination Date, Executive will be prohibited, to
the fullest extent allowed by applicable law, and except with the advance written approval of the
then CEO or General Counsel of Cadence, from directly or indirectly, individually or on behalf of
persons or entities not now parties to this Agreement, intentionally and knowingly interfering or
attempting to interfere with the relationship or prospective relationship of Cadence or any Cadence
affiliate with any former, present or future client, customer, supplier, joint venture partner or
financial backer of Cadence or any Cadence affiliate.

     e. Executive will fully cooperate with Cadence in all matters relating to his employment and
the termination thereof, including the winding up of work performed in Executive’s prior position
and the orderly transition of such work to other Cadence employees. Cadence will reasonably supply
Executive with the resources that he requests in order to discharge such responsibilities,
including but not limited to staff support and tech support until the Termination Date or, in
Cadence’s sole discretion, thereafter (but not beyond August 31, 2005). From August 1, 2005 until
October 31, 2005, Cadence will provide Executive with access to voicemail and a Cadence e-mail
address. Executive also agrees to participate as a witness in any litigation or regulatory
proceeding to which the Company or any of its affiliates is a party at the request of the Company
upon delivery to Executive of reasonable advance notice and the Company’s written commitment to
reimburse Executive for all reasonable expenses incurred in connection therewith.

     f. Executive will not make any statement, written or oral, that disparages Cadence or any of
its affiliates, or any of Cadence’s or its affiliates’ products, services, policies, business
practices, employees, executives, officers or directors. The foregoing provision shall not
preclude Executive from making any statements required by applicable law.

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     g. Notwithstanding Section 5 of Executive’s Employment Agreement with the Company, effective
as of October 1, 2004 (the “Employment Agreement”), the parties agree that damages would be an
inadequate remedy for Cadence in the event of a breach or threatened breach by Executive of Section
2(b), 2(c), 2(d) or 2(f) hereof. In the event of any such breach or threatened breach, Cadence
may, either with or without pursuing any potential damage remedies, obtain from a court of
competent jurisdiction, and enforce, an injunction prohibiting Executive from violating any such
section of this Agreement and requiring Executive to comply with such terms of this Agreement.

     3. TRANSITION AND TERMINATION PAYMENTS AND BENEFITS. In consideration for Executive’s
resignation and Executive’s execution of this Agreement (including the release set forth in Section
5 hereof), Cadence will provide the following termination payments and benefits to which Executive
would not otherwise be entitled, provided that (i) the Effective Date (as defined in Section 6
hereof) and the Termination Date have occurred and (ii) Executive has returned to the Company all
copies (whether printed, electronic or in any other medium) of all records, documents, materials
and files containing or relating to confidential, proprietary or sensitive company information in
his possession or control during his period of employment with Cadence, as well as all other
company-owned property then in his possession (other than those items set forth in Section 3(c)
below):

     a. All of the unvested options and other outstanding stock awards held by Executive on the
Termination Date, which would have vested over the succeeding thirty (30) month period had
Executive continued to serve as Executive Chairman under the Employment Agreement during that
period, shall immediately vest and become exercisable in full on the Termination Date; there shall
be no further vesting of those options or stock awards, notwithstanding any provision in any stock
option or stock agreement to the contrary. This acceleration will have no effect on any other
provisions of the stock awards. For the avoidance of doubt, the Company hereby confirms that
Executive shall have a period of one (1) year from the Termination Date during which to exercise
the outstanding options held by Executive on the Termination Date, as set forth in the terms of the
option agreements documenting the terms of such grants from the Company to Executive. Executive
hereby acknowledges and agrees that he is in possession of material, non-public information
regarding Cadence and, as a result, shall remain subject to the Company’s “Insider Trading Policy”
until August 1, 2005, after which time he will no longer be subject to the Company’s “Insider
Trading Policy” unless specifically notified by the Company’s General Counsel prior to August 1,
2005 as to the additional length of time that he shall be subject to such policy and the reason
therefor.

     b. The Company shall continue to provide Executive with, and bear the full cost of, health,
disability and life insurance coverage for Executive, his spouse and dependents to the extent that
such coverage is commensurate with the coverage now provided to Executive, his spouse and
dependents as of the Transition Date, for a period of 12 months following the Termination Date.
The Company shall structure such health, disability and life insurance coverage as nontaxable
benefits to the maximum extent possible, but, as long as the Company has satisfied its obligation
under this sentence, the Company’s cost coverage or reimbursement obligation shall in no event
include any amount to compensate for any tax liability including without limitation any
“gross-up” amount. For a period of six months following the Termination

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Date, Executive shall be responsible for the full cost of such coverage; provided, however, that
such costs paid by Executive shall be fully reimbursed by the Company as soon as administratively
feasible following the termination of such six month period. For the second six month period,
commencing on February 1, 2006 and ending on July 31, 2006, the Company shall pay directly the full
cost of such coverage. With respect to Executive’s disability insurance coverage, which, after the
Termination Date, the Company is unable to provide to Executive under the Company-sponsored
disability insurance plans, the Company will use its best efforts to assist Executive in applying
for alternative coverage that is commensurate with the coverage Executive had under existing
Company plans immediately prior to the Transition Date. Specifically for health insurance
coverage, to the extent permitted by the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) and by the Company’s group health insurance policies, Executive shall elect COBRA
continuation coverage and Executive shall be responsible for the full cost of Executive’s and his
covered dependents’ COBRA continuation premiums for a period of six months following the
Termination Date; provided, however, that such costs shall be fully reimbursed by the Company as
soon as administratively feasible following the termination of such six-month period. For the
second six-month period, commencing on February 1, 2006 and ending on July 31, 2006, the Company
shall pay the full cost of Executive’s and his covered dependents’ COBRA continuation premiums.
Executive agrees to notify both the General Counsel and the executive overseeing Human Resources at
Cadence, in writing, immediately upon the commencement of health benefit coverage that would cause
Executive’s COBRA continuation coverage to cease. This paragraph provides only for the Company’s
payment of COBRA continuation premiums for the periods specified above and is not intended to
affect, nor does it affect, the rights of Executive or any of Executive’s covered dependents under
any applicable law with respect to health insurance continuation coverage.

     c. The Company shall transfer to Executive ownership of the home office and personal
communications equipment being used by Executive outside of the office as of the Termination Date,
including Executive’s laptop computer, after it has been reviewed and cleaned by the Cadence
Information Technology department (removing all confidential and proprietary Cadence information
and all Cadence-owned and/or licensed software programs).

     d. In consideration for Executive’s acceptance and non-revocation of this Agreement, Company
will pay to Executive on March 17, 2006, a lump-sum payment equal to the sum of (i) 180% of
Executive’s annual Base Salary at the highest annual rate in effect during Executive’s employment
as Executive Chairman (as of the Transition Date, such amount was $900,000), less applicable tax
deductions and withholding, and (ii) $100,000, less applicable tax deductions and withholding.

     e. In further consideration for Executive’s acceptance of this Agreement and contingent upon
Executive’s adhering to the terms of this Agreement as well as executing and delivering the Release
of Claims at Attachment I (to this Agreement) to the General Counsel of Cadence at any time on or
after March 1, 2006, and not timely revoking such Release of Claims, the Company will pay to
Executive on March 17, 2006 (or the first date on which such Release of Claims becomes effective,
if later) a lump-sum payment equal to 180% of Executive’s annual Target Bonus at the highest target
rate in effect during Executive’s employment as Executive Chairman

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(as of the Transition Date such annual target was $900,000), less applicable tax deductions and
withholding.

Executive agrees that execution of and not revoking the Releases of Claims described in this
Section 3 are consideration for the payments and other consideration made to Executive pursuant to
Section 3.

     f. As promptly as practicable after the Effective Date, Cadence shall amend its 1994
Non-Qualified Deferred Compensation Plan (the “NQDCP”), and take all other necessary actions, to
permit Executive to revoke or reduce his deferral election for compensation otherwise payable after
July 31, 2005, and to authorize him to revise the form of payment election pertaining to
compensation actually deferred in respect of 2005 in a manner consistent with Internal Revenue Code
Section 409A and IRS Notice 2005-1. It is also understood between the parties that Executive shall
receive distribution of his accounts under the NQDCP attributable to deferrals made prior to 2005
consistent with any election heretofore made or modified in a manner consistent with Section 3.5 of
the NQDCP.

     4. NO CHANGE IN CONTROL. This Agreement is not being executed by Executive pursuant to Section
4.5 of the Employment Agreement in connection with a Change in Control (as defined in Section 4.5
of the Employment Agreement).

     5. GENERAL RELEASE OF CLAIMS.

     a. Executive hereby irrevocably, fully and finally releases Cadence, and each of its parents,
subsidiaries, affiliates, directors, officers, agents and employees (collectively, the
“Releasees”), from all causes of action, claims, suits, demands or other obligations or
liabilities, whether known or unknown, suspected or unsuspected, that Executive ever had or now has
as of the time that Executive signs this Agreement which relate to his hiring, his employment with
the Company, the termination of his employment with the Company and claims asserted in shareholder
derivative actions or shareholder class actions against the Company or any of its officers and
members of its Board of Directors, to the extent those derivative or class actions relate to the
period during which Executive served as Chief Financial Officer, CEO or Executive Chairman. The
claims released include, but are not limited to, any claims arising from or related to Executive’s
employment with Cadence and/or Executive’s service on the Board, such as claims arising under (as
amended) Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1974, the Americans with Disabilities Act, the Equal Pay Act,
the Fair Labor Standards Act, the California Fair Employment and Housing Act, the California Labor
Code, the Employee Retirement Income Security Act of 1974 (except for any vested right Executive
has to benefits under an ERISA plan), the state and federal Worker Adjustment and Retraining
Notification Act, and the California Business and Professions Code; any other local, state,
federal, or foreign law governing employment; and the common law of contract and tort. In no
event, however, shall any claims, causes of action, suits, demands or other obligations or
liabilities be released pursuant to the foregoing if and to the extent they relate to:

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     i. any amounts or benefits to which Executive is or becomes entitled to pursuant to the
provisions of this Agreement (including, without limitation, Sections 1 and 3 hereof) or
pursuant to the provisions designated in Section 7.12 of the Employment Agreement to survive
the termination of Executive’s full-time employment as Executive Chairman;

     ii. claims for workers’ compensation benefits under any of the Company’s workers’
compensation insurance policies or funds; and

     iii. claims related to Executive’s COBRA rights.

     b. Executive hereby represents and warrants that he has not filed any claim, charge or
complaint against any of the Releasees.

     c. Executive acknowledges and agrees that the payments and other consideration provided to
him in this Agreement constitute adequate consideration for the release set forth in this Section
5.

     d. Executive intends that this release of claims cover all claims subject to this release,
whether or not known to Executive. Executive further recognizes the risk that, subsequent to the
execution of this Agreement, Executive may incur loss, damage or injury that Executive attributes
to the claims encompassed by this release. Executive expressly assumes this risk by signing this
Agreement and voluntarily and specifically waives any rights conferred by California Civil Code
section 1542 which provides as follows:

A general release does not extend to claims which the creditor does not know or suspect to
exist in his or her favor which if known by him or her must have materially affected his or
her settlement with the debtor.

     e. Executive represents and warrants that there has been no assignment or other transfer of
any interest in any claim by Executive that is covered by this release.

     6. REVIEW OF AGREEMENT; REVOCATION OF ACCEPTANCE. Executive has been given at least 21 days
in which to review and consider this Agreement, although Executive is free to accept this Agreement
anytime within that 21-day period. Executive has consulted with an attorney about this Agreement.
If Executive accepts this Agreement, Executive will have an additional 7 days from the date that
Executive signs this Agreement to revoke that acceptance, which Executive may effect by means of a
written notice sent to both the General Counsel and the executive overseeing Human Resources at
Cadence. If this 7-day period expires without a timely revocation, this Agreement will become
final and effective on the 8th day following the date of Executive’s signature and will be the
“Effective Date” of this Agreement.

     7. NO ADMISSION OF LIABILITY. Nothing in this Agreement will constitute or be construed in
any way as an admission of any liability or wrongdoing whatsoever by Cadence (or any of the other
Releasees) or Executive.

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     8. INTEGRATED AGREEMENT. This Agreement, together with the provisions designated in Section
7.12 of the Employment Agreement to survive the termination of Executive’s full-time employment as
Executive Chairman, is intended by the parties to be a complete and final expression of their
rights and duties respecting the subject matter of this Agreement. Notwithstanding anything in the
Employment Agreement to the contrary, this Agreement supersedes in its entirety the form of
Executive Transition and Release Agreement attached to the Employment Agreement as Exhibit A, and
any provisions, rights or duties as set forth therein, as well as that section of Executive’s
Incentive Stock Awards (ID Nos. R20985 and R20982) entitled “Termination of Status as an Employee
or Consultant” as well as any similar provision in any of Executive’s stock option agreements.
Except as expressly provided herein, nothing in this Agreement is intended to negate Executive’s
continuing obligations under Executive’s Employee Proprietary Information and Inventions Agreement,
a copy of which is attached to Executive’s Employment Agreement as Exhibit C, or any other
agreement governing the disclosure and/or use of proprietary information, which Executive signed
while working with Cadence or its predecessors; nor to waive any of Executive’s obligations under
state and federal trade secret laws.

     9. FULL SATISFACTION OF COMPENSATION OBLIGATIONS; ADEQUATE CONSIDERATION. Executive agrees
that the payments and benefits provided herein, together with any payments or benefits to which
Executive is or may become entitled to pursuant to the provisions of the Employment Agreement that
survive the termination of Executive’s full-time employment as Executive Chairman pursuant to
Section 7.12 of the Employment Agreement, are in full satisfaction of all obligations of Cadence to
Executive arising out of or in connection with Executive’s employment through the Termination Date,
including, without limitation, all compensation, salary, bonuses, reimbursement of expenses, and
benefits.

     10. ENFORCEMENT OF RIGHTS.

     a. If Executive is involved in any actual or threatened legal proceeding to enforce or defend
his contractual rights under this Agreement or the Employment Agreement upon or following the
occurrence of a Change in Control (as defined in Section 4.5 of the Employment Agreement), the
Company shall reimburse Executive for all of the reasonable attorneys’ fees and costs and other
expenses incurred by Executive in connection therewith.

     b. Upon the event of any dispute, controversy, claim, litigation or arbitration arising out
of or concerning Executive’s employment by the Company or this Agreement, the prevailing party in
any such dispute, controversy, claim, litigation or arbitration shall be entitled to reasonable
attorneys’ fees (excluding expert fees and costs), except as otherwise set forth in Section 4.8 of
the Employment Agreement (in which the reference to “Transition Agreement” shall mean this
Agreement) or Section 10(a) above.

     c. As provided under Section 7.3(a) of the Employment Agreement, the Company shall pay or
reimburse Executive for all reasonable attorneys’ fees incurred by Executive in connection with the
negotiation, creation and implementation of this Agreement and any other agreements contemplated by
this Agreement.

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     11. TAXES AND OTHER WITHHOLDINGS. Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable hereunder all federal, state, local and foreign taxes and
other amounts that are required to be withheld by applicable laws or regulations, and the
withholding of any amount shall be treated as payment thereof for purposes of determining whether
Executive has been paid amounts to which he is entitled.

     12. WAIVER. Neither party shall, by mere lapse of time, without giving notice or taking other
action hereunder, be deemed to have waived any breach by the other party of any of the provisions
of this Agreement. Further, the waiver by either party of a particular breach of this Agreement by
the other shall neither be construed as, nor constitute, a continuing waiver of such breach or of
other breaches of the same or any other provision of this Agreement.

     13. MODIFICATION. This Agreement may not be modified unless such modification is embodied in
writing, signed by the party against whom the modification is to be enforced.

     14. ASSIGNMENT AND SUCCESSORS. Cadence shall have the right to assign its rights and
obligations under this Agreement to an entity that, directly or indirectly, acquires all or
substantially all of the assets of Cadence. The rights and obligations of Cadence under this
Agreement shall inure to the benefit and shall be binding upon the successors and assigns of
Cadence. Executive shall not have any right to assign his obligations under this Agreement and
shall only be entitled to assign his rights under this Agreement upon his death, solely to the
extent permitted by this Agreement, or as otherwise agreed to by Cadence.

     15. SEVERABILITY. In the event that any part of this Agreement is found to be void or
unenforceable, all other provisions of the Agreement will remain in full force and effect.

     16. GOVERNING LAW. This Agreement will be governed and enforced in accordance with the laws of
the State of California, without regard to its conflict of laws principles.

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EXECUTION OF AGREEMENT

The parties execute this Agreement to evidence their acceptance of it.

	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	July 24, 2005	 	 
	 	Dated:	 	July 24, 2005	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	H. RAYMOND BINGHAM	 	 	 	 	 	CADENCE DESIGN SYSTEMS, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ H. Raymond Bingham

	 	 	 	 	 	By:	 	/s/ R.L. Smith McKeithen
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	R. L. Smith McKeithen
	 

	 	 	 	 	 	 	 	 	 	Senior Vice President & General Counsel

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ATTACHMENT I

RELEASE OF CLAIMS

(To be signed on or about March 1, 2006)

     1. For valuable consideration, I irrevocably, fully and finally release Cadence Design
Systems, Inc. (“Cadence”), and each of its parent, subsidiaries, affiliates, directors, officers,
agents and employees, from all causes of action, claims, suits, demands or other obligations or
liabilities, whether known or unknown, suspected or unsuspected, that I ever had or now have as of
the time that I sign this Release which relate to my hiring, my employment with Cadence, the
termination of my employment with Cadence and claims asserted in shareholder derivative actions or
shareholder class actions against Cadence or any of its officers and members of the Board of
Directors, to the extent those derivative or class actions relate to the period during which I
served as Chief Financial Officer, President and Chief Executive Officer or as Executive Chairman.
The claims released include, but are not limited to, any claims arising from or related to my
employment with Cadence and/or my service on the Board of Directors, such as claims arising under
(as amended) Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1974, the Americans with Disabilities Act, the Equal Pay Act,
the Fair Labor Standards Act, the California Fair Employment and Housing Act, the California Labor
Code, the Employee Retirement Income Security Act of 1974 (except for any vested right I have to
benefits under an ERISA plan), the state and federal Worker Adjustment and Retraining Notification
Act, and the California Business and Professions Code; any other local, state, federal, or foreign
law governing employment; and the common law of contract and tort. This Release is not intended
to, and does not, encompass (i) any right to compensation or benefits that I have under my
Executive Transition and Release Agreement with Cadence (including, without limitation, Sections 1
and 3 thereof) or pursuant to those provisions of my Employment Agreement dated as of October 1,
2004 with Cadence, which, pursuant to Section 7.12 of such Employment Agreement survive the
termination of my full-time employment as Executive Chairman, (ii) any claims I may have for
workers’ compensation benefits under any of Cadence’s workers’ compensation insurance policies or
funds, and (iii) any claims related to my COBRA rights.

     2. I intend that this Release cover all claims subject hereto, whether or not known to me. I
further recognize the risk that, subsequent to the execution of this Agreement, I may incur loss,
damage or injury that I attribute to the claims encompassed by this Release. I expressly assume
this risk by signing this Release and voluntarily and specifically waive any rights conferred by
California Civil Code section 1542 which provides as follows:

A general release does not extend to claims which the creditor does not know or suspect to
exist in his or her favor which if known by him or her must have materially affected his or
her settlement with the debtor.

     3. I hereby represent and warrant that there has been no assignment or other transfer of any
interest in any claim by me that is covered by this Release.

 

 

     4. I acknowledge and agree that the payments and other consideration provided and to be
provided to me in connection with my termination from Cadence constitute adequate consideration for
the release set forth herein.

     5. I acknowledge that Cadence has given me 21 days in which to consider this Release and
advised me to consult an attorney about it. I further acknowledge that once I execute this
Release, I will have an additional 7 days in which to revoke my acceptance of this Release by means
of a written notice of revocation given to both the General Counsel and the executive overseeing
Human Resources at Cadence. This Release will not be final and effective until the expiration of
this revocation period.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	.	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	H. RAYMOND BINGHAMExhibit 10.1

 

 

 

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

by and among

KAYDON CORPORATION

KAYDON CORPORATION LIMITED

KAYDON ACQUISITION IX, INC.

and

MOOG INC.

MOOG CONTROLS LIMITED

MOOG CANADA CORPORATION

 

Dated as of July 26, 2005

STOCK PURCHASE AGREEMENT

        THIS STOCK
PURCHASE AGREEMENT (this "Agreement"), dated as of July 26, 2005,
is by and among Kaydon Corporation, a Delaware corporation ("Kaydon"),
Kaydon Corporation Limited, a corporation organized under the laws of England
and Wales ("Kaydon Limited"), and Kaydon Acquisition IX, Inc., a
Delaware corporation ("Acquisition" and, together with Kaydon and
Kaydon Limited, "Sellers"), and Moog Inc., a New York corporation
("Moog"), Moog Controls Limited, a corporation organized under the
laws of England and Wales ("Moog U.K.") and Moog Canada
Corporation, a Nova Scotia unlimited liability company ("Moog Canada"
and, together with Moog and Moog U.K., "Buyers").

RECITALS

        A. Kaydon is the
record owner of all of the issued and outstanding shares of common stock, par
value $.01 per share (the "Electro-Tec Shares"), of Electro-Tec
Corp., a Delaware corporation ("Electro-Tec").

        B. Kaydon Limited
is the record owner of all of the issued and outstanding ordinary shares (the 
"IDM Shares"), of I.D.M. Electronics Limited, a corporation organized
under the laws of England and Wales ("IDM").

        C. Acquisition is
the record owner of all of the issued and outstanding shares of capital stock,
no par value per share (the "Focal Shares" and, together with the
Electro-Tec Shares and the IDM Shares, the "Shares"), of Focal
Technologies Corporation, a corporation organized under the laws of Nova Scotia,
Canada ("Focal").

        D. Kaydon desires
to sell to Moog, and Moog desires to purchase from Kaydon, the Electro-Tec
Shares; Kaydon Limited desires to sell to Moog U.K., and Moog U.K. desires to
purchase from Kaydon Limited, the IDM Shares; and Acquisition desires to sell to
Moog Canada, and Moog Canada desires to purchase from Acquisition, the Focal
Shares, in each case upon the terms set forth in this Agreement.

        NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth herein, and subject to the terms and
conditions set forth herein, Sellers and Buyers hereby agree as follows:

ARTICLE I

DEFINITIONS

        For purposes of
this Agreement:

        "Action"
or "Actions" means any lawsuit, legal proceeding, administrative
enforcement proceeding, arbitration proceeding, dispute, investigation or other
proceeding before or by any Governmental Authority.

        "Affiliate"
means with respect to any Person, any Person that directly or indirectly
controls, is controlled by or is under common control with such Person. As used
in this 

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definition, "control" (including with its correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies, whether through the ownership of securities, the
ownership of partnership or other equity interests, by contract or otherwise.

        "Agreement"
has the meaning set forth in the preamble.

        "Arbitration Firm"
has the meaning set forth in Section 2.3(b).

        "Balance Sheet
Date" has the meaning set forth in Section 4.5(a).

        "Business 
Day" means any day other than a Saturday, Sunday or a day on which
national banks are authorized or obligated by Law or executive order to close in
the United States.

        "Buyers"
has the meaning set forth in the preamble.

        "Buyers'
Disallowed Deduction" has the meaning set forth in Section 6.4(e).

        "Buyer Indemnitees"
has the meaning set forth in Section 7.3.

        "Cash"
means the fair market value (expressed in United States dollars) of all cash and
cash equivalents (including marketable securities and short term investments) of
the Companies.

        "Closing"
has the meaning set forth in Section 3.1.

        "Closing Date"
means the date on which the Closing occurs.

        "Code"
means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

        "Companies"
means Electro-Tec, IDM and Focal and "Company" means any of them.

        "Company Debt"
means all liabilities and obligations, including principal, interest, fees,
penalties and expenses, relating to or arising from (i) indebtedness of the
Companies for borrowed money and (ii) obligations of the Companies under
capitalized leases.

        "Company
Employees" has the meaning set forth in Section 4.17(c).

        "Confidentiality
Agreement" means that certain confidentiality agreement between Kaydon
and Moog dated May 17, 2005.

        "Consent"
means any consent, approval, authorization, qualification, waiver, registration
or notification required to be obtained from, filed with or delivered to a
Person in connection with the consummation of the transactions provided for
herein.

        "Contracts"
means all written contracts, leases, licenses, and other agreements (including
any amendments and other modifications thereto), to which any of the Companies
is a party that are in effect on the date of this Agreement.

-2-

        "Cost of
Completion" means the cost to manufacture the remaining unfulfilled
products and provide the remaining services under the applicable Contract
including only the Company's standard material cost, standard direct labor cost
and standard overhead cost for the relevant product.

        "Covenant
Termination Date" has the meaning set forth in Section 7.1(a).

        "Deferred Consent"
has the meaning set forth in Section 3.4.

        "Deferred Item"
has the meaning set forth in Section 3.4.

        "Downward
Adjustment Amount" has the meaning set forth in Section 2.3(d).

        "Employee Plans"
has the meaning set forth in Section 4.11(a).

        "Environment"
means soil, surface waters, groundwater, land, stream sediments, surface or
subsurface strata, and ambient air.

        "Environmental
Law" means all Laws relating to the protection of the Environment or the
generation, production, use, storage, treatment, transportation or disposal of
Hazardous Material.

        "ERISA"
means the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder.

        "Escrow Agent"
means JP Morgan Trust Company, National Association.

        "Exchange Act"
means the Securities Exchange Act of 1934, as amended.

        "Financial
Statements" has the meaning set forth in Section 4.5(a).

        "Final Net Working
Capital" has the meaning set forth in Section 2.3(a).

        "Final Net Working
Capital Statement" has the meaning set forth in Section 2.3(c).

        "GAAP"
means United States generally accepted accounting principles applied on a
consistent basis.

        "General
Enforceability Exceptions" has the meaning set forth in Section
4.4.

        "Governmental
Authority" means any government or political subdivision, whether
federal, state, local or foreign, or any agency, regulatory authority or
instrumentality of any such government or political subdivision, or any federal,
state, local or foreign court or arbitrator.

        "Government
Contract" means any Contract between any Company and a Governmental
Authority.

-3-

        "Government
Subcontract" means any Contract that is a subcontract between any
Company and a third party relating to a Contract between such third party and
any Governmental Authority.

        "Hazardous
Material" means any pollutant, toxic substance, including asbestos and
asbestos-containing materials, hazardous waste, hazardous material, hazardous
substance, contaminant, petroleum, radiation and radioactive materials and
polychlorinated biphyenyls as defined in, listed by or regulated by any
Environmental Law.

        "Indemnification
Notice" has the meaning set forth in Section 7.6(a).

        "Indemnified
Party" has the meaning set forth in Section 7.6(a).

        "Indemnifying
Party" has the meaning set forth in Section 7.6(a).

        "Intellectual
Property" means any and all (i) patents and patent applications; (ii)
trademarks, service marks, trade names, brand names, trade dress, slogans, logos
and Internet domain names; (iii) inventions, discoveries, ideas, processes,
formulae, designs, models, industrial designs, know-how, confidential
information, proprietary information and trade secrets, whether or not patented
or patentable; (iv) copyrights, writing and other copyrightable works and works
in progress, databases, website content and software (other than "off-the-shelf"
software, software embedded in products and machinery and other software
generally available from retail vendors); (v) other intellectual property rights
and foreign equivalent or counterpart rights and forms of protection of a
similar or analogous nature or having similar effect in any jurisdiction
throughout the world; (vi) registrations and application for registration of any
of the foregoing; and (vii) renewals, extensions, continuations, divisionals,
reexaminations or reissues or equivalent or counterpart of any of the foregoing
in any jurisdiction throughout the world.

        "Intercompany
Debt" means all liabilities and obligations owing from any of the
Companies, on the one hand, to Kaydon or any of its Affiliates, on the other
hand (other than trade payables arising from intercompany sales of product in
the ordinary course of business set forth on Schedule 1).

        "Interim Financial
Statements" has the meaning set forth in Section 4.5(a).

        "IRS" has
the meaning set forth in Section 4.11(b).

        "Law"
means any law, statute, code, ordinance, regulation or rule of any Governmental
Authority in effect on or prior to the Closing Date.

        "Lease"
has the meaning set forth in Section 4.8(b).

        "Leased Real
Property" has the meaning set forth in Section 4.8(b).

        "Liens"
means any security interest, mortgage, lien, option, pledge, right of first
refusal, charge, claim, right of way, easement, encroachment or other similar
restriction, including any restriction on use, voting (in the case of the
Shares), transfer, receipt of income or exercise of any other attribute of
ownership.

-4-

        "Losses"
has the meaning set forth in Section 7.2.

        "Material Adverse
Effect" means any change, occurrence or development that has a material
adverse effect on the business, results of operations or financial condition of
the Companies taken as a whole, but excluding any effect (a) resulting from
general economic conditions (whether as a result of acts of terrorism, war
(whether or not declared), armed conflicts or otherwise), (b) affecting
companies in the industry in which they conduct their businesses generally, (c)
resulting from the announcement or performance of this Agreement or the
transactions contemplated hereby, or (d) resulting from any actions required
under this Agreement to obtain any Consent from any Person.

        "Material
Contracts" has the meaning set forth in Section 4.12(a).

        "Net Working
Capital" has the meaning set forth on Exhibit A.

        "Order"
means any order, judgment, ruling, injunction, assessment, award, decree or writ
of any Governmental Authority.

        "Owned Real
Property" has the meaning set forth in Section 4.8(a).

        "Payoff Letters"
means the letters provided by the holders of Company Debt to the Companies in
connection with the repayment of the Company Debt as contemplated hereby.

        "Permits"
means any license, permit, authorization, certificate of authority,
qualification or similar document or authority that has been issued or granted
by any Governmental Authority.

        "Permitted Liens"
means (a) Liens arising in connection with Company Debt, (b) Liens for Taxes of
Governmental Authorities not yet due and payable or which are being contested in
good faith by appropriate proceedings, (c) mechanics', workmens', repairmen's,
warehousemen's, carriers' or other like Liens arising or incurred in the
ordinary course of business or by operation of Law if the underlying obligations
are not delinquent, and (d) with respect to the Real Property, (i) any
conditions that may be shown by a current, accurate survey, (ii) easements,
encroachments, restrictions, rights of way and any other non-monetary title
defects, and (iii) zoning, building and other similar restrictions; provided,
however, that none of the foregoing described in clause (d) do or will
individually or in the aggregate materially impair the continued use, occupancy
or operation of the property to which they relate in the business of any Company
as presently conducted. 

        "Person"
means any individual, sole proprietorship, partnership, corporation, limited
liability company, joint venture, unincorporated society or association, trust
or other legal entity or any Governmental Authority.

        "Power of
Attorney" has the meaning set forth in Section 3.5.

        "Purchase Price"
has the meaning set forth in Section 2.2(a).

-5-

        "Real Property"
means the Owned Real Property together with the Leased Real Property and all
buildings and other structures and improvements located thereon and all rights,
privileges, interests, easements and appurtenances thereunto.

        "Release"
means any releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping of a Hazardous
Material into the Environment.

        "SEC" has
the meaning set forth in Section 6.9.

        "Section 116
Withholding Escrow Agreement" has the meaning set forth in Section
2.2(a).

        "Section 338
Election" has the meaning set forth in Section 6.4(a)(i).

        "Securities Act"
means the Securities Act of 1933, as amended.

        "Sellers"
has the meaning set forth in the preamble.

        "Sellers'
Disallowed Deduction" has the meaning set forth in Section 6.4(e).

        "Seller
Indemnitees" has the meaning set forth in Section 7.2.

        "Sellers'
Knowledge" means the actual knowledge of Brian P. Campbell, John R.
Emling, Peter C. DeChants, Kenneth W. Crawford, John F. Brocci, Jerald Benjamin
and, with respect to a particular Seller, also includes the General Manager (the
Managing Director in the case of Kaydon Limited) and Controller of the Company
being sold by such Seller.

        "Shares"
has the meaning set forth in the recitals.

        "Substantial
Interest" means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or
other voting interests representing at least 50% of the outstanding voting power
of a Person or equity securities or other equity interests representing at least
50% of the outstanding equity securities or equity interests in a Person.

        "Target Net
Working Capital" means $10,373,000.

        "Tax"
means any federal, state, local or foreign net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, value-added,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax of any kind whatsoever imposed by any
Taxing Authority, and including any fine or penalty thereon.

        "Tax Returns"
means all Tax returns, statements and reports.

-6-

        "Taxing Authority"
means any Governmental Authority responsible for the administration or
imposition of any Tax.

        "Threshold
Deductible" has the meaning set forth in Section 7.5(a).

        "Transition
Services Agreement" has the meaning set forth in Section 3.2(h).

        "Unaudited
Financial Statements" has the meaning set forth in Section 4.5(a).

        "Upward Adjustment
Amount" has the meaning set forth in Section 2.3(e).

ARTICLE II

SALE AND PURCHASE

        2.1 
Sale and Purchase of Shares.
At the Closing (a) Kaydon shall sell, assign and transfer to Moog all of the
Electro-Tec Shares, Kaydon Limited shall sell, assign and transfer to Moog U.K.
all of the IDM Shares and Acquisition shall sell, assign and transfer to Moog
Canada all of the Focal Shares, (b) Buyers shall purchase and acquire the Shares
and shall pay and deliver the Purchase Price (as defined in Section 2.2
hereof) to Sellers and take the other actions described in this ARTICLE II,
and (c) the parties shall take the actions described in ARTICLE III.

        2.2
Purchase Price.

               
(a) Subject
to the adjustment set forth in Section 2.3, in full consideration
for the transfer of the Shares, at the Closing, Buyers shall pay to Sellers, an
aggregate amount equal to (i) $72,400,000 minus (ii) $0.00, representing
the aggregate amount of Company Debt which is set forth in detail on 
Schedule 4.25 (such amount, the "Purchase Price"). The
Purchase Price shall be payable to Sellers at the Closing by means of (i) a wire
transfer of $64.9 million in immediately available funds in U.S. Dollars to an
account designated in writing by Sellers at least three Business Days prior to
the Closing Date and (ii) a wire transfer of $7.5 million in immediately
available funds in U.S. Dollars to an account designated in writing by the
Escrow Agent, which amount shall be held pursuant to an escrow agreement in the
form attached hereto as Exhibit F (the "Section 116
Withholding Escrow Agreement"). The Purchase Price shall be allocated
among and paid to the Sellers as set forth on Schedule 2.2(a) and
the parties shall report the purchase and sale of the Shares in their respective
Tax Returns in accordance with such allocation.

               
(b) 
At the Closing, Buyers shall on behalf of the
Companies, cause the Company Debt, if any, which is capable of being prepaid to
be repaid in full to the party or parties entitled thereto pursuant to the
Payoff Letters. 

        2.3 
Purchase Price Adjustment.

               
(a) Final Net Working Capital Statement. Within 60 days
after the Closing Date, Moog shall cause to be prepared and delivered to Kaydon
a final net working capital statement (the "Final Net Working Capital
Statement"), setting forth the combined Net Working Capital of the
Companies as of the close of business on the Closing Date (the "Final 

-7-

Net Working Capital"). The Final Net Working
Capital Statement is to be prepared in accordance with GAAP and the principles
set forth on Exhibit A. The Buyers and the Sellers agree that the
purpose of the purchase price adjustment contemplated by this Section 2.3
is (i) to measure changes between the Target Net Working Capital and the Final
Net Working Capital, and (ii) to account for any Cash in the Companies as of the
Closing Date. The purchase price adjustment is not intended to permit the
introduction of different judgments, accounting methods, policies, practices,
procedures, classifications or estimation methodology for purposes of
determining the asset and liability balances from those used in the preparation
of the Interim Financial Statements except as set forth on Exhibit A.

               
(b) Dispute. Within 60 days following receipt by Kaydon of
the Final Net Working Capital Statement, Kaydon shall deliver written notice to
Moog of any dispute it has with respect to the preparation or content of the
Final Net Working Capital Statement. Such notice must describe in reasonable
detail the specific items contained in the Final Net Working Capital Statement
that Kaydon disputes and the dollar amount of each such dispute and provide
reasonable supporting documentation for each such dispute. If Kaydon does not
notify Moog of a dispute with respect to the Final Net Working Capital Statement
within such 60-day period, such Final Net Working Capital Statement will be
final, conclusive and binding on the parties. In the event of a notification of
a dispute by Kaydon, Moog and Kaydon shall negotiate in good faith to resolve
such dispute. If Moog and Kaydon, notwithstanding such good faith effort, fail
to resolve such dispute within 30 days after Kaydon advises Moog of its
objections, then Moog and Kaydon jointly shall engage the firm of Deloitte &
Touche LLP to resolve such dispute. If such firm is unable to serve, Moog and
Kaydon shall jointly select an arbiter from an accounting firm of national
standing that is not the independent auditor of either Moog or Kaydon (or their
respective Affiliates). If Moog and Kaydon are unable to select such an arbiter
within such time period, the American Arbitration Association shall make such
selection. Deloitte & Touche LLP or any other Person so selected shall be
referred to herein as the "the "Arbitration Firm". The Arbitration
Firm shall only consider those items and amounts set forth on the Final Net
Working Capital Statement as to which Moog and Kaydon have disagreed within the
time period specified above and must resolve the matter in accordance with the
terms and provisions of this Agreement. Upon the agreement of Moog and Kaydon or
the decision of the Arbitration Firm, the Final Net Working Capital Statement
will be final, conclusive and binding on the parties. The fees, expenses and
costs of the Arbitration Firm will be borne equally by Moog and the Sellers.

               
(c) Access. For purposes of complying with the terms set
forth in this Section 2.3, each party shall cooperate with and
make available to the other parties and their respective representatives all
information, records, data and working papers, and shall permit reasonable
access to its facilities and personnel, as may be reasonably required in
connection with the preparation and analysis of the Final Net Working Capital
Statement and the resolution of any disputes thereunder.

               
(d) Downward Adjustment. If the Final Net Working Capital
(as finally determined pursuant to Section 2.3(b)) is less than
the Target Net Working Capital, then the Purchase Price will be adjusted such
that the net effect to the Purchase Price is a decrease in an amount equal to
the shortfall between the Final Net Working Capital and the Target Net Working
Capital (the "Downward Adjustment Amount"). Sellers shall pay or
cause to be paid, 

-8-

by bank wire transfer of immediately available funds, to an
account or accounts designated in writing by Buyers, an amount in cash equal to
the Downward Adjustment Amount. Such payments shall be made to Buyers within
five Business Days from the date on which the Final Net Working Capital is
finally determined pursuant to Section 2.3(b), plus interest on
the Downward Adjustment Amount from the Closing Date to the date of payment
thereof at the per annum rate equal to the 90 day London Interbank Offer Rate on
the Closing Date, as published in the Wall Street Journal.

               
(e) Upward Adjustment. If the Final Net Working Capital
(as finally determined pursuant to Section 2.3(b)) is greater than
the Target Net Working Capital, then the Purchase Price will be adjusted such
that the net effect to the Purchase Price is an increase in an amount equal to
the excess of the Final Net Working Capital over the Target Net Working Capital
(the "Upward Adjustment Amount"). Buyers shall pay or cause to be
paid, by bank wire transfer of immediately available funds, to an account
designated in writing by Sellers, an amount in cash equal to the Upward
Adjustment Amount. Such payments shall be made to Sellers within five Business
Days from the date on which the Final Net Working Capital is finally determined
pursuant to Section 2.3(b), plus interest on the Upward Adjustment
Amount from the Closing Date to the date of payment thereof at the per annum
rate equal to the 90 day London Interbank Offer Rate on the Closing Date, as
published in the Wall Street Journal.

               
(f) Any Upward Adjustment Amount or Downward Adjustment Amount
shall be allocated among the Sellers in the same proportion as the payment of
the Purchase Price and shall be paid to or by each Seller consistent with such
allocation.

ARTICLE III

CLOSING AND DELIVERIES

        3.1
Closing.
The closing of the transactions contemplated hereby (the "Closing")
will take place at the offices of Dykema Gossett PLLC, 2723 S. State St., Ann
Arbor, Michigan, on the date hereof. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing will be
deemed to have been taken and executed simultaneously and no proceedings will be
deemed to have been taken nor documents executed or delivered until all have
been taken, executed and delivered.

        3.2 
Deliveries by Sellers.
At the Closing, Sellers shall deliver or cause to be delivered to Buyers the
following items:

               
(a) The stock certificates representing
the Shares, with duly executed stock powers attached in proper form for
transfer;

               
(b) The Payoff Letters reflecting all outstanding Company Debt
which is capable of being prepaid and any necessary UCC termination statements
or other releases as may be reasonably required to evidence the satisfaction of
such Company Debt;

               
(c) The certificate of incorporation (or foreign equivalent) of
each Company certified as of the most recent practicable date by the relevant
Governmental Authority;

-9-

               
(d) A certificate of the relevant Governmental Authority as to
the good standing of each Company as of the most recent practicable date;

               
(e) A certificate of the Secretary of each Company, given by the
Secretary on behalf of such Company and not in the Secretary's individual
capacity, certifying as to the bylaws (or foreign equivalent) and the incumbency
of each officer of such Company and as to the resolutions of the Board of
Directors (or equivalent) of such Company authorizing this Agreement and the
transactions contemplated hereby;

               
(f) Written resignations from the
directors and officers of each Company who are listed on Schedule 3.2(f),
each effective as of the Closing Date, which resignations shall include a
release substantially in the form attached hereto as Exhibit E;

               
(g) Original corporate record books and stock record books of
each Company;

               
(h) A duly executed counterpart to the Transition Services
Agreement substantially in the form attached hereto as Exhibit B
(the "Transition Services Agreement");

               
(i) A duly executed counterpart to the Section 116 Withholding
Escrow Agreement; and

               
(j) A duly executed Power of Attorney.

        3.3 
Deliveries by Buyers.
At the Closing, Buyers shall deliver to Sellers the following items:

               
(a) The Purchase Price paid to Sellers in accordance with 
Section 2.2(a) and the Company Debt which is capable of being prepaid
paid to the relevant Persons in accordance with Section 2.2(b);

               
(b) A certificate of the Secretary of Moog, given by the
Secretary on behalf of Moog and not in the Secretary's individual capacity,
certifying as to the resolutions of the Board of Directors of Moog authorizing
this Agreement and the transactions contemplated hereby (including authorizing
and directing Moog U.K. and Moog Canada to enter into this Agreement and to
consummate the transactions contemplated hereby);

               
(c) A duly executed counterpart to the Transition Services
Agreement; and

               
(d) A duly executed counterpart to the Section 116 Withholding
Escrow Agreement

        3.4 
Consents to Assignment.
Anything in this Agreement to the contrary notwithstanding, this Agreement shall
not constitute an agreement to assign or transfer any Contract, Permit or any
claim, right or benefit arising thereunder or resulting therefrom, if the sale
of the Shares, without the consent of a Governmental Authority or any other
Person, as the case may be, would constitute a breach thereof. If such consent
(a "Deferred Consent") is not obtained, then (a) the Contract or
Permit to which such Deferred Consent relates (a "Deferred Item")
shall be withheld from sale pursuant to this Agreement without any reduction in
the

-10-

 Purchase Price, (b) from and
after the Closing, Sellers and Buyers will cooperate, in all reasonable respects
(not including the payment of money or other consideration) to obtain such
Deferred Consent as soon as practicable after the Closing and (c) until such
Deferred Consent is obtained, Sellers and Buyers will cooperate, in all
reasonable respects, to provide to Buyers the benefits under the Deferred Item
to which such Deferred Consent relates (with Buyers entitled to all the gains
and responsible for all the losses, Taxes, liabilities and obligations
thereunder) and Sellers shall not transfer any Deferred Item to any other Person
or Governmental Authority. 

        3.5 
Stock Transfer Stamp Tax.
Moog U.K. acknowledges that, on the Closing Date, it is acquiring the IDM
Shares subject to due stamping in respect of transfer taxes under United Kingdom
law. Kaydon Limited shall deliver a Power of Attorney in substantially the form
of Exhibit G (the "Power of Attorney") to secure the
interest of Moog U.K. as the buyer of the IDM Shares, which Power of Attorney
shall expire on the date on which such taxes are paid in accordance with 
Section 6.4(g) and Moog U.K. is entered in the register of members of
IDM as holder of the IDM Shares. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS

        The
Sellers represent and warrant to Buyers as of the date of this Agreement as
follows:

        4.1
Organization and
Standing. Each Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Company is duly qualified to do business,
and in good standing, in each jurisdiction in which the character of the
properties owned or leased by it or in which the conduct of its business
requires it to be so qualified, except where the failure to be so qualified or
to be in good standing would not have a Material Adverse Effect. Each Seller
has full corporate power and authority necessary to carry on the businesses in
which it is engaged, and to own and use the properties owned and used by it.
Sellers have made available to Moog correct and complete copies of the
certificate of incorporation and bylaws (or the foreign equivalent of each of
them) of the Companies (each as amended to date) and the minute books
(containing the records of meetings of the stockholders and the board of
directors or foreign equivalents) and the stock record books of the Companies.
No Company is in default under or in violation of any provision of its
certificate of incorporation or bylaws (or the foreign equivalent of each of
them).

        4.2

Capitalization.
The Shares issued and outstanding as set forth on Schedule 4.2
represent the only issued and outstanding shares of capital stock of the
Companies and are duly authorized, validly issued, fully paid and nonassessable.
Kaydon is the record and beneficial owner of the Electro-Tec Shares and has
good and valid title to the Electro-Tec Shares, free and clear of all Liens.
Kaydon Limited is the record and beneficial owner of the IDM Shares and has good
and valid title to the IDM Shares, free and clear of all Liens. Acquisition is
the record and beneficial owner of the Focal Shares and has good and valid title
to the Focal Shares, free and clear of all Liens. There are no (a) outstanding
securities convertible or exchangeable into shares of capital stock of any
Company; (b) options, warrants, calls, subscriptions or other rights, agreements
or commitments obligating any Company to issue, transfer, sell or register under
the Securities Act or the Exchange Act any shares of its capital stock; or
(c) voting trusts or other 

-11-

agreements or understandings to which any Company is a party
or by which any Company is bound with respect to the voting, transfer or other
disposition of its shares of capital stock.

        4.3 
No Subsidiaries or Investments.
No Company owns, directly or indirectly, any outstanding voting stock,
membership interests, partnership interests or equity of any other corporation,
limited liability company, partnership or other entity, nor does any Company
have the right to acquire by any means, an interest or investment representing
an equity, profit or voting interest entitling such Company to vote for or
appoint the management of any other Person. No Company is subject to any
obligation to make any investment (in the form of loans or capital
contributions) in any Person.

        4.4 
Authority, Validity and Effect; No Conflict; Required
Filings and Consents. 

               
(a) Each Seller has all requisite corporate power and authority
to enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated herein. This Agreement, and each other agreement
executed and delivered by the Sellers pursuant to this Agreement, has been duly
executed and delivered by each Seller pursuant to all necessary authorization
and is the legal, valid and binding obligation of each Seller, enforceable
against each Seller in accordance with its terms, except as limited by
(a) applicable bankruptcy, reorganization, insolvency, moratorium or other
similar Laws affecting the enforcement of creditors' rights generally from time
to time in effect, and (b) the availability of equitable remedies (regardless of
whether enforceability is considered in a proceeding at Law or in equity)
(collectively (a) and (b) together, the "General Enforceability
Exceptions").

               
(b) Other than as set forth in Schedule 4.4(b),
neither the execution and delivery of this Agreement by Sellers, nor the
consummation by Sellers of the transactions contemplated herein, nor compliance
by Sellers with any of the provisions hereof, will (i) conflict with or result
in a breach of any provisions of the certificate of incorporation, bylaws or
similar organizational document of Sellers or the Companies, (ii) constitute or
result in a material breach of any term, condition or provision of, or
constitute a material default under, or give rise to any right of termination,
cancellation or acceleration with respect to any Material Contract or Government
Contract or Government Subcontract, (iii) violate any Order or Law applicable to
the Companies or any of their respective properties or assets or (iv) result in
the imposition of any Lien upon the Shares or any of the assets or properties of
the Companies.

               
(c) Other than as set forth in 
Schedule 4.4(c), no Consent or Permit is required to be obtained by the
Companies or Sellers for the consummation by Sellers of the transactions
contemplated in this Agreement that if not obtained would have a Material
Adverse Effect.

        4.5
Financial
Statements; No Undisclosed Liabilities.

               
(a) Attached to Schedule 4.5(a) are copies of the
following financial statements: (i) the unaudited combined balance sheet of the
Companies as of December 31, 2004, and the related unaudited combined statements
of income and cash flows for the year then ended, (the "Unaudited
Financial Statements"), and (ii) the unaudited combined balance
sheet of the Companies as of July 2, 2005 (the "Balance Sheet Date"),
and the related unaudited 

-12-

combined statements of income and cash flows for the 
six-month period then ended (the "Interim Financial Statements"
and together with the Unaudited Financial Statements, the "Financial
Statements"). Other than as set forth on Schedule 4.5(a)-1,
(x) the books and records of the Companies from which the Unaudited Financial
Statements were prepared fairly present in all material respects the assets,
liabilities and operations of the Companies and (y) the Unaudited Financial
Statements are in conformity with such books and records.

               
(b) Other than as set forth in Schedule 4.5(a)-1 and 4.5(b),
the Financial Statements have been prepared by management in accordance with
GAAP applied on a consistent basis (except for the absence of footnote
disclosure and customary year-end adjustments, none of which will be material)
and fairly present, in all material respects, the financial position and results
of operations of the Companies as of the dates and for the periods indicated.

               
(c) To Sellers' Knowledge, no Company has any liability or
obligation of any nature, whether accrued, absolute, contingent, direct,
indirect, unliquidated or otherwise, and whether due or to become due, which is
not reflected in the Financial Statements or disclosed in the notes thereto,
except those (i) which were incurred in the ordinary course of business or (ii)
which are described in Schedule 4.5(c).

        4.6
Taxes.

               
(a) Each Company has filed all Tax Returns that it was required
to file and has paid all Taxes shown thereon as due and owing. All such Tax
Returns were correct and complete in all material respects.

               
(b) No Company has agreed to any extension or waiver of the
statute of limitations applicable to any Tax Return, or agreed to any extension
of time with respect to an Tax assessment or deficiency, which period (after
giving effect to such extension or waiver) has not yet expired.

               
(c) The Companies have withheld and paid all Taxes required to
have been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.

               
(d) There are no Liens for unpaid Taxes on the assets of the
Companies, except Liens for Taxes of Governmental Authorities not yet due and
payable or being contested in good faith by appropriate proceedings for which
collection or enforcement against the property is stayed and for which
appropriate reserves in accordance with GAAP have been established on the
Financial Statements and the Final Net Working Capital Statement.

               
(e) As of the date of this Agreement, there is no Action
currently pending or, to the Sellers' Knowledge, threatened with respect to any
Company in respect of any Tax.

               
(f) Since the date of acquisition by Kaydon of such Company, no
Company (i) has been a member of an affiliated group of corporations within the
meaning of Section 1504 of the Code (other than a group the common parent of
which is Kaydon), or (ii) has any liability 

-13-

for Income Taxes of any Person (other than such Company)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law).

               
(g) No Company is subject to any agreement with any Seller or any
other Company relating to the sharing, allocation or payment of, or indemnity
for, Taxes relating to its business.

        4.7 
Title; Sufficiency of Assets.

               
(a) Except as set forth on Schedule 4.7(a), the
Companies have good and valid title to all of the properties and assets,
tangible or intangible, owned by the Companies, or a valid leasehold interest in
such assets leased by the Companies, free and clear of all Liens except for
Permitted Liens, excluding properties and assets sold or disposed of by the
Companies in the ordinary course of business since the Balance Sheet Date. 

               
(b) Except for the "Kaydon" name, as addressed in the Transition
Services Agreement, and as set forth on Schedule 4.7(b), the
properties and assets, tangible and intangible, that are owned, leased or
licensed by the Companies constitute, as of the date hereof, all of the
properties and assets, tangible and intangible, used or held for use in the
conduct of the business of the Companies as currently conducted by the
Companies. The buildings, facilities, machinery, equipment, furniture, leasehold
and other improvements, fixtures, vehicles, structures, and other tangible
property material to the business or operations of the Companies (the 
"Tangible Property") (i) are in reasonable working order (normal wear
and tear excepted) and (ii) are suitable for their current use and are currently
in use by the Companies in the operation of their respective businesses in the
ordinary course.

        4.8
Real Property.

               
(a) Schedule 4.8(a) contains a complete and
accurate description of all real property which is owned by the Companies (the
"Owned Real Property"). The Companies have marketable title to the
Owned Real Property free and clear of any Liens, except for Permitted Liens.

               
(b) Each real estate lease, sublease or other occupancy agreement
(each, a "Lease") with respect to Real Property leased by any
Company (the "Leased Real Property") is listed in Schedule
4.8(b) and each Lease is in full force and effect and, other than as set
forth on Schedule 4.8(b), all rent and other material sums and
charges payable thereunder are current and no Company, or to Sellers' Knowledge,
any other party to the Lease, is in breach or default in any material respect
with respect thereto. Each Company enjoys peaceful and undisturbed possession of
the Leased Real Property.

               
(c) The Real Property constitutes all real property interests
used in the conduct of the business and operations of the Companies as now
conducted.

               
(d) No Company has received written notice of any default or
breach by the Companies under any covenants, conditions, restrictions,
rights-of-way or easements affecting the Real Property, and to the Sellers'
Knowledge, no such default or breach now exists.

-14-

               
(e) No portion of the Real Property or interest therein,
including access thereto or any easement benefiting such property, is subject to
temporary requisition of use by any Governmental Authority or has been
condemned, or taken in any proceeding similar to a condemnation proceeding, nor,
to Sellers' Knowledge, is there now pending any condemnation, expropriation,
requisition or similar proceeding against the Real Property or any portion
thereof. 

               
(f) No person has any right or option to acquire the Real
Property, or any part thereof, or any interest therein, from the Companies. No
Company has entered into any agreement with any person granting the right to
use, occupy or possess the Real Property.

               
(g) There are no existing or, to the Knowledge of the Sellers,
threatened, general or special assessments affecting the Companies' interest in
the Real Property or any portion thereof. 

        4.9
Compliance with Laws.
Other than with respect to compliance with Tax Laws, which is addressed in 
Section 4.6, Laws governing Employee Plans, which is addressed in 
Section 4.11, Environmental Laws, which is addressed in Section
4.18, Permits, which is addressed in Section 4.10,
Governmental Contracts, which is addressed in Section 4.13 and
employment Laws, which is addressed in Section 4.17, each Company:

               
(a) is in material compliance with all Laws and Orders applicable
to its business, assets, properties or employees conducting its business; and

               
(b) has received no written notification or any other written
communication from any Governmental Authority within the past two years (i)
asserting that such Company is not in compliance with any Law, or (ii)
threatening to suspend, cancel or revoke any Permit owned or held by such
Company.

        4.10
Permits.
Schedule 4.10 contains a complete list, as of the date of this
Agreement, of all material Permits (including under Environmental Laws) issued
to the Companies that are currently used by the Companies in connection with
their respective businesses, all of which Permits are in full force and effect.
No Company is in material violation of or material default under any such
Permit. The Permits listed on Schedule 4.10 constitute all
material Permits necessary for the conduct of the business of the Companies as
currently conducted by the Companies.

        4.11 
Employee Benefit Plans.

               
(a) Schedule 4.11(a) sets forth a complete list of
(i) all "employee benefit plans," as defined in Section 3(3) of ERISA and (ii)
all other severance pay, salary continuation, bonus, incentive, stock option,
welfare, insurance, fringe benefit, retirement, pension, profit sharing or
deferred compensation plans, contracts, programs or funds to which any Company
makes or is required to make payments, transfers, or contributions in respect of
the employees of such Company (all of the above being hereinafter individually
or collectively referred to as "Employee Plan" or "Employee
Plans," respectively).

               
(b) Sellers have delivered or have caused to be delivered to Moog
true and complete copies of (i) the Employee Plans (including related trust
agreements, custodial 

-15-

agreements, insurance contracts, investment contracts and
other funding arrangements, if any, and adoption agreements, if any), (ii) any
amendments to the Employee Plans, (iii) with respect to the Electro-Tec
Corporation Employee Retirement Benefit Plan or any other Employee Plan that is
intended to be "qualified" within the meaning of Section 401(a) of the Code, the
latest determination letter of the Internal Revenue Service relating to that
Employee Plan; (iv) summary plan descriptions and summaries of material
modifications that have been provided to Company Employees; and (v) the three
most recent annual reports on Form 5500 prepared in connection with each
Employee Plan (if any such report was required), including all attachments
(including without limitation the audited financial statements, if any such
financial statements were required).

               
(c) Each Employee Plan has been maintained, operated, funded and
administered in substantial compliance with its terms and any related documents
or agreements and in substantial compliance with all applicable Laws.

               
(d) Each Employee Plan intended to be qualified under Section
401(a) of the Code has heretofore been determined by the IRS to be so qualified,
and each trust created thereunder has heretofore been determined by the IRS to
be exempt from tax under the provisions of Section 501(a) of the Code. Those
determinations have not been revoked. There are no pending proceedings or, to
Sellers' Knowledge, threatened proceedings in which the 'qualified' status of
any Employee Plan is at issue and in which revocation of the IRS determination
letter has been threatened. Each such Employee Plan has not been amended since
the receipt of the most recent IRS determination letter, in a manner that would
adversely affect the 'qualified' status of the Plan.

               
(e) The term "Foreign Plan" means any Employee Plan
that is maintained outside of the United States. Each Foreign Plan substantially
complies with all applicable Law (including, without limitation, applicable Law
regarding the form, funding and operation of the Foreign Plan) in all material
respects. The Financial Statements reflect the Foreign Plan liabilities and
accruals for contributions required to be paid to the Foreign Plans, in
accordance with GAAP.

               
(f) Except as set forth on Schedule 4.11(f), the
Companies have no unfunded liabilities in connection with any pension,
post-retirement, defined benefit, deferred compensation or similar plan. All
contributions, premium payments and other payments due from the Companies to or
under such plans have been paid in a timely manner. No tax or penalty has been
incurred by any of the Companies with respect to any Employee Plan.

               
(g) There is no Action by any Governmental Authority pending, or
to the Sellers' Knowledge, threatened, with respect to any Employee Plan, its
related assets or trusts, or any fiduciary, administrator or sponsor of such
Employee Plan. 

               
(h) To Sellers' Knowledge, neither any Employee Plan nor any
other Person has engaged in a "prohibited transaction," as defined in ERISA
Section 406 or Code Section 4975, with respect to such Employee Plan, for which
no individual or class exemption exists.

-16-

               
(i) Except as disclosed on Schedule 4.11(i), none
of the Companies, nor any trade or business, whether or not incorporated, that
is deemed to be under common control or affiliated with any of the Sellers
within the meaning of ERISA Section 4001 or Code Sections 414(b), (c), (m) or
(o), has ever sponsored or had any obligation with respect to, and no Employee
Plan is currently, (i) a multi-employer plan (within the meaning of ERISA
Section 3(37), (ii) a defined benefit pension plan that is subject to Title IV
of ERISA or (iii) an "employee welfare benefit plan," as defined in ERISA
Section 3(1), that provides benefits to or on behalf of any person following
retirement or other termination of employment (except to the extent required by
Code Section 4980B).

               
(j) There is no Contract, plan or arrangement covering any
employee or former employee of any of the Companies that, individually or in the
aggregate, could give rise to the payment by any of the Companies, directly or
indirectly, of any amount that would not be deductible pursuant to the terms of
Code Section 280G. There has been no disallowance of a deduction under Code
Section 162(m) for employee remuneration of any amount paid or payable by any of
the Companies under any contract or Employee Plan.

        4.12
Material Contracts.

               
(a) Set forth in Schedule 4.12(a) is a list of the
following Contracts to which any Company is a party (other than Government
Contracts and Government Subcontracts, which are addressed in Section 4.13)
(the "Material Contracts"):

          (i)
  Each Contract that requires any Company to make payments, or entitles
  any Company to receipts, equal to more than $100,000 per annum.

  
          
  (ii) Each Contract limiting the right of any Company to engage in or
  compete with any Person in any business or in any geographical area or permits
  any Company to limit the freedom of any Person to compete in a business with
  such Company or in any geographic area;

  
          
  (iii) Each commission agreement, sales representative agreement,
  distributor agreement, consulting agreement or similar Contract;

  
           
  (iv) Each agreement under which any Company has conferred a power of
  attorney; 

  
          
  (v) Any refund, rebate, price adjustment, surcharge, sales promotion,
  value guarantee or similar Contract; 

  
           
  (vi) Indemnification agreements with any director, officer or other
  third party;

  
          
  (vii) Each agreement for the acquisition or disposition by the
  Companies of any operating business, whether by merger, stock purchase, asset
  purchase or otherwise;

  -17-

  
  
        
  (viii) Each agreement establishing a partnership, joint venture or
  other similar agreement or arrangement; and

  
          
  (ix) Each Contract containing a provision providing for punitive
  damages, or for lost profits, consequential or exemplary damages.

               
(b) Each of the Material Contracts is valid and binding on the
Company which is a party thereto and, to the Sellers' Knowledge, each other
party thereto, subject only to the General Enforceability Exceptions. Each of
the Material Contracts is, to Sellers' Knowledge, in full force and effect and
neither the Company which is a party to the Material Contract nor, to the
Sellers' Knowledge, any other party thereto, is in material default thereunder
or in material breach thereof. The Companies have delivered or made available
complete and accurate copies of the Material Contracts (including all
amendments, modifications and applicable waivers thereto) to Moog.

        4.13
Government
Contracts. 

               
(a) Schedule 4.13(a) lists each Government Contract
and Government Subcontract. Except as set forth in Schedule 4.13(a),
(i) each Company has complied in all material respects with all terms and
conditions of all such Government Contracts and Government Subcontracts,
including all clauses, provisions and requirements incorporated expressly by
reference therein, (ii) no Governmental Authority nor any prime contractor,
subcontractor or other Person has notified Sellers or any Company in writing
that a Company has breached or violated any Law, certification, representation,
clause, provision or requirement pertaining to any such Government Contract or
Government Subcontract in any material respect, (iii) no Company has received
any written notice of termination for convenience, notice of termination for
default, cure notice or show cause notice pertaining to any such Government
Contract or Government Subcontract, (iv) other than in the ordinary course of
business, no cost incurred by the Companies pertaining to any such Government
Contract or Government Subcontract has been questioned or challenged, is the
subject of any audit or investigation or has been disallowed by any Governmental
Authority and (v) no payments due to the Companies pertaining to any such
Government Contracts or Government Subcontracts have been withheld or set off,
nor has any written claim been made to withhold or set off money, and the
Companies are entitled to all payments received to date with respect thereto.

               
(b) To Sellers' Knowledge, except as set forth on Schedule
4.13(b, (i) neither any Company nor any director, officer, employee,
consultant or other representative of any Company is or has been under
administrative, civil or criminal investigation, indictment or information by
any Governmental Authority or any audit or investigation of any Company with
respect to any alleged act or omission arising under or relating to any
Government Contract or Government Subcontract and (ii) no Company has made
voluntary disclosure with respect to any alleged irregularity, mischarging,
misstatement or omission arising under or related to any Government Contract or
Government Subcontract that has led or would be reasonably likely to lead, to
any of the consequences set forth in clauses (i) above or any other damage,
penalty assessment, recoupment or payment or disallowance of cost.

-18-

               
(c) There are no material outstanding claims against any Company,
either by any Governmental Authority or by any prime contractor, subcontractor,
vendor or other Person, arising under or relating to any Government Contract or
Government Subcontract.

               
(d) Neither any Company nor any director, officer or employee of
any Company has been suspended, proposed for disbarment or debarred from
participation in the award of any Government Contract, offer or bid with the
United States government or any other Governmental Authority (excluding for this
purpose ineligibility to bid on certain Government Contracts due to generally
applicable bidding requirements). 

               
(e) To Sellers' Knowledge, no Government Contract or Government
Subcontract contains any provisions under which any Governmental Authority or
any other Person is given unlimited rights in any Intellectual Property.

        4.14 
Legal Proceedings.
As of the date of this Agreement, except as set forth in Schedule 4.14,
there are no Actions pending, or, to the Sellers' Knowledge, threatened, against
any Company or to which any Company is a party or relating to any of the assets
or properties of any Company with an amount in controversy in excess of
$100,000. No Company or any of the assets or properties of any Company is
subject to any Order.

        4.15
Intellectual
Property. 

               
(a) Schedule 4.15(a) identifies all of the
Intellectual Property which is owned by and currently used in the business of
the Companies including, but not limited to, the following: (i) each patent,
trademark registration, or copyright registration that has been issued to, and
that is currently pending and unexpired, for any Intellectual Property; (ii)
each pending patent application or application for registration that any Company
has made for any of its Intellectual Property; and (iii) each registered or
unregistered trademark, service mark, trade name, corporate name or Internet
domain name. Schedule 4.15(a) also identifies all of the
Intellectual Property used by the Company pursuant to a license or sublicense.
Except for the "Kaydon" name and as addressed in the Transition Services
Agreement, each Company owns free and clear of all Liens, or has the right to
use pursuant to a legal, valid, binding and enforceable license, sublicense,
agreement or permission, all Intellectual Property necessary for the operation
of its business as presently conducted. The Companies have delivered to Moog
correct and complete copies of all such patents, registrations, applications,
licenses and agreements (as amended to date).

               
(b) Except with respect to Government Contracts and Government
Subcontracts (which are addressed in Section 4.13), with respect
to each item of Intellectual Property owned by the Companies (i) no Company has
granted any license or other right (including under any Government Contract or
Government Subcontract) that does or that will, subsequent to the Closing Date,
permit or enable anyone other than such Company to use any such Intellectual
Property, (ii) no Action is pending or, to the Knowledge of the Sellers,
threatened which challenges the legality, validity, enforceability, use or
ownership of the item and (iii) other than routine indemnities given to
distributors, sales representatives, dealers and customers, no Company has any
current obligations to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to the item.

-19-

               
(c) No Company has received any notice of a claim and, to the
Sellers' Knowledge, there is no threatened claim, against any Company asserting
that any of the Intellectual Property owned by the Companies infringes or
violates the rights of any Person. No Company has within the last two years
given any notice to any Person asserting infringement by such Person of any of
the Intellectual Property owned by the Companies. 

               
(d) The Companies have taken reasonable commercial actions to
maintain and protect each item of Intellectual Property owned by them.

               
(e) With respect to each item of Intellectual Property which is
used by any Company pursuant to a license, sublicense or other agreement: (i)
the license, sublicense or other agreement covering the item is valid and
binding on the Company and, to Sellers' Knowledge, the other party thereto and
(ii) no Company, nor, to Sellers' Knowledge, any other party to the license,
sublicense or other agreement is in material breach or default thereof.

        4.16
Insurance.
There are no outstanding claims by the Companies under any insurance
policies covering the Companies and their respective businesses except for
routine claims under worker's compensation and Employee Plans. There is no claim
pending under any policy as to which coverage has been denied or disputed in
writing by the underwriter of such policy.

        4.17

Personnel. 

               
(a) No (i) Company is a party to or subject to any collective
bargaining agreements, shop floor agreement or other agreement or understanding
with a labor union or labor organization and (ii) labor union or other
collective bargaining unit represents any Company Employee. To the Sellers'
Knowledge, there is no union campaign being conducted to solicit cards from
employees to authorize a union to request a National Labor Relations Board
certifications election with respect to the Company Employees.

               
(b) There are no unfair labor practice charges, complaints or
Actions involving employees or former employees of the Companies pending against
any Company before the National Labor Relations Board or similar foreign entity;
there is no labor strike, lockout, organized slowdown, organized work stoppage,
material dispute or other material labor controversy in effect or, to the
Sellers' Knowledge, threatened against any of the Companies; and there has been
no charge of discrimination filed against or, to Sellers' Knowledge, threatened
against any Company with the Equal Employment Opportunity Commission or similar
Governmental Authority. No Company has experienced a labor strike, labor
disturbance, slowdown, work stoppage or other labor dispute at any time during
the three years immediately preceding the date of this Agreement.

               
(c) Schedule 4.17(c) sets forth the name, job
title, and total compensation (including bonuses, commissions or incentive
compensation) for each of the last two calendar years of each employee of the
Companies (the "Company Employees"). Except as set forth on 
Schedule 4.17(c), none of the Company Employees have notified any
Company or been notified by any Company that he or she will cancel, has canceled
or otherwise will terminate such employee's relationship with the Companies.

-20-

               
(d) Each Company has paid in full to each Company Employee all
wages, salaries, commissions, bonuses, benefits, and other compensation due to
such employees or otherwise arising under any policy, practice, agreement, plan,
program, statute or other Law. Other than as set forth in Schedule 4.17(d),
no Company is liable for any severance pay or other payments to any employee or
former employee arising from the termination of employment, and Buyers will not
have any liability under any benefit or severance policy, practice, agreement,
plan, or program which exists or arises as a result of or in connection with the
transactions contemplated by this Agreement or as a result of the termination by
any Company of any employee on or before the Closing Date.

               
(e) No Company Employee is on or subject to any layoff,
short-term or long-term disability, workers compensation claim or other leave of
absence except as set forth on Schedule 4.17(e).

               
(f) Except as set forth on Schedule 4.17(f) or as
except as otherwise provided by Law, each of the Company Employees is an
employee at will. 

               
(g) Each Company with respect to its business (i) is in material
compliance with all applicable Laws respecting employment (including under the
Occupational Safety and Health Administration), employment practices, labor,
terms and conditions of employment and wages and hours, in each case, with
respect to the Company Employees, (ii) has withheld all amounts required by Law
or by agreement to be withheld from wages, salaries and other payments to the
Company Employees and (iii) is not liable for any arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing, and no Company
has received within the past three years any written notice of failure to comply
with any of these requirements that have not been rectified.

               
(h) With respect to each Company Employee who works in the United
States who was hired by a Company on and after November 6, 1986, the Company
which employs such employee has on file a valid Form I-9 for each such employee.
All Company Employees who work in the United States are (i) United States
citizens or lawful permanent residents of the United States, (ii) aliens whose
right to work in the United States is unrestricted, (iii) aliens who have valid,
unexpired work authorization issued by the Attorney General of the United States
(Immigration and Naturalization Service) or (iv) aliens who have been
continually employed by the Company which employs them since November 6, 1986.
With respect to such employees, no Company has been the subject of an
immigration compliance or employment visit from, nor has any Company been
assessed any fine or penalty by, or been the subject of any order or directive
of, the United States Department of Labor or the Attorney General of the United
States (Immigration and Naturalization Service).

               
(i) Schedule 4.17(i) states the number of Company
Employees in the United States terminated by Electro-Tec in the three months
prior to the date of this Agreement and contains a complete and accurate list of
the following information for each such Company Employee who has been terminated
or laid off (other than for cause), or whose hours of work have been reduced by
more than fifty percent (50%) by Electro-Tec, in the six (6) months prior to the
date of this Agreement: (i) the date of such termination, layoff or reduction in
hours, 

-21-

(ii) the reason for such termination, layoff or reduction in
hours and (iii) the location to which the employee was assigned. 

        4.18 
Environmental Matters.
Except as set forth on Schedule 4.18:

               
(a) Except as would not result in a material liability to any
Company, each Company and the operations of its business is in compliance with
all Environmental Laws; 

               
(b) No Company has generated, manufactured, refined, transported,
treated, stored, handled, disposed, transferred, produced or processed any
Hazardous Materials, except in material compliance with all applicable
Environmental Laws;

               
(c) No Company has received any written notice or inquiry from
any Governmental Authority, operator, tenant, subtenant, licensee or occupant of
the Real Property with regard to any release of any Hazardous Materials by any
Company at or in the vicinity of any Real Property in violation of Environmental
Laws;

               
(d) To Sellers' Knowledge, no underground storage tanks,
polychlorinated byphenyls, or friable asbestos materials now exist on the Real
Property; 

               
(e) Sellers have provided to Moog complete and accurate copies of
"Phase 1" and "Phase II" environmental site assessments of the environmental
conditions of the Real Property and the operations thereat, to the extent in the
possession of Sellers;

               
(f) There are no Contracts, Orders or Permit conditions, or other
orders or directives of any Governmental Authority relating to the past, present
or future ownership, use, operation, sale, transfer or conveyance of the
Companies' assets or the Real Property that require any change in the present
condition of such assets or the Real Property or any work, repair, construction,
containment, clean-up, investigation, study, removal or other remedial action or
capital expenditure in order for such assets or the Real Property to be in
compliance with any applicable Environmental Law or Permit under any
Environmental Law;

               
(g) There are no notices, Liens or Actions, pending or, to
Sellers' Knowledge, threatened, that seek money damages, injunctive relief,
remedial action or any other remedy, that arise out of, relate to, or result
from, (i) any Environmental Law (including, but not limited to, a claim that any
Company is or may be a potentially responsible person or otherwise liable in
connection with any Release or threat of Release of any Hazardous Material at
any place at any time), (ii) any non-compliance or alleged non-compliance with
any Permit under any Environmental Law or (iii) human exposure to any Hazardous
Material, noise, vibration or nuisance of whatever kind arising out of the
condition of the Companies' assets or the Real Property or the ownership, use,
operation, sale, transfer or conveyance thereof.

The only representations and warranties given by the Sellers
in respect of Environmental Laws are those contained in this Section 4.18
and no other representation or warranty in this Agreement will be deemed,
directly or indirectly, to be a representation or warranty in any matter
relating to Environmental Laws except for Section 4.10 regarding
Permits under Environmental Laws.

-22-

        4.19 
Conduct of Business in Ordinary Course.
Except for the transactions contemplated hereby or as set forth on 
Schedule 4.19, and except for distributions of Cash, since the Balance
Sheet Date each Company has conducted its respective businesses and
operations in the ordinary course of business consistent with past practice,
including, without limitation, as to the collection of receivables and payment
of accounts payable. Since the Balance Sheet Date,
there has been no Material Adverse Effect. Without limiting the foregoing and
except as set forth on Schedule 4.19, since the Balance Sheet
Date, there has not been, with respect to any Company, any:

               
(a) increase in the compensation of or granting of bonuses
payable or to become payable by such Company to any officer or employee of such
Company's business, other than annual increases or bonuses consistent with such
Company's past practices;

               
(b) sale or transfer by such Company of any tangible or
intangible asset of such Company's business or any cancellation of any claim in
connection with such business, except in the ordinary course of business;

               
(c) change in accounting methods or principles of such Company's
business;

               
(d) damage, destruction or loss (whether or not covered by
insurance) to its assets in excess of $25,000;

               
(e) dividends declared or paid or any distributions made on its
capital stock or any shares of its capital stock redeemed or purchased (other
than cash dividends and distributions); or

               
(f) acquisition of all or any part of the assets, properties,
capital stock or business of any other Person, whether by merger, consolidation,
stock purchase, asset purchase or otherwise.

        4.20 
Suppliers and Customers.
No supplier or customer of the Companies' business has provided written notice
to any Company that such supplier or customer intends to terminate its
relationship with such Company, and to Sellers' Knowledge, (i) no such supplier
or customer intends to terminate such relationship and (ii) there is no material
dispute with any such supplier or customer. 

        4.21 
Absence of Certain Commercial Practices.
No Company has in violation of any Law: (a) given or agreed to give any gift or
similar benefit of more than nominal value to any customer, supplier,
governmental employee or official or any other Person who is or may be in a
position to help or hinder such Company or assist in connection with any
proposed transaction, which gift or similar benefit, if not given in the past,
might have adversely affected the business or prospects of such Company, or
which, if not continued in the future, might adversely affect the business or
prospects of such Company, or (b) used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to governmental officials or others
or established or maintained any unlawful or unrecorded funds. No Company has
accepted or received any unlawful contributions, payments, gifts, entertainment
or expenditures.

-23-

        4.22 
Warranty; Product Liability.

               
(a) Schedule 4.22(a) contains a true and complete
list of any express warranties given by any Company covering or relating to any
of its products or services, including those related to the warranty
obligations. 

               
(b) Schedule 4.22(b) sets forth a true and complete
list of (i) all products manufactured, marketed or sold by the Companies that
have been recalled or withdrawn (whether voluntarily or otherwise) at any time
during the past five (5) years (for purposes of this Section 4.22, a product
shall have been recalled or withdrawn if all or a substantial number of products
in a product line were recalled or withdrawn) and (ii) all Actions (whether
completed or pending) at any time during the past five (5) years seeking the
recall, withdrawal, suspension or seizure of any product sold by the Companies.

               
(c) Except as provided in any of the standard product warranties
described in Schedule 4.22(a), no Company has sold any products or
services which are subject to an extended warranty.

               
(d) To Sellers' Knowledge, there are no statements, citations or
decisions by any Governmental Authority or regulatory body or any product
testing laboratory stating that any product of any Company is unsafe or fails to
meet any standards, whether mandatory or voluntary, promulgated by such
Governmental Authority or regulatory body or testing laboratory, nor have there
been any mandatory or voluntary recalls, field fix or retrofit of any product of
any Company. 

        4.23 
No Brokers. No
broker, finder or similar agent has been employed by or on behalf of Sellers or
the Companies, and no Person with which Sellers or the Companies has had any
dealings or communications of any kind is entitled to any brokerage commission,
finder's fee or any similar compensation, in connection with this Agreement or
the transactions contemplated hereby.

        4.24 
Transactions with Stockholders, Officers, Directors,
Etc. Except as disclosed in Schedule
4.24, and other than accrued but unpaid salary due from the end of the
last pay period, there are (a) no amounts owing from any Company to any (i)
Affiliate of any Company, (ii) present or former stockholder, officer, director,
member, partner or employee of any Company or any Affiliate of any Company or
(iii) limited liability company, corporation, partnership, trust or other entity
in which any Person described in clause (ii) has a Substantial Interest as a
member, shareholder, partner, trustee or otherwise, (b) no amounts owing from
any such Person to any Company, nor have there been since the Balance Sheet
Date, or are there currently pending any transactions between any Company and
any such Person except as set forth on Schedule 1 and (c) except
for the "Kaydon" name and as addressed in the Transition Services Agreement, no
assets or properties used in the business of any Company which are owned, leased
or licensed by any Affiliate of any Company.

        4.25 
Company Debt. The
total amount of the Company Debt, including the amount of any penalties or other
expenses which will be incurred in connection with the prepayment of any Company
Debt on the date hereof, is set forth on Schedule 4.25. 

-24-

        4.26 
Loss Contracts.
Except as set forth in Schedule 4.26, no Company is a party to any
Contract where, to Sellers' Knowledge, the Cost of Completion of such Contract
(net of reserves set aside in the Interim Financial Statements for such type of
losses) would be reasonably expected to significantly exceed the balance of
monies to be paid by a customer or other Person to such Company under such
Contract.

        4.27 
Export Control Regulations.
Schedule 4.27 contains a true and complete list of all (a) active,
pending and proposed export licenses issued by the United States Government for
the products exported by the Companies and (b) voluntary written disclosures
made that are currently open for submission to the United States Government with
respect to import and export matters.

        4.28 
Banks, Brokers and Proxies.
Schedule 4.28 sets forth:

               
(a) the name of each bank, trust company, securities or other
broker or other financial institution with which any Company has an account,
credit line or safe deposit box or vault;

               
(b) the name of each Person authorized by any Company to draw
thereon or to have access to any safe deposit box or vault;

               
(c) the purpose of each such account, safe deposit box or vault;
and

               
(d) the names of all Persons authorized by proxy, powers of
attorney or other instruments to act on behalf of any Company in matters
concerning its business or affairs.

All such accounts, credit lines, safe deposit boxes and
vaults are maintained by the applicable Company for normal business purposes,
and no such proxies, powers of attorney or other like instruments are
irrevocable.

        4.29 
Accounts Payable and Notes Payable; Accruals.
The accounts payable, the notes payable and the accruals reflected in the
Financial Statements have arisen in bona fide arm's-length transactions in the
ordinary course of business, except for pricing and payment terms on
intercompany sales. 

        4.30 
Accounts Receivable.
All accounts receivable of the Companies reflected in the Financial Statements
arose from bona fide transactions relating to the sale of goods or the provision
of services in the ordinary course of business. No right of offset has been
asserted in writing against any such accounts receivable and no agreement for
deduction or discount has been made with respect to any such accounts
receivable.

        4.31 
Inventory. Except
as set forth on Schedule 4.31, all inventory of the Companies
reflected in the Interim Financial Statements (i) is located at the Real
Property, (ii) is in good and merchantable condition and (iii) consists only of
items of a quality or quantity commercially usable and saleable in the ordinary
course of business, except for excess and obsolete items and items of below
standard quality, all of which have been written off or written down to net
realizable value in the Interim Financial Statements (based on the Companies'
accounting policies and procedures applied on a consistent basis with those used
in the preparation of the

-25-

 Financial Statements). Except
as set forth on Schedule 4.31, none of the inventory of the
Companies is on consignment. The inventory as reflected in the Financial
Statements has been valued at the lower of cost basis or fair market value, net
of reserves, in a manner consistent with past practices and procedures
(including, but not limited to, the method of computing overhead and other
indirect expenses to be applied to inventory).

        4.32 
Disclaimer of other Representations and Warranties.
Except as expressly set forth in this Article IV, the Sellers make
no representation or warranty, express or implied, at law or in equity, in
respect of the Companies or any of their respective assets, liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYERS

        
Buyers represent and warrant to Sellers as follows:

        5.1 
Investment Intent.
The Shares are being purchased for the account of Buyers and not with the view
to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act and the rules and regulations
promulgated thereunder. Buyers acknowledge that each is informed as to the risks
of the transactions contemplated hereby and of ownership of the Shares; 
provided, however, that such representation shall not affect the
liability of Sellers for any breach of their representations and warranties
contained in this Agreement. Buyers acknowledge that the Shares have not been
registered under the Securities Act or the Exchange Act or any state or foreign
securities laws and that the Shares may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of unless such sale, transfer,
offer, pledge, hypothecation or other disposition is pursuant to the terms of an
effective registration statement under the Securities Act and are registered
under any applicable state or foreign securities laws or pursuant to an
exemption from registration under the Securities Act or the Exchange Act and any
applicable state or foreign securities laws.

        5.2 
Organization and Standing.
Each Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each Buyer is duly
qualified to do business, and in good standing, in each jurisdiction in which
the character of the properties owned or leased by it or in which the conduct of
its business requires it to be so qualified, except where the failure to be so
qualified or to be in good standing would not have a material adverse effect on
such Buyer.

        5.3 
Authorization, Validity and Effect.
Each Buyer has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement and to consummate the
transactions contemplated herein. This Agreement, and each other agreement
executed and delivered by the Buyers pursuant to this Agreement has been duly
executed and delivered by each Buyer pursuant to all necessary authorization and
is the legal, valid and binding obligation of each Buyer, enforceable against
each Buyer in accordance with its terms, except as limited by the General
Enforceability Exceptions. 

-26-

        5.4 
No Conflict; Required Filings and Consents.

               
(a) Neither the execution and delivery of this Agreement by
Buyers, nor the consummation by Buyers of the transactions contemplated herein,
nor compliance by Buyers with any of the provisions hereof, will (i) conflict
with or result in a breach of any provisions of the articles or certificate of
incorporation or by-laws or equivalent organizational documents of Buyers, (ii)
constitute or result in the breach of any term, condition or provision of, or
constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation or
imposition of any Lien upon, any property or assets of Buyers or, pursuant to
any note, bond, mortgage, indenture, license, agreement, lease or other
instrument or obligation to which it is a party or by which any Buyer or any of
its properties or assets may be subject, and that would, in any such event, have
a material adverse effect on such Buyer, or (iii) violate any Order or Law
applicable to any Buyer or any of its properties or assets.

               
(b) No Consent is necessary for the
consummation by Buyers of the transactions contemplated in this Agreement.

        5.5 
No Reliance. The
purchase of the Shares by Buyers and the consummation of the transactions
contemplated hereunder by Buyers are not done in reliance upon any warranty or
representation by, or information from, Sellers or any Company of any sort, oral
or written, except the representations and warranties specifically set forth in
this Agreement (including the Schedules and Exhibits hereto) and in any
certificates required to be delivered to Buyers by Sellers hereunder and
thereunder. 

        5.6 
Litigation. There
are no Actions pending or, to Buyers' knowledge, overtly threatened against or
affecting any Buyer at law or in equity, or before or by any Governmental
Authority that would adversely affect such Buyer's performance under this
Agreement or the consummation of the transactions contemplated hereby.

        5.7 
No Brokers. No
broker, finder or similar agent has been employed by or on behalf of Buyers, and
no Person with which Buyers have had any dealings or communications of any kind
is entitled to any brokerage commission, finder's fee or any similar
compensation, in connection with this Agreement or the transactions contemplated
hereby.

ARTICLE VI

COVENANTS AND AGREEMENTS

        6.1
Publicity.
Kaydon and Moog will mutually agree on a press release announcing the
transactions contemplated by this Agreement. After such press release is issued,
Kaydon and Moog will be entitled to issue any further press releases or make any
such other public announcements without obtaining such prior approval of the
other Party.

        6.2 
Records. With
respect to the financial books and records and minute books of the Companies
relating to matters on or prior to the Closing Date: (a) for a period of five
years after the Closing Date, Buyers shall not cause or permit their destruction
or disposal without first offering to surrender them to Kaydon, and (b) where
there is a legitimate purpose, including, without limitation, an audit of any
Seller by the IRS or any other Taxing Authority, Buyers shall allow Kaydon and
its representatives reasonable access to such books and records during regular

-27-

business hours. With respect to the
financial books and records of the Sellers relating to Company matters on or
prior to the Closing Date: (a) for a period of five years after the Closing
Date, Sellers shall not cause or permit their destruction or disposal without
first offering to surrender them to Moog, and (b) where there is a legitimate
purpose, including, without limitation, an audit of any Buyer or any Company by
the IRS or any other Taxing Authority, Kaydon shall allow Moog and its
representatives reasonable access to such books and records during regular
business hours. Notwithstanding anything in this Agreement to the contrary, upon
Closing, all books and records located at the Companies' facilities shall be the
property of Buyers.

        6.3 
Employee Matters. 
Following the Closing, Buyers will use their reasonable
best efforts to retain all Company Employees; provided, however,
that nothing in this Agreement shall limit the right of Buyers to terminate the
employment of any Company Employee following the Closing Date. Effective as of
the Closing Date and for a period of at least twenty-four (24) months
thereafter, Buyers shall cause the Companies to continue to provide the Company
Employees with compensation and employee benefits that are, in the aggregate,
and not on an individual basis, substantially equivalent to those provided to
them immediately prior to the Closing Date. Buyers shall provide severance and
continuation benefits to each Company Employee in the amounts and on the terms
and conditions as set forth on Exhibit C.

        6.4 
Tax Matters.

               
(a) Code § 338(h)(10) Election. 

          (i) 
  Kaydon and Moog agree that they shall jointly make or cause to be made a Code
 § 338(h)(10) Election (and any corresponding election under state or local law
  where available) ("Section 338 Election") with respect to the
  purchase and sale of the Electro-Tec Shares. Kaydon will include any income,
  gain, loss, deduction, or other tax item resulting from the Section 338(h)(10)
  Election on its Tax Returns to the extent required by applicable Law. Kaydon
  also shall pay any Tax imposed on Electro-Tec attributable to making the
  Section 338 Election, including (i) any Tax imposed under Reg. Section
  1.338(h)(10)-1T and (d)(5), or (ii) any state, local or foreign Tax imposed on
  Electro-Tec's gains.

  
          (ii) As
  soon after the Closing Date as is practicable and in any event not later than
  60 days after the Closing Date, Moog shall complete final Forms 8023 and 8883
  (and all required attachments) and any similar forms required to be filed in
  order to effect the Section 338 Election under state or local law and shall
  present such forms to Kaydon for approval (which approval shall not be
  unreasonably withheld or delayed) promptly after their completion. For
  purposes of the Section 338 Election, the aggregate amount of (A) the Purchase
  Price allocated to Electro-Tec pursuant to Schedule 2.2(a) (with
  adjustments being allocated in accordance with Section 2.3) and
  (B) the liabilities of Electro-Tec shall be allocated to the assets of
  Electro-Tec for all purposes (including tax and financial accounting purposes)
  in a manner consistent with the methodology set forth on Exhibit D.
  If there is a dispute concerning the application of such 

  -28-

  
  
methodology to the final Section 338 Election forms, Moog
  and Kaydon shall attempt to resolve such dispute and if they have not done so
  within thirty days after receipt by Kaydon of the proposed forms, all
  unresolved items shall be submitted to the Arbitration Firm for resolution in
  accordance with such methodology. The parties shall direct the Arbitration
  Firm to resolve the dispute within twenty days of submission or as soon
  thereafter as practicable and in any event not later than thirty days prior to
  any filing deadline. The determination of the Arbitration Firm shall be final
  and binding on the parties, and judgment on such determination may be entered
  in any court having jurisdiction. Kaydon and Moog shall each be responsible
  for one-half of the fees and expenses of the Arbitration Firm under this
  Section.

  
          (iii) 
  Kaydon shall cooperate with Moog in filing such election forms and Moog shall
  take any other actions that are necessary for making or perfecting the
  elections and Moog shall execute Forms 8023 and 8883 and such other applicable
  election forms.

  
          (iv) Moog
  and Kaydon shall report all transactions pursuant to this Agreement consistent
  with the Section 338 Election, except where required otherwise by applicable
  state law, and shall take no position contrary thereto unless required to do
  so pursuant to a "determination" within the meaning of Section 1313 of the
  Code. Kaydon shall pay any and all Taxes attributable to the making of the
  Section 338 Election and shall indemnify Moog and Electro Tec against any Loss
  (as defined in Section 7.2) relating to such Taxes. 

  
          (v) The
  parties agree that a violation of the provisions of this Section 6.4(a)
  is a proper subject of injunctive relief.

               
(b) Preparation of Tax Returns. Kaydon will prepare or
cause to be prepared and file or cause to be filed all income Tax Returns for
the Companies for all periods ending on or prior to the Closing Date which are
filed after the Closing Date and Kaydon will pay or cause to be paid all Taxes
due thereon. Moog will cause to prepare or be prepared and file or cause to be
filed all income Tax Returns for the Companies for all periods ending after the
Closing Date and will pay or cause to be paid all Taxes due thereon. Moog will
also prepare or cause to be prepared and will file or cause to be filed all
other Tax Returns for the Companies for all periods ending on or prior to the
Closing Date which are filed after the Closing Date in a manner consistent with
prior returns. Moog will permit Kaydon to review and comment on each such Tax
Return described in the preceding sentence prior to filing and will make such
revisions reasonably requested by Kaydon.

               
(c) Cooperation on Tax Matters. 

          (i) The
  Parties will cooperate fully, as and to the extent reasonably requested by the
  other Party, in connection with the filing of Tax Returns and any audit,
  litigation or other proceeding with respect to Taxes. Such cooperation will
  include the retention and (upon the other Party's request) the provision of
  records and information reasonably relevant to any such filing, audit, 

  -29-

  
  
litigation, or other proceeding and making employees
  available on a mutually convenient basis to provide additional information and
  explanation of any material provided hereunder. The Parties agree that the
  Buyers will cause the Companies (i) to retain all books and records with
  respect to Tax matters pertinent to the Companies relating to any taxable
  period beginning before the Closing Date until expiration of the statute of
  limitations (and, to the extent notified by Moog or Kaydon, any extensions
  thereof) of the respective taxable periods, and to abide by all record
  retention agreements entered into with any Taxing Authority, and (ii) give the
  Parties reasonable written notice prior to transferring, destroying or
  discarding any such books and records and, if a Party so requests, the
  Companies will allow such Party to take possession of such books and records.
  

  
          (ii) The
  Parties further agree, upon request, to use their commercially reasonable best
  efforts to obtain any certificate or other document from any Governmental
  Authority or any other Person as may be necessary to mitigate, reduce or
  eliminate any Tax that could be imposed (including without limitation with
  respect to the transactions contemplated by this Agreement). 

               
(d) Refunds and Tax Benefits; Amended Returns. Any Tax
refunds that are received by any of the Buyers or any of the Companies, and any
amounts credited against Tax to which any of the Buyers or any of the Companies
become entitled, that relate to Tax periods or portions thereof ending on or
before the Closing Date will be for the account of the Sellers, and the Buyers
will pay over to the Sellers any such refund or the amount of any such credit
within 15 days after receipt or entitlement thereto. In addition, to the extent
that a claim for refund or a proceeding that relates to Tax periods or portions
thereof ending on or before the Closing Date results in a payment or credit
against Tax by a Taxing Authority to any of the Buyers or any of the Companies,
the Buyers will pay such amount to the Sellers within 15 days after receipt or
entitlement thereto. Following the Closing, the Buyers will not file an amended
Tax Return for the Companies for a Tax period beginning before the Closing Date
without the advance written consent of Kaydon. If requested by Kaydon, the
Buyers shall, at Kaydon's sole cost and expense, file a claim for refund or
amended Tax Return with respect to Tax periods of the Companies ending on or
prior to the Closing Date unless the Buyers determine in good faith that such
claim or Tax Return is contrary to applicable Law. 

               
(e) Disallowed Deductions. 

          (i) If,
  in connection with any audit or other investigation by any Taxing Authority of
  any Taxes payable by Sellers for any period ending on or prior to the Closing
  Date: (A) any deduction claimed by any of the Sellers with respect to any such
  pre-Closing tax period is disallowed by the Taxing Authority conducting such
  audit or investigation and (B) the Taxing Authority which is conducting such
  audit or investigation agrees that any of the Buyers or any of the Companies
  will be permitted to use such deduction for purposes of calculating the Taxes
  due and payable by any of the Buyers or any of the Companies with respect to
  any period ending after the Closing Date (any such deduction being hereinafter
  referred to as a "Sellers' Disallowed Deduction"), then Buyers
  agree to pay to Sellers an amount equal to the amount of the Sellers'
  Disallowed Deduction 

  -30-

  
  
multiplied by the applicable tax rate of Buyers or the
  Companies, as the case may be, in the jurisdiction in which such Tax audit or
  investigation is being conducted and in the year the Sellers' Disallowed
  Deduction may be used by Buyers or the Companies, no later than thirty (30)
  days following the date on which the applicable Taxing Authority issues a
  written statement which indicates that the Sellers' Disallowed Deduction may
  not be used by Sellers in connection with their calculation of the Taxes
  payable for periods ending on or before the Closing Date but may be used for
  purposes of calculating the Taxes payable by Buyers or the Companies for any
  period ending after the Closing Date. Sellers will provide Buyers or the
  Companies with such information as may be reasonably requested by Buyers in
  order to enable Buyers or the Companies to use the Sellers' Disallowed
  Deduction and file a claim for a tax refund for any tax period ending after
  the Closing Date in which the Sellers' Disallowed Deduction may be used.
  Buyers shall reimburse Sellers for all reasonable out-of-pocket costs incurred
  by Sellers in connection with the taking of any action which Buyers request
  Sellers to take in connection with the filing of any such claim for a tax
  refund.

  
          (ii) If,
  in connection with any audit or other investigation by any Taxing Authority of
  any Taxes payable by Buyers or the Companies for any period after the Closing
  Date, (A) any deduction claimed by any of the Buyers or any of the Companies
  with respect to any such post-Closing tax period is disallowed by the Taxing
  Authority conducting such audit or investigation and (B) the Taxing Authority
  which is conducting such audit or investigation agrees that Sellers will be
  permitted to use such deduction for purposes of calculating the Taxes due and
  payable by them with respect to any period on or before the Closing Date (any
  such deduction being hereinafter referred to as a "Buyers' Disallowed
  Deduction"), then, Sellers agrees to pay to Buyers an amount equal to
  the amount of the Buyers' Disallowed Deduction multiplied by Sellers'
  applicable tax rate in the jurisdiction in which such Tax audit or
  investigation is being conducted and in the year the Buyers' Disallowed
  Deduction may be used by Sellers or Buyers, no later than thirty (30) days
  following the date on which the applicable Taxing Authority issues a written
  statement which indicates that the Buyers' Disallowed Deduction may not be
  used by Buyers or the Companies in connection with their calculation of the
  Taxes payable for periods ending after the Closing Date but may be used for
  purposes of calculating the Taxes payable by Sellers or Buyers for any period
  ending on or before the Closing Date. Buyers will provide Sellers with such
  information as may be reasonably requested by Sellers in order to enable
  Sellers to use the Buyers' Disallowed Deduction and file a claim for a tax
  refund for any tax period ending on or before the Closing Date in which the
  Buyers' Disallowed Deduction may be used. Sellers shall reimburse Buyers for
  all reasonable out-of-pocket costs incurred by Buyers or the Companies in
  connection with the taking of any action which Sellers request Buyers or the
  Companies to take in connection with the filing of any such claim for a tax
  refund.

               
(f) Notwithstanding any provision of this Section 6.4,
Buyers shall have the right to participate in any audit, examination or
proceeding, any claim for refund to any other 

-31-

action described in this Section 6.4, if, as a
result of such audit, examination or proceeding, claim for refund or other
action, the Taxes payable by Buyers would likely be materially increased for any
past, current or future period.

               
(g) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees, recording
charges and other fees and charges (including any penalties and interest)
incurred in connection with the consummation of the transactions contemplated by
this Agreement are to be paid by Buyers when due, and Buyers shall, at its own
expense, file all necessary Tax Returns and other documentation with respect to
all such Taxes, fees and charges, and, if required by applicable Law, the
parties to this Agreement shall, and shall cause their Affiliates to, join in
the execution of any such Tax Returns or other documentation. 

        6.5 
Kaydon Name. 
Buyers acknowledge and agree that notwithstanding anything else in this
Agreement they are not acquiring and have no right to use the name "Kaydon" or
any variation thereof.

        6.6 
Insurance Claims.
In the event that, after the Closing, Buyers suffer any loss, arising out of a
third party claim or otherwise, that Buyers notify Sellers would be covered by
any insurance policy maintained by or for the benefit of Sellers or any asset
used in the business of the Companies, Sellers shall present and diligently
prosecute a claim for payment under such policy in respect of such loss, and pay
to Buyers the proceeds of such claim under such policy as reimbursement in
respect of the amount of such loss. Losses reimbursed under this Section
6.6 shall not (to the extent of such reimbursement) be taken into
account in calculating the Threshold Deductible.

        6.7 
Change of Name Agreements.
As soon as practicable following the Closing and to the extent required under
applicable Law, Buyers shall prepare, in accordance with Federal Acquisition
Regulations, 48 C.F.R. § 42.12, and any applicable agency regulations or
policies, a written request meeting the requirements of the Federal Acquisition
Regulations Part 42, as reasonably interpreted by the Responsible Contracting
Officer (as such term is defined in Federal Acquisition Regulations Part 42),
which shall be submitted by Buyers to each Responsible Contracting Officer, for
the applicable U.S. Governmental Authority to recognize a change in the
contractor's name for each Government Contract and Government Subcontract, if
applicable. Sellers shall cooperate with Buyers as necessary to effect such name
change.

        6.8 
Additional Information for SEC Filings. 

               
(a) Sellers shall cooperate with Moog in the event that financial
statements and other financial data, or other information relating to Sellers
and their Affiliates, is required (i) to be included in any registration
statement or other filing by Moog with the United States Securities and Exchange
Commission (the "SEC"), (ii) to comply with SEC Laws, rules and
regulations relating to any such registration statement or filing or (iii) to
comply with other applicable Law. Moog shall pay or reimburse, as the case may
be, Sellers for any reasonable out-of-pocket expenses incurred by them in
complying with this Section 6.8(a) which they would not have
incurred but for the requirements of this Section 6.8(a).

-32-

               
(b) Buyers shall cooperate with Kaydon in the event that
financial statements and other financial data, or other information relating to
the Companies, is required (i) to be included in any registration statement or
other filing by Kaydon with the United States Securities and Exchange Commission
(the "SEC"), (ii) to comply with SEC Laws, rules and regulations
relating to any such registration statement or filing or (iii) to comply with
other applicable Law. Kaydon shall pay or reimburse, as the case may be, Buyers
for any reasonable out-of-pocket expenses incurred by them in complying with
this Section 6.8(b) which they would not have incurred but for the
requirements of this Section 6.8(b).

        6.9 
Intercompany Debt.
To the extent not fully paid or otherwise satisfied or settled prior to Closing,
Kaydon will fully pay, satisfy or otherwise settle all Intercompany Debt, or
cause such Intercompany Debt to be fully paid, satisfied or otherwise settled,
promptly following the Closing.

        6.10 
Sale Bonus Payments.
With respect to each agreement listed on Schedule 6.10, Moog shall
pay, or cause to be paid, on behalf of Kaydon, the sale bonuses payable under
each such agreement to the parties entitled thereto, in each case in accordance
with the terms of the applicable agreement. Promptly following Kaydon's receipt
of proof of payment satisfactory to Kaydon in its sole discretion, Kaydon shall
reimburse Moog for all sale bonus payments actually paid under this 
Section 6.10.

        6.11 
Certain Patent.
From and after the Closing Date, Kaydon shall cooperate, and shall cause
Acquisition to cooperate, with Moog and Focal in all actions necessary to assign
ownership of U.K. Patent 2179173 to Focal.

ARTICLE VII

REMEDIES

        7.1 
Survival. The
representations, warranties, covenants and agreements of Sellers on the one
hand, and Buyers, on the other hand, contained in this Agreement (including the
Schedules attached hereto) will survive the Closing Date but only to the extent
specified below:

               
(a) all covenants and agreements contained in this Agreement that
contemplate performance thereof following the Closing Date will survive the
Closing Date until the date of expiration of such covenant or agreement in
accordance with its terms (such date, the "Covenant Termination Date").

               
(b) Except for the representations and warranties contained in 
Sections 4.1 (Organization and Standing), 4.2 (Capitalization), 4.4(a) and
(b) (Authority, Validity and Effect; No Conflict), 4.6 (Taxes), 4.7(a) (Title),
4.12 (Employee Benefit Plans), 4.23 (No Brokers) and 4.25 (Company Debt)
which shall survive for the applicable statute of limitations, and the
representations and warranties contained in Section 4.18 (Environmental
Matters) which shall survive until the fifth anniversary of the Closing
Date, the representations and warranties contained in this Agreement (including
the Schedules attached hereto) will survive the Closing Date until December 1,
2006 (with each of the foregoing dates being, with respect to the representation
or warranty to which it relates, the "Representation Termination Date"),
at which point such representations and warranties and any claim for
indemnification by 

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any Buyer Indemnitee or Seller Indemnitee, as applicable, on
account thereof will terminate, except for pending claims, as of the
Representation Termination Date.

        7.2 
Indemnification by Buyers.
From and after the Closing Date and ending on (i) in the case of claims brought
under any covenant or agreement of Buyers contained in this Agreement that
survive the Closing Date, the Covenant Termination Date, or (ii) in the case
Buyers breach any of their representations or warranties in this Agreement, the
Representation Termination Date, Buyers shall jointly and severally indemnify
and hold harmless Sellers and their respective successors and permitted assigns,
and the officers, employees, directors, managers, members, partners and
stockholders of Sellers, and each of their heirs and personal representatives
(collectively, the "Seller Indemnitees") from and against, and
shall pay to Seller Indemnitees the amount of, any and all out-of-pocket losses,
liabilities, claims, damages, penalties, fines, judgments, awards, settlements,
taxes, costs, fees (including, but not limited to, reasonable investigation
fees), expenses (including, but not limited to, reasonable attorneys' fees) and
disbursements (collectively, "Losses") actually incurred by any
Seller Indemnitees following the Closing Date caused by (a) any breach of or
inaccuracy in the representations and warranties of Buyers contained in this
Agreement (including the Schedules attached hereto) (other than breaches,
inaccuracies or misrepresentations of any representation or warranty of which
Sellers or any of their respective officers, directors, employees, agents or
Affiliates had knowledge as of the Closing) and (b) any material breach of the
covenants or agreements of Buyers contained in this Agreement that survive the
Closing Date.

        7.3 
Indemnification by Sellers.
From and after the Closing Date and ending on (i) in the case of claims brought
under any covenant or agreement of Sellers contained in this Agreement that
survive the Closing Date, the Covenant Termination Date, or (ii) in the case
Sellers breach any of their representations or warranties in this Agreement, the
Representation Termination Date, Sellers shall jointly and severally indemnify
and hold harmless Buyers and their respective successors and permitted assigns,
and the officers, employees, directors, managers, members, partners and
stockholders of Buyers, and each of their heirs and personal representatives
(collectively, the "Buyer Indemnitees") from and against, and
shall pay to Buyer Indemnitees the amount of, any and all Losses actually
incurred by any of Buyer Indemnitees following the Closing Date caused by (a)
any breach of or inaccuracy in the representations and warranties of Sellers
contained in this Agreement (including the Schedules attached hereto) (other
than breaches, inaccuracies or misrepresentations of any representation or
warranty of which the Buyers or any of their officers, directors, employees,
agents or Affiliates had knowledge as of the Closing) and (b) any material
breach of the covenants or agreements of Sellers contained in this Agreement
that survive the Closing Date. From and after the Closing Date, Sellers shall
also jointly and severally indemnify and hold harmless the Buyer Indemnitees
from and against, and shall pay to Buyer Indemnitees the amount of, any and all
Losses actually incurred by any of Buyer Indemnitees following the Closing Date
relating to Acquisition's obligations under Section 116 of the Income Tax Act
(Canada). 

        7.4 
Exclusive Remedy.
The parties agree that, from and after the Closing Date, the exclusive remedies
of the parties for any Losses based upon, arising out of or otherwise in respect
of the matters set forth in this Agreement, whether based in contract, tort or
otherwise, are the indemnification or reimbursement obligations of the parties
set forth in this Article VII. The provisions of this 
Section 7.4 will not, however, prevent or limit a cause of action on 

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account of fraud or under 
Section 2.3(b) or 6.4 to enforce any decision or determination of the
Arbitration Firm.

        7.5 
Limitations on Reimbursement to Buyer Indemnitees.
Notwithstanding anything herein to the contrary, the right of the Buyer
Indemnitees to indemnification under Section 7.3 is limited as
follows:

               
(a) In the case Sellers breach any of their representations and
warranties in this Agreement, the Buyer Indemnitees will be entitled to
indemnification pursuant to Section 7.3 to the extent that the
aggregate amount of all Losses suffered by the Buyer Indemnitees in respect of
such breaches exceeds $800,000 (the "Threshold Deductible"), and
then only to the extent of the excess up to a maximum of $12 million; provided
that such limitations shall not apply to any Losses incurred as a result of a
breach of any representation or warranty contained in Sections 4.2
(Capitalization), 4.7(a) (Title) and 4.25 (Company Debt). No Losses in
respect of an indemnification claim by a Buyer Indemnitee shall be included in
determining whether the Threshold Deductible has been reached unless an
Indemnification Notice seeking indemnification for such Losses has been given by
the Buyer Indemnitee to Sellers in accordance with Section 7.6 and
such Losses have been determined by the Sellers in their reasonable judgment to
result from an indemnification event.

               
(b) The Buyer Indemnitees will not be entitled to indemnification
pursuant to Section 7.3 on account of any Losses to the extent any
such Losses are covered by any insurance or other third party indemnification.

               
(c) The Buyer Indemnitees will not be entitled to indemnification
pursuant to Section 7.3 on account of any Losses to the extent
that any Buyer or any Company receives any Tax benefit as a result of such
Losses.

               
(d) The Buyer Indemnitees will not be entitled to indemnification
pursuant to Section 7.3 for punitive damages, or for lost profits,
consequential, exemplary or special damages (except to the extent a Buyer
Indemnitee is obligated to pay such damages to a third party).

               
(e) The Buyer Indemnitees will not be entitled to indemnification
pursuant to Section 7.3 for Losses to the extent that any Buyer
Indemnitee has been compensated therefor pursuant to Section 2.3
as reflected on the Final Net Working Capital Statement.

               
(f) The limitations on indemnification rights set forth in this
Section 7.5 will not prevent or limit a cause of action on the account of fraud
or any amount owed by any Seller to Buyers or the Companies under Section
6.4(e).

        7.6 
Procedures.

               
(a) In the event that a party shall incur or suffer any Losses in
respect of which indemnification may be sought by such party (an 
"Indemnified Party") pursuant to the provisions of this Article
VII from any other party or parties (each, an "Indemnifying Party"),
the Indemnified Party shall submit to the Indemnifying Party with reasonable
promptness a written notice of such claim (an "Indemnification Notice")
stating in reasonable detail a 

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demand for indemnification in accordance with this 
Article VII, including the nature and basis for such claim. In the case
of Losses arising by reason of any third-party claim, the Indemnification Notice
shall be given within five (5) business days of the filing or other written
assertion of any such claim against the Indemnified Party, but the failure of
the Indemnified Party to give the Indemnification Notice within such time period
shall not relieve the Indemnifying Party of any liability that the Indemnifying
Party may have to the Indemnified Party, except to the extent that the
Indemnifying Party is prejudiced thereby.

               
(b) The Indemnified Party shall provide to the Indemnifying Party
on request all information and documentation in the Indemnified Party's
possession (i) that is not privileged and is reasonably necessary and (ii) that
is critical (whether or not privileged) to support and verify any Losses which
the Indemnified Party believes give rise to a claim for indemnification
hereunder and shall give the Indemnifying Party reasonable access to all books,
records and personnel in the possession or under the control of the Indemnified
Party which would have bearing on such claim.

               
(c) In the case of third-party claims with respect to which an
Indemnification Notice is given, the Indemnifying Party will have the right at
any time to assume and thereafter conduct the defense of the third party claim
with counsel of his, her or its choice; provided, however, that the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the third party claim without the prior written
consent of the Indemnified Party (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the payment of money damages and
does not impose an injunction or other equitable relief upon the Indemnified
Party. Unless and until an Indemnifying Party assumes the defense of the third
party claim, however, the Indemnified Party may defend against the third party
claim in any manner he, she or it reasonably may deem appropriate. In no event
will the Indemnified Party consent to the entry of any judgment or enter into
any settlement with respect to the third party claim without the prior written
consent of each of the Indemnifying Parties, (not to be withheld unreasonably)
and no Indemnifying Party shall have any liability in respect of any such
judgment or settlement to which it has not consented.

        7.7 
Subrogation. Upon
making any payment to the Indemnified Party for any indemnification claim
pursuant to this Article VII, the Indemnifying Party shall be
subrogated, to the extent of such payment, to any right which the Indemnified
Party may have against any third parties with respect to the subject matter
underlying such indemnification claim and the Indemnified Party shall assign any
such rights to the Indemnifying Party.

ARTICLE VIII

MISCELLANEOUS AND GENERAL

        8.1
Expenses.
All costs and expenses (including all legal, accounting, broker, finder or
investment banker fees) incurred in connection with this Agreement and the
transactions contemplated hereby are to be paid by the party incurring such
expenses except as expressly provided herein. Notwithstanding the foregoing
or anything to the contrary contained herein, in the event that any dispute
between any Buyer and any Seller results in litigation, arbitration, mediation
or any other contest, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any
right of such prevailing party 

-36-

with respect to this Agreement, including, but not limited
to, reasonable attorneys' fees and expenses.

        8.2 
Successors and Assigns.
This Agreement is binding upon and inures to the benefit of the parties hereto
and their respective successors and assigns, but is not assignable by any party
without the prior written consent of the other parties hereto.

        8.3 
Third Party Beneficiaries.
Each party hereto intends that this Agreement does not benefit or create any
right or cause of action in or on behalf of any Person other than the parties
hereto, except as provided in Section 6.5 and with respect to the
Buyer Indemnitees and the Seller Indemnitees in their capacity as such.

        8.4 
Further Assurances.
The parties shall execute such further instruments and take such further actions
as may reasonably be necessary to carry out the intent of this Agreement. Each
party hereto shall cooperate affirmatively with the other parties, to the extent
reasonably requested by such other parties, to enforce rights and obligations
herein provided.

        8.5 
Notices. Any
notice or other communication provided for herein or given hereunder to a party
hereto must be in writing, and sent by facsimile transmission (electronically
confirmed), delivered in person, mailed by first class registered or certified
mail, postage prepaid, or sent by Federal Express or other overnight courier of
national reputation, addressed as follows:

               
If to the Buyers:

                       
Moog Inc.

                       
Seneca & Jamison Road

                       
East Aurora, New York 14052

                       
Attention:  Robert R. Banta, Executive Vice President & CFO

                       
Fax: (716) 687-5465

               
with a copy to:

                       
Hodgson Russ LLP

                       
One M&T Plaza

                       
Buffalo, New York 14203

                       
Attention: John B. Drenning, Esq. and Robert J. Olivieri, Esq.

                       
Fax: (716) 849-0349

-37-

               
If to the Sellers:

                       
Kaydon Corporation

                       
315 East Eisenhower Parkway, Suite 300

                       
Ann Arbor, Michigan 48108

                       
Attn: Brian P. Campbell, President

                       
Fax: (734) 747-6928

               
with a copy to:

                       
Dykema Gossett PLLC

                       
2723 South State Street, Suite 400

                       
Ann Arbor, Michigan 48104

                       
Attn: Barbara A. Kaye

                       
Fax: (734) 214-7676

or to such other address with respect to a party as such
party notifies the other in writing as above provided.

        8.6 
Complete Agreement.
This Agreement and the Schedules and Exhibits hereto, together with the
Confidentiality Agreement, contain the complete agreement between the parties
hereto with respect to the transactions contemplated hereby and thereby and
supersede all prior agreements and understandings between the parties hereto
with respect thereto.

        8.7 
Captions. The
captions contained in this Agreement are for convenience of reference only and
do not form a part of this Agreement.

        8.8 
Amendment. This
Agreement may be amended or modified only by an instrument in writing duly
executed by Sellers and Buyers; provided, however, that no
amendment may be made that is prohibited by any Law.

        8.9 
Governing Law.
This Agreement is to be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware, without regard to its rules of conflict
of laws.

        8.10 
Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction will, as to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.

        8.11 
Counterparts and Facsimile Signatures.
This Agreement may be executed in two or more counterparts, each of which will
be deemed an original but all of which will constitute but one instrument and by
facsimile.

-38-

        8.12 
Consent to Jurisdiction and Service of Process.
Except for the matters to be decided by the Arbitration Firm pursuant to 
Section 2.3 and 6.4(a), the parties hereto hereby submit to the
jurisdiction of any state or federal court sitting in Washtenaw County, Michigan
in respect of the interpretation and enforcement of the provisions of this
Agreement and any related agreement, certificate or other document delivered in
connection herewith and hereby waive, and agree not to assert, any defense in
any action, suit or proceeding for the interpretation or enforcement of this
Agreement and any related agreement, certificate or other document delivered in
connection herewith, that they are not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in such courts or that
this Agreement may not be enforced in or by such courts or that their property
is exempt or immune from execution, that the suit, action or proceeding is
brought in an inconvenient forum, or that the venue of the suit, action or
proceeding is improper. Service of process with respect thereto may be made upon
Buyers or Sellers by mailing a copy thereof by registered or certified mail,
postage prepaid, to such party at its address as provided in Section 8.5
hereof.

        8.13 
No Liability as Representatives.

               
(a) Each of the Sellers hereby authorizes Kaydon to make and
deliver any certificate, notice, consent or instrument required or permitted to
be made or delivered under this Agreement, which Kaydon determines in its sole
discretion to be necessary, appropriate or desirable. Any party receiving a
certificate, notice, consent or instrument from Kaydon is entitled to rely upon,
and act in accordance with, such certificate, notice, consent or instrument.
Buyers and the Companies will have no liability to any of the Sellers, arising
out of the acts or omissions of Kaydon or any disputes among any of the Sellers
or among any of the Sellers and Kaydon. Buyers may rely entirely on its dealings
with, and notices to and from, Kaydon to satisfy any obligations the Buyers
might have to or from any of the Sellers under this Agreement or with respect to
the transactions contemplated hereby.

               
(b) Each of the Buyers hereby authorizes Moog to make and deliver
any certificate, notice, consent or instrument required or permitted to be made
or delivered under this Agreement, which Moog determines in its sole discretion
to be necessary, appropriate or desirable. Any party receiving a certificate,
notice, consent or instrument from Moog is entitled to rely upon, and act in
accordance with, such certificate, notice, consent or instrument. Sellers will
have no liability to any of the Buyers, arising out of the acts or omissions of
Moog or any disputes among any of the Buyers or among any of the Buyers and
Moog. Sellers may rely entirely on its dealings with, and notices to and from,
Moog to satisfy any obligations the Sellers might have to or from any of the
Buyers under this Agreement or with respect to the transactions contemplated
hereby.

        8.14 
Independence of Covenants and Representations and
Warranties. All covenants hereunder shall be
given independent effect so that if a certain action or condition constitutes a
default under a certain covenant, the fact that such action or condition is
permitted by another covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning 

-39-

the same or similar subject matter is
correct or is not breached will not affect the incorrectness or a breach of such
initial representation or warranty.

[Signatures on Following Page]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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        IN
WITNESS WHEREOF, Buyers and Sellers have caused this Agreement to be executed as
of the day and year first above written.

	 	
    MOOG INC.

	 	 
	 	By: 	 
	 	Name:
	 	Title:
	 	 
	 	 
	 	MOOG CONTROLS LIMITED
	 	 
	 	By: 	 
	 	Name:
	 	Title:
	 	 
	 	 
	 	MOOG CANADA CORPORATION
	 	 
	 	By: 	 
	 	Name:
	 	Title:
		
		
		KAYDON CORPORATION
	 	 
	 	By: 	 
	 	Name:
	 	Title:
	 	 
	 	 
	 	KAYDON CORPORATION LIMITED
	 	 
	 	By: 	 
	 	Name:
	 	Title:
	 	 
	 	 
	 	KAYDON ACQUISITION IX, INC.
	 	 
	 	By: 	 
	 	Name:
	 	Title:

-41-

	
    Table of Contents

	 	 
	 	 
	ARTICLE I DEFINITIONS 	1
	 	 	 	 	 
	ARTICLE II SALE AND PURCHASE 	7
	 	2.1 	 	Sale and Purchase of Shares 	7
	 	2.2 	 	Purchase Price 	7
	 	2.3 	 	Purchase Price Adjustment 	7
	 	 	 	 	 
	ARTICLE III CLOSING AND DELIVERIES 	9
	 	3.1 	 	Closing 	9
	 	3.2 	 	Deliveries by Sellers 	9
	 	3.3 	 	Deliveries by Buyers 	10
	 	3.4 	 	Consents to Assignment 	10
	 	3.5 	 	Stock Transfer Stamp Tax 	11
	 	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
    SELLERS 	11
	 	4.1 	 	Organization and Standing 	11
	 	4.2 	 	Capitalization 	11
	 	4.3 	 	No Subsidiaries or Investments 	12
	 	4.4 	 	Authority, Validity and Effect; No Conflict; Required
    Filings and Consents 	12
	 	4.5 	 	Financial Statements; No Undisclosed Liabilities 	12
	 	4.6 	 	Taxes 	13
	 	4.7 	 	Title; Sufficiency of Assets 	14
	 	4.8 	 	Real Property 	14
	 	4.9 	 	Compliance with Laws 	15
	 	4.10 	 	Permits 	15
	 	4.11 	 	Employee Benefit Plans 	15
	 	4.12 	 	Material Contracts 	17
	 	4.13 	 	Government Contracts 	18
	 	4.14 	 	Legal Proceedings 	19
	 	4.15 	 	Intellectual Property 	19
	 	4.16 	 	Insurance 	20
	 	4.17 	 	Personnel 	20
	 	4.18 	 	Environmental Matters 	22
	 	4.19 	 	Conduct of Business in Ordinary Course 	23
	 	4.20 	 	Suppliers and Customers 	23
	 	4.21 	 	Absence of Certain Commercial Practices 	23
	 	4.22 	 	Warranty; Product Liability 	24
	 	4.23 	 	No Brokers 	24
	 	4.24 	 	Transactions with Stockholders, Officers, Directors, Etc
    	24
	 	4.25 	 	Company Debt 	24
	 	4.26 	 	Loss Contracts 	25
	 	4.27 	 	Export Control Regulations 	25
	 	4.28 	 	Banks, Brokers and Proxies 	25

-i-

	
    Table of Contents

    (continued)

	 	 	 	 	 
	 	 	 	 	 
	 	4.29 	 	Accounts Payable and Notes Payable; Accruals 	25
	 	4.30 	 	Accounts Receivable 	25
	 	4.31 	 	Inventory 	25
	 	4.32 	 	Disclaimer of other Representations and Warranties 	26
	 	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF
    BUYERS 	26
	 	5.1 	 	Investment Intent 	26
	 	5.2 	 	Organization and Standing 	26
	 	5.3 	 	Authorization, Validity and Effect 	26
	 	5.4 	 	No Conflict; Required Filings and Consents 	27
	 	5.5 	 	No Reliance 	27
	 	5.6 	 	Litigation 	27
	 	5.7 	 	No Brokers 	27
	 	 	 	 	 
	ARTICLE VI COVENANTS AND AGREEMENTS 	27
	 	6.1 	 	Publicity 	27
	 	6.2 	 	Records 	27
	 	6.3 	 	Employee Matters 	28
	 	6.4 	 	Tax Matters 	28
	 	6.5 	 	Kaydon Name 	32
	 	6.6 	 	Insurance Claims 	32
	 	6.7 	 	Change of Name Agreements 	32
	 	6.8 	 	Additional Information for SEC Filings 	32
	 	6.9 	 	Intercompany Debt 	33
	 	6.10 	 	Sale Bonus Payments 	33
	 	6.11 	 	Certain Patent 	33
	 	 	 	 	 
	ARTICLE VII REMEDIES 	33
	 	7.1 	 	Survival 	33
	 	7.2 	 	Indemnification by Buyers 	34
	 	7.3 	 	Indemnification by Sellers 	34
	 	7.4 	 	Exclusive Remedy 	34
	 	7.5 	 	Limitations on Reimbursement to Buyer Indemnitees 	35
	 	7.6 	 	Procedures 	35
	 	7.7 	 	Subrogation 	36
	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS AND GENERAL 	36
	 	8.1 	 	Expenses 	36
	 	8.2 	 	Successors and Assigns 	37
	 	8.3 	 	Third Party Beneficiaries 	37
	 	8.4 	 	Further Assurances 	37
	 	8.5 	 	Notices 	37
	 	8.6 	 	Complete Agreement 	38

-ii-

	
    Table of Contents

    (continued)

	 	 	 	 	 
	 	 	 	 	 
	 	8.7 	 	Captions 	38
	 	8.8 	 	Amendment 	38
	 	8.9 	 	Governing Law 	38
	 	8.10 	 	Severability 	38
	 	8.11 	 	Counterparts and Facsimile Signatures 	38
	 	8.12 	 	Consent to Jurisdiction and Service of Process 	39
	 	8.13 	 	No Liability as Representatives 	39
	 	8.14 	 	Independence of Covenants and Representations and
    Warranties 	39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-iii-

Table of Exhibits and Schedules

	

    EXHIBITS	 
	 	 
	Exhibit A 	Net Working Capital Schedule
	Exhibit B 	Form of Transition Services Agreement
	Exhibit C 	Severance and Continuation Benefits/Stay Bonuses
	Exhibit D 	Allocation
	Exhibit E 	Form of Resignation and Release
	Exhibit F 	Form of Section 116 Withholding Escrow Agreement
	Exhibit G 	Form of Power of Attorney
	 	 
	

    SCHEDULES	 
	 	 
	Schedule 1 	Intercompany Trade Payables
	Schedule 2.2(a) 	Purchase Price Allocation
	Schedule 3.2(f) 	Officer and Director Resignations
	Schedule 4.2 	Capitalization
	Schedule 4.4(b) 	Conflicts
	Schedule 4.4(c) 	Consents of the Companies
	Schedule 4.5(a) 	Financial Statements
	Schedule 4.5(a)-1 	Reconciliation of Financial Information
	Schedule 4.5(b) 	Deviations from GAAP
	Schedule 4.5(c) 	Liabilities
	Schedule 4.7(a) 	Title to Assets
	Schedule 4.7(b) 	Assets Owned by Others
	Schedule 4.8(a) 	Owned Real Property
	Schedule 4.8(b) 	Leased Real Property
	Schedule 4.10 	Permits
	Schedule 4.11(a) 	Employee Plans
	Schedule 4.11(i) 	Post-Retirement or Post-Employment Benefits
	Schedule 4.12(a) 	Material Contracts
	Schedule 4.13(a) 	Government Contracts and Government Subcontracts
	Schedule 4.13(b) 	Government Contract Investigations
	Schedule 4.14 	Legal Proceedings
	Schedule 4.15(a) 	Intellectual Property
	Schedule 4.17(c) 	Company Employees
	Schedule 4.17(d) 	Severance and Similar Obligations
	Schedule 4.17(e) 	Inactive Company Employees
	Schedule 4.17(f) 	Company Employees not At-Will
	Schedule 4.17(i) 	Recent Company Employee Terminations
	Schedule 4.18 	Environmental Matters
	Schedule 4.19 	Conduct of Business
	Schedule 4.22(a) 	Warranty; Product Liability
	Schedule 4.22(b) 	Recalled and Withdrawn Products

 

	Schedule 4.24 	Transactions with Stockholders, Officers, Directors, etc.
	Schedule 4.25 	Company Debt
	Schedule 4.26 	Loss Contracts
	Schedule 4.27 	Export Control Regulations 
	Schedule 4.28 	Banks, Brokers and Proxies
	Schedule 4.31 	Inventory
	Schedule 6.10 	Sale Bonuses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-ii-

Exhibit A

Basis of Preparation: Working capital of the Companies shall
be prepared based on the operations of the Companies and reflect the underlying
activity of such operations.

For purposes of the Final Net Working Capital Statement,
Working Capital of the Companies is defined as current assets minus current
liabilities of the companies, calculated in accordance with US GAAP, with the
following exceptions and clarifications outlined below:

    	 	1.	The calculation of current assets and current liabilities shall exclude
    the following:
	 	 	a. 	Any short term intercompany accounts (e.g. I/C Balance Corporate
        and I/C Balance Other)
	 	 	b. 	Liabilities related to income taxes payable (e.g. Federal Tax
        Payable, State Tax Payable)
	 	 	c. 	Liabilities related to accruals for medical benefits at
        Electro-Tec (currently maintained on Kaydon books)
	 	 	d. 	Warranty reserve of approximately US$31,868 at Focal Technologies
	 	 	e. 	Advertising expense accrual for trade show and adjustment to rent
        expense for retroactive rent review accrual at IDM of approximately
        US$13,015 in aggregate.
	 	 	f. 	Any prepaid asset relating to insurance coverages which are to be
        terminated at closing.
	 	 	g. 	Any amount in accrued sales tax at Focal representing withholding
        tax on interest payable on intercompany debt to Kaydon.
	 	 	h. 	Deferred tax assets and liabilities at Electro-Tec and Focal.
	 	 	 
	 	2.	Except as noted herein, the Final Net Working Capital Statement shall be
    prepared using the same accounting methods, policies, practices and
    procedures, with consistent classifications, judgments and estimation
    methodologies, as were used in preparing the month-end April 30, 2005
    unaudited combined balance sheet of the Companies, and shall not take into
    account any changes in circumstances or events occurring after the Closing
    Date.
	 	 	 
	 	3.	In preparing the Final Net Working Capital Statement, the respective
    amounts included in the Final Net Working Capital Statement for all reserves
    and for asset valuation allowances that were valued for the unaudited April
    30, 2005 balance sheet by subjective estimates shall be calculated using the
    same methodology in respect of such items on the unaudited April 30, 2005
    balance sheet except to reflect changes in circumstances or events occurring
    and based on the most current information known to Kaydon, between the date
    of the unaudited April 30, 2005 balance sheet and the Closing Date.
	 	 	 
	 	4.	The parties agree that Final Net Working Capital shall include book Cash
    and book overdraft, if any, of the Companies as of the close of business on
    the Closing Date.

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