Document:

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                                                                   Exhibit 10.16

                              AMENDED AND RESTATED
                             INTELLECTUAL PROPERTY
                                   AGREEMENT

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT AND AN
UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED WITH THE SECURITY AND
EXCHANGE COMMISSION
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                               TABLE OF CONTENTS

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ARTICLE 1 --GENERAL BACKGROUND....................................................................    1

      h1.1  Applied's Business....................................................................    1

      1.2   Kinetics' Business....................................................................    1

      1.3   Existing Business Relationship between the Parties....................................    1

      1.4   Renegotiation of the Outsource Relationship...........................................    2

      1.5   Scope of this Agreement...............................................................    2

      1.6   Statement of Agreement................................................................    2

Article 2 - Definitions...........................................................................    3

      2.1   Affiliate.............................................................................    3

      2.2   Agreement.............................................................................    3

      2.3   Applied...............................................................................    3

      2.4   Applied FDS or Applied Fluid Delivery System..........................................    3

      2.5   Applied FDS Technology................................................................    3

      2.6   Applied Future IP.....................................................................    3

      2.7   Applied IP............................................................................    3

      2.8   Applied Pre-Existing IP...............................................................    3

      2.9   Applied System........................................................................    4

      2.10  Component.............................................................................    4

      2.11  Confidential Information..............................................................    4

      2.12  Current Applied FDS Technology........................................................    4

      2.13  Current Applied FDS or Current Applied Fluid Delivery Systems.........................    4

      2.14  Design IP.............................................................................    4

      2.15  Design Services.......................................................................    4

      2.16  Design Services Agreement or DSA......................................................    5

      2.17  Design SOW............................................................................    5

      2.18  Development Services..................................................................    5

      2.19  Development Services Agreement or DVA.................................................    5

      2.20  Documentation.........................................................................    5

      2.21  Effective Date........................................................................    5

      2.22  Existing Component....................................................................    5

      2.23  FDS Technology........................................................................    6

      2.24  Fluid Delivery System or FDS..........................................................    6
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      2.25  Future Applied FDS....................................................................    6

      2.26  Future Applied FDS Technology.........................................................    6

      2.27  Future Modifications..................................................................    6

      2.28  GSA...................................................................................    6

      2.29  IP Rights.............................................................................    7

      2.30  Kinetics..............................................................................    7

      2.31  Kinetics Future IP....................................................................    7

      2.32  Kinetics IP...........................................................................    7

      2.33  Kinetics Pre-Existing IP..............................................................    7

      2.34  Manufacturing Process.................................................................    7

      2.35  Outsource Relationship................................................................    8

      2.36  Party(ies)............................................................................    8

      2.37  Standard Services.....................................................................    8

      2.38  Third Party Applications..............................................................    8

      2.39  Third Party FDS Technology............................................................    8

Article 3 - Intellectual Property.................................................................    8

      3.1   Pre-Existing IP.......................................................................    8

      3.2   License to Kinetics for FDS Operations................................................    8

      3.3   Future Modifications - Generally......................................................    9

      3.4   Standard Services.....................................................................    9

      3.5   Design Services.......................................................................    9

            3.5.1     Design Services Procedure...................................................    9

            3.5.2     Performance of Design Services..............................................    9

            3.5.3     Ownership of Design IP......................................................   10

      3.6   Development Services..................................................................   10

      3.7   Applied's Approval of Design Services and Development Services........................   10

      3.8   Ownership of Manufacturing Processes..................................................   10

      3.9   Trademark Rights......................................................................   10

      3.10  Applications for IP Rights............................................................   11

      3.11  Existing Third Party FDS Technology...................................................   11

      3.12  Future Third Party FDS Technology.....................................................   11

      3.13  License to Applied For Cover and Support..............................................   12
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      3.14  Reservation of Rights.................................................................   12

Article 4 - Confidentiality.......................................................................   13

      4.1   Definition............................................................................   13

      4.2   Confidentiality Obligations...........................................................   15

      4.3   Identification As Confidential........................................................   16

      4.4   Need-To-Know Disclosure...............................................................   17

      4.5   Remedies..............................................................................   17

      4.6   Visual Information....................................................................   17

Article 5 - Term and Termination..................................................................   17

      5.1   Term..................................................................................   17

      5.2   Termination...........................................................................   18

            5.2.1     In Event of a GSA Termination...............................................   18

            5.2.2     By Either Party in Event of an IPA Default..................................   18

            5.2.3     By Either Party Immediately Upon Confidentiality Breach.....................   18

            5.2.4     By Either Party of a DSA....................................................   18

            5.2.5     By Either Party of a Development Services Agreement.........................   19

            5.2.6     Effective Date of Termination Upon GSA Termination..........................   19

      5.3   Consequences of Termination or Expiration.............................................   20

      5.4   Termination of the Amended IPA........................................................   22

Article 6 - Warranties and Representations........................................................   22

      6.1   Kinetics Pre-Existing IP Rights.......................................................   22

      6.2   Applied Pre-Existing IP Rights........................................................   22

      6.3   Future Modifications..................................................................   22

      6.4   Completeness of Schedules of Pre-Existing IP Rights...................................   23

      6.5   Disclaimer of Warranties..............................................................   23

      6.6   Limitation of Liability...............................................................   23

Article 7 - Indemnities...........................................................................   23

      7.1   Indemnification - Performance of Agreement............................................   23

      7.2   Indemnification - Infringement/Misappropriation.......................................   24

      7.3   Indemnification/Duty to Defend Set-Off................................................   24

      7.4   Indemnified Party's Obligations.......................................................   25
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Article 8 - General Provisions....................................................................   25

      8.1   Entire Agreement......................................................................   25

      8.2   Succession and Assignment.............................................................   25

      8.3   Export Regulation.....................................................................   26

      8.4   Rules of Construction.................................................................   27

      8.5   Attorneys' Fees.......................................................................   27

      8.6   General Provisions....................................................................   27
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                              AMENDED AND RESTATED
                        INTELLECTUAL PROPERTY AGREEMENT

      This Amended and Restated Intellectual Property Agreement (the
"Agreement") is by and between Applied Materials, Inc., a Delaware corporation,
having places of business in Santa Clara, California and Austin, Texas, and
Kinetics Fluid Systems, Inc., a California corporation, having places of
business in Santa Clara, California and Austin, Texas.

                                   ARTICLE 1
                               GENERAL BACKGROUND

      1.1.  APPLIED'S BUSINESS. Applied, among other activities, designs,
manufactures and markets (a) semiconductor wafer fabrication equipment, (b)
wafer inspection and metrology equipment, (c) flat panel display fabrication
equipment, (d) wafer fabrication factory control software, (e) toxics abatement
or recycling equipment, (f) thin film application processes, and (g) parts,
components and processes related to any of the foregoing.

      1.2.  KINETICS' BUSINESS. Kinetics, among other activities, designs,
develops, manufactures and markets, for use in semiconductor fabrication
equipment and other applications, (a) Fluid Delivery Systems, (b) Components,
(c) chemical and slurry delivery systems, (d) process chillers, (e) thermal
measurement and control devices, (f) utility infrastructure and delivery systems
for semiconductor fabrication facilities, (g) ancillary equipment to connect the
utility infrastructure of semiconductor fabrication facilities to semiconductor
fabrication equipment, and (h) waste recycling systems for chemicals and slurry.

      1.3.  EXISTING BUSINESS RELATIONSHIP BETWEEN THE PARTIES. The Parties
previously established a business relationship, according to which Kinetics
manufactures for Applied fluid delivery systems for incorporation into various
systems sold by Applied, including semiconductor fabrication equipment, flat
panel display fabrication equipment and thin film application process equipment
("Outsource Relationship"). The Outsource Relationship is
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defined by a series of agreements, including an "Intellectual Property
Agreement" dated June 28, 1999 ("Original IPA.") The Original IPA was amended by
a series of three amendments - (1) First Amendment to Intellectual Property
Agreement dated September 20, 1999, (2) Second Amendment to Intellectual
Property Agreement dated September 20, 1999, and (3) Third Amendment to
Intellectual Property Agreement dated June 25, 2000 (the thrice-amended Original
IPA and any of its predecessor agreements, including the Original IPA, are
referred to hereinafter as the "Amended IPA"). The Amended IPA defines each
Party's intellectual property rights and obligations related to the fluid
delivery systems manufactured for Applied by Kinetics until the Effective Date
of this Agreement.

      1.4.  RENEGOTIATION OF THE OUTSOURCE RELATIONSHIP. The Parties have
renegotiated the Outsource Relationship to reflect developments since the
relationship was initially created. As a part of these renegotiations, the
Parties have renegotiated their respective duties, obligations and rights
relating to intellectual property in and related to fluid delivery systems, and
desire to reflect same in this Agreement. More specifically, the Parties desire
that this Agreement supersede the Amended IPA, which terminates on the Effective
Date of this Agreement.

      1.5.  SCOPE OF THIS AGREEMENT. The Parties desire to enter into new
agreements, including a new agreement defining their respective intellectual
property rights, to reflect more accurately the current business conditions
surrounding the Outsource Relationship.

      1.6.  STATEMENT OF AGREEMENT. Now, therefore, in consideration of the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree to the following terms, conditions and obligations.
<PAGE>
                                   ARTICLE 2
                                  DEFINITIONS

      2.1   AFFILIATE means "affiliate" as defined in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.

      2.2   AGREEMENT means this Amended and Restated Intellectual Property
Agreement.

      2.3   APPLIED means Applied Materials, Inc. and all of its domestic and
international divisions and subsidiaries.

      2.4   APPLIED FDS or APPLIED FLUID DELIVERY SYSTEM means Current Applied
FDS and Future Applied FDS.

      2.5   APPLIED FDS TECHNOLOGY means Current Applied FDS Technology and
Future Applied FDS Technology.

      2.6   APPLIED FUTURE IP means all IP Rights relating to Future
Modifications owned by Applied, including, without limitation, Design IP.
Applied Future IP includes any and all IP Rights in and to software for
"Capacity FDS Hardware" and "Product Change Hardware" and to "Improved Software"
(all as defined in Section 4.2 of the GSA) provided or purchased by Applied in
accordance with Section 4.2 of the GSA.

      2.7   APPLIED IP means Applied Pre-Existing IP and Applied Future IP.
Applied IP includes any and all IP Rights in and to "Test Fixture Software" (as
defined in Section 4.2 of the GSA) provided or purchased by Applied in
accordance with Section 4.2 of the GSA.

      2.8   APPLIED PRE-EXISTING IP means all existing IP Rights relating to the
Current Applied FDS or Current Applied FDS Technology that are owned by Applied,
or to which Applied otherwise has rights (but only to the extent of such
rights), as of the Effective
<PAGE>
Date, as set forth in Schedule 2.8. Applied Pre-Existing IP, for purposes of the
license of Section 3.2, does not include Applied business information (such as
sub-tier supplier information and Component pricing information) relating to the
Current Applied FDS Technology.

      2.9   APPLIED SYSTEM means capital equipment sold by Applied that
incorporates a Fluid Delivery System.

      2.10  COMPONENT means a component, part or sub-assembly of a Fluid
Delivery System, including but not limited to, valves, tubing, mass flow
controllers, base plates, brackets, sticks, manifolds (final and SLD), safety
sensors, GPLIS, VDS, ozonators, pneumatics, manifolds, filters, cables,
transducers, fluid delivery controllers and enclosures.

      2.11  CONFIDENTIAL INFORMATION means Confidential Information as defined
in Section 4.1.

      2.12  CURRENT APPLIED FDS TECHNOLOGY means the FDS Technology currently
utilized in connection with the Current Applied Fluid Delivery Systems.

      2.13  CURRENT APPLIED FDS or CURRENT APPLIED FLUID DELIVERY SYSTEMS means
the Fluid Delivery Systems sold to Applied by Kinetics for incorporation into an
Applied System as of the Effective Date.

      2.14  DESIGN IP means any and all IP Rights, other than Kinetics
Pre-Existing IP or Manufacturing Processes, relating to a Future Modification
created, conceived or first reduced to practice by or for a Party after the
Effective Date and during the course of, and as a result of, Design Services.

      2.15  DESIGN SERVICES means those services provided by Kinetics to Applied
hereunder for the preparation and delivery of a detailed design of a Future
Applied FDS or Component, comprised exclusively of Existing Components,
implementing Applied's specific
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requirements and including one or more of the following activities: (a) the
selection and configuration of Existing Components; (b) the preparation or
release, or both, of bills of materials, drawings, product definition forms,
engineering change orders or other documentation related to the selection and
configuration of Existing Components; and (c) the manufacture, testing and
delivery of such Future Applied FDS.

      2.16  DESIGN SERVICES AGREEMENT OR DSA means an agreement with respect to
Design Services entered into and executed by Kinetics and Applied in accordance
with Section 3.5 of this Agreement.

      2.17  DESIGN SOW means a written statement of work for Design Services
agreed to and executed by both Parties, specifying the scope of Design Services
to be provided by Kinetics, the related fees payable by Applied and any other
related responsibilities of each Party in accordance with Section 3.5.1.

      2.18  DEVELOPMENT SERVICES means any services with respect to Future
Modifications provided by Kinetics to Applied other than Design Services and
Standard Services.

      2.19  DEVELOPMENT SERVICES AGREEMENT OR DVA means a written agreement with
respect to Development Services entered into and executed by Kinetics and
Applied, in accordance with Section 3.6 of this Agreement.

      2.20  DOCUMENTATION means all blueprints, drawings, schematics, manuals,
flowcharts, specifications, prototypes, specimens, software, manuals and other
tangible materials related to the FDS Technology.

      2.21  EFFECTIVE DATE means June 1, 2002.
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      2.22  EXISTING COMPONENT means a Component of a Current Applied FDS, or
any other Component that is commercially available to or from Kinetics as of the
effective date of the applicable DSA.

      2.23  FDS TECHNOLOGY means the technology, both tangible and intangible,
related to the design and manufacture of a Fluid Delivery System.

      2.24  FLUID DELIVERY SYSTEM OR FDS means a product that distributes or
controls fluid (liquid, vapor or gas) to a tool or chamber, including all
hardware that is embodied in or that is inside or attached to any such fluid
delivery system, including but not limited to Components, but not including the
Applied system controller or weldments that connect the fluid delivery system to
the tool or chamber.

      2.25  FUTURE APPLIED FDS means any future Fluid Delivery System that
incorporates a Future Modification.

      2.26  FUTURE APPLIED FDS TECHNOLOGY means any Future Modification relating
to Standard Services, Design Services, or Development Services. Future Applied
FDS Technology also means any Future Modification relating to: (a) the FDS test
fixture(s) identified in Schedule 4.2.2(c) of the GSA; and (b) Purchased FDS
Test Fixture(s), Capacity FDS Hardware, Product Change Hardware and Improved
Software, all as defined in Section 4.2 of the GSA, provided or purchased by
Applied in accordance with Section 4.2 of the GSA.

      2.27  FUTURE MODIFICATIONS means improvements, enhancements or
modifications created, conceived or first reduced to practice by or for a Party
pursuant to the provisions hereof after the Effective Date to an Applied FDS or
the Applied FDS Technology, or both, and inventions, discoveries, works of
authorship, know-how, technical information, work
<PAGE>
product and/or other information related thereto, but in any case excludes any
Manufacturing Processes.

      2.28  GSA means the Global Supply Agreement concurrently entered into by
the Parties or any subsequent Global Supply Agreement entered into by the
Parties.

      2.29  IP RIGHTS means all patent rights, copyrights, trade secret rights,
mask work rights and other intellectual or intangible proprietary rights (other
than trademarks, service marks and similar rights) in any jurisdiction.

      2.30  KINETICS means (a) Kinetics Fluid Systems, Inc.; (b) all
unincorporated divisions of Kinetics Fluid Systems, Inc.; and (c) those
subsidiaries and affiliates of Kinetics Fluid Systems, Inc. that are approved
(through written supplement to this Agreement or the GSA) by Applied as
permitted to perform obligations hereunder. Unit Instruments, Inc. shall not be
included in the term "Kinetics" unless a written amendment to this Agreement,
executed by Unit Instruments, Inc. and by both Parties, so provides.

      2.31  KINETICS FUTURE IP means all IP Rights relating to Future
Modifications and owned by Kinetics, including all ***.

      2.32  KINETICS IP means Kinetics Pre-Existing IP and Kinetics Future IP.

      2.33  KINETICS PRE-EXISTING IP means all existing IP Rights relating to
the Current Applied FDS or Current Applied FDS Technology that are owned by
Kinetics, or to which Kinetics otherwise has rights (but only to the extent of
such rights), as of the Effective Date, as set forth in Schedule 2.33.

      2.34  MANUFACTURING PROCESS means: (a) each process or apparatus for
manufacturing Fluid Delivery Systems, Components or both, developed ***, but
excluding any process or apparatus owned by *** under the specific provisions of
the GSA or any "Tooling
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Loan Agreement" between the Parties; (b) any IP Rights and know-how related to
each process or apparatus as defined in paragraph (a), both tangible and
intangible; and (c) related documentation, including without limitation assembly
procedures, test procedures, operational method sheets, process mapping, product
synchronizations and sequence of events documentation; but, in each case,
excludes ***.

      2.35  OUTSOURCE RELATIONSHIP means the business relationship between the
Parties, according to which Kinetics manufactures for Applied FDS's for
incorporation into Applied Systems.

      2.36  PARTY(IES) means Applied, Kinetics or both, depending upon context.

      2.37  STANDARD SERVICES shall have the meaning given such term by the GSA.

      2.38  THIRD PARTY APPLICATIONS means those computer software applications
as set forth in Schedule 2.38.

      2.39  THIRD PARTY FDS TECHNOLOGY means FDS Technology owned by a party
other than the Parties.

                                   ARTICLE 3
                             INTELLECTUAL PROPERTY

      3.1   PRE-EXISTING IP. Each Party's Pre-Existing IP shall remain such
Party's sole property.

      3.2   LICENSE TO KINETICS FOR FDS OPERATIONS. Applied grants to Kinetics a
non-exclusive, non-transferable (except as provided in Section 3.7 and Section
8.2), royalty-free, worldwide license to reproduce, distribute, create
derivative works of, use, make, have made, sell, offer to sell, import,
practice, modify and improve Applied IP and, to the extent possible, the Third
Party Applications for the limited purposes of fulfilling its obligations under
this

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* Confidential Treatment Requested
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Agreement, the GSA and each DSA and DVA. With respect to the Third Party
Applications, Applied's license of rights is subject to any and all limitations
on such license as set forth in Applied's contracts with the applicable vendors.
Applied does not represent or warrant that Kinetics requires a license to or
that Applied has the right to license the Third Party Applications,
notwithstanding Applied's representation and warranty of Section 6.2.

      3.3   FUTURE MODIFICATIONS - GENERALLY. Future Modifications may involve
Design Services, Development Services or Standard Services.

      3.4   STANDARD SERVICES. The Parties have agreed, as part of the GSA, to
terms and conditions relevant to the provision by Kinetics of Standard Services.
Applied shall own any Fluid Delivery System and FDS Technology, and any IP
Rights related thereto, created, conceived or first reduced to practice by or
for a Party during the course of, and as a result of, Standard Services, but in
no event shall Applied own any ***.

      3.5   DESIGN SERVICES.

            3.5.1 DESIGN SERVICES PROCEDURE. If the Parties agree that Kinetics
will perform Design Services for Applied, then the Parties will execute a Design
SOW, addressing the issues referred to in Schedule 3.5.1, which shall be part of
the Purchase Order (as defined in the GSA) under which Kinetics will provide the
Design Services. Each Design SOW, together with the related Purchase Order,
shall form a separate contract (a "Design Services Agreement") between the
Parties relating to those Design Services, which contract incorporates the terms
of this Agreement, the GSA, the Design SOW and the

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* Confidential Treatment Requested
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related Purchase Order. In the event (and to the extent) of conflict between or
among this Agreement, the GSA, the Design SOW and the related Purchase Order,
precedence shall be given first to this Agreement, second to the GSA, third to
the Design SOW and fourth to the Purchase Order.

            3.5.2 PERFORMANCE OF DESIGN SERVICES. Kinetics shall provide the
Design Services to Applied as specified in the DSA. Applied shall pay Kinetics
the fees specified in the DSA for the Design Services in accordance with the
GSA.

            3.5.3 OWNERSHIP OF DESIGN IP. Applied shall own any and all Design
IP, and Kinetics hereby assigns and transfers to Applied any and all rights
Kinetics may have in Design IP. Furthermore, Kinetics shall obtain any and all
necessary assignments from its employees or subcontractors, as the case may be,
to assure that Kinetics and, in turn, Applied receives full and complete
ownership of Design IP.

      3.6   DEVELOPMENT SERVICES. If the Parties agree that Kinetics will
perform Development Services, then the Parties will negotiate in good faith to
agree upon and execute a Development Services Agreement.

      3.7   APPLIED'S APPROVAL OF DESIGN SERVICES AND DEVELOPMENT SERVICES.
Applied has the right to perform services substantially similar to Design
Services and Development Services solely, jointly with a third party or jointly
with Kinetics. Kinetics may not perform any Design Services or Development
Services unless performed jointly with Applied or otherwise approved by Applied;
however, Kinetics may subcontract those obligations to perform any agreed-to
Design Services or Development Services that Kinetics reasonably determines to
be outside Kinetics' core competency or as necessary to efficiently meet
Applied's requirements, and sublicense to the subcontractor associated licenses
and rights required to perform those obligations, with Applied's prior written
approval, such approval not to be unreasonably withheld, delayed or denied.
<PAGE>
      3.8   OWNERSHIP OF MANUFACTURING PROCESSES. *** will own each
Manufacturing Process.

      3.9   TRADEMARK RIGHTS. Applied grants to Kinetics a non-exclusive,
royalty-free, worldwide license to use Applied's trademarks, as defined in
Schedule 2.8, in the manner designated by Applied in connection with any Applied
Fluid Delivery Systems. Kinetics will not include any of its trademarks on any
Applied Fluid Delivery Systems, except that Kinetics may place the Kinetics
trademark(s) on Components manufactured by or for Kinetics and utilized in any
Applied Fluid Delivery Systems. The Parties acknowledge the importance of
maintaining the quality of Applied Fluid Delivery Systems and, accordingly,
Kinetics agrees to follow all the quality requirements of Sections 4.1 and 4.3
through 4.7 of the GSA.

      3.10  APPLICATIONS FOR IP RIGHTS. Each Party has the sole right to control
the process of preparing, filing, prosecuting and/or maintaining an application
or applications in relation to any IP Rights allocated to such Party hereunder,
and such Party shall bear the costs thereof. Each Party agrees to (i) disclose
promptly in writing to the other Party all IP Rights allocated to the other
Party hereunder; and (ii) assist the other Party as reasonably necessary to
obtain, register or apply for any such IP Rights, including by causing its
personnel and contractors to assign such IP Rights, sign or provide documents
and render assistance.

      3.11  EXISTING THIRD PARTY FDS TECHNOLOGY. In the event that Applied has a
license to Third Party FDS Technology which is necessary for Applied Fluid
Delivery Systems being requested by Applied, Applied, in its sole discretion,
will either: (a) sublicense that Third Party FDS Technology to Kinetics, if
Applied has the right to do so; or (b) make commercially reasonable efforts to
assist Kinetics in obtaining a license to the Third Party FDS Technology

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<PAGE>
from the owner; provided that neither Party will be required to take any act in
violation of existing agreements with third parties.

      3.12  FUTURE THIRD PARTY FDS TECHNOLOGY. In the event that the Parties
agree to introduce in the future Third Party FDS Technology into any Applied
Fluid Delivery System, then the Party with the relationship to the Third Party
will obtain all necessary rights from the Third Party to allow Kinetics to
manufacture Applied Fluid Delivery Systems incorporating the Third Party
Technology.

      3.13  LICENSE TO APPLIED FOR COVER AND SUPPORT. If Applied obtains Applied
Fluid Delivery Systems from a second source (i) in accordance with Applied's
"cover" rights under GSA Section 7.2 or (ii) to effect support as provided by
GSA Section 4.8.3.b, then Kinetics agrees to extend to Applied a non-exclusive,
non-transferable, royalty-free, worldwide, irrevocable (provided that Applied
complies with all related obligations) license to manufacture, have manufactured
for sale to Applied (and grant a sublicense to the manufacturer as necessary to
exercise this right to have manufactured for sale to Applied), use and sell any
such Applied Fluid Delivery Systems incorporating any Kinetics IP solely for
incorporation into an Applied System in accordance with Applied's "cover" rights
under GSA Section 7.2 or "Post Term Support" rights under GSA Section 4.8.3.b,
as required. The license will expire upon expiration or termination in each case
of Applied's "cover" rights under GSA Section 7.2(d) or "Post Term Support"
rights under GSA Section 4.8.3.b. Furthermore, in order for Applied to fully
enjoy its licenses pursuant to this Section, Kinetics agrees to provide to
Applied assistance, FDS Technology and Documentation, and otherwise take all
action, necessary to allow Applied or a reasonably skilled FDS manufacturer, in
the case that Applied exercises its sublicensing rights,
<PAGE>
to manufacture the Applied Fluid Delivery System. Notwithstanding the foregoing,
Kinetics shall not be required to provide *** to Applied or its manufacturer.

      3.14  RESERVATION OF RIGHTS. All IP Rights of each Party that are not
expressly granted in this Agreement are reserved and retained by such Party.
Except as expressly provided in this Agreement, as of the Effective Date, no
other licenses of IP Rights are granted whatsoever, whether expressly or by
implication or estoppel, by either Party to the other Party.

                                   ARTICLE 4
                                CONFIDENTIALITY

      4.1   DEFINITION. Confidential Information means all non-public,
proprietary information of, or disclosed by, a Party ("Disclosing Party") that,
from time-to-time, may be acquired by a Party ("Receiving Party") from the
Disclosing Party that is: (i) related to an Applied FDS or Applied FDS
Technology; or (ii) related to the provision of Applied FDS or Applied FDS
Technology pursuant to this Agreement, the GSA, a DSA or a Development Services
Agreement; or (iii) Visual Information as defined in Section 4.6. The
Confidential Information may be in any form, medium, state or condition,
inclusive of information that is embodied in a product or tangible item or that
is intangible, whether disclosed in oral, written, graphic, machine recognizable
(including computer programs, algorithms or databases), model or sample form or
any derivation thereof, and shall include all of the following:

            (a)   Processes; formulas; trade secrets; know-how; proprietary
      information; innovations; inventions; discoveries; improvements; research;
      development; product analysis or evaluations and test results, information
      and design; operations; systems; specifications; standards; drawings;
      designs; devices; data; patterns; compilations; methods; programs;
      technical documentation; manufacturing techniques or sequences;

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      schematics; configurations; computer programs, codes and operating
      standards; all whether or not patented or patentable.

            (b)   Product plans; customer configurations or product designs;
      confidential information received from customers; supplier configurations
      or product designs; confidential information received from suppliers.

            (c)   Marketing plans; business plans; business activities;
      facilities; warehousing and leasing; inventory; inventory management
      plans, methods and procedures; inventory, materials and Components
      qualification and evaluation; business and product forecasts; corporate
      financial information and budgets or projections; business processes.

            (d)   Personnel information; organizational structure; salaries and
      benefits; employee qualifications, requirements, resumes and individual
      data; labor cost models.

            (e)   Supplier information, including identity; product sales;
      product manufacturing; supply; pricing; evaluation and performance
      histories; forecasts; requirements or standards; logistics; delivery or
      freight arrangements or requirements; materials handling techniques,
      standards or requirements; supplier personnel.

            (f)   Customer information including: identity, product sales;
      product purchase histories or forecasts; customer agreements, terms and
      pricing; customer personnel.

            (g)   The terms, but not existence, of this Agreement, the GSA, any
      DSA or Development Services Agreement, and any and all information
      relating to the Outsource Relationship.

      Notwithstanding the above, Confidential Information does not include
information:
<PAGE>
            (i)   of which the Receiving Party was rightfully in possession
      prior to disclosure, as evidenced by appropriate documentation;

            (ii)  that was independently developed by employees or agents of the
      Receiving Party without use of Confidential Information provided by the
      Disclosing Party hereunder;

            (iii) that the Receiving Party rightfully receives from a third
      party not owing a duty of confidentiality to the Disclosing Party;

            (iv)  that becomes publicly available without fault of the Receiving
      Party; or

            (v)   whose disclosure is required by order of a court or government
      authority, provided that Disclosing Party shall notify the other party in
      advance of such a disclosure or release; shall take commercially
      reasonable efforts (at least equal to the efforts such party takes to
      protect the confidentiality of its own information) to protect the
      confidentiality of the Confidential Information in the Agreement, which
      shall include deleting the financial terms of or other Confidential
      Information in the Agreement from (or obtaining confidential treatment of
      such terms and information in) disclosure or public release when permitted
      by applicable law, rule or regulation (and requesting such deletion or
      equivalent protection or confidential treatment where approval by a court
      or governmental authority is required).

      4.2   CONFIDENTIALITY OBLIGATIONS. The Receiving Party shall hold the
Disclosing Party's Confidential Information in strictest confidence for five (5)
years after receipt, using such measures as the Receiving Party uses to protect
the confidentiality of its own Confidential Information of like importance, but
in no event using less than reasonable care. The Receiving Party shall not make
any disclosure of such Confidential Information, other than to its
<PAGE>
employees, consultants, agents and representatives on a need to know basis. This
prohibition against disclosure includes a prohibition against disclosure by
Kinetics to any Kinetics Affiliate, unless (1) Kinetics notifies Applied of a
commercially reasonable need for such disclosure and (2) Kinetics obtains
Applied's prior written consent to such disclosure, which consent will not be
unreasonably withheld, and (3) the Affiliate executes an Non-Disclosure
Agreement (NDA) having confidentiality obligations at least equal to those of
this Article 4. The Receiving Party shall inform each such employee, consultant,
agent and representative of the Receiving Party's confidentiality obligations
under this Agreement, and shall be jointly and severally liable for any breach
of this Agreement by any such employee, consultant, agent or representative. The
Receiving Party shall use the Confidential Information solely to perform the
activities contemplated by this Agreement, the GSA, and each DSA and Development
Services Agreement entered into by the Parties pursuant to Section 3 hereof.
Kinetics will not, without Applied's prior written consent: (i) use IP Rights
contributed by Applied in connection with the sale to Applied's customers of
Fluid Delivery Systems or Components, or (ii) sell to Applied's customers Fluid
Delivery Systems or Components to which Applied contributed IP Rights. The
preceding provision relates to Applied Pre-Existing IP Rights, as well as IP
Rights in Future Modifications.

      4.3   IDENTIFICATION AS CONFIDENTIAL. Unless such information is disclosed
orally or as Visual Information (as defined by Section 4.6), Confidential
Information shall be designated as such by an appropriate legend, such as
"Kinetics Confidential" or "Applied Confidential". Confidential Information that
is disclosed orally shall be identified as confidential before or at the time of
disclosure, and shall be confirmed as confidential in a written notice given by
the Disclosing Party to the Receiving Party within thirty (30) days after such
oral
<PAGE>
disclosure. Such notice must contain a reasonable summary of the orally
disclosed Confidential Information and a statement to the effect that such
information is Confidential Information. Applied shall not be required to
designate or identify Visual Information (as defined by Section 4.6) as
"Confidential".

      4.4   NEED-TO-KNOW DISCLOSURE. The Receiving Party agrees to limit
disclosure of Confidential Information of the Disclosing Party only to those
employees, agents, contractors and representatives of the Receiving Party who
have a need to know the Confidential Information in order to perform the
obligations set forth in the this Agreement, the GSA and each DSA and
Development Services Agreement entered into by the Parties pursuant to Section 3
hereof, and provided that, before any such disclosure, each such employee,
agent, consultant and representative shall execute an Employee Joinder of the
form and substance of Schedule 4.4.

      4.5   REMEDIES. The Parties acknowledge and agree that money damages above
will not be an adequate remedy for any breach of the obligations set forth in
this Article 4 of this Agreement or of any confidentiality obligation between
the Parties. Accordingly, the Parties agree that the Disclosing Party may be
irreparably harmed and shall be entitled to seek injunctive relief, including a
temporary or preliminary injunction or a permanent injunction, or to any other
appropriate relief to restrain or redress any breach or threatened breach of
confidentiality, in addition to any other remedies either Party may have in law
or equity.

      4.6   VISUAL INFORMATION. The Parties recognize and acknowledge that, in
order for Kinetics to perform its GSA obligations, select Kinetics employees
will have access to Applied information stored within and presented by Applied's
computer system, or as a result of access to and presence on Applied facilities
("Visual Information"). The Visual Information will include both FDS-related and
non-FDS information.
<PAGE>
                                   ARTICLE 5
                              TERM AND TERMINATION

      5.1   TERM. This Agreement shall commence on the Effective Date and expire
concurrently with expiration of the GSA, unless terminated earlier in accordance
with Section 5.2.

      5.2   TERMINATION.

            5.2.1 IN EVENT OF A GSA TERMINATION. This Agreement will be
terminated in the event of a termination of the GSA.

            5.2.2 BY EITHER PARTY IN EVENT OF AN IPA DEFAULT. This Agreement may
be terminated by either Party by written notice to the other Party in the Event
of IPA Default by the other Party upon the failure by the other Party to correct
the Event of IPA Default within thirty (30) days of receipt of written notice of
the Event of Default. An Event of IPA Default means a material breach of the
warranties, representations, covenants or obligations under this Agreement. In
the event that the allegedly defaulting party disputes the claim that an Event
of Default has occurred, then either party may exercise its rights in and to the
Business Review Process of Section 7.2.5 of the GSA.

            5.2.3 BY EITHER PARTY IMMEDIATELY UPON CONFIDENTIALITY BREACH. If a
Party materially breaches its confidentiality obligations under Article 4 in a
manner that cannot be cured, then, in addition to any rights under Section
5.2.2, the other Party may give written notice to the breaching Party that the
other Party intends to promptly terminate this Agreement. During the five (5)
business days after receipt of such notice, the breaching Party shall meet with
the other Party to discuss the confidentiality breach and whether the breaching
Party can cure it, but if the Parties do not agree in writing within such period
on a plan to be implemented by the breaching Party to cure the confidentiality
breach, then after such period the other Party may
<PAGE>
immediately terminate this Agreement by written notice to the breaching Party.
During such period, the breaching party will take appropriate steps to remedy or
mitigate its breach.

            5.2.4 BY EITHER PARTY OF A DSA. A Party may terminate a DSA by
written notice to the other Party if the other Party is in material breach of
that DSA and fails to remedy that material breach within thirty (30) days after
receiving written notice of the material breach from the terminating Party. In
addition, any and all DSA's pending upon a termination pursuant to Section 5.2.1
- 5.2.3 shall terminate concurrently with the termination of the respective GSA
or IPA, as applicable. Upon termination of a DSA: (i) each Party shall cease all
activities pursuant to the DSA; (ii) Kinetics shall deliver to Applied all
work-in-progress as of the termination date on each deliverable specified in the
DSA; and (iii) Applied shall pay to Kinetics a quantum meruit of fees payable
for the Design Service commenced but not completed under the DSA.

            5.2.5 BY EITHER PARTY OF A DEVELOPMENT SERVICES AGREEMENT. A Party
may terminate a DVA by written notice to the other Party if the other Party is
in material breach of that DVA and fails to remedy that material breach within
thirty (30) days after receiving written notice of the material breach from the
terminating Party. In addition, any and all DVA's pending upon a termination
pursuant to Section 5.2.1 - 5.2.3 shall terminate concurrently with the
termination of the respective GSA or IPA, as applicable. Upon termination of a
DVA: (i) each Party shall cease all activities pursuant to the DVA; (ii)
Kinetics shall deliver to Applied all work-in-progress as of the termination
date on each deliverable specified in the DVA; and (iii) Applied shall pay to
Kinetics a quantum meruit of fees payable for the Development Services commenced
but not completed under the DVA.
<PAGE>
            5.2.6 EFFECTIVE DATE OF TERMINATION UPON GSA TERMINATION. Any such
termination pursuant to Section 5.2.1 will become effective upon that date
determined by the GSA. A Party shall exercise such right of termination by the
issuance of a notice of termination with respect to this Agreement that is
issued concurrently with a Notice of Termination for Default with respect to the
GSA pursuant to Article 25(b)(ii), or a Notice of Termination for Applied
Default with respect to the GSA pursuant to Article 25(d)(iii), and the date on
which termination of this Agreement is effective shall be the same date on which
such termination of the GSA becomes effective, in accordance with the
requirements of the GSA. The period between the notice of termination and the
date on which such termination is effective is hereafter referred to as the
"Wind-Down Period." During the Wind-Down Period, each Party will continue to
comply with its obligations under the GSA, including particularly the provisions
thereof related to the Wind-Down Period.

      5.3   CONSEQUENCES OF TERMINATION OR EXPIRATION. Upon the date of
expiration of this Agreement or the date on which termination of this Agreement
is effective, as the case may be:

            (a)   Each Party shall cease all activities pursuant to this
      Agreement, the then existing GSA and any DSA or Development Services
      Agreement entered into by the Parties pursuant to Section 3 hereof,
      respectively, other than the activities provided for by this Section 5.3;

            (b)   Each Party shall cease use of and return to the other Party
      all Confidential Information, including all Documentation reflecting and
      all other tangible embodiments of the Confidential Information, owned by
      the other Party, except as provided for in this Section 5.3;
<PAGE>
            (c)   Each Party shall confirm in writing to the other Party that
      all Confidential Information has been returned;

            (d)   The obligations of Articles 4, 6 and 7 and Sections 3.10, 5.4,
      8.4 and 8.5 (as applicable) shall remain in full force and effect, unless
      expressly terminated by mutual written agreement of the Parties;

            (e)   The licenses of Sections 3.2 and 3.9 will terminate;

            (f)   Kinetics agrees to provide to Applied any and all training or
      training materials reasonably necessary for Applied to assume
      manufacturing and servicing of the Applied Fluid Delivery Systems being
      manufactured or developed as of the date of termination in the same manner
      as then practiced by Kinetics, but Kinetics shall not be required to
      provide ***;

            (g)   Kinetics will disclose to Applied all FDS Technology necessary
      to manufacture the Applied Fluid Delivery Systems being manufactured or
      developed as of the date of termination in the same manner as then
      practiced by Kinetics, but Kinetics shall not be required to provide ***;

            (h)   Kinetics will provide to Applied all Documentation (and all
      copies of same) necessary to manufacture the Applied Fluid Delivery
      Systems being manufactured or developed as of the date of termination in
      the same manner as then practiced by Kinetics, but Kinetics shall not be
      required to provide ***; and

            (i)   Notwithstanding the above, each Party may retain the other
      Party's Confidential Information to the extent and for the period
      necessary to perform any obligations during the Wind-Down Period and any
      post-termination obligations under the GSA, and each party shall perform
      such obligations under the GSA.

-------
*Confidential Treatment Requested

<PAGE>
The above itemization of consequences is not exhaustive; instead, the Parties
agree that, upon termination, Kinetics will take any and all steps necessary to
place Applied in the same position as Kinetics at the time of termination with
respect to the manufacturing, developing or both of Fluid Delivery Systems being
manufactured or developed by Kinetics for Applied at the date of termination.
These steps include the provisions by Kinetics of all information, in whatever
form, relevant to FDS Technology, as it relates to the Applied Fluid Delivery
Systems, and the license by Kinetics of all IP Rights, necessary for Applied to
continue the manufacture of and have manufactured the then existing Applied
Fluid Delivery Systems and utilization of the associated FDS Technology.
Notwithstanding the foregoing, Kinetics shall not be required to provide
Manufacturing Processes.

      5.4   TERMINATION OF THE AMENDED IPA. The Parties hereby terminate the
Amended IPA on the Effective Date of this Agreement. This Agreement supersedes
the Amended IPA on and from the Effective Date, and accordingly each party
waives its rights, and shall not perform its obligations, under Section 5.3 of
the Amended IPA related to termination or expiration of the Amended IPA.

                                   ARTICLE 6
                         WARRANTIES AND REPRESENTATIONS

      6.1   KINETICS PRE-EXISTING IP RIGHTS. Kinetics represents and warrants
that (a) it is the owner of Kinetics' Pre-existing IP, (b) it is not aware of
any claim of ownership or infringement by any third party with respect to the
Kinetics Pre-Existing IP, (c) it has the right to grant the licenses granted
under this Agreement, and (d) it has not and will not grant to any third parties
rights inconsistent with the rights granted to Applied hereunder.
<PAGE>
      6.2   APPLIED PRE-EXISTING IP RIGHTS. Applied represents and warrants that
(a) it is the owner of Applied's Pre-existing IP, (b) it is not aware of any
claim of ownership or infringement by any third party with respect to the
Applied Pre-Existing IP, (c) it has the right to grant the licenses granted
under this Agreement, and (d) it has not and will not grant to any third parties
rights inconsistent with the rights granted to Kinetics hereunder.

      6.3   FUTURE MODIFICATIONS. The Parties represent and warrant that they
will not knowingly infringe upon or misappropriate any third-party's IP Rights
in performing any jointly agreed-to Future Modifications pursuant to this
Agreement and any DSA or DVA.

      6.4   COMPLETENESS OF SCHEDULES OF PRE-EXISTING IP RIGHTS. The Parties
represent and warrant that the Schedules of Pre-Existing IP Rights are complete
and accurate as to the best of the Parties' belief. In the event that any
additional Pre-Existing IP Rights of a Party are identified after the Effective
Date and upon the Parties' agreement that the information constitutes a
Pre-Existing IP Right, the Parties agree to amend the Schedule(s) accordingly.

      6.5   DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, THE GSA, OR ANY DSA OR DVA, ANY FDS TECHNOLOGY OR CONFIDENTIAL
INFORMATION PROVIDED BY EITHER PARTY UNDER ANY SUCH AGREEMENT IS PROVIDED "AS
IS" AND WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED, IMPLIED, OR STATUTORY,
INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, TITLE, OR NON-INFRINGEMENT, AND NEITHER PARTY SHALL
STATE, COMMUNICATE, SUGGEST, OR REPRESENT TO ANY THIRD PARTY OTHERWISE.

      6.6   LIMITATION OF LIABILITY. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, THE GSA, OR ANY DSA OR DVA, IN NO EVENT SHALL EITHER
<PAGE>
PARTY BE LIABLE FOR ANY SPECIAL, INDIRECT, PUNITIVE, CONSEQUENTIAL, OR
CONTINGENT DAMAGES, WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH EXCLUDED DAMAGES.

                                   ARTICLE 7
                                  INDEMNITIES

      7.1   INDEMNIFICATION - PERFORMANCE OF AGREEMENT. *** (The "Indemnifying
Party") shall indemnify, defend, and hold *** harmless from and against any and
all claims, suits, losses, and liabilities or portions thereof and the
associated costs and expense, including attorneys' fees, to the extent awarded
by a court of competent jurisdiction or pursuant to a settlement, caused in
whole or in part by the breach by the Indemnifying Party of any term or
provision of this Agreement or any DSA or DVA, or any negligent, grossly
negligent or intentional acts, errors, or omissions by the Indemnifying Party,
its employees, officers, agents or representatives in the performance of this
Agreement or any DSA or DVA.

      7.2   INDEMNIFICATION - INFRINGEMENT/MISAPPROPRIATION. In the event that
*** is charged with infringement, misappropriation or other violation of any
third-party's IP Rights as a result of any IP Rights licensed by *** under this
Agreement or any DSA or DVA, but not including the Third Party Applications, ***
shall have the sole responsibility to:

            (a)   defend against any such claim at its sole expense, and

            (b)   account for any injury, loss, or damage, of any kind or
                  nature, or any other liability incurred by or imposed upon ***
                  charged with infringement or misappropriation.

----------
* Confidential Treatment Requested
<PAGE>
Notwithstanding the foregoing and the priority of agreements provision of
Section 1.3 of the GSA, Kinetics' indemnification duty relating to its supply
obligations will be governed by the GSA.

      7.3   INDEMNIFICATION/DUTY TO DEFEND SET-OFF. If a claim of infringement,
misappropriation or other violation is made by a third party as a result of
Kinetics' performance pursuant to this Agreement and Applied incurs expenses in
connection with the defense of such matter as a result of Kinetics' failure to
comply with its obligations set forth in Sections 7.1 and 7.2, Applied may apply
up to fifty percent (50%) of any future royalties that otherwise may be payable
to Kinetics hereunder in order to recover such expenses.

      7.4   INDEMNIFIED PARTY'S OBLIGATIONS. In connection with any indemnity
provided under this Agreement, the indemnified Party shall (a) provide
reasonable cooperation and assistance to the indemnifying Party; and (b) provide
prompt written notice of any claim that would trigger an indemnity obligation.
The indemnifying Party will not be responsible for any obligation under any
settlement agreement entered into without the indemnifying Party's consent.

                                   ARTICLE 8
                               GENERAL PROVISIONS

      8.1   ENTIRE AGREEMENT. This instrument, including the exhibits and
schedules hereto, sets forth the entire agreement between the Parties and merges
and supersedes any and all previous agreements, understandings and negotiations
between the Parties as to such subject matter, except for the GSA executed
concurrently herewith. The GSA shall determine the priority of provisions
amongst this Agreement, the GSA and each DSA and Development Services Agreement
in the event of inconsistency among them. Any representation, promise, or
condition in connection with such subject matter that is not incorporated in
this instrument shall
<PAGE>
not be binding upon either Party. This Agreement may not be amended, modified or
supplemented by the Parties in any manner, except by an instrument in writing
signed by the Parties.

      8.2   SUCCESSION AND ASSIGNMENT.

            (a)   This Agreement shall be binding upon and inure to the benefit
of each of the Parties and its respective permitted successors and permitted
assigns. Neither Kinetics nor Applied shall assign or transfer to another person
this Agreement, or its rights, interests or obligations under this Agreement, in
whole or in part, whether voluntarily or by operation of law, (i) without the
prior express written consent of the other party, or (ii) under and in
accordance with the requirements set out in Article 17 of Exhibit 1 to the GSA,
which Article is incorporated herein by this reference to apply to this
Agreement.

            (b)   If a Party assigns or transfers the GSA, or permits the GSA to
vest in another, in whole or in part, pursuant to any transaction in accordance
with the provisions of the GSA, then that Party shall also assign, transfer or
cause to vest in such other person, this Agreement, in whole or in like part.

            (c)   Except as permitted and as provided in or under Sections 8.2
(a) and (b) above, neither Party may assign, transfer or permit this Agreement
or any rights or obligations hereunder to vest in any other person, in whole or
in part, without the express prior written consent of the other.

            (d)   With prior notice to and express written consent by Applied
(which may be included as part of a DSA or DVA), Kinetics may, solely for the
purpose of providing Design or Development Services to Applied, delegate part,
but not all, of its obligations hereunder, and may assign and sublicense part
but not all of its rights hereunder, to an Affiliate of Kinetics if
<PAGE>
Kinetics remains primarily, or equally with the Affiliate, obligated for
performance of all of Kinetics' obligations as a party to this Agreement and the
Affiliate agrees in writing to be bound by the terms and conditions of this
Agreement.

            (e)   Any assignment, transfer or vesting of this Agreement not made
in compliance with and approved as required under this Section shall be void
and, at the option of the other Party, may be deemed a breach of and default
under this Agreement.

      8.3   EXPORT REGULATION. The Parties will not knowingly export directly or
indirectly, any technology or know-how to any countries, agencies, groups or
companies prohibited by the United States Department of Commerce or United
States Department of State unless prior authorization is obtained.

      8.4   RULES OF CONSTRUCTION. Capitalized terms used herein shall have the
meaning assigned to them by the definitions in Article 2. Additionally, the
singular includes the plural and the plural includes the singular; words
importing any genders include the other gender; references to "writing" include
printing, typing, lithography and any other means of reproducing words in
tangible, visible form; references to articles, section (or any subdivision of
sections), schedules and exhibits are to those of this Agreement, unless
otherwise indicated; the words "hereof," "hereunder," "herein," and any other
words of similar import refer to this Agreement, including its schedules and
exhibits; and the word "including," when used in this Agreement, is not intended
to be exclusive and, in all cases, means "including without limitation". The
headings contained in this Agreement are intended for reference only and shall
not be referred to in the interpretation of this Agreement.
<PAGE>
      8.5   ATTORNEYS' FEES. If either Party seeks to enforce its rights under
this Agreement by legal proceedings or otherwise, the non-prevailing Party shall
pay all costs and expenses, including reasonable attorneys' fees, incurred by
the prevailing Party.

      8.6   GENERAL PROVISIONS. The following provisions of the GSA and of
Exhibit 1 of the GSA are incorporated into this Agreement by reference, provided
that references in such provisions to the "Agreement" shall, when used herein,
be references to this Amended and Restated Intellectual Property Agreement:

            (i)    Article 11 of Exhibit 1 to the GSA, entitled "Applicable Law,
                   Consent to Jurisdiction and Venue."

            (ii)   Article 23 of Exhibit 1 to the GSA, entitled "Force Majeure."

            (iii)  Section 9.1 of the GSA, entitled "Independent Contractor."

            (iv)   Section 9.2 of the GSA, entitled "No Third Party
                   Beneficiary."

            (v)    Section 9.3 of the GSA, entitled "Severability."

            (vi)   Section 9.4 of the GSA, entitled "Waiver."

            (vii)  Section 9.6 of the GSA, entitled "Execution."

            (viii) Section 10 of the GSA, entitled "Representations and
                   Warranties of the Parties."

            (ix)   Section 1.2.2 of the GSA, entitled "Notices."

            (x)    Article 17 of Exhibit 1 to the GSA, entitled "Assignment and
                   Succession", pursuant to Section 8.2 of this Agreement
<PAGE>
      IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date set forth below to be effective as of the Effective Date.

                                               APPLIED MATERIALS, INC.

                                               By:    /s/ Paul Hohlstein
                                                   -----------------------------
                                               Name:      Paul Hohlstein
                                                      --------------------------
                                               Title:     Vice President
                                                      --------------------------
                                               Date:      5/21/02
                                                      --------------------------

                                               KINETICS FLUID SYSTEMS, INC.

                                               By:    /s/ Dan Rubin
                                                   -----------------------------
                                               Name:      Dan Rubin
                                                      --------------------------
                                               Title:     President
                                                      --------------------------
                                               Date:      5/21/02
                                                      --------------------------
<PAGE>

                                    SCHEDULES
<PAGE>
                                  SCHEDULE 2.8

                           APPLIED FDS PRE-EXISTING IP

APPLIED FDS CONFIDENTIAL INFORMATION

      1.    Confidential Information with respect to: (a) *** fixture hardware
            and test fixture hardware that is based upon ***; and (b) "Current
            TF Software", as defined in GSA Section 4.2.3(c), being all software
            used, as of the Effective Date, in the testing operation of all ***
            and test fixtures listed in GSA Schedules 4.2.2(a), (c) and (d).

      2.    Confidential Information with respect to ***.

      3.    Confidential Information with respect to process ***.

      4.    Confidential Information with respect to ***

      5.    Confidential Information embodied in the documentation related to
            Items 1-8.

      6.    Confidential Information embodied in the *** drawings, ***
            procedures, *** and engineering change orders related to the ***
            Applied Fluid Delivery Systems.

      7.    Confidential Information embodied in the Applied Software and
            Databases listed below.

APPLIED FDS TRADEMARKS

      "APPLIED MATERIALS", including U.S. Trademark Regs. No. 1,980,572 and No.
      1,943,850

      Stylized "A" and "APPLIED MATERIALS", including U.S. Trademark Regs. No.
      1,690,615 and No. 1,588,182

      Stylized "A", including U.S. Trademark Reg. No. 1,549,863

      "AMAT" (unregistered)

APPLIED COPYRIGHTS

      Copyrights, whether or not registered, related to Applied-owned
Documentation and, as appropriate, to Applied's ***.

----------

* Confidential Treatment Requested
<PAGE>
*** DATABASES:

      A.    In-House Developed ***

            ***
            ***
            ***
            ***
            ***

      B.    In-House *** and ***

            ***
            ***
            ***
            ***
            ***
            ***
            ***

      C.    Test Fixture Software

            All "Current TF Software", as defined in GSA Section 4.2.3(c), being
      all software used, as of the Effective Date, in the testing operation of
      all test fixtures listed in GSA Schedules 4.2.2(a), (c) and (d).

----------

* Confidential Treatment Requested
<PAGE>
                                  SCHEDULE 2.33

                            KINETICS PRE-EXISTING IP

PATENTS AND PATENT APPLICATIONS:

                  PATENTS OWNED BY KINETICS FLUID SYSTEMS, INC.

<TABLE>
<CAPTION>
                                              PATENT          FILING        PATENT        PATENT
MATTER NUMBER       PATENT      COUNTRY     APPLICATION        DATE         NUMBER        ISSUE      INVENTOR         PRODUCTS
                                             SERIAL NO.                                    DATE
-------------  ---------------  -------  -----------------  ----------  --------------  ----------  ----------  --------------------
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
I0294/7005     Integrated Gas   U.S.A.   08/404,485         3/17/1995   5,605,179       2/25/1997   Benjamin    very early Insync
I0294/7003     Panel                                                                                Strong,     gas panel (like was
                                                                                                    Brent       in lobby at Centre
                                                                                                    Elliot,     Pointe); multiple
                                                                                                    Frank       valves in single
                                                                                                    Balma       block, MFCs
                                                                                                                connected on VCR
                                                                                                                tube stubs;

I0294/7005     Integrated Gas   U.S.A.   08/736,354         10/22/1996                              Benjamin    see above
               Panel                                                                                Strong,
                                                                                                    Brent
                                                                                                    Elliot,
                                                                                                    Frank
                                                                                                    Balma

I0294/7006EP   Building Blocks  EP       97947611.6         12/3/1996                   11/17/1998  Jeffrey R.  foreign filing off
               for Integrated                                                                       Markulec    US#5,836,355; "IGS"
               Gas Panel                                                                            et al       modular blocks (long
                                                                                                                bolts);

I0294/7006JP   Building Blocks  JP       525622/98          11/19/1997                              Jeffrey R.  foreign filing off
               for Integrated                                                                       Markulec    US#5,836,355; "IGS"
               Gas Panel                                                                            et al       modular blocks (long
                                                                                                                bolts);

I0294/7006KR   Building Blocks  KR       99-7004883         11/19/1997                              Jeffrey R.  foreign filing off
               for Integrated                                                                       Markulec    US#5,836,355; "IGS"
               Gas Panel                                                                            et al       modular blocks (long
                                                                                                                bolts);
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
I0294/7006PCT  Building Blocks  PCT      PCT/US97/21327     11/19/1997  WO 98/25058     6/11/1998   Jeffrey R.  foreign filing off
               for Integrated                                                                       Markulec    US#5,836,355; "IGS"
               Gas Panel                                                                            et al       modular blocks (long
                                                                                                                bolts);

               Building Blocks  U.S.A    08/760,150         12/3/1996   5,836,355       11/17/1998  Jeffrey R.  variations upon
               for Integrated                                                                       Markulec    Insync "IGS" style
               Gas Panel                                                                            et al       multiple block
                                                                                                                modular substrates
                                                                                                                on two planes;

I0294/7006     Building Blocks  U.S.A    08/931,060         9/15/1997   6,302,141       10/16/2001  Jeffrey R.  Insync "IGS" style
               for Integrated                                                                       Markulec    multiple block
               Gas Panel                                                                            et al       modular substrates
                                                                                                                on two planes;

               Improved         U.S.A    08/672,826         6/28/1996                               Benjamin
               Compression Sea                                                                      Strong,
                                                                                                    Dennis
                                                                                                    Rex

               MFC - Quick      PCT      PCT/US96/04708     4/4/1996                                Benjamin
               Change Method                                                                        Strong,
               and Apparatus                                                                        Frank
                                                                                                    Balma,
                                                                                                    Brent
                                                                                                    Elliot,
                                                                                                    Michael
                                                                                                    Green

               MFC - Quick      U.S.A    08/437/093         5/5/1995                                Benjamin
               Change Method                                                                        Strong,
               and Apparatus                                                                        Frank
                                                                                                    Balma,
                                                                                                    Brent
                                                                                                    Elliot,
                                                                                                    Michael
                                                                                                    Green

I0294/7005EP   Mounting Plane   EP       98925252.3         6/4/1998    PCT/US98115474  1/21/1999   Jeffrey R.  foreign filing for
               For Integrated                                           WO99/02867                  Markulec,   US#6,231,260;
               Gas Panel                                                                            Dennis G.   "Versaplane" modular
                                                                                                    Rex,        gas panel mounting
                                                                                                    Richard     plate;
                                                                                                    E.
                                                                                                    Schuster,
                                                                                                    Brent D.
                                                                                                    Elliot
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
I0294/7005JP   Mounting Plane   Japan    2000-502327                                                Jeffrey R.  foreign filing for
               For Integrated                                                                       Markulec,   US#6,231,260;
               Gas Panel                                                                            Dennis G.   "Versaplane" modular
                                                                                                    Rex,        gas panel mounting
                                                                                                    Richard     plate;
                                                                                                    E.
                                                                                                    Schuster,
                                                                                                    Brent D.
                                                                                                    Elliot

I0294/7005KR   Mounting Plane   Korea                                                               Jeffrey R.  foreign filing for
               For Integrated                                                                       Markulec,   US#6,231,260;
               Gas Panel                                                                            Dennis G.   "Versaplane" modular
                                                                                                    Rex,        gas panel mounting
                                                                                                    Richard     plate;
                                                                                                    E.
                                                                                                    Schuster,
                                                                                                    Brent D.
                                                                                                    Elliot

I0294/7005PCT  Mounting Plane   PCT      PCT/US598/11574    6/4/1998    WO99/02867      01/251/99   Jeffrey R.  foreign filing for
               For Integrated                                                                       Markulec,   US#6,231,260;
               Gas Penel                                                                            Dennis G.   "Versaplane" modular
                                                                                                    Rex         gas panel mounting
                                                                                                    Richard     plate;
                                                                                                    E.
                                                                                                    Schuster,
                                                                                                    Brent D.
                                                                                                    Elliot

I0294/7005     Mounting Plane   U.S.A    08/893,773         7/11/1997   6,231,260       5/15/2001   Jeffrey R.  "Versaplane"
               For Integrated                                                                       Markulec,   mounting plate;
               Gas Panel                                                                            Dennis G.
                                                                                                    Rex,
                                                                                                    Richard
                                                                                                    E.
                                                                                                    Schuster,
                                                                                                    Brent D.
                                                                                                    Elliot

I0294/7007CA   Sieve Like       Canada   2332286            3/31/1999                                           foreign filing for
               Structure for                                                                                    US#6,158,454;
               Fluid Flow                                                                                       venting modular
               Through                                                                                          backplance;
               Structural
               Arrangement

I0294/7007CN   Sieve Like       China    99807334.2                                                             foreign filing for
               Structure for                                                                                    US#6,158,454;
               Fluid Flow                                                                                       venting modular
               Through                                                                                          backplance;
               Structural
               Arrangement

I0294/7007EP   Sieve Like       EP       PCT99914326.6                                                          foreign filing for
               Structure for             Pursuant to                                                            US#6,158,454;
               Fluid Flow                PCT/US99/07223                                                         venting modular
               Through                                                                                          backplance;
               Structural
               Arrangement
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
I0294/7007JP   Sieve Like       JP       PCT99914326.6                                                          foreign filing for
               Structure for             Pursuant to                                                            US#6,158,454;
               Fluid Flow                PCT/US99/07223                                                         venting modular
               Through                                                                                          backplance;
               Structural
               Arrangement

I0294/7007KR   Sieve Like       KR       2000-7011447                                                           foreign filing for
               Structure for                                                                                    US#6,158,454;
               Fluid Flow                                                                                       venting modular
               Through                                                                                          backplance;
               Structural
               Arrangement

I0294/7007PCT  Sieve Like       PCT      PCT/US99/07223     3/31/1999   WO99/53115      10/21/1999              foreign filing for
               Structure for                                                                                    US#6,158,454;
               Fluid Flow                                                                                       venting modular
               Through                                                                                          backplance;
               Structural
               Arrangement

I0294/7007     Sieve Like       U.S.A    09/060,519         4/14/1998   6,158,454       12/12/2000  Michael J.  mounting plate
               Structure for                                                                        Duret,      design allowing
               Fluid Flow                                                                           Erin        exhaust air to sweep
               Through                                                                              Martin      past mechanical
               Structural                                                                           HasenKamp,  seals of surface
               Arrangement                                                                          Jeffrey R.  mounted modular
                                                                                                    Markulec,   components;
                                                                                                    Dennis G.
                                                                                                    Rex,
                                                                                                    Richard
                                                                                                    E.
                                                                                                    Schuster

I0294/7008TW   System Of        Taiwan   89125954 based on  12/6/2000                                           foreign filing for
               Modular                   US 09/456,226                                                          US#6,283,155;
               Substrates                                                                                       "K.1" modular
               for Enabling                                                                                     (1.5");
               The
               Distribution of
               Process
               Fluids
               Thorough
               Removable
               Components

I0294/7008     System Of        U.S.A    09/456,226         12/6/1999   6,283,155       9/4/2001    Kim Ngoc    "K.1" modular
               Modular                                                                              Vu          substrates (1.5"
               Substrates For                                                                                   wide) using internal
               Enabling The                                                                                     seal to avoid welded
               Distribution of                                                                                  caps;
               Process Fluids
               Thorough
               Removable
               Components
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
I0294/7008WO   System Of        WO       PCT/US00/42589     12/6/2000   WO 01/42694                             foreign filing for
               Modular                   based on US                                                            US#6,283,155;
               Substrates For            09/456,226                                                             "K.1" modular
               Enabling The                                                                                     (1.5");
               Distribution of
               Process Fluids
               Thorough
               Removable
               Components

I0294/7008     System of        USA      09/456,226         12/6/1999                               Kim Ngoc    "K.1" modular (1.5")
               Modular                                                                              Vu          no-welds substrates;
               Substrates of
               Enabling the
               Distribution of
               Process Fluids
               Through
               Removable
               Components

I0294/7008TW   System of        Taiwan   09/456,226         12/6/1999                               Kim Ngoc    "K.1" modular (1.5")
               Modular                                                                              Vu          no-welds substrates;
               Substrates of
               Enabling the
               Distribution of
               Process Fluids
               Through
               Removable
               Components
</TABLE>

                     PATENTS OWNED BY UNIT INSTRUMENTS, INC.

           (KINETICS FLUID SYSTEMS, INC HAS RIGHTS TO THESE PATENTS.)

<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
               Welded           USA      09/398,302         9/20/1999   6,125,887       10/3/2000   James V.    modular substrate
               Interconnection                                                                      Pinto       system which
               Modules For                                                                                      combines individual
               High Purity                                                                                      component station
               Fluid Flow                                                                                       with orbitally
               Control                                                                                          welded elbow-tee-
               Applications                                                                                     cross-etc. as single
                                                                                                                part

               Torque Tight     USA      501682             7/12/1995   5,524,936       6/11/1996   Barr et.    mechanism to prevent
               Locking Device                                                                       al.         VCR fittings from
                                                                                                                loosening through
                                                                                                                vibration or chained
                                                                                                                assembly sequence

U0128/7000EP   Manifold System  EP       99933722.3                                                 Kim N. Vu   foreign filing for
               of Removable                                                                         et al.      US#tbd; flanged
               Components For                                                                                   modular substrates
               Distribution Of                                                                                  - k1s ETC.;
               Fluids
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
U0128/7000JP   Manifold System  Japan    2000-229369        1/16/2001                               Kim N. Vu   foreign filing for
               of Removable                                                                         et al.      US#tbd; flanged
               Components For                                                                                   modular substrates
               Distribution Of                                                                                  - k1s ETC.;
               Fluids

U0128/7000KR   Manifold System  Korea    10-2001-7000241    1/8/2001                                Kim N. Vu   foreign filing for
               of Removable                                                                         et al.      US#tbd; flanged
               Components For                                                                                   modular substrates
               Distribution Of                                                                                  - k1s ETC.;
               Fluids

U0128/7000     Manifold System  USA      09/111,999         7/8/1998    GRANTED                     Eric J.     covers individual
               of Removable                                                                         Redemann,   modular substrates
               Components For                                                                       Kim N. Vu,  with overlapping
               Distribution Of                                                                      and David   flange
               Fluids                                                                               P. Sheriff  interconnections;
                                                                                                                Z-Cubes, K1S, K1H,
                                                                                                                etc.

U0128/7000WO   Manifold System  WO       PCT/US99/15272     07/7/99                                 Kim N. Vu   foreign filing for
UNI/001WO      of Removable              09/229,722         01/13/99                                et al.      US#tbd; flanged
               Components For                                                                                   modular substrates
               Distribution Of                                                                                  - K1S, etc.;
               Fluids

U0128/7001     Manifold System  USA      09/229,722         1/13/1999                               Eric J.     covers individual
               of Removable                                                                         Redemann,   modular substrates
               Components For                                                                       Kim N. Vu,  with tongue & pocket
               Distribution Of                                                                      and David   interconnections;
               Fluids                                                                               P. Sheriff  Z-Cubes, K1S, K1H,
                                                                                                                etc.

U0128/7006EP   Gas Panel        EP       97913896.3         5/12/1999                               Eric J.     foreign filing for
                                                                                                    Redemann,   US#5,992,463;
                                                                                                    Kim N. Vu   panel of long
                                                                                                                monolithic
                                                                                                                substrates;

U0128/7006JP   Gas Panel        Japan    522,597/1998       10/29/1997                              Eric J.     foreign filing for
                                                                                                    Redemann,   US#5,992,463;
                                                                                                    Kim N. Vu   panel of long
                                                                                                                monolithic
                                                                                                                substrates;

U0128/7006TW   Gas Panel        Taiwan   86116147           10/30/1997  122,473         10/29/2000  Eric J.     foreign filing for
                                                                                                    Redemann,   US#5,992,463;
                                                                                                    Kim N. Vu   panel of long
                                                                                                                monolithic
                                                                                                                substrates
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
U0128/7006KR   Gas Panel        Korea    7003781/1999       10/29/1997                              Eric J.     foreign filing for
                                                                                                    Redemann,   US#5,992,463;
                                                                                                    Kim N. Vu   panel of long
                                                                                                                monolithic
                                                                                                                substrates;

U0128/7006     Gas Panel        USA      08/739,936         10/30/1996  5,992,463       11/30/1999  Redemann,   panel of long
                                                                                                    Kim N. Vu   monolithic
                                                                                                                substrates;

U0128/7009     Gas Panel        USA      09/371,408         8/10/1999   6,192,938       2/27/2001   Eric J.     similar to
                                                                                                    Redemann,   US#5,992,463
                                                                                                    Kim N. Vu   individual gas
                                                                                                                string using long
                                                                                                                substrate; also
                                                                                                                covers super
                                                                                                                component;

U0128/7010     Gas Panel        USA      09/371,655         8/10/1999   6,189,570       2/20/2001   Eric J.     similar to
                                                                                                    Redemann,   US#5,992,463 panel
                                                                                                    Kim N. Vu   of multiple long
                                                                                                                substrates;

U0128/7011     Gas Panel        USA      09/371,659         8/10/1999   6,142,539       11/7/2000   Eric J.     covers any modular
                                                                                                    Redemann,   component base with
                                                                                                    Kim N. Vu   combination of inlet
                                                                                                                & outlet seals with
                                                                                                                keeper and retained
                                                                                                                screws;

U0128/7012CA   Gas Panel        Canada   2,307,663          10/28/1998                              Eric J.     foreign filing for
                                                                                                    Redemann,   US#6,293,310B1;
                                                                                                    Kim N. Vu   "V" channel under
                                                                                                                bridging
                                                                                                                components;

U0128/7012CN   Gas Panel        China    98811585.9         5/26/2000                               Eric J.     foreign filing for
                                                                                                    Redemann,   US#6,293,310B1;
                                                                                                    Kim  N. Vu  "V" channel under
                                                                                                                bridging
                                                                                                                components;

U0128/7012EP   Gas Panel        EP       98,956,297         10/28/1998                              Eric J.     foreign filing for
Murgitroyd &                                                                                        Redemann,   US#6,293,310B1;
Co. File                                                                                            Kim N. Vu   "V" channel under
No. P26089                                                                                                      bridging components;

U0128/7012EP   Gas Panel        EP/      1,102,387          10/28/1998                              Eric J.     foreign filing for
Murgitroyd &                    HONG                                                                Redemann,   US#6,293,310B1;
Co. File                        KONG                                                                Kim N. Vu   "V" channel under
No. P26089                                                                                                      bridging components;
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
U0128/7012JP   Gas Panel        Japan                                                               Eric J.     foreign filing for
                                                                                                    Redemann,   US#6,293,310B1;
                                                                                                    Kim N. Vu   "V" channel under
                                                                                                                bridging components;

U0128/7012KR   Gas Panel        Korea    10-2000-7004589    10/28/1998                              Eric J.     foreign filing for
                                                                                                    Redemann,   US#6,293,310B1;
                                                                                                    Kim N. Vu   "V" channel under
                                                                                                                bridging components;

U0128/7012MX   Gas Panel        Mexico   4,198              4/28/2000                               Eric J.     foreign filing for
                                                                                                    Redemann,   US#6,293,310B1;
                                                                                                    Kim  N. Vu  "V" channel under
                                                                                                                bridging components;

U0128/7012PCT  Gas Panel        PCT      PCT/US98/22912     10/28/1998                              Eric J.     foreign filing for
                                                                                                    Redemann,   US#6,293,310B1;
                                                                                                    Kim N. Vu   "V" channel under
                                                                                                                bridging components;

U0128/7012PCL  Gas Panel        HK       1102386.7                                                  Eric J.     foreign filing for
                                                                                                    Redemann,   US#6,293,310B1;
                                                                                                    Kim N. Vu   "V" channel under
                                                                                                                bridging components;

U0128/7012     Gas Panel        USA      08/960,464         10/29/1997  6,293,310       9/25/2001   Eric J.     covers small
                                                                                                    Redemann,   individual modular
                                                                                                    Kim N. Vu   substrates having
                                                                                                                "V" channel under
                                                                                                                bridging components;

U0128/7018     Gas Panel        USA      09/732,435         12/7/2000                               Eric J.     covers incorporating
                                                                                                    Redemann,   moisture sensor into
                                                                                                    Kim N. Vu   gas path defined by
                                                                                                                modular substrate
                                                                                                                architecture;

U0128/7019     Gas Panel        USA      09/732,434         12/7/2000                               Eric J.     covers using
                                                                                                    Redemann,   prepackaged
                                                                                                    Kim N. Vu   components with
                                                                                                                seals + keeper +
                                                                                                                screws;
</TABLE>
<PAGE>
<TABLE>
<S>            <C>              <C>      <C>                <C>         <C>             <C>         <C>         <C>
U0128/7026     Fluid Flow       USA      60/291,430         Provisional                             Kim Ngoc    early approaches to
               System                                       Application                             Vu          "super-component"
                                                            05/16/2001                                          shown to AMAT under
                                                                                                                NDA;

U0128/7028     Gas Panel        USA      9939487            8/23/2001                               Redemann,   covers components
                                                                                                    Kim N. Vu   bridging between
                                                                                                                substrates -
                                                                                                                applicable to both
                                                                                                                MFCs & parts on K1S,
                                                                                                                etc.;
</TABLE>
<PAGE>
CONFIDENTIAL INFORMATION:

1.    Surface Passivation

      Know-how associated with polishing and passivation of fluid delivery
      stainless steel surfaces by mechanical, chemical and electromechanical
      means.

2.    Machining and Surface Finishing Processes

      (a)   counterbore creation/finish

      (b)   circular pattern workhardening

      (c)   no-lap sharp edge

      (d)   Z-Bloc component & substrate process sequences

      (e)   Plug/cap methods for long drilled passages

3.    Proprietary skills and know-how related to:

      (a)   computerized solid modeling design techniques;

      (b)   orbital and TIG welding of corrosion resistant metals, including
            design of welding hardware and tooling;

      (c)   assembling fluid handling items composed of various polymers;

      (d)   functional test and commissioning of fluid handling subsystems;

      (e)   apparatus for intentionally inducing a phase change within fluids
            being transported; and

      (f)   databases & libraries of components and methods for making facility
            connections to semiconductor process tools and means for speeding
            field fabrication of same.

4.    Confidential Information embodied in the software, databases and documents
      listed below.

COPYRIGHTS:

1.    "GasWare" - software that takes a FDS schematic and creates a BOM and
      model for that FDS.

2.    "FabWare" - a database of information relating to connections between
      semiconductor fabrication tooling and facilities.

3.    "Manufacturing Scheduling" software.

4.    Other software and documents created by Kinetics (including its employees
      and consultants) related to Current Applied FDS or Current Applied FDS
      Technology.
<PAGE>
                                  SCHEDULE 2.38
                            THIRD PARTY APPLICATIONS

A.    Customized Applications

      ORACLE
      PDM
      MM 3000
      GPSI

B.    Off-the-Shelf Applications

      SMS
      Interwise (LEAP training)
      Reflection
      Lotus Notes
      Netscape Navigator
      Microsoft Windows NT
      Microsoft Office (no access)
      McAfee VirusScan
      BoKs

C.    Netscape Plug Ins

      Jinitiator (Oracle plug-in for LEAP)
      Brio
      Macromedia Shockwave author.exe
      Macromedia Shockwave dir/flash.exe
      Install from the Web
      Real Player
      WinZip
      Adobe Acrobat Plug-in
      MS Agent Plug-in

D.    Additional (Non-Core Image) Applications

      Autoview
      Fastlook
<PAGE>
                          SCHEDULE 3.5.1 -- DESIGN SOW

                                 DESIGN SERVICES
                                STATEMENT OF WORK

      This Design Services Statement of Work ("Design SOW") is entered into as
of ("Design SOW Effective Date") by and between Applied Materials, Inc., a
Delaware corporation having offices located in Santa Clara, CA ("Applied") and
Kinetics Fluid Systems, Inc., a California corporation having offices located in
Santa Clara, CA ("Kinetics") (collectively the "Parties").

      This Design SOW is entered into by and between the Parties under and
pursuant to the Intellectual Property Agreement between the Parties with an
effective date of ______________, 2001 ("IPA").

      This Design SOW incorporates the terms of the IPA and of the Global Supply
Agreement between the Parties with an effective date of June 1, 2002 ("GSA").

      In the event (and to the extent) of conflict between this Design SOW and
the related Purchase Order, then this Design SOW shall take precedence over the
Purchase Order, except to the extent that this Design SOW expressly states that
the Purchase Order shall take precedence.

      [PARTIES TO INSERT A DESCRIPTION OF:

      (I)   THE SCOPE OF THE DESIGN SERVICES TO BE PROVIDED,

      (II)  A SPECIFICATION FOR EACH DELIVERABLE,

      (III) ANY DELIVERY DUE DATES FOR EACH DELIVERABLE,

      (IV)  THE AMOUNT OR METHOD OF CALCULATION OF ANY FEES PAYABLE, AND

      (V)   PAYMENT DUE DATES.]

      Each of the parties hereto has caused this Agreement to be executed by its
duly authorized officer or representative as of the Design SOW Effective Date
set forth above.

APPLIED MATERIALS, INC.                   KINETICS FLUID SYSTEMS, INC.

By:                                       By:
Signature:                                Signature:
          -----------------------                   ----------------------------
Printed Name:                             Printed Name:
             --------------------                      -------------------------
Title:                                    Title:
      ---------------------------               --------------------------------
Date:                                     Date:
     ----------------------------              ---------------------------------
<PAGE>
                                  SCHEDULE 4.4

                            KINETICS EMPLOYEE JOINDER

      I am an employee, agent, contractor or representative of Kinetics Fluid
Systems, Inc. ("KINETICS").

      Kinetics has entered into agreements with Applied Materials, Inc.
("APPLIED") under which Kinetics will manufacture fluid delivery systems for
Applied.

      As part of that relationship, Applied will disclose its Confidential
Information (defined below) to Kinetics, and Kinetics will disclose the
Confidential Information to those Kinetics employees, agents, contractors and
representatives who must receive the information to perform under the
agreements.

      Applied and Kinetics have agreed to protect the confidentiality of each
other's Confidential Information and, as part of this agreement, have agreed to
have those employees, agents, contractors and representatives that receive
Confidential Information review and agree to the following undertakings
regarding the Confidential Information:

      1     DEFINITION. Confidential Information means all non-public,
proprietary information of, or disclosed by, Applied that, from time-to-time,
may be acquired by Kinetics from Applied and that is related to the fluid
delivery systems being manufactured by Kinetics for Applied pursuant to the
Global Supply Agreement between Applied and Kinetics. The Confidential
Information may be in any form, medium, state or condition, inclusive of
information that is embodied in a product or tangible item or that is
intangible, whether disclosed in oral, written, graphic, machine recognizable
(including computer programs, algorithms or databases), model or sample form or
any derivation thereof. Notwithstanding the above, Confidential Information does
not include information:

            (i)   of which Kinetics was rightfully in possession prior to
disclosure, as evidenced by appropriate documentation;

            (ii)  that was independently developed by employees or agents of
Kinetics without use of Confidential Information provided by Applied hereunder;

            (iii) that Kinetics rightfully receives from a third party not owing
a duty of confidentiality to Applied;

            (iv)  that becomes publicly available without fault of Kinetics; or

            (v)   whose disclosure is required by order of a court or government
authority, provided that Applied shall have been given timely notice of such
requirement and that Kinetics shall cooperate with Applied to limit the scope
and effect of such order.

      2     CONFIDENTIALITY OBLIGATIONS. I will hold Applied's Confidential
Information in strictest confidence for five (5) years after receipt, using such
measures as Kinetics uses to protect the confidentiality of its own Confidential
Information of like importance, but in no event using less than reasonable care.
I will not disclose any Confidential Information, other than to other Kinetics
employees, consultants, agents and representatives who have a need to know the
Confidential Information in order to perform the agreements between Kinetics and
Applied. I
<PAGE>
will not disclose any Confidential Information to any Kinetics Group company
other than Kinetics Fluid Systems, Inc., unless I am specifically advised by
Kinetics that such disclosure has been permitted by Applied. I will use the
Confidential Information solely to perform the activities contemplated by the
agreements between Kinetics and Applied.

      3     IDENTIFICATION AS CONFIDENTIAL. Unless such information is disclosed
orally, Confidential Information shall be designated as such by an appropriate
legend, such as "Kinetics Confidential" or "Applied Confidential". Confidential
Information that is disclosed orally shall be identified as confidential before
or at the time of disclosure, and shall be confirmed as confidential in a
written notice given within thirty (30) days after such oral disclosure. Such
notice must contain a reasonable summary of the orally disclosed Confidential
Information and a statement to the effect that such information is Confidential
Information.

      4     REMEDIES. I acknowledge and agree that money damages above will not
be an adequate remedy for any breach of the obligations set forth herein.
Accordingly, I agree that Applied may be irreparably harmed and shall be
entitled to seek injunctive relief, including a temporary or preliminary
injunction or a permanent injunction, or to any other appropriate relief to
restrain or redress any breach or threatened breach of confidentiality, in
addition to any other remedies Applied may have in law or equity.

      5     VISUAL INFORMATION. I acknowledge that, in order for Kinetics to
perform its obligations related to the manufacture of fluid delivery systems for
Applied, I may access to Applied Confidential Information stored within and
presented by Applied's computer system or as a result of access to and presence
on Applied facilities ("VISUAL INFORMATION"). The Visual Information will
include both gas panel and non-gas panel Confidential Information. I will only
access, use or disclose any Visual Information as necessary to manufacture Fluid
Delivery Systems pursuant to the Global Supply Agreement between Applied and
Kinetics.

      I have read, and I understand and agree to be bound by, the
confidentiality terms set forth above.

-------------------------
(Signature)

-------------------------
(Printed name)

-------------------------
(Date)
<PAGE>
                            APPLIED EMPLOYEE JOINDER

      I am an employee, agent, contractor or representative of Applied
Materials, Inc. ("APPLIED").

      Applied has entered into agreements with Kinetics Fluid Systems, Inc.
("KINETICS") under which Kinetics will manufacture fluid delivery systems for
Applied.

      As part of that relationship, Kinetics will disclose its Confidential
Information (defined below) to Applied, and Applied will disclose the
Confidential Information to those Applied employees, agents, contractors and
representatives who must receive the information to perform under the
agreements.

      Applied and Kinetics have agreed to protect the confidentiality of each
other's Confidential Information and, as part of this agreement, have agreed to
have those employees, agents, contractors and representatives that receive
Confidential Information review and agree to the following undertakings
regarding the Confidential Information:

      1     DEFINITION. Confidential Information means all non-public,
proprietary information of, or disclosed by, Kinetics that, from time-to-time,
may be acquired by Applied from Kinetics and that is related to the fluid
delivery systems being manufactured by Kinetics for Applied pursuant to the
Global Supply Agreement between Applied and Kinetics. The Confidential
Information may be in any form, medium, state or condition, inclusive of
information that is embodied in a product or tangible item or that is
intangible, whether disclosed in oral, written, graphic, machine recognizable
(including computer programs, algorithms or databases), model or sample form or
any derivation thereof. Notwithstanding the above, Confidential Information does
not include information:

            (i)   of which Applied was rightfully in possession prior to
disclosure, as evidenced by appropriate documentation;

            (ii)  that was independently developed by employees or agents of
Applied without use of Confidential Information provided by Kinetics hereunder;

            (iii) that Applied rightfully receives from a third party not owing
a duty of confidentiality to Kinetics;

            (iv)  that becomes publicly available without fault of Applied; or

            (v)   whose disclosure is required by order of a court or government
authority, provided that Kinetics shall have been given timely notice of such
requirement and that Applied shall cooperate with Kinetics to limit the scope
and effect of such order.

      2     CONFIDENTIALITY OBLIGATIONS. I will hold the Kinetics' Confidential
Information in strictest confidence for five (5) years after receipt, using such
measures as Applied uses to protect the confidentiality of its own Confidential
Information of like importance, but in no event using less than reasonable care.
I will not disclose any Confidential Information, other than to other Applied
employees, consultants, agents and representatives who have a need to know the
Confidential Information in order to perform the agreements between Kinetics and
Applied. I
<PAGE>
will use the Confidential Information solely to perform the activities
contemplated by the agreements between Kinetics and Applied.

      3     IDENTIFICATION AS CONFIDENTIAL. Unless such information is disclosed
orally, Confidential Information shall be designated as such by an appropriate
legend, such as "Kinetics Confidential" or "Applied Confidential". Confidential
Information that is disclosed orally shall be identified as confidential before
or at the time of disclosure, and shall be confirmed as confidential in a
written notice given within thirty (30) days after such oral disclosure. Such
notice must contain a reasonable summary of the orally disclosed Confidential
Information and a statement to the effect that such information is Confidential
Information.

      4     REMEDIES. I acknowledge and agree that money damages above will not
be an adequate remedy for any breach of the obligations set forth herein.
Accordingly, I agree that Kinetics may be irreparably harmed and shall be
entitled to seek injunctive relief, including a temporary or preliminary
injunction or a permanent injunction, or to any other appropriate relief to
restrain or redress any breach or threatened breach of confidentiality, in
addition to any other remedies Kinetics may have in law or equity.

      I have read, and I understand and agree to be bound by, the
confidentiality terms set forth above.

-------------------------
(Signature)

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(Printed name)

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(Date)<PAGE>
                                                                   Exhibit 10.18

                             RESTRUCTURING AGREEMENT

                                   DATED AS OF

                                  APRIL 9, 2004

                                  BY AND AMONG

                  KH LLC, A DELAWARE LIMITED LIABILITY COMPANY,

                  CELERITY GROUP, INC., A DELAWARE CORPORATION,

                  KINETICS GROUP, INC., A DELAWARE CORPORATION,

                 CELERITY GROUP, INC., A CALIFORNIA CORPORATION,

            KINETICS CHEMPURE SYSTEMS, INC., AN ARIZONA CORPORATION,

   FTS SYSTEMS, INC. (f/k/a KINETICS THERMAL SYSTEMS), A NEW YORK CORPORATION,

                KINETIC SYSTEMS, INC., A CALIFORNIA CORPORATION,

              KINETIC SYSTEMS CARIBE, INC., A DELAWARE CORPORATION,

          KINETIC SYSTEMS INTERNATIONAL, INC., A CALIFORNIA CORPORATION

                        TENNENBAUM CAPITAL PARTNERS, LLC,

                    ARES CORPORATE OPPORTUNITIES FUND, L.P.,

                    ARES LEVERAGED INVESTMENT FUND II, L.P.,

                               ARES III CLO, LTD.,

                               ARES IV CLO, LTD.,

                               ARES VII CLO LTD.,

                               ARES VIII CLO LTD.,

                          ARES TOTAL VALUE FUND, L.P.,

                    SPECIAL VALUE ABSOLUTE RETURN FUND, LLC,

                          SPECIAL VALUE BOND FUND, LLC,

                        SPECIAL VALUE BOND FUND II, LLC,

             J.B. FUQUA FAMILY CHARITABLE LEAD ANNUITY TRUST - 2000,

                  MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,

                        MIDOCEAN CAPITAL INVESTORS, L.P.,

                   MIDOCEAN CELERITY INVESTMENT PARTNERS, LP,

                             BEHRMAN CAPITAL III LP,

                      STRATEGIC ENTREPRENEUR FUND III L.P.,

                           GRYPHON PARTNERS II, L.P.,

                          GRYPHON PARTNERS II-A, L.P.,

<PAGE>

         THIS RESTRUCTURING AGREEMENT (this "Agreement"), dated as of April 9,
2004, is entered into by and among (1) KH LLC, a Delaware limited liability
company ("KH LLC"); (2) Celerity Group, Inc., a Delaware corporation, f/k/a
Kinetics Holdings Corporation ("Holdings"), Kinetics Group, Inc., a Delaware
corporation ("KGI"), Celerity Group, Inc., a California corporation
("Celerity"), Kinetics Chempure Systems, Inc., an Arizona corporation
("Chempure"), FTS Systems, a New York corporation ("KTS") (Holdings, KGI,
Celerity, Chempure, and KTS, collectively, the "Celerity Group"); (3) Kinetic
Systems, Inc., a California corporation ("KSI"), Kinetic Systems Caribe, Inc., a
Delaware corporation ("KSB"), Kinetic Systems International, Inc., a California
corporation ("KSI International" and together with KSI and KSB, collectively,
the "KSI Group"); (4) Tennenbaum Capital Partners, LLC ("TCP"), Ares Corporate
Opportunities Fund, L.P. ("ACOF"), Ares Leveraged Investment Fund II, L.P.
("Ares II"), Ares III CLO, Ltd. ("Ares III"), Ares IV CLO, Ltd. ("Ares IV"),
Ares VII CLO Ltd., ("Ares VII"), Ares VIII CLO Ltd. ("Ares VIII"), Ares Total
Value Fund, L.P. ("AVTF"), Special Value Absolute Return Fund, LLC ("SVAR"),
Special Value Bond Fund, LLC ("SVBF"), Special Value Bond Fund II, LLC ("SVBF
II"), J.B. Fuqua Family Charitable Lead Annuity Trust -- 2000 ("J.B. Fuqua"),
Massachusetts Mutual Life Insurance Company, ("Mass Mutual"), MidOcean Celerity
Investment Partners, L.P. ("MidOcean"), MidOcean Capital Investors, L.P.
("MidOcean Investors"), Behrman Capital III LP ("Capital III"), Strategic
Entrepreneur Fund III L.P., (together with Capital III, "Behrman") and Gryphon
Partners II, L.P. ("Gryphon II"), Gryphon Partners II-A, L.P. (together with
Gryphon II, "Gryphon"). Each of the foregoing parties are referred to
individually as a "Party" and collectively as the "Parties."

                                    RECITALS

         WHEREAS, the Parties have determined that a split of the Celerity Group
business and the KSI Group business is in the mutual best interests of the
Parties as well as the potential underwritten initial public offering of common
stock of Holdings (the "Holdings IPO") would be in their mutual best interests
and in the best interests of the other stakeholders of Holdings;

         WHEREAS, the Parties have concluded that a series of financing, capital
and corporate restructuring transactions (collectively, the "Restructuring") are
necessary to facilitate the split and the Holdings IPO, all as set forth more
specifically herein and in the term sheet attached to this Agreement as Exhibit
A (the "Term Sheet") ;

         WHEREAS, simultaneous with the execution of this Agreement, the
Parties, together with additional stakeholders of the Celerity Group and the KSI
Group, are entering into a number of agreements and completing a series of
transactions constituting a portion of the Restructuring (collectively, the
"Phase I Restructuring"), all as set forth more specifically in Article II of
this Agreement;

         WHEREAS, the Parties are proceeding with the Phase I Restructuring in
partial reliance upon their mutual commitment to use their respective best
efforts to complete the balance of the Restructuring (collectively, the "Phase
II Restructuring"), by completing the additional transactions and entering into
the additional related agreements contemplated by Article III of this Agreement;
and

         WHEREAS, the Parties desire, as a condition to the completion of the
Phase I Restructuring, to memorialize their respective good faith intentions and
obligations to use their

                                       2
<PAGE>

respective commercially reasonable efforts to complete the Phase II
Restructuring substantially in accordance with the terms set forth in Article
III by entering into this Agreement.

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

                                    AGREEMENT

                                   ARTICLE I

                                   DEFINITIONS

         SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below.

         "Abandonment Agreement" has the meaning set forth in Section
2.3(c)(ii).

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

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

         "Amended and Restated TCP Purchase Agreement" has the meaning set forth
in Section 2.3(b)(i).

         "Amended and Restated Securities Purchase Agreement" means the Amended
and Restated Securities Purchase Agreement dated as of April 2, 2004 by and
among KGI, KHC, KSI, ACOF, SVAR, SVBF, SVBF II, MidOcean Investors, Berhman and
Gryphon that memorializes certain rights and understandings with respect to the
senior subordinated notes due 2006 issued by KGI and warrants issued in
connection therewith.

         "Ares Current Holders" means Ares II, Ares VII and Ares VIII.

         "Ares Purchasers" means Ares III, Ares IV and Ares ATV.

         "Ares II" has the meaning set forth in the preamble.

         "Ares III" has the meaning set forth in the preamble.

         "Ares IV" has the meaning set forth in the preamble.

         "Ares VII" has the meaning set forth in the preamble.

         "Ares VIII" has the meaning set forth in the preamble.

         "Assignment Agreement" has the meaning set forth in Section 2.3(c)(i).

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

                                       3
<PAGE>

         "Behrman Note" means the Capital Call Note held by Behrman in the
original principal amount of $4,581,270.74.

         "Bridge Contribution Agreement" has the meaning set forth in Section
2.2.

         "Bridge Instruments" means those certain 12.5% Junior Subordinated
Notes issued by KGI in favor of the Bridge Instrumentholders, each dated July
17, 2003.

         "Bridge Instrumentholders" means each registered holder of the Bridge
Instruments, together with their successors and registered assigns.

         "Bridge Instrument Exchange Option Agreement" has the meaning set forth
in Section 2.4(c)(vii).

         "Capital III" has the meaning set forth in the preamble.

         "Capital Call Exchange Agreement" has the meaning set forth in Section
2.4(c)(iii).

         "Capital Call Notes" means those certain 15% Convertible Senior
Subordinated Notes dated June 6, 2003 and issued by Holdings to the Capital Call
Noteholders in the original principal amount of $10,000,000.

         "Capital Call Noteholders" means collectively MidOcean Investors and
Behrman.

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

         "Celerity Group" has the meaning set forth in the preamble.

         "Celerity Merger" has the meaning set forth in Section 3.3.

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

         "Contributions and Exchanges" has the meaning set forth in Section
2.4(c).

         "Contributing Optionees" has the meaning set forth in Section
2.4(c)(v).

         "Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of December 10, 2002, by and among Holdings, KGI, as the
"Borrower", the Guarantors party thereto, The Bank of Nova Scotia, as
Administrative Agent, Collateral Agent and Documentation Agent, Bankers Trust
Company, as Syndication Agent, Deutsche Bank Securities, Inc., as Lead Arranger
and Book Manager, Banc One Capital Markets, Inc., as Co-Arranger and various
Lenders party thereto, as may be amended, supplemented, amended and restated or
otherwise modified from time to time.

         "First Seller Note" means that certain First 11% Junior Subordinated
Note dated August 30, 2000 in the original principal amount of $25,000,000,
issued by Holdings in favor of United States Filter.

                                       4
<PAGE>

         "Governmental Authority" means the government of the United States or
of any other nation, or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity (including any federal or other association of or
with which any such nation may be a member or associated) exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.

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

         "Gryphon II" has the meaning set forth in the preamble.

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

         "Holdings IPO" has the meaning set forth in the first recital.

         "Holdings Merger" has the meaning set forth in Section 2.4(b).

         "J.B. Fuqua" has the meaning set forth in the preamble.

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

         "KGI Contributions" has the meaning set forth in Section 2.5.

         "KH LLC" has the meaning set forth in the preamble.

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

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

         "KSI Bridge Instruments" has the meaning set forth in Section 2.2.

         "KSI Group" has the meaning set forth in the preamble.

         "KSI Mezzanine Purchase Agreement" has the meaning set forth in Section
3.6(a).

         "KSI Note" has the meaning set forth in Section 2.5.

         "KSI Spin-Off" has the meaning set forth in Section 2.6.

         "KSI TCP Purchase Agreement" has the meaning set forth in Section
3.6(b).

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

         "March Bridge" means the $5 million bridge financing to Celerity
evidenced by the 30 day subordinated secured note and security agreement, each
dated as of March 8, 2004 between Celerity and certain shareholders of Holdings,
and the guaranty of KSI in favor of lenders under the March Bridge.

         "Mass Mutual" has the meaning set forth in the preamble.

                                       5
<PAGE>

         "Merger Sub" has the meaning set forth in Section 2.4(b).

         "Merger Agreement" has the meaning set forth in Section 2.4(b).

         "Mezzanine1 Loans" means loans in the aggregate principal amount of
$5,000,000 under the Amended and Restated Securities Purchase Agreement that are
transferred from Holdings (as successor by merger with KGI) to KSI as part of
the transactions contemplated by Section 3.6(a).

         "Mezzanine Notes" shall mean the notes evidencing the loans made
pursuant to the Amended and Restated Securities Purchase Agreement.

         "Mezzanine Purchase Option Agreement" has the meaning set forth in
Section 2.3(c)(iv).

         "Mezzanine Purchasers" means those purchasers of the notes issued by
KGI pursuant to the Amended and Restated Securities Purchase Agreement.

         "Mezzanine Warrants" shall mean the "Warrants," as defined in the
Original Mezzanine Purchase Agreement.

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

         "MidOcean Investors" has the meaning set forth in the preamble.

         "MidOcean Note" means the Capital Call Note held by MidOcean Investors
in the original principal amount of $5,379,446.92.

         "New KSI Revolver" has the meaning set forth in Section 3.6(a)(iii).

         "New Second Lien Notes" means those promissory notes issued by Holdings
in favor of the TCP Purchasers pursuant to the Amended and Restated TCP Purchase
Agreement.

         "Option Exchange Agreement" has the meaning set forth in Section
2.4(c)(v).

         "Original Mezzanine Loan Facility" means the aggregate senior
subordinated loans made to KGI by the Original Mezzanine Purchasers in an
original aggregate principal amount of $70,000,000.

         "Original Mezzanine Notes" means the aggregate senior subordinated
notes issued by KGI to the Original Mezzanine Purchasers in an original
aggregate principal amount of $70,000,000.

         "Original Mezzanine Purchase Agreement" means that certain Securities
Purchase Agreement, dated as of August 30, 2000, by and among Holdings, KGI, as
"Borrower," and the Original Mezzanine Purchasers, as may be amended,
supplemented, amended and restated or otherwise modified from time to time prior
to the date hereof.

         "Original Mezzanine Purchasers" means collectively J. H. Whitney
Mezzanine Fund, L.P., J. H. Whitney Market Value Fund, L.P., The Northwestern
Mutual Life Insurance Company, Albion Alliance Mezzanine Fund, L.P., Albion
Alliance Mezzanine Fund II, L.P.,

                                       6
<PAGE>

GoldenTree High Yield Opportunities I L.P., GoldenTree High Yield Master Fund,
Ltd. and DB Structured Products, Inc., f/k/a Deutsche Banc Sharps Pixley Inc.,
SVAR, SVBF and SVBF II.

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

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Phase I Restructuring" has the meaning set forth in the third recital.

         "Phase II Restructuring" has the meaning set forth in the fourth
recital.

         "Registration Statement" has the meaning set forth in Section 3.1.

         "Restructuring" has the meaning set forth in the second recital.

         "Restructuring Document" has the meaning set forth in Section 5.1.

         "SEC" shall mean the Securities and Exchange Commission or any
successor thereto.

         "Second Lien Notes" means those senior secured notes issued pursuant to
the Amended and Restated TCP Purchase Agreement.

         "Second Seller Note" means that certain Second 11% Convertible Junior
Subordinated Note dated August 30, 2000 in the original principal amount of
$25,000,000, issued by Holdings in favor of United States Filter.

         "Senior Bank Purchase Option Agreement" has the meaning set forth in
Section 2.3(a)(ii).

         "Senior Lenders" means collectively The Bank of Nova Scotia, Bankers
Trust Company, Deutsche Bank Securities, Inc., Banc One Capital Markets, Inc.,
and various Lenders to the Credit Agreement, together with their successors and
registered assigns.

         "Senior Loan Facility" means the aggregate loans and facility made by
the Senior Lenders to KGI in an aggregate original principal amount of
$260,000,000.

         "Shareholders Agreement" has the meaning set forth in Section 2.4(d).

         "Strategic Note" means the Capital Call Note held by Strategic
Entrepreneur Fund III, L.P. in the original principal amount of $39,282.34.

         "Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in

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<PAGE>

which such Person and/or one or more Subsidiaries of such Person has more than a
50% equity interest at the time.

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

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

         "SVBF II" has the meaning set forth in the preamble.

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

         "TCP/Mezzanine Exchange Agreement" has the meaning set forth in Section
2.4(c)(iv).

         "TCP Purchase Agreement" means that certain Purchase Agreement, dated
as of September 26, 2003 by and among Holdings, KGI, as the "Borrower," the
Guarantors party thereto, the TCP Purchasers and Tennenbaum Capital Partners,
LLC, as collateral agent for the TCP Purchasers, as amended, supplemented,
amended and restated or otherwise modified from time to time.

         "TCP Purchasers" means SVAR, SVBF, SVBF II, the Ares Purchasers, J.B.
Fuqua and Mass Mutual.

         "TCP Purchase Option Agreement" has the meaning set forth in Section
2.3(b)(ii).

         "TCP Warrants" shall mean the "Tennenbaum Warrants," as defined in the
TCP Purchase Agreement.

         "TCP1 Notes" means the Second Lien Notes in the aggregate principal
amount of $50,000,000 that will be transferred from KGI to KSI as part of the
transactions contemplated by Section 3.6(b).

         "Term Sheet" has the meaning set forth in the second recital.

         "Transaction Documents" means, collectively, this Agreement (including
all exhibits and schedules hereto) and all other agreements exhibited to this
Agreement or contemplated herein to be entered into in respect of the
Restructuring.

         "Transactions" means the execution, delivery and performance by each
Party of, and all other transactions contemplated by, the Transaction Documents.

         "United States Filter" means United States Filter Corporation, a
Delaware corporation.

         "United States Filter Exchange Agreement" has the meaning set forth in
Section 2.4(c)(ii).

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<PAGE>

                                   ARTICLE II

                              PHASE I RESTRUCTURING

         SECTION 2.1 PLAN AND INTENTION.

                  (a) Simultaneous with the execution of this Agreement the
Parties are executing and delivering each of the agreements identified in this
Article II and effecting the transactions contemplated by such agreements. Each
of the agreements required to be delivered and each of the transactions
contemplated by such agreements and this Article II are being entered into
and/or performed on the understanding that all of such agreements will be
executed and delivered and all such transactions performed as required herein
and therein, and the failure of any one step shall relieve the Parties of their
obligations to deliver the agreements identified in this Article II or to
proceed with any of the transactions contemplated by such agreements or this
Article II. Each Party is entering into each such agreement on the understanding
and expectation that the Parties shall in good faith negotiate with the other
Parties in an effort to reach agreement on a version of each of the agreements
identified in Article III that will be acceptable to each party to each such
agreement and shall use commercially reasonable efforts to execute and deliver
such agreements expeditiously upon such agreement and to cause the transactions
contemplated by such executed agreements to occur as promptly as practicable (it
being understood among the Parties that "best effort" and commercially
reasonable efforts" for purposes of this Agreement shall not require any Party
to agree to any agreement or provision: (1) that is not reasonable and customary
with respect to such a party in a similar circumstance (except to the extent
that such agreement or provision is set forth in this Agreement or the Term
Sheet), (2) that conflicts with or in inconsistent with this Agreement
(including the Term Sheet) or (3) that requires such Party to contribute or lend
additional funds to the Celerity Group or the KSI Group other than pursuant to a
definitive document expressly contemplated under this Agreement and acceptable
to such Party). References in the Phase I Restructuring to definitive agreements
shall refer to the forms of such agreements substantially in the form of those
documents marked "final" with the consent of the parties thereto as of the date
hereof.

                  (b) To the extent that there is any conflict between this
Agreement and any definitive agreement referenced herein and executed by the
parties thereto, the terms of such executed, definitive agreement shall prevail.

         SECTION 2.2 CONTRIBUTION OF BRIDGE INSTRUMENTS. Simultaneous with the
execution of this Agreement, the Bridge Instrumentholders have executed and
delivered an agreement (the "Bridge Contribution Agreement") pursuant to which
the Bridge Instrumentholders shall contribute the Bridge Instruments to KSI in
exchange for issuance by KSI to the Bridge Instrumentholders of Junior
Subordinated Instruments, in form and substance similar to Exhibit A to the
Bridge Contribution Agreement (collectively, the "KSI Bridge Instruments"). The
Bridge Instrumentholders, KSI and KGI also shall have executed and delivered a
side letter which provides each Bridge Instrumentholder with the right to
rescind its contribution of the Bridge Instruments to KSI in the event that the
Holdings IPO does not occur on or before June 30, 2004; provided that if the
Bridge Instrumentholders exercise their rescission right, then no later than two
days prior to the consummation of a Holdings IPO that occurs after June 30,
2004,

                                       9
<PAGE>

the Bridge Instrumentholders shall recontribute the Bridge Instruments to KSI if
the Phase II Restructuring is consummated on or prior to the consummation of the
Holdings IPO.

         SECTION 2.3 FINANCING TRANSACTIONS.

                  (a) SENIOR LOAN FACILITY. Contemporaneous with the execution
of this Agreement, the Celerity Group and the KSI Group shall effect a
restructuring of the Senior Loan Facility as follows:

                           (i) Amendment No. 7 to the Credit Agreement shall be
executed by all parties thereto and be delivered to Holdings and KGI.

                           (ii) KSI and the other parties thereto shall have
executed a purchase option agreement in favor of the Senior Lenders (the "Senior
Bank Purchase Option Agreement"). The purposes of the Senior Bank Purchase
Option Agreement will be, among other things, to establish the financial
covenants applicable to the KSI Group on a stand-alone basis following the KSI
Spin-Off and to grant an option in favor of the Senior Lenders that provides for
the Senior Lenders to require KSI to purchase KGI's obligations outstanding
under the Senior Loan Facility in the event of an Event of Default (as defined
in the Senior Bank Purchase Option Agreement).

                  (b) TCP AGREEMENTS. Contemporaneous with the execution of this
Agreement, the TCP Purchasers, the Celerity Group and the KSI Group shall effect
a restructuring of the TCP Purchase Agreement and Second Lien Notes as follows:

                           (i) The TCP Purchasers and the other parties thereto
shall have executed and delivered an amended and restated TCP Purchase Agreement
(the "Amended and Restated TCP Purchase Agreement"), which shall reflect the
terms set forth in the Term Sheet opposite the caption "New 2nd Lien Notes."
Pursuant to the Amended and Restated TCP Purchase Agreement the following
transactions will occur:

                                    (1) the TCP Purchasers (other than the Ares
         Purchasers) will purchase from KGI (x) $29,000,000 aggregate principal
         amount of New Second Lien Notes (with the same priority and ranking as
         the existing Second Lien Notes) and (y) a strip of warrants to purchase
         3.03% of the fully diluted equity of Holdings. in exchange for
         $16,669,027.00 and (ii) the $10,000,000 of existing Mezzanine Notes
         purchased pursuant to Section 2.3(c) below;

                                    (2) SVAR, SVBF and SVBF II will purchase
         from KGI a liquidation certificate with a payment amount of $833,333.33
         in exchange for $125,000.00 in cash,

                                    (3) SVAR, SVBF and SVBF II will pay
         $74,676.64 for a strip of warrants equal to the amount sufficient to
         gross up SVAR, SVBF and SVBF II to 5/60 of 6% of the fully diluted
         equity of Holdings (to be calculated excluding the TCP Retained
         Warrants (as defined in the TCP Purchase Agreement),

                                       10
<PAGE>

                                    (4) the Ares Purchasers will purchase from
         KGI (x) $5 million aggregate principal amount of New Second Lien Notes
         (with the same priority and ranking as the existing Second Lien Notes)
         and (y) a strip of warrants to purchase 0.5% of the fully diluted
         equity of Holdings in exchange for $5,000,000 in cash; and

                                    (5) the TCP Purchasers will receive
         anti-dilution protection for the warrants that they acquired in
         connection with their purchase of existing Second Lien Notes as set
         forth in the Term Sheet.

                           (ii) KSI and the other parties thereto shall have
executed a purchase option agreement in favor of the TCP Purchasers (the "TCP
Purchase Option Agreement"). The purposes of the TCP Purchase Option Agreement
will be, among other things, to establish the financial covenants applicable to
the KSI Group on a stand-alone basis following the KSI Spin-Off and to grant to
the TCP Purchasers the option to require KSI to purchase KGI's obligations
outstanding under the TCP Purchase Agreement and Second Lien Notes in the event
of an Event of Default (as defined in the TCP Purchase Option Agreement).

                  (c) MEZZANINE FINANCING. Contemporaneous with the execution of
this Agreement, the Celerity Group and the Mezzanine Purchasers shall effect a
restructuring of the Original Mezzanine Loan Facility as follows:

                           (i) (x) The Mezzanine Purchasers (other than SVAR,
SVBF and SVBF II) and KGI shall execute and deliver, against execution and
delivery by the Original Mezzanine Purchasers (other than SVAR, SVBF and SVBF
II), the Assignment and Assumption Agreement (the "Assignment Agreement")
pursuant to which, as described in the Term Sheet, such Mezzanine Purchasers
will purchase from such Original Mezzanine Purchasers (1) $55,000,000 face
amount of the Original Mezzanine Notes and (2) all the warrants associated with
the Original Mezzanine Notes held by such Original Mezzanine Purchasers other
than the Retained Warrants (as defined in the Assignment Agreement), for an
aggregate purchase price equal to $52,868,703.64 and (y) the TCP Purchasers
(other than the Ares Purchasers) and KGI shall execute and deliver the TCP
Assignment and Assumption Agreement pursuant to which such TCP Purchasers will
purchase from such Original Mezzanine Purchasers $10,000,000 face amount of the
Original Mezzanine Notes for an aggregate purchase price equal to
$12,131,296.36.

                           (ii) The Original Mezzanine Purchasers shall enter
into an abandonment agreement (the "Abandonment Agreement") as a result of which
such Original Mezzanine Purchasers shall surrender and forfeit the $10,000,000
liquidation preference certificate that they previously received.

                           (iii) Subject to the receipt by the Celerity Group
and KSI of all requisite board, stockholder and creditor approvals and consents
necessary to effect the Holdings Merger and the KSI Spin-Off, the Mezzanine
Purchasers, Holdings and KGI (as "Borrower") shall execute and deliver the
Amended and Restated Securities Purchase Agreement. As contemplated by the
Amended and Restated Securities Purchase Agreement, (1) the Mezzanine Purchasers
(other than SVAR, SVBF and SVBF II) will pay Holdings $2,131,296.36 for the new
warrants they are to receive from Holdings and the new liquidation certificate
representing

                                       11
<PAGE>

the right to receive 55/60 of $10 million (or $9,166,667) and (2) KGI will issue
amended and restated Mezzanine Notes.

                           (iv) KSI shall execute a purchase option agreement in
favor of the Mezzanine Purchasers (the "Mezzanine Purchase Option Agreement").
The purposes of the Mezzanine Purchase Option Agreement will be, among other
things, to establish the financial covenants applicable to the KSI Group on a
stand-alone basis following the KSI Spin-Off and to grant an option in favor of
the Mezzanine Purchasers that provides for Mezzanine Purchasers to require KSI
to purchase KGI's obligations outstanding under the Original Mezzanine Loan
Facility in the event of an Event of Default (as defined in the Mezzanine
Purchase Option Agreement).

                  (d) GUARANTEES. Concurrently with the effective time of the
Holdings Merger, and with KH LLC having received a written opinion of a
nationally recognized valuation firm affirming the solvency of KGI (taking into
consideration and having given effect to the consummation of the transactions
contemplated by Article II other than this Section 2.3(d)), which opinion is a
requirement to the consummation of the financing transactions described in this
Section 2.3, KH LLC shall execute and deliver the following guarantees and
pledge agreements, each of which shall remain in full force and effect until
replaced by the guarantees and pledge agreements set forth in Section 3.9 of
this Agreement:

                           (i) KH LLC shall execute a non-recourse guaranty in
favor of the Senior Lenders pursuant to which KH LLC shall guaranty amounts owed
by KGI under the Senior Loan Facility, which shall be secured by a first
priority lien on the capital stock of Holdings and KSI owned by KH LLC;

                           (ii) KH LLC shall execute a non-recourse guaranty and
related pledge agreement in favor of the TCP Purchasers pursuant to which KH LLC
shall guaranty amounts owed by KGI under the Amended and Restated TCP Purchase
Agreement, which shall be secured by a second priority lien on the capital stock
of Holdings and KSI owned by KH LLC; and

                           (iii) KH LLC shall execute a non-recourse guaranty in
favor of the Mezzanine Purchasers pursuant to which KH LLC shall guaranty
amounts owed by KGI under the Amended and Restated Securities Purchase Agreement
(which guaranty shall be limited to amounts received with respect to capital
stock of Holdings and KSI owned by KH LLC), subject to the prior perfected liens
on such shares.

                  (e) REPAYMENT OF MARCH BRIDGE. Contemporaneous with the
execution of this Agreement, Holdings shall cause Celerity to repay in full the
March Bridge.

                  (f) KHC-KSI FACILITY. KGI and KSI shall enter into a loan
facility that will allow KGI to make payments to KSI for working capital
purposes to the extent permitted under the Credit Agreement, TCP Purchase
Agreement and Amended and Restated Securities Purchase Agreement.

                                       12
<PAGE>

         SECTION 2.4 MERGER TRANSACTIONS. KH LLC, the Celerity Group and the
other Parties shall take the following actions, immediately following
consummation of the transactions contemplated by Section 2.3 (other than Section
2.3(d)) of this Agreement:

                  (a) INFORMATION STATEMENT. Holdings has distributed to all
holders of shares of its capital stock, as well as all holders of options,
warrants and other securities convertible or exchangeable for or into shares of
such capital stock, a Consent Solicitation and Information Statement.

                  (b) HOLDINGS MERGER. Knight Acquisition Corp., a Delaware
corporation ("Merger Sub"), shall merge with and into Holdings, with Holdings as
the surviving company (the "Holdings Merger"), pursuant to the terms of that
certain Agreement and Plan of Merger dated as of April 2, 2004, by and among KH
LLC, Merger Sub, and Holdings (the "Merger Agreement"). The Merger Agreement
shall have been adopted by holders of (1) two-thirds of the outstanding shares
of Series A Preferred Stock and Series A-1 Preferred Stock of Holdings, voting
together as a single series; (2) two-thirds of the outstanding shares of Series
B Preferred Stock and Series B-1 Preferred Stock of Holdings, voting together as
a single series; and (3) a majority of the outstanding shares of Holdings
capital stock, voting together as a single class (on an as-converted to common
stock basis). Persons holding at least 95% of the holders of capital stock of
Holdings shall have executed and delivered, or unconditionally agreed to execute
and deliver, the LLC Agreement and the Unitholders Agreement.

                  (c) CONTRIBUTION AND EXCHANGE OF INTERESTS IN KH LLC.
Concurrently with the effective time of the Holdings Merger the following shall
occur (collectively, "Contributions and Exchanges"):

                           (i) By virtue of the Holdings Merger and without any
further action on the part of the Celerity Group or its stockholders, the
outstanding shares of Holdings capital stock shall be canceled and converted
into units of KH LLC as set forth in the Merger Agreement, and each record
holder of Holdings capital stock (except for any dissenting shares and shares of
Holdings capital stock cancelled pursuant to the terms of the Merger Agreement)
shall be admitted as a member of KH LLC on the terms set forth in the Amended
and Restated LLC Agreement;

                           (ii) Pursuant to that certain letter agreement dated
as of April 2, 2004 entered into by and among KH LLC and United States Filter
(the "United States Filter Exchange Agreement"), the First Seller Note shall be
contributed by United States Filter to KH LLC in exchange for 1 Class C-1 Unit
of KH LLC; the Second Seller Note shall be contributed by United States Filter
to KH LLC in exchange for 8,333,333 Class C Units of KH LLC; and the two
warrants held by United States Filter, each dated August 30, 2000 to purchase up
to an aggregate of 7,150,094 shares of common stock of Holdings at $3 per share,
subject to adjustment from time to time, shall be contributed by United States
Filter to KH LLC in exchange for 7,150,094 Common B Units of KH LLC;

                           (iii) Pursuant to that certain letter agreement dated
as of April 2, 2004 entered into by and among KH LLC and the Capital Call
Noteholders (the "Capital Call Exchange Agreement") the following shall occur:
(i) the MidOcean Note shall be contributed by

                                       13
<PAGE>

MidOcean Investors to KH LLC in exchange for 1,494,291 Class D Units of KH LLC,
and the warrant dated December 10, 2002 to purchase 125,520 shares of common
stock of Holdings shall be contributed by MidOcean Investors to KH LLC in
exchange for 125,520 Common Units of KH LLC; (ii) the Behrman Note shall be
contributed by Behrman to KH LLC in exchange for 1,272,575 Class D Units of KH
LLC, and the warrant dated December 10, 2002 to purchase 106,902 shares of
common stock of Holdings shall be contributed by Behrman to KH LLC in exchange
for 106,902 Common Units of KH LLC; and (iii) the Strategic Note shall be
contributed by Strategic to KH LLC in exchange for 10,912 Class D Units of KH
LLC, and the warrant dated December 10, 2002 to purchase 911 shares of common
stock of Holdings shall be contributed by Strategic to KH LLC in exchange for
911 Common Units of KH LLC;

                           (iv) Pursuant to that certain letter agreement dated
as of April 2, 2004 entered into by and among KH LLC, the TCP Purchasers and the
Mezzanine Purchasers (the "TCP/Mezzanine Exchange Agreement"), each of the TCP
Purchasers and Mezzanine Purchasers shall contribute to KH LLC the TCP Warrants
and the Mezzanine Warrants, as applicable, in exchange for the Units of KH LLC
listed in the TCP/Mezzanine Exchange Agreement;

                           (v) Pursuant to that certain letter agreement dated
as of April 2, 2004 entered into by and among KH LLC and certain holders
("Contributing Optionees") of options to purchase Holdings common stock (the
"Option Exchange Agreement") the Contributing Optionees shall contribute to KH
LLC certain options in exchange for the Profit Units of KH LLC listed on Exhibit
B to the Option Exchange Agreement;

                           (vi) Pursuant to the Assignment Agreement, the
Original Mezzanine Purchasers (other than SVAR, SVBF and SVBF II) shall
contribute the Retained Warrants to KH LLC in exchange for the agreed Units of
KH LLC.

                           (vii) Each Bridge Instrumentholder shall be a party
to that certain letter agreement dated April 2, 2004 entered into by and among
KH LLC and the Bridge Instrumentholders (the "Bridge Instrument Exchange Option
Agreement") that will provide each holder of the KSI Bridge Instruments shall
have the option to contribute the KSI Bridge Instruments to KH LLC in exchange
for the Class E Units of KH LLC, as listed on Exhibit B to the Bridge Instrument
Exchange Option Agreement.

                           (viii) Following the contributions to KH LLC pursuant
to the Contributions and Exchanges, KH LLC shall contribute the First Seller
Note, Second Seller Note and Capital Call Notes to Holdings in exchange for
shares of Series C-1 preferred stock, Series C preferred stock and Series D
preferred stock, respectively, of Holdings with an aggregate liquidation value
equal to the aggregate principal amount of each such note contributed to KH LLC.

                  (d) UNITHOLDERS' AGREEMENT. Concurrently with the effective
time of the Holdings Merger, the members of KH LLC shall enter into a
Unitholders Agreement with KH LLC, Holdings and KSI which shall govern certain
restrictions on transfer, registration rights, governance and certain other
matters. Upon execution of the Unitholders Agreement by the parties thereto, KH
LLC shall cause the termination of the Fourth Amended and Restated Shareholders
Agreement ("Shareholders Agreement").

                                       14
<PAGE>

                  (e) HOLDINGS CERTIFICATE. Effective upon the Holdings Merger,
the Restated Certificate of Incorporation of Holdings amending and restating the
Certificate of Incorporation of Holdings shall be filed with and become
effective in the State of Delaware.

         SECTION 2.5 KGI CONTRIBUTIONS. For good and valid consideration, prior
to and as a condition precedent of the KSI Spin-Off, KGI shall (1) contribute to
KSI: (a) that certain intercompany Promissory Note dated December 31, 2001
issued by KSI in favor of KGI in the aggregate principal amount of $150,000,000,
and (b) the net accounts receivable owing to KGI from KSI less KGI's good faith
estimate of the fair market value of the Bridge Instruments at the time the
Bridge Instruments are redeemed (collectively, the "KGI Contributions"), in each
case pursuant to that certain Contribution Agreement dated as of April 2, 2004,
between KGI and KSI, and (2) issue a promissory note in favor of KSI in the
original principal amount of $13,000,000 (the "KSI Note").

         SECTION 2.6 KSI SPIN-OFF. Immediately after the KGI Contributions and
KGI's issuance of the KSI Note, KGI shall make a distribution to Holdings of the
100% equity interest in KSI owned by KGI. Promptly thereafter, Holdings shall
make a distribution to KH LLC of the 100% equity interest in KSI owned by
Holdings, resulting in KSI becoming a wholly-owned direct Subsidiary of KH LLC
(the "KSI Spin-Off").

         SECTION 2.7 PRE-EMPTIVE RIGHTS NOTICE. In connection with certain of
the transactions in the Phase I Restructuring, the stockholders of Holdings have
pre-emptive rights set forth in Section 2.7 of the Shareholders Agreement to
purchase their pro rata share of the Mezzanine Notes being transferred by the
Original Mezzanine Purchasers together with the Mezzanine Warrants and the
liquidation certificate issued in connection therewith. Promptly following
consummation of the Phase I Restructuring, Holdings shall comply with Section
2.7 of the Shareholders Agreement, and MidOcean, Behrman and Gryphon agree that
in the event any stockholder exercises its pre-emptive rights, then they shall
agree to proportionate sell-downs among themselves of the Mezzanine Notes and
associated warrants and liquidation certificate.

                                  ARTICLE III

                             PHASE II RESTRUCTURING

         SECTION 3.1 PLAN AND INTENTION. The Parties agree to use commercially
reasonable efforts to take the actions set out in this Article III as promptly
as practicable, but in no event later than the date on which the registration
statement for the Holding IPO (the "Registration Statement") is to be declared
effective by the SEC, each in accordance with the forms of agreement attached
hereto or, if no such form is attached, substantially in accordance with the
relevant terms of the Term Sheet, as specified below. The Parties shall in good
faith cooperate to complete the negotiation and preparation of the agreements
and transactions identified in Article III (it being understood among the
Parties that no fees or other charges shall be incurred by the Celerity Group or
KSI Group with respect to the Phase II Restructuring other than actual expenses
or as set forth in the Term Sheet).

         SECTION 3.2 FILING OF REGISTRATION STATEMENT. Holdings shall use its
reasonable best efforts to prepare and file the Registration Statement on Form
S-1 with the SEC with respect to

                                       15
<PAGE>

the Holdings IPO as soon as reasonably practicable following completion of the
transactions described in the Phase I Restructuring and completion by Ernst &
Young of the audited financial statements required by Regulation S-K to be
included in the Registration Statement. Holdings and each other member of the
Celerity Group shall use their respective best efforts to respond as promptly as
reasonably practicable to comments raised by the SEC to the Registration
Statement, and to file such amendments as are necessary to cause the
Registration Statement to be declared effective by the SEC. It is the intention
of the Parties that Holdings will seek to have the Registration Statement
declared effective no later than June 30, 2004, it being understood by the
Parties that the consummation and timing of the Holdings IPO is subject to
conditions outside the control of the Parties.

         SECTION 3.3 CELERITY MERGER. Assuming that all conditions as may be set
forth in the underwriting agreement in respect to the Holdings IPO have been
satisfied (other than the condition set forth in this Section 3.3), then
immediately prior to closing of the Holdings IPO, Celerity shall merge with and
into KGI, with KGI as the surviving entity (it being understood that at any time
following the execution of this Agreement but prior to the closing of the
Holding IPO Chempure shall merge with and into Celerity, with Celerity as the
surviving entity). Immediately thereafter, KGI shall merge with and into
Holdings, with Holdings as the surviving entity. (The merger transactions
referred to in the foregoing two sentences shall be referred to hereinafter as
the "Celerity Merger.") Upon consummation of the Celerity Merger, all remaining
debt obligations of KGI shall be assigned to and assumed by Holdings by
operation of law and Holdings shall become the "Borrower" of such obligations.

         SECTION 3.4 USE OF PROCEEDS. Holdings shall apply the proceeds from the
Holdings IPO to pay in full amounts outstanding under the Senior Loan Facility,
to reduce the outstanding amount of other indebtedness of the Celerity Group, to
repay the KSI Note and to provide capital to the Celerity Group, as described in
the Term Sheet under the caption "Uses of IPO Proceeds."

         SECTION 3.5 SUPPORT AGREEMENT. Following effectiveness of the
Registration Statement but prior to entering into the agreements described in
Section 3.6, KH LLC shall enter into the KSI Support Agreement on the terms
described in the Term Sheet opposite the caption "Support Agreement."

         SECTION 3.6 RESTRUCTURING OF INDEBTEDNESS. Contemporaneous with the
closing of the Holdings IPO and use of the proceeds therefrom in accordance with
Section 3.4, the TCP Purchasers, the Mezzanine Purchasers, KSI and KGI will
enter into the following agreements, pursuant to which KSI will assume certain
indebtedness of Holdings in consideration for the receipt of certain common
stock of Holdings, and Holdings will be released from any obligations in respect
of such assumed indebtedness:

                  (a) KSI MEZZANINE PURCHASE AGREEMENT. KSI shall execute a
Purchase Agreement in favor of the Mezzanine Purchasers (the "KSI Mezzanine
Purchase Agreement") that provides for the rights, terms and conditions set
forth in the Term Sheet opposite the caption "Post-IPO KSI" including the
following:

                                       16
<PAGE>

                           (i) assumption by KSI of Holdings' obligations to pay
the Mezzanine Purchasers the Mezzanine1 Loans amounts and amounts payable under
the liquidation certificates;

                           (ii) issuance by KSI of (a) new promissory notes in
favor of the Mezzanine Purchasers to evidence the assumed Mezzanine1 Loans and
(b) new liquidation certificates to evidence the assumed liquidation
certificates;

                           (iii) Mezzanine Purchasers' consent to (a)
establishment of a revolving credit facility by KSI in an amount not to exceed
the amount specified in the Term Sheet (the "New KSI Revolver"), which shall be
on terms that are reasonably acceptable to the Mezzanine Purchasers, and (b) if
net proceeds of the Holdings IPO were equal to or greater than $193,000,000,
application of $13,000,000 of such net proceeds to be applied by KGI toward
repayment of the KSI Note; and

                           (iv) new independent set of financial covenants,
including (1) minimum EBITDA; (2) total leverage; (3) fixed charge coverage; and
(4) minimum worldwide cash plus unused revolver subject to a borrowing base of
no less than $15 million.

The amounts set forth in this Section 3.6(a) assume the Holdings IPO will yield
$203,000,000 of net proceeds, and if the net proceeds are more or less than this
amount, then the amounts above are subject to change as set forth in the Term
Sheet.

                  (b) KSI GROUP'S TCP PURCHASE AGREEMENT. KSI shall execute a
new Purchase Agreement (the "KSI TCP Purchase Agreement") in favor of the TCP
Purchasers that shall provide for the rights, terms and conditions set forth in
the Term Sheet opposite the caption "Post-IPO KSI" including the following:

                           (i) assumption by KSI of Holdings' obligations to pay
the $50,000,000 TCP1 Notes, secured by a continuing security interests in all
assets of KSI;

                           (ii) issuance of new promissory notes by KSI in favor
of the TCP Purchasers in an aggregate original principal amount of $50,000,000,
to evidence the notes issued on exchange of the TCP1 Notes;

                           (iii) the TCP Purchasers' consent to (a)
establishment of the New KSI Revolver, which shall be on terms that are
reasonably acceptable to the TCP Purchasers, and (b) if net proceeds of the
Holdings IPO were equal to or greater than $193,000,000, application of
$13,000,000 of such net proceeds to be applied by KGI toward repayment of the
KSI Note; and

                           (iv) new independent set of financial covenants,
including (1) minimum EBITDA; (2) total leverage; (3) senior leverage; (4) fixed
charge coverage; and (5) minimum worldwide cash plus unused revolver subject to
a borrowing base of no less than $15 million.

The amounts set forth in this Section 3.6(b) assume the Holdings IPO will yield
$203,000,000 of net proceeds, and if the net proceeds are more or less than this
amount, then the amounts above are subject to change as set forth in the Term
Sheet.

                                       17
<PAGE>

                  (c) MODIFICATION OF KGI INDEBTEDNESS. Celerity, KGI, the
Mezzanine Purchasers and the TCP Purchasers shall cooperate in good faith to
amend the Amended and Restated TCP Purchase Agreement and Amended and Restated
Securities Purchase Agreement on terms reasonably acceptable to them to provide
for the rights, terms and conditions consistent with those set forth in the Term
Sheet opposite the caption "Post-IPO" for Holdings.

                  (d) ISSUANCE OF HOLDINGS' COMMON STOCK. Contemporaneous with
the consummation of the Holdings IPO, Holdings shall issue to KSI Holdings
common stock with a fair market value (based on the price per share set forth in
the prospectus) equal to $65,000,000 in consideration for KSI's assumption of
$65,000,000 of certain liabilities of the Celerity Group, including the TCP1
Notes and the Mezzanine1 Notes. The Celerity Group and the KSI Group shall
structure the issuance of stock and assumption of liabilities as a taxable
purchase of Holdings' common stock by KSI in exchange for KSI's assumption of
$65,000,000 of certain liabilities of the Celerity Group, including the TCP1
Notes and Mezzanine1 Notes. The amounts set forth in this Section 3.6(d) assume
the Holdings IPO will yield $203,000,000 of net proceeds, and if the net
proceeds are more or less than this amount, then the amounts above are subject
to change as set forth in the Term Sheet.

                  (e) REDEMPTION OF THE BRIDGE INSTRUMENTS. One day prior to the
consummation of the Holdings IPO, KGI shall redeem from KSI and cancel all of
the Bridge Instruments held by KSI in exchange for an amount of the net
intercompany payables owing from KSI to KGI equal in fair value to the Bridge
Instruments redeemed and canceled. The Celerity Group and the KSI Group intend
to structure the redemption of the Bridge Instruments as a redemption of stock
by KGI for its fair value within the meaning of Section 317(b) of the Internal
Revenue Code of 1986, as amended.

         SECTION 3.7 NEW REVOLVING FACILITIES. Simultaneous with the
consummation of the Holdings IPO, KSI shall establish the New KSI Revolver and
Holdings will establish a revolving credit facility in an amount not to exceed
the amount specified in the Term Sheet (the "New Holdings Revolver"). KSI and
Holdings shall use commercially reasonable efforts to cause each of the New KSI
Revolver and the New Holdings Revolver, respectively, to have the borrowing
capacity specified therefor in the Term Sheet. (The consents required to
implement these facilities are provided in Section 3.6(a)(iii) and Section
3.6(b)(iii) above.)

         SECTION 3.8 CANCELLATION OF THE PURCHASE OPTION AGREEMENTS. Upon
consummation of the Holdings IPO and the agreements described in Section 3.6 and
repayment of the Senior Loan Facility as contemplated in Section 3.4, the Senior
Bank Purchase Option Agreement, the TCP Purchase Option Agreement and the
Mezzanine Purchase Option Agreement shall become void and of no further force
and effect.

         SECTION 3.9 GUARANTEES BY KH LLC. Upon receipt by KH LLC of a written
opinion of a nationally recognized valuation firm affirming the solvency of
Holdings and KSI (taking into consideration and having given effect to, the
consummation of the transactions contemplated by this Article III, other than
this Section 3.9), each of the Guarantees described in Section 2.3(d) shall be
cancelled and contemporaneous therewith KH LLC shall execute and deliver the
following, to be effective concurrently with execution and delivery of the
agreements contemplated by Section 3.6(a) and Section 3.6(b):

                                       18
<PAGE>

                  (a) KH LLC shall execute a non-recourse guaranty in favor of
the lenders under the KSI TCP Purchase Agreement and KSI Mezzanine Purchase
Agreement in respect of amounts owed by KSI to such parties. KH LLC shall pledge
a first priority lien on the shares of Holdings owned by KH LLC in favor of the
TCP Purchasers and a second priority lien on such Holdings shares in favor of
the purchasers under the KSI Mezzanine Purchase Agreement, such common stock to
be subject to standard underwriters' lockup provisions. Such guaranty and pledge
will be on terms consistent with those set forth in the Term Sheet.

                  (b) KH LLC shall execute a non-recourse guaranty in favor of
the lenders under the New KSI Revolver, the lenders under the KSI TCP Purchase
Agreement and the lenders under the KSI Mezzanine Purchase Agreement. KH LLC
shall pledge a first priority lien on the shares of KSI owned by KH LLC in favor
of the lenders under the New KSI Revolver, a second priority lien on such KSI
shares in favor of the purchasers under the KSI TCP Purchase Agreement and a
third priority lien on such shares in favor of the purchasers under the KSI
Mezzanine Purchaser Agreement. Such guaranty and pledge will be on terms
consistent with those set forth in the Term Sheet.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         Each Party, as to itself, represents and warrants, as of the date
hereof to each other Party as follows:

         SECTION 4.1 ORGANIZATION; POWERS. Such Party is duly organized, validly
existing and, where applicable, in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and is qualified to do business in, and, where
applicable, is in good standing in, every jurisdiction where such qualification
is required.

         SECTION 4.2 AUTHORIZATION; ENFORCEABILITY. The Transactions to be
performed by such Party are within such Party's corporate powers and have been
duly authorized by all necessary corporate and shareholder action. This
Agreement has been duly executed and delivered by such Party and constitutes a
legal, valid and binding obligation of such Party, enforceable against such
Party in accordance with its terms, except as such enforceability may be limited
by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

         SECTION 4.3 GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions to
be performed by such Party (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except for (i) such as have been obtained or made and are in full force and
effect, and (ii) those that the failure to have or obtain will not have a
material adverse effect on the business condition, assets, operations or
financial performance of such Party, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of such
Party or any order of any Governmental

                                       19
<PAGE>

Authority having jurisdiction, and (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon such Party or
its assets. The Parties will endeavor to obtain all third-party consents
required for any of the Transactions.

         SECTION 4.4 COMPLIANCE WITH LAWS AND AGREEMENTS. Such Party is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do so,
individually or in the aggregate, would not have a material adverse effect in
respect on the business condition, assets, operations or financial performance
of such Party.

                                   ARTICLE V

                                    COVENANTS

         As an inducement to each of the Parties to enter into this Agreement,
each of the Parties covenants to all of the other Parties as follows:

         SECTION 5.1 EXECUTED COUNTERPARTS. Each Party will deliver to the
others a counterpart of this Agreement and each other agreement contemplated by
the Phase I Restructuring, and agrees that upon reaching a definitive agreement
negotiated pursuant to Section 2.1 of this Agreement to deliver to the others a
counterpart of each such definitive agreement contemplated by the Phase II
Restructuring (each such agreement, a "Restructuring Document"), to which such
other Party is intended to be a party signed on behalf of such other Party or
satisfactory written evidence (which may include a fax transmission of signed
signature pages) that such other Party has signed a counterpart of this
Agreement and each other Transaction Document, in any case notarized as
necessary.

         SECTION 5.2 ORGANIZATIONAL DOCUMENTS. The Parties will use their
respective best efforts to obtain such documents and certificates as may be
reasonably requested relating to satisfactory evidence of all governmental
filings and approvals required to effect the Restructuring.

                                   ARTICLE VI

                                  MISCELLANEOUS

         SECTION 6.1 FURTHER ASSURANCES. Each Party hereby agrees that to the
extent that this Agreement (including the Term Sheet) contemplate an agreement
that cannot be consummated pursuant to one or more of the definitive agreements
referenced herein, then the Parties shall in good faith negotiate with the other
Parties in an effort to reach agreement on and enter into such other agreements
(each, a "Substitute Agreement") that may be required to effectuate the terms of
this Agreement (including the Term Sheet); provided, however, that no Party
shall be obligated to enter into a Substitute Agreement that contains any terms
or provisions that are less favorable to such Party in any material respect than
the agreement that such Substitute Agreement is intended to replace or that is
otherwise inconsistent with the terms of this Agreement and the Term Sheet.

                                       20
<PAGE>

         SECTION 6.2 EXPENSES; NO INDEMNIFICATION. Except as may be expressly
agreed in the other Transaction Documents, Celerity Group shall be responsible
for any and all out-of-pocket expenses, fees, charges, disbursements of any
counsel and any other costs it, any of its agents or any other Party incurs in
connection with the negotiation, execution and delivery of this Agreement and
the other Transaction Documents.

         SECTION 6.3 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed
in counterparts (and by different Parties on different counterparts), each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement shall become effective when it
shall have been executed by all Parties listed on the signature pages hereto,
and thereafter shall be binding upon and inure to the benefit of the Parties and
their respective successors and assigns. Delivery of an executed counterpart of
a signature page to this Agreement by fax shall be effective as delivery of a
manually executed counterpart of this Agreement.

         SECTION 6.4 HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         SECTION 6.5 AMENDMENT. None of the terms or provisions of this
Agreement may be amended, supplemented or otherwise modified without the consent
of each of the Parties.

         SECTION 6.6 FULL AND COMPLETE AGREEMENT. Subject to Section 2.1, this
Agreement together with the Exhibits attached hereto and the other Transaction
Documents represent the complete understanding between the parties, supersedes
any and all agreements and understandings, whether oral or written and may not
be modified, altered, changed, or waived, in whole or in part, except upon
written consent of the parties.

                                  [END OF PAGE]

                            [SIGNATURE PAGES FOLLOW]

                                       21
<PAGE>

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

                                    KH LLC,

                                    a Delaware limited liability company

                                    By: /s/ John Goodman
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

                                    CELERITY GROUP, INC.,
                                    a Delaware corporation

                                    By: /s/ John Goodman
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

                                    KINETICS GROUP, INC.,
                                    a Delaware corporation

                                    By:  /s/ John Goodman
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

                                    CELERITY GROUP, INC.,
                                    a California corporation

                                    By:  /s/ John Goodman
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

<PAGE>

                                    KINETICS CHEMPURE SYSTEMS, INC.,
                                    an Arizona corporation

                                    By:  /s/ John Goodman
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

                                    FTS SYSTEMS, INC.
                                    a New York corporation

                                    By: /s/ John R. Ferron
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

                                    KINETIC SYSTEMS, INC.,
                                    a California corporation

                                    By:  /s/ John R. Ferron
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

                                    KINETIC SYSTEMS CARIBE, INC.,
                                    a Delaware corporation

                                    By: /s/ John R. Ferron
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

                                    KINETIC SYSTEMS INTERNATIONAL, INC.,
                                    a California corporation

                                    By:  /s/ John R. Ferron
                                        ________________________________________
                                    Name:
                                         _______________________________________
                                    Its:
                                        ________________________________________

<PAGE>

                                    BEHRMAN CAPITAL III, L.P.

                                    By:  Behrman Brothers III, LLC
                                    Its: General Partner

                                    By: /s/ William Matthes
                                        ________________________________________
                                    Name:   William Matthes
                                    Title: Managing Member

                                    STRATEGIC ENTREPRENEUR FUND III, L.P.

                                    By: /s/ William Matthes
                                        ________________________________________
                                    Name:   William Matthes
                                    Title: General Partner

<PAGE>

                                    MIDOCEAN CAPITAL INVESTORS, LP

                                    By:   MidOcean Capital Partners, LP
                                    Its:  General partner

                                    By: /s/ Frank Schiff
                                        ________________________________________
                                    Name:
                                    Title:

                                    MIDOCEAN CELERITY INVESTMENT PARTNERS, LP

                                    By:  MidOcean Celerity Holdings, LLC
                                    Its: General partner

                                    By: /s/ Frank Schiff
                                        ________________________________________
                                    Name:
                                    Title:

<PAGE>

                                    GRYPHON PARTNERS II, L.P.,
                                    a Delaware limited partnership

                                    By:  Gryphon GenPar II, L.L.C.,
                                    a Delaware limited partnership
                                    Its:  General Partner

                                    By: /s/ Jeffrey L. Ott
                                        _______________________________________
                                    Name:   Jeffrey L. Ott
                                    Title: Member and Principal

                                    GRYPHON PARTNERS II-A, L.P.,
                                    a Delaware limited partnership

                                    By:  Gryphon GenPar II, L.L.C.,
                                    a Delaware limited partnership
                                    Its:  General Partner

                                    By: /s/ Jeffrey L. Ott
                                        ________________________________________
                                    Name:   Jeffrey L. Ott
                                    Title: Member and Principal

<PAGE>

                                    MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

                                    By: /s/ Richard E. Spencer, II
                                       _________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

                                    ARES CORPORATE OPPORTUNITIES FUND, L.P.

                                    By:  ACOF Management, L.P.
                                    Its: General Partner

                                    By:  ACOF Operating Manager, L.P.
                                    Its: General Partner

                                    By:  Ares Management, Inc.
                                    Its: General Partner

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

                                    ARES LEVERAGED INVESTMENT FUND II, L.P.

                                    By:  ARES Management II, L.P.
                                    Its: General Partner

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

<PAGE>

                                    ARES TOTAL VALUE FUND, L.P.

                                    By:  Ares Total Value Management LLC
                                    Its: General Partner

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

                                    ARES III CLO, LTD.

                                    By:  ARES CLO Management LLC
                                    Its: Investment Manager

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

                                    ARES IV CLO, LTD.

                                    By:  Ares CLO Management IV, L.P.
                                    Its: Investment Manager

                                    By:  Ares CLO GP IV, LLC
                                    Its: Managing Member

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

                                    ARES VII CLO LTD.

                                    By:  Ares CLO Management VII, L.P.,
                                    Its: Investment Manager

                                    By:  Ares CLO GP VII, LLC,
                                    Its: General Partner

<PAGE>

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

                                    ARES VIII CLO LTD.

                                    By:  Ares CLO Management VIII, L.P.,
                                    Its: Investment Manager

                                    By:  Ares CLO GP VIII, LLC,
                                    Its: General Partner

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Its:________________________________________

TCP ENTITIES

                               TENNENBAUM CAPITAL PARTNERS, LLC, AS AGENT

                                 By:  TENNENBAUM & CO., LLC
                                 Its: Managing Member

                               SPECIAL VALUE ABSOLUTE RETURN FUND,
                                 LLC, as Purchaser
                                 By:  SVAR/MM, LLC
                                 Its: Managing Member

                                 By:  TENNENBAUM CAPITAL PARTNERS, LLC
                                 Its: Managing Member

                                 By:  TENNENBAUM & CO., LLC
                                 Its: Managing Member

                               SPECIAL VALUE BOND FUND, LLC,

                                 By: SVIM/MSM, LLC

<PAGE>

                                 Its: Manager

                                 By:  TENNENBAUM & CO., LLC
                                 Its: Managing Member

                               SPECIAL VALUE BOND FUND II, LLC,

                                 By:  SVIM/MSM II, LLC
                                 Its: Managing Member

                                 By:  TENNENBAUM & CO., LLC
                                 Its: Managing Member

                               J.B. FUQUA FAMILY CHARITABLE LEAD
                                 ANNUITY TRUST - 2000

                                 By:  TENNENBAUM CAPITAL PARTNERS, LLC
                                 Its: Investment Manager

                                 By:  TENNENBAUM & CO., LLC
                                 Its: Managing Member

                                 Each of the above by: /s/ Michael Tennenbaum
                                                       _________________________
                                 Name:_______________________
                                 Title:______________________

                                 Address for Notices:
                                 11100 Santa Monica Blvd.
                                 Suite 210
                                 Los Angeles, CA 90025
                                 Attention:  David A. Hollander

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