Document:

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                            ASSET PURCHASE AGREEMENT

                                 BY AND BETWEEN

                                M.H. RHODES, INC.

                                       AND

                        CAPEWELL COMPONENTS COMPANY, LLC

                          Closing Date December 1, 2000

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                                TABLE OF CONTENTS

                                                                            PAGE

1 .  DEFINITIONS...............................................................1

2.   SALE OF ASSETS; CLOSING...................................................3
     2.1.   Sale of Assets.....................................................3
     2.2.   Consideration......................................................3
     2.3.   Buyer's Assumption of Liabilities..................................3
     2.4.   Closing............................................................3
     2.5.   Deliveries by Seller at Closing....................................3
     2.6.   Deliveries by Buyer at Closing.....................................4
     2.7.   Allocation of Purchase Price.......................................5

3.   REPRESENTATIONS AND WARRANTIES OF SELLER..................................5
     3.1.   Organization and Power.............................................5
     3.2.   Authorization......................................................5
     3.3.   No Conflict........................................................5
     3.4.   Title to Purchased Assets..........................................6
     3.5.   Condition of Purchased Assets......................................6
     3.6.   Inventories........................................................6
     3.7.   Pre-Bill...........................................................6
     3.8.   Litigation.........................................................6
     3.9.   Compliance: Business Practices.....................................6
     3.10.  Absence of Undisclosed Liabilities.................................6
     3.11.  Absence of Certain Changes.........................................7
     3.12.  Contracts..........................................................7
     3.13.  Intellectual Property..............................................8
     3.14.  Environmental Matters..............................................8
     3.15.  Taxes..............................................................9
     3.16.  Insurance..........................................................9
     3.17.  Powers of Attorney.................................................9
     3.18.  Brokers............................................................9
     3.19.  Statements not Misleading.........................................10
     3.20.  Product Warranties................................................10
     3.21.  Labor Matters.....................................................10

4.   REPRESENTATIONS AND WARRANTIES OF BUYER..................................10
     4.1.   Organization and Power of Buyer...................................10
     4.2.   Authorization.....................................................10
     4.3.   No Conflict.......................................................10
     4.4.   Litigation........................................................11
     4.5.   Brokers...........................................................11

5.   COVENANTS................................................................11
     5.1.   Covenants not to Compete..........................................11
     5.2.   Use of Name M.H. Rhodes, Inc......................................13
     5.3.   Transfer of Goodwill and Business.................................14
     5.4.   Expenses; Transfer Taxes..........................................14
     5.5.   Taxes.............................................................14
     5.6.   Public Announcements..............................................14
     5.7.   Accounts Payable..................................................14

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6.   CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS..............................14
     6.1.   Representations and Warranties Accurate...........................14
     6.2.   Opinion of Counsel to Seller......................................15
     6.3.   Litigation Affecting Closing......................................15
     6.4.   Instruments of Sale, Etc..........................................15
     6.5    Consents..........................................................15
     6.6    No Material Adverse Effect........................................15
     6.7.   Deliveries at Closing.............................................15
     6.8.   Due Diligence.....................................................15
     6.9.   Disclosure Schedules..............................................15
     6.10.  Maintenance of Inventory..........................................15
     6.11.  Advance Recording of Sales........................................15
     6.12.  Execution by Owosso...............................................16
     6.13.  Termination of Sales Representative Agreements....................16

7.   CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.............................16
     7.1.   Representations and Warranties Accurate...........................16
     7.2.   Litigation Affecting Closing......................................16
     7.3.   Consents..........................................................16
     7.4.   Deliveries at Closing.............................................16
     7.5.   Release of Assumed Liability......................................16

8.   INDEMNIFICATION..........................................................17
     8.1.   Indemnification...................................................17
     8.2.   Procedures for Indemnification....................................17
     8.3.   Limitations on Indemnification....................................18
     8.4.   Survival..........................................................18
     8.5.   Bulk Sales Laws...................................................19
     8.6.   Exclusive Remedy..................................................19

9.   TERMINATION..............................................................19
     9.1.   Termination Events................................................19
     9.2.   Effect of Termination.............................................19

10.  MISCELLANEOUS............................................................20
     10.1.  Notices...........................................................20
     10.2.  Entire Agreement..................................................20
     10.3.  Counterparts......................................................20
     10.4.  Further Assurances................................................20
     10.5.  Parties in Interest; Assignment...................................21
     10.6.  Governing Law.....................................................21
     10.7.  Schedules and Headings............................................21
     10.8.  Amendment.........................................................21
     10.9.  Waiver............................................................21
     10.10. Confidentiality...................................................21

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EXHIBITS AND SCHEDULES

Exhibit A       --   Opinion of Counsel to Seller
Exhibit B       --   Assignment and Assumption Agreement
Exhibit C       --   Bill of Sale, Assignment and Conveyance

Schedule 1A     --   Assumed Liabilities
Schedule 1B     --   Excluded Assets
Schedule 1C     --   Purchased Assets
Schedule 2.7    --   Allocation of Purchase Price
Schedule 3.3    --   Consents, Etc.
Schedule 3.4    --   Title to Purchased Assets
Schedule 3.5    --   Condition of Purchased Assets
Schedule 3.8    --   Litigation
Schedule 3.10   --   Liabilities
Schedule 3.11   --   Absence of Certain Changes
Schedule 3.14   --   Environmental Matters
Schedule 3.20   --   Product Warranties
Schedule 5.1    --   Territory

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                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (the "Agreement") is executed as of
December 1, 2000, by and between M.H. Rhodes, Inc., a Delaware corporation (a
subsidiary of Owosso Corporation) ("Seller"), and CAPEWELL COMPONENTS COMPANY,
LLC, a Connecticut limited liability company ("Buyer" and together with Seller,
the "parties").

                                    RECITALS

         WHEREAS, Buyer wishes to purchase from Seller, and Seller wishes to
sell to Buyer, certain of the assets, properties, rights and business of Seller
relating to its timer and switch product line (the "Business") upon the terms
and conditions of this Agreement. Buyer also wishes to assume from Seller, and
Seller wishes to assign to Buyer, certain liabilities of Seller, but only to the
extent specifically set forth in Section 2.3 hereof.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, and intending to be
legally bound, the parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
following meanings:

         "Assumed Liabilities" shall mean only the duties, liabilities or
obligations of Seller arising after the Closing Date in connection with the
items identified on Schedule 1A except as otherwise noted on Schedule 1A, and
shall specifically exclude, among other things, (i) any liabilities for
employment, income, sales, property or other Taxes incurred or accrued by
Seller, including without limitation as a result of this transaction; (ii) any
fees or expenses incurred by Seller in connection with this transaction; (iii)
any liabilities for sums borrowed from banks or other Persons, including any
interest thereon or expenses related thereto; (iv) any debt, payables or other
liabilities to Related Persons; (v) except as specifically set forth on Schedule
1A, any liabilities related to any employee benefit plan, including, without
limitation, any 401(k), profit sharing or pension plan, whether or not sponsored
by Seller; and (vi) any claims or litigation pending against Seller.

         "Closing" shall mean the consummation of the purchase and sale
transaction described herein.

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         "Closing Date" shall mean the date on which the Closing occurs, as
specified in Section 2.4.

         "Environmental Law" shall mean any applicable federal, state or local
law, statute, ordinance, rule, regulation, code or common law and any license,
permit, authorization or order, judgment, decree or injunction related to
pollution, waste, contamination, environmental conditions or the protection of
the environment (including, without limitation, the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of any hazardous substances), including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. Section 9601, et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901, et seq.; the Clean Air Act, as
amended, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251, et seq.; the Toxic Substances Control
Act, as amended, 125 U.S.C. Section 1251, et seq.; the Emergency Planning and
Community Right to Know Act, 42 U.S.C. Section 11001, et seq.; and the Safe
Drinking Water Act, 42 U.S.C. Section 300f, et seq.

         "Excluded Assets" shall mean those assets of Seller (other than the
Purchased Assets) of any kind or nature, including without limitation, those
items listed on Schedule 1B hereto.

         "Governmental Entity" shall mean any court, administrative agency,
commission, state, municipality or other governmental authority or
instrumentality, domestic or foreign, national or international.

         "Known to Seller" or "to Seller's Knowledge" means any matter that was
known, or would become known in the exercise of reasonable care and after
reasonable inquiry, by Kenneth Bagnell and Frank Darmos, both of whom are
employed by Seller.

         "Liens" shall mean, with respect to the Purchased Assets, all
liabilities, claims, liens, charges, pledges, security interests, options,
restrictions or other encumbrances of any kind.

         "Material Adverse Effect" shall mean a material adverse effect on the
results of operations, financial condition or prospects of the Business.

         "Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
Governmental Entity (or any department, agency or political subdivision
thereof).

         "Purchase Price" shall mean the aggregate amount to be paid by Buyer to
Seller for the Purchased Assets.

         "Purchased Assets" shall mean all of the assets of any kind or nature
used in the Business and identified on Schedule 1C, but excluding the Excluded
Assets.

         "Reference Date" shall mean the date hereof.

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         "Related Person" shall mean any officer, director, employee or
consultant of Seller or any holder of five percent (5%) or more of any class of
capital stock of Seller or any member of the immediate family of any such
officer, director, employee, consultant or any Person controlled by any such
officer, director, employee, consultant or a member of the immediate family of
any such officer, director, employee or consultant.

         "Taxes" (or "Tax" where the context requires) shall mean all federal,
state, county, city, local, foreign and other taxes (including, without
limitation, premium, excise, value added, sales, use, occupancy, gross receipts,
franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll-related and property
taxes, import duties and other governmental charges and assessments), whether or
not measured in whole or in part by net income, including deficiencies,
interest, additions to tax or interest or penalties with respect thereto.

                                    ARTICLE 2

                             SALE OF ASSETS; CLOSING

         Section 2.1. Sale of Assets. At the Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer, free and clear of all Liens, good and
marketable title to all of the Purchased Assets.

         Section 2.2. Consideration. In addition to the assumption by Buyer of
the Assumed Liabilities, the Purchase Price shall be Two Million Dollars
($2,000,000). Buyer shall pay the Purchase Price by delivery of $2,000,000 in
cash by wire transfer of immediately available funds at Closing to Seller.

         Section 2.3. Buyer's Assumption of Liabilities. On the terms and
subject to the conditions set forth in this Agreement, and in further
consideration of the transfer of the Purchased Assets, at the Closing Buyer
shall assume only those duties, liabilities or obligations of Seller included in
the Assumed Liabilities.

         Section 2.4. Closing. The Closing shall take place (both in person and
via facsimile, telephone, mail and other mutually acceptable means of
communication and delivery) at the offices of Buyer's counsel, Shipman & Goodwin
LLP, in Hartford, Connecticut on December 1, 2000 or at such other time and
location as the parties hereto shall agree in writing.

         Section 2.5. Deliveries by Seller at Closing. At the Closing, Seller
shall deliver to Buyer:

         (a) A certificate of Seller, dated as of the Closing Date, certifying
in such detail as Buyer may specify to the fulfillment of the conditions
specified in Section 6.1;

         (b) An opinion of Seller's counsel, dated the Closing Date, to the
effect and substantially in the form of Exhibit A to this Agreement;

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         (c) Evidence of authorization to change Seller's name and documents
sufficient to effectuate such change and to convey all rights in Seller's name
to Buyer;

         (d) Bill of Sale in the form of Exhibit C, and such assignments and
other instruments of transfer as may be reasonably satisfactory to Buyer's
counsel, and with such consents to the conveyance, transfer and assignment
thereof as may be necessary to effect the conveyance, transfer, assignment and
delivery of the Purchased Assets and to vest in Buyer good and marketable title
thereto and to assure to Buyer the full benefit of the Purchased Assets,
including without limitation:

              (i) the transfer of all registered Intellectual Property rights of
         the Business (as the term Intellectual Property is defined in Section
         3.13 hereof) and applications therefor;

              (ii) consent from Yosemite Investment, Inc. to the assignment by
         Seller for the license to use U.S. Patent No. 4,697,932 to make, use
         and sell Seller's Marktime Electronic Signaltron Model EB timer/beepers
         contained in that certain Settlement Agreement dated October 31, 1994
         by and between Seller and Yosemite Investment, Inc.; and

         (e) A commitment to release any security interest, Lien or other
encumbrance on any Purchased Assets from any third party, including (i) Bank
One; (ii) PNC Bank; and (iii) the Connecticut Department of Economic and
Community Development;

         (f) Good standing certificate of recent date for Seller from the
Secretary of State of the State of Delaware and a certificate of existence from
the Secretary of the State of Connecticut; and

         (g) A certificate of the Secretary of Seller, dated as of the Closing
Date, enclosing copies of Seller's existing Certificate of Incorporation, Bylaws
and the resolutions of Seller's Board of Directors authorizing the transactions
completed hereby.

         Simultaneously with the deliveries referred to in this Section, Seller
shall take or cause to be taken all such actions as may reasonably be required
to put Buyer in actual possession and operating control of the Purchased Assets.

         Section 2.6. Deliveries by Buyer at Closing. At the Closing, Buyer
shall deliver to Seller:

         (a) Assignment and Assumption Agreement in the form attached hereto as
Exhibit B, fully executed by Buyer, pursuant to which Buyer assumes, as of the
Closing Date, the future payment and performance of the Assumed Liabilities;

         (b) A certificate of Buyer, dated the Closing Date, certifying in such
detail as Seller may specify to the fulfillment of the conditions specified in
Section 7.1;

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         (c) A certificate of existence of recent date for Buyer from the
Secretary of the State of Connecticut;

         (d) In accordance with Section 2.2 of this Agreement, an amount equal
to the Purchase Price;

         (e) A certificate of the President of Buyer, dated as of the Closing
Date, enclosing copies of Buyer's existing Articles of Organization and the
resolutions of Buyer's Board of Managers authorizing the transactions completed
hereby; and

         (f) Such other documents and instruments as are reasonably necessary to
be delivered to Seller by Buyer in order to effect the transaction contemplated
by this Agreement in accordance with the terms and conditions hereof.

         Section 2.7. Allocation of Purchase Price. The Purchase Price as
determined for federal income tax purposes shall be allocated among the
Purchased Assets and Seller's covenant not to compete as set forth on Schedule
2.7 to be prepared jointly by Buyer and Seller and attached to this Agreement.
Each party agrees that it shall not take any position that varies from or is
inconsistent with such allocation in any filing made by such party with the
Internal Revenue Service ("IRS") or any other governmental or regulatory
authority, except to the extent an adjustment to the allocation is required by
the IRS subsequent to an IRS audit. The allocation shall be prepared in a manner
consistent with Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the income tax regulations promulgated thereunder. Buyer and
Seller shall timely file IRS Form 8594 based on the allocation of the Purchase
Price provided under this Section 2.7.

                                    ARTICLE 3

                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller hereby represents and warrants to Buyer as follows:

         Section 3.1. Organization and Power. Seller is a corporation duly
organized and validly existing under the laws of the State of Delaware. Seller
has full power and authority to own its properties and conduct the business
presently being conducted by it. Seller has full legal power, authority and
capacity to execute this Agreement and to consummate the transactions
contemplated by this Agreement.

         Section 3.2. Authorization. The execution, delivery and performance of
this Agreement by Seller have been duly authorized and approved by all requisite
action on the part of its Board of Directors. This Agreement constitutes the
valid and binding obligation of Seller and is enforceable against Seller in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
relating to or limiting creditors' rights generally and by equitable principles.

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         Section 3.3. No Conflict. Except as set forth on Schedule 3.3, the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and the compliance with the terms hereof will
not, (a) violate any law, judgment, order, decree, statute, ordinance, rule or
regulation applicable to Seller, or any permit, license or approval of any
Governmental Entity, the violation of which would have a Material Adverse
Effect, (b) conflict with any provision of Seller's certificate of incorporation
or by-laws, (c) result in any violation of, and will not conflict with, or
result in a breach of any terms of, or constitute a default under, any mortgage,
instrument or agreement to which Seller is a party or by which Seller or any of
the Purchased Assets is bound, or create any Lien upon any of the Purchased
Assets, or (d) require any notice to, or consent, approval, order or
authorization of, or the registration, declaration or filing with, any
Governmental Entity or other third party.

         Section 3.4. Title to Purchased Assets. Except as stated on Schedule
3.4, Seller has good, valid and marketable title to the Purchased Assets, free
and clear of all Liens. No other party has any rights or claims to possession of
any of the Purchased Assets. Except as set forth on Schedule 3.4, none of the
Purchased Assets are subject to any option, contract, arrangement or
understanding that would restrict Seller's ability to transfer the Purchased
Assets to Buyer as contemplated herein.

         Section 3.5. Condition of Purchased Assets. Except as stated on
Schedule 3.5, the Purchased Assets currently used in the Business are in good
operating condition, ordinary wear and tear excepted, and in the state of
maintenance and repair appropriate for the use thereof in the ordinary and usual
course of business by Seller. Schedule 3.5 also lists those Purchased Assets not
currently used in the Business and no representation or warranty as to the
operating condition or state of maintenance or repair is given with respect to
such assets.

         Section 3.6. Inventories. Seller has good and marketable title to the
inventories included in the Purchased Assets free and clear of all Liens. The
inventories included in the Purchased Assets consist of items of a quality and
quantity that are saleable or useable in the ordinary course of the Business
consistent with past practice.

         Section 3.7. Pre-Bill. Seller has not pre-billed or received prepayment
for products to be sold, services to be rendered, or expenses to be incurred
with respect to the Business subsequent to the Closing Date.

         Section 3.8. Litigation. Except as set forth on Schedule 3.8, there is
no suit, action or proceeding pending against or affecting Seller or the
employees of Seller relating to the Business, the Purchased Assets, or the
transactions contemplated hereby, nor to Seller's Knowledge is there any such
suit, action or proceeding threatened against Seller, or any of the employees of
Seller. Seller is not subject to any order of a Governmental Entity which could
reasonably be expected to adversely affect the ability of Seller to consummate
the transactions contemplated hereby and the Business is not subject to any
order of any Governmental Entity.

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         Section 3.9. Compliance: Business Practices. Seller has all necessary
licenses, permits and other approvals of Governmental Entities necessary to
operate the Business as now conducted, each of which is in good standing, and
Seller has conducted the Business and properly filed all necessary reports in
accordance with applicable laws and regulations, other than in any case with
respect to the foregoing, the failure of which would not individually or in the
aggregate, have a Material Adverse Effect.

         Section 3.10. Absence of Undisclosed Liabilities. Except as set forth
on Schedule 3.10, the Business does not have any material liabilities or
obligations, either accrued, contingent or otherwise, which are not reflected in
this Agreement or the Schedules hereto, except as have been incurred in the
ordinary course of business.

         Section 3.11. Absence of Certain Changes. Except as set forth on
Schedule 3.11, since the Reference Date, neither the Business (nor the Seller
with respect to the Business) has or will have as of the Closing:

         (a) suffered any change in the Purchased Assets or the Business that,
either individually or in the aggregate, has had a Material Adverse Effect;

         (b) suffered any damage, destruction or loss, whether or not covered by
insurance, which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or materially adversely affect the
Purchased Assets;

         (c) declared or made or agreed to declare or make any distributions of
any of the Purchased Assets to any stockholder;

         (d) pledged, hypothecated or otherwise encumbered any of the Purchased
Assets;

         (e) sold or transferred any of the Purchased Assets except in the
ordinary course of business consistent with past practices;

         (f) suffered any material adverse change in its relationships with
customers or its Contracts (as defined in Section 3.12);

         (g) entered or agreed to enter into any agreement or arrangement
granting any preferential rights to purchase any of the Purchased Assets except
in the ordinary course of business consistent with past practices;

         (h) placed any orders for materials, merchandise or supplies in
exceptional or unusual quantities based upon past operating practices or
accepted orders from customers under conditions relating to price, terms of
payment, time of delivery, or like matters materially different from the
conditions regularly and usually specified on acceptance of orders for similar
merchandise from customers similarly situated except in the ordinary course of
business consistent with past practices; or

         (i) entered into any other transaction other than in the ordinary
course of business consistent with past practices, or been involved in any event
or experienced any condition of any character, that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect or
materially adversely affect the Purchased Assets.

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         Section 3.12. Contracts. The contracts portion of Schedule 1C lists all
of the material contracts, leases, arrangements and understandings (written or
oral) including, without limitation, sales orders, purchase orders and
distribution agreements, which relate to the Business as it is conducted by
Seller (the "Contracts"). All Contracts have been entered into in the ordinary
course of business, and they are all part of the Purchased Assets. Seller has
complied, and all other parties to the Contracts have complied, with the
provisions of the Contracts in all material respects. Neither Seller nor, to
Seller's Knowledge, the other Persons who are a party to such Contracts,
arrangements and understandings are in default thereof and all Contracts are
valid and in effect. Seller has not received notice of default under any
Contract, and to Seller's Knowledge, no event has occurred or is expected to
occur which (after notice and lapse of time or both) would become a breach or
default under, or otherwise permit unilateral modification, cancellation,
acceleration or termination of any such Contract. No customer, supplier or
vendor of the Business has given any notice to Seller or, to Seller's Knowledge,
made any threat or otherwise revealed an intent to cancel or otherwise terminate
its relationship with Seller, to materially and adversely change its
relationship with Seller, to substantially reduce the volume of business it
currently does with Seller or to refuse to renew any Contract when it expires.

         Section 3.13. Intellectual Property. (a) The intellectual property
portion of Schedule 1C (the "Intellectual Property Schedule") attached hereto
contains a description of all U.S. and foreign patents, pending patent
applications, trademarks, trademark registrations, pending applications for
trademark registration, service marks, service mark registrations, pending
applications for service mark registration, trade names, registered copyrights,
pending copyright applications and any other intellectual property rights or
licenses (collectively, the "Intellectual Property") owned or licensed by Seller
for use in the Business. The Intellectual Property Schedule separately discloses
all Intellectual Property under license, all of which licenses are assignable to
Buyer except as noted on the Intellectual Property Schedule. No Intellectual
Property rights not described on the Intellectual Property Schedule are
necessary in connection with the conduct of the Business. Except as provided on
the Intellectual Property Schedule, Seller owns the entire right, title and
interest in and to, and has the exclusive perpetual royalty-free right to use,
the Intellectual Property, free and clear of all Liens. There are no pending or,
to Seller's Knowledge, threatened claims against Seller by any Person with
respect to any Intellectual Property, or its use. To Seller's Knowledge, no
Person is infringing upon nor has any Person misappropriated the Intellectual
Property, and to Seller's Knowledge, Seller is not infringing upon the
Intellectual Property rights of any other Person.

         (b) Seller owns and has the unrestricted right to use all trade
secrets, including know-how, inventions, designs, processes, computer software
and documentation for such software and technical data required for or incident
to the development, manufacture, operation and sale of all products sold or
proposed to be sold by Seller with respect to the Business, free and clear of
any Liens, including without limitation, all claims of current and former
employees, consultants, officers, and directors of Seller. Kenneth Bagnell and
Frank Darmos, who are employees of Seller, have executed acknowledgements
regarding confidentiality and proprietary information with respect to the
Intellectual Property.

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         Section 3.14. Environmental Matters. Except as set forth on Schedule
3.14:

         (a) There are no outstanding or to Seller's Knowledge, threatened
actions, claims, proceedings, determinations or judgments by any party,
including but not limited to any Governmental Entity, against or involving the
Business or the Purchased Assets in any manner arising under any Environmental
Law. Seller has not received any notice of, nor to Seller's Knowledge are there
any outstanding or threatened orders, determinations or notices of violation
issued by any Governmental Entity administering any Environmental Law in
connection with ownership of or operation by Seller of the Business or the
Purchased Assets which have not been complied with or resolved to the
satisfaction of such Governmental Entity.

         (b) The Business is being and has been operated in compliance with all
Environmental Laws including, but not limited to, laws relating to all
discharges into or onto the soil and/or the ground or surface water, emissions
into the ambient air, and generation, accumulation, labeling, transportation,
handling, treatment, storage and disposal of waste material or process
by-products (including solid, hazardous or toxic waste or hazardous materials or
substances, if any) or removal of any existing condition, material or substance.
Seller has complied with all notice, record keeping and reporting requirements
imposed by any Governmental Entity and any informational requests or demands
arising under any Environmental Law with respect to the Business or the
Purchased Assets.

         (c) Seller has not released, disposed of or caused or permitted the
disposal of any solid waste, hazardous waste, hazardous material or hazardous
substance, as such terms are defined by any Environmental Law (the "Controlled
Substances") generated by the Purchased Assets or resulting from the operation
of the Business upon any of the real properties from which Seller has conducted
the Business. Seller has not, directly or indirectly, disposed of Controlled
Substances generated by the Purchased Assets or resulting from the operation of
the Business off-site in violation of any Environmental Law.

         (d) There are no pending or to Seller's Knowledge, threatened actions,
claims, proceedings or judgments against Seller by any present or former
officers, agents or employees of Seller alleging or involving personal injury or
damage as a result of the violation of any Environmental Law or otherwise
involving environmental conditions caused by the Purchased Assets or resulting
from the operation of the Business under which such persons were employed nor is
there a basis for commencing any such action, claim or proceeding.

         (e) Each of the Purchased Assets has not generated, and is free of all
asbestos, asbestos-containing materials, polychlorinated biphenyls, oil and
petroleum products, and all Controlled Substances.

                                      -9-
<PAGE>

         (f) The transactions contemplated by this Agreement are not subject to
any environmental transfer act in any jurisdiction in which Seller maintains any
tangible personal property or fixtures, or owns, leases, rents or occupies any
real property, nor are there any permits or approvals or the transfer of any
permits or approvals required by a Governmental Entity for the transactions
contemplated by this Agreement.

         Section 3.15. Taxes. With respect to the Purchased Assets or the
Business, Seller has paid all Taxes it is required to pay. There are (and as of
immediately following the Closing there will be) no Liens on the Purchased
Assets relating to or attributable to Taxes.

         Section 3.16. Insurance. The Purchased Assets are insured for Seller's
benefit and will continue to be so insured through the Closing, in amounts and
against risks that are commercially reasonable.

         Section 3.17. Powers of Attorney. No Person has any power of attorney
to act on behalf of Seller in connection with the Business other than such
powers to so act as normally pertain to the officers of Seller.

         Section 3.18. Brokers. There are no claims for brokerage commissions,
finder's fees or similar compensation arising out of or due to any act of or on
behalf of Seller in connection with the transactions contemplated by this
Agreement.

         Section 3.19. Statements not Misleading. No representation or warranty
of Seller or document furnished by Seller hereunder is false or inaccurate in
any material respect or contains or will contain any untrue statement of a
material fact or omits or will omit to state any fact necessary to make the
statements contained herein or therein not misleading.

         Section 3.20. Product Warranties. Schedule 3.20 sets forth a summary
description of the product warranty policies of the Business for the benefit of
its customers and distributors for damaged or defective products or any other
matter covered by the warranty policies of the Business, along with the product
warranty claims experience of the Business for fiscal years 1998, 1999 and 2000.
The warranty policies described on Section 3.20 are consistent with the past
business practices of the Business and Seller has not made any modifications to
such policies within six (6) months of the date hereof.

         Section 3.21. Labor Matters. Seller and Lodge # 354 of District Lodge
No. 170 of the International Association of Machinists and Aerospace Workers
(the "Union") have executed a settlement agreement dated November 28, 2000 that
resolves the Union's claims with respect to the sale of the Purchased Assets.

                                      -10-
<PAGE>

                                    ARTICLE 4

                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to Seller as follows:

         Section 4.1. Organization and Power of Buyer. Buyer is a limited
liability company duly organized and validly existing under the laws of the
State of Connecticut. Buyer has all necessary power and authority to own its
properties and conduct the business presently being conducted by it, to execute
this Agreement and the other agreements and instruments to be executed and
delivered by it in connection with this Agreement, to perform its obligations
hereunder and under the other agreements and instruments to be executed and
delivered in connection with this Agreement, and to consummate the transactions
contemplated by this Agreement.

         Section 4.2. Authorization. The execution, delivery and performance of
this Agreement and the other agreements and instruments to be executed and
delivered in connection with this Agreement by Buyer have been duly authorized
and approved by all requisite action on the part of Buyer, and this Agreement
and the other agreements and instruments to be executed and delivered in
connection with this Agreement constitute the valid and binding obligations of
Buyer and are enforceable against Buyer in accordance with their terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, and other similar laws relating to or limiting creditors' rights
generally and by equitable principles.

         Section 4.3. No Conflict. The execution and delivery by Buyer of this
Agreement or the other documents, agreements or instruments to be executed by
Buyer pursuant hereto do not, and the consummation of the transactions
contemplated hereby and the compliance with the terms hereof will not, (a)
violate any law, judgment, order, decree, statute, ordinance, rule or regulation
applicable to Buyer, or any permit, license or approval of any Governmental
Entity, (b) conflict with any provision of Buyer's articles of organization or
operating agreement, (c) result in any violation of, and will not conflict with,
or result in a breach of any terms of, or constitute a default under, any
mortgage, instrument or agreement to which Buyer is a party or by which Buyer is
bound, or (d) require any notice to, or consent, approval, order or
authorization of, or the registration, declaration or filing with, any
Governmental Entity or other third party, which, in the case of clause (c) or
(d), would have a material adverse effect on Buyer's ability to consummate the
transactions contemplated by this Agreement.

         Section 4.4. Litigation. There is no suit, action or proceeding pending
against or affecting Buyer, or the transactions contemplated hereby, nor, to
buyer's knowledge, is there any such suit, action or proceeding threatened
against Buyer, or any of the employees of Buyer which could reasonably be
expected to have a material adverse effect on Buyer. The Buyer is not subject to
any order of a Governmental Entity which could materially adversely affect the
ability of Buyer to consummate the transactions contemplated hereby.

                                      -11-
<PAGE>

         Section 4.5. Brokers. There are no claims for brokerage commissions,
finder's fees or similar compensation arising out of or due to any act of or on
behalf of Buyer in connection with the transactions contemplated by this
Agreement.

                                    ARTICLE 5

                                    COVENANTS

         Section 5.1.  Covenants not to Compete.

         (a) Non-Competition. For the Non-Compete Period (as that term is
defined below), within the territories in which Buyer conducts its business at
Closing, which territories are identified on Schedule 5.1 (the "Territory"),
Seller and Owosso Corporation ("Owosso"), along with their respective
successors, assigns, parents, subsidiaries, subdivisions and affiliated or
related entities (together "Affiliates") shall not, directly or indirectly,
without the written authorization of Buyer, engage in competition with Buyer or
an Affiliate thereof, in any manner or capacity (e.g., as an advisor, principal,
agent, partner, member, officer, director, stockholder, employee, member of any
association, or otherwise), in the Business (including the manufacture and sale
of timing devices, bell ringing timers, electric time switches and coin meters)
as was engaged in by Seller on the Closing Date, including the design,
development, manufacture, distribution, marketing, leasing or selling of
products, services or systems which are competitive with the products, services
or systems being sold, marketed or produced by, or which are under development
by, the Business at the time of the Closing or during the Non-Compete Period;
provided however, that nothing in this Section 5.1 shall limit (i) Seller from
engaging in any other business Seller is engaged in on the Closing Date, or (ii)
Owosso or its Affiliates from engaging in any business it or they are engaged in
on the Closing Date. Seller, Owosso or its Affiliates shall not own, participate
in the ownership of, lend money, guarantee loans, make gifts of money or other
property, or otherwise lend financial or other assistance in any form to any
Person which is engaged in, or will within the Non-Compete Period engage in, any
of the activities prohibited by this Section 5.1.

         (b) Limitation on Covenant. Ownership by Seller, Owosso or its
Affiliates, as a passive investment, of less than one percent (1%) of the
outstanding shares of capital stock of any corporation listed on a national
securities exchange or publicly traded in the over-the-counter market shall not
constitute a breach of this Section 5.1.

         (c) Employees. During the Non-Compete Period, Seller, Owosso or its
Affiliates shall not, either on its own account or in conjunction with or on
behalf of any other Person employ, solicit, entice away or attempt to employ,
solicit or entice away from Buyer any Person who is an officer, manager,
consultant or employee of Buyer.

         (d) Confidentiality. Seller, Owosso or its Affiliates will not at any
time hereafter make use of or disclose or divulge to any Person (other than to
officers or employees of Buyer whose province it is to know the same) any
information (other than any information properly available to the public or
disclosed or divulged pursuant to an order of a court of competent jurisdiction)

                                      -12-
<PAGE>

relating to Buyer or the Business, the identity of the customers and suppliers
of Buyer or the Business, or the products, finances, contractual arrangements,
business or methods of business of Buyer or the Business and shall use its best
endeavors to prevent the publication or disclosure of any such information.
Seller and Owosso acknowledge that many of the Purchased Assets are trade
secrets which Buyer has purchased and which Seller and Owosso are forever
restricted from using or disclosing. If, in connection with the Business,
Seller, Owosso or its Affiliates shall have obtained trade secrets or other
confidential information belonging to any third party under an agreement which
contained restrictions on disclosure by Seller or Owosso, Seller or Owosso will
not at any time infringe such restrictions.

         (e) Injunctive Relief. Seller and Owosso acknowledge that any violation
of any provision of this Section 5.1 will cause irreparable harm to Buyer, that
damages for such harm will be incapable of precise measurement and that, as a
result, Buyer will not have an adequate remedy at law to redress the harm caused
by such violations. Therefore, in the event of a violation of Section 5.1 by
Seller, Owosso or its Affiliates, in addition to its other remedies, Buyer shall
be entitled, without the necessity of either proof of actual damage or the
posting of a bond, to injunctive relief, including but not limited to an
immediate temporary injunction, temporary restraining order and/or preliminary
or permanent injunction to restrain or enjoin any such violation. Seller and
Owosso acknowledge that any violation of this Section 5.1 will cause Buyer
irreparable harm at its principal place of business in the State of Connecticut,
and, therefore, Seller and Owosso hereby submit, exclusively for purposes of
this Section 5.1 and for no other section of this Agreement, to jurisdiction
before any court of record in the State of Connecticut, at Buyer's election, and
Seller and Owosso hereby waive any right to raise the question of jurisdiction
and venue in any action that Buyer may bring in any such court against Seller or
Owosso.

         (f) Severability. Buyer, Seller and Owosso understand and agree that
the covenant set forth in this Section 5.1 shall be construed as a series of
separate covenants not to compete, one covenant for each country, state and
province within the Territory and one for each month of the non-competition
period. Should any clause, portion or paragraph of this Section 5.1 be
unenforceable or invalid for any reason, such unenforceability or invalidity
shall not affect the enforceability or validity of the remainder of this Section
5.1. Should any particular covenant or restriction, including but not limited to
the covenants and restrictions of Section 5.1(a), 5.1(c) and 5.1(d), be held to
be unreasonable or unenforceable for any reason, including without limitation
the time period, geographical area and scope of activity covered by such
covenant, then a court may modify any such covenant or restriction in order to
give it effect and allow it to be enforced to the greatest extent that would be
reasonable and enforceable.

         (g) Acknowledgment. Seller and Owosso acknowledge that this covenant
not to compete is a mandatory condition precedent to the Closing of the
transactions contemplated by this Agreement, and that, in the absence of the
preceding covenant not to compete, Buyer would not have consummated the Closing.

                                      -13-
<PAGE>

         (h)      Non-Compete Period.

                  (i) The Non-Compete Period shall be five (5) years after the
         Closing Date or, if five years is deemed unreasonable by a court of
         competent jurisdiction, then one of the periods of time listed in
         clause (ii), as ordered by such court.

                  (ii) If ordered by a court of competent jurisdiction, the
         Non-Compete Period for Seller and Owosso shall be one of the following
         periods of time as deemed reasonable by such court:

                      (A) four (4) years and six (6) months from the Closing
                          Date;

                      (B) four (4) years from the Closing Date;

                      (C) three (3) years and six (6) months from the Closing
                          Date;

                      (D) three (3) years from the Closing Date;

                      (E) two (2) years and six (6) months from the Closing
                          Date;

                      (F) two (2) years from the Closing Date;

                      (G) one (1) year and six (6) months from the Closing Date;

                      (H) one (1) year from the Closing Date; or

                      (I) six (6) months from the Closing Date.

         Section 5.2. Use of Name "M.H. Rhodes, Inc.". From and after the
Closing Date, Seller shall cease to use the name "M.H. Rhodes, Inc." or any
similar name in connection with the Business without the prior written consent
of Buyer, except that Seller may continue to use the M.H. Rhodes, Inc. name on
Seller's existing stock of business forms and checks for a transition period not
to exceed nine (9) months from the Closing Date.

         Section 5.3. Transfer of Goodwill and Business. From and after the
Closing Date until March 31, 2001, Seller shall, when requested to do so by
Buyer, provide commercially reasonable good faith assistance to effectuate a
smooth transfer of the Business and goodwill related thereto to Buyer. Such
assistance shall include, but not necessarily be limited to, providing Buyer on
commercially reasonable terms Seller's computerized data and computer files
relating to the operation of the Business in a format that can be utilized by
Buyer in its computer system.

         Section 5.4. Expenses; Transfer Taxes. All costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense. Any sales, use, franchise,
conveyance or other transfer Tax which becomes payable by any of the parties to
this Agreement as a result of the conveyance and transfer from Seller to Buyer
of the Purchased Assets or otherwise as a result of the transactions

                                      -14-
<PAGE>

contemplated hereby and any other transfer or documentary Taxes or any filing or
recording fees applicable to such conveyance and transfer shall be paid by
Seller, and Seller shall promptly provide Buyer with proof of payment of such
Taxes.

         Section 5.5. Taxes. Seller shall be responsible for all Taxes with
respect to the Purchased Assets or the Business that accrue or relate to the
operation of the Business prior to the Closing Date and Buyer shall be
responsible for all Taxes that accrue or relate to the operation of the Business
from and after the Closing Date.

         Section 5.6. Public Announcements. Buyer and Seller shall mutually
agree on any announcement or correspondence with or to the public or customers,
suppliers or employees of Seller about the terms and conditions of this
Agreement or the transactions contemplated hereby unless such announcement is
required by law in the good faith opinion of counsel and in such a case, the
announcing or corresponding party shall notify the other party and provide it in
advance with a copy of the public disclosure and a reasonable opportunity to
comment on such proposed disclosure.

         Section 5.7. Accounts Payable. Within 45 days of the Closing Date, the
Business shall have no outstanding accounts payable liabilities to its trade
creditors.

                                    ARTICLE 6

                   CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS

         All obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or at the Closing Date, of each of the following
conditions, provided that Buyer may waive in writing any condition contained in
this Article 6 prior to or on the Closing Date:

         Section 6.1. Representations and Warranties Accurate. All
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects with respect to those representations
and warranties qualified as to materiality, and in all respects as to those
representations and warranties not so qualified, on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of the Closing, except as otherwise specifically contemplated
by this Agreement. Seller shall have complied with all covenants and conditions
required to be performed or complied with by it prior to or at the Closing Date.
Seller shall furnish Buyer with an appropriate certificate to the foregoing
effect as of the Closing Date.

         Section 6.2. Opinion of Counsel to Seller. Buyer shall have been
furnished with an opinion of counsel to Seller, dated the Closing Date and
addressed to Buyer, on the matters set forth in Exhibit A.

         Section 6.3. Litigation Affecting Closing. No action, suit or
proceeding shall be pending or, to Seller's Knowledge, threatened by or before
any court or Governmental Entity in which it is sought to restrain or prohibit

                                      -15-
<PAGE>

or to obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.

         Section 6.4. Instruments of Sale, Etc. Seller shall have executed and
delivered to Buyer such instruments of sale, conveyance, transfer and assignment
satisfactory to counsel for Buyer as are necessary or desirable to vest in Buyer
title to all of the Purchased Assets or to confirm the status of title to the
Purchased Assets, including, without limitation, documents sufficient to
effectuate the change in Seller's corporate name as required by Section 2.5(c)
and the assignment of the Purchased Assets as required by Section 2.5(d).

         Section 6.5. Consents. All authorizations, approvals, permits or
consents of any Governmental Entity or third Person necessary for the
consummation of the transactions contemplated by this Agreement shall have been
duly obtained by Seller in writing, shall be effective on the Closing Date, and
shall have been delivered to Buyer, other than authorizations, approvals,
permits or consents the failure of which to obtain would not have a Material
Adverse Effect.

         Section 6.6. No Material Adverse Effect. There shall not have occurred
any event listed in Section 3.11 that would have a Material Adverse Effect or
materially adversely affect the Purchased Assets or the Assumed Liabilities.

         Section 6.7. Deliveries at Closing. Seller shall have delivered to
Buyer, fully executed by all applicable parties, each of the items specified in
Section 2.5 of this Agreement.

         Section 6.8. Due Diligence. Buyer shall have completed a due diligence
review of the Purchased Assets and the Business to its reasonable satisfaction.

         Section 6.9. Disclosure Schedules. Seller shall have provided true and
accurate disclosure schedules hereto as of the Closing Date, which shall not
contain any material adverse change from the disclosure schedules previously
delivered to Buyer, if any.

         Section 6.10. Maintenance of Inventory. Seller shall have maintained
its inventory related to the Business, including raw materials, work-in-process
and finished goods, at levels consistent with its historical business practices.

         Section 6.11. Advance Recording of Sales. Seller shall not have
solicited or accepted advance payments from customers for services or goods
which are to be performed or delivered by Buyer subsequent to the Closing Date.

         Section 6.12. Execution by Owosso. This Agreement shall have been
executed by Owosso.

         Section 6.13. Termination of Sales Representative Agreements. Seller
shall have provided written notice to all of the existing sales representatives
of the Business, for which Seller has sales representative agreements currently
in force, terminating such agreements within 30 days of the date of such notice.

                                      -16-
<PAGE>

                                    ARTICLE 7

                  CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS

         All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
provided that Seller may waive in writing any condition contained in this
Article 7 prior to or on the Closing Date:

         Section 7.1. Representations and Warranties Accurate. All
representations and warranties of Buyer contained in this Agreement and the
other agreements and instruments executed and delivered by Buyer in connection
with this Agreement, shall have been true when made and shall be true in all
material respects at and as of the Closing Date, except as otherwise
specifically contemplated by this Agreement. Buyer shall have performed and
complied in all material respects with all covenants and conditions required to
be performed or complied with by it prior to or at the Closing Date. Buyer shall
furnish Seller with an appropriate certificate to the foregoing effect dated the
Closing Date.

         Section 7.2. Litigation Affecting Closing. No action, suit or
proceeding shall be pending or threatened by or before any court or Governmental
Entity in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.

         Section 7.3. Consents. All authorizations, approvals, permits or
consents of any Governmental Entity or third Person necessary for the
consummation of the transactions contemplated by this Agreement shall have been
duly obtained by Buyer in writing, shall be effective on the Closing Date, and
shall have been delivered to Seller.

         Section 7.4. Deliveries at Closing. Buyer shall have delivered to
Seller, fully executed by Buyer, each of the items specified in Section 2.6 of
this Agreement, including an amount equal to the Purchase Price.

         Section 7.5. Release of Assumed Liability. Seller shall have received
an unconditional release, in form and substance satisfactory to Seller, executed
by Joseph Morelli ("Morelli") and his spouse with respect to the retirement
benefits set forth on Schedule 1A hereto as granted by Seller to Morelli in that
certain employment agreement between Seller and Morelli dated July 1, 1998.

                                    ARTICLE 8

                                 INDEMNIFICATION

         Section 8.1. Indemnification. Seller and Buyer shall hold harmless and
indemnify one another from and against any and all liability, loss or damage,
including reasonable attorneys' fees and other expenses, resulting from the

                                      -17-
<PAGE>

breach by the indemnifying party of its representations, warranties and
covenants under this Agreement or any documents or instruments furnished in
connection with the transactions contemplated hereby. Seller shall hold harmless
and indemnify Buyer from and against any and all liability, loss or damage,
including reasonable attorneys' fees and other expenses, resulting from any
activities, occurrences, conditions or obligations of Seller or the Business as
operated by Seller that took place or existed on or prior to the Closing Date
(other than the Assumed Liabilities), including any liability, loss or damages
based upon (a) alleged injuries to persons, property or business by reason of
alleged defectiveness, improper design, improper manufacture, malfunction or
otherwise, of any product manufactured by the Business, whether known or
unknown, currently asserted or arising hereafter, if such claims are based upon
or arise out of injuries or other events occurring, or products manufactured,
prior to or on the Closing Date; and (b) any liability arising under any
Environmental Law whether or not such liability or obligation was disclosed to
Buyer. Buyer shall hold harmless and indemnify Seller from and against any and
all liability, loss or damage, including reasonable attorneys' fees and other
expenses, resulting from any activities, occurrences, conditions or obligations
of Buyer or the Business as operated by Buyer that took place or existed after
the Closing Date including any liability, loss or damages based upon (i) alleged
injuries to persons, property or business by reason of alleged defectiveness,
improper design, improper manufacture, malfunction or otherwise, of any product
manufactured by the Business, whether known or unknown, currently asserted or
arising hereafter, if such claims are based upon or arise out of injuries or
other events occurring, or products manufactured, after the Closing Date, (ii)
any liability or obligation of the Business with respect to the repair and
replacement of products of the Business shipped to customers or distributors
prior to the Closing Date, consistent with Seller's warranty policies in
existence on the Closing Date, and (iii) any other Assumed Liabilities.

         Section 8.2  Procedures for Indemnification.

         (a) Third Party Claims. Promptly after receipt by Buyer or Seller, as
the case may be, of notice of (i) any claim, or (ii) the commencement of any
suit, action, investigation or proceeding, Buyer or Seller, as the case may be
(the "Indemnified Party"), will, if a claim with respect thereto is to be made
against the Seller or Buyer, as the case may be, due to its obligation to
provide indemnification hereunder (the "Indemnifying Party"), give the
Indemnifying Party written notice of such claim or the commencement of such
suit, action, investigation or proceeding, but the failure to provide such
notice shall not relieve the Indemnifying Party of any of its obligations
hereunder, except to the extent that the Indemnifying Party demonstrates that
the defense of such claim, suit, action, investigation or proceeding is
materially prejudiced by the Indemnified Party's failure to give such notice.
The Indemnifying Party shall have the right, at its option, unless so relieved,
to compromise or defend, at its own expense by its own counsel, any such matter
involving the asserted liability of the Indemnified Party. In the event that the
Indemnifying Party shall undertake to compromise or defend any such asserted

                                      -18-
<PAGE>

liability, it shall promptly notify the Indemnified Party of its intention to do
so. The Indemnified Party shall, at the cost and expense of the Indemnifying
Party for Indemnified Party's out-of-pocket expenses, cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against, any
such asserted liability. The Indemnified Party shall have the right to
participate in any such defense, contest or other action (x) at its own cost and
expense if the Indemnifying Party has assumed and continued the defense thereof
and (y) at the cost and expense of the Indemnifying Party if the Indemnifying
Party shall have failed to assume or abandoned such defense. The Indemnifying
Party shall have the right to control the defense of any such proceeding unless
it is relieved of its liability hereunder with respect to such defense by the
Indemnified Party. The Indemnified Party retains the right to relieve the
Indemnifying Party of its obligation hereunder for indemnification in respect of
any claim, suit, action, investigation, or proceeding at any time, including
upon notification of the Indemnifying Party's intent to settle. Under no
circumstances shall the Indemnified Party compromise or settle any asserted
liability without the written consent of the Indemnifying Party (which may not
be unreasonably withheld). Under no circumstances shall the Indemnifying Party
compromise or settle any asserted liability without the written consent of the
Indemnified Party (which may not be unreasonably withheld) unless (1) there is
no finding or admission of any violation of any federal, state, local or
municipal law, including constitutions, statutes, regulations, administrative
orders, court orders or any principle of common law, or any violation of the
rights of any Person and no effect on any other claims that may be made against
the Indemnified Party, and (2) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party.

         (b) Other Claims. A claim for indemnification for any matter not
involving a third-party claim may be asserted by notice to the party from whom
indemnification is being sought.

         Section 8.3 Limitations on Indemnification. Notwithstanding any
provision in this Article 8 to the contrary, no claim for indemnification may be
made under any indemnification obligation under this Article 8 unless and until
the aggregate of all identifiable claims suffered by the potential indemnified
parties exceeds $20,000 and thereafter only for amounts in excess of said
$20,000 threshold, except that claims based upon Sections 3.13 and 8.5 of this
Agreement shall not be subject to such $20,000 threshold or the limitation
contained in the next sentence of this Section 8.3. Notwithstanding the
foregoing, except as otherwise specifically provided for in this Section 8.3,
neither Buyer nor Seller shall have any indemnification obligation under this
Article 8 that exceeds the Purchase Price.

         Section 8.4. Survival. Except for (a) the covenant contained in Section
5.1 hereof (which shall survive for a period of five (5) years), and (b) the
representation and warranty contained in Section 3.21 hereof (which shall not
survive the Closing), the representations, warranties and covenants of
indemnification contained in this Agreement shall survive the Closing for a
period of eighteen (18) months; provided, however, that notwithstanding the
foregoing, the representations and warranties under (i) Sections 2.3, 3.2 and
4.2 shall survive the Closing until the expiration of the applicable statute of
limitations and (ii) Section 5.5 shall survive the Closing until the expiration
of the applicable statute of limitations and six (6) months beyond any extension
of the statute of limitations applicable to Section 5.5 agreed to by the
taxpayer, regardless of any investigation or due diligence inquiry that may have
been made on behalf of the party for whose benefit the representations,
warranties and covenants were made.

                                      -19-
<PAGE>

         Section 8.5 Bulk Sales Laws. Buyer hereby waives compliance by Seller
with the provisions of any bulk sales or bulk transfer laws of any jurisdiction
in connection with the transaction contemplated hereby and Seller agrees to
indemnify Buyer and hold it harmless against any liability, loss or damage
arising from claims or demands of whatever nature, including reasonable
attorneys' fees incurred in contesting the same, asserted by any present or
future creditor of Seller or other Person (including, without limitation, a
trustee in bankruptcy or debtor in possession under the U.S. Bankruptcy Code)
against Buyer or the Purchased Assets for noncompliance with bulk transfer or
sale laws or similar laws which may be applicable to the sale or transfer of the
Purchased Assets, including claims made by the State of Connecticut Department
of Revenue Services for unpaid sales and use taxes pursuant to Connecticut
General Statutes ss. 12-424.

         Section 8.6. Exclusive Remedy. Except for the rights and remedies based
on fraud and the remedy of specific performance in the case of the covenant in
Section 5.1 of this Agreement, the indemnification provided pursuant to this
Article 8 shall be the sole and exclusive remedy under this Agreement for any
liabilities, losses or damages as a result of, with respect to or arising out of
any breach of this Agreement.

                                    ARTICLE 9

                                   TERMINATION

         Section 9.1. Termination Events. This Agreement may by notice given
prior to or at the Closing be terminated:

         (a) by Buyer if a material breach of any provision of this Agreement
has been committed by Seller, and by Seller if a material breach of any
provision of this Agreement has been committed by Buyer, provided that the other
party has not waived such breach in writing;

         (b) (i) by Buyer if any of the conditions in Section 6 have not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date or (b) by Seller if any of the conditions in Section 7
have not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller has not waived such
condition on or before the Closing Date;

         (c) by mutual written consent of Buyer and Seller; or

         (d) by Buyer or Seller if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before December 8, 2000,
or such later date as the parties may agree upon in writing.

                                      -20-
<PAGE>

         Section 9.2. Effect of Termination. Each party's right of termination
under Section 9.1 is in addition to any other rights it may have under this
Agreement or otherwise and the exercise of a right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to Section 9.1,
all further obligations of the parties under this Agreement will terminate
except that the obligations in Sections 5.4 and 10.10 shall survive; provided,
however, that if this Agreement is terminated by a party because of the breach
of the Agreement by another party or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of another party's failure to comply with its obligations under this
Agreement the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.

                                   ARTICLE 10

                                  MISCELLANEOUS

         Section 10.1. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and delivered personally or sent by
overnight delivery, postage prepaid to the addresses set forth below:

         To Buyer:

                  Capewell Components Company, LLC
                  105 Nutmeg Road South
                  South Windsor, CT 06074
                  Attention:  President

         To Seller or Owosso:

                  Owosso Corporation
                  The Triad Building
                  2200 Renaissance Boulevard, Suite 150
                  King of Prussia, PA 19406
                  Attention:  Chief Financial Officer

         Section 10.2. Entire Agreement. This Agreement (including the schedules
and exhibits hereto) constitutes the sole understanding of the parties with
respect to the subject matter hereof.

         Section 10.3. Counterparts. This Agreement may be executed in two or
more counterparts, including by facsimile signature, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

                                      -21-
<PAGE>

         Section 10.4. Further Assurances. Each party shall, at the request of
the other party, do and perform or cause to be done or performed all such
further acts and furnish, execute and deliver such other documents, instruments,
certificates, notices or other further assurances as counsel for the requesting
party may reasonably request, from time to time after the Closing Date, to
consummate more effectively the transactions contemplated by this Agreement or
to vest in Buyer all of Seller's right, title and interest in the Acquired
Assets or the Business.

         Section 10.5. Parties in Interest; Assignment. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and permitted assigns. This Agreement may not be assigned
by either party without the prior written consent of the other party, except
that after the Closing Date, each party may, without the consent of the other
party, assign this Agreement and its rights hereunder to an affiliate or related
party of such party. No assignment of this Agreement shall relieve the assigning
party of responsibility for the performance of any of its obligations hereunder.
Nothing herein is intended to, nor shall it, create any rights in any Person
other than the parties hereto and their respective successors and permitted
assigns.

         Section 10.6. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Connecticut,
without reference to its conflicts of laws principles.

         Section 10.7. Schedules and Headings. All of the schedules and exhibits
attached hereto are a part of this Agreement and all of the matters contained
therein are incorporated herein by reference. The descriptive headings of the
several Articles and Sections of this Agreement are inserted for convenience
only and do not constitute part of this Agreement.

         Section 10.8. Amendment. This Agreement may be amended only by the
parties hereto by any instrument in writing signed by or on behalf of each of
the parties hereto.

         Section 10.9. Waiver. Any term or provision of this Agreement may be
waived only in writing by the party or parties who are entitled to the benefits
being waived.

         Section 10.10 Confidentiality. Between the date of this Agreement and
the Closing Date, Buyer and Seller will maintain in confidence and will use
reasonable efforts to cause the directors, officers, partners, employees,
agents, and advisors of Buyer and Seller to maintain in confidence and not use
to the detriment of another party any written oral or other information obtained
in confidence from another party in connection with this Agreement or the
transactions contemplated hereby unless (a) such information is already known to
such party or to others not bound by a duty of confidentiality, or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
contemplated transactions, or (c) the furnishing or use of such information is
required by legal proceedings. If the transactions contemplated by this
Agreement are not consummated, each party will return or destroy as much of such
written information as the other party may reasonably request.

                                      -22-
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                 OWOSSO CORPORATION

Date: February 8, 2001           By: /s/ George B. Lemmon, Jr.
                                     -------------------------
                                     George B. Lemmon, Jr., President, Chief
                                     Executive Officer, and Director

                                 By: /s/ John M. Morrash
                                     John M. Morrash, Executive Vice President -
                                     Finance, Chief Financial Officer and
                                     Treasurer and Secretary

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on January 26, 2001, in the
capacities indicated:

Signature                                     Title

/s/  John R. Reese                           Chairman of the Board and Director
-------------------------------
John R. Reese

/s/ George B. Lemmon, Jr.                    President, Chief Executive Officer,
-------------------------------              and a Director
George B. Lemmon, Jr.

/s/ John M. Morrash                          Executive Vice President - Finance,
-------------------------------              Chief Financial Officer and
John M. Morrash                              Treasurer and Secretary

/s/ Ellen D. Harvey                          Director
-------------------------------
Ellen D. Harvey

/s/ Harry E. Hill                            Director
-------------------------------
Harry E. Hill

/s/ Lowell P. Huntsinger                     Director
-------------------------------
Lowell P. Huntsinger

/s/ Eugene P. Lynch                          Director
-------------------------------
Eugene P. Lynch

/s/ James A. Ounsworth                       Director
-------------------------------
James A. Ounsworth

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the date first above written.

M.H. RHODES, INC.                            CAPEWELL COMPONENTS
                                             COMPANY, LLC

By: /s/ John M. Morrash                      By: /s/ Kenneth W. MacCormac
    ----------------------------                 -------------------------------
    Name: John M. Morrash                        Name: Kenneth W. MacCormac
    Title: Secretary/Treasurer                   Title: President

     Owosso Corporation, the sole shareholder of Seller, hereby guarantees all
obligations and performance requirements of Seller hereunder, except with
respect to Seller's obligations in Section 5.3 of this Agreement, and agrees to
be bound by the applicable provisions of Section 5.1 of this Agreement.

                                            OWOSSO CORPORATION

                                            By: /s/ John M. Morrash
                                                --------------------------------
                                                Name:  John M. Morrash
                                                Title: Executive Vice President-
                                                       Finance, Chief Financial
                                                       Officer, Treasurer and
                                                       Secretary<PAGE>

                               AMENDMENT AGREEMENT

         Bank One, Michigan ("Bank One"), PNC Bank, National Association ("PNC",
and individually, collectively and in all combinations with Bank One and Bank
One as Agent (as defined below), the "Lenders"). Owosso Corporation ("Owosso"),
Ahab Investment Company ("Ahab"), DWZM, Inc. ("DWZM"), Motor Products-Owosso
Corporation ("Motor Products"), Snowmax, Incorporated ("Snowmax"), Motor
Products-Ohio Corporation ("Motor Products-Ohio"), GBMC, Inc. ("GBMC"), Stature
Electric, Inc. ("Stature"), Owosso Motor Group, Inc. ("Motor Group"), Astro Air
Coils, Inc., f/k/a Astro Air Acquisition Corporation ("Astro Air"), Cramer
Company, f/k/a M.H. Rhodes, Inc. ("Rhodes") and Ahab International Investment
Company, f/k/a Astro Air UK Holdings, Inc. ("Ahab International") enter into
this Amendment Agreement (this "Agreement") on February ___, 2001. For
convenience, each of the foregoing other than Bank One and PNC are sometimes
referred to collectively as the "Borrowers" or individually as a "Borrower" and
are sometimes referred to collectively as the "Parties" and individually as a
"Party".

                                    RECITALS

         A. Lenders have provided a revolving credit loan to Borrowers jointly
and severally (the "Loans"). In connection with the Loans, Lenders and Borrowers
entered into an Amended and Restated Credit Agreement dated as of January 22,
1999, as amended by a First Amendment to Amended and Restated Credit Agreement
dated as of June 14, 2000, a Second Amendment to Amended and Restated Credit
Agreement dated as of September 28, 2000, a Third Amendment to Amended and
Restated Credit Agreement, Revolving Credit Note, Amended and Restated Pledge
Agreement and Security Agreement dated effective October 29, 2000 (the "Third
Amendment"), a Fourth Amendment to Amended and Restated Credit Agreement,
Revolving Credit Notes and Security Agreement dated as of November 30, 2000 (the
"Fourth Amendment") and a Fifth Amendment to Amended and Restated Credit
Agreement, Revolving Credit Notes, Amended and Restated Pledge Agreement and
Security Agreement dated January 24, 2001 (as amended, and as may be further
amended, the "Loan Agreement"). The Loans are additionally evidenced by an
Amended and Restated Revolving Credit Note dated January 24, 2001 given by the
Borrowers in favor of Bank One in the original principal amount of
$21,772,197.08 (the "Bank One Note") and an Amended and Restated Revolving
Credit Note dated January 24, 2001 given by the Borrowers in favor of PNC in the
original principal amount of $12,441,235.92 (the "PNC Note"). Under the terms of
the Loan Agreement, Bank One acts as Agent on behalf of each of the Lenders and
Owosso acts as agent on behalf of each of the Borrowers. Bank One acting in its
capacity as agent for the Lenders, including itself, is sometimes referred to as
"Bank One as Agent".

         B. In connection with the Loans, Borrowers executed and delivered to
Bank One as Agent a Security Agreement dated January 22, 1999 as amended by the
Third Amendment and the Fourth Amendment (as amended, and as may be further
amended, the "Security Agreement"), in which Borrowers granted Bank One as Agent
a first-priority lien and security interest in all of each Borrower's assets,
including without limitation accounts, inventory, documents, instruments,
general intangibles, chattel paper, furniture, fixtures and equipment, then
existing and thereafter acquired, to secure the Loans and the Obligations (as
defined below).

<PAGE>

         C. As further security for the Obligations, Owosso executed an Amended
and Restated Pledge Agreement dated as of January 22, 1999, as amended by the
Third Amendment (as amended, and as may be further amended, the "Pledge
Agreement"), in favor of Bank One as Agent whereby Owosso pledged 100% of the
issued and outstanding stock of each of the other Borrowers to secure the
Obligations.

         D. For convenience, the Loan Agreement, Bank One Note, PNC Note,
Security Agreement, and Pledge Agreement, together with all other loan
documents, instruments and agreements executed in connection with or in
furtherance of any of the foregoing, including all documents referenced herein
or executed in connection herewith, as amended and as may be further amended
from time to time, including as amended by this Agreement, but exclusive of all
present or future oral agreements between Lender and any one of the parties, and
further including without limitation the Reimbursement, Credit and Security
Agreement dated as of October 1, 1998 between Statute and PNC and all related
mortgages and loan and security documents, are referred to collectively as the
"Loan Documents" and individually as a "Loan Document". Capitalized terms used
but not defined in this Agreement have the same meanings given to those terms in
the Loan Documents.

         E. On February 9, 2001, there was $33,813,443.00 in principal owing by
Borrowers to Lenders under the Loan Agreement plus accrued but unpaid interest,
costs and expenses (including attorneys' fees and consultant fees) called for by
the Loan Documents (all such obligations together with all other principal and
interest due or becoming due to Lenders, together with the payment of all other
sums, indebtedness and liabilities of any and every kind now or hereafter owing
and to become due from Borrowers to Lenders, however created, however incurred,
evidenced, acquired or arising, and whether direct or indirect, primary,
secondary, fixed or contingent, matured or unmatured, joint, several, or joint
and several, and whether for principal, interest, reimbursement obligations,
indemnity obligations, obligations under guaranty agreements, fees, costs,
expenses, or otherwise, and all of each Borrowers' obligations under this
Agreement, together with all other present and future obligations of Borrowers
to Lenders, or any of them, are referred to collectively as the "Obligations").

         F. Each Party, jointly and severally, acknowledges and agrees that:

                   (1) The Obligations, and all other obligations of any one or
         more of the Parties to Bank One are owing to Bank One without setoff,
         recoupment, defense or counterclaim, in law or in equity, of any nature
         or kind.

                       (2) The Obligations are secured by

                           (i)      Valid, perfected, indefeasible, enforceable,
                                    first-priority, liens and security interests
                                    in favor of Bank One as Agent for the
                                    benefit of the Lenders in, among other
                                    things, all of each Borrower's present and
                                    future accounts, general intangibles,
                                    chattel paper, instruments, documents,
                                    inventory, equipment, fixtures, and all
                                    products and proceeds of all the foregoing.

                           (ii)     A first priority, perfected lien and
                                    security interest in 100% of the issued and
                                    outstanding stock of each of the Borrowers
                                    other than Owosso.

                                       2
<PAGE>

For convenience, all collateral referred to in this paragraph, together with all
other collateral described in the Loan Documents and all collateral heretofore,
simultaneously herewith or hereafter granted to Bank One as Agent or to either
of the Lenders by any one or more of the Parties to secure any of the
Obligations or any other obligations to Lenders or either of them, is referred
to collectively as the "Collateral".

         G. Each Party reaffirms, ratifies, confirms and approves its
obligations and duties under the Loan Documents as modified by this Agreement.
Each Party, jointly and severally, reaffirms, ratifies and confirms the liens,
assignments and security interests granted to Bank One as Agent, for the benefit
of the Lenders, in the Collateral under the Loan Documents or otherwise.

         H. Borrowers are in default under the Loan Documents (the "Specified
Defaults") for the following reasons (defined terms used in Paragraphs 1-3 below
have the same meanings as in the Loan Agreement):

            1. The Borrowers' and their Subsidiaries' Consolidated Net Worth as
of October 31, 2000 was $18,432,000 instead of not less than $24,866,000 as
required by Section 5.2(a) of the Loan Agreement.

            2. The ratio of Consolidated Total Debt of the Borrowers and their
Subsidiaries for the quarter ended October 31, 2000 to Consolidated EBITDA of
the Borrowers and their Subsidiaries for the four quarter period ended October
31, 2000 was (92.28) to 1 instead of not greater than 3.5 to 1 as required by
Section 5.2(b) of the Loan Agreement.

            3. The ratio of Consolidated Fixed Charges Coverage Availability of
the Borrowers and their Subsidiaries to Consolidated Fixed Charges of the
Borrowers and their Subsidiaries was 0.06 to 1 as of October 31, 2000 instead of
not less than 1.25 to 1 as required by Section 5.2(c) of the Loan Agreement.

            4. The Borrowers have failed to provide the year end financial
statements required by Section 5.1(d)(iii) of the Loan Agreement.

The Parties hereby acknowledge the occurrence of these Specified Defaults and
agree that these defaults have not been waived by the Lenders and remain
outstanding. Each Party represents and warrants, after due inquiry and
investigation, that it is not aware of any other events of default or defaults,
or of any event that, with the passage of time, notice, or both, would become an
event of default or a default under the Loan Documents or this Agreement.

         I. Each Party also acknowledges that based on the Specified Defaults,
Lenders have the right to enforce their rights under the Loan Documents and
applicable law. Further, if Lenders took such action, each Party acknowledges
that Lenders actions would be within their rights under the Loan Documents and
applicable law, and would be reasonable and appropriate under the circumstances.

                                       3
<PAGE>

         J. Each Party acknowledges and agrees that (i) Lenders and Bank One as
Agent fully performed all of their obligations under the Loan Documents; (ii)
but for this Agreement, Lenders would have no obligation to continue to lend to
Borrowers; (iii) but for this Agreement, Lenders would have no obligation to
forbear from enforcing their rights and remedies beyond the Forbearance Period
(as hereinafter defined); and (iv) Lenders have made no representations of any
nature or kind that the Forbearance Period (as hereinafter defined) will be
extended beyond the expiration thereof.

         K. Each Party further acknowledges and agrees that the actions taken by
Lenders to date in furtherance of the Loan Documents are reasonable and
appropriate under the circumstances and are within Lenders' rights under the
Loan Documents and applicable law.

         L. Each Party represents and warrants to Lenders that it received
direct and substantial economic benefit from all of the Obligations and that it
will continue to receive direct and substantial economic benefit from the
Obligations, and from any other loans made or that may be made in the future.

         M. The Parties have outlined to the Lenders a plan whereby they expect
to be able to timely satisfy all the Obligations in full and have requested that
the Lenders allow them time to implement this plan and have stated that they
believe that the plan will result in satisfaction in full of the Obligations by
February 15, 2002.

         N. In order to grant the Borrowers time to ultimately satisfy the
Obligations in full pursuant to the above-referenced plan, the Parties have
requested that Lenders agree (1) to forbear from exercising their rights and
remedies under the Loan Documents and applicable law in connection with the
Specified Defaults until February 15, 2002 and (2) to amend certain terms and
conditions of the Loan Documents.

         O. Subject to the terms and conditions of this Agreement, and in
reliance on the Parties' agreements, acknowledgments, representations, and
warranties in this Agreement, Lenders have agreed to amend the Loan Documents,
and to forbear from enforcing their rights and remedies on account of the
Specified Defaults under the Loan Documents as set forth below.

                                    AGREEMENT

         Based on the foregoing Recitals (which are incorporated herein as
agreements, representations, warranties, and covenants of the Parties, as the
case may be), and for other good and valuable consideration, the adequacy and
receipt of which is acknowledged by each party hereto, Lenders and each Party
agree as follows:

         1. Forbearance. Subject to the following conditions precedent and those
set forth elsewhere in this Agreement, Lenders agree to forbear from enforcing
their rights and remedies, whether under the Loan Documents or otherwise
available at law or in equity in connection therewith, based on the Specified
Defaults; as well as their rights and remedies based solely on any worsening of
the Specified Defaults or any future defaults arising only under sections
5.2(a), (b) or (c) of the Loan Agreement, through February 15, 2002 (the
"Forbearance Period"):

                                       4
<PAGE>

                  (a) Bank One as Agent receives, on or before February 9, 2001,
a fully executed copy of this Agreement, together with fully executed copies of
all Exhibits hereto that require signature, by facsimile, with original
signatures to follow by overnight delivery.

                  (b) The Lenders receive on or before February 14, 2001 all
financial statements and related materials required to be delivered under
Section 5.1(d)(iii) of the Loan Agreement.

                  (c) There are no further or additional Events of Default, or
defaults under this Agreement or the Loan Documents, and each Party complies
with all terms and conditions of this Agreement and the Loan Documents.

2.       Amendments to Loan Agreement.

                  (a) The following new definitions are added to Section 1.1:

                  ""Borrowing Base" means (a) 75% of the net amount of Eligible
                  Receivables plus (b) 40% of the lesser of cost or market
                  value, or any other reasonable valuation approved by the
                  Agent, of Eligible Inventory, plus (c) an amount not to exceed
                  $23,257,000.00 (the "Additional Amount") minus (d) the total
                  amount of L/C Outstandings."

                  ""Commitments" means the sum of each Bank's Commitment."

                  ""Eligible Inventory" means that portion of Borrowers'
                  inventory consisting of raw materials and finished goods
                  inventory that is listed on the weekly borrowing base
                  certificate delivered by Borrowers to the Banks that the
                  Agent, in its reasonable discretion, determines to be Eligible
                  Inventory, as based on the following minimum requirements:

                           (a) The inventory has not been shipped, delivered,
                  provided to, purchased or sold by Borrowers on a bill and
                  hold, consignment sale, guaranteed sale, or sale or return
                  basis, or any other similar basis or understanding.

                           (b) The inventory is located on premises listed on
                  Schedule 23(k) and no negotiable warehouse receipt, bill of
                  lading or other document of title has been issued for the
                  inventory.

                           (c) No account has arisen with respect to such
                  inventory.

                           (d) The inventory has not been billed to a customer
                  on a "progress billing" basis.

                                       5
<PAGE>

                           (e) The inventory is valued at the lower of cost or
                  market, on a first-in-first-out basis or any other reasonable
                  valuation method approved in writing by the Agent.

                           (f) The inventory is in Borrowers' possession or
                  control but has not been placed with any third party on a
                  consignment basis.

                           (g) The inventory is not subject to any royalty,
                  copyright, trademark, tradename, or licensing arrangement, or
                  any law, rule, or regulation that could limit or impair the
                  Banks' ability to exercise their rights with respect to such
                  inventory.

                           (h) If the inventory is located on premises not owned
                  by Borrowers, the landlord or owner of such premises must have
                  waived its distraint, lien, and similar rights with respect to
                  such inventory and must have agreed in a written agreement
                  satisfactory to the Banks (A) to give the Banks notice of any
                  default by Borrowers and the option to cure such default, (B)
                  to permit the Banks to enter such premises to sell, repossess,
                  or remove the inventory at any time, and (C) to grant the
                  Banks such other rights as they may request.

                           (i) The inventory is not packaging, labels, or
                  manuals.

                           (j) The inventory is not inactive or obsolete
                  inventory.

                           (k) The inventory meets all standards imposed by any
                  governmental or agency, department, or division having
                  regulatory authority over such inventory or its use or sale
                  including, without limitation, standards set forth in the Fair
                  Labor Standards Act.

                           (l) No representation or warranty in this Agreement,
                  any documents or agreements between the Borrowers and the
                  Banks, or any of them, or any borrowing base certificate has
                  been breached with respect to such inventory.

                           (m) The inventory is of good and merchantable quality
                  and is readily salable.

                           (n) The inventory is subject to a first-priority lien
                  and security interest in favor of the Agent, for the benefit
                  of the Banks, and is not subject to any other lien or
                  encumbrance.

                           (o) The inventory is not disqualified for any other
                  reason generally  accepted in the commercial finance business.

                                       6
<PAGE>

                  Any inventory that is at any time Eligible Inventory and that
                  subsequently fails to meet any of the requirements set forth
                  above ceases to be Eligible Inventory immediately and must be
                  removed from the Borrowing Base immediately."

                  ""Eligible Accounts" means each of Borrowers' accounts listed
                  on a borrowing base certificate delivered by the Borrowers to
                  Lenders that the Agent, in its reasonable discretion,
                  determines to be an Eligible Account, as based on the
                  following minimum requirements:

                           (a) The account is valued at its face amount and
                  represents a complete, bona fide transaction for Eligible
                  Inventory sold, delivered, and not rejected in whole or in
                  part, by the account debtor or for services rendered (but
                  excluding any amounts in the nature of a service charge added
                  to the amount due on an invoice because the invoice has not
                  been paid when due or any amounts due or claimed to be due
                  from the cancellation or termination of a contract or
                  agreement) that requires no further act under any
                  circumstances on the part of Borrowers or any other person or
                  entity to make such account payable by the account debtor, and
                  the account arises from an arm's-length transaction in the
                  ordinary course of Borrowers' business between Borrowers and
                  an account debtor that is not an affiliate, partner, officer,
                  or employee of Borrowers, or a member of the family of any
                  partner, officer, or employee of Borrowers.

                           (b) The account is not unpaid more than 120 days from
                  the earlier of (A) the date on which the original invoice
                  rendered in connection with such account was issued and (B)
                  the date on which the Eligible Inventory was shipped to the
                  account debtor or the services performed.

                           (c) The account is not owing from an account debtor
                  whose accounts are Tainted. "Tainted" means that 50% or more
                  of the total accounts owing from a particular account debtor
                  are 120 days or more old from date of invoice or are not
                  otherwise Eligible Accounts for any reason.

                           (d) The goods the sale of which gave rise to the
                  account were shipped or delivered or provided to the account
                  debtor on an absolute and final sale basis and not on a bill
                  and hold sale basis, a consignment sale basis, a guaranteed
                  sale basis, a sale or return basis, or on the basis of any
                  other similar understanding, and no part of such goods have
                  been returned or rejected.

                           (e) The account is not evidenced by chattel paper or
                  an instrument of any kind.

                                       7
<PAGE>

                           (f) The account debtor with respect to the account
                  (A) is not insolvent, (B) is not the subject of any bankruptcy
                  or insolvency proceedings of any kind or of any other
                  proceeding or action, threatened or pending, which might have
                  a materially adverse effect on its business, and (C) is not,
                  in the Agent's reasonable discretion, deemed ineligible for
                  credit for other reasons (including, without limitation,
                  unsatisfactory past experience of Borrowers or Lenders with
                  the account debtor or unsatisfactory reputation of the account
                  debtor).

                           (g) The account debtor is located within the
                  continental United States of America.

                           (h) (A) The account debtor is not the government of
                  the United States of America, or any department, agency or
                  instrumentality thereof, or (B) if the account debtor is an
                  entity mentioned in the preceding clause, the Federal
                  Assignment of Claims Act (or applicable similar legislation)
                  has been fully complied with so as to validly perfect Lender's
                  first-priority security interest to Lender's satisfaction.

                           (i) The account is a valid, legally enforceable
                  obligation of the account debtor with respect thereto and is
                  not subject to any dispute, condition, contingency, set-off,
                  recoupment, reduction, claim for credit, allowance,
                  adjustment, counterclaim or defense on the part of such
                  account debtor, and no fact exists that may provide a basis
                  for any of the foregoing in the present or future.

                           (j) The account is subject to a first-priority
                  security interest in the Agent's favor, for the benefit of the
                  Banks, and is not subject to any other lien, claim,
                  encumbrance, or security interest whatsoever.

                           (k) The account is evidenced by an invoice or other
                  documentation in form reasonably acceptable to the Agent and
                  arises from a valid, existing and enforceable contract.

                           (l) Borrowers have observed and complied with (A) all
                  laws of the United States of America (including the Fair Labor
                  Standards Act) and (B) all laws of the state in which the
                  account debtor or the account is located which, if not
                  observed and complied with, would deny to Borrowers access to
                  the courts of such state.

                           (m) No representation or warranty contained in this
                  Agreement, in any other documents or agreements between the
                  Borrowers and the Banks, or any of them, or in any borrowing
                  base certificate with respect to such account has been
                  breached.

                                       8
<PAGE>

                           (n) The account is not subject to any provision
                  prohibiting its assignment or requiring notice of or consent
                  to such assignment and is not a bonded account.

                           (o) The account does not represent any manufacturer's
                  or supplier's credits, discounts, incentive plans, or other
                  similar arrangements entitling Borrowers to discounts on
                  future purchases.

                           (p) The Eligible Inventory giving rise to the account
                  was not, at the time of sale thereof, subject to any lien or
                  encumbrance except in the Agent's favor, for the benefit of
                  the Banks or the liens set forth on Schedule 1.1 hereto (the
                  "Permitted Liens").

                           (q) The Agent has not notified Borrowers that the
                  account or the account debtor is unsatisfactory.

                           (r) The account is payable in freely transferable
                  United States Dollars.

                           (s) The account is not disqualified for any other
                  reason  generally accepted in the commercial finance business.

                           In addition to the foregoing requirements, accounts
                  of any account debtor that are otherwise qualified will be
                  reduced to the extent of (1) any accounts payable (including,
                  without limitation, the Agent's good faith estimate of any
                  contingent liabilities) by Borrowers to such account debtor
                  ("Contras") and (2) that portion of an account representing a
                  retainage or holdback by the account debtor; provided that the
                  Agent, in its sole discretion may determine that none of the
                  accounts in respect of such account debtor are Eligible
                  Accounts if Contras represent 50% or more of the amount owing
                  to Borrowers from such account debtor.

                           Any account that is at any time an Eligible Account
                  and that subsequently fails to meet any of the requirements
                  set forth above immediately ceases to be an Eligible Account
                  and must be removed from the Borrowing Base immediately."

                  (b) The definition of "Floating Rate" set forth in Section 1.1
of the Loan Agreement is amended and restated in its entirety to read as
follows:

                  ""Floating Rate" means (a) as to amounts outstanding under the
                  Additional Amount, the per annum rate equal to the sum of 2%
                  plus the Prime Rate in effect from time to time and (b) as to
                  all other Borrowings, the per annum rate equal to the sum of
                  1 1/2% plus the Prime Rate in effect from time to time; which
                  Floating Rate shall change simultaneously with any change in
                  such Prime Rate; provided, however, that if any Optional
                  Reduction is not made, then the otherwise applicable Floating
                  Rate will increase by 1% per annum for each Optional Reduction
                  that is not made."

                                       9
<PAGE>

                  (c) The following new text is added to the end of current
Section 2.1:

                  "Notwithstanding anything to the contrary in this Agreement,
                  the maximum principal amount to be advanced to the Borrowers
                  at any time may not exceed the lesser of (a) the Borrowing
                  Base and (b) the Commitments."

                  (d) Effective as of the date of this Agreement the Borrowers
will have no further right to elect or request Eurodollar Rate Loans, nor will
any further Eurodollar Rate Loans be made by the Lenders. Any Eurodollar Rate
Loans outstanding as of the date of this Agreement will convert to Floating Rate
Loans at the end of the applicable Interest Period. All capitalized terms used
in this subsection (d) have the same meanings as in the Loan Agreement.

                  (e) The following new subsection (d) is added to the end of
current Section 2.3:

                           "(d) The Borrowers further agree to pay the Agent,
                           for the benefit of the Banks, an unused line fee of
                           1/2% per annum of the difference between (i) the
                           Commitments and (ii) the average daily outstanding
                           principal balance of the Revolving Credit Loans,
                           payable quarterly in arrears on each calendar quarter
                           end and upon such date as all of the Borrowers'
                           obligations hereunder may be paid in full."

                  (f) The definition of "Commitment" is amended to add to the
end of the parenthetical currently reading, "(as such amount has been or may be
permanently reduced from time to time pursuant to Section 2.2)" the following
new text:

                           "or otherwise by agreement between the Borrowers and
                           the Banks)."

                  (g) Section 2.2 is amended by adding the following new
subsection (d) at the end thereof:

                           "(d) The Commitments will additionally cumulatively
                           reduce by the following amounts (each an "Optional
                           Reduction") at the following times in accordance with
                           the terms of this Section 2.2:

                                       10
<PAGE>

                                            Total Cumulative
                  Date                      Reduction            New Commitments
                  ----                      ----------------     ---------------
                  June 30, 2001             $1,000,000           $33,213,433.00
                  September 30, 2001        $3,000,000           $31,213,433.00
                  December 31, 2001         $6,000,000           $28,213,433.00

                  Failure by the Borrowers to effectuate any Optional Reduction
                  will not constitute an Event of Default hereunder but will
                  result in an increase in the Floating Rate."

                  (h) The definition of "Prime Rate" is amended and restated in
its entirety to read as follows:

                  ""Prime Rate" means a rate per annum equal to the prime rate
                  of interest announced from time to time by Agent or its parent
                  (which is not necessarily the lowest rate charged to any
                  customer), changing when and as said prime rate changes."

                  (i) The definitions of "Year 2000 Issues" and "Year 2000
Program" are deleted.

                  (j) Sections 4.15 and 5.1(i) are amended and restated in their
entireties to read "Intentionally omitted."

                  (k) A new Section 8.6(m) is added as follows:

                           "(m) The Borrowers agree that the Banks may provide
                           any information the Banks may have about the
                           Borrowers or any of them or about any matter related
                           to this Agreement or any other document or agreement
                           between the Banks and the Borrowers, or any of them,
                           to Bank One Corporation or any of their subsidiaries
                           or affiliates or their successors."

                  (l) The Borrowers acknowledge that based on the Specified
Defaults under the terms of the Loan Agreement they may not make any purchase or
acquisition or merge, consolidate or amalgamate with any other person, all as
more fully discussed in Section 5.2(g), without the prior written consent of
Bank One as Agent and the Lenders.

         3. Amendment to Security Agreement. The Security Agreement is amended
to provide that, notwithstanding anything to the contrary contained in the terms
of the Security Agreement or any of the other Loan Documents, the collateral
given in favor of Bank One as Agent under the terms of the Security Agreement
secures any and all obligations of any of the Borrowers to either of the Banks
or to Bank One as Agent, whenever or however arising, including without
limitation obligations arising under this Agreement.

                                       11
<PAGE>

         4. Amendment to Pledge Agreement. The Pledge Agreement is amended to
provide that, notwithstanding anything to the contrary contained in the terms of
the Pledge Agreement or any of the other Loan Documents, the collateral given in
favor of Bank One as Agent under the terms of the Pledge Agreement secures any
and all obligations of any of the Borrowers to either of the Banks or to Bank
One as Agent, whenever or however arising, including without limitation
obligations arising under this Agreement.

         5. Fees. Borrowers must pay to the Banks, for their pro rata benefit, a
forbearance fee in the amount of $300,000, which has been fully earned by the
Banks and is payable as follows to the Lenders for their pro rata benefit:

                  (a) $150,000 simultaneous with the execution of this
Agreement; and

                  (b) $150,000 due on the earlier of (i) February 15, 2002 or
(ii) the date that all of the Borrowers' obligations to the Lenders are paid in
full; provided, however, that if all of the Borrowers' obligations to the
Lenders are paid on or before February 15, 2002, $50,000 of the otherwise
required forbearance fee will be waived.

         6. Letter of Credit Fees. Notwithstanding anything to the contrary set
forth in any of the Loan Documents or otherwise, effective as of the date of
this Agreement fees on all letters of credit (including any Letter of Credit (as
defined in the Loan Agreement)) issued by either of the Banks individually or by
the Banks jointly, and whether or not comprising a portion of the Commitments,
will accrue at the rate of 1 1/2% per annum.

         7. Defaults. In addition to any other Events of Default, events of
default or defaults provided for in the Loan Documents, the occurrence of any of
the following constitutes an Event of Default, an event of default, and a
default under this Agreement (and each Loan Document):

                  (a)      If any Party fails to comply with any term or
                           condition in this Agreement (or any agreement
                           referred to or incorporated herein) or the Loan
                           Documents (other than the Specified Defaults and
                           Sections 5.2(a), (b) or (c) of the Loan Agreement),
                           or any other document or agreement between any Party
                           and Bank One, without regard to any notice or cure
                           periods set forth in any of the Loan Documents.

                  (b)      If any lender, supplier, creditor, lessor, bond
                           holder or representative thereof (collectively,
                           "Creditor") of any Party (i) obtains a judgment
                           against any Party which has not been dismissed or
                           stayed for 10 days and which, together with all other
                           outstanding judgments entered against any of the
                           Parties, exceeds $100,000 in the aggregate, or (ii)
                           receives from any party any voluntary prepayments of
                           obligations.

                                       12
<PAGE>

                  (c)      If any representation or warranty made by any Party
                           in this Agreement or in connection with the
                           negotiation hereof is untrue when made.

                  (d)      If any party attaches by way of seizure, levy, lien
                           or otherwise any assets of any one or more of the
                           Parties and the claim underlying such attachment,
                           together with all other such claims against any of
                           the Parties (the "Attachment Claims") and the amount
                           of all Government Claims (as defined below), exceeds
                           $100,000 in the aggregate, provided, however, that if
                           any attachment in any amount is made against any
                           account of any of the Borrowers with either of the
                           Lenders, then notwithstanding that there may not then
                           exist an Event of Default the appropriate Lender will
                           be entitled to set off against amounts in that
                           account for the full amount of the Obligations.

                  (e)      If any government, department or agency files any
                           notice of lien, levy or assessment against any one or
                           more of the Parties, or if any taxes or debts that
                           are owing become a lien or encumbrance upon any
                           assets of any one or more of the Parties, and the
                           claim underlying such action, lien or encumbrance,
                           together with all other such claims against any of
                           the Parties (the "Government Claims") and the amount
                           of all Attachment Claims, exceeds $100,000 in the
                           aggregate, provided, however, that if any attachment
                           in any amount is made against any account of any of
                           the Borrowers with either of the Lenders, then
                           notwithstanding that there may not then exist an
                           Event of Default the appropriate Lender will be
                           entitled to set off against amounts in that account
                           for the full amount of the Obligations.

                  (f)      If the Borrowers' consolidated Operating Profit, on a
                           cumulative basis commencing February 1, 2001, is less
                           than the amount indicated below as of the end of each
                           month indicated below:

                                      2001
                                      ----

February    March     April        May         June       July         August
--------    ------    -------      -------     -------    ---------    ---------
(88,000)    20,000    331,000      702,000     958,000    1,364,000    1,665,000

September   October      November       December
---------   -------      ---------      ---------
1,910,000   2,403,000    2,437,000      2,573,000

                                       13
<PAGE>

                                      2002
                                      ----

                   January                        February
                   ---------                      ---------
                   2,788,000                      3,006,000

                           For purposes of this Section, "Operating Profit"
                           means income before interest expense and taxes,
                           determined in accordance with generally accepted
                           accounting principles consistently applied. The level
                           of required Operating Profit will be adjusted to omit
                           the earnings of any businesses or assets sold after
                           the date of this Agreement.

                  (g)      If the Borrowers' aggregate capital expenditures for
                           the period from January 1, 2001 through February 15,
                           2002 exceed $3,167,000 for maintenance expenditures
                           or $900,000 for other expenditures.

                  (h)      If Owosso makes any distributions or pays any
                           dividends on or with respect to any of its stock,
                           common or preferred, or if any of the Borrowers make
                           payments of principal or interest with respect to any
                           subordinated debt except as provided on the letter
                           agreement with Lowell Huntsinger attached as Exhibit
                           7(h) hereto (the "Permitted Subordinated Debt
                           Payments").

         8. Due Date. All Obligations mature and are payable in full upon the
expiration of the Forbearance Period. Lenders have advised the Parties that they
expect that during the Forbearance Period they will use their best efforts to
obtain alternative financing or otherwise satisfy the Obligations in full on or
before the expiration of the Forbearance Period.

         9. Consultant. Notwithstanding anything to the contrary contained in
the Loan Documents, Borrower is responsible for and must pay within 30 days of
receipt of an invoice therefore all reasonable charges, costs, and expenses
incurred by Lenders or either of them with respect to any consultant Lenders may
jointly engage. Furthermore, each Party must make the Borrowers' premises and
books and records available to any consultant retained by Lenders.

         10. Payments. Borrowers must timely make all monthly principal,
interest and other payments due Lenders.

         11. No Further Forbearance Implied. Each Party acknowledges that
Lenders have no obligation to extend the term of the Forbearance Period, or
forbear from enforcing their rights and remedies after the Forbearance Period,
and nothing contained herein or otherwise is intended to be or is a promise or
agreement to continue making loans beyond the Forbearance Period, or extend the
term of the Forbearance Period beyond the expiration thereof. Furthermore, no
future agreement by Lenders to continue making loans, or to extend the term of
the Forbearance Period beyond the expiration thereof, or any other agreement, is
valid or enforceable unless it is contained in a written agreement signed by
Lenders or Bank One as Agent.

                                       14

<PAGE>

         12. Additional Reporting. In addition to any reports or information
required by the Loan Documents (which must be provided timely), or that Lenders
may hereafter reasonably request, each Party must provide Lenders with:

                  (a)      Within one day of receipt, copies of written notices
                           of default received from other creditors.

                  (b)      Within one day of gaining knowledge thereof, any
                           adverse information regarding any Party which would
                           have a material adverse impact on the Party's
                           operations, business prospects or ability to
                           generally meet its obligations, financial and
                           otherwise.

                  (c)      Within ten days of receipt, any correspondence or
                           other documentation relating to a refinancing or sale
                           of the Borrowers or any of them.

                  (d)      On the first business day of each week, as of the
                           close of business of the prior week, a borrowing base
                           certificate for the Borrowers in form and substance
                           acceptable to Bank One as Agent in its sole
                           discretion, with the Eligible Inventory figure to be
                           updated on a monthly basis only as of the end of the
                           prior month on the first borrowing base certificate
                           provided in each calendar month.

                  (e)      Monthly, within 15 business days after the end of
                           each calendar month, management prepared financial
                           statements and monthly accounts receivable and
                           accounts payable reports for each of the Borrowers,
                           all in form and substance acceptable to Bank One as
                           Agent at its discretion and prepared in accordance
                           with the template attached as Schedule 12(e) hereto,
                           as well as a covenant compliance certificate covering
                           the Earnings Before Taxes financial covenant set
                           forth in this Agreement certified as accurate by an
                           officer of the Borrowers acceptable to Bank One as
                           Agent at its discretion to the best of his knowledge
                           after reasonable inquiry.

                  (f)      Monthly, within 15 business days after the end of
                           each calendar month, a report in form and substance
                           acceptable to the Agent detailing the Parties' steps
                           and actions towards satisfying the Obligations in
                           full and in a timely manner.

         13. No Overdrafts. Each Party acknowledges that other than intra-day
"overdrafts" arising solely as a result of normal operations of the Borrowers'
cash management system, neither of Lenders nor their affiliates will, under any
circumstances, honor any checks or other items presented to Lenders or their
affiliates for payment for which there are insufficient available funds in the
Borrowers' accounts, and Lenders or their affiliates may return any such items
so presented.

                                       15

<PAGE>

         14. Authorization to Debit Accounts. If any payment called for by the
Loan Documents, this Agreement (or any agreement referred to or incorporated
herein), or any other present or future agreements between Lenders or either of
them or any of their affiliates on the one hand, or any one or more of the
Parties on the other hand, is not paid when and as called for in the terms of
such agreement, then Lenders or any of their affiliates may debit any one or
more of the Parties' accounts at Lenders or any of their affiliates for such
amount. The fact that Lenders or any of their affiliates has debited any such
account will in no way waive or diminish any default for failure to make such
payment when and as due.

         15. Expenses, Fees and Costs; Indemnification.

                  (a) Each Party, jointly and severally, is responsible for the
payment of all fees and out-of-pocket disbursements incurred by Bank One as
Agent, or either of Lenders, including reasonable fees of counsel and court
costs and recordation fees and taxes, in any way arising from or in connection
with this Agreement, any Collateral, any Loan Document, any Obligations, or the
business relationship between Lenders or either of them, on the one hand, and
any one or more of the Parties, on the other hand, including, without
limitation: (1) Audit Fees (as defined below); (2) all reasonable fees and
expenses (including recording fees and insurance policy fees) of each of the
Lenders and counsel for each of the Lenders for the preparation, examination,
approval, negotiation, execution and delivery of, or the closing of any of the
transactions contemplated by, this Agreement or any of the Loan Documents; (3)
all reasonable fees and out-of-pocket disbursements incurred by each of the
Lenders, including reasonable attorneys' and consultants' fees, in any way
arising from or in connection with any action taken by either of the Lenders to
monitor, administer, enforce, or collect any of the Obligations (including under
this Agreement, any other Loan Document, or otherwise) or any other obligations
of any one or more of the Parties, whether joint, joint and several, or several,
under this Agreement, any Loan Document, any other existing or future document
or agreement, or arising from or relating to the business relationship between
either of the Lenders, on the one hand, and any one or more of the Parties, on
the other hand, or otherwise securing any of the Obligations, including any
actions to lift the automatic stay or to otherwise in any way monitor or
participate in any bankruptcy, reorganization or insolvency proceeding of any
one or more of the Parties; (4) all reasonable expenses and fees (including
reasonable attorneys' fees) incurred in relation to, in connection with, in
defense of or in prosecution of any litigation instituted by any one or more of
the Parties, either of the Lenders, or any third party, against or involving
either of the Lenders arising from, relating to, or in connection with any of
the Obligations, or any one or more of the Parties' other obligations, this
Agreement, any Collateral, any Loan Document, or the business relationship
between either of the Lenders, on the one hand, and any one or more of the
Parties, on the other hand, including any so-called "lender liability" action,
any claim and delivery or other action for possession of, or foreclosure on, any
of the Collateral, post-judgment enforcement of any rights or remedies including
enforcement of any judgments, and prosecution of any appeals (whether

                                       16

<PAGE>

discretionary or as of right and whether in connection with pre-judgment or
post-judgment matters), provided, however, that the Parties will not be required
to pay fees or expenses to the extent, but only to the extent, that the
litigation in connection with which they are incurred is initiated by one or
more Borrowers against one or more Lenders and is attributable solely to the
gross negligence or willful misconduct of the Lenders or Bank One as Agent; (5)
all costs, expenses, and fees incurred by either of the Lenders or its agents in
connection with appraisals and reappraisals of all or any of the Collateral (and
each Party must fully cooperate with such appraisers and make their property
available for appraisal in connection with as many appraisals as either of the
Lenders may request); and (6) all reasonable costs, expenses, and fees incurred
by either of the Lenders or their counsel in connection with consultants, expert
witnesses, or other professionals retained by either of the Lenders or their
counsel, to assist, advise, or give testimony with respect to any matter
relating to the Collateral, the Obligations, the Loan Documents, or the business
relationship between either of the Lenders, on the one hand, and any one or more
of the Parties, on the other hand (and each Party must fully cooperate with such
consultant, expert witness or other professional and must make their premises,
books and records, accounting systems, computer systems and other media for the
recordation of information available to such persons). Each Party's agreement,
jointly and severally, to be responsible for either of the Lenders' reasonable
attorneys' fees and costs applies regardless of whether or not either of the
Lenders prevails in whole or in part in any action, proceeding, litigation, or
otherwise, and regardless of the nature of any action or litigation or the
theories or bases of recovery or defense, provided, however, that the Parties
will not be required to pay fees or expenses to the extent, but only to the
extent, that the litigation in connection with which they are incurred is
initiated by one or more Borrowers against one or more Lenders and is
attributable solely to the gross negligence or willful misconduct of the Lenders
or Bank One as Agent. Each Party, jointly and severally, agrees to indemnify
each of the Lenders for all Claims (as hereinafter defined) that may be imposed
on, incurred by, or asserted against either of the Lenders in connection with
this Agreement, any Loan Document, or the transactions contemplated hereby or
thereby, or the business relationship between either of the Lenders, on the one
hand, and any one or more of the Parties, on the other hand, other than claims
attributable solely to the gross negligence or willful misconduct of the Lenders
or Bank One as Agent. All of each Party's obligations under this paragraph,
including all indemnification obligations, survive repayment of the Obligations,
termination of the Loan Documents, or both.

                  (b) All of the foregoing costs, expenses, reimbursement
obligations, and indemnification obligations are part of the Obligations and are
secured by all of the Collateral.

                  (c) "Claims" means any demand, claim, action or cause of
action, damage, liability, loss, cost, debt, expense, obligation, tax,
assessment, charge, lawsuit, contract, agreement, undertaking or deficiency, of
any kind or nature, whether known or unknown, fixed, actual, accrued or
contingent, liquidated or unliquidated (including interest, penalties,
reasonable attorneys' fees and other costs and expenses incident to proceedings
or investigations relating to any of the foregoing or the defense of any of the
foregoing), whether or not litigation has commenced.

         16. Verification of Accounts/Audits. Each Party agrees that Bank One as
Agent, through its employees or authorized agents, is permitted to send a letter
to and otherwise contact the Borrowers' account debtors to verify account
receivable balances and other matters. In addition, Lenders are permitted full
and complete access to the Borrowers' facilities, and books and records to
conduct audits as often as Lenders reasonably desire. The cost of such audits is
part of the Obligations, is secured by all Collateral, and must be paid by the
Borrowers within thirty (30) days of receipt of an invoice therefor (the "Audit
Fees"). The Audit Fees are in addition to all other interest, fees, costs, and
expenses provided for in the Loan Documents or this Agreement.

                                       17
<PAGE>

         17. Other Documents. Each Party must execute any documents reasonably
requested by Lenders to carry out the intent of or to implement this Agreement,
or any other Loan Document, including without limitation any new UCC financing
statements, UCC amendments, mortgages or other documents necessary to ensure
that Bank One as Agent, for the benefit of the Lenders, holds a properly
perfected security interest in all of the assets of each of the Borrowers.

         18. Cross Default/Cross Collateralization/Remedies. An Event of Default
or a default under this Agreement (or any agreement referred to or incorporated
herein) is an event of default and a default under each document and agreement
comprising the Loan Documents. An Event of Default or a default under any
document or agreement comprising the Loan Documents is an event of default and a
default under this Agreement (and all agreements referred to or incorporated
herein). Additionally, notwithstanding anything in the Loan Documents to the
contrary, a default or an Event of Default under any of the Loan Documents is a
default and Event of Default under each of the other Loan Documents. Immediately
upon the occurrence of an event of default or a default under this Agreement or
any Loan Document (or any document executed in connection herewith or referenced
herein), and without notice or an opportunity to cure such event of default or
default, Bank One as Agent may exercise any remedies provided in this Agreement,
the Loan Documents and under applicable law with respect to the Specified
Defaults as well as with respect to any new event of default or default, and, at
the election of Bank One as Agent and without further notice, the Forbearance
Period automatically expires, and all of each Party's obligations to Lenders
(including the Obligations) will be immediately due and payable. On and after
the date that any event of default or default occurs under this Agreement (or
any agreement referred to or incorporated herein) or under any Loan Document,
Bank One as Agent may immediately cease making any loans or other financial
accommodations available to any Party. In any event, after the earlier of
expiration of the Forbearance Period or the occurrence of an Event of Default,
event of default or default under this Agreement or any Loan Document, Bank One
as Agent may immediately without notice take action to enforce its rights and
remedies under the Loan Documents (including enforcement action on account of
the Specified Defaults, this Agreement, or applicable law), including collecting
the Obligations and foreclosing on the Collateral. Absent the prior occurrence
of an Event of Default or default, all Obligations are due and payable in full
at the expiration of the Forbearance Period. Any references in cross-default
provisions in this Agreement or any document or agreement executed in connection
herewith or in the Loan Documents to a "default" or an "event of default"
include a default under this Agreement. Notwithstanding anything to the contrary
in the Loan Documents, all Collateral granted to Bank One as Agent or to the
Lenders, collectively or individually, by any Party secures all of that Party's
Obligations to Lenders or either of them, as well as all of each other Party's
Obligations to Lenders or either of them.

         19. Loan Documents and Guaranties Continue. Except as expressly
modified and amended by the terms of this Agreement, all other terms and
conditions of the Loan Documents remain in full force and effect and are
ratified, confirmed, and approved. If there is an express conflict between the
terms of this Agreement and the terms of the Loan Documents, including the Loan
Documents executed in connection herewith, the terms of this Agreement govern
and control.

                                       18

<PAGE>

         20. Reservation of Rights/No Waivers.

                  (a) This Agreement grants a forbearance until the expiration
of the Forbearance Period on the terms and conditions set forth in this
Agreement. Except for such forbearance through the expiration of the Forbearance
Period, all of Lenders' rights and remedies against each Party and the
Collateral are expressly reserved, including all rights and remedies resulting
from, or arising in connection with, the Specified Defaults. Likewise, nothing
herein is a waiver of any Specified Defaults existing as of the date hereof, an
agreement to consent to new events of default or defaults (except as otherwise
provided in Section 1), or in any way prejudices Lenders' rights and remedies
under the Loan Documents or applicable law. Bank One as Agent has the right to
waive any term, provision, or condition in this Agreement or the Loan Documents,
in its sole discretion, and any such waiver does not prejudice, waive, or reduce
any other right or remedy that Lenders may have against any one or more of the
Parties. No waiver of rights or any condition of this Agreement, the Loan
Documents, or any other agreement by Lenders is effective unless contained in a
writing signed by Bank One as Agent.

                  (b) ANYTHING CONTAINED IN THIS AGREEMENT OR IN ANY OTHER
AGREEMENT TO THE CONTRARY NOTWITHSTANDING, NOTHING CONTAINED IN THIS AGREEMENT
OR IN ANY OTHER AGREEMENT RESTRICTS OR PROHIBITS THE RIGHT OF BANK ONE AS AGENT
TO BLOCK, STOP OR PROHIBIT PAYMENTS TO ANY SUBORDINATED CREDITOR(S) ON ACCOUNT
OF THE SPECIFIED DEFAULTS, EVENTS OF DEFAULT OR DEFAULTS, OR OTHERWISE.

         21. Credit Inquiries. If customers, buyers, investors, potential
alternative financing sources, or other parties ask either of Lenders about the
current lending relationship among Lenders and any one or more of the Parties,
each Party agrees that Lenders may refer such inquiries to Owosso.

         22. Entire Agreement, Etc.

                  (a) This Agreement and the Exhibits hereto constitute the
Parties' and Lenders' entire understanding with respect to the subject matter
hereof. Modifications or amendments to this Agreement must be in writing and
signed by the party to be charged in order to be effective. This Agreement is
governed by the internal laws of the State of Michigan (without regard to
conflicts of law principles). This Agreement is binding on each Party and its
respective successors, assigns, heirs, and personal representatives and inures
to Lenders' respective benefit and the benefit of their successors and assigns.
If any provision of this Agreement conflicts with any applicable statute or law,
or is otherwise unenforceable, such offending provision is null and void only to
the extent of such conflict or unenforceability, and is deemed separate from and
does not invalidate any other provision of this Agreement.

                  (b) This Agreement is being entered into among competent
persons, who are experienced in business and represented by counsel (or who have
had the opportunity to be represented by counsel), and has been reviewed by the
Parties and their counsel, if any. Therefore, any ambiguous language in this
Agreement will not necessarily be construed against any particular party as the
drafter of such language.

                                       19

<PAGE>

                  (c) This Agreement may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one
instrument. Facsimile copies of signatures are treated as original signatures
for all purposes.

                  (d) References in the Loan Documents and all other documents
executed in connection with the Loan Documents (as each of the foregoing is
amended hereby) to the Loan Documents mean the Loan Documents as amended by this
Agreement.

                  (e) The term "including" means including, without limitation,
and the term "includes" means includes, without limitation.

                  (f) All headings are inserted for convenience only and do not
affect the construction or interpretation of this Agreement.

         23. Additional Representations. Each Party represents and warrants to
Lenders that:

                  (a) (i) Borrowers' execution, delivery, and performance of
this Agreement and all agreements and documents delivered in connection herewith
by Borrowers have been duly authorized by all necessary corporate action and
does not and will not require any consent or approval of their stockholders,
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to them or of their articles of incorporation or bylaws, or result
in a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which any Borrower is a
party or by which they or their properties may be bound or affected; (ii) no
authorization, consent, approval, license, exemption of or filing a registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary to the valid
execution, delivery or performance by Borrowers of this Agreement and all
agreements and documents delivered in connection with this Agreement; and (iii)
this Agreement and all agreements and documents delivered pursuant hereto by any
one or more of the Parties are the legal, valid and binding obligations of each
such Party enforceable against each such Party in accordance with the terms
thereof.

                  (b) After giving effect to the amendments contained herein and
effected in accordance herewith, all representations and warranties contained in
the Loan Documents are true and correct on and as of the date hereof with the
same force and effect as if made on and as of the date hereof.

                  (c) Except for the Specified Defaults, each Party has duly and
properly performed, complied with and observed each of its covenants,
agreements, and obligations contained in the Loan Documents.

                  (d) Once this Agreement has been executed and delivered,
Borrowers' draft consolidated financial statements for the fiscal year ended
October 31, 2000, copies of which have previously been furnished to Lenders and
which are attached as Exhibit 23(d) hereto, fairly present Borrowers' financial
condition at such dates and the results of Borrowers' operations for the periods
indicated, all substantially in accordance with generally accepted accounting
principles applied on a consistent basis, except for footnote disclosures to be
modified to reflect, and consistent with the terms of, this Agreement.

                                       20

<PAGE>

                  (e) No Party or any one or more of them has assigned any
claim, set off or defense to any individual or entity.

                  (f) This Agreement and all of the Exhibits and other written
material delivered by any one or more of the Parties to Lenders in connection
with the transactions contemplated hereby do not contain any statement that is
false or misleading with respect to any material fact and do not omit to state a
material fact necessary in order to make the statements therein not false or
misleading. There is no additional fact of which any Party is aware that has not
been disclosed in writing to Lenders that materially affects adversely or, so
far as each Party can reasonably foresee, will materially affect adversely any
Party's financial condition, business prospects, or any Collateral.

                  (g) All Parties executing this Agreement in a representative
capacity warrant that they have authority to execute this Agreement and legally
bind the entity they represent.

                  (h) Borrowers' chief executive offices and principal places of
business are located at the addresses listed on Schedule 23(h).

                  (i) All of Borrowers' business records are kept only at the
addresses listed on Schedule 23(i).

                  (j) Borrowers' corporate names are exactly as set forth on the
signature page of this Agreement and Borrowers have not changed their corporate
names since their dates of incorporation, nor have they or do they use any
tradenames or tradestyles, except as indicated on Schedule 23(j).

                  (k) Schedule 23(k) is a correct and complete list of all
locations of all of the Collateral and the owner and/or lessor of each such
facility as well as, to the best of the Parties' knowledge, the holders of any
mortgages on such facilities and locations.

                  (l) Borrowers have not, during the past five years, been
parties to any merger or consolidation, or acquired all or substantially all of
the assets of any person or entity, or acquired any of their property or assets
out of the ordinary course of business, except as set forth on Schedule 23(l).

                  (m) Borrowers own or possess adequate licenses or other rights
to use all patents, processes, trademarks, trade names, copyrights, and other
intellectual property necessary to conduct their businesses as now conducted or
presently intended to be conducted and Borrowers have no reason to believe that
any such rights conflict or will conflict with the rights of others. A list of
all patents, trademarks, copyright filings or registrations, and other
intellectual property in which Borrowers have any interest is attached to this
Agreement as Schedule 23(m).

                  (n) Owosso has no wholly or partially owned foreign or
domestic subsidiaries besides the other Borrowers to this Agreement.

                                       21

<PAGE>

                  (o) All issued and outstanding stock for each of the Borrowers
other than Owosso is pledged in favor of Bank One as Agent for the benefit of
the Lenders, and all original stock certificates evidencing such stock have been
delivered to Bank One as Agent for the benefit of the Lenders.

         24. Survival; Reliance. All agreements, representations and warranties
made in this Agreement (and all agreements referred to or incorporated herein)
survive the execution of this Agreement (and all documents and agreements
referred to or incorporated herein). Notwithstanding anything in this Agreement
(or any documents or agreements referred to or incorporated herein) to the
contrary, no investigation or inquiry by Lenders (including by their agents)
with respect to any matter that is the subject of any representation, warranty,
covenant or other agreement set forth herein or therein is intended, nor is it
to be interpreted, to limit, diminish, or otherwise affect the full scope and
effect of any such representation, warranty, covenant or other agreement. All
terms, covenants, agreements, representations and warranties of each Party made
herein (or in any documents or agreements referred to or incorporated herein),
or in any certificate or other document delivered or to be delivered pursuant
hereto, are deemed to be material and to have been relied upon by Lenders,
notwithstanding any investigation heretofore or hereafter made by Lenders or
their agents.

         25. Notices. Any notice or other communication required or permitted to
be given under this Agreement or any of the Loan Documents must be in writing
and delivered personally, telegraphed, telecopied, or telexed, or mailed (by
certified or registered mail or by recognized overnight courier), postage
prepaid, and is deemed given when so delivered personally, telegraphed or
telexed, or if mailed, two days after the date of mailing, addressed as follows
(or to any another address as to which any party so advises the other parties in
writing):

                  (a)   If to Borrowers:    Owosso Corporation
                                            The Triad Building
                                            2200 Renaissance Blvd., Suite 150
                                            King of Prussia, PA  19406
                                            Telecopy:    (610) 275-5122

                        With a copy to:     Baldo M. Carnecchia, Jr., Esq.
                                            Montgomery, McCracken, Walker
                                            & Rhoads, LLP
                                            123 South Broad Street
                                            Philadelphia, PA  19109-1099
                                            Telecopy:  (215) 772-7620

                  (b)   If to PNC:          Mr. William R. Breisch
                                            PNC Bank, National Association
                                            1600 Market Street, 11th Floor
                                            Philadelphia, PA  19103
                                            Telecopy:  (215) 585-8391

                                       22

<PAGE>

                        With a copy to:     Mark Gittelman, Esq.
                                            PNC Bank, National Association
                                            1600 Market Street, 28th Floor
                                            Philadelphia, PA  19103
                                            Telecopy:  (215) 585-8713

                  (c)   If to Bank One:     Bank One, Michigan
                                            611 Woodward Avenue
                                            Detroit, MI  48226
                                            Telecopy:  (313) 225-4355
                                            Attn:    Barry J. Rourke

                        With a copy to:     Honigman Miller Schwartz and Cohn
                                            2290 First National Building
                                            Detroit, MI 48226
                                            Telecopy:  (313) 465-7573
                                            Attn: Michelle Epstein Taigman, Esq.

Defaults have occurred under the Loan Documents and each Party, to the fullest
extent allowed under applicable law, waives all notices that Lenders might be
required to give but for this waiver, including notices under Sections 9-504,
9-505, and 9-506 of the Uniform Commercial Code as enacted in the State of
Michigan or the relevant state concerning the applicable Collateral.
Furthermore, each Party waives all rights to redeem any of the Collateral,
including any right to redeem any of the Collateral under Section 9-506 of the
Uniform Commercial Code.

         26. Additional Covenants. Borrowers may not (a) except as permitted in
the terms of any subordination agreements executed by Bank One as Agent, make
any payments, whether principal, interest or otherwise, on account of
subordinated debt except for Permitted Subordinated Debt Payments, (b) acquire
or retire any of its shares of capital stock, or declare or pay dividends or
make any other distributions upon any of its shares of capital stock or
percentage ownership interests, (c) purchase or acquire any securities of, or
make any loans or advances to, or investments in, any person, firm or
corporation, except obligations of the United States Government, open market
commercial paper rated one of the top two ratings by a rating agency of
recognized standing, or certificates of deposit in insured financial
institutions except for intercompany transfers to disburse loan proceeds
borrowed by Owosso as agent under the terms of the Loan Agreement, as amended
hereby, and advances to Ahab and back to the advancing Borrower for purposes of
investment in Delaware (d) notwithstanding anything to the contrary in the Loan
Documents, create or permit to exist any lien on any of their property, real or
personal, except liens set forth as "Permitted Liens" on exhibits to the General
Security Agreements given by each of the Borrowers in favor of Bank One as
Agent, for the benefit of the Lenders and dated of approximate even date
herewith, liens to Lenders or Bank One as Agent, liens incurred in the ordinary
course of business securing current nondelinquent liabilities for taxes,
worker's compensation, unemployment insurance, social security and pension
liabilities, liens for taxes being contested in good faith if adequate security
for such contested taxes is posted with Bank One as Agent, or other liens not to
exceed $100,000 in the aggregate for all Borrowers at any one time outstanding,
or (e) notwithstanding anything to the contrary in the Loan Documents, incur, or
permit to remain outstanding, debt for borrowed money or installment
obligations, including leases other than real estate leases in existence as of
the date hereof, except debt to the Lenders or Bank One as Agent, debt set forth
in the financial statements attached as Exhibit 23(d) hereto or debt in an
aggregate amount for all Borrowers at any one time outstanding not to exceed
$350,000.

                                       23

<PAGE>

         27. Impairment of Collateral. The execution and delivery of this
Agreement (and all agreements and documents referred to herein) does not impair
or affect any other security (by endorsement or otherwise) for the Obligations,
or any one or more of the Parties' other obligations to Lenders. No security
taken before or after as security for the Obligations impairs or affects this
Agreement (or any agreement or document referred to herein). All present and
future additional security is cumulative security.

         28. Time Is of the Essence. Time is of the essence as to each and every
term and provision of this Agreement and each Loan Document.

         29. Adverse Events. Promptly upon gaining knowledge thereof or at such
time as any Party should have known thereof, each Party must inform Lenders of
the occurrence of any Event of Default, or default, or any event that with the
lapse of time, service of notice, or both, would constitute an Event of Default
or default under this Agreement or any of the Loan Documents, or of any other
occurrence that has or could reasonably be expected to have a material adverse
effect on any Party's business, properties, or financial condition, the
Collateral or upon any Party's ability to comply with its obligations under this
Agreement or the Loan Documents.

         30. Non-Waiver. No failure or delay on either Lender's part in the
exercise of any power or right, and no course of dealing between any one or more
of the Parties and either Lender, operates as a waiver of such power or right,
nor does any single or partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power or right. The
remedies provided for herein are cumulative and not exclusive of any remedies
that are available to either Lender at law or in equity. No notice to or demand
on any Party not required hereunder or under the Loan Documents entitles any
such Party to any other or further notice or demand in similar or other
circumstances, or waives either Lender's right to any other or further action in
any circumstances without notice or demand. Any waiver of any provision of this
Agreement or the Loan Documents and any consent to any departure by any one or
more of the Parties from the terms of any provision of this Agreement or the
Loan Documents, is effective only if in writing signed by an authorized officer
of Bank One as Agent, and only in the specific instance and for the specific
purpose for which given.

         31. No Other Promises or Inducements. There are no promises or
inducements that have been made to any signatory hereto to cause such signatory
to enter into this Agreement other than those that are set forth in this
Agreement.

                                       24

<PAGE>

         32. Legal Rate Adjustment. This Agreement and all security agreements,
mortgages, notes, and other Loan Documents between any one or more of the
Parties and Lenders are expressly limited so that in no event whatsoever will
the amount of interest paid or agreed to be paid to either Lender exceed the
highest rate of interest permissible under applicable law. If, from any
circumstances, fulfillment of any provision of this Agreement or any other Loan
Document at the time performance of such provisions is due, involves exceeding
the interest limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable to this Agreement and the Obligations, then the
obligation to be fulfilled is reduced to an amount computed at the highest rate
of interest permissible under applicable law, and if, for any reason whatsoever,
either Lender ever receives as interest an amount that would be deemed unlawful
under applicable law, such interest will be automatically applied to the payment
of the principal amount of the Obligations (whether or not then due and
payable), and not to the payment of interest, or will be refunded to the
applicable Party, if such principal has been paid in full.

         33. Deliveries/Additional Actions. Simultaneous with execution of this
Agreement, Borrowers must deliver to the Lenders fully executed copies of each
of the following, all of which must be in form and substance satisfactory to the
Lenders in their discretion:

                  (a)      A mortgage covering the Borrowers' Owosso, Michigan
owned real estate;

                  (b)      Board resolutions for each of the Borrowers;

                  (c)      A guaranty from each of the Borrowers covering all of
the obligations of all of the other Borrowers to the Lenders;

                  (d)      A security  agreement from each of the Borrowers
granting Bank One as Agent for the benefit of the Lenders a lien on all personal
property of the Borrowers; and

                  (e)      Such UCC financing statements and other documents,
instruments and agreements as the Lenders may request or require.

Borrowers must additionally provide each of the following in form and substance
acceptable to the Lenders within 90 days of execution of this Agreement;

                  (a)      An appraisal of machinery and equipment of the Motors
Group and Coil Group located in the United States;

                  (b)      Appraisals of the Owosso, Michigan and Watertown, New
York real estate; and

                  (c)      A mortgage covering Stature's interests in the
Watertown, New York real estate.

Borrowers must additionally use their reasonable best efforts to provide each of
the following in form and substance satisfactory to the Lenders at their
discretion within 90 days of execution of this Agreement:

                  (a)      Landlord waivers from all lessors of real estate
leased by the Borrowers or any of them;

                  (b)      Acknowledgements of Lenders' liens and rights from
each warehouse housing assets of the Borrowers; and

                  (c)      Notice filings covering all consigned inventory.

                                       25

<PAGE>

                  The failure to provide landlord waivers, warehouse
acknowledgments or consignment filings shall not constitute an Event of Default
hereunder, but if such landlord waivers and warehouse acknowledgments are not
provided within the required time then the inventory located at these locations
will automatically and immediately cease to be Eligible Inventory until such
time as acceptable landlord waivers and warehouse acknowledgments may be
provided.

Finally, Borrowers must cooperate with Lenders in the conduct of a field audit.

         34. STATUTE OF FRAUDS. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND THE LENDERS AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
AND THE LENDERS. ALL PRIOR AND CONTEMPORANEOUS ORAL AGREEMENTS, IF ANY, BETWEEN
EITHER LENDER, ON THE ONE HAND, AND ANY ONE OR MORE OF THE PARTIES, ON THE OTHER
HAND, ARE MERGED INTO THIS AGREEMENT AND DO NOT SURVIVE THE EXECUTION OF THIS
AGREEMENT.

          35. RELEASE. AS OF THE DATE HEREOF EACH PARTY REPRESENTS AND WARRANTS
THAT THEY ARE AWARE OF, AND POSSESS, NO CLAIMS OR CAUSES OF ACTION AGAINST
EITHER LENDER OR BANK ONE AS AGENT. NOTWITHSTANDING THIS REPRESENTATION AND AS
FURTHER CONSIDERATION FOR THE AGREEMENTS AND UNDERSTANDINGS HEREIN, EACH PARTY
INDIVIDUALLY, JOINTLY, SEVERALLY, AND JOINTLY AND SEVERALLY, IN EVERY CAPACITY,
INCLUDING BUT NOT LIMITED TO, AS SHAREHOLDERS, OFFICERS, PARTNERS, DIRECTORS,
INVESTORS, OR CREDITORS OF ANY ONE OR MORE OF THE PARTIES, EACH OF ITS
EMPLOYEES, AGENTS, EXECUTORS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES EACH OF
THE LENDERS AND BANK ONE AS AGENT, THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS FROM ANY LIABILITY,
CLAIM, RIGHT OR CAUSE OF ACTION THAT NOW EXISTS, OR HEREAFTER ARISES, WHETHER
KNOWN OR UNKNOWN, ARISING FROM OR IN ANY WAY RELATED TO FACTS IN EXISTENCE AS OF
THE DATE HEREOF. BY WAY OF EXAMPLE AND NOT LIMITATION, THE FORGOING INCLUDES ANY
CLAIMS IN ANY WAY RELATED TO ACTIONS TAKEN OR OMITTED TO BE TAKEN BY EITHER OF
THE LENDERS OR BANK ONE AS AGENT UNDER THE LOAN DOCUMENTS, THE BUSINESS
RELATIONSHIP WITH EITHER OF THE LENDERS OR BANK ONE AS AGENT AND ALL OTHER
OBLIGATIONS OF ANY NATURE OR KIND OF ANY ONE OR MORE OF THE PARTIES, ANY ORAL
AGREEMENTS OR UNDERSTANDINGS (ACTUAL OR ALLEGED), ANY BANKING RELATIONSHIPS THAT
ANY ONE OR MORE OF THE PARTIES HAS OR MAY HAVE HAD WITH EITHER OF THE LENDERS AT
ANY TIME AND FOR ANY REASON INCLUDING, BUT NOT LIMITED TO, DEMAND DEPOSIT
ACCOUNTS, OR OTHERWISE, BUT DOES NOT INCLUDE THE PARTIES' FUTURE RIGHTS TO
RECEIVE LOANS UNDER THE TERMS OF THE LOAN DOCUMENTS, AS AMENDED BY THIS
AGREEMENT OR AS TO AMOUNTS ON DEPOSIT WITH EITHER OF THE LENDERS OR STOCK
CERTIFICATES PLEDGED TO AND HELD BY EITHER OF THE LENDERS AS COLLATERAL FOR THE
OBLIGATIONS.

                                       26

<PAGE>

         36. WAIVER OF JURY TRIAL AND BOND; SUBMISSION TO JURISDICTION; AND
             ACKNOWLEDGMENT.

                  (a) 1. ANY JUDICIAL PROCEEDING AGAINST ANY PARTY BROUGHT BY
         EITHER LENDER WITH RESPECT TO ANY TERM OR CONDITION OF THIS AGREEMENT,
         OR ANY OTHER PRESENT OR FUTURE AGREEMENT BETWEEN ANY PARTY AND EITHER
         LENDER AND/OR ANY OTHER MATTER OF ANY KIND WHATSOEVER MAY BE BROUGHT BY
         EITHER LENDER IN A COURT OF COMPETENT JURISDICTION IN THE STATE OF
         MICHIGAN, UNITED STATES OF AMERICA, AND THE PARTIES EACH HEREBY
         IRREVOCABLY CONSENT AND SUBMIT THEMSELVES TO JURISDICTION IN ANY SUCH
         COURT; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
         PARTIES AND LENDERS ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR
         RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
         JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE BOUND
         BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
         AGREEMENT, OR ANY OTHER PRESENT AND FUTURE AGREEMENT BETWEEN ANY OF THE
         PARTIES AND LENDER AND/OR ANY OTHER MATTER OF ANY KIND WHATSOEVER.

         2. EACH OF THE PARTIES WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
         UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
         FIRST-CLASS MAIL OR MESSENGER DIRECTED TO IT AT ITS ADDRESS SET FORTH
         IN THIS AGREEMENT. EACH OF THE PARTIES WAIVES ANY BOND OR SURETY OR
         SECURITY UPON SUCH BOND OR SURETY THAT MIGHT, BUT FOR THIS WAIVER, BE
         REQUIRED OF LENDER.

         3. NOTHING CONTAINED IN THIS SECTION AFFECTS OR LIMITS THE RIGHT OF
         EITHER LENDER OR BANK ONE AS AGENT TO SERVE LEGAL PROCESS IN ANY OTHER
         MANNER PERMITTED BY LAW OR AFFECTS EITHER LENDER'S OR BANK ONE AS
         AGENT'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY PARTY OR
         THEIR PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION SELECTED BY
         EITHER LENDER OR BANK ONE AS AGENT IN ITS SOLE AND ABSOLUTE DISCRETION.

         4.       Intentionally omitted.

         5. EACH OF THE PARTIES WAIVES ANY OBJECTION TO JURISDICTION AND VENUE
         OF ANY ACTION INSTITUTED HEREUNDER OR IN CONNECTION HEREWITH AND MAY
         NOT ASSERT ANY DEFENSE BASED IN ANY WAY ON LACK OF JURISDICTION OR
         VENUE OR BASED UPON FORUM NON CONVENIENS.

                                       27

<PAGE>

                  (b) EACH PARTY ACKNOWLEDGES THAT (1) IT HAS FULLY READ ALL OF
         THIS AGREEMENT AND HAS BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH
         COUNSEL AND OTHER ADVISORS OF ITS CHOICE, AND AFTER CONSULTING WITH
         SUCH COUNSEL OR ADVISORS (OR HAVING HAD THE OPPORTUNITY TO DO SO), IT
         KNOWINGLY, VOLUNTARILY AND WITHOUT DURESS, COERCION, UNLAWFUL
         RESTRAINT, INTIMIDATION OR COMPULSION, ENTERS INTO THIS AGREEMENT,
         BASED UPON SUCH ADVICE AND COUNSEL (IF ANY) AND IN THE EXERCISE OF ITS
         BUSINESS JUDGMENT, (2) THIS AGREEMENT HAS BEEN ENTERED INTO IN EXCHANGE
         FOR GOOD AND VALUABLE CONSIDERATION, RECEIPT OF WHICH THE PARTY HERETO
         ACKNOWLEDGES, (3) IT HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS
         AND PROVISIONS OF THIS AGREEMENT AND IS NOT RELYING ON THE OPINIONS OR
         ADVICE OF EITHER LENDER OR BANK ONE AS AGENT OR THEIR AGENTS OR
         REPRESENTATIVES IN ENTERING INTO THIS AGREEMENT.

                  (c) THE PARTIES AND LENDERS ACKNOWLEDGE THAT THE RIGHT TO A
         TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT MAY BE
         WAIVED. EACH OF THE PARTIES AND LENDERS EACH KNOWINGLY, VOLUNTARILY,
         IRREVOCABLY, AND AFTER THE OPPORTUNITY TO CONSULT WITH THEIR RESPECTIVE
         COUNSEL, WITHOUT COERCION, WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY
         OF ALL DISPUTES BETWEEN THEM INCLUDING, WITHOUT LIMITATION, ANY CLAIMS
         AND/OR DEFENSES ASSERTED IN ANY JUDICIAL PROCEEDING DESCRIBED HEREIN.
         NEITHER LENDERS NOR ANY OF THE PARTIES WILL BE DEEMED TO HAVE GIVEN UP
         THIS WAIVER OF JURY TRIAL UNLESS THE PARTY CLAIMING THAT THIS WAIVER
         HAS BEEN RELINQUISHED HAS A WRITTEN INSTRUMENT SIGNED BY THE OTHER
         PARTY STATING THAT THIS WAIVER HAS BEEN GIVEN UP. THE PARTIES OR
         LENDERS MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT
         WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVERS AND CONSENTS
         CONTAINED HEREIN.

                                  OWOSSO CORPORATION,
                                  a Pennsylvania corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Executive Vice President-Finance,
                                          Chief Financial Officer,
                                          Secretary/Treasurer
                                          -------------------------------------

[Signatures continued on following page]

                                       28
<PAGE>

[Signatures continued from preceding page]

                                  AHAB INVESTMENT COMPANY,
                                  a Delaware corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  DWZM, INC.
                                  a Pennsylvania corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  MOTOR PRODUCTS-OWOSSO
                                  CORPORATION,
                                  a Delaware corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  SNOWMAX, INCORPORATED,
                                  a Pennsylvania corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

[Signatures continued on following page]

                                       29

<PAGE>

[Signatures continued from preceding page]

                                  MOTOR PRODUCTS-OHIO CORPORATION,
                                  a Pennsylvania corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  GBMC, INC.,
                                  a Kansas corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  STATURE ELECTRIC, INC.,
                                  a New York corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  OWOSSO MOTOR GROUP, INC.,
                                  a Pennsylvania corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

[Signatures continued on following page]

                                       30

<PAGE>

[Signatures continued from preceding page]

                                  ASTRO AIR COILS, INC., f/k/a Astro Air
                                  Acquisition Corporation,
                                  a Delaware corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  CRAMER COMPANY, f/k/a
                                  M.H. Rhodes, Inc.,
                                  a Delaware corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  AHAB INTERNATIONAL INVESTMENT
                                  COMPANY, f/k/a Astro Air
                                  U.K. Holdings, Inc.,
                                  a Delaware corporation

                                  By:     /s/   John M. Morrash
                                          -------------------------------------

                                  Name:   John M. Morrash
                                          -------------------------------------

                                  Title:  Secretary/Treasurer
                                          -------------------------------------

                                  BANK ONE, MICHIGAN, in its individual
                                  capacity and as Agent

                                  By:     /s/  Barry J. Rourke
                                     -------------------------------------------
                                           Barry J. Rourke, First Vice President

[Signatures continued on following page]

                                       31

<PAGE>

[Signatures continued from preceding page]

                                  PNC BANK, NATIONAL ASSOCIATION,

                                  By:     /s/ William R. Breisch
                                          -------------------------------------

                                  Name:   William R. Breisch
                                          -------------------------------------

                                  Title:  Vice President
                                          -------------------------------------

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