Document:

EX-4.5

 

Exhibit 4.5

EXECUTION VERSION

AMENDMENT NO. 2 TO

REVOLVING CREDIT AGREEMENT

     THIS AMENDMENT NO. 2 TO REVOLVING CREDIT AGREEMENT, dated as of January 31, 2007, (this
“Amendment”), among the following:

     (i) OM GROUP, INC., a Delaware corporation (herein, together with its successors and assigns
the “Borrower”);

     (ii) the financial institutions party hereto as Lenders; and

     (iii) NATIONAL CITY BANK, as the administrative agent (in such capacity, the “Administrative
Agent”) and the collateral agent (in such capacity, the “Collateral Agent”) for the Lenders.

PRELIMINARY STATEMENTS:

     WHEREAS, the Borrower, the Lenders named therein, the Administrative Agent, the Collateral
Agent and the other parties thereto entered into the Revolving Credit Agreement, dated as of
December 20, 2005 (as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”); capitalized terms used herein and not otherwise defined herein have the
meanings ascribed to such terms in the Credit Agreement.

     WHEREAS, the parties hereto desire to amend certain terms of the Credit Agreement, as more
fully set forth below.

     NOW, THEREFORE, the parties hereby agree as follows:

         SECTION 1. AMENDMENTS.

          1.1 Effective on the Second Amendment Effective Date, Section 1.1 of the Credit Agreement is
hereby amended by adding the following definitions to read in their entirety as follows:

     “Second Amendment” means Amendment No. 2 to Revolving Credit Agreement, dated as of
January 31, 2007, among the Borrower, the Lenders, the Administrative Agent and the
Collateral Agent.

     “Temporary Revolving Loans” shall mean Revolving Loans made pursuant to the Total
Temporary Revolving Loans Commitment.

     “Total Temporary Revolving Loans Commitment” means (i) during the Temporary Revolving
Loans Availability Period, $125,000,000, and (ii) at all other times, zero dollars ($0.00).

     “Temporary Revolving Loans Effective Date” shall have the meaning provided in Section
2.1(d) of this Agreement.

 

 

     “Temporary Revolving Loans Termination Date” means the earliest of (i) the date on
which the Borrower receives net proceeds from the sale of the Nickel Business (as such term
is defined in the First Amendment), and (ii) July 31, 2007 and (iii) three (3) business days
after the Borrower has provided written notice to the Administrative Agent of its intention
to terminate the Total Temporary Revolving Loans Commitment.

     “Temporary Revolving Loans Availability Period” means January 31, 2007 (provided that
the Second Amendment Effective Date (as such term is defined in the Second Amendment) has
occurred) through the earliest of (i) the tenth day following the Second Amendment Effective
Date (as such term is defined in the Second Amendment) if the Borrower shall not have
exercised its call rights with respect to all of its outstanding Public Notes on or before
such tenth day, (ii) April 6, 2007, and (iii) the Nickel Sale Closing Date (as such term
is defined in the First Amendment).

          1.2 Effective on the Second Amendment Effective Date, Section 1.1 of the Credit Agreement is
hereby amended by amending and restating the definition of “Revolving Commitment” and “Total
Revolving Commitment” to read as follows:

     “Revolving Commitment” shall mean, with respect to each Lender, the amount set forth
opposite such Lender’s name in Annex I hereto as its “Revolving Commitment” as the same may
be reduced from time to time pursuant to section 4.2, 4.3, 5.2 and/or 10.2, increased from
time to time pursuant to section 2.1(c) hereof, increased pursuant to section 2.1(d) hereof
or adjusted from time to time as a result of assignments to or from such Lender pursuant to
section 12.4.

     “Total Revolving Commitment” shall mean the Revolving Commitments of the Lenders,
including any increase thereto pursuant to section 2.1(c) and any increase thereto pursuant
to 2.1(d).

          1.3 Effective on the Second Amendment Effective Date, Section 2.1(c) is amended by inserting a
new clause (iv) to read in its entirety as follows:

     (iv) Notwithstanding anything herein to the contrary, the Total Revolving Commitment
may not be increased pursuant to the provisions of this Section 2.1(c) at any time during
the Temporary Revolving Loans Availability Period or when Temporary Revolving Loans are
outstanding.

          1.4 Effective on the Second Amendment Effective Date, Section 2.1 is amended by inserting a
new subsection (d) thereto to read as follows:

     (d) Temporary Revolving Loan Commitments. The Borrower may, by no less than three (3)
Business Days’ written notice to the Administrative Agent at any time during the Temporary
Revolving Loans Availability Period, request that the Total Revolving Commitment be
increased by the Total Temporary Revolving Loans Commitment available at such time. Such
notice shall set forth the date (the “Temporary
Revolving Loans Effective Date”) on which such increase is requested to become effective
(which shall be not less than three (3) Business Days nor more than ten (10)

2

 

Business Days
after the date of such notice and which, in any event, must be prior to the earliest of (i)
the Revolving Maturity Date, (ii) the end of Temporary Revolving Loans Availability Period,
and (iii) the Temporary Revolving Loans Termination Date). On the Temporary Revolving Loans
Effective Date, the Revolving Credit Commitment of each Lender shall be increased by their
pro rata share of the Total Temporary Revolving Loans Commitment. Notwithstanding the
foregoing, no increase in the Total Revolving Commitment (or in the Revolving Credit
Commitment of any Lender) shall become effective under this section 2.1(d) unless (A) on the
Temporary Revolving Loans Effective Date, the conditions set forth in section 6.2 shall be
satisfied and the Administrative Agent shall have received a certificate to that effect
dated such date and executed by a responsible financial officer of the Borrower and (B) on
the Temporary Revolving Loans Effective Date, the Borrower demonstrates that, after giving
effect to the Borrowing of Temporary Revolving Loans and the redemption in full of all of
the Borrower’s Public Notes, the Borrower has Unutilized Total Revolving Commitments plus
cash and Cash Equivalents on hand of at least $50,000,000. The proceeds of the Temporary
Revolving Loans shall only be used to redeem the Borrower’s Public Notes. Notwithstanding
anything herein or in the First Amendment to the contrary, on the Temporary Revolving Loans
Termination Date, all Temporary Revolving Loans shall be repaid in full and the Total
Revolving Commitment shall be automatically reduced to $100,000,000 (or such greater amount
to the extent the Borrower has requested an increase in the Total Revolving Commitment under
Section 2.1(c), which increase may only be effective upon repayment in full of the Temporary
Revolving Loans and otherwise in accordance with the provisions of Section 2.1(c)), and the
Revolving Credit Commitment of each Lender shall be likewise reduced on a pro-rata basis.
Notwithstanding anything in this Agreement or the First Amendment to the contrary, if any
Temporary Revolving Loans are outstanding on the date of the Borrower’s receipt of Net Cash
Proceeds from the Nickel Business Sale (as defined in the First Amendment), up to 100% of
such Net Cash Proceeds shall be used to repay all Temporary Revolving Loans outstanding on
the Nickel Business Sale Date (as defined in the First Amendment).

          1.5 Effective on the Second Amendment Effective Date, Section 5.2(g) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:

     (g) Mandatory Prepayment—Certain Proceeds of Debt and Equity Securities. Not later
than the Business Day following the date of the receipt by the Borrower or any Subsidiary of
the cash proceeds (net of underwriting discounts and commissions, placement agent fees and
other customary fees and costs associated therewith) (i) in excess of $25,000,000 in the
aggregate during the term of this Agreement from any sale or issuance of debt securities by
the Borrower or any Subsidiary after the Closing Date in an underwritten public offering,
Rule 144A offering, or private placement with one or more institutional investors, the
Borrower will prepay the principal of first, Swing Line Loans, second, after all Swing Line
Loans have been paid in full, Unpaid Drawings, and third, after all Unpaid Drawings have
been paid in full, Revolving Loans, in an amount at least equal to the lesser of (x) 100% of
such net proceeds, and (y) an amount equal to the then aggregate outstanding principal
amount of
the outstanding Loans, if any, or (ii) if any Temporary Revolving Loans are
outstanding, from the issuance of equity securities, then the Borrower will prepay
outstanding

3

 

Temporary Revolving Loans in an amount equal to the lesser of (x) the net
proceeds of such issuance, and (y) an amount equal to the then aggregate outstanding
principal amount of the outstanding Temporary Revolving Loans.

          1.6 Effective on the Second Amendment Effective Date, Section 9.6(d) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:

     (d) the Borrower may, during any fiscal year, declare and pay cash dividends on its
common stock, if immediately prior to and immediately after giving effect to such action (A)
no Default under section 10.1(a) or Event of Default shall have occurred and be continuing,
(B) the Borrower shall be in compliance with sections 9.7 and 9.8, after giving pro forma
effect to such action, (C) the aggregate amount so expended during such fiscal year is not
in excess of the greater of (x) $15,000,000, or (y) 25% of the Borrower’s year-to-date
Consolidated Net Income (if positive) for the portion of the current fiscal year ending on
the last day of the month preceding the date of payment, and (D) no Temporary Revolving
Loans are outstanding;

         SECTION 2. BINDING EFFECT.

     This Amendment shall become effective on and as of the date (the “Second Amendment Effective
Date”) first written above provided that the following conditions are satisfied on or before such
date:

     (a) This Amendment shall have been executed by the Borrower, each Lender, the
Administrative Agent and the Collateral Agent, and counterparts hereof as so executed shall
have been delivered to the Administrative Agent;

     (b) Each Subsidiary Guarantor shall have delivered to the Administrative Agent, for the
benefit of the Lenders, an Acknowledgement and Consent with respect to this Amendment;

     (c) The representations and warranties of the Borrower and the other Credit Parties in
the Credit Agreement, the other Credit Documents and this Amendment shall be true and
correct in all material respects on and as of the Second Amendment Effective Date, except to
the extent such representations or warranties expressly relate to a specified date, in which
case such representations and warranties shall be true and correct as of such specified
date;

     (d) No Default or Event of Default shall be in existence immediately prior to or
immediately after the date of this Amendment after giving effect to the provisions hereof;

     (e) The Borrower shall have delivered an officer’s certificate regarding the items set
forth in subsections (c) and (d) above;

     (f) Administrative Agent shall have received a secretary’s certificate from each Credit
Party certifying the resolutions of such Credit Party authorizing this
Amendment (including, in the case of the Borrower, the increases in commitments and
borrowings thereunder contemplated hereby, the organizational documents of each credit

4

 

party
(or, if not changed since last certified to the Lenders, a statement to such effect) and the
incumbency of each Credit Party (or, if not changed since last certified to the Lenders, a
statement to such effect);

     (g) No order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any foreign or domestic governmental or
public body or authority, or any subdivision thereof, shall be required to authorize or
shall be required as a condition to the execution, delivery and performance of this
Amendment that shall not have been obtained, and there shall be no legal or regulatory
prohibitions or restrictions on the effectiveness of this Amendment or the transactions
contemplated hereby;

     (h) On the Second Amendment Effective Date, the Administrative Agent shall have
received an opinion, addressed to the Administrative Agent and each of the Lenders and dated
the Second Amendment Effective Date, from Squire, Sanders & Dempsey LLP, special counsel to
the Borrower covering such matters incident to the transactions contemplated hereby as the
Administrative Agent may reasonably request, such opinion to be in form and substance
satisfactory to the Administrative Agent;

     (i) Each Lender shall have received a draft of the Borrower’s unaudited financial
statements for the period ended December 31, 2006;

     (j) The Borrower shall have paid to the Administrative Agent, for the pro rata benefit
of the Lenders, a closing fee in the aggregate amount of $125,000;

     (k) The Borrower shall have paid all reasonable legal fees and expenses of the
Administrative Agent in connection with this Amendment and the documents executed in
connection therewith to the extent such fees and expenses have been invoiced on or prior to
such date; and

     (l) There shall be no material adverse change in or affecting the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower or its
Subsidiaries.

          The Administrative Agent shall notify the Borrower and each Lender in writing of the
effectiveness hereof and of the Second Amendment Effective Date, and will promptly furnish a copy
of this Amendment to each Lender.

     SECTION 3. RATIFICATIONS.

     The terms and provisions set forth in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Credit Agreement, and except as expressly
modified and superseded by this Amendment, the terms and provisions of the Credit Agreement are
ratified and confirmed and shall continue in full force and effect.

     SECTION 4. REPRESENTATIONS AND WARRANTIES.

     The Borrower represents and warrants to the Lenders and the Administrative Agent as follows:

5

 

     (a) Authorization, Validity and Binding Effect. This Amendment has been duly
authorized by all necessary corporate action on the part of the Borrower, has been duly
executed and delivered by a duly authorized officer or officers of the Borrower, and
constitutes the valid and binding agreement of the Borrower, enforceable against the
Borrower in accordance with its terms.

     (b) Representations and Warranties True and Correct. The representations and
warranties of the Borrower and each other Credit Party contained in the Credit Agreement and
each other Credit Document, as amended hereby, are true and correct on and as of the date
hereof as though made on and as of the date hereof, except to the extent that such
representations and warranties expressly relate to a specified date, in which case such
representations and warranties are hereby reaffirmed as true and correct as of the date when
made.

     (c) No Event of Default, etc. No condition or event has occurred or exists which
constitutes or which, after notice or lapse of time or both, would constitute a Default or
an Event of Default.

     (d) Compliance. The Borrower and each of its Subsidiaries is in full compliance with
all covenants and agreements contained in the Credit Agreement, as amended hereby, and each
of the other Credit Documents to which they are a party, and without limitation of the
foregoing, each Subsidiary of the Borrower which as of the date hereof is required to be a
Subsidiary Guarantor, has as on or prior to the date hereof become a Subsidiary Guarantor
under the Subsidiary Guaranty.

         SECTION 5. MISCELLANEOUS.

          5.1 Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of
the Borrower, each Lender, the Administrative Agent and the Collateral Agent and each of their
respective permitted successors and assigns.

          5.2 Survival of Representations and Warranties. All representations and warranties made in
this Amendment shall survive the execution and delivery of this Amendment, and no investigation by
the Administrative Agent or any Lender or any subsequent Loan or issuance of a Letter of Credit
shall affect the representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.

          5.3 Reference to Credit Agreement. The Credit Agreement and any and all other agreements,
instruments or documentation now or hereafter executed and delivered pursuant to the terms of the
Credit Agreement as amended hereby, are hereby amended so that any reference therein to the Credit
Agreement shall mean a reference to the Credit Agreement as amended hereby.

          5.4 Expenses. As provided in the Credit Agreement, but without limiting any terms or
provisions thereof, the Borrower agrees to pay on demand all reasonable costs and expenses incurred
by the Administrative Agent in connection with the preparation, negotiation,
and execution of this Amendment, including without limitation the reasonable costs and fees of
the Administrative Agent’s special legal counsel, regardless of whether this Amendment becomes
effective in accordance with the terms hereof, and all costs and expenses incurred by

6

 

the
Administrative Agent or any Lender in connection with the enforcement or preservation of any rights
under the Credit Agreement, as amended hereby.

          5.5 Severability. Any term or provision of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment and the effect thereof shall be confined to the term or provision so held to be invalid
or unenforceable.

          5.6 Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
OHIO, NOTWITHSTANDING ITS CONFLICTS OF LAWS RULES. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
JURISDICTION OTHER THAN THE STATE OF OHIO GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT
DOCUMENTS.

          5.7 Headings. The headings, captions and arrangements used in this Amendment are for
convenience only and shall not affect the interpretation of this Amendment.

          5.8 Entire Agreement. This Amendment is specifically limited to the matters expressly set
forth herein. This Amendment and all other instruments, agreements and documentation executed and
delivered in connection with this Amendment embody the final, entire agreement among the parties
hereto with respect to the subject matter hereof and supersede any and all prior commitments,
agreements, representations and understandings, whether written or oral, relating to the matters
covered by this Amendment, and may not be contradicted or varied by evidence of prior,
contemporaneous or subsequent oral agreements or discussions of the parties hereto. There are no
oral agreements among the parties hereto relating to the subject matter hereof or any other subject
matter relating to the Credit Agreement.

          5.9 Jury Trial Waiver. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AMENDMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OR ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATION IN THIS SECTION.

          5.10 Counterparts. This Amendment may be executed by the parties hereto separately in one or
more counterparts, each of which when so executed shall be deemed to be an original, but all of
which when taken together shall constitute one and the same agreement.

(Signature pages follow.)

7

 

     IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first
above written.

	 	 	 	 	 
	OM GROUP, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:

Title:	 	 
	 
	 	 	 	 
	NATIONAL CITY BANK,	 	 
	 

	 	Individually as a Lender, the Swing Line
Lender, the Letter of Credit Issuer, and in its capacity as the
Administrative Agent and the Collateral Agent, and the Arranger	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:

Title:	 	 
	 
	 	 	 	 
	KEYBANK NATIONAL ASSOCIATION,	 	 
	 

	 	as a Lender	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:

Title:	 	 
	 
	 	 	 	 
	JPMORGAN CHASE BANK, N.A.,	 	 
	 

	 	as a Lender	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:

Title:	 	 

 

 

ACKNOWLEDGMENT, CONSENT AND RATIFICATION

     For the avoidance of doubt, and without limitation of the intent and effect of sections 6 and
10 of the Subsidiary Guaranty (as such term is defined in the Credit Agreement referred to in the
Amendment No. 2 to Revolving Credit Agreement (the “Amendment”), to which this Acknowledgment,
Consent and Ratification (this “Acknowledgment”) is appended), each of the undersigned hereby
unconditionally and irrevocably (i) acknowledges receipt of a copy of the Credit Agreement and the
Amendment, and (ii) consents to all of the terms and provisions of the Credit Agreement as amended
by the Amendment.

     Each of the undersigned hereby reaffirms, as of the Second Amendment Effective Date, (i) the
covenants and agreements made by the undersigned contained in each Credit Document to which it is a
party, in each case, as such covenants and agreements may be modified by the Amendment, (ii) its
guarantee of the Obligations pursuant to the Subsidiary Guaranty, and (iii) its pledges and other
grants of Liens in respect of the Obligations pursuant to the applicable Credit Documents to which
such Person is a party.

     Each of the undersigned hereby represents and warrants that, immediately after giving effect
to the Amendment, each Credit Document, in each case as modified by the Amendment (where
applicable), to which it is a party continues to be a legal, valid and binding obligation of the
undersigned, enforceable against such party in accordance with its terms (except, in any case, as
such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar
law affecting creditors’ rights generally and by principles of equity).

     Each of the undersigned further confirms that each Credit Document, as modified by the
Amendment (where applicable), to which it is a party is and shall continue to be in full force and
effect and the same are hereby ratified and confirmed in all respects, except that upon the
occurrence of the Second Amendment Effective Date, all references in such Credit Documents to the
“Credit Agreement”, “Credit Documents”, “thereunder”, “thereof”, or words of similar import shall
mean the Credit Agreement and the other Credit Documents, as the case may be, in each case after
giving effect to the amendments and other modifications provided for in the Amendment.

     Capitalized terms which are used herein without definition shall have the respective meanings
ascribed thereto in the Credit Agreement referred to herein or the Second Amendment, as applicable.
This Acknowledgment is for the benefit of the Lenders and the Administrative Agent, and their
respective successors and assigns. This Acknowledgment shall be binding upon the successors and
assigns of each of the undersigned. This Acknowledgment, Consent and Ratification may be executed
by any of the undersigned in separate counterparts, each of which shall be an original and all of
which together shall constitute one and the same instrument.

     JURY TRIAL WAIVER. EACH OF THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS ACKNOWLEDGMENT
AND OR THE FOREGOING AMENDMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING, WITHOUT LIMITATION, ANY
AMENDMENTS, WAIVERS OR OTHER MODIFICATIONS RELATING TO ANY OF THE FOREGOING), OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR

 

 

THEREBY. EACH OF THE UNDERSIGNED HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING JURY TRIAL WAIVER, AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES TO THIS ACKNOWLEDGMENT AND THE SECOND AMENDMENT HAVE BEEN INDUCED TO ENTER
INTO THIS ACKNOWLEDGEMENT AND THE SECOND AMENDMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS SET FORTH IN THIS PARAGRAPH.

(Signature page follows.)

 

 

     IN WITNESS WHEREOF, each of the undersigned has duly executed and delivered this
Acknowledgment, Consent and Ratification as of the date of the Amendment referred to herein.

	 	 	 
	 

	 	OMG AMERICAS, INC.,
	 

	 	          as a Guarantor
	 

	 	OMG FIDELITY, INC.,
	 

	 	          as a Guarantor
	 

	 	OMG JETT, INC.,
	 

	 	          as a Guarantor
	 

	 	OM HOLDINGS, INC.,
	 

	 	          as a Guarantor
	 

	 	OMG KG HOLDINGS, INC.,
	 

	 	          as a Guarantor

	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	as an officer, on behalf of	 	 
	 

	 	 	 	each of the above corporations<PAGE>

                                                                  Exhibit 10 (b)

                                                                  EXECUTION COPY

                                Eaton Corporation
                         2006 Annual Report on Form 10-K
                                   Item 15 (b)

================================================================================

                               PURCHASE AGREEMENT

                                     Between

                             V.G.A.T. INVESTORS, LLC

                                       and

                                EATON CORPORATION

                          Dated as of December 24, 2006

================================================================================

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                     Page
<S>                                                                                                                  <C>
Article I. DEFINITIONS...........................................................................................      1

         Section 1.1.      Certain Definitions...................................................................      1
         Section 1.2.      Terms Generally.......................................................................     12

Article II. PURCHASE AND SALE OF THE SHARES......................................................................     12

         Section 2.1.      Purchase and Sale of the Shares.......................................................     12
         Section 2.2.      Purchase Price........................................................................     12
         Section 2.3.      Estimated Purchase Price Adjustment...................................................     12
         Section 2.4.      Post-Closing Purchase Price Adjustment................................................     13
         Section 2.5.      Closing...............................................................................     15
         Section 2.6.      Closing Deliveries....................................................................     15
         Section 2.7.      Satisfaction of Conditions............................................................     16
         Section 2.8.      Transfer Taxes........................................................................     16
         Section 2.9.      Reorganization Taxes..................................................................     16

Article III. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY GROUP..........................................     18

         Section 3.1.      Organization of the Company and the Company Group.....................................     18
         Section 3.2.      Noncontravention......................................................................     18
         Section 3.3.      Title to Shares.......................................................................     19
         Section 3.4.      Subsidiaries of the Company; Capitalization...........................................     19
         Section 3.5.      Government Authorizations.............................................................     20
         Section 3.6.      Financial Statements; Securities Filings..............................................     20
         Section 3.7.      Absence of Certain Changes............................................................     21
         Section 3.8.      Tax Matters...........................................................................     21
         Section 3.9.      Real Property.........................................................................     23
         Section 3.10.     Intellectual Property.................................................................     23
         Section 3.11.     Environmental Matters.................................................................     24
         Section 3.12.     Contracts.............................................................................     25
         Section 3.13.     Insurance.............................................................................     27
         Section 3.14.     Litigation............................................................................     28
         Section 3.15.     Employee Matters......................................................................     28
         Section 3.16.     Legal Compliance......................................................................     31
         Section 3.17.     Licenses and Permits..................................................................     31
         Section 3.18.     Brokers' Fees.........................................................................     31
         Section 3.19.     No Undisclosed Liabilities............................................................     32
         Section 3.20.     Internal Controls and Procedures......................................................     32
         Section 3.21.     Transactions with Affiliates..........................................................     32
         Section 3.22.     Customers and Suppliers...............................................................     33
         Section 3.23.     Warranties............................................................................     33
         Section 3.24.     List of Government Contracts, Subcontracts and Bids...................................     33
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         Section 3.25.     Compliance, Performance, Termination and Breach of Government Contracts...............     34
         Section 3.26.     Internal Controls, Audits and Investigations..........................................     35
         Section 3.27.     Debarment, Suspension and Exclusion...................................................     35
         Section 3.28.     Absence of Unlawful Payments..........................................................     35
         Section 3.29.     No Undisclosed Liabilities of Carter Ground Fueling, Ltd..............................     35
         Section 3.30.     NO ADDITIONAL REPRESENTATIONS.........................................................     36

Article IV. REPRESENTATIONS AND WARRANTIES REGARDING SELLER......................................................     36

         Section 4.1.      Organization..........................................................................     36
         Section 4.2.      Authorization.........................................................................     36
         Section 4.3.      Noncontravention......................................................................     37
         Section 4.4.      Brokers' Fees.........................................................................     37

Article V. REPRESENTATIONS AND WARRANTIES REGARDING BUYER........................................................     37

         Section 5.1.      Organization..........................................................................     37
         Section 5.2.      Authorization.........................................................................     37
         Section 5.3.      Financial Capacity....................................................................     38
         Section 5.4.      Noncontravention......................................................................     38
         Section 5.5.      Government Authorizations.............................................................     38
         Section 5.6.      Litigation............................................................................     38
         Section 5.7.      Brokers' Fees.........................................................................     38
         Section 5.8.      Investment............................................................................     39
         Section 5.9.      Information...........................................................................     39

Article VI. COVENANTS............................................................................................     39

         Section 6.1.      Conduct of the Company................................................................     39
         Section 6.2.      Access to Information.................................................................     42
         Section 6.3.      Commercially Reasonable Efforts.......................................................     43
         Section 6.4.      HSR Act Compliance; Government Approvals..............................................     43
         Section 6.5.      Public Announcements..................................................................     44
         Section 6.6.      Notification of Certain Matters.......................................................     45
         Section 6.7.      Post-Closing Access; Preservation of Records..........................................     45
         Section 6.8.      Further Assurances....................................................................     46
         Section 6.9.      Director and Officer Indemnification..................................................     46
         Section 6.10.     Exclusivity...........................................................................     46
         Section 6.11.     Reorganization........................................................................     47
         Section 6.12.     Severance and Transaction Bonus Payments..............................................     48
         Section 6.13.     Split-Dollar Life Insurance Policy....................................................     48
         Section 6.14.     Pre Closing Financials................................................................     48
         Section 6.15.     Cooperation with Davis Litigation and LETS Dispute....................................     48
         Section 6.16.     Support for Indemnification Obligations...............................................     49
         Section 6.17.     280G Compliance.......................................................................     49
         Section 6.18.     Insurance Policies....................................................................     50
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                                                                                                                  <C>
Article VII. CONDITIONS TO CLOSING...............................................................................     50

         Section 7.1.      Conditions Precedent to Obligations of Buyer and Seller...............................     50
         Section 7.2.      Conditions Precedent to Obligation of Seller..........................................     50
         Section 7.3.      Conditions Precedent to Obligations of Buyer..........................................     51

Article VIII. LIMITATIONS........................................................................................     52

         Section 8.1.      Waiver of Damages.....................................................................     52
         Section 8.2.      Consequential Damages.................................................................     52

Article IX. INDEMNIFICATION......................................................................................     53

         Section 9.1.      General Indemnification by Seller.....................................................     53
         Section 9.2.      General Indemnification by Buyer......................................................     53
         Section 9.3.      Certain Limitations...................................................................     54
         Section 9.4.      Indemnification Procedures............................................................     56
         Section 9.5.      Exclusive Remedy......................................................................     58
         Section 9.6.      Mitigation............................................................................     58

Article X. TERMINATION...........................................................................................     58

         Section 10.1.     Termination Events....................................................................     58
         Section 10.2.     Effect of Termination.................................................................     58

Article XI. MISCELLANEOUS........................................................................................     59

         Section 11.1.     Parties in Interest...................................................................     59
         Section 11.2.     Assignment............................................................................     59
         Section 11.3.     Notices...............................................................................     59
         Section 11.4.     Amendments and Waivers................................................................     61
         Section 11.5.     Exhibits and Disclosure Schedule......................................................     61
         Section 11.6.     Headings..............................................................................     61
         Section 11.7.     Construction..........................................................................     61
         Section 11.8.     No Other Representations or Warranties................................................     61
         Section 11.9.     Entire Agreement......................................................................     62
         Section 11.10.    Severability..........................................................................     62
         Section 11.11.    Expenses..............................................................................     62
         Section 11.12.    Governing Law.........................................................................     63
         Section 11.13.    Consent to Jurisdiction; Waiver of Jury Trial.........................................     63
         Section 11.14.    Specific Performance..................................................................     63
         Section 11.15.    Counterparts..........................................................................     64
</TABLE>

EXHIBITS

Exhibit A - Form of Release
Exhibit B - Form of Lease

                                       3
<PAGE>

DISCLOSURE SCHEDULES

<TABLE>
<S>                        <C>
Schedule 2.3(a)            Purchase Price Adjustment

Schedule 3.1               Organization

Schedule 3.2               Noncontravention

Schedule 3.3               Title to Shares

Schedule 3.4(a)            Subsidiaries of the Company; Capitalization

Schedule 3.4(b)            Subsidiaries of the Company; Capitalization

Schedule 3.4(c)            Capital Stock

Schedule 3.6               Financial Statements

Schedule 3.7               Absence of Certain Changes

Schedule 3.8               Past Tax Returns

Schedule 3.8(k)            Section 280G Matters

Schedule 3.9(b)            Leased Real Property

Schedule 3.10(a)           Intellectual Property

Schedule 3.10(b)           Intellectual Property

Schedule 3.11              Environmental Matters

Schedule 3.12(a)(i)-(xx)   Material Contracts

Schedule 3.13              Insurance

Schedule 3.14              Litigation

Schedule 3.15(a)           Employee Benefit Plans

Schedule 3.15(g)           Defined Benefit Plans

Schedule 3.15(i)           Employee Welfare Benefit Plan

Schedule 3.15(j)           Foreign Plans

Schedule 3.15(k)           Labor Relations

Schedule 3.15(l)           Triggering Events

Schedule 3.15(n)           Employees

Schedule 3.18              Brokers' Fees

Schedule 3.19              No Undisclosed Liabilities

Schedule 3.21              Transactions with Affiliates

Schedule 3.22              Customers and Suppliers

Schedule 3.23              Warranties

Schedule 3.24              Government Contracts, Subcontracts and Bids

Schedule 3.25              Compliance Regarding Government Contracts and Bids
</TABLE>

                                       4
<PAGE>

<TABLE>
<S>                        <C>
Schedule 3.26              Internal Controls, Audits and Investigations

Schedule 3.29              No Undisclosed Liabilities of Carter Ground Fueling, Ltd.

Schedule 4.3               Noncontravention

Schedule 4.4               Brokers' Fees

Schedule 6.1               Conduct of the Company

Schedule 6.11(a)           Reorganization

Schedule 6.12              Severance and Transaction Bonus Payments

Schedule 6.13              Split-Dollar Insurance Policy

Schedule 7.3(e)            Consents and Approvals

Schedule 7.3(f)            Payoff Letters
</TABLE>

                                       5
<PAGE>

                               PURCHASE AGREEMENT

      Purchase Agreement, dated as of December 24, 2006, by and between V.G.A.T.
Investors, LLC, a limited liability company organized under the laws of Delaware
("Seller"), and Eaton Corporation, an Ohio corporation ("Buyer"). Seller and
Buyer are referred to collectively herein as the "Parties."

                                   WITNESSETH

      WHEREAS, Seller owns all of the issued and outstanding shares of common
stock (the "Shares") in AT Holdings Corporation, a Delaware corporation (the
"Company");

      WHEREAS, Seller and Buyer intend that Seller shall retain certain assets
that are currently held by the Company or one of its Subsidiaries, as defined
herein as the Excluded Assets;

      WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of the Shares, on the terms and subject to the conditions set
forth in this Agreement; and

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises herein made, and in consideration of the representations and
warranties, herein contained, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Parties hereto,
intending to become legally bound, hereby agree as follows:

                                   Article I.

                                  DEFINITIONS

      Section 1.1. Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:

      "9.25% Notes" means the 9.25% notes issued under the Indenture, dated as
of June 23, 2004, among Argo-Tech, the Subsidiary Guarantors (as defined
therein) and BNY Midwest Trust Company, as Trustee.

      "11.75% Notes" means the 11.75% notes issued under and the Indenture,
dated as of October 28, 2005, between the Company and the Bank of New York Trust
Company, N.A., as Trustee.

      "ACS Spin-Off" means each of the creation of Aviation Component Solutions,
Inc. ("ACSI"), the contribution of assets and Liabilities to ACSI and the
distribution of the stock of ACSI to or from a member of the Company Group.

      "ACSI" has the meaning set forth in the definition of ACS Spin-Off.

<PAGE>

      "Action" means any action, charge, complaint, material grievance,
arbitration, investigation, suit, claim or other proceeding, at law or in
equity, by or before any court or other Governmental Authority.

      "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

      "Agreement" means this Purchase Agreement, including all Exhibits and
Schedules hereto (including the Disclosure Schedule), as the same may be
amended, modified or supplemented from time to time in accordance with its
terms.

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

      "Argo-Tech" means Argo-Tech Corporation, a Delaware corporation.

      "ATC Costa Mesa" has the meaning set forth in the definition of Excluded
Assets.

      "ATC (HBP)" has the meaning set forth in the definition of Excluded
Assets.

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

      "Balance Sheet Date" means October 28, 2006.

      "Basket Damages" has the meaning set forth in Section 9.3(b).

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

      "Bonus Payments" has the meaning set forth in Section 6.12.

      "Business Day" means any day other than Saturday, Sunday or any other day
on which banking institutions in New York are not open for the transaction of
normal banking business.

      "Buyer" has the meaning set forth in the preamble to this Agreement.

      "Buyer Group" has the meaning set forth in Section 9.1.

      "Buyer's Surviving Representations" has the meaning set forth in Section
9.2.

      "Capitalized Lease Obligations" means, with respect to any Person, for any
applicable period, the obligations of such Person under a lease that are
required to be classified and accounted for as capital lease obligations under
GAAP, and the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.

      "Cash" means at any particular time, all cash and cash equivalents of the
Company Group, determined in accordance with GAAP, other than any cash and cash
equivalents subject to any Lien or any limitation on repatriation to the United
States or similar limitation.

                                       2
<PAGE>

      "Closing" has the meaning set forth in Section 2.5.

      "Closing Adjustment Statement" has the meaning set forth in Section
2.4(a).

      "Closing Cash" has the meaning set forth in Section 2.4(a).

      "Closing Date" means the date the Closing occurs pursuant to Section 2.5.

      "Closing Debt" has the meaning set forth in Section 2.4(a).

      "Closing Working Capital" has the meaning set forth in Section 2.4(a).

      "COBRA" means Part 6 of Subtitle B of Title I of ERISA, section 4980B of
the Code, and any similar state Law.

      "Code" means the United States Internal Revenue Code of 1986, as amended.

      "Commission" has the meaning set forth in Section 3.6(b).

      "Company" has the meaning set forth in the recitals to this Agreement.

      "Company Group" means the Company and the Company's Subsidiaries but
excludes the entities and assets included in the Excluded Assets and the
Excluded Liabilities.

      "Company Intellectual Property" has the meaning set forth in Section
3.10(b).

      "Company Plans" has the meaning set forth in Section 3.15(a).

      "Consents" means consents, approvals, exemptions, waivers, authorizations,
filings, registrations and notifications.

      "Control" means, with respect to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
partnership interests, by contract or otherwise.

      "Costa Mesa Property" has the meaning set forth in the definition of
Excluded Assets.

      "Credit Agreement" means the Fourth Amended and Restated Credit Agreement,
dated as of September 13, 2005, between Argo-Tech, National City Bank, as
Administrative Agent, and the other signatories thereto.

      "Cryogenics" has the meaning set forth in the definition of Excluded
Assets.

      "Current Policy" has the meaning set forth in Section 6.18.

      "Damages" means all losses, claims, damages, payments, penalties, fines,
interest, Taxes, Liabilities, costs and expenses (including costs and expenses
of Actions, amounts paid in

                                       3
<PAGE>

connection with any assessments, judgments or settlements relating thereto,
interest and penalties recovered by a third party with respect thereto and
out-of pocket expenses and reasonable attorneys', experts', consultants' and
other representatives' fees and expenses reasonably incurred in defending
against any such Actions or in enforcing a Party's rights hereunder).

      "Davis Litigation" has the meaning set forth in the definition of Excluded
Assets.

      "De Minimis Amount" has the meaning set forth in Section 9.3(b).

      "Disclosure Schedule" means the disclosure schedule delivered by Seller to
Buyer on the date hereof.

      "Effective Time" has the meaning set forth in Section 2.5.

      "Environmental Laws" means any Law existing on the date hereof concerning
(i) pollution or protection of the environment or (ii) exposure of persons to
toxic or hazardous substances; provided, however, that the term "Environmental
Law" shall not include any Law relating to worker safety matters to the extent
not related to exposure to Hazardous Materials.

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

      "ERISA Affiliate" means any Person that at any relevant time is considered
a single employer with the Company Group under section 414 of the Code.

      "Estimated Cash" has the meaning set forth in Section 2.3(a).

      "Estimated Debt" has the meaning set forth in Section 2.3(a).

      "Estimated Reorganization Taxes" means the amount of the Reorganization
Taxes, as estimated in good faith by the Company's accountants, in consultation
with Buyer's accountants, prior to the Closing.

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

      "Excluded Assets" means: (i) the cryogenics division of Argo-Tech
Corporation Costa Mesa, a California corporation wholly-owned by Argo-Tech ("ATC
Costa Mesa", and the cryogenics division, "Cryogenics"), the assets and
liabilities of which are identified on Section 6.11(i) of the Disclosure
Schedule; (ii) the real property located at 671 West Seventeenth Street, Costa
Mesa, California 92627 owned by ATC Costa Mesa (the "Costa Mesa Property");
(iii) Argo-Tech Corporation (HBP), a Delaware corporation wholly-owned by
Argo-Tech ("ATC (HBP)"); (iv) Argo Tracker Corporation, a Delaware corporation
wholly-owned by the Company; and (v) J.C. Carter Japan K.K., a Japanese limited
liability company wholly-owned by ATC Costa Mesa ("JKK"). The Excluded Assets
will also include all Intellectual Property that would otherwise constitute
Company Intellectual Property but that primarily relates to, or is used in the
business of or otherwise in connection with, any of the Excluded Assets
identified in the prior sentence, subject to a worldwide, royalty-free, fully
paid-up, non-exclusive right and license to Buyer and its Affiliates to use and
sublicense such Intellectual Property in connection with the business of the
Company Group and the business of Buyer and its Affiliates as of the

                                       4
<PAGE>

date hereof, including (A) a worldwide, royalty-free, fully paid-up,
non-exclusive right and license to use and sublicense the "Carter" name and Mark
and the "J.C. Carter" name and Mark in connection with the current businesses of
Cryogenics and JKK and (B) a worldwide, royalty-free, fully paid-up,
non-exclusive right and license to use the "Argo-Tech" name and Mark on existing
inventory of stationary, signage and similar items, but only for a transitional
period after the Closing Date. Notwithstanding the above, the term "Excluded
Assets" shall not include the Company Plans (as defined in Section 3.15(a)) or
any assets related thereto.

      "Excluded Assets Distribution" has the meaning set forth in Section
6.16(a).

      "Excluded Liabilities" means any and all Liabilities arising from or
related to: (i) the ownership, use or operation of the assets or business
constituting the Excluded Assets or of any entity the stock or other equity
interests of which is included in the Excluded Assets; (ii) the Reorganization
(including any Taxes arising out of or related thereto); (iii) the ACS Spin-Off
and the ownership, use or operation of the assets or business of ACSI by any
member of the Company Group; (iv) Brian Davis, et al. v. Argo-Tech Corporation,
et al. (Cuyahoga County Court of Common Pleas, Case No. 05 CV 552002) (the
"Davis Litigation") and (v) the contract dispute between Carter Ground Fueling,
Ltd. and Leading Edge Technologies Services LLC, a Dubai based IT services
company ("LETS Dispute"); provided that in no event will the Excluded
Liabilities include any Liabilities for: (A) Taxes (except as expressly set
forth in this Agreement); (B) any breach of Environmental Law or any permit or
other authorization required by any Environmental Law; (C) any Action brought
pursuant to any Environmental Law, any disposal or release of Hazardous
Materials, or that otherwise relate to pollution or protection of the
environment or the exposure of persons to toxic or hazardous substances; or (D)
the Company Plans (as defined in Section 3.15(a)) or any Liabilities related
thereto.

      "Expected Payment" has the meaning set forth in Section 3.8(k).

      "Expiration Date" has the meaning set forth in Section 10.1(b).

      "Expired Policy" has the meaning set forth in Section 6.18.

      "Final Closing Adjustment Statement" has the meaning set forth in Section
2.4(f).

      "Final Reorganization Taxes Statement" has the meaning set forth in
Section 2.9(h).

      "Financial Statements" has the meaning set forth in Section 3.6(a).

      "Foreign Plans" has the meaning set forth in Section 3.15(j).

      "Fundamental Representations" has the meaning set forth in Section 9.1.

      "GAAP" means United States generally accepted accounting principles
consistently applied.

      "Giveback Provision" has the meaning set forth in Section 6.16(a).

                                       5
<PAGE>

      "Government Bid" means any bid, offer, proposal or response to
solicitation that, if accepted or awarded, would result in the establishment of
a Government Contract.

      "Government Contract" means any contract, agreement, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, blanket
purchase agreement, letter agreement, purchase order, delivery order, task
order, grant, cooperative agreement, change order or other commitment or funding
vehicle that exists between any member of the Company Group and (i) any
Governmental Authority, (ii) any prime contractor to any Governmental Authority
or (iii) any subcontractor with respect to any contract described in clause (i)
or (ii).

      "Governmental Authority" means any US or foreign federal, state or local
government, court of competent jurisdiction, administrative agency or commission
or other governmental or regulatory authority or instrumentality.

      "Hazardous Materials" means (i) asbestos, polychlorinated biphenyls or
petroleum, (ii) any substance that requires removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous waste" or
"hazardous substance" by any Environmental Law, or (iii) any substance, material
or waste that is regulated by any Environmental Law because it is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous.

      "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

      "Indebtedness" means, without duplication: (i) all indebtedness of the
Company Group for borrowed money, whether current, short-term, or long-term,
secured or unsecured (including all obligations for principal and accrued but
unpaid interest, but excluding prepayment premiums, penalties, breakage costs
and other similar obligations, and also excluding trade accounts payable); (ii)
all indebtedness of the Company Group for the deferred purchase price for
purchases of property outside the ordinary course of business that is not
evidenced by trade accounts payables; (iii) any payment or obligations of the
Company Group in respect of letters of credit (other than stand-by letters of
credit in support of ordinary course trade payables); (iv) any Liability of the
Company Group with respect to interest rate swaps, collars, caps and similar
hedging obligations; (v) any Capitalized Lease Obligations of the Company Group;
(vi) any indebtedness referred to in clauses (i) through (v) above that is
directly or indirectly guaranteed by any member of the Company Group and (v) to
the extent not paid at or prior to Closing, the Bonus Payments.

      "Indemnified Claim" has the meaning set forth in Section 9.4(f).

      "Indemnified Officers" has the meaning set forth in Section 6.9.

      "Indemnified Party" has the meaning set forth in Section 9.2.

      "Indemnifying Party" has the meaning set forth in Section 9.2.

      "Indemnity Reduction Amounts" has the meaning set forth in Section 9.3(c).

                                       6
<PAGE>

      "Indentures" mean, collectively, the Indenture, dated as of June 23, 2004,
among Argo-Tech, the Subsidiary Guarantors (as defined therein) and BNY Midwest
Trust Company, as Trustee, and the Indenture, dated as of October 28, 2005,
between the Company and the Bank of New York Trust Company, N.A., as Trustee.

      "Injunction" has the meaning set forth in Section 6.3.

      "Intellectual Property" means all: (a) patents and patent applications,
together with reissues, continuations, continuations-in-part, revisions,
divisionals, extensions and reexaminations thereof; (b) trademarks, service
marks, trade dress, logos, trade names and Internet domain names, and
applications, registrations, and renewals in connection therewith, and all
goodwill associated therewith (collectively, "Marks"); (c) copyrights, whether
registerered or unregistered and all other rights corresponding, registrations
and applications thereof); (d) trade secrets, research records, processes,
procedures, formulae, know-how, engineering process, records of invention,
customer lists and related customer information, databases, confidential
business information, copyrightable work, technology, blue prints, designs,
plans, invention disclosures, inventions (whether or not patentable or reduced
to practice), in each case to the extent protectable under applicable Law; and
(e) computer software (including source code, data, databases and related
documentation).

      "International Competition Laws" has the meaning set forth in Section
6.4(c).

      "Inventory" means inventory of raw materials, work in process, finished
goods, packaging materials and supplies and related items, including all
inventory (as defined in the Uniform Commercial Code in effect in the State of
Ohio as of the date hereof), in each case whether on hand or in transit and
including inventory on consignment to customers.

      "JKK" has the meaning set forth in the definition of Excluded Assets.

      "Knowledge" means: (i) with respect to Seller, the actual knowledge, or
the knowledge one would be expected to have after reasonable inquiry and
investigation with respect to matters within the scope of one's employment
and/or assigned duties, of Michael Lipscomb, Paul R. Keen, Frank Dubey, Richard
T. Walker, John S. Glover, Chris Michael and Catherine Kramer, and, solely with
respect to Section 3.15 and the benefit related provisions of Section 3.8,
Sharon Iafelice and Michelle McCormick; and (ii) with respect to Buyer, the
actual knowledge, or the knowledge one would be expected to have after
reasonable inquiry and investigation with respect to matters within the scope of
one's employment and/or assigned duties, of David S. Barrie, Ken D. Semelsberger
and Mary E. Huber.

      "Laws" means all applicable federal, state, local and foreign laws,
statutes, constitutions, rules, regulations, ordinances and similar provisions
having the force of law and all judgments, rulings, orders, decrees,
injunctions, guidance and guidelines of Governmental Authorities.

      "Leased Real Property" has the meaning set forth in Section 3.9(b).

                                       7
<PAGE>

      "Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due).

      "Licenses" means licenses, permits, consents, approvals, authorizations,
registrations, qualifications and certifications of any governmental or
administrative agency or authority (whether federal, state or local) and
accrediting bodies.

      "Lien" means any mortgage, pledge, lien, encumbrance, restriction, option,
charge, claim, easement, deed of trust, mortgage, conditional sales agreement,
right of first refusal or other security interest or restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership,
voluntarily incurred or arising by operation of law.

      "LLC Agreement" has the meaning set forth in Section 6.16(a).

      "Marks" has the meaning set forth in the definition of Intellectual
Property.

      "Material Adverse Effect" means: (a) with respect to the Company Group, an
event, factor, circumstance, development, condition, change, effect, fact or
occurrence having, individually or in the aggregate, a material adverse effect
on: (A) the business, operations, assets, Liabilities or condition (financial or
otherwise), or results of operations, of the Company Group, taken as a whole,
excluding, in each case, any such event, factor or occurrence resulting from or
arising out of or in connection with (i) general economic, industry or market
events, occurrences, developments, circumstances or conditions, (ii) changes in
applicable Laws, (iii) changes in accounting principles that are required to be
made by the Company Group under GAAP, (iv) changes in political conditions
(including acts of war, whether or not declared, armed hostilities or terrorism
unless in any such case causing material damage to the facilities of the Company
Group), (v) the public announcement of the transactions contemplated by this
Agreement (other than the Reorganization), or (vi) any action permitted under
this Agreement or taken with the consent of the Buyer, except in the case of
each of clauses (i) and (ii), to the extent the Company Group is affected in a
disproportionate manner as compared to other Persons engaged in the businesses
in which the Company Group is engaged; or (B) the ability of Seller or the
Company Group to perform its obligations under, or to consummate the
transactions contemplated by, this Agreement; and (b) with respect to Buyer, a
material adverse effect on the ability of Buyer to perform its obligations
under, or to consummate the transaction contemplated by, this Agreement.

      "Material Contracts" has the meaning set forth in Section 3.12.

      "Merger" means the transactions consummated in connection with the
Agreement and Plan of Merger, dated as of September 13, 2005, among the Company,
Argo-Tech, Greatbanc Trust Company, as Trustee for the Argo-Tech Corporation
Employee Stock Ownership Plan, Seller and Vaughn Merger Sub, Inc.

      "Nonassignable Policy" has the meaning set forth in Section 6.18.

                                       8
<PAGE>

      "Non-Company Software" means any and all third party software,
applications and modules, whether in source code or object code, licensed to,
used by or held for use by any member of the Company Group.

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

      "Open Source Software" means computer software or firmware that is
distributed at no charge or under a compulsory license agreement (including but
not limited to the GNU General Public License, GNU Lesser General Public
License, Mozilla Public License, and Eclipse Public License) that requires the
licensee to (i) include the source code of such software or firmware with any
distribution of such software or firmware, (ii) distribute any modifications of
such software or firmware under such license agreement, and/or (iii) permit the
licensee's downstream licensees to modify such software or firmware.

      "Other Parties" has the meaning set forth in Section 3.12(b).

      "Owned Real Property" means all land, together with all buildings,
structures, improvements and fixtures located thereon, and all easements and
other rights and interests appurtenant thereto, owned by a member of the Company
Group and used in the Company's business.

      "Parties" has the meaning set forth in the preamble to this Agreement.

      "Permitted Liens" means any: (a) mechanic's, materialmen's, laborer's,
workmen's, repairmen's, carrier's and similar Liens, including all statutory
Liens, arising or incurred in the ordinary course of business for amounts not
delinquent; (b) Liens for Taxes, assessments and other governmental charges not
yet due and payable as of the Closing Date or, if so due, (i) not delinquent or
(ii) being contested in good faith through appropriate proceedings; (c) purchase
money Liens and Liens securing rental payments under capital lease arrangements;
(d) pledges or deposits under workers' compensation legislation, unemployment
insurance Laws or similar Laws; (e) zoning, building codes and other land use
Laws regulating the use or occupancy of real property or the activities
conducted thereon which are imposed by any Governmental Authority having
jurisdiction over such real property, which are not materially violated by the
current use or occupancy of such real property or the operation of the Company
Group thereon; (f) all exceptions, restrictions, easements, charges,
rights-of-way and monetary and nonmonetary encumbrances which are set forth in
any permits, licenses, governmental authorizations, registrations or approvals
listed in the Disclosure Schedule; and (g) Liens that do not materially
interfere with the use of any asset that is material to the business conducted
by the Company Group.

      "Person" means an individual, partnership, limited liability partnership,
corporation, limited liability company, association, joint stock company, trust,
estate, joint venture, unincorporated organization, or governmental entity (or
any department, agency, or political subdivision thereof).

      "Proposed Reorganization Taxes Statement" has the meaning set forth in
Section 2.9(c).

                                       9
<PAGE>

      "Public Reports" has the meaning set forth in Section 3.6(b).

      "Purchase Price" means $695,000,000, subject to adjustment as set forth in
Article II.

      "Real Property Leases" has the meaning set forth in Section 3.9(b).

      "Remedies Exception" means (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other Laws of general application, heretofore or
hereafter enacted or in effect, affecting the rights and remedies of creditors
generally, and (ii) the exercise of judicial or administrative discretion in
accordance with general equitable principles, particularly as to the
availability of the remedy of specific performance or other injunctive relief.

      "Reorganization" has the meaning set forth in Section 6.11(a).

      "Reorganization Taxes" means the net amount of Taxes payable by the
Company or any of its Subsidiaries solely as a result of (i) the transactions
constituting the Reorganization (as described in Section 6.11(a) of the
Disclosure Schedule) and (ii) the ACS Spin-Off (for the avoidance of doubt,
taking into account any item of loss or expense generated by any aspect of the
Reorganization or the ACS Spin-Off).

      "Reorganization Taxes Indemnification Period" has the meaning set forth in
Section 9.3(d).

      "Right" means any option, warrant, convertible or exchangeable security or
other right, however denominated, to subscribe for, purchase or otherwise
acquire any equity interest or other security of any class or any restricted
stock or phantom equity, with or without payment of additional consideration in
cash or property, either immediately or upon the occurrence of a specified date
or a specified event or the satisfaction or happening of any other condition or
contingency.

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

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

      "Seller" has the meaning set forth in the preamble to this Agreement.

      "Seller Group" has the meaning set forth in Section 9.2.

      "Seller's Surviving Representations" has the meaning set forth in Section
9.1.

      "Shares" has the meaning set forth in the recitals to this agreement.

      "Subsidiary," when used with respect to any Person, means any other Person
of which (a) in the case of a corporation, at least (i) a majority of the equity
or (ii) a majority of the voting interests are owned or Controlled, directly or
indirectly, by such first Person, by any one or more of its Subsidiaries, or by
such first Person and one or more of its Subsidiaries or (b) in the case of any
Person other than a corporation, such first Person, one or more of its
Subsidiaries,

                                       10
<PAGE>

or such first Person and one or more of its Subsidiaries (i) owns a majority of
the equity interests thereof or (ii) has the power to elect or direct the
election of a majority of the members of the governing body thereof.

      "Surviving Covenants" has the meaning set forth in Section 9.3(d).

      "Surviving Representations" has the meaning set forth in Section 9.2.

      "Tax" means any federal, state, local, or foreign tax, charge, duty, fee,
levy or other assessment, in each case imposed by a Governmental Authority,
including income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real or personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, and including any interest, penalty, or addition thereto.

      "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any extension,
schedule or attachment thereto, and including any amendment thereof, required to
be filed with any taxing authority.

      "Third Party Claim" has the meaning set forth in Section 9.4(a).

      "Threshold Amount" has the meaning set forth in Section 9.3(b).

      "Transaction Documents" means this Agreement and all other documents
delivered or required to be delivered by any Party pursuant to this Agreement.

      "Transfer Taxes" means all transfer or similar Taxes (excluding Taxes
measured by net income), including sales, real property, use, excise, stock
transfer, stamp, documentary, filing, recording, permit, license, authorization
and similar Taxes, filing fees and similar charges.

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

      "Unlawful Payment" has the meaning set forth in Section 3.28(a).

      "WARN Act" has the meaning set forth in Section 3.15(k).

      "Working Capital" means those categories of current assets and liabilities
of the Company Group identified as being included in working capital as set
forth in the "Working Capital" portion of Section 2.3(a) of the Disclosure
Schedule; provided that for purposes of determining Estimated Working Capital in
accordance with Section 2.3 and Closing Working Capital in accordance with
Section 2.4, accrued but unpaid income Taxes which shall take into account any
non-deductible payment under Section 280G of the Code and income Tax
receivables, net of any applicable valuation allowance, shall be included in the
calculation of "Working Capital" (for the avoidance of doubt, taking into
account any deduction, expense or loss attributable to the payment of the Bonus
Payments or the exercise or termination of all outstanding options to purchase
Shares or any Expected Payments for any Tax period ending on

                                       11
<PAGE>

or prior to the Closing Date). Also for the avoidance of doubt, Working Capital
shall exclude deferred Tax assets and Liabilities and the Excluded Assets and
Excluded Liabilities and shall include accrued income Taxes of the Excluded
Assets.

      Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The words "herein",
"hereof" and "hereunder" and words of similar import refer to this Agreement
(including the Exhibits to this Agreement and the Disclosure Schedule) in its
entirety and not to any part hereof unless the context shall otherwise require.
All references herein to Articles, Sections, Exhibits and the Disclosure
Schedule shall be deemed references to Articles and Sections of, and Exhibits
and the Disclosure Schedule to, this Agreement unless the context shall
otherwise require. Unless the context shall otherwise require, any references to
any agreement or other instrument or statute or regulation are to it as amended
and supplemented from time to time (and, in the case of a statute or regulation,
to any successor provisions). Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. Any
reference in this Agreement to a "day" or a number of "days" (without explicit
reference to "Business Days") shall be interpreted as a reference to a calendar
day or number of calendar days. If any action is to be taken or given on or by a
particular calendar day, and such calendar day is not a Business Day, then such
action may be deferred until the next Business Day.

                                  Article II.

                         PURCHASE AND SALE OF THE SHARES

      Section 2.1. Purchase and Sale of the Shares. Upon the terms and subject
to the conditions of this Agreement, Buyer agrees to purchase from Seller, and
Seller agrees to sell to Buyer, all of the Shares at the Closing, for the
consideration specified in Section 2.2. Prior to the Closing Date, Buyer may,
upon prior written notice to Seller, assign its right to purchase the Shares to
one or more of its wholly owned Subsidiaries for the purpose of carrying out the
transactions contemplated hereby; provided that no such assignment shall relieve
Buyer of its obligations hereunder.

      Section 2.2. Purchase Price. At Closing, Buyer shall pay the Purchase
Price in immediately available funds by wire transfer to an account or accounts
that have been designated by Seller to Buyer at least five Business Days prior
to the Closing.

      Section 2.3. Estimated Purchase Price Adjustment.

      (a) At least five Business Days prior to the Closing Date, Seller
shall cause the Company to deliver to Buyer a statement, in substantially the
form of Section 2.3(a) of the Disclosure Schedule (which sets forth a
calculation of Cash, Indebtedness and Working Capital, determined as if the
Closing had occurred on October 28, 2006), setting forth the Company's
reasonable, good faith estimate of (i) the amount of Cash as of the Effective
Time on the Closing Date (the "Estimated Cash"), (ii) the amount of Indebtedness
as of the Effective Time on the Closing Date (the "Estimated Debt") and (iii)
the amount of Working Capital as of the Effective

                                       12
<PAGE>

Time on the Closing Date (the "Estimated Working Capital") and, in each case,
the basis for the calculation thereof.

      (b) The purchase price paid by the Buyer at Closing shall be increased by
(i) the Estimated Cash, and (ii) if the Estimated Working Capital minus the
Benchmark is positive, by the amount of such excess. The purchase price paid by
the Buyer at Closing shall be decreased by (A) Estimated Debt, and (B) if the
Benchmark minus the Estimated Working Capital is positive, by the amount of such
excess. The "Benchmark" shall be $37,000,000.

      Section 2.4. Post-Closing Purchase Price Adjustment.

      (a) Within sixty days after the Closing Date, Buyer shall prepare
and deliver to Seller a statement (the "Closing Adjustment Statement"), setting
forth Buyer's calculation of (i) the amount of Cash as of the Effective Time on
the Closing Date ("Closing Cash"), (ii) the amount of Indebtedness as of the
Effective Time on the Closing Date ("Closing Debt") and (iii) the Working
Capital as of the Effective Time on the Closing Date ("Closing Working
Capital"). The (i) Closing Adjustment Statement shall be prepared in accordance
with Section 2.3(a) of the Disclosure Schedule and otherwise in accordance with
GAAP and (ii) the net book value of the Inventory shall be computed based upon
the quantities of Inventory on hand as of the Closing Date as determined through
a physical inventory conducted by Buyer within five days of such date. Seller or
its representatives may observe such physical inventory.

      (b) If Seller reasonably disagrees with the calculation of Closing Cash,
Closing Debt or Closing Working Capital set forth in the Closing Adjustment
Statement (on the basis of mathematical errors, failure to adhere to the
requirements of Section 2.3(a) of the Disclosure Schedule or failure to
otherwise adhere to GAAP), Seller may deliver to Buyer a written notice of such
objection no later than thirty days after the date on which Buyer delivered the
Closing Adjustment Statement to Seller, which notice shall specify the nature of
each dispute and the basis therefor (an "Objection"). Failure by Seller to
deliver an Objection within such thirty-day period will be deemed to be Seller's
acceptance of the Closing Adjustment Statement as the Final Closing Adjustment
Statement. The Parties shall attempt in good faith to reach agreement resolving
all disputes set forth in the Objection within thirty days after its delivery.
If the Parties are unable to resolve any or all such disputes within such
thirty-day period, the Parties shall, promptly after the expiration of such
period, submit for resolution all unresolved disputes to the Cleveland, Ohio
office of PricewaterhouseCoopers (or if the Cleveland, Ohio office of
PricewaterhouseCoopers cannot or is unwilling to serve in such capacity, a
nationally recognized, independent public accounting firm selected by mutual
agreement of Seller and Buyer, or if they cannot agree, selected by mutual
agreement of the independent public accounting firms regularly used by Seller
and Buyer in the conduct of their respective businesses) (the "Arbitrator") as
an arbiter for resolution. In selecting the Arbitrator in accordance with the
preceding sentence for purposes of this Agreement, the Parties hereby waive any
conflict or potential conflict arising from any services performed by such firm
for the Company Group, Seller, Buyer or any of their respective Affiliates.

      (c) Promptly, but no later than thirty days after its acceptance of
its appointment as Arbitrator, the Arbitrator shall determine, based solely on
presentations by Buyer and Seller and not by independent review, those items in
dispute on the Closing Adjustment Statement and

                                       13
<PAGE>

shall render a written report to Buyer and Seller as to the resolution of each
dispute and the resulting calculation of Closing Cash, Closing Debt and/or
Closing Working Capital, as applicable. In resolving any disputed item, the
Arbitrator (i) shall not assign a value to such item greater than the greatest
value for such item claimed by either Party or less than the smallest value for
such item claimed by either Party; (ii) shall rule only on the objections raised
by the Parties, accepting all other aspects of the Closing Adjustment Statement;
and (iii) shall have no right, authority or discretion to employ any accounting
standard or principles except for those provided for herein. The Arbitrator will
have exclusive jurisdiction over, and resort to the Arbitrator as provided in
this Section 2.4(c) will be the sole recourse and remedy of, the Parties against
one another or any other Person with respect to any disputes arising out of or
relating to Closing Cash, Closing Debt or Closing Working Capital. The
Arbitrator's determination will be conclusive and binding on the Parties and
will be enforceable in a court of competent jurisdiction.

      (d) Each Party shall cooperate with and make available to the other Party
and its representatives all records, and shall permit access to its facilities
and personnel, as reasonably required in connection with the preparation and
analysis of the Closing Adjustment Statement and the resolution of any disputes
with respect thereto.

      (e) The fees and expenses of the Arbitrator shall be borne by each Party
in the proportion that the aggregate dollar amount of items submitted to the
Arbitrator that are unsuccessfully disputed by such Party bears to the aggregate
dollar amount of all items submitted to the Arbitrator.

      (f) As used herein, the term "Final Closing Adjustment Statement" means
(i) the Closing Adjustment Statement if Seller does not deliver an Objection in
accordance with Section 2.4(b); (ii) if Seller timely gives an Objection and all
of the disputed items are resolved by agreement of the Parties, the Closing
Adjustment Statement, as amended, if necessary, to reflect such resolution of
all disputes; or (iii) if any disputed items are submitted to the Arbitrator for
resolution, the Closing Adjustment Statement, as amended, if necessary, to
reflect any resolution of any disputes by agreement of the Parties and the
resolution of all other disputes by the Arbitrator.

      (g) If (i) Closing Working Capital plus Closing Cash is less than (ii)
Estimated Working Capital plus Estimated Cash, Seller shall pay Buyer, as an
adjustment to the Purchase Price, the amount of such deficit. If (A) Closing
Working Capital plus Closing Cash is greater than (B) Estimated Working Capital
plus Estimated Cash, Buyer shall pay Seller, as an adjustment to the Purchase
Price, the amount of such excess. If (i) Closing Debt is greater than (ii)
Estimated Debt, Seller shall pay Buyer, as an adjustment to the Purchase Price,
the amount of such excess. If (A) Closing Debt is less than (B) Estimated Debt,
Buyer shall pay Seller, as an adjustment to the Purchase Price, the amount of
such deficit.

      (h) The net amount of any payment required to be made under this Section
2.4 shall (i) be made by wire transfer of immediately available funds no later
than five Business Days after the date on which the Closing Adjustment Statement
becomes the Final Closing Adjustment Statement as provided in this Section 2.4
and (ii) shall bear interest at a rate equal to 8% per annum from the Closing
Date to the date of payment.

                                       14
<PAGE>

      Section 2.5. Closing. Unless this Agreement shall have been terminated
pursuant to Article X and subject to the satisfaction or, when permissible,
waiver of the conditions set forth in Article VII, the closing of the
transactions contemplated by this Agreement, other than the Reorganization, (the
"Closing") shall take place (a) at the offices of Kirkland & Ellis LLP, 153 East
53rd Street, New York, New York 10022, as soon as possible but in no event later
than the third Business Day after the date on which the last of the conditions
set forth in Article VII (other than any such conditions which by their terms
are not capable of being satisfied until the Closing Date) is satisfied or, when
permissible, waived or (b) at such other time and/or place as the Parties may
mutually agree in writing. The Closing shall be effective as of 12:01 a.m. on
the Closing Date (the "Effective Time").

      Section 2.6. Closing Deliveries.

      (a) At or prior to the Closing, Seller will deliver or cause to be
delivered to Buyer the following:

      (i) stock powers endorsed in blank necessary to transfer the certificates
   representing the Shares to Buyer and originals of all certificated securities
   representing the equity interests in the Company;

      (ii) resignations or terminations of the executive officers, directors and
   managers of the Company Group from their status as executive officers,
   directors and managers effective as of the Closing (other than those Persons
   identified by Buyer prior to Closing with respect to whom such resignation or
   termination is not required);

      (iii) the certificates referred to in Sections 7.3(a) and 7.3(b);

      (iv) a non-foreign affidavit, dated as of the Closing Date, in form and
   substance required under the Treasury Regulations issued pursuant to Section
   1445 of the Code, stating that Seller is not a "foreign person" as defined in
   Section 1445 of the Code;

      (v) a Seller Release, dated as of the Closing Date, in substantially the
   form attached hereto as Exhibit A, duly executed by Seller;

      (vi) a lease, between ATC (HBP) and Argo-Tech Corporation (OEM) in
   substantially the form attached hereto as Exhibit B, with such amendments as
   are in form and substance reasonably acceptable to Buyer, for the lease of
   space in Cleveland, Ohio, duly executed by the parties thereto;

      (vii) a lease, between ATC Costa Mesa and the owner of the Costa Mesa
   Property in substantially the form attached hereto as Exhibit B, with such
   amendments, including with respect to economic terms, as are in form and
   substance reasonably acceptable to Buyer, for the lease of space in Costa
   Mesa, California, duly executed by the parties thereto; and

      (viii) all other documents required to be delivered by Seller to Buyer at
   the Closing pursuant to this Agreement.

                                       15
<PAGE>

      (b) At the Closing, Buyer will deliver or cause to be delivered to Seller
the following:

      (i) the Purchase Price in immediately available funds to the account as
   provided in Section 2.2;

      (ii) the certificates referred to in Sections 7.2(a) and 7.2(b); and

      (iii) all other documents required to be delivered by Buyer to Seller at
   the Closing pursuant to this Agreement.

      Section 2.7. Satisfaction of Conditions. All conditions to the obligations
of Seller and Buyer to proceed with the Closing under this Agreement will be
deemed to have been fully and completely satisfied or waived for purposes of
Article VII upon the Closing.

      Section 2.8. Transfer Taxes. All applicable Transfer Taxes (including any
stock Transfer Taxes due as a result of the sale of the Shares and Transfer
Taxes, if any, imposed upon the transfer of real and personal property) payable
in connection with this Agreement, the transactions, other than the
Reorganization, contemplated by this Agreement or the documents giving effect to
such transactions will be paid by Buyer. Notwithstanding anything to the
contrary herein, Seller shall be liable for all Transfer Taxes due or payable as
a result of or in connection with the Reorganization.

      Section 2.9. Reorganization Taxes.

      (a) As soon as practicable after the date hereof, and in any event at
least ten Business Days prior to the Closing Date, the Company shall deliver to
Buyer and Seller a statement of the Estimated Reorganization Taxes. Buyer and
Seller shall use their reasonable best efforts to agree on the amount of the
Reorganization Taxes, or on as many elements thereof as are possible, prior to
the Closing Date. Buyer, Seller and the Company shall cooperate, and shall cause
their respective accountants to cooperate, in the determination of the
Reorganization Taxes. If Buyer and Seller are not able to agree on the amount of
the Reorganization Taxes, or on any element thereof, prior to Closing, then the
amount of the Estimated Reorganization Taxes (or the element thereof) for
purposes of Closing shall be the amount initially proposed by the Company.

      (b) At the Closing, the Purchase Price shall be increased or decreased, as
applicable, by the amount of the Estimated Reorganization Taxes;

      (c) If Buyer and Seller have agreed on the amount of the Reorganization
Taxes prior to Closing, then the agreed amount shall be the amount of Estimated
Reorganization Taxes and also the amount of Reorganization Taxes. If there are
unagreed items at Closing, then within 10 days after the Closing Date, Seller
shall prepare and deliver to Buyer a statement (the "Proposed Reorganization
Taxes Statement"), containing Seller's computation of the Reorganization Taxes.

      (d) If Buyer reasonably disagrees with the Proposed Reorganization Taxes
Statement, then Buyer may deliver to Seller an Objection no later than thirty
days after the date

                                       16
<PAGE>

on which Seller delivered the Proposed Reorganization Taxes Statement to Buyer;
provided, however, that if Seller has not provided to Buyer prior to the Closing
such appraisals and business valuations reasonably satisfactory to Buyer with
respect to the value of any material Excluded Asset, then Buyer may deliver to
Seller an Objection no later than ten days after Buyer has received, at Seller's
cost, such appraisals and business valuations. Failure by Buyer to deliver an
Objection within such thirty-day period will be deemed to be Buyer's acceptance
of the Proposed Reorganization Taxes Statement as the Final Reorganization Taxes
Statement. The Parties shall attempt in good faith to reach agreement resolving
all disputes set forth in the Objection within thirty days after its delivery.
If the Parties are unable to resolve any or all such disputes within such
thirty-day period, then the Parties shall, promptly after the expiration of such
period, submit all unresolved disputes to the Arbitrator as an arbiter for
resolution.

      (e) Promptly, but no later than thirty days after its acceptance of its
appointment as Arbitrator, the Arbitrator shall determine, based solely on
presentations by Buyer and Seller and not by independent review, those items in
dispute on the Proposed Reorganization Taxes Statement and shall render a
written report to Buyer and Seller as to the resolution of each dispute and the
resulting calculation of the Reorganization Taxes. In resolving any disputed
item, the Arbitrator (i) shall not assign a value to such item greater than the
greatest value for such item claimed by either Party or less than the smallest
value for such item claimed by either Party; and (ii) shall rule only on the
objections raised by the Parties, accepting all other aspects of the Proposed
Reorganization Taxes Statement. The Arbitrator will have exclusive jurisdiction
over, and resort to the Arbitrator as provided in this Section 2.9(e) will be
the sole recourse and remedy of, the Parties against one another with respect to
any disputes arising out of or relating to Reorganization Taxes (other than as
provided in Section 9.1(iv)). In particular, Reorganization Taxes shall be
excluded from the computation of Estimated Working Capital and Closing Working
Capital pursuant to Sections 2.3 and 2.4. The Arbitrator's determination will be
conclusive and binding on the Parties and will be enforceable in a court of
competent jurisdiction.

      (f) Each Party shall cooperate with and make available to the other Party
and its representatives all records, and shall permit access to its facilities
and personnel, as reasonably required in connection with the preparation and
analysis of the Proposed Reorganization Taxes Statement and the resolution of
any disputes with respect thereto.

      (g) The fees and expenses of the Arbitrator shall be borne by each Party
in the proportion that the aggregate dollar amount of items submitted to the
Arbitrator that are unsuccessfully disputed by such Party bears to the aggregate
dollar amount of all items submitted to the Arbitrator.

      (h) As used herein, the term "Final Reorganization Taxes Statement" means:
(i) the Proposed Reorganization Taxes Statement, if Buyer does not deliver an
Objection in accordance with Section 2.9(d); (ii) if Buyer timely gives an
Objection and all of the disputed items are resolved by agreement of the
Parties, the Proposed Reorganization Taxes Statement, as amended, if necessary,
to reflect such resolution of all disputes; or (iii) if any disputed items are
submitted to the Arbitrator for resolution, the Proposed Reorganization Taxes
Statement, as amended, if necessary, to reflect any resolution of any disputes
by agreement of the Parties and the resolution of all other disputes by the
Arbitrator.

                                       17
<PAGE>

      (i) If the amount of the Reorganization Taxes, as reflected on the Final
Reorganization Taxes Statement, exceeds the amount of the Estimated
Reorganization Taxes, then the Purchase Price shall be decreased by the amount
of such excess and Seller shall pay to Buyer an amount equal to such excess. If
the amount of the Reorganization Taxes, as reflected on the Final Reorganization
Taxes Statement, is less than the amount of the Estimated Reorganization Taxes,
then the Purchase Price shall be increased by the amount of such shortfall and
Buyer shall pay to Seller an amount equal to such shortfall. The amount of any
payment required to be made under this Section 2.9(i) shall (i) be made by wire
transfer of immediately available funds no later than five Business Days after
the date on which the Reorganization Taxes are finally determined as provided in
this Section 2.9 and (ii) shall bear interest at a rate equal to 8% per annum
from the Closing Date to the date of payment.

                                  Article III.

           REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY GROUP

      Seller represents and warrants to Buyer as of the date hereof and as of
the Closing Date, except as set forth in the Disclosure Schedule, as follows:

      Section 3.1. Organization of the Company and the Company Group. The
Company is a corporation, validly existing and in good standing under the laws
of Delaware, and the Company has all requisite corporate power and authority to
carry on its business as it is currently conducted and to own, lease and operate
its properties where such properties are now owned, leased or operated. Each
other member of the Company Group (i) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and (ii)
has all requisite organizational power and authority to carry on its respective
business as it is currently conducted and to own, lease and operate its
respective properties where such properties are now owned, leased or operated,
except in all cases where any failures of the representations in this sentence
to be true would not, individually or in the aggregate, have a material and
adverse effect on the Company Group. Each member of the Company Group is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or license necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed or in good standing would not have a Material Adverse Effect on the
Company Group. Section 3.1 of the Disclosure Schedule lists the jurisdictions in
which any member of the Company Group is qualified or licensed to do business as
a foreign Person.

      Section 3.2. Noncontravention. Neither the execution and delivery of this
Agreement by Seller, nor the consummation by the Company Group of the
transactions contemplated hereby or the performance by the Company Group of the
transactions contemplated hereby and by the Transaction Documents will (i)
violate, conflict with or result in a breach or default under any provision of
the certificate of incorporation or bylaws, or other organizational documents,
of any member of the Company Group, (ii) except as set forth in Section 3.2 of
the Disclosure Schedule, violate, conflict, result in a breach of or default
under, give rise to any notification or Consent requirement or any right of
termination, cancellation, payment or acceleration under or result in the
creation of any Lien (other than Permitted Liens) upon any of the properties or
assets of any member of the Company Group under any Material Contract, or (iii)
subject to the Consents of Governmental Authorities described in Section 3.5,

                                       18
<PAGE>

violate any Law to which any member of the Company Group is subject, except, in
the case of clauses (ii) and (iii), for such matters which would not have a
Material Adverse Effect on the Company Group.

      Section 3.3. Title to Shares. As of the date hereof, Seller holds of
record and owns beneficially the Shares set forth as owned by it in Section 3.3
of the Disclosure Schedule which Shares constitute (as of the date hereof) 100%
of the issued and outstanding capital stock of the Company, free and clear of
any and all Liens, except for any restrictions on sales of securities under
applicable securities Laws. As of the Closing Date, Seller will hold of record
and own beneficially all issued and outstanding Shares, which Shares will
constitute 100% of the issued and outstanding capital stock of the Company, free
and clear of any and all Liens, except for any restrictions on sales of
securities under applicable securities Laws All of the Shares have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in Section 3.3 of the Disclosure Schedule, neither Seller nor any
member of the Company Group is a party to any convertible securities, calls,
preemptive rights, options, warrants, purchase rights or other contracts,
agreements or commitments (other than this Agreement) that would require Seller
to sell, transfer or otherwise dispose of the Shares held by it. Except for this
Agreement and as set forth in Section 3.3 of the Disclosure Schedule, Seller is
not a party to any voting trust, proxy or other agreement or understanding with
respect to the voting of the Shares held by it.

      Section 3.4. Subsidiaries of the Company; Capitalization

      (a) Section 3.4(a) of the Disclosure Schedule sets forth for each of the
Company's Subsidiaries (i) its name and jurisdiction of organization, (ii) its
form of organization and (iii) the percentage of capital stock, membership
interests or units held by the Company, directly or indirectly, in such
Subsidiary. The Company is the sole beneficial and record owner of the
outstanding shares of capital stock or other interests in the Company's
Subsidiaries, free and clear of all Liens, except for (i) any restrictions on
sales of securities under applicable securities Laws or (ii) any Liens falling
within clause (b) of the definition of Permitted Liens. All of the issued and
outstanding shares of capital stock or other equity interests of the Company's
Subsidiaries have been duly authorized, validly issued and are fully paid and
nonassessable. There are no outstanding Rights, warrants, conversion rights or
similar agreements, commitments or understandings for the purchase or
acquisition from any of the Company's Subsidiaries of any shares of capital
stock or other equity interests of such Subsidiary. Except as disclosed on
Section 3.4(a) of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries owns or has any right to acquire, directly or indirectly, any
outstanding capital stock of, or other equity interests in, any Person.

      (b) Except as disclosed on Section 3.4(b) of the Disclosure Schedule, (i)
the Company Group has no Subsidiaries and does not, directly or indirectly, own
any interest in any other Person, foreign or domestic (whether through
acquisition of an equity interest or otherwise) in any other Person other than a
member of the Company Group, (ii) there are no stockholder agreements, voting
trusts, proxies or other agreements with respect to the purchase, sale or voting
of the capital stock or stock rights of any member of the Company Group, and
(iii) there is no existing Right or contract to which any member of the Company
Group is a party requiring, and there are no Rights or convertible securities of
a member of the Company Group outstanding which upon conversion or exchange
would require, the issuance of any shares of capital stock or other equity
interests in any member of the Company Group or other securities convertible
into

                                       19
<PAGE>

shares of capital stock or other equity interests of the Company or any
Subsidiary, and there are no outstanding or authorized equity appreciation,
phantom unit, profit participation or similar rights of the Company or any
Subsidiary in any member of the Company Group. Except as set forth on in Section
3.4(b) of the Disclosure Schedule, no outstanding securities of the Company
other than shares of its common stock have any right to vote on matters as to
which the shareholders of the Company have a right to vote. Except as disclosed
on Section 3.4(b) of the Disclosure Schedule, there are no restrictions on the
transfer of the Shares or any equity securities of any member of the Company
Group other than those imposed by applicable state and federal securities Laws.
Except as disclosed on Section 3.4(b) of the Disclosure Schedule, no holder of
any security of any member of the Company Group is entitled to preemptive or
similar statutory or contractual rights, either arising pursuant to any
agreement or instrument to which such member of the Company Group is a party, or
which are otherwise binding upon such member of the Company Group.

      (c) The equity capitalization of the Company, including (i) each class of
capital stock, and (ii) the name of each holder and the number of shares held,
is as set forth in Section 3.4(c) of the Disclosure Schedule.

      Section 3.5. Government Authorizations. Except for (i) required filings
under the HSR Act, (ii) compliance with any applicable requirements of the
Securities Act, (iii) compliance with any other applicable securities Laws and
(iv) Consents not required to be made or given until after the Closing, no
material Consent of, with or to any Governmental Authority is required to be
obtained or made by Seller in connection with the execution, delivery and
performance of this Agreement by Seller or the consummation of the transactions
contemplated hereby, other than any such requirement that is applicable as a
result of the specific legal or regulatory status of Buyer or as a result of any
other facts that specifically relate to the business or activities in which
Buyer is engaged.

      Section 3.6. Financial Statements; Securities Filings.

      (a) Set forth in Section 3.6(a) of the Disclosure Schedule are correct and
complete copies of (i) the audited consolidated balance sheets of Argo-Tech and
its Subsidiaries as of October 29, 2005 and October 30, 2004 and the related
consolidated statements of operations and cash flows for the fiscal years then
ended (the "Audited Financial Statements") and (ii) the unaudited consolidated
balance sheets of (A) Argo-Tech and its Subsidiaries as of the Balance Sheet
Date and (B) the Company Group as of the Balance Sheet Date and October 29,
2005, and the related consolidated statements of operations and cash flows for
the fiscal years then ended (the "Unaudited Financial Statements" and, together
with the Audited Financial Statements, the "Financial Statements"). Except as
set forth therein, (x) the Financial Statements present fairly and accurately,
in all material respects, respectively, the consolidated financial position,
statements of operations and cash flows of Argo-Tech and its Subsidiaries and
the Company Group, as the case may be, at the respective dates set forth therein
and for the respective periods covered thereby, (y) were prepared in accordance
with GAAP, and (z) are consistent with the books and records of Argo-Tech and
its Subsidiaries and the Company Group, as the case may be, in all material
respects (which books and records are correct and complete in all material
respects).

                                       20
<PAGE>

      (b) Except as disclosed on Section 3.6(b) of the Disclosure Schedule,
since January 1, 2004, Argo-Tech has made all filings with the U.S. Securities
and Exchange Commission (the "Commission") that it has been required to make
under the Securities Act and the Securities Exchange Act and pursuant to the
terms of the Indentures (such reports collectively, the "Public Reports"). Each
of the Public Reports as of its date has complied with the Securities Act or the
Securities Exchange Act, as applicable, and the rules promulgated thereunder or
pursuant thereto in all material respects. None of the Public Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.

      Section 3.7. Absence of Certain Changes. Since the Balance Sheet Date,
except as contemplated by or disclosed in or pursuant to this Agreement or as
set forth in Section 3.7 of the Disclosure Schedule, each member of the Company
Group has conducted its business only in the ordinary course, and has not been
subject to any event or development that would, individually or in the
aggregate, have a Material Adverse Effect. Without limiting the generality of
the foregoing, since the Balance Sheet Date, no member of the Company Group has
engaged in any practice, taken any action, omitted to take any action or entered
into any transaction which, if the same had occurred between the date hereof and
the Closing Date, would violate or breach Section 6.1(b).

      Section 3.8. Tax Matters. Except as set forth in Section 3.8 of the
Disclosure Schedule, with respect to periods ending on or before the Closing
Date:

      (a) Each member of the Company Group has duly and timely filed, or caused
to be timely filed, with the appropriate Tax authorities all material Tax
Returns that it was required to file, and paid or caused to be paid all material
Taxes that it owed, whether or not shown to be due thereon. No member of the
Company Group is currently a beneficiary of any extension of time under which to
file any material Tax Returns. There are no Liens for Taxes on any of the assets
of any member of the Company Group other than Permitted Liens.

      (b) No member of the Company Group has waived or requested a waiver of any
statute of limitations in respect of material Taxes or agreed to or requested
any extension of time with respect to a material Tax assessment or deficiency,
which waiver or extension is still in effect.

      (c) No member of the Company Group is a party to any Tax allocation, Tax
sharing or other similar agreement.

      (d) No member of the Company Group has any Liability for the Taxes of any
Person, other than itself, under Section 1.1502-6 of the Treasury Regulations
(or any similar provision of state, local or foreign law) as a transferee or
successor, by contract or otherwise.

      (e) No member of the Company Group has distributed stock of another
Person, or has had its stock distributed by another Person, in a transaction
that was purported or intended to be governed in whole or in part by Code
Section 355 or Code Section 361.

                                       21
<PAGE>

      (f) Each member of the Company Group has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any Person.

      (g) There is no material dispute or claim concerning any Tax Liability of
any member of the Company Group claimed or raised by any taxing authority in
writing or, to Seller's Knowledge, otherwise claimed or raised by any taxing
authority. Section 3.8 of the Disclosure Schedule lists, as of September 13,
2005, all federal, state, local, and foreign income or corporation Tax Returns
filed with respect to any member of the Company Group for taxable periods ended
on or after January 1, 2001, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject of audit. Seller
has made available to Buyer correct and complete copies of all such material
federal income and corporation Tax Returns, examination reports, and statements
of deficiencies assessed against or agreed to by any member of the Company Group
filed or received since January 1, 2001. The Company Group has filed all
federal, state, local, and foreign income or corporation Tax Returns required to
be filed with respect to any member of the Company Group since September 13,
2005, or has timely made a request for extension of such filing. Seller shall
cause the Company to deliver to Buyer a list of all such filings or requests for
extension made since September 13, 2005, within ten Business Days of the date
hereof.

      (h) No member of the Company Group will be required to include any
material item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) change in accounting method for a taxable period ending
on or before the Closing Date; (ii) "closing agreement" as described in Code
Section 7121 (or similar provision of state, local or foreign Tax law) executed
on or before the Closing Date; or (iii) installment or open transaction
disposition made on or before the Closing Date.

      (i) No member of the Company Group has filed a consent under former Code
Section 341(f) concerning collapsible corporations. No member of the Company
Group has participated in any "listed transaction" within the meaning of
Treasury Regulations Section 1.6011-4. No claim has been made in writing by any
taxing authority that any member of the Company Group is or may be subject to
taxation by a jurisdiction in which it does not file income Tax Returns.

      (j) To Seller's Knowledge, no executive officer of the Company Group has
directed any member of the Company Group to take any Prohibited Action with
respect to the administration of any arrangement such executive officer knew to
be subject to Section 409A of the Code. For this purpose, a "Prohibited Action"
means an actual, affirmative action that the executive officer believed, at the
time of such action, would cause the administration of the relevant deferred
compensation arrangement to fail to be in good faith compliance with Section
409A of the Code and/or its related guidance.

      (k) Based solely on the arrangements and compensation levels in effect on
the date hereof, and assuming that no employee of the Company Group is
terminated in connection with the change of control that will occur upon
consummation of the transactions contemplated by this Agreement, other than
those persons who are listed on Section 3.8(k)(i) of the Disclosure Schedule and
except as reflected on Section 3.8(k)(ii) of the Disclosure Schedule, no
"Expected Payment" that any member of the Company Group would otherwise deduct
for federal tax

                                       22
<PAGE>

purposes during a taxable period commencing after the Closing will be
non-deductible to such member of the Company Group pursuant to Section 280G of
the Code. For purposes hereof, "Expected Payment" means a payment to any
director, officer, employee, or agent of any member of the Company Group that
such member of the Company Group owes or is required to provide pursuant to an
arrangement in effect on the date hereof. Except as reflected on Section
3.8(k)(ii) of the Disclosure Schedule, the Company is not party to any binding
agreement in effect on the date hereof that will require the Company to "gross
up" or otherwise reimburse any such Person for any excise Tax imposed pursuant
to Section 4999 of the Code.

      Section 3.9. Real Property.

      (a) Other than Owned Real Property that is included in the Excluded
Assets, no member of the Company Group holds any Owned Real Property.

      (b) Section 3.9(b) of the Disclosure Schedule sets forth (i) a true and
complete list of all licenses, agreements and leases of real property under
which any member of the Company Group is a lessee, lessor, sub-lessee or
sub-lessor and all amendments, extensions, renewals, guarantees, and other
agreements with respect thereto (the "Real Property Leases") and (ii) a true and
complete list of the addresses of all real property leased by any member of the
Company Group. The real property leasehold or subleasehold estates and other
rights to use or occupy real property subject to the Real Property Leases is
hereinafter referred to as the "Leased Real Property". There are no oral Real
Property Leases. Except as set forth in Section 3.9(b) of the Disclosure
Schedule, (A) to Seller's Knowledge, neither any member of the Company Group nor
any other party to any Real Property Lease is in breach or default in any
material respect under any Real Property Lease, (B) each Real Property Lease is
legal, valid, binding, enforceable and in full force and effect, subject to
proper authorization and execution of such Real Property Lease by the other
party thereto and to the Remedies Exception, (C) to Seller's Knowledge, no event
has occurred or circumstance exists which, with the delivery of notice, the
passage of time or both, would constitute a material breach or default of any
Real Property Lease; (D) no security deposit or portion thereof deposited with
respect to any Real Property Lease has been applied in respect of a breach or
default under such Real Property Lease that has not been redeposited in full;
and (E) no member of the Company Group owes any brokerage commissions or
finder's fees with respect to any Real Property Lease, and no member of the
Company Group has collaterally assigned or granted any other security interest
in any Real Property Lease or any interest therein

      Section 3.10. Intellectual Property.

      (a) Section 3.10(a) contains a complete and accurate list of (i) all of
the following that are owned by any member of the Company Group: (A) issued
patents and pending patent applications, (B) registrations and applications for
registration of any Marks, and (C) registered copyrights, and (ii) Non-Company
Software (other than off-the-shelf software with a total replacement cost and/or
license fee of less than $250,000).

      (b) A member of the Company Group (i) owns all Intellectual Property set
forth on Section 3.10(a)(i) of the Disclosure Schedule, and (ii) subject to
clause (B) below, owns or has the right to use all Intellectual Property that is
necessary for the operation of the business of any member of the Company Group
as each is currently conducted, and all such Intellectual

                                       23
<PAGE>

Property is free and clear of all Liens (other than Permitted Liens)
(collectively, the "Company Intellectual Property"). All issuance, renewal,
maintenance and other fees and payments that are or have become due with respect
to Company Intellectual Property set forth on Section 3.10(a) of the Disclosure
Schedule on or before the Closing have been timely paid by or on behalf of the
Company Group. To Seller's Knowledge, (i) all of the Company Intellectual
Property is valid, subsisting and in full force and effect, and (ii) the conduct
of the business of the Company Group is not currently operated in a manner that
infringes or misappropriates any Intellectual Property rights of any third
parties. Except as set forth on Section 3.10(b) of the Disclosure Schedule, (A)
there are no proceedings, claims or actions against any member of the Company
Group that are presently pending, and, to Seller's Knowledge, no claims or
actions have been threatened since January 1, 2002 that contest the validity,
use, ownership or enforceability of any Company Intellectual Property; and (B)
to Seller's Knowledge, no third party is infringing or misappropriating any
Company Intellectual Property, which, in the case of each of subsections (A) and
(B), if adversely determined or if such action is not redressed, would have a
Material Adverse Effect on the Company Group.

      (c) All licenses, assignments and other contracts relating to the use of
all Non-Company Software and the Intellectual Property material to the operation
of the business of any member of the Company Group, as each is currently
conducted, that is owned by third parties, are valid and in full force and
effect. No employee or consultant of any member of the Company Group holds any
right, title or interest in or to any Company Intellectual Property that is
material to the business of any member of the Company Group as currently
conducted. Each member of the Company Group has taken all commercially
reasonable precautions to protect the proprietary nature of each material item
of Intellectual Property, and to maintain in confidence all trade secrets and
confidential information of the business comprising a part thereof. No software
or other technology incorporated into any product of the Company or any of its
Subsidiaries (excluding any third party's product) distributed or otherwise sold
by the Company or any of its Subsidiaries constitutes Open Source Software or a
derivative work based on any Open Source Software. The term "off-the-shelf
software" as used above in this Section 3.10 does not include Open Source
Software.

      Section 3.11. Environmental Matters. This Section 3.11 shall constitute
the sole representations of Seller with respect to environmental matters,
including matters relating to Environmental Law or Hazardous Materials.

      (a) Except as set forth on Section 3.11 of the Disclosure Schedule:

      (i) within the past three (3) years, no member of the Company Group has
   violated in any material respect any applicable Environmental Law or any
   permit, license or other authorization applicable to the Company Group
   required under Environmental Law;

      (ii) within the past three (3) years, no member of the Company Group has
   received any written notice, complaint or claim that remains uncured,
   alleging that any member of the Company Group is in material violation of any
   Environmental Law or subject to any material Liability under any
   Environmental Law;

                                       24
<PAGE>

      (iii) no member of the Company Group is subject to any outstanding consent
   decree, compliance order or administrative order from or settlement agreement
   with any Governmental Authority, in each case containing material obligations
   for a member of the Company Group pursuant to any Environmental Law;

      (iv) there are no material Actions pending or, to Seller's Knowledge,
   threatened before any Governmental Authority against any member of the
   Company Group;

      (v) (A) to Seller's Knowledge, no asbestos or asbestos-containing material
   is or has been present at the Leased Real Property, and no member of the
   Company Group currently produces or manufactures, or (B) has produced,
   manufactured or sold, any products or inventory that contain asbestos, in
   each case so as would reasonably be expected to result in material Liability
   under Environmental Law to any member of the Company Group; and

      (vi) to Seller's Knowledge, there has been no disposal or release of any
   Hazardous Material on any site or facility owned, operated or leased by any
   member of the Company Group that would reasonably be expected to result in
   material Liability under Environmental Law to any member of the Company
   Group.

      (b) There are no material environmental audits, assessments or
investigation reports with respect to the Leased Real Property in the
possession, custody or reasonable control of the Company Group that have not
been made available to Buyer.

      Section 3.12. Contracts.

      (a) Except as contemplated by this Agreement or as set forth in Section
3.12 of the Disclosure Schedule, the Company Group is not a party to or
otherwise bound or affected by any oral or written:

      (i) customer contracts involving payments in excess of $500,000 in the
   aggregate or otherwise entered into outside of the ordinary course of
   business;

      (ii) supplier contracts involving payments in excess of $500,000 in the
   aggregate or otherwise entered into outside of the ordinary course of
   business;

      (iii) contract for the employment of any officer, director, individual,
   employee, consultant or other Person on a full-time, part-time or consulting
   basis which (i) provides for total cash compensation (salary and bonus) in
   excess of $150,000 for any 12-month period, (ii) provides for the payment of
   cash or other compensation or benefits upon the consummation of the
   transactions contemplated hereby, or (iii) provides any severance benefits or
   making any severance arrangements;

      (iv) bonus, pension, profit-sharing, retirement, hospitalization,
   insurance, stock purchase, stock option or similar plan, contract or
   understanding pursuant to which benefits are provided to any employee of the
   Company Group (other than group insurance plans and expense reimbursements
   applicable to employees generally);

                                       25
<PAGE>

      (v) collective bargaining or similar agreements;

      (vi) agreement or indenture relating to the borrowing of money or to the
   mortgaging or pledging of, or otherwise placing a Lien on, any material
   asset, or any guarantee therefor;

      (vii) contract, agreement, license, or release with respect to the use,
   license, transfer, or disposition of any material Intellectual Property
   outside of the ordinary course of business (other than licenses for
   mass-marketed computer software with a replacement cost and/or annual license
   fee of less than $100,000);

      (viii) stockholders agreement, registration rights agreement, voting
   agreement, voting trust agreement or similar agreements to which the Company
   Group is subject;

      (ix) agreement, or group of related agreements with the same party or any
   group of affiliated parties, under which the Company Group has advanced or
   agreed to advance money or has agreed to lease any personal property as
   lessor in each case, involving consideration in excess of $100,000 in any
   12-month period;

      (x) Lease of personal property by the Company Group involving annual
   payments in excess of $100,000;

      (xi) agreement concerning a partnership or joint venture or minority
   equity investment, or relating to loans or advances to any Person, other than
   loans and advances to employees made in the ordinary course of business;

      (xii) instrument or agreement whereby the Company Group grants any other
   Person a power of attorney outside the ordinary course of business or
   indemnifies outside the ordinary course of business any other Person against
   loss or Liability;

      (xiii) instrument or agreement whereby any other Person indemnifies
   outside the ordinary course of business any member of the Company Group
   against loss or Liability;

      (xiv) agreement concerning confidentiality or non-competition other than
   confidentiality agreements entered into by Argo-Tech in a commercial context
   in the ordinary course of business;

      (xv) agreement with any officer, director or stockholder of any member of
   the Company Group;

      (xvi) other than this Agreement, agreement under which the Company Group
   would reasonably be expected to have Liabilities or obligations in the future
   relating to the acquisition or disposition of assets having a value in excess
   of $250,000 by way of merger, consolidation, purchase, sale or otherwise, or
   granting to any Person a right at such Person's option to purchase or acquire
   any material asset or property of the Company Group or any interest therein
   (not including dispositions of inventory in the ordinary course);

                                       26
<PAGE>

      (xvii) agreement, contract or commitment for the construction or
   modification of any building, structure or other fixed asset, or for the
   incurrence of any other capital expenditure involving amounts in excess of
   $250,000;

      (xviii) to Seller's Knowledge, agreement or contract for which any member
   of the Company Group is reasonably likely under the contract terms and
   applicable Law to have Liability for consequential damages in excess of
   $15,000,000;

      (xix) customer or supplier contract involving payments in excess of
   $500,000 in the aggregate which provides for the payment of liquidated
   damages; or

      (xx) other contract or group of related contracts with the same party
   involving more than $500,000 and continuing over a period of more than six
   months from the date or dates thereof (including renewals or extensions
   optional with another party), which contract or group of contracts is not
   terminable by the Company Group without penalty upon notice of 30 days, or
   less (collectively, all agreements listed, or required to be listed on
   Section 3.12 of the Disclosure Schedule pursuant to (i) through (xvii) of
   this Section 3.12 are referred to as the "Material Contracts").

      (b) Except as set forth in Section 3.12 of the Disclosure Schedule, (i)
each Material Contract is in full force and effect and is the legal, valid and
binding obligation of a member of the Company Group which is a party to such
Material Contract, subject to the Remedies Exception and, to Seller's Knowledge,
the other parties thereto (the "Other Parties"), and (ii) no member of the
Company Group or, to the Seller's Knowledge, any of the Other Parties to any
Material Contract is in breach, violation or default in any material respect and
has received written notice of such breach, violation or default in any material
respect, and, to Seller's Knowledge, no event has occurred which with notice or
lapse of time or both would constitute a breach, violation or default in any
material respect by a member of the Company Group or any Other Party, or permit
termination, modification, or acceleration by the Other Parties, under such
Material Contract, except that, in order to avoid a default, violation or breach
in any material respect under any Material Contract, the Consent of the Other
Parties set forth in Section 3.2 of the Disclosure Schedule may be required in
connection with the transactions contemplated hereby.

      (c) All products sold pursuant to any OEM contracts in the engine division
to which a member of the Company Group is party will result in book losses,
which losses through the Balance Sheet Date with respect to firm orders are
reflected in the Unaudited Financial Statements. These losses are recovered by
the Company Group from aftermarket and overhaul sales of such products over
time. Any firm contracts other than OEM contracts in the engine division that
can be reasonably expected to result in book losses have been fully reserved for
in the balance sheet accounts of the Company Group through the Balance Sheet
Date reflected in the Unaudited Financial Statements.

      Section 3.13. Insurance. Section 3.13 of the Disclosure Schedule contains
a correct and complete list and description (including the name of the insurer,
name of the policyholder, amount and type of coverage) of all material policies
or binders of insurance provided to any member of the Company Group. All such
policies are in full force and effect, are current on premium payments and no
written notice of cancellation, non-renewal,

                                       27
<PAGE>

termination, premium increase or change in coverage has been received with
respect thereto, and to Seller's Knowledge, there is no existing default by any
insured thereunder. Following the Closing, the Company Group will have the full
benefit of all such policies, or comparable replacement policies. Section 3.13
of the Disclosure Schedule sets forth a list or description of each claim made
under any such policy since January 1, 2004 involving or which would reasonably
be expected to involve an amount in excess of $250,000.

      Section 3.14. Litigation. Except as set forth in Section 3.14 of the
Disclosure Schedule, (i) there are, and since January 1, 2004 there have been,
no asserted claims in writing or Actions pending or, to Seller's Knowledge,
threatened in law or in equity or before any Governmental Authority against (A)
any member of the Company Group which are reasonably likely to result in
Liability for any member of the Company Group or call into question the validity
of this Agreement or the transactions contemplated by this Agreement or (B) to
the Seller's Knowledge, any director or officer or any member of the Company
Group that would be reasonably likely to result in Liability of the Company
Group exceeding $1,000,000 or call into question the validity of this Agreement
or the transactions contemplated by this Agreement, and (ii) there are no
outstanding material injunctions, judgments, orders, decrees, rulings, decisions
or charges to which any member of the Company Group is a party or by which any
member of the Company Group is bound by or with any Governmental Authority.
Except as set forth in Section 3.14 of the Disclosure Schedule, since January 1,
2004, no member of the Company Group has entered into any settlement agreement
with respect to any Action (or threatened Action) involving a payment or
provision of other consideration in an amount or value in excess of $500,000 by
such member of the Company Group, whether or not covered by insurance or
otherwise subject to indemnification or that had consequences that were
otherwise material to the Company Group.

      Section 3.15. Employee Matters.

      (a) Section 3.15(a) of the Disclosure Schedule sets forth a complete and
correct list of each "employee benefit plan " (as such term is defined in
Section 3(3) of ERISA), and each other benefit or compensation plan, program,
agreement or arrangement (excluding salaries, wages and de minimis fringe
benefit plans, programs or arrangements) that any member of the Company Group on
the date hereof maintains, provides or sponsors, or to which any member of the
Company Group contributes or has any obligation to contribute, or with respect
to which any member of the Company Group has any Liability (collectively, the
"Company Plans").

      (b) Each Company Plan (and each related trust, insurance contract, or
fund) has been maintained, funded, and administered in accordance with the terms
of such Company Plan and the terms of any applicable collective bargaining
agreement and is in material compliance in form and in operation with the
applicable requirements of ERISA and the Code, and all other applicable Laws.

      (c) All required reports and descriptions (including annual reports on
Form 5500), summary annual reports, and summary plan descriptions) have been
timely filed and/or distributed in accordance with the applicable requirements
of ERISA and the Code with respect to each Company Plan, and the Company Group
and each ERISA Affiliate have materially complied and are in material compliance
with the requirements of COBRA.

                                       28
<PAGE>

      (d) All contributions (including all employer contributions and employee
salary reduction contributions) and premium payments that are due have been made
within the time periods prescribed by ERISA and the Code with respect to each
Company Plan, and all material contributions and material premium payments for
any period ending on or before the Closing Date that are not yet due have been
made with respect to each Company Plan or properly accrued.

      (e) Each Company Plan that is intended to meet the requirements of a
"qualified plan" under section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Seller's
Knowledge, nothing has occurred that could adversely affect the qualified status
of any such Company Plan so as to result in any material Liability to any member
of the Company Group. Each such Company Plan has been timely amended to comply
with the provisions of the legislation commonly referred to as "GUST" and
"EGTRRA" and submitted to the Internal Revenue Service for a determination
letter that takes the GUST amendments into account within the GUST remedial
amendment period.

      (f) Seller has made available to Buyer correct and complete copies of the
plan documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the three most recent annual
reports (IRS Form 5500, with all applicable attachments), the most recent
actuarial valuation and all related trust agreements, insurance contracts, and
other funding arrangements that implement each Company Plan.

      (g) Except as set forth on Section 3.15(g) of the Disclosure Schedule, no
member of the Company Group or any ERISA Affiliate maintains, sponsors,
contributes to, or has any Liability under (or with respect to) any "defined
benefit plan" (as defined in section 3(35) of ERISA), or, within the past five
(5) years, any "multiemployer plan" (as defined in section 3(37) of ERISA), or
otherwise has any Liability under Title IV of ERISA. No asset of any member of
the Company Group is subject to any Lien under ERISA or the Code. There has been
no application for or waiver of the minimum funding standards imposed by section
302 of ERISA and section 412 of the Code with respect to any Company Plan; no
Company Plan has an "accumulated funding deficiency" within the meaning of
section 412 of the Code; and there has been no "reportable event" (within the
meaning of section 4043 of ERISA) with respect to any Company Plan for the prior
three years.

      (h) To Seller's Knowledge: (1) there have been no non-exempt, uncorrected
prohibited transactions (as defined in section 406 of ERISA or section 4975 of
the Code) with respect to any Company Plan; (2) no fiduciary (as defined in
section 3(21) of ERISA) has any Liability for any breach of fiduciary duty or
any other failure to act or comply in connection with the administration or
investment of the assets of any Company Plan; and (3) no Action with respect any
Company Plan (other than routine claims for benefits) is pending or threatened,
and there is no basis for any such Action.

      (i) Except as set forth on Section 3.15(i) of the Disclosure Schedule, no
member of the Company Group maintains, contributes to or has an obligation to
contribute to, or any Liability with respect to, the provision of medical,
health, or life insurance or other welfare type benefits for current or future
retired or terminated directors, officers, employees or contractors of any
member of the Company Group (or any spouse or other dependent thereof) other
than in accordance with COBRA.

                                       29
<PAGE>

      (j) Section 3.15(j) of the Disclosure Schedule contains a complete and
correct list of each benefit or compensation plan, program, agreement or
arrangement (excluding salaries, wages and de minimis fringe benefit plans,
programs or arrangements) with respect to which any member of the Company Group
has any Liability relating to the provision of benefits to any current or former
employee, officer, director or contractor of the Company Group residing or
working outside the United States (each, a "Foreign Plan"). Each Foreign Plan
has been maintained, funded and administered in all material respects in
accordance with its terms and the requirements of all applicable Laws, and no
Foreign Plan has any unfunded or underfunded Liabilities.

      (k) There is no labor strike, material labor dispute, or concerted work
stoppage pending or, to the Seller's Knowledge, threatened, and since January 1,
2001 no member of the Company Group has experienced any labor strike or material
concerted labor dispute. Except as set forth in Section 3.15(k) of the
Disclosure Schedule no Company Group member is party to or otherwise bound by
any collective bargaining agreement or relationship with any labor organization.
Except as set forth in Section 3.15(k) of the Disclosure Schedule, each member
of the Company Group has complied in all material respects with all applicable
labor and employment Laws in connection with the employment of its employees,
including those Laws relating to wages and hours, collective bargaining, equal
employment opportunity and affirmative action, layoffs, immigration, workplace
safety and the collection and payment of all Taxes and other withholdings.
Within the past three years, no Company Group member has implemented any plant
closing or layoff of employees that could implicate (without regard to any
actions that could be taken by the Company following the Closing) the Worker
Adjustment and Retraining Notification Act of 1988, as amended, or any similar
foreign, state or local Law, (collectively, the "WARN Act").

      (l) Except as set forth in Section 3.15(l) of the Disclosure Schedule,
neither the execution and performance of this Agreement, nor the consummation by
the Parties of the transactions contemplated hereby, will constitute a
triggering event under any Company Plan that will result in any payment, whether
a severance payment or otherwise, becoming due from such Company Plan or from
the Company to any present or former employee (or dependents of such person).

      (m) The Company is in all material respects in compliance with the Health
Insurance Portability and Accountability Act of 1996 (ERISA Section 701 et seq)
to the extent applicable.

      (n) Section 3.15(n) of the Disclosure Schedule sets forth a true and
complete list of (i) all directors of any member of the Company Group, (ii) all
officers (with office held) of any member of the Company Group, (iii) all
consultants and contract employees (with total cash compensation (salary and
bonus) in excess of $150,000 for any 12-month period) retained by any member of
the Company Group currently, and (iv) all employees of any member of the Company
Group, including each such employee's job title, remuneration and duration of
employment period. No more than twenty of the individuals identified on Section
3.15(n) of the Disclosure Schedule are "leased employees" as that term is
defined under Section 414(n) of the Code. Seller shall cause the Company to
deliver to Buyer a list of such individuals who are "leased employees" within
ten Business Days of the date hereof.

                                       30
<PAGE>

      (o) The Argo-Tech Corporation Employee Stock Ownership Plan has been
terminated lawfully by its sponsor and in compliance with relevant provisions of
the Code and ERISA. The sponsor of this Plan has received a favorable
determination letter from the Internal Revenue Service providing that the
termination of this plan did not adversely affect its Tax-qualified status under
the Code, a copy of which has been provided to Buyer. To Seller's Knowledge,
there are no pending or threatened claims regarding the termination of this Plan
or any transactions flowing from such termination, including Actions for breach
of fiduciary duties.

      (p) No member of the Company Group has any further Liability to any
employee, former employee, owner or former owner of any member of the Company
Group or its predecessors which arose as a result of the Merger.

      Section 3.16. Legal Compliance. Except with respect to Tax matters (which
are addressed exclusively in Section 3.8), environmental matters (which are
addressed exclusively in Section 3.11) and employee matters (which are addressed
exclusively in Section 3.15), no member of the Company Group is, or for the past
three years has been, in material violation of any Law applicable to its assets,
properties, business or operations, including the Arms Export Control Act and
the International Traffic in Arms Regulations. No member of the Company Group
has received a written notice at any time in the past three years alleging any
material failure to comply with any Law, including the Arms Export Control Act
and the International Traffic in Arms Regulations. Each member of the Company
Group is in compliance with any privacy policies or related policies, programs
or other notices adopted by such member of the Company Group for such member's
use and collection of personal information, except to the extent the failure of
any such compliance would not have a Material Adverse Effect on the Company
Group. To the Seller's Knowledge, (i) there has not been any notice to,
complaint against, or audit, proceeding or investigation conducted with respect
to any member of the Company Group by any Person (including any Governmental
Authority) regarding any material violation of Laws related to the collection,
use or disclosure of personal information by any Person in connection with the
operation of the business of any member of the Company Group, (ii) none is
threatened or pending and (iii) there is no reasonable basis for the same.

      Section 3.17. Licenses and Permits. The Company Group currently has all
material Licenses which are required for the operation of its respective
businesses as presently conducted. To the Seller's Knowledge, all material
Licenses that the Company Group currently has will be available for use by the
Buyer and the Company Group immediately after the Closing Date. No member of the
Company Group is in default (and, to the Seller's Knowledge, no event has
occurred that, with the notice or lapse of time or both, would constitute a
default) of any term, condition or provision of any material License to which it
is a party that would have a Material Adverse Effect on the Company Group. To
the Seller's Knowledge, no written notice has been received by any officer of
any member of the Company Group at any time in the past three years alleging the
failure to hold any material License.

      Section 3.18. Brokers' Fees. Except as set forth on Section 3.18 of the
Disclosure Schedule, no member of the Company Group has entered into any
contract or other arrangement or understanding (written or oral, express or
implied) with any Person which may result in the obligation of the Company or
Buyer or any of its Affiliates to pay any fees, commissions or other
compensation to any broker or finder or person providing comparable or

                                       31
<PAGE>

similar services as a result of the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement.

      Section 3.19. No Undisclosed Liabilities. Except as disclosed in Section
3.19 of the Disclosure Schedule or as disclosed or reserved against on the
Financial Statements, neither the Company nor any of its consolidated
Subsidiaries has any Liabilities of any kind that would have been required by
GAAP to be reflected on a consolidated balance sheet of the Company Group or in
the notes thereto, other than (a) Liabilities incurred in the ordinary course of
business after the Balance Sheet Date (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any material breach of
contract, material breach of warranty, material tort, material infringement, or
material violation of a Law), (b) Liabilities relating to the current or future
performance, or arising in accordance with any terms, of any contract or
agreement to which the Company or any Subsidiary is subject and which are either
listed on Section 3.12 of the Disclosure Schedule or are not required to be so
listed (none of which results from, arises out of, relates to, is in the nature
of, or was caused by any material breach of any such contract or agreement) and
(c) Liabilities incurred in connection with the transactions contemplated hereby
(other than the Reorganization).

      Section 3.20. Internal Controls and Procedures. Argo-Tech has established
and maintains disclosure controls and procedures and internal control over
financial reporting (as such terms are defined in paragraphs (e) and (f),
respectively, of Rule 15d-15 under the Securities Exchange Act) as required by
Rule 15d-15 under the Securities Exchange Act. Argo-Tech has disclosed, based on
its most recent evaluation prior to the date of this Agreement, to its auditors
and the Company's auditors and to the board of directors of Argo-Tech and audit
committee of the board of directors of the Company: (A) all significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
in any material respect Argo-Tech's ability to record, process, summarize and
report financial information and (B) any fraud, whether or not material, that
involves Argo-Tech's executive officers or other employees who have a
significant role in Argo-Tech's internal control over financial reporting. As of
the date of this Agreement, to Seller's Knowledge, Argo-Tech has not identified
any material weaknesses in the design or operation of internal control over
financial reporting. There are no outstanding loans made by Argo-Tech or any of
its subsidiaries to any executive officer (as defined in Rule 3b-7 under the
Securities Exchange Act) or member of the board of directors of the Company.

      Section 3.21. Transactions with Affiliates. Except as disclosed on Section
3.21 of the Disclosure Schedule, no officer, director or Affiliate of the
Company Group or Seller or, to Seller's Knowledge, any Affiliate of any such
individual or entity (excluding, for the avoidance of doubt, any portfolio
company or other Persons in which an equity holder of Seller or any of their
respective Affiliates otherwise has an investment) (i) is a consultant,
creditor, debtor, customer, distributor, supplier or vendor of, or is a party to
any material contract or agreement (other than any employment, management
services, retention, severance, change of control, transaction bonus or similar
compensation contract or agreement listed on Section 3.12 of the Disclosure
Schedule or not required to be so listed) with, any member of the Company Group
or (ii) owns any direct or indirect interest in any material asset used in
connection with the business of the Company Group.

                                       32
<PAGE>

      Section 3.22. Customers and Suppliers.

      (a) Section 3.22 of the Disclosure Schedule lists the ten largest
customers (based on net revenue received by the Company Group) and the ten
largest suppliers (based on payments made by the Company Group) of the Company
Group (on a consolidated basis) for the most recently completed fiscal year.
Opposite the name of each such customer is the approximate percentage of
consolidated net sales attributable to such customer. Except as disclosed on
Section 3.22 of the Disclosure Schedule, since December 31, 2005, (a) no
customer listed in Section 3.22 of the Disclosure Schedule has indicated in
writing its plans or intent to stop, or materially decrease the rate of, buying
products and services from the Company Group and (b) no supplier listed in
Section 3.22 of the Disclosure Schedule has indicated in writing its plans or
intent to stop, or materially decrease the rate of, supplying materials,
products or services to the Company Group.

      (b) Section 3.22 of the Disclosure Schedule lists all top-level products
sold by any member of the Company Group pursuant to FAA Parts Manufacturing
Authority. No member of the Company Group has received written notice that any
qualifications or approvals for its products as established by its customers
have been revoked or terminated and, to Seller's Knowledge, no such revocation
or termination is threatened or contemplated. No member of the Company Group
holds any security clearances from the Department of Defense.

      Section 3.23. Warranties. The accrual for warranty claims (a) set forth on
the Financial Statements for the year ended October 28, 2006, and (b) as set
forth on Argo-Tech's books and records as of the date hereof, adequately reflect
an amount required for satisfaction of warranty related Liabilities due in
respect of goods sold or services rendered by the Company Group prior to each
such date, as applicable. No member of the Company Group has agreed to provide
any express product or service warranties other than (i) standard warranties,
the terms of which have been provided to Buyer and identified as the Company's
warranties, (ii) warranties for parts, components and original equipment that
expressly provide that cure is to be effected by repair or replacement of the
defective or noncomplying products and (iii) other warranties that will not, if
material claims are made thereunder, have a Material Adverse Effect on the
Company Group. Except as disclosed on Section 3.23 of the Disclosure Schedule,
there are no pending, and during the past three years there have been no,
material warranty claims made by any third parties with respect to any product
manufactured or sold by the Company Group.

      Section 3.24. List of Government Contracts, Subcontracts and Bids. Section
3.24 of the Disclosure Schedule sets forth a current, complete and accurate list
of all Government Contracts involving payments in excess of $500,000 that are
currently active in performance (or have been active in performance in the past
but have not been closed after receiving final payment, or have been active in
performance for the three years prior to the Closing Date) and to which any
member of the Company Group is a party. This schedule accurately reports for
each such Government Contract the contractor, the customer, the contract number,
as well as the applicable member of the Company Group's best estimate of the
total value of the Government Contract. Each Government Contract listed in the
schedule is in full force and effect and is valid and enforceable against the
applicable member(s) of the Company Group in accordance with its terms, subject
to the Remedies Exception. Seller has made available to Buyer complete and
correct copies of all such Government Contracts listed in such schedule. Except
as disclosed on Section 3.24 of the Disclosure Schedule, no Government Contract
listed in the schedule was

                                       33
<PAGE>

awarded on the basis of any qualification as a "small business concern," "small
disadvantaged business," protege status or other preferential status (including
disadvantaged-business, minority-owned business, women-owned business or other
business status based on ownership or control, or participation in or
qualification under other preferential status programs, such as the Historically
Underutilized Business Zone program or participation under Section 8(a) of the
Small Business Act or similar preferences). Section 3.24 of the Disclosure
Schedule also sets forth a current, accurate and complete list of each of the
unexpired Government Bids involving payments in excess of $500,000 that any
member of the Company Group has submitted to a Governmental Authority.

      Section 3.25. Compliance, Performance, Termination and Breach of
Government Contracts. With respect to any and all Government Contracts and
Government Bids to which any member of the Company Group is or has been a party,
except as set forth in Section 3.25 of the Disclosure Schedule, at all times
during the three year period prior to the Closing Date:

      (a) each member of the Company Group is, and has been, in compliance with
all material terms and conditions of each Government Contract (including all
provisions and requirements incorporated expressly, by reference or by operation
of applicable Laws);

      (b) each member of the Company Group is, and has been, in compliance in
all material respects with all requirements of applicable Laws pertaining to
each Government Contract and Government Bid and all requirements of Governmental
Authorities regarding such applicable Laws with respect to each Government
Contract and Government Bid;

      (c) no Government Contract has been the subject of a termination for
default or for convenience, and no member of the Company Group has received any
written demand for cure or show cause regarding performance of a Government
Contract or any written (or, to Seller's Knowledge, oral) notice of or claim for
or assertion of a condition of default, a breach of contract, a violation of any
applicable Laws or a violation of a contract requirement (including all
provisions and requirements incorporated expressly, by reference or by operation
of Law therein) in connection with a Government Contract or Government Bid,
whether from a Government Authority or from any prime contractor, subcontractor,
vendor or other third party;

      (d) to Seller's Knowledge, no event has occurred which, with the passage
of time or the giving of notice or both, would reasonably be expected to result
in a condition of default or breach of contract or a material violation of any
applicable Laws with respect to a Government Contract or Government Bid; and

      (e) no member of the Company Group has violated in any material respect
any applicable Laws or administrative or contractual restriction concerning the
employment of (or discussions concerning possible employment with) current or
former officials or employees of a Governmental Authority (regardless of the
branch of government), including the so-called "revolving door" restrictions set
forth at 18 U.S.C. Section 207 or similar provisions under state or local laws.

                                       34
<PAGE>

      Section 3.26. Internal Controls, Audits and Investigations.

      (a) No member of the Company Group is currently being or has in the past
three years been audited by any Governmental Authority, except in the ordinary
course of business or as is customary in the industry or as provided by
applicable regulations, or, to Seller's Knowledge, is being investigated by any
Government Authority, nor to Seller's Knowledge, has such audit or investigation
been threatened.

      (b) Except as disclosed on Section 3.26(b) of the Disclosure Schedule,
during the past three years no member of the Company Group has been under
administrative, civil or criminal indictment or criminal information, or audit
by a Governmental Authority with respect to any deficient performance,
mischarging, misstatement or omission or other alleged irregularity, arising
under or relating to any Government Contract or Government Bid.

      Section 3.27. Debarment, Suspension and Exclusion.

      (a) During the past three years, no member of the Company Group and no
director or officer thereof has been the subject of a debarment, suspension or
exclusion from participation in programs funded by any Governmental Authority or
in the award of any Government Contract, nor, to Seller's Knowledge, have any of
them been listed on any list of parties excluded from participation in
government-funded programs nor, to Seller's Knowledge, has any such debarment,
suspension or exclusion proceeding or proposed listing been initiated or
threatened in the past three years.

      (b) No written notice has been received that any determination has been
made by a Governmental Authority that any member of the Company Group is
nonresponsible or ineligible for award of a government contract within the past
three years, nor, to Seller's Knowledge, do any circumstances exist that would
reasonably be expected to warrant the institution of debarment, suspension or
exclusion proceedings or any finding of nonresponsibility or ineligibility with
respect any member of the Company Group in the future.

Section 3.28.     Absence of Unlawful Payments.

      (a) No member of the Company Group has within the past three years, (i)
used any funds of any member of the Company Group or any of their predecessors,
partners, Affiliates, principals or officers, for unlawful contributions,
payments, gifts or entertainment, or (ii) made any unlawful expenditures
relating to political activity to government officials or others (any payment
pursuant to (i) or (ii) hereinafter referred to as an "Unlawful Payment"), nor
has any member of the Company Group received written notice of any Unlawful
Payment. The Company Group has reasonably adequate financial controls to prevent
such Unlawful Payments.

      (b) The Company Group is in compliance in all material respects and has,
during all periods for which any applicable statute of limitations has not
expired, complied with the applicable provisions of the U.S. Foreign Corrupt
Practices Act, as amended, and other applicable foreign laws and regulations
relating to corrupt practices and similar matters.

      Section 3.29. No Undisclosed Liabilities of Carter Ground Fueling, Ltd.
Except as disclosed in Section 3.29 of the Disclosure Schedule or as disclosed
or reserved against on the

                                       35
<PAGE>

Financial Statements, Carter Ground Fueling, Ltd. does not have any material
Liabilities of any kind, other than: (a) Liabilities incurred in the ordinary
course of business after the Balance Sheet Date (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, tort, infringement, or violation of a Law); (b) Liabilities relating
to the current or future performance, or arising in accordance with any terms,
of any contract or agreement to which Carter Ground Fueling is subject and which
is listed on Section 3.29 of the Disclosure Schedule (none of which results
from, arises out of, relates to, is in the nature of, or was caused by any
breach of any such Material Contract); and (c) Liabilities incurred in
connection with the transactions contemplated hereby (other than the
Reorganization).

      Section 3.30. NO ADDITIONAL REPRESENTATIONS. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN ARTICLE III OF THIS AGREEMENT, THE COMPANY EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
THE CONDITION, VALUE OR QUALITY OF THE BUSINESS OR THE ASSETS OF THE BUSINESS,
AND THE COMPANY SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO THE ASSETS OF THE BUSINESS, OR ANY PART THEREOF, OR AS TO THE
WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT, IT BEING UNDERSTOOD THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
ARTICLE III OF THIS AGREEMENT, SUCH SUBJECT ASSETS ARE BEING ACQUIRED "AS IS,
WHERE IS" ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND THE PURCHASER
SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF.

                                  Article IV.

                         REPRESENTATIONS AND WARRANTIES
                                REGARDING SELLER

      Seller represents and warrants to Buyer as of the date hereof and as of
the Closing Date, except as set forth in the Disclosure Schedule, as follows:

      Section 4.1. Organization. Seller is a limited liability company validly
organized, validly existing and in good standing under the laws of the State of
Delaware, and Seller has all requisite limited liability company power and
authority to carry on its business as it is currently conducted and to own,
lease and operate its properties and assets where such properties and assets are
now owned, leased or operated.

      Section 4.2. Authorization. Seller has all requisite power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which it is party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Seller of this Agreement and the other Transaction
Documents to which it is party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Seller and Seller's members. This Agreement and the other
Transaction Documents to which it is party have been, or will be, duly executed
and delivered by Seller and,

                                       36
<PAGE>

assuming this Agreement constitutes a legal, valid and binding obligation of
Buyer, constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to the Remedies Exception.

      Section 4.3. Noncontravention. Neither the execution and delivery of this
Agreement by Seller, nor the consummation by Seller of the transactions
contemplated hereby or the performance by Seller of its obligations hereunder
and under the Transaction Documents will (i) violate, conflict with or result in
a breach or default under any provision of the organizational documents of
Seller, (ii) except as set forth in Section 4.3 of the Disclosure Schedule,
violate, conflict, result in a breach of or default under, give rise to any
notification or Consent requirement or any right of termination, cancellation,
payment or acceleration under or result in the creation of any Lien (other than
Permitted Liens) upon any of the Shares under any Material Contract, or (iii)
subject to the Consents specified in Section 3.5 and compliance with the HSR
Act, violate any Law to which Seller is subject, except, in the case of clauses
(ii) and (iii), for such matters which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company Group.

      Section 4.4. Brokers' Fees. Except as set forth on Section 4.4 of the
Disclosure Schedule, Seller has not entered into any contract or other
arrangement or understanding (written or oral, express or implied) with any
Person which may result in the obligation of any members of the Company Group or
Buyer or any of its Affiliates to pay any fees, commissions or other
compensation to any broker or finder or Person providing comparable or similar
services as a result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement.

                                   Article V.

                 REPRESENTATIONS AND WARRANTIES REGARDING BUYER

      Buyer represents and warrants to Seller as of the date hereof and as of
the Closing Date as follows:

      Section 5.1. Organization. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of Ohio and Buyer has all
requisite corporate power and authority to carry on its business as it is
currently conducted and to own, lease and operate its properties where such
properties are now owned, leased or operated. Buyer is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or license necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Buyer.

      Section 5.2. Authorization. Buyer has all requisite power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Buyer of this Agreement and the other Transaction
Documents to which it is party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary

                                       37
<PAGE>

action on the part of Buyer. This Agreement and the other Transaction Documents
to which it is party have been, or will be, duly executed and delivered by Buyer
and, assuming this Agreement constitutes a legal, valid and binding obligation
of Seller, constitutes a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to the Remedies
Exception.

      Section 5.3. Financial Capacity. At or prior to the Closing, Buyer will
have sufficient cash, available lines of credit or other sources of immediately
available funds to pay in cash the Purchase Price for the Shares in accordance
with the terms of Article II and any other amounts to be paid by it hereunder.

      Section 5.4. Noncontravention. Neither the execution and delivery of this
Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby or the performance by Buyer of its obligations hereunder and
under the Transaction Documents will (i) violate, conflict with or result in a
breach or default under any provision of the organizational documents of Buyer,
or (ii) violate, conflict, result in a breach of or default under, give rise to
any notification or Consent requirement or any right of termination,
cancellation, payment or acceleration under or result in the creation of any
Lien (other than Permitted Liens) upon the properties or assets of Buyer under
any material agreement, contract, lease, license, instrument or other
arrangement to which Buyer or any of its Affiliates is a party or by which any
of their respective properties are bound, or (iii) subject to compliance with
the HSR Act, violate any Law to which Buyer or any of its Subsidiaries is
subject, except, in the case of clauses (ii) and (iii), for such violations or
breaches which would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer.

      Section 5.5. Government Authorizations. Except for required filings under
the HSR Act, no Consent of, with or to any Governmental Authority is required to
be obtained or made by or with respect to Buyer or any of its Subsidiaries or
Affiliates in connection with the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is party by Buyer or
the consummation by Buyer of the transactions contemplated hereby and thereby.

      Section 5.6. Litigation. There are no Actions pending or, to Buyer's
Knowledge, threatened in law or in equity or before any Governmental Authority
against Buyer or any of its Affiliates which would have, individually or in the
aggregate, a Material Adverse Effect on Buyer, and there are no outstanding
injunctions, judgments, orders, decrees, rulings, or charges to which Buyer or
any of its Affiliates is a party or by which it is bound by or with any
Governmental Authority which would have, individually or in the aggregate, a
Material Adverse Effect on Buyer.

      Section 5.7. Brokers' Fees. None of Buyer or any of its Affiliates has any
contract or other arrangement or understanding (written or oral, express or
implied) with any Person which may result in the obligation of Seller or any of
its Affiliates (other than any obligations of the Company Group after the
Closing Date), or prior to Closing the Company or any of its Affiliates, to pay
any fees, commissions or other compensation to any broker or finder or Person
providing comparable or similar services as a result of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
by this Agreement.

                                       38
<PAGE>

      Section 5.8. Investment. Buyer is aware that the Shares being acquired by
Buyer pursuant to the transactions contemplated hereby have not been registered
under the Securities Act or under any state securities Laws. Buyer qualified as
an "accredited investor" as such terms is defined in Rule 501(a) promulgated
under the Securities Act, and Buyer is purchasing the Shares solely for
investment and not with a view toward, or for sale in connection with, any
distribution thereof within the meaning of the Securities Act, nor with any
present intention of distributing or selling any of the Shares. Buyer and its
Subsidiaries and Affiliates will not sell or otherwise dispose of the Shares
except in compliance with the registration requirements or exemption provisions
under the Securities Act and the rules and regulations promulgated thereunder,
or any other applicable securities Laws. Buyer has knowledge, experience and
expertise in business and financial matters and has the capability of
understanding and evaluating the risks and merits associated with transactions
contemplated by this Agreement.

      Section 5.9. Information. Seller and the Company Group have provided Buyer
with such access to the facilities, books, records and personnel of each member
of the Company Group and Affiliates as Buyer has deemed necessary and
appropriate in order for Buyer to investigate to its satisfaction the business
and properties of each member of the Company Group and Affiliates sufficiently
to make an informed investment decision to purchase the Shares and to enter into
this Agreement. Buyer agrees to accept the Shares on the Closing Date based upon
its own investigation, examination and determination with respect thereto as to
all matters and without reliance upon any express or implied representations or
warranties of any nature made by or on behalf of or imputed to Seller, except as
expressly set forth in this Agreement.

                                  Article VI.

                                   COVENANTS

      Section 6.1. Conduct of the Company.

      (a) Seller covenants and agrees that, except (i) as otherwise expressly
permitted or required by this Agreement (including as described in Section 6.1
of the Disclosure Schedule and the other matters expressly set forth in the
other Schedules and Exhibits hereto) and the other Transaction Documents, (ii)
required by any change in applicable Law, (iii) as necessary or desirable for
Seller to effectuate the retention of the Excluded Assets (through
reorganization, disposition or otherwise) or (iv) as otherwise approved in
writing by Buyer, during the period commencing on the date hereof and ending on
the Closing Date, Seller will cause the Company to use commercially reasonable
efforts to conduct the business of the Company Group in the ordinary course, to
keep available the services of the officers and key employees of the Company
Group and to maintain and preserve intact the business, organizations and
relationships with customers, suppliers and others having business relationships
with the Company Group in all material respects in order to preserve for Buyer
to and after the Closing Date the business of the Company Group (it being
understood that such efforts will not include any requirement or obligation to
pay any consideration not otherwise required to be paid by the terms of an
existing agreement or offer or grant any financial accommodation or other
benefit not otherwise required to be made by the terms of an existing
agreement).

                                       39
<PAGE>

      (b) Until the Closing, Seller covenants and agrees that except (i) as
otherwise contemplated by this Agreement (including as described in Section 6.1
of the Disclosure Schedule and the other matters contemplated by the other
Schedules and Exhibits hereto) and the other Transaction Documents, (ii)
required by any change in applicable Law, (iii) as necessary or desirable for
Seller to effectuate the retention of the Excluded Assets (through
reorganization, disposition or otherwise) or (iv) otherwise approved in writing
by Buyer (which approval shall not be unreasonably withheld or delayed), Seller
will cause each member of the Company Group not to take any of the following
actions:

      A. (1) amend its certificate of formation, limited liability company
agreement, certificate of incorporation, bylaws, partnership agreement or
operating agreement, as applicable; or (2) authorize for issuance, issue, grant,
sell, deliver, dispose of, pledge or otherwise encumber any shares of its
capital stock or issue any Rights to subscribe for or acquire any shares of its
capital stock;

      B. declare, set aside, pay or make any dividend or other distribution with
respect to its shares of capital stock or any other payment to Seller or any
Affiliate of Seller;

      C. except as required by GAAP, change any accounting methods, principles
or practices;

      D. sell, transfer, lease or otherwise dispose of or encumber any of the
material tangible assets or material properties pertaining to the business of
the Company Group with a value in excess of $1,000,000 in each case or having an
aggregate value of $5,000,000, other than the sale of inventory in the ordinary
course of business;

      E. settle or knowingly compromise any litigation (whether or not commenced
prior to the date of this Agreement), other than settlements involving amounts
payable by the Company and its Subsidiaries that are not in excess of $250,000
in the aggregate or settlements that require satisfaction of monitoring or
reporting obligations to any Governmental Authority in the ordinary course of
business;

      F. amend in any respect, or enter into any new, contract or agreement with
any labor unions representing employees of the Company or any Subsidiary;

      G. other than in the ordinary course of business, enter into or materially
amend, modify, renew or terminate any Material Contract (or an agreement that
would constitute a Material Contract if in effect on the date hereof), including
any transaction involving any merger, consolidation, joint venture, license
agreement, partial or complete liquidation or dissolution, reorganization,
recapitalization, restructuring, or a purchase, sale, lease or other acquisition
or disposition of any assets or capital stock;

      H. permit any of the member(s) of the Company Group to (1) create, incur
or assume any material indebtedness for borrowed money other than borrowings
under the Company's existing revolving line of credit and the incurrence of
trade payables, in each case, in the ordinary course of business, (2)
voluntarily assume, guarantee, endorse or otherwise voluntarily become liable or
responsible (whether directly, contingently or otherwise) for any material
obligations of any Person other than another member of the Company Group, (3)
make

                                       40
<PAGE>

any loans or advances of cash or cash equivalents to any Person, other than any
member of the Company Group that is not a Person included in the Excluded
Assets, other than in the ordinary course of business, or (4) make any capital
contributions to or equity investments in any Person other than any member of
the Company Group;

      I. cancel any material third party indebtedness owed to any member of the
Company Group or in a manner that would give rise to any material Liability of
any member of the Company Group;

      J. (1) grant of any bonus, deferred compensation, material severance,
retention or termination pay with a value in excess of $250,000 in the aggregate
(other than pursuant to policies or agreements of any member of the Company
Group in effect on the date hereof which have been disclosed to Buyer in the
schedules hereto which are made without violating Section 409A of the Code)
except as otherwise required by Law; (2) make any material change in the key
management structure of the Company Group, including the hiring of additional
officers or the termination of existing officers; (3) grant any increase in the
base compensation or bonus opportunity of any director, officer or employee
other than normal increases in base compensation or bonus opportunity consistent
with past practices for employees who are not officers or (4) adopt, enter into
or amend (or promise to adopt, enter into or amend) any Company Plan other than
as required by Law, pursuant to policies or agreements of any member of the
Company Group in effect on the date hereof which have been disclosed to Buyer in
the schedules hereto, as described in Section 6.11 hereof, as would not
reasonably be expected to result in an increase in the amount of Liability under
any Company Plan of more than $250,000 or as would make the representations and
warranties made by Seller in Section 3.8(k) untrue;

      K. impose any Liens upon any asset, tangible or intangible other than
Permitted Liens;

      L. cancel, knowingly compromise, waive or release any valid right or claim
of a member of the Company Group involving more than $250,000;

      M. other than in the ordinary course of business, (1) amend, modify,
extend, renew or terminate any Real Property Lease; or (2) enter into any new
lease, sublease, license or other agreement for the use or occupancy of any real
property, in either case, requiring rental and other payments in excess of
$250,000 annually as averaged over the term thereof;

      N. other than in the ordinary course of business, (1) abandon, fail to
maintain or use commercially reasonable efforts to protect and defend in a
manner consistent with past practice any Company Intellectual Property, or (2)
license, sublicense, assign, sell or otherwise transfer any Company Intellectual
Property, that, in the case of each of subsections (1) and (2), is either
individually or in the aggregate material to the business of the Company Group
as currently conducted;

      O. enter into any contract or agreement that contains a material covenant
not to compete or materially restricts its rights to freely engage in business
applicable to a member of the Company Group or any Affiliate of a member of the
Company Group by virtue of such affiliation;

                                       41
<PAGE>

      P. agree with any third party, whether in writing or otherwise, to do any
of the foregoing; or

      Q. make any new Tax election or change any Tax election, change any method
of accounting or accounting period, settle any Tax claim or assessment relating
to any member of the Company Group, enter into any closing agreement, surrender
any right to claim for refund of Tax, Consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment relating to any
member of the Company Group, or any other similar action relating to the filing
of any Tax Return or payment of any Tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, Consent or other action would
reasonably be expected to have the effect of materially increasing the Tax
Liability of a member of the Company Group for any period ending after the
Closing Date or materially decreasing any Tax attribute of a member of the
Company Group existing on the Closing Date; provided that nothing in this
Section 6.1(b)Q shall prohibit anything contemplated by this Agreement,
including, without limitation the Reorganization.

      Section 6.2. Access to Information. Prior to the Closing Date, or, if
earlier, the date this Agreement is terminated pursuant to Section 10.1, Buyer
may make or cause to be made such investigation of the Company Group and of its
financial and legal condition as Buyer deems reasonably necessary or advisable.
Seller shall, and shall cause the Company Group to, permit Buyer and its
authorized agents or representatives, including its independent accountants, to
have reasonable access to the properties, books and records of the Company Group
during normal business hours to review information and documentation relative to
the properties, books, contracts, commitments and other records of the Company
Group; provided that such investigation shall only be upon reasonable notice and
shall not unreasonably disrupt personnel and operations of the business of the
Company Group and shall be at Buyer's sole cost and expense; provided, further,
that (i) neither Buyer, nor any of its Affiliates or representatives, shall
conduct any environmental site assessment, compliance evaluation or
investigation with respect to any member of the Company Group without prior
consultation with Seller and without ongoing consultation with Seller with
respect to any such activity (it being understood and agreed that in no event
shall any subsurface investigation or testing of any environmental media be
conducted) and (ii) Seller shall, and shall cause the Company Group to, make
available to Buyer all information and reports relating to any such activity
conducted in connection with the Reorganization. All requests for access to the
offices, properties, books and records of the Company Group shall be made to
such representatives of Seller as Seller shall designate, who shall be solely
responsible for coordinating all such requests and all access permitted
hereunder. It is further agreed that neither Buyer nor its representatives shall
contact any of the employees, customers, suppliers, parties that have business
relationships with or are joint venture partners of any member of the Company
Group or any of their respective Affiliates in connection with the transactions
contemplated hereby, whether in person or by telephone, mail or other means of
communication, without the specific prior authorization of such representatives
of Seller, such authorizations not to be unreasonably withheld or delayed. Any
access to the offices, properties, books and records of the Company Group shall
be subject to the following additional limitations: (a) such access shall not
violate any Law or agreement to which Seller or any member of the Company Group
is a party or otherwise expose Seller or any member of the Company Group to a

                                       42
<PAGE>

material risk of Liability; (b) Buyer shall give Seller notice of at least two
(2) Business Days before conducting any inspections or communicating with any
third party relating to any property of the Company Group, and a representative
of Seller shall have the right to be present when Buyer or its representatives
conducts its or their investigations on such property; and (c) none of Buyer or
its representatives shall damage the property of the Company Group or any
portion thereof.

      Section 6.3. Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement and applicable Law, each of the Parties hereto
shall use its commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary, proper
or advisable under applicable Laws and regulations or otherwise to consummate
and make effective the transactions contemplated by this Agreement as soon as
practicable, including such actions or things as any other Party hereto may
reasonably request in order to cause any of the conditions to such other Party's
obligation to consummate such transactions specified in Article VII to be fully
satisfied. Without limiting the generality of the foregoing, the Parties shall
(and shall cause their respective directors, officers and Subsidiaries to, and
use their commercially reasonable efforts to cause their respective Affiliates,
employees, agents, attorneys, accountants and representatives to) consult and
fully cooperate with and provide reasonable assistance to each other in (i)
obtaining all necessary Consents or other permission or action by, and giving
all necessary notices to and making all necessary filings, meetings or
appearances with and applications and submissions to, any Governmental Authority
or other Person, (ii) lifting any permanent or preliminary injunction or
restraining order or other similar order issued or entered by any court or
Governmental Authority (an "Injunction") of any type referred to in Section
7.1(a) and (iii) in general, consummating and making effective the transactions
contemplated hereby. Buyer and its Affiliates shall not enter into or complete
any transactions that could reasonably be expected to delay, hinder or prohibit
the consummation of the transactions contemplated hereby, including causing the
failure of the closing conditions set forth in Article VII to be satisfied.
Notwithstanding the foregoing, each Party hereby agrees to use its commercially
reasonable best efforts to obtain the consent of the holders of the 9.25% Notes
for the consummation of and to otherwise cause the reorganization to occur as
contemplated by Section 6.11.

      Section 6.4. HSR Act Compliance; Government Approvals.

      (a) Buyer and Seller shall timely and promptly cause to be made all
filings which may be required for the satisfaction of the closing condition set
forth in Section 7.1(b) by each of them and their respective Affiliates in
connection with the consummation of the transactions contemplated hereby. In
furtherance and not in limitation of the foregoing, each of the Parties agrees
to use its commercially reasonable efforts to file, and to cause each of their
Affiliates to file in conjunction with such party, Notification and Report Forms
under the HSR Act and similar applications with any other applicable
Governmental Authority whose Law requires notification in connection with the
consummation of the purchase by Buyer of the Shares as promptly as practicable
following the date of this Agreement. Seller and Buyer agree, and shall cause
each of their respective Subsidiaries and Affiliates, to (i) request in their
respective Notification and Report Forms under the HSR Act for early termination
of the waiting period under the HSR Act and (ii) to cooperate and to use their
respective commercially reasonable efforts to obtain any governmental Consent
required for the Closing (including through

                                       43
<PAGE>

compliance with the HSR Act, to respond to any governmental requests for
information, and to contest and resist any Action, including any legislative,
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, Injunction or other order (whether temporary,
preliminary or permanent) that restricts, prevents or prohibits the consummation
of the transactions contemplated by this Agreement, including by vigorously
pursuing all available avenues of administrative and judicial appeal and all
available legislative action). Notwithstanding anything contained herein to the
contrary, no Party or any of their respective Affiliates shall be required to
divest any assets in connection with this Section 6.4 generating annual revenues
in excess of $35,000,000 or to defend any Action that would require any such
divestiture. Each Party shall furnish to the other Party such necessary
information and assistance as such other Party may reasonably request in
connection with the preparation of any necessary filings or submissions by it to
any Governmental Authority referred to in Section 7.1(b). Without in any way
limiting the foregoing, the Parties will consult and cooperate with one another,
and consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any Party in connection with
proceedings under or relating to the HSR Act.

      (b) Each of the Parties shall notify and keep the other Party advised as
to (i) any material communication from the Federal Trade Commission, the United
States Department of Justice or any other Governmental Authority regarding any
of the transactions contemplated hereby and (ii) any Action pending and known to
such Party, or to its knowledge threatened, which challenges the transactions
contemplated hereby. Subject to the provisions of Article X, Seller and Buyer
shall not take any action inconsistent with their obligations under this
Agreement or, without prejudice to Buyer's rights under this Agreement, which
would materially hinder or delay the consummation of the transactions
contemplated by this Agreement.

      (c) Buyer shall pay all of the filing fees associated with the HSR Act and
any antitrust filings or notifications that may be required in jurisdictions
outside of the United States ("International Competition Laws"). Subject to the
proviso in Section 6.4(a), Buyer agrees to take any and all steps necessary to
avoid or eliminate each and every impediment under the HSR Act or International
Competition Laws to enable the transactions contemplated by this Agreement to be
consummated as expeditiously as possible, and in no event later than the
Expiration Date, including proposing, negotiating, committing to and effecting,
by consent decree, hold separate order or otherwise, the sale, divestiture or
disposition of such assets or businesses (or otherwise taking or committing to
take any action that limits the freedom of action with respect to, or its
ability to retain, any businesses, product lines, or assets) as may reasonably
be required in order to obtain any merger clearance under the HSR Act or
International Competition Laws or to avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order, or other order in
any suit or proceeding by any Governmental Authority or other person, which
would otherwise have the effect of preventing the consummation of the
transactions contemplated by this Agreement on or before the Expiration Date.

      Section 6.5. Public Announcements. Except to the extent otherwise required
by applicable Law or the listing standards of the New York Stock Exchange (and
then only after consultation with Seller), at any time prior to the Closing none
of the Parties will issue any press

                                       44
<PAGE>

release or make any other public announcements concerning the transactions
contemplated hereby or the contents of this Agreement without the prior written
consent of the other Party. Following the Closing, either party may issue such
press releases and make such public announcements contemplated above without the
consent of the other Party hereto, provided each Party will use reasonable
efforts to provide the other Party the prior opportunity to review and comment
upon such communication.

      Section 6.6. Notification of Certain Matters. Between the date hereof and
the Closing Date, each Party will give prompt written or electronic notice to
the other Party after it becomes aware of: (i) any information that indicates
that any of the representations or warranties contained herein are not true and
correct , (ii) the occurrence or non-occurrence of any event which will result,
or has a reasonable prospect of resulting, in the failure of any condition,
covenant or agreement contained in this Agreement to be complied with or
satisfied, (iii) any failure of Seller or Buyer, as the case may be, to comply
with or satisfy any condition, covenant or agreement to be complied with or
satisfied by it hereunder, (iv) any notice or other communication from any third
party alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement or that such
transactions otherwise may violate the rights of or confer remedies upon such
third party, or (v) any filing or threatened filing of litigation or other
matter related to this Agreement in the transaction contemplated hereby.

      Section 6.7. Post-Closing Access; Preservation of Records.

      (a) From and after the Closing, Buyer will make or cause to be made
available to Seller all books, records, Tax Returns and documents of the Company
Group (and the assistance of employees responsible for such books, records and
documents or whose participation that Seller determines is otherwise necessary
or desirable in connection therewith) during regular business hours as may be
reasonably necessary for (i) investigating, settling, preparing for the defense
or prosecution of, defending or prosecuting any Action, (ii) preparing reports
to stockholders and Government Authorities or (iii) such other purposes for
which access to such documents is believed by Seller to be reasonably necessary,
including preparing and delivering any accounting or other statement provided
for under this Agreement or otherwise, preparing Tax Returns or responding to or
disputing any Tax audit; provided, however, that access to such books, records,
documents and employees will not interfere with the normal operations of the
Company Group and the reasonable out-of-pocket expenses of the Company Group
incurred in connection therewith will be paid by Seller. Buyer will cause the
Company Group to maintain and preserve all such Tax Returns, books, records and
other documents for the greater of (A) seven years after the Closing Date or (B)
any applicable statutory or regulatory retention period, as the same may be
extended and, in each case, shall offer to transfer such records to Seller at
the end of any such period by providing Seller with not less than twenty (20)
days written notice of Buyer's intention to destroy or dispose of such records
with Seller to exercise its rights to obtain such records within such twenty
(20) day period.

      (b) From and after the Closing, Seller will make or cause to be made
available to Buyer all books, records and documents of Seller relating to the
business (and the assistance of employees responsible for such books, records
and documents) during regular business hours for the same purposes, to the
extent applicable, as set forth in Section 6.7(a); provided, however, that
access to such books, records, documents and employees will not interfere with
the normal

                                       45
<PAGE>

operations of Seller and the reasonable out-of-pocket expenses of Seller
incurred in connection therewith will be paid by Buyer.

      Section 6.8. Further Assurances. Seller and Buyer each agree that from
time to time after the Closing Date, they will execute and deliver or cause
their respective Affiliates (including, with respect to Buyer, the Company
Group) to execute and deliver such further instruments, and take (or cause their
respective Affiliates, including, with respect to Buyer, the Company Group, to
take) such other action, as may be reasonably necessary to carry out the
purposes and intents of this Agreement and the other Transaction Documents.

      Section 6.9. Director and Officer Indemnification. For six (6) years from
and after the Closing Date, to the fullest extent permitted by applicable Law,
Buyer shall cause the Company Group to, indemnify and hold harmless the officers
and directors of any member of the Company Group who held any such position at
any time on or prior to the Closing (collectively, "Indemnified Officers") in
respect of acts or omission occurring prior to the Closing, and Buyer shall
cause the applicable member of the Company Group to, maintain, for six (6) years
from and after the Closing, indemnification provisions in its organizational
documents that are no less favorable to the Indemnified Officers than those in
effect with respect to such member of the Company Group immediately prior to the
Closing. Without limiting the foregoing and in connection therewith, the
applicable member of the Company Group shall, and Buyer shall cause such member
of the Company Group to, periodically advance or reimburse each Indemnified
Officer for all reasonable fees and expenses of counsel as such fees and
expenses are incurred, subject to the terms of such indemnification provisions
and applicable Laws. Buyer shall cause to be obtained and maintained in effect,
for a period of six (6) years after the Closing, policies of directors' and
officers' liability insurance protecting the Indemnified Officers with coverages
and containing terms and conditions (including with respect to deductible,
amount and payment of attorneys' fees) that are no less favorable than those in
existing policies; provided that in no event shall the Company or any its
Subsidiaries be required to pay annual premiums for any such director's and
officer's liability policy in excess of 300% of the annual premium of such
policy in effect as of the date hereof and if such premiums for comparable
coverage would exceed such limit then the Company will obtain the maximum
coverage available within such limit. Buyer may, but shall not be obliged to,
acquire a six (6) year tail policy for the persons currently covered by the
Company's directors' and officers' liability insurance policy that is consistent
with the preceding sentence. If acquired, such policy shall be prepaid and
non-cancelable. Notwithstanding any other provision of this Agreement to the
contrary, each of the Parties agrees that from and after the Closing Date each
Indemnified Officer shall be a third party beneficiary under this Agreement for
purposes of enforcing this Section 6.9.

      Section 6.10. Exclusivity. Seller will not and will cause its Affiliates
not to (i) solicit, initiate or encourage the submission of any proposal or
offer from any person relating to the acquisition of any capital stock or other
voting securities, or any portion of the assets (other than the Excluded Assets)
of the Company or any Subsidiaries (including any acquisition structured as a
merger, consolidation or share exchange), or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. Seller will notify Buyer promptly if
any person makes any proposal, offer, inquiry or contact with respect to any of
the foregoing. Seller and the Company Group shall immediately

                                       46
<PAGE>

cease and cause to be terminated any existing activities, discussions or
negotiations by Seller, the Company Group or any officer, director or employee
of or investment banker, attorney, accountant or other advisor or representative
of Seller or the Company Group, with any Persons conducted heretofore with
respect to any of the foregoing and, subject to the terms of any applicable
confidentiality agreements between such Persons and Seller, the Company Group or
their representatives, shall give notice to such Persons to return to the
Company Group or destroy any confidential information previously provided to
such Persons, and any such Persons shall be denied access to any electronic
dataroom or similar access to confidential information relating to the Company
Group. Notwithstanding anything to the contrary contained in this Agreement, the
Company Group and their officers, directors, employees, investment bankers,
attorneys, accountants or other advisors or representatives may solicit
proposals, enter into agreements and take any other action necessary or
desirable to enable the Company Group to dispose of their interests in each of
the Excluded Assets.

      Section 6.11. Reorganization.

      (a) Seller and the Company Group shall use their respective commercially
reasonable efforts to cause the transactions described in Section 6.11(a) of the
Disclosure Schedule, pursuant to which the Excluded Assets will be sold to a
third party or distributed to Seller and the Excluded Liabilities will be
assumed by such third party or Seller, as the case may be (collectively, the
"Reorganization"), to be completed contemporaneously with the Closing
substantially in accordance with the terms described in Section 6.11(a) of the
Disclosure Schedule and pursuant to documentation, including any required
consents that is in form and substance reasonably acceptable to Buyer (such
acceptance not to be unreasonably withheld, conditioned or delayed). In the
event that the Reorganization cannot be completed as outlined in Section 6.11(a)
of the Disclosure Schedule, the Parties shall negotiate in good faith and use
their commercially reasonable efforts to agree on an alternative structure that
gives effect to the economic intent of the Reorganization or to such other
structure or arrangement as the Parties may agree that will result in the
Reorganization being consummated and the condition set forth in Section 7.3(g)
being satisfied; provided that any such restructuring of the Reorganization
shall be, for the avoidance of doubt, subject to the prior written approval of
Buyer. In connection with the Reorganization: (i) Seller, the Company and
Argo-Tech shall use their respective commercially reasonable efforts to obtain
the consent of the requisite percentage of the lenders under the Credit
Agreement and the holders of the 9.25% Notes, in each case to the transactions
contemplated by the Reorganization and (ii) Seller and the Company shall use
their respective commercially reasonable efforts to repurchase on or prior to
the Closing Date all of the 11.75% Notes; provided that the costs of any
consent, premium, prepayment penalty, breakage cost or other similar costs
associated with (i) and (ii) above are to be borne by Buyer and Seller as set
forth in Section 11.11.

      (b) Buyer shall, and shall use commercially reasonable efforts to cause
its Subsidiaries and its and their respective officers, employees and
representatives to, reasonably assist Seller and the Company Group, when
reasonably requested to do so by Seller, in connection with the consummation of
the transactions contemplated by this Section 6.11(a)(i) and (ii) and Section
7.3(g); provided that (i) such assistance does not unreasonably interfere with
the ongoing business of Buyer and its Subsidiaries and (ii) Seller reimburses
the reasonable out of pocket costs incurred by Buyer and its Subsidiaries in
connection with such assistance.

                                       47
<PAGE>

      Section 6.12. Severance and Transaction Bonus Payments. Seller and the
Company shall use their respective commercially reasonable efforts to pay, or
cause to be paid, the bonuses or severance or other compensation payable to any
employees or representatives of the Company Group listed on Section 6.12 of the
Disclosure Schedule due and payable as a result of or in connection with the
consummation of the transactions contemplated hereby and any termination of
employment of such Persons (such payments, the "Bonus Payments").

      Section 6.13. Split-Dollar Life Insurance Policy. Seller and the Company
Group shall use their respective commercially reasonable efforts to get the
employees of the Company Group listed on Section 6.13 of the Disclosure Schedule
to agree to the cancellation of their split-dollar life insurance policy
arrangements and the replacement thereof with other arrangements reasonably
proposed by Buyer.

      Section 6.14. Pre Closing Financials. Seller shall, and shall cause the
Company to, use commercially reasonable efforts to deliver to Buyer as soon as
it is reasonably available, the audited consolidated balance sheet of Argo-Tech
and its Subsidiaries as of the Balance Sheet Date and the related consolidated
statements of operations and cash flows for the fiscal years then ended. When
delivered, such financial statements will (x) present fairly and accurately, in
all material respects, respectively, the consolidated financial position,
statements of operations and cash flows of Argo-Tech and its Subsidiaries at the
dates set forth therein and for the periods covered thereby, (y) be prepared in
accordance with GAAP, and (z) be consistent with the books and records of
Argo-Tech and its Subsidiaries in all material respects.

      Section 6.15. Cooperation with Davis Litigation and LETS Dispute.

      (a) With regard to any Action and settlements relating to, arising out of
or in connection with the Davis Litigation or the LETS Dispute:

      (i) Buyer: (A) hereby acknowledges and agrees that Seller shall have
   exclusive conduct and control relating to the Davis Litigation and the LETS
   Dispute, including the right to negotiate, settle, compromise, discharge any
   Liability and make any offer of the foregoing, and Buyer and the Company
   Group or any of their successors and assigns shall not do any of the
   foregoing without the prior written consent of Seller or unless requested by
   Seller to do so; (B) shall promptly provide Seller with all notices,
   requests, inquiries, minutes of meetings, correspondence, documents, claims,
   court papers and any other material received which is relevant to the Davis
   Litigation or the LETS Dispute; and (C) shall not engage in any
   correspondence, meeting or any other communication with any Person relating
   to or in connection with the Davis Litigation or the LETS Dispute; and

      (ii) Buyer shall, and shall cause the Company Group (after completion of
   the Closing) and their successors and assigns to, at Seller's sole cost and
   expense, give Seller and its Affiliates all reasonable cooperation and
   assistance as Seller may request from time to time, including: (A) access to
   information and records to the extent relevant to the Davis Litigation and
   the LETS Dispute (in each case, including the right to take copies and, if
   required, originals and use any such material in any Action or settlement);
   (B) access to any relevant premises and any computer/information systems; and
   (C) access to current and (to the extent within their power) former employees
   of any member of the

                                       48
<PAGE>

   Company Group; provided that Seller shall reimburse Buyer, the Company Group
   or their respective Affiliates for all expenses reasonably incurred in
   complying with this Section, such reimbursement to be on a cost only basis
   and subject to Buyer providing all necessary evidence and documentation
   supporting the costs incurred.

      (b) All information and matters relating to the Davis Litigation and the
LETS Dispute, including the requests for cooperation and assistance and the
actual cooperation and assistance provided, are strictly confidential. Buyer and
each member of the Company Group shall not, and shall cause its respective
officers, directors and representatives not to, disclose such confidential
information to any third party without the prior written consent of Seller
(unless such disclosure is required by applicable Law or legal process).

      Section 6.16. Support for Indemnification Obligations.

      (a) The Management Committee of Seller shall amend the Amended and
Restated Limited Liability Company Agreement of Seller, dated as of October 28,
2005 (the "LLC Agreement"), to provide that during the Reorganization Taxes
Indemnification Period, in the event (i) Seller has distributed to its members
any of the Excluded Assets or any proceeds resulting from the sale thereof (an
"Excluded Assets Distribution") and (ii) Seller is obligated to provide
indemnification to any member of the Buyer Group for any claim for Damages under
Article IX of this Agreement but does not have adequate funds to satisfy such
obligation, then Seller shall have the right to require each of its members to
make a capital contribution to Seller in an aggregate amount equal to the lesser
of (A) the amount necessary to satisfy such indemnification obligation or (B)
the portion of the value of such Excluded Assets Distribution that were
distributed to such member (such provision of the LLC Agreement, the "Giveback
Provision"). For the avoidance of doubt, (1) any member's obligation to make any
contribution to Seller pursuant to the Giveback Provision will be completely
satisfied if such member returns to Seller the Excluded Asset(s) or proceeds
thereof distributed to it and (2) no member shall have any liability to Seller
or any other Person under the Giveback Provision for any Excluded Assets or
proceeds distributed to any other member. Seller hereby agrees that it shall not
amend the Giveback Provision without the prior written consent of Buyer.

      (b) Seller agrees that it shall, until the expiration of the
Reorganization Taxes Indemnification Period, either (i) retain the Excluded
Assets or the proceeds thereof or (ii) exercise and use its commercially
reasonable best efforts to enforce its rights under the Giveback Provision in
the event that during such period it does not have sufficient assets to meet its
obligation to indemnify any member of the Buyer Group in accordance with Article
IX of this Agreement.

      Section 6.17. 280G Compliance. Prior to Closing, the Company shall use
reasonable efforts to obtain the approval by shareholders (in the manner
contemplated by Q&A 7 of Treas. Reg. Section 1.280G) of any payments or benefits
required to be paid or provided by the Company or its Subsidiaries in connection
with the transactions contemplated by this Agreement that the Company determines
prior to Closing are "excess parachute payments" within the meaning of Section
280G of the Code, it being understood and agreed that the refusal of any
recipient of any such "excess parachute payments" to waive his or her rights to
such payment and/or the failure of the Company to sanction any such recipient
for such refusal shall not be deemed to violate this Section 6.17.

                                       49
<PAGE>

      Section 6.18. Insurance Policies. In the event that any insurance policy
(i) as set forth in Section 3.13 of the Disclosure Schedule (a "Current Policy")
or (ii) that is no longer in effect but under which any member of the Company
Group may, notwithstanding the expiration of such policy, seek recovery or
recourse from such insurer (an "Expired Policy") is in the name of Seller or any
entity included in the Excluded Asset and cannot be assigned to a member of the
Company Group, Seller and the Company shall (A) provide comparable replacement
policies, providing substantially the same coverage upon substantially the same
economic terms as set forth in any such Current Policy and (B) if necessary, (1)
assign to the Buyer any rights of Seller to make claims on behalf of the Company
Group under any Current Policy or Expired Policy that can not be assigned to a
member of the Company Group (a "Nonassignable Policy") or (2) if such rights of
Seller cannot be assigned, at the sole expense of Buyer or the Company Group,
make such claims and/or take such other actions with respect to such
Nonassignable Policies on behalf of the Company Group as the Buyer or Company
Group may reasonably request.

                                  Article VII.

                              CONDITIONS TO CLOSING

      Section 7.1. Conditions Precedent to Obligations of Buyer and Seller. The
respective obligations of each Party to consummate the transactions contemplated
by this Agreement are subject to the satisfaction (or, where legally
permissible, waiver by such Party in writing) at or prior to the Closing Date of
each of the following conditions:

      (a) No Adverse Order. There shall be no Injunction, restraining order or
decree of any nature of any Governmental Authority of competent jurisdiction
that is in effect that restrains in any material respect or prohibits the
consummation of the transactions contemplated hereby.

      (b) Antitrust Authorizations. All applicable waiting periods (and any
extensions thereof) under any Laws (including the HSR Act) shall have expired or
been terminated.

      Section 7.2. Conditions Precedent to Obligation of Seller. The obligation
of Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction (or waiver by Seller) at or prior to the Closing
Date of each of the following additional conditions:

      (a) Accuracy of Buyer's Representations and Warranties. The
   representations and warranties of Buyer contained in this Agreement,
   disregarding all qualifications contained herein relating to materiality or
   Material Adverse Effect, shall be true and correct, in each case on and as of
   the date hereof and as of the Closing Date, except to the extent that the
   failure of such representations and warranties to be true and correct would
   not, individually or in the aggregate, constitute a Material Adverse Effect
   on Buyer; and Seller shall have received a certificate signed by a duly
   authorized officer of Buyer confirming the foregoing as of the Closing Date.

      (b) Covenants and Agreements of Buyer. Buyer shall have performed and
   complied with all of its covenants and agreements hereunder in all material
   respects

                                       50
<PAGE>

   through the Closing; and Seller shall have received a certificate signed by a
   duly authorized officer of Buyer confirming the foregoing as of the Closing
   Date.

      (c) Closing Documents. On or prior to the Closing Date, Buyer shall have
   delivered the Purchase Price and all agreements, instruments and documents
   required to be delivered by Buyer under Section 2.6(b).

      Section 7.3. Conditions Precedent to Obligations of Buyer. The obligation
of Buyer to consummate the transactions contemplated by this Agreement is
subject to the satisfaction (or waiver by Buyer) at or prior to the Closing Date
of each of the following additional conditions:

      (a) Accuracy of the Seller's Representations and Warranties. The
   representations and warranties of Seller contained in this Agreement,
   disregarding all qualifications contained herein relating to materiality or
   Material Adverse Effect, shall be true and correct, in each case on and as of
   the date hereof and as of the Closing Date, except to the extent that the
   failure of such representations and warranties to be true and correct would
   not, individually or in the aggregate constitute a Material Adverse Effect on
   the Company Group; and Buyer shall have received a certificate from Seller
   signed by a duly authorized officer of Seller and a duly authorized officer
   of the Company confirming the foregoing as of the Closing Date.

      (b) Covenants and Agreements of Seller. Seller shall have performed and
   complied with all of its covenants and agreements hereunder in all material
   respects through the Closing; and Buyer shall have received a certificate
   from Seller signed by a duly authorized officer of Seller confirming the
   foregoing as of the Closing Date.

      (c) Closing Documents. On or prior to the Closing Date, Seller shall have
   delivered all agreements, instruments and documents required to be delivered
   by Seller pursuant to Section 2.6(a).

      (d) Material Adverse Effect. There shall not have occurred since the date
   hereof any Material Adverse Effect on the Company Group or any change, event
   or effect that would have a Material Adverse Effect on the Company Group, in
   each case taking into account any adverse changes in the financial
   performance or results of the Company Group as reflected in the audited
   consolidated balance sheet of Argo-Tech and its Subsidiaries as of the
   Balance Sheet Date and the related consolidated statements of operations and
   cash flows for the fiscal year then ended when compared to the unaudited
   consolidated balance sheet of Argo-Tech and its Subsidiaries as of the
   Balance Sheet Date and the related consolidated statements of operations and
   cash flows for the fiscal year then ended included in the Unaudited Financial
   Statements.

      (e) Consents and Approvals. All Consents listed in Section 7.3(e) of the
   Disclosure Schedule shall have been received, in form and substance
   reasonably satisfactory to Buyer.

      (f) Payoff Letters. The Company shall have delivered to Buyer executed
   receipts, payoff letters or similar documents executed by the Company Group's
   lenders

                                       51
<PAGE>

   under all agreements and arrangements evidencing the repayment of
   Indebtedness identified on Section 7.3(f) of the Disclosure Schedule and the
   release of all Liens against the Company Group's assets existing in respect
   thereof, each in form and substance reasonably satisfactory to Buyer.

      (g) Reorganization. The Reorganization shall have been consummated
   substantially in accordance with the terms described in Section 6.11(a) or on
   such other terms as the Parties may agree in accordance with the terms
   hereof.

      (h) Company Plan Transfer. Each Company Plan that is sponsored or
   maintained by an entity that is an Excluded Asset shall have been transferred
   to a member of the Company Group, such that, as of the Closing, eligible
   current and former employees of the Company Group (and their eligible
   beneficiaries) shall participate in employee benefit plans sponsored by a
   member of the Company Group. The Company Plans shall have been amended, as
   necessary, to effectuate such transfer.

      (i) Stock Options. Seller shall have caused the exercise of, or otherwise
   terminated, all outstanding options to purchase Shares.

      (j) LLC Agreement. The LLC Agreement shall have been amended, in form and
   substance reasonably satisfactory to Buyer, to implement the Giveback
   Provision.

      (k) Audited Argo-Tech Financials. Seller shall have delivered to Buyer,
   prior to the Closing but in any event at least 5 Business Days prior to the
   Closing Date, the audited consolidated balance sheet of Argo-Tech and its
   Subsidiaries as of the Balance Sheet Date and the related consolidated
   statements of operations and cash flows for the fiscal year then ended,
   together with the audit report of Deloitte and Touche thereon.

                                 Article VIII.

                                  LIMITATIONS

      Section 8.1. Waiver of Damages. Notwithstanding anything to the contrary
contained in this Agreement, Seller and Buyer agree that (i) the recovery by any
Party of any Damages suffered or incurred by such Party as a result of any
breach by the other Party of any of its obligations under this Agreement shall
be limited to the actual damages suffered or incurred by such Party as a result
of the breach by the breaching Party of its obligations hereunder and (ii) in no
event shall any Party have any Liability to any other Party except (A) if there
is a Closing, as expressly provided in Article IX and (B) if there is no
Closing, for Damages incurred or suffered by such Party for any breach by the
other Party of an obligation or covenant or willful breach of a representation
or warranty contained in this Agreement to the extent such breach resulted in
the failure of the Closing to occur, subject to any other express limitations
set forth in this Agreement.

      Section 8.2. Consequential Damages. Notwithstanding anything contained
herein to the contrary and in furtherance of and without limiting the foregoing,
but subject to Article X, no member of the Seller Group and no member of Buyer
Group will be entitled, after the Closing, to any recovery under this Agreement
for its own special, exemplary, punitive,

                                       52
<PAGE>

consequential, incidental or indirect damages or lost profits (including any
Damages on account of lost opportunities); provided, however, that nothing
herein shall prevent any member of the Seller Group or Buyer Group from being
indemnified pursuant to Article IX for all components of awards against them in
claims by third parties for which indemnification is provided pursuant to
Article IX, including special, exemplary, punitive, consequential, incidental or
indirect damages or lost profits components of such claims.

                                   Article IX.

                                 INDEMNIFICATION

      Section 9.1. General Indemnification by Seller. Following the Closing and
subject to the terms and conditions of this Article IX, Seller will indemnify,
defend and hold harmless the Buyer, its Affiliates and each of their respective
employees, directors and officers (collectively, the "Buyer Group") from and
against any and all Damages actually incurred by any member of Buyer Group based
upon or arising out of:

      (i) any breach of any Surviving Covenant of Seller contained in this
   Agreement;

      (ii) any breach of any of Seller's representations and warranties
   contained in (A) Section 3.3 (Title to Shares), Section 3.4(b) (Subsidiaries
   of the Company; Capitalization) solely to the extent such representations and
   warranties relate to the capital stock and other equity interests of the
   members of the Company Group and Section 3.18 and Section 4.4 (Broker's Fees)
   (the "Fundamental Representations") or (B) Section 3.1 (Organization),
   Section 3.2 (Noncontravention), Section 3.4(a) and (c) (Subsidiaries of the
   Company; Capitalization), Section 3.5 (Governmental Authorizations), Section
   3.6 (Financial Statements; Securities Filings), Section 3.7 (Absence of
   Certain Changes), Section 3.8 (Tax Matters), Section 3.10 (Intellectual
   Property), Section 3.11(a)(v)(B) (Environmental Matters), Section 3.12
   (Contracts), Section 3.13 (Insurance), Section 3.14 (Litigation), Section
   3.15 (Employee Matters), Section 3.16 (Legal Compliance), Section 3.17
   (Licenses and Permits), Section 3.19 (No Undisclosed Liabilities), Section
   3.20 (Internal Controls and Procedures), Section 3.21 (Transactions with
   Affiliates), Section 3.22 (Customers and Suppliers), Section 3.23
   (Warranties), Section 3.24 (Government Contracts), Section 3.25 (Compliance,
   Performance, Termination and Breach of Government Contracts), Section 3.26
   (Internal Controls, Audits and Investigations), Section 3.27 (Debarment,
   Suspension and Exclusion), and Section 3.28 (Absence of Unlawful Payments)
   and Section 3.29 (No Undisclosed Liabilities of Carter Ground Fueling, Ltd.)
   (such representations, together with the Fundamental Representations, the
   "Seller's Surviving Representations");

      (iii) the Excluded Liabilities; and

      (iv) any Reorganization Taxes in excess of the amount shown on the Final
   Reorganization Taxes Statement.

      Section 9.2. General Indemnification by Buyer. Following the Closing and
subject to the terms and conditions of this Article IX, Buyer will indemnify,
defend and hold

                                       53
<PAGE>
harmless Seller, its Affiliates and each of their respective employees,
directors and officers (collectively, the "Seller Group") from and against, any
and all Damages actually incurred by any member of the Seller Group based upon
or arising out of (i) any breach of any Surviving Covenant of Buyer contained in
this Agreement or (ii) any breach of Buyer's representations and warranties
contained in Article V (the "Buyer's Surviving Representations", and, together
with the Seller's Surviving Representations, the "Surviving Representations").
Any party providing indemnification pursuant to this Article IX is referred to
herein as an "Indemnifying Party", and any member of Buyer Group or Seller Group
seeking indemnification pursuant to this Article IX is referred to herein as an
"Indemnified Party".

          Section 9.3. Certain Limitations.

          (a) Notwithstanding anything contained herein to the contrary, the
maximum aggregate Liability of Seller to all members of Buyer Group (i) for
indemnification pursuant to Sections 9.1(i) and (ii), excluding claims based
upon or arising out of a breach of the Fundamental Representations, taken
together with any and all Damages under this Agreement, shall be limited to the
amount equal to $22,500,000 and (ii) for indemnification pursuant to Section
9.1(iii), taken together with any and all Damages under this Agreement, shall be
limited to the Purchase Price actually paid to Seller.

          (b) Notwithstanding anything contained in this Agreement to the
contrary, no member of the Buyer Group shall be entitled to indemnification
under this Agreement, and Seller shall not be liable, with respect to any of the
Buyer Group's Damages in respect of Buyer's Indemnifiable Claims pursuant to
Section 9.1(ii), excluding claims based upon or arising out of a breach of the
Fundamental Representations, (collectively, "Basket Damages"), unless (i) in the
case of any particular Indemnifiable Claim, the amount of the Buyer Group's
Damages with respect to such Indemnifiable Claim exceeds $100,000 (the "De
Minimis Amount") and (ii) the aggregate amount of all Basket Damages that exceed
the De Minimis Amount exceeds $2,250,000 (the "Threshold Amount"), at which
point the Seller shall be liable for the entire aggregate amount of Basket
Damages after such thresholds have been reached; provided that, in the case of
any Indemnifiable Claim relating to a breach of Section 3.29 the De Minimis
Amount shall not apply and the Threshold shall be $100,000; provided further
that in the case of any Indemnifiable Claim relating to a breach of Section
3.8(k) the De Minimis Amount and the Threshold shall not apply (provided that no
member of the Buyer Group shall be entitled to indemnification relating to a
breach of Section 3.8(k) to the extent that the non-deductibility of the payment
under Section 280G of the Code that is the subject matter of the Indemnifiable
Claim has been taken into account in the calculation of Working Capital).

          (c) The amount which an Indemnifying Party is or may be required to
pay to an Indemnified Party in respect of Damages for which indemnification is
provided under this Agreement will be reduced by any amounts actually received
(including amounts received under insurance polices) by or on behalf of the
Indemnified Party from third parties and any Tax benefit available to any such
Indemnified Party or its Affiliates arising in connection with the accrual,
incurrence or payment of any such Damages (such amounts and benefits are
collectively referred to herein as "Indemnity Reduction Amounts"). For purposes
of this Agreement, a Tax benefit shall be deemed to have been realized at the
time any refund of Taxes is received or applied against other Taxes due, or at
the time of filing of a Tax Return (including any relating to estimated Taxes)
on which a loss, deduction or credit is applied in reduction of Taxes which

                                       54
<PAGE>

would otherwise be payable; provided, however, that where a party has other
losses, deductions, credits or similar items available to it, deductions,
credits or items for which the other party would be entitled to a payment under
this Agreement shall be treated as the last items utilized to produce a Tax
benefit. If any Indemnified Party receives any Indemnity Reduction Amounts in
respect of an Indemnified Claim for which indemnification is provided under this
Agreement after the full amount of such Indemnified Claim has been paid by an
Indemnifying Party or after an Indemnifying Party has made a partial payment of
such Indemnified Claim and such Indemnity Reduction Amounts exceed the remaining
unpaid balance of such Indemnified Claim, then the Indemnified Party will
promptly remit to the Indemnifying Party an amount equal to the excess (if any)
of (i) the amount theretofore paid by the Indemnifying Party in respect of such
Indemnified Claim, less (ii) the amount of the indemnity payment that would have
been due if such Indemnity Reduction Amounts in respect thereof had been
received before the indemnity payment was made. An insurer or other third party
who would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurer or any other third party shall
be entitled to any benefit they would not be entitled to receive in the absence
of the indemnification provisions by virtue of the indemnification provisions
hereof. Seller and Buyer, as appropriate, will, or will cause each Indemnified
Party to, use its commercially reasonable efforts to pursue promptly any claims
or rights it may have against all third parties which would reduce the amount of
Damages for which indemnification is provided under this Agreement.

          (d) Each and every representation and warranty of Seller or Buyer
contained in this Agreement other than the Surviving Representations shall
expire with the consummation of the sale of the Shares and shall not survive the
Closing; and none of Seller, any member of the Company Group or Buyer shall have
any Liability whatsoever with respect to any such representations and warranties
thereafter. The Fundamental Representations shall survive the Closing Date until
the two year anniversary of the Closing Date; the Surviving Representations
(other than the Fundamental Representations and the representations and
warranties contained in Section 3.29) shall survive the Closing Date until the
later of (i) the one year anniversary of the Closing Date and (ii) March 31,
2008; and representations and warranties contained in Section 3.29 shall survive
the Closing Date until the 18 month anniversary of the Closing Date; and, in
each case, none of Seller, any member of the Company Group or Buyer shall have
any Liability whatsoever with respect thereto thereafter. Each and every
covenant contained in this Agreement (other than the covenants which by their
terms are to be performed by either of the Parties following Closing
(collectively, the "Surviving Covenants")) shall expire with the consummation of
the sale of the Shares and shall not survive the Closing; and none of the
Seller, any member of the Company Group or Buyer shall have any Liability
whatsoever with respect to any such covenant thereafter. The Surviving Covenants
will survive the Closing Date until, and will expire when, in each case, the
applicable statute of limitations has expired. The indemnification obligation
set forth in Section 9.1(iv) shall survive until the 60th day following the
expiration of the applicable statute of limitations (such period from the
Closing Date, the "Reorganization Taxes Indemnification Period"). Unless this
Agreement is terminated prior to Closing, this Section 9.3(d) will survive until
the last of the Surviving Representations and Surviving Covenants will expire.

                                       55
<PAGE>

          (e) The obligations of each Party to indemnify, defend and hold
harmless the other Party and other Persons pursuant to this Article IX shall
terminate with respect to Sections 9.1 and 9.2 upon the expiration of the
applicable survival periods as set forth in Section 9.3(d).

          (f) Notwithstanding anything contained in this Agreement, any amounts
payable pursuant to the indemnification obligations under Section 6.9 and
Article IX shall be paid without duplication, and in no event shall any Party be
indemnified under different provisions of this Agreement for the same Damages.

          (g) Seller shall not be entitled to claim that any Indemnification
Claim by any member of the Buyer Group is or has been released, waived or
otherwise barred, in whole or in part, by any waiver, release or indemnity
granted by Seller or any of its Affiliates to Ernst & Young, Deloitte and Touche
or any other professional advisor engaged by Seller or any of its Affiliates in
connection with the transactions contemplated by this Agreement. Seller shall
not pursue any claim against Ernst & Young, Deloitte and Touche or any other
professional advisor engaged by Seller or any of its Affiliates in connection
with the transactions contemplated by this Agreement in response to any
Indemnified Claim made by any member of the Buyer Group.

          Section 9.4. Indemnification Procedures.

          (a) If any claim or demand is made against an Indemnified Party with
respect to any matter, or any Indemnified Party shall otherwise learn of an
assertion or of a potential claim, by any Person who is not a Party (or an
Affiliate thereof) (a "Third Party Claim") which may give rise to a claim for
indemnification against an Indemnifying Party under this Agreement, then the
Indemnified Party shall notify the Indemnifying Party in writing and in
reasonable detail of the Third Party Claim within five (5) business days
(including the factual basis for the Third Party Claim, and, to the extent
known, the amount of the Third Party Claim); provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifying Party will
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party is actually prejudiced as a result
thereof (except that the Indemnifying Party will not be liable for any expenses
incurred during the period in which the Indemnified Party failed to give such
notice); it being understood and agreed that the failure of the Indemnified
Party to so notify the Indemnifying Party prior to settling a Third Party Claim
(whether by paying a claim or executing a binding settlement agreement with
respect thereto) or the entry of a judgment or issuance of an award with respect
to a Third Party Claim shall constitute actual prejudice to the Indemnifying
Party's ability to defend against such Third Party Claim. Thereafter, the
Indemnified Party will deliver to the Indemnifying Party, promptly after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received or transmitted by the Indemnified Party
relating to the Third Party Claim.

          (b) The Indemnifying Party will have the right to participate in or to
assume the defense of the Third Party Claim (in either case at the expense of
the Indemnifying Party) with counsel of its choice reasonably satisfactory to
the Indemnified Party. The Indemnifying Party will be liable for the reasonable
fees and expenses of counsel employed by the Indemnified Party for any period
during which the Indemnifying Party has failed to assume the defense thereof
(other than during any period in which the Indemnified Party shall have failed
to give notice of the Third Party Claim as provided above following a reasonable
period of time to

                                       56
<PAGE>

provide such notice). Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party will not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; provided, however,
that if the Parties reasonably agree that a conflict of interest exists in
respect of such claim, such Indemnified Party will have the right to employ
separate counsel reasonably satisfactory to the Indemnifying Party to represent
such Indemnified Party and in that event the reasonable fees and expenses of
such separate counsel (but not more than one separate counsel for all
Indemnified Parties) shall be paid by such Indemnifying Party. If the
Indemnifying Party is conducting the defense of the Third Party Claim, the
Indemnified Party, at its sole cost and expense, may retain separate counsel,
and participate in the defense of the Third Party Claim, it being understood
that the Indemnifying Party will control such defense subject to the limitations
set out in this Section 9.4.

          (c) No Indemnifying Party will consent to any settlement, compromise
or discharge (including the consent to entry of any judgment) of any Third Party
Claim without the Indemnified Party's prior written consent (which consent will
not be unreasonably withheld or delayed); provided, that if the Indemnifying
Party assumes the defense of any Third Party Claim, the Indemnified Party will
agree to any settlement, compromise or discharge of such Third Party Claim which
the Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of Damages in connection with such
Third Party Claim and unconditionally releases the Indemnified Party completely
from all Liability in connection with such Third Party Claim and provided that
such settlement does not impose any material non-monetary restrictions or
material obligations on the Indemnified Party. Whether or not the Indemnifying
Party shall have assumed the defense of a Third Party Claim, the Indemnified
Party will not admit any Liability, consent to the entry of any judgment or
enter into any settlement or compromise with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (which consent will
not be unreasonably withheld or delayed).

          (d) If the Indemnifying Party assumes the defense of any Third Party
Claim, the Indemnifying Party will keep the Indemnified Party informed of all
material developments relating to or in connection with such Third Party Claim.
If the Indemnifying Party chooses to defend a Third Party Claim, the Parties
will cooperate in the defense thereof (with the Indemnifying Party being
responsible for all reasonable out-of-pocket expenses of the Indemnified Party
(other than for the fees and expenses of its counsel) in connection with such
cooperation), which cooperation will include the provision to the Indemnifying
Party of records and information which are reasonably relevant to such Third
Party Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.

          (e) Any claim on account of Damages for which indemnification is
provided under this Agreement which does not involve a Third Party Claim will be
asserted by reasonably prompt written notice (but in any event within the
relevant period specified in Section 9.3(d)) given by the Indemnified Party to
the Indemnifying Party.

          (f) In the event of payment in full by an Indemnifying Party to any
Indemnified Party in connection with any claim (an "Indemnified Claim"), such
Indemnifying Party will be subrogated to and will stand in the place of such
Indemnified Party as to any events or circumstances in respect of which such
Indemnified Party may have any right or claim

                                       57
<PAGE>

relating to such Indemnified Claim against any claimant or plaintiff asserting
such Indemnified Claim or against any other Person. Such Indemnified Party will
cooperate with such Indemnifying Party in a reasonable manner, and at the cost
and expense of such Indemnifying Party, in prosecuting any subrogated right or
claim.

          Section 9.5. Exclusive Remedy. After the Closing, the remedies set
forth in this Article IX shall be the sole and exclusive remedy with respect to
any and all claims (other than to the extent any such claims are grounded in
fraud) relating, directly or indirectly, to the subject matter of this
Agreement; it being understood and agreed that any claims brought prior to the
Closing (other than to the extent any such claims are grounded in fraud) shall
be extinguished and released at Closing if such claims could not have been made
immediately after the Closing pursuant hereto. Without limiting the generality
of the foregoing and subject to Article IX and Section 11.14, Buyer and Seller
hereby waive, to the fullest extent permitted under applicable Law, any and all
rights, claims and causes of action it or any of their respective Subsidiaries
or Affiliates may have against the other Party or any of its Subsidiaries and
Affiliates with respect to the subject matter of this Agreement (other than to
the extent any such claims are grounded in fraud), whether arising under or
based upon any Federal, state, provincial, local or foreign statute, Law,
Environmental Law, ordinance, rule, regulation or common law.

          Section 9.6. Mitigation. Buyer and Seller shall cooperate with each
other with respect to resolving any claim or Liability with respect to which one
Party is obligated to provide indemnification hereunder, including by making
commercially reasonable efforts to mitigate or resolve any such claim or
Liability.

                                   Article X.

                                   TERMINATION

          Section 10.1. Termination Events. Without prejudice to other remedies
which may be available to the Parties by Law or this Agreement, this Agreement
may be terminated and the transactions contemplated hereby may be abandoned at
any time prior to the Closing:

          (a) by mutual written consent of Seller and Buyer;

          (b) by either Seller or Buyer by giving written notice to the other
     Party if the Closing shall not have occurred by March 31, 2007 (the
     "Expiration Date"); provided that the right to terminate this Agreement
     under this clause (b) shall not be available to any Party whose failure to
     fulfill any obligation under this Agreement has been the cause of, or
     resulted in, the failure of the Closing to occur on or before such date; or

          (c) by either Seller or Buyer by giving written notice to the other
     Party if any Governmental Authority shall have issued an order, decree or
     ruling or taken any other action permanently restraining, enjoining or
     otherwise prohibiting the consummation of any of the transactions
     contemplated by this Agreement, and such order, decree, ruling or other
     Action shall not be subject to appeal or shall have become final and
     unappealable.

          Section 10.2. Effect of Termination. In the event of any termination
of this Agreement pursuant to Section 10.1, all rights and obligations of the
Parties hereunder shall

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terminate without any Liability on the part of either Party or its Subsidiaries
and Affiliates in respect thereof, except that (a) the obligations of Buyer and
Seller under Section 6.5 (Public Announcements) and Article XI of this Agreement
shall remain in full force and effect and (b) such termination shall not relieve
any Party of any Liability for damages incurred or suffered by the other Party
for any breach of an obligation or covenant or willful breach of a
representation or warranty contained in this Agreement prior to termination to
the extent such breach resulted in the failure of the Closing to occur. For the
avoidance of doubt, the Parties understand and agree that any termination of
this Agreement shall be without prejudice to, and shall not effect, any and all
rights to damages that any Party may have hereunder or otherwise under
applicable law.

                                   Article XI.

                                  MISCELLANEOUS

          Section 11.1. Parties in Interest. Except as provided in Section 6.9
and in this Section 11.1, nothing in this Agreement, whether express or implied,
shall be construed to give any Person, other than the Parties or their
respective successors and permitted assigns, any legal or equitable right,
remedy, claim or benefit under or in respect of this Agreement.

          Section 11.2. Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns. Except as permitted under Section 2.1, no Party may assign
(by contract, stock sale, operation of Law or otherwise) either this Agreement
or any of its rights, interests, or obligations hereunder without the express
prior written consent of the other Party, and any attempted assignment, without
such consent, shall be null and void.

          Section 11.3. Notices. All notices and other communications required
or permitted to be given by any provision of this Agreement shall be in writing
and mailed (certified or registered mail, postage prepaid, return receipt
requested) or sent by hand or overnight courier, or by facsimile transmission
(with acknowledgment received), charges prepaid and addressed to the intended
recipient as follows, or to such other addresses or numbers as may be specified
by a Party from time to time by like notice to the other Parties:

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<PAGE>

If to Seller:           V.G.A.T. Investors, LLC

                        c/o Vestar Capital Partners
                        245 Park Avenue
                        New York, NY 10167
                        Attn.: Brian O'Connor and General Counsel
                        Facsimile: (212) 808-4922

                        and

                        c/o Greenbriar Equity Group LLC
                        555 Theodore Fremd Avenue
                        Suite A-201
                        Rye, NY 10580
                        Attn: Reginald Jones and General Counsel
                        Facsimile: (914) 925-9699

with copies to:         Kirkland & Ellis LLP
                        Citigroup Center
                        153 East 53rd Street
                        New York, NY 10022
                        Attn.: Michael Movsovich and Jeffrey Symons
                        Facsimile:   (212) 446-6460

                        and

                        AT Holdings Corporation
                        23555 Euclid Avenue
                        Cleveland, OH 44117
                        Attn: Michael Lipsomb and Paul R. Keen Esq.
                        Facsimile: (216) 579-0212

If to Buyer:            Eaton Corporation
                        1111 Superior Avenue
                        Cleveland, OH 44114
                        Attn.: Office of the Secretary
                        Facsimile: (216) 479-7103

with a copy to:         Baker & Hostetler LLP
                        3200 National City Center
                        1900 East Ninth Street
                        Cleveland, OH 44114
                        Attn.: John M. Gherlein Esq.
                        Facsimile: (216) 696-0740

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<PAGE>

All notices and other communications given in accordance with the provisions of
this Agreement shall be deemed to have been given and received when delivered by
hand or transmitted by facsimile (with acknowledgment received), three (3)
Business Days after the same are sent by certified or registered mail, postage
prepaid, return receipt requested or one (1) Business Day after the same are
sent by a reliable overnight courier service, with acknowledgment of receipt.

          Section 11.4. Amendments and Waivers. This Agreement may not be
amended, supplemented or otherwise modified except in a written instrument
executed by each of the Parties. No waiver by any of the Parties of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No waiver by any of the Parties of any of the provisions hereof
shall be effective unless explicitly set forth in writing and executed by the
Party sought to be charged with such waiver.

          Section 11.5. Exhibits and Disclosure Schedule.

          (a) All Exhibits, Schedules and the Disclosure Schedule attached
hereto are hereby incorporated herein by reference and made a part hereof. Any
matter disclosed pursuant to any Section of or Schedule or Exhibit to this
Agreement or the Disclosure Schedule (or any section of any Schedule or Exhibit
to this Agreement or the Disclosure Schedule) whose relevance or applicability
to any representation made elsewhere in this Agreement or to the information
called for by any other Section of or Schedule or Exhibit to this Agreement or
the Disclosure Schedule (or any other section of any Schedule or Exhibit to this
Agreement or the Disclosure Schedule) is reasonably apparent on its face shall
be deemed to be an exception to such representations and to be disclosed with
respect to all such other Sections of and Schedules and Exhibits to this
Agreement and the Disclosure Schedule (and all sections of all Schedules and
Exhibits to this Agreement and the Disclosure Schedule) where it is so apparent
on its face, notwithstanding the omission of a reference or cross-reference
thereto.

          (b) Neither the specification of any dollar amount in any
representation nor the mere inclusion of any item in a Schedule or in the
Disclosure Schedule as an exception to a representation or warranty shall be
deemed an admission by a Party that such item represents an exception or
material fact, event or circumstance or that such item is reasonably likely to
result in a Material Adverse Effect on the Company Group or Buyer.

          Section 11.6. Headings. The table of contents and section headings
contained in this Agreement are for reference purposes only and shall not be
deemed a part of this Agreement or affect in any way the meaning or
interpretation of this Agreement.

          Section 11.7. Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.

          Section 11.8. No Other Representations or Warranties. Except for the
representations and warranties expressly set forth in this Agreement, Buyer
acknowledges that

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<PAGE>

none of Seller or any of its respective Subsidiaries and Affiliates or any other
Person makes any representation or warranty, express or implied, at law or in
equity, with respect to the Company Group and Affiliates, the Shares or any of
the assets or Liabilities of the Company Group and its Affiliates, or with
respect to any other information provided to Buyer, whether on behalf of Seller,
the Company or such other Persons, including as to the probable success or
profitability of the Company Group after the Closing. Neither Seller nor any
other Person will have or be subject to any Liability or indemnification
obligation to Buyer or any other Person resulting from the distribution to
Buyer, or Buyer's use of, any such information, including any information,
document or material made available to Buyer in certain "data rooms," management
presentations or in any other form in expectation or contemplation of the
transactions contemplated by this Agreement.

          Section 11.9. Entire Agreement. This Agreement (including the
Disclosure Schedule and the Exhibits hereto), the Transaction Documents and the
Confidentiality Agreement constitute the entire agreement among the Parties with
respect to the subject matter hereof and thereof and supersede any prior
understandings, negotiations, agreements, discussions or representations among
the Parties of any nature, whether written or oral, to the extent they relate in
any way to the subject matter hereof or thereof.

          Section 11.10. Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be
declared by any court of competent jurisdiction to be invalid, illegal, void or
unenforceable in any respect, all other provisions of this Agreement, or the
application of such provision to Persons or circumstances other than those as to
which it has been held invalid, illegal, void or unenforceable, shall
nevertheless remain in full force and effect and will in no way be affected,
impaired or invalidated thereby. Upon such determination that any provision, or
the application of any such provision, is invalid, illegal, void or
unenforceable, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
greatest extent possible.

          Section 11.11. Expenses. Unless otherwise provided herein, each of
Buyer and Seller agrees to pay, without right of reimbursement from the other,
all costs and expenses incurred by it incident to, without limitation, the
process leading to the execution of this Agreement, the negotiations and
preparations of this Agreement and the performance of its obligations hereunder,
including the fees and disbursements of counsel, accountants, financial
advisors, experts and consultants employed by the respective Parties in
connection with the transactions contemplated hereby, whether or not the
transactions contemplated by this Agreement are consummated. In furtherance of
the foregoing, Seller acknowledges and agrees that, except as expressly
otherwise set forth in this Agreement, Seller shall bear all costs and expenses
of Seller and the Company Group referred to in the previous sentence, including
costs and expenses in connection with the Reorganization (but not the costs of
any consent, premium, prepayment penalty, breakage cost or other similar costs
associated with (i) obtaining the consent of the holders of the 9.25% Notes to
the Reorganization, which shall be shared equally by Buyer and Seller up to
$1,000,000, with any amounts in excess of $1,000,000 being paid by Seller, and
(ii) the repurchase of the 11.75% Notes(the principal amount and accrued
interest of which shall be borne by the Buyer), the costs of which shall be
shared equally be Buyer and Seller up to

                                       62
<PAGE>

$4,000,000, with any amounts in excess of $4,000,000 being paid by Seller),
whether incurred by Seller or the Company Group, up to and including the Closing
(including satisfying any such cost and expense that is billed to the Company
Group after the Closing Date) in the event that the transactions contemplated by
this Agreement are consummated; provided, however, that for the avoidance of
doubt Seller shall not be obligated to pay any expenses of the Company Group
that are reflected in the Closing Working Capital and any tax benefits arising
from the payment of the amounts set forth in (i) and (ii) above shall be
allocated pro rata based on the actual amounts paid by Buyer and Seller. Buyer
shall be obligated to pay any and all costs of any audit of any member of the
Company Group as may be required to enable Buyer to obtain any financing or
complete and file any filing by Buyer or an Affiliate of Buyer with any
Governmental Authority or otherwise. Notwithstanding anything to the contrary in
this Agreement, the provisions and covenants of this Section 11.11 will survive
the Closing and will remain in force indefinitely.

          Section 11.12. Governing Law. This Agreement and all claims arising
out of or relating to this Agreement and the transactions contemplated hereby
shall be governed by the Laws of the State of New York, without regard to the
conflicts of law principles that would result in the application of any Law
other than the Law of the State of New York.

          Section 11.13. Consent to Jurisdiction; Waiver of Jury Trial.

          (a) Each of the Parties irrevocably submits to the exclusive
jurisdiction of (i) state courts of the State of Ohio and (ii) the United States
District Court for the Northern District of Ohio for the purposes of any suit,
Action or other proceeding arising out of or relating to this Agreement or any
transaction contemplated hereby (and agrees not to commence any Action, suit or
proceeding relating hereto except in such courts). Each of the Parties further
agrees that service of any process, summons, notice or document hand delivered
or sent by U.S. registered mail to such Party's respective address set forth in
Section 11.3 will be effective service of process for any Action, suit or
proceeding in Ohio with respect to any matters to which it has submitted to
jurisdiction as set forth in the immediately preceding sentence. Each of the
Parties irrevocably and unconditionally waives any objection to the laying of
venue of any Action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby in (i) state courts of the
State of Ohio or (ii) the United States District Court for the Northern District
of Ohio, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such Action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, each Party agrees that a final judgment in any
Action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment in any jurisdiction or in any other manner provided in law or in
equity.

          (b) EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          Section 11.14. Specific Performance. Notwithstanding anything to the
contrary contained herein, the Parties agree that irreparable damage would occur
in the event that any of

                                       63
<PAGE>

the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached and it is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement, in addition to any other remedy to which they are entitled at law or
in equity.

          Section 11.15. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.

                                * * * * *

                                       64
<PAGE>

          IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed as of the date first above written.

                                        V.G.A.T. Investors, llc

                                        By:_____________________________________
                                           Name:
                                           Title:

                     (Signature Page to Purchase Agreement)

<PAGE>

          IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed as of the date first above written.

                                        EATON CORPORATION

                                        By:
                                            ___________________________________
                                            Name: D.S. Barrie
                                            Title: Authorized Signatory

                                        By:
                                           ____________________________________
                                           Name: M.E. Huber
                                           Title: Authorized Signatory

                     (Signature Page to Purchase Agreement)

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