Document:

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                                                                   EXHIBIT 10.1

                                                                  EXECUTION COPY

                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                       THE SHAREHOLDER[S] SIGNATORY HERETO
                                       AND
                               KAYDON CORPORATION

                           DATED AS OF JANUARY 7, 2005

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                                TABLE OF CONTENTS

<TABLE>

<S>                                                                                                             <C>
Article I  Definitions............................................................................................1
Article II  Purchase and Sale.....................................................................................8
   2.1   Purchase and Sale........................................................................................8
   2.2   Purchase Price...........................................................................................8
   2.3   Purchase Price Adjustment................................................................................8
Article III  Closing and Deliveries..............................................................................10
   3.1   Closing.................................................................................................10
   3.2   Deliveries by Sellers...................................................................................10
   3.3   Deliveries by Buyer.....................................................................................11
   3.4   Escrow..................................................................................................12
Article IV  Representations and Warranties of Sellers............................................................12
   4.1   Organization of the Company and Subsidiary; Qualification; Capitalization...............................12
   4.2   Authority; No Violation or Consent......................................................................13
   4.3   No Subsidiaries or Investments..........................................................................13
   4.4   Financial Statements....................................................................................14
   4.5   No Undisclosed Liabilities..............................................................................15
   4.6   Conduct of Business in Ordinary Course..................................................................15
   4.7   Real Estate and Tangible Personal Properties; Title.....................................................16
   4.8   Intellectual Property...................................................................................17
   4.9   Environmental Matters...................................................................................20
   4.10  Insurance...............................................................................................21
   4.11  Labor Matters...........................................................................................22
   4.12  Employee Benefit Plans..................................................................................24
   4.13  Material Contracts......................................................................................26
   4.14  Legal Proceedings, Etc..................................................................................28
   4.15  Permits.................................................................................................28
   4.16  Taxes...................................................................................................28
   4.17  Transactions with Shareholders, Officers, Directors, Etc................................................30
   4.18  Brokers.................................................................................................31
   4.19  Inventory...............................................................................................31
   4.20  Accounts Receivable; Accounts Payable...................................................................31
   4.21  Suppliers...............................................................................................31
   4.22  Customers...............................................................................................31
   4.23  Effect of Transaction...................................................................................32
   4.24  Compliance with Laws....................................................................................32
   4.25  Absence of Certain Commercial Practices.................................................................32
   4.26  No Competing Business; Total Assets.....................................................................33
   4.27  Warranties; Product Liability...........................................................................33
   4.28  Bank Accounts...........................................................................................33
   4.29  No Material Misstatements or Omissions..................................................................33
</TABLE>

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<TABLE>

<S>                                                                                                             <C>
Article V  Representations and Warranties of each Seller.........................................................34
   5.1   Authority, Validity and Effect; No Conflicts, Required Filings and Consents.............................34
   5.2   Title to Shares.........................................................................................34
   5.3   Filtration Systems, Inc.................................................................................35
   5.4   Broker..................................................................................................35
   5.5   Taxes...................................................................................................35
Article VI  Representations and Warranties of Buyer..............................................................35
   6.1   Organization............................................................................................35
   6.2   Authority Relative to this Agreement....................................................................35
   6.3   Consents and Approvals; No Violation....................................................................36
   6.4   Litigation..............................................................................................36
   6.5   Investment Intent.......................................................................................36
   6.6   No Brokers..............................................................................................36
Article VII  Covenants of the Parties............................................................................37
   7.1   Further Assurances......................................................................................37
   7.2   Cooperation in Litigation...............................................................................37
   7.3   Noncompetition, Nonsolicitation and Nondisparagement....................................................37
   7.4   Section 338(h)(10) Election.............................................................................38
   7.5   Taxes...................................................................................................39
   7.6   Appointment of Sellers' Representative..................................................................40
   7.7   Company Employees.......................................................................................41
   7.8   Federal Tax on Deposit..................................................................................43
Article VIII  Indemnification....................................................................................43
   8.1   Indemnification by Sellers..............................................................................43
   8.2   Indemnification by Buyer................................................................................44
   8.3   Definition of Losses and Legal Expenses.................................................................44
   8.4   Third Party Claims......................................................................................44
   8.5   Procedure Relating to Other Claims......................................................................45
   8.6   Subrogation.............................................................................................45
   8.7   Limitations On Indemnification Obligations..............................................................46
   8.8   Payment for Indemnity Claims............................................................................46
   8.9   Survival................................................................................................46
Article IX  Miscellaneous........................................................................................47
   9.1   Construction and Interpretation.........................................................................47
   9.2   Expenses................................................................................................48
   9.3   Notices.................................................................................................48
   9.4   Assignment..............................................................................................49
   9.5   Entire Agreement........................................................................................50
   9.6   Counterparts............................................................................................50
   9.7   Governing Law...........................................................................................50
   9.8   Severability............................................................................................51
   9.9   Third Parties...........................................................................................51
   9.10  Consent to Jurisdiction and Service of Process..........................................................51
   9.11  Schedules...............................................................................................51
</TABLE>

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                            STOCK PURCHASE AGREEMENT

         THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January
7, 2005, is by and among each of the individuals signatory hereto who owns
capital stock (the "Shares") in Purafil, Inc., a Georgia company (the "Company")
or in Purafil Europa B.V. ("Subsidiary") (each, a "Seller" and collectively,
"Sellers") and Kaydon Corporation, a Delaware corporation ("Buyer").

                                   BACKGROUND

          A.      The Company and Subsidiary are engaged in the design,
                  manufacture, and sales of gas-phase air filtration chemicals
                  and systems for industrial and commercial facilities
                  throughout the world (the "Business").

          B.      Sellers are owners of all of the outstanding Shares of the
                  Company or Subsidiary.

          C.      Sellers desire to sell to Buyer, and Buyer desires to purchase
                  from Sellers, all of the Shares upon the terms set forth in
                  this Agreement.

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

                              ARTICLE I      DEFINITIONS

For purposes of this Agreement:

        "2002 FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.4(A).

        "2003 FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.4(A).

        "2004 FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.4(A).

        "ACTION" or "ACTIONS" means any lawsuit, legal proceeding,
administrative enforcement proceeding or arbitration proceeding before any
Governmental Authority.

        "AFFILIATE" means with respect to any Person, any Person that directly
or indirectly controls, is controlled by or is under common control with such
Person.

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

        "AUDITED FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4.4(A).

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        "BONUS PLANS" has the meaning set forth in SECTION 4.12(C).

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

        "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which national banks are authorized or obligated by Law or executive order to
close.

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

        "BUYER 401(K) PLAN" has the meaning set forth in SECTION 7.7(B).

        "BUYER PLANS" has the meaning set forth in SECTION 7.7(C)(I).

        "BUYER INDEMNIFIED PARTIES" has the meaning set forth in SECTION 8.1.

        "BUYER WELFARE PLANS" has the meaning set forth in SECTION 7.7(C)(II).

        "BV STATEMENTS" has the meaning set forth in SECTION 4.4(A).

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

        "CLOSING" has the meaning set forth in SECTION 3.1.

        "CLOSING DATE" has the meaning set forth in SECTION 3.1.

        "COBRA" has the meaning set forth in SECTION 4.12(D).

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

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

        "COMPANY 401(K) PLAN" has the meaning set forth in SECTION 7.7(B).

        "COMPANY EMPLOYEES" has the meaning set forth in SECTION 4.11(E).

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

        "CONTRACTS" means all contracts, leases, licenses, and other agreements
(including any amendments and other modifications thereto), whether oral or
written.

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        "CURRENT ASSETS" has the meaning set forth in SECTION 2.3(A).

        "CURRENT LIABILITIES" has the meaning set forth in SECTION 2.3(A).

        "DEBT" means all liabilities and obligations, including principal,
interest, fees, penalties and expenses, relating to or arising from (i)
indebtedness of the Company or Subsidiary for borrowed money, whether or not
secured, including obligations under leases required to be capitalized under
GAAP, (ii) obligations of the Company or Subsidiary evidenced by bonds, notes,
debentures, letters of credit or similar instruments, (iii) obligations of the
Company or Subsidiary under conditional sale, title retention or similar
agreements or arrangements creating an obligation of the Company or Subsidiary
with respect to the deferred purchase price of property (other than customary
trade credit), (iv) interest rate and currency obligation swaps, hedges or
similar arrangements, (v) all obligations of the Company or Subsidiary to
guarantee any of the foregoing types of obligations on behalf of any Person
other than the Company or Subsidiary, (vi) any bank overdraft accounts and (vii)
all obligations of another Person secured by any asset or right of the Company
or Subsidiary.

        "DECEMBER 2004 FINANCIAL STATEMENTS" has the meaning set forth in
SECTION 7.5(D).

        "DEBT AGREEMENTS" means all agreements of the Company and Subsidiary
under which either has any liability for Debt.

        "EMPLOYEE PLANS" has the meaning set forth in SECTION 4.12(A).

        "EMPLOYEES" has the meaning set forth in SECTION 7.7(A).

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

        "ENVIRONMENTAL CLAIM" means any claims, suits, actions, proceedings,
judgments, obligations, liabilities, fines, penalties, costs, damages or
expenses (including reasonable attorney and consulting fees) arising under or
relating to any Environmental Condition on or affecting the Real Property or the
operations thereon.

        "ENVIRONMENTAL CONDITION" means the presence of any Hazardous Materials
in the soils, surface water or groundwater in, on, under or migrating from or to
the Real Property, any failure by the Company or Subsidiary to comply with
Environmental Laws or Permits issued or required under Environmental Laws, and
any liabilities or obligations under Environmental Laws arising out of or
relating to the activities of the Company or Subsidiary.

        "ENVIRONMENTAL LAW" means all Laws relating to the protection of the
Environment.

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

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        "ESCROW AGENT" means J.P. Morgan Trust Company, National Association.

        "ESCROW AGREEMENT" means an agreement by and among the Escrow Agent,
Sellers' Representative and Buyer substantially in the form of Exhibit A
attached hereto.

        "ESCROW FUNDS" means $4,150,000.

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

        "FILTRATION SYSTEMS" means Filtration Systems, Inc., a Georgia
corporation.

        "FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.4(A).

        "GAAP" means for the Company financial statements, United States
generally accepted accounting principles applied on a consistent basis, and for
Subsidiary financial statements, Netherlands generally accepted accounting
principles applied on a consistent basis.

        "GENERAL ENFORCEABILITY EXCEPTIONS" has the meaning set forth in
SECTION 5.1(A).

        "GOVERNMENTAL AUTHORITY" means any government or political subdivision,
whether federal, state, local or foreign, or any agency or instrumentality of
any such government or political subdivision, or any federal, state, local or
foreign court or arbitrator.

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

        "HIPAA" has the meaning set forth in SECTION 4.12(D).

        "IMMIGRATION ACT" has the meaning set forth in SECTION 4.11(K).

        "INDEMNIFICATION CAP" has the meaning set forth in SECTION 8.7(B).

        "INDEMNIFICATION DEDUCTIBLE CAP" has the meaning set forth in SECTION
8.7(A).

        "INDEMNIFIED PARTY" has the meaning set forth in SECTION 8.3.

        "INDEMNIFYING PARTY" has the meaning set forth in SECTION 8.3.

        "INTELLECTUAL PROPERTY" means any and all (i) patents and patent
applications; (ii) trademarks, service marks, trade names, brand names, trade
dress, slogans, logos and Internet domain names, together with the goodwill of
the business(es) symbolized by each of these; (iii) inventions, discoveries,
ideas, processes, formulae, designs, models, industrial designs, know-how,
confidential information, proprietary information and trade secrets, whether or
not patented

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or patentable; (iv) copyrights, writing and other copyrightable works and works
in progress, databases, website content and software; (v) other intellectual
property rights and foreign equivalent or counterpart rights and forms of
protection of a similar or analogous nature or having similar effect in any
jurisdiction throughout the word; (vi) registrations and application for
registration of any of the foregoing; (vii) databases; (viii) renewals,
extensions, continuations, divisionals, reexaminations or reissues or equivalent
or counterpart of any of the foregoing in any jurisdiction throughout the world,
that are owned by the Company or Subsidiary; and (ix) the right to bring suit
and collect damages for all past infringements for each of the foregoing,
including all rights to sue and seek recovery for damages, attorneys' fees and
costs, and any and all equitable remedies, including injunctive relief.

        "INTERIM ACCOUNTING PRINCIPLES" has the meaning set forth in Section
2.2(a).

        "INTERIM FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4.4(A).

        "INTERNAL 2004 FINANCIAL STATEMENTS" has the meaning set forth in
SECTION 4.4(C).

        "IRS" has the meaning set forth in SECTION 4.12(B).

        "LAW" means any law, statute, code, ordinance, regulation or rule of
any Governmental Authority.

        "LEGAL EXPENSES" has the meaning set forth in SECTION 8.3.

        "LIENS" means any security interest, mortgage, lien, option, pledge or
other encumbrance.

        "LOSS" OR "LOSSES" has the meaning set forth in SECTION 8.3.

        "MATERIAL ADVERSE EFFECT" means, with respect to the Company,
Subsidiary, Sellers or Buyer, as applicable, any change, occurrence or
development that has a material adverse effect on the business, operations,
results of operations, condition (financial or otherwise) or prospects of such
party, or that would prevent or delay the consummation of the transactions
contemplated hereby; provided, however, that "Material Adverse Effect" shall not
be deemed to include the impact of (a) changes in Laws of general applicability
or interpretations thereof by courts or Governmental Authorities, (b) changes in
GAAP or regulatory accounting principles, or (c) actions and omissions of the
Company or Subsidiary taken with the written consent of Buyer in contemplation
of the transactions contemplated by this Agreement.

        "MATERIAL CONTRACTS" has the meaning set forth in SECTION 4.13(A).

        "NET WORKING CAPITAL" has the meaning set forth in SECTION 2.3(A).

        "NORMAL WORKING CAPITAL" has the meaning set forth in SECTION 2.3(A).

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        "OFF BALANCE SHEET ARRANGEMENT" means any transaction, agreement or
other contractual arrangement to which an entity unconsolidated with the Company
or Subsidiary is a party, under which the Company or Subsidiary has: (i) any
obligation under a guarantee; (ii) a retained or contingent interest in assets
transferred to an unconsolidated entity or similar arrangement that serves as
credit, liquidity or market risk support to such entity for such assets; (iii)
any obligation, including a contingent obligation, under a contract that would
be accounted for as a derivative instrument; or (iv) any obligation, including a
contingent obligation, arising out of a variable interest in an unconsolidated
entity that is held by, and material to, the Company or Subsidiary, where such
entity provides financing, liquidity, market risk or credit risk support to, or
engages in leasing, hedging or research and development services with, the
Company or Subsidiary.

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

        "OSHA" has the meaning set forth in SECTION 4.11(M).

        "PAYOFF LETTERS" means the letters provided by the lenders or other
holders of Debt in connection with the repayment of the Debt as contemplated by
this Agreement.

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

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

        "PURCHASE PRICE" has the meaning set forth in SECTION 2.2(A).

        "REAL PROPERTY" means all of the Company's and Subsidiary's interests
in real property, in fee, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, rights of way, all buildings and other
improvements thereon, and other interests in real property currently used in the
business or operations of the Company and Subsidiary.

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

        "REVIEWING ACCOUNTANT" has the meaning set forth in SECTION 2.3(C).

        "SECTION 338 ELECTION" has the meaning set forth in SECTION 7.4(A).

        "SECTION 338 ELECTION TAXES" has the meaning set forth in SECTION
7.4(D).

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

        "SELLER" OR SELLERS" has the meaning set forth in the preamble.

        "SELLERS' KNOWLEDGE" means the knowledge that William Weiller, David
Nicholas, James Mash, Robert Burkholder, Barbara Harris, Wolfgang Schmidl, David
Schaaf or Meridith Christianson or any officer of Subsidiary has or would have
based upon reasonable inquiry of the employees of the Company and Subsidiary who
have responsibility for the matter in question and of the Company's or
Subsidiary's counsel and independent accountants and upon a reasonable review of
the Company's and Subsidiary's books and records relating to the matter in
question.

        "SELLER'S NOTICE" has the meaning set forth in SECTION 2.3(B).

        "SELLERS' REPRESENTATIVE" is William Weiller.

        "SHARES" means all of the capital stock of the Company and Subsidiary
owned by Sellers.

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

        "TANGIBLE PROPERTY" has the meaning set forth in SECTION 4.7(B).

        "TAX" OR "TAXES" means any federal, state, local or foreign income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value-added (or similar), transfer, franchise, profits, license,
withholding, payroll, employment, unemployment, social security, disability,
estimated, excise, severance, stamp, occupation, premium, property,
environmental (including taxes under Code ss.59A) or windfall profit tax,
custom, duty or other tax of any kind whatsoever (including any interest,
penalty, or addition thereto) imposed by any Taxing Authority, whether disputed
or not and including any obligation to indemnify or otherwise assume or succeed
to the Tax liability of any other Person.

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

        "TAX RETURNS" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

        "WORKING CAPITAL REPORT" has the meaning set forth in SECTION 2.3(B).

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                              ARTICLE II     PURCHASE AND SALE

     2.1   Purchase and Sale. Upon and subject to the terms and conditions of
this Agreement, Sellers shall sell, convey, transfer, assign and deliver to
Buyer, and Buyer shall purchase from Sellers, as of and with effect from the
close of business on the Closing Date, the Shares, constituting all of the
issued and outstanding shares of the capital stock of the Company and Subsidiary
owned by Sellers. Sellers shall deliver to Buyer the stock certificates, as
applicable, representing all of the Shares, with duly executed and notarized
stock powers or other evidence of transfer attached in proper form for transfer,
free and clear of all Liens, and Buyer shall purchase and acquire all of the
Shares and shall pay and deliver the Purchase Price (as defined in Section
2.2(a) hereof) to Sellers and take the other actions described in this ARTICLE
II.

     2.2   Purchase Price.

           (a) Subject to the adjustment set forth in Section 2.3, in full
consideration for the transfer of all Shares, at the Closing, Buyer shall pay to
Sellers $41,500,000, (i) plus $1,500,000 (ii) minus the aggregate amount
outstanding under Debt Agreements, and (iii) minus the Escrow Funds (such net
amount, the "Purchase Price"), by means of a wire transfer of immediately
available funds to an account designated in writing by the Sellers'
Representative on Exhibit D. Set forth on Schedule 2.2(a) is a complete and
accurate listing of all Sellers, Shares held by each Seller and allocation of
the Purchase Price to each Seller.

           (b) At the Closing, Buyer shall (i) on behalf of the Company, cause
the Debt to be repaid in full to the party or parties entitled thereto pursuant
to the Payoff Letters, and (ii) pay the Escrow Funds into an escrow account to
be held by the Escrow Agent in accordance with the terms of the Escrow
Agreement.

     2.3   Purchase Price Adjustment. A post-closing adjustment to the
Purchase Price shall be made as follows:

           (a) The Purchase Price assumes that the Company's Net Working Capital
(as defined below) as of the close of business on the Closing Date will total
$3,750,000 (the "Normal Working Capital"). For purposes of this Agreement, Net
Working Capital shall be determined in accordance with the accounting principles
utilized in the preparation of the Interim Financial Statements (as defined
below) (the "Interim Accounting Principles"), consistent with past practices
(except as set forth on Exhibit B) and the Normal Working Capital. "Net Working
Capital" shall mean the sum of Current Assets less Current Liabilities as set
forth on Exhibit B. "Current Assets" shall mean the current assets of the
Company and Subsidiary as set forth on a balance sheet prepared in accordance
with Interim Accounting Principles, excluding (i) Cash and Cash Equivalents
which cannot be documented to Buyer's satisfaction are unrestricted, freely

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transferable, not subject to offset, and fully available to Buyer on the Closing
Date without the inconvenience of payment of any additional surcharges, taxes or
penalties of any kind other than costs associated with the exchange of currency,
if applicable, and (ii) Federal Tax on deposit. "Current Liabilities" shall mean
the current liabilities of the Company and Subsidiary as set forth on a balance
sheet prepared in accordance with Interim Accounting Principles, excluding Debt.
A physical inventory was taken by the Buyer at which representatives of Buyer
and the Sellers were present on January 3, 2005.

         (b) Not later than thirty (30) days after the Closing Date, Buyer shall
cause to be prepared and delivered to the Sellers' Representative a report
setting forth the Net Working Capital as of the close of business on the Closing
Date (the "Working Capital Report"). Sellers, acting through the Sellers'
Representative, shall have thirty (30) days from the date the Working Capital
Report is received by the Sellers' Representative to review such report and
provide Buyer with written notice of any objections thereto and the basis for
such objections (the "Seller's Notice"). During such thirty (30) day period,
Buyer shall provide the Sellers' Representative with reasonable access to the
Company's and Subsidiary's accounts and records during normal business hours. If
Buyer does not receive the Seller's Notice, the Working Capital Report shall be
deemed accepted for all purposes of this Agreement; any item which is not
identified in the Seller's Notice shall be deemed accepted by the Sellers'
Representative for all purposes of this Agreement. Buyer and the Sellers'
Representative shall work together in good faith to resolve their differences as
identified in the Seller's Notice within the thirty (30) days following the
delivery of Seller's Notice.

         (c) If Buyer and the Sellers' Representative fail to reach a mutually
agreeable determination with respect to the Working Capital Report within the
thirty (30) days following the delivery of Seller's Notice, then the disputed
item(s) shall be submitted to KPMG, LLP (the "Reviewing Accountant") for
resolution. Buyer and the Sellers' Representative shall direct the Reviewing
Accountant to resolve such item(s) within thirty (30) days of submission or as
soon thereafter as is practicable. The Reviewing Accountant's determination
shall be final and binding on Buyer and the Sellers' Representative, and
judgment on such determination may be entered in any court having jurisdiction.
Buyer and Sellers shall each be responsible for 50% of the fees and expenses of
the Reviewing Accountant. Any agreement as to the Net Working Capital shall be
in writing and signed by or on behalf of Buyer and by the Sellers'
Representative, on behalf of Sellers.

         (d) To the extent that the Net Working Capital is less than the Normal
Working Capital, the Purchase Price shall be reduced by the amount of such
shortfall and the deficiency, together with interest thereon at the rate earned
on the Escrow Funds, shall be paid to Buyer from the Escrow Funds within three
(3) Business Days after the Net Working Capital is determined in accordance with
this Section 2.3.

         (e) In the event that the Net Working Capital exceeds the Normal
Working Capital, then the Purchase Price shall be increased by the amount of
such excess. Buyer shall

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pay to the Sellers' Representative the amount of such excess in Net Working
Capital together with interest thereon at the rate earned on the Escrow Funds
within three (3) Business Days after the Net Working Capital is determined in
accordance with this Section 2.3.

                              ARTICLE III    CLOSING AND DELIVERIES

         3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur on the date of this Agreement, which date
shall be referred to in this Agreement as the "Closing Date" and the Closing
shall be deemed to be effective as of the close of business on the Closing Date.
All proceedings to be taken and all documents to be executed and delivered by
all parties at the Closing will be deemed to have been taken and executed
simultaneously and no proceedings will be deemed to have been taken nor
documents executed or delivered until all have been taken, executed and
delivered.

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

             (a) The stock certificates or other evidence representing the
Shares, with duly executed and notarized stock powers or other evidence of
transfer attached in proper form for transfer free and clear of all Liens;

             (b) The Payoff Letters reflecting all outstanding Debt and any
necessary Uniform Commercial Code termination statements or other releases as
may be reasonably required to evidence the satisfaction of the Debt arising
under the Debt Agreements;

             (c) Any necessary Uniform Commercial Code termination statements or
other releases as may be reasonably required to evidence the satisfaction of all
Liens;

             (d) The articles of incorporation of the Company and of Filtration
Systems certified as of the most recent practicable date by the Georgia
Secretary of State and the equivalent governing instruments of Subsidiary
certified as of the most recent practicable date by the applicable authority in
the jurisdiction of organization or incorporation; provided, however, that in
the event such documents are certified on a date more than 30 days prior to
Closing, Sellers shall provide evidence at Closing satisfactory to Buyer that
such documents have been updated (orally or otherwise) to a date no more than 15
days prior to Closing;

             (e) A certificate of the Georgia Secretary of State as to the good
standing of the Company and of Filtration Systems as of the most recent
practicable date and a certificate as to the good standing (or equivalent
documentation) of Subsidiary as of the most recent practicable date from the
applicable authority in the jurisdiction of organization or incorporation;
provided, however, that in the event such certifications are certified on a date
more than 30 days prior to Closing, Sellers shall provide evidence at Closing
satisfactory to Buyer that such certifications have been updated (orally or
otherwise) to a date no more than 15 days prior to Closing;

                                       10

<PAGE>

             (f) Original corporate record books and stock record books of the
Company, Filtration Systems and Subsidiary;

             (g) A counterpart to the Escrow Agreement, duly executed by
Sellers' Representative;

             (h) Evidence of receipt of all Consents required to consummate the
transactions contemplated hereby;

             (i) A certificate of the Secretary of the Company, given by the
Secretary on behalf of the Company and not in the Secretary's individual
capacity, certifying as to the bylaws of the Company and as to the resolutions
of the Board of Directors of the Company ratifying prior actions and authorizing
this Agreement and the transactions contemplated hereby;

             (j) Documents evidencing the sale of the Mini Cooper automobile to
and purchase by William Weiller at the book value of such automobile;

             (k) Written resignations or other documentation evidencing the
resignation of directors and officers of the Company, Filtration Systems and
Subsidiary who are listed on Schedule 3.2(k);

             (l) Evidence satisfactory to the Buyer regarding the assignment to
and assumption by William Weiller of the lease agreements listed on Schedule
3.2(l);

             (m) Employment agreements for key employees identified on Schedule
3.2(m);

             (n) A survey of the Real Property;

             (o) To the extent not provided prior to the Closing, copies of
powers of attorney executed by each Seller who is not individually executing
this Agreement properly conferring such power of execution on Sellers'
Representative; and

             (p) Evidence satisfactory to the Buyer regarding the transfer by
William Weiller of all of the outstanding equity interest in Filtration Systems,
Inc. to the Company free and clear of any Liens.

         3.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver the
following items:

             (a) The Purchase Price paid to the Sellers' Representative in
accordance with Section 2.2(a);

             (b) Amounts owed under the Debt Agreements in accordance with the
Payoff Letters;

                                       11

<PAGE>

             (c) The Escrow Funds to the Escrow Agent;

             (d) A certificate of the Secretary of Buyer, given by the Secretary
on behalf of Buyer and not in the Secretary's individual capacity, certifying as
to the resolutions of the Board of Directors of Buyer authorizing this Agreement
and the transactions contemplated hereby; and

             (e) A counterpart to the Escrow Agreement, duly executed by Buyer
and the Escrow Agent.

         3.4 Escrow. At the Closing, Buyer shall deposit by wire transfer of
immediately available funds the Escrow Funds into escrow to be held in
accordance with the terms of the Escrow Agreement in substantially the form
attached to this Agreement as Exhibit A. To the extent that amounts are to be
paid by Sellers to Buyer pursuant to this Agreement, such amounts shall be paid
from the Escrow Funds pursuant to the terms of the Escrow Agreement.
Disbursement of all or any of the Escrow Funds shall be governed by the terms of
the Escrow Agreement.

                  ARTICLE IV     REPRESENTATIONS AND WARRANTIES OF SELLERS

         Sellers, jointly and severally, represent and warrant to Buyer that the
following representations and warranties are true and correct.

         4.1 Organization of the Company and Subsidiary; Qualification;
Capitalization.

             (a) The Company, Filtration Systems and Subsidiary are
corporations, and are duly organized, validly existing and in good standing
under the laws of each respective jurisdiction of incorporation. The Company and
Subsidiary are duly qualified to do business, and in good standing, in each
jurisdiction in which the character of the properties owned or leased by it or
in which the conduct of its business requires it to be so qualified as set forth
on Schedule 4.1(a). No business other than the solicitation of sales is
conducted in states other than those states in which the primary facilities of
the Company and Subsidiary are located, including activities of any sales
representative on behalf of the Company or Subsidiary. Neither the Company nor
Subsidiary has used any assumed name or has done business under any name other
than its formal name at any time during the five years prior to the date of this
Agreement.

             (b) The authorized and issued capital stock of the Company,
Filtration Systems and Subsidiary are set forth on Schedule 4.1(b). All issued
shares of such capital stock are validly issued and outstanding, fully paid and
nonassessable, and owned beneficially and of record by Sellers as set forth on
Schedule 4.1(b) (or by the Company with respect to the shares of Subsidiary and
of Filtration Systems set forth on Schedule 4.1(b)). Each Seller has good title
to such shares, free and clear of any and all Liens. There are no (a)
outstanding securities convertible or exchangeable into shares of capital stock
of the Company, Filtration Systems or Subsidiary; (b) options, warrants, calls,
subscriptions or other rights, agreements or commitments obligating the Company,
Filtration Systems or Subsidiary to issue, transfer or sell any shares of

                                       12

<PAGE>

capital stock; (c) voting trusts or other agreements or understandings to which
the Company, Filtration Systems or Subsidiary is a party or by which the
Company, Filtration Systems or Subsidiary is bound with respect to the voting,
transfer or other disposition of shares of capital stock; or (d) outstanding
contractual obligations of the Company, Subsidiary or any Seller to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company,
Filtration Systems or Subsidiary.

         4.2 Authority; No Violation or Consent.

             (a) Neither the execution and delivery of this Agreement nor the
consummation by Sellers of the transactions contemplated herein, nor compliance
by the Company or Sellers with any of the provisions hereof, will (i) conflict
with or result in a breach of any provisions of the articles of incorporation or
organization, bylaws or similar organizational document of the Company or
Subsidiary, (ii) constitute or result in the breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to any Material Contract,
or result in the creation or imposition of a Lien upon any property or assets of
the Company, Filtration Systems or Subsidiary, or (iii) violate any Order or Law
applicable to the Company, Filtration Systems or Subsidiary or any of their
respective properties or assets.

             (b) No Consent is required to be obtained by the Company or
Subsidiary for the consummation of the transactions contemplated in this
Agreement.

         4.3 No Subsidiaries or Investments.

             (a) Except for Filtration Systems and Subsidiary, neither the
Company nor Subsidiary beneficially owns, directly or indirectly, any
outstanding voting stock, membership interests, partnership interests or equity
of any other corporation, limited liability company, partnership or other
entity, nor is the Company or Subsidiary a party to or involved with any
partnership, joint venture, limited liability company or other entity in which
the Company or Subsidiary, directly or indirectly, has, or pursuant to any
agreement has or will have the right to acquire by any means, an interest or
investment representing an equity, profit or voting interest entitling the
Company or Subsidiary to vote for or appoint the management of such entity.

             (b) Except as disclosed on Schedule 4.3(b), Filtration Systems (i)
has been inactive and has not conducted business operations since at least 1994;
(ii) does not currently own or have any interest in any assets; (iii) is not a
party to any agreement, contract or understanding, whether written or oral, and
(iv) has no liability or obligation, secured or unsecured (whether known or
unknown, asserted or unasserted, absolute, accrued, contingent or otherwise, and
whether due or to become due), nor is there any such liability or obligation for
which Filtration Systems is or may become liable, except for obligations under
the contracts identified in Schedule 4.3(b) (none of which arise out of a breach
of such contract). To the Sellers' Knowledge, there is no circumstance,
condition, event or arrangement existing at

                                       13

<PAGE>

Closing that will give rise after the date of this Agreement to any liabilities
of Filtration Systems (or to Buyer after completion of the transaction).

         4.4 Financial Statements.

             (a) Copies of the following financial statements have been
delivered to Buyer or have been made available to Buyer for its review: (i) the
audited combined financial statements and report of independent certified public
accountants of the Company and Subsidiary as of October 26, 2002 and October 27,
2001, together with the notes thereto (the "2002 Financial Statements"), (ii)
the audited combined financial statements and report of independent certified
public accountants of the Company and Subsidiary as of October 25, 2003 and
October 26, 2002, together with the notes thereto (the "2003 Financial
Statements"), (iii) the audited combined financial statements and report of
independent certified public accountants of the Company and Subsidiary as of
October 30, 2004 and October 25, 2003, together with the notes thereto (the
"2004 Financial Statements"), (iv) the audited financial statements of
Subsidiary and report of independent certified public accountants of Subsidiary
as of and for each of the years ended October 30, 2004, October 25, 2003,
October 26, 2002 and October 27, 2001, in each case, together with the notes
thereto (the "BV Statements"), (v) the unaudited combined balance sheet of the
Company and Subsidiary as of November 27, 2004, and the related unaudited
combined income statement for the one-month period then ended and the unaudited
combined balance sheet of the Company and Subsidiary as of October 30, 2004, and
the related unaudited combined income statement for the twelve-month period then
ended (collectively, the "Interim Financial Statements"), (the 2002 Financial
Statements, 2003 Financial Statements, 2004 Financial Statements, the BV
Statements, together with the Interim Financial Statements, are collectively the
"Financial Statements"; the 2002 Financial Statements, 2003 Financial
Statements, 2004 Financial Statements, the BV Statements, but not including the
Interim Financial Statements, are collectively the "Audited Financial
Statements").

             (b) The Audited Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis and fairly present, in all
material respects, the financial position, results of operations, stockholders'
equity, and cash flows of the Company and Subsidiary, as of the dates and for
the periods indicated.

             (c) Except as disclosed on Schedule 4.4(c), the internally prepared
unaudited combined balance sheet of the Company and Subsidiary as of October 30,
2004, and the related unaudited combined income statement for the twelve-month
period then ended (the "Internal 2004 Financial Statements") have been prepared
in accordance with GAAP applied on a consistent basis and fairly present, in all
material respects, the financial position and results of operations of the
Company and Subsidiary, as of the dates and for the periods indicated.

             (d) The Interim Financial Statements have been prepared by
management in a manner and on a basis consistent with the accounting principles
and policies utilized by management in preparation of the Internal 2004
Financial Statements and fairly present, in all

                                       14

<PAGE>

material respects, the financial position and results of operations of the
Company and Subsidiary as of the dates and for the periods indicated.

             (e) The Financial Statements are correct and complete and are
consistent with the books and records of the Company and Subsidiary, except as
set forth on Schedule 4.4(e).

             (f) There are no Off Balance Sheet Arrangements effected by the
Company or Subsidiary.

             (g) The Company and Subsidiary each maintain accurate books and
records reflecting their assets and liabilities and maintain proper and adequate
internal accounting controls which provide assurance that (i) transactions are
executed with management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the combined financial statements of the
Company and Subsidiary and to maintain accountability for the Company's and
Subsidiary's combined assets; (iii) access to the Company's and Subsidiary's
assets is permitted only in accordance with management's authorization; (iv)
except as disclosed on Schedule 4.4(g), the reporting of the Company's and
Subsidiary's combined assets is compared with existing assets at regular
intervals; and (v) accounts, notes and other receivables and inventory are
recorded accurately, and proper adequate procedures are implemented to effect
the collection thereof on a current and timely basis.

         4.5 No Undisclosed Liabilities. Neither the Company nor Subsidiary has
any liability or obligation, secured or unsecured (whether known or unknown,
asserted or unasserted, absolute, accrued, contingent or otherwise, and whether
due or to become due), nor is there any such liability or obligation for which
the Company or Subsidiary is or may become liable, contingently or otherwise,
which are not reflected in the Financial Statements or disclosed in the notes
thereto, except those (i) which are of the type not required under GAAP to be
reflected in the Financial Statements, (ii) which were incurred in the ordinary
course of business after December 1, 2004, and are consistent with past
practices in nature and are individually and in the aggregate in an amount
consistent with the Financial Statements, or (iii) which are disclosed on
Schedule 4.5 to this Agreement. To the Sellers' Knowledge, there is no
circumstance, condition, event or arrangement existing at Closing that will give
rise after the date of this Agreement to any liabilities of the Company or
Subsidiary (or to Buyer after consummation of the transactions contemplated by
this Agreement), other than liabilities incurred in the ordinary course of
business.

         4.6 Conduct of Business in Ordinary Course. Since January 1, 2004, (a)
the Company and Subsidiary have conducted their respective businesses and
operations in the ordinary course of business consistent with past practices
including, without limitation, as to the granting of terms of sale including
discounts and payment terms, collection of receivables, payment of accounts
payable and manufacture and shipment of inventory, except as set forth on
Schedule 4.6(a), (b) there has not been any change that has had a Material
Adverse Effect on the Company or Subsidiary, (c) there has not been any
declaration, setting aside or payment of any

                                       15

<PAGE>

dividend or other distribution (whether in cash, stock, property or any
combination thereof) in respect of any Company's or Subsidiary's capital stock
or any repurchase, redemption or other acquisition by any Company or Subsidiary
of any shares of capital stock or other equity interests of the Company or
Subsidiary, except as set forth on Schedule 4.6(c), (d) there has not been any
damage, destruction or casualty loss, whether covered by insurance or not, which
has a Material Adverse Effect on the Company or Subsidiary; (e) there has not
been any material change by the Company or Subsidiary in its accounting methods,
principles or practices, or internal controls; and (f) there has been no
acquisition or disposition of an asset or assets by the Company or Subsidiary
with an individual value in excess of $15,000 or an aggregate value in excess of
$50,000, except as set forth on Schedule 4.6(f).

         4.7 Real Estate and Tangible Personal Properties; Title.

             (a) Schedule 4.7(a) contains a complete and accurate description of
all the Real Property and of the Company's or Subsidiary's interest therein. The
Real Property listed on Schedule 4.7(a) comprises all real property interests
used in the conduct of the business and operations of the Company and Subsidiary
as now conducted. Except as disclosed on Schedule 4.7(a), neither the Company
nor Subsidiary currently owns or leases any real property nor has the Company or
Subsidiary previously owned or leased any real property.

             (b) The buildings, facilities, machinery, equipment, molds,
furniture, leasehold and other improvements, fixtures, vehicles, structures, any
related capitalized items and other tangible property material to the business
or operations of the Company or Subsidiary (the "Tangible Property") (i) are in
good operating condition and repair (normal wear and tear and temporary service
outages for repair or replacement excepted), (ii) have received or are receiving
repair and replacement in accordance with the Company's or Subsidiary's past
practices, (iii) are located at the Real Property except as disclosed on
Schedule 4.7(b), and (iv) are suitable for their current use and are currently
in use by the Company or Subsidiary, as applicable, in the operation of their
businesses in the ordinary course. The Tangible Property is free of any material
structural or engineering defects that would have a Material Adverse Effect.

             (c) The Company and Subsidiary, as applicable, each have good,
valid and marketable fee simple title to all of the Real Property and to the
Tangible Property and all of the other assets reflected on the 2004 Financial
Statements as owned by the Company and Subsidiary, all of which are free and
clear of all Liens, other than (i) those set forth on Schedule 4.7(c), (ii)
those which do not, individually or in the aggregate, materially interfere with
the current or future use of the Real Property or Tangible Property or
materially detract from their value, (iii) liens of mechanics, materialmen,
laborers, warehousemen, carriers and other similar common law or statutory liens
arising in the ordinary course of business which are not yet due and payable or,
if due and payable, have been adequately bonded, and (iv) zoning, entitlement
and other land use and environmental regulations by governmental agencies. The
Company's buildings, improvements and conduct of its business does not encroach
upon any real property

                                       16

<PAGE>

rights of any Person, including any Governmental Authority, nor is any third
Person or any structure encroaching upon any of the Company's Real Property.

             (d) The Real Property is currently zoned in the zoning category
which permits operation of such properties as now used, operated and maintained
for the operation of the Company's and Subsidiary's business, and none of the
Real Property nor its respective use is in violation of any Law, nor to the
Sellers' Knowledge is there a pending or threatened investigation regarding a
potential violation of any Law. The consummation of the transactions
contemplated herein will not result in a violation of any Law or the termination
(or required renewal) of any applicable zoning variance or Permit now existing.
The Real Property is not located on a flood plain.

             (e) No portion of the Real Property or interest therein, including
access thereto or any easement benefiting such property, is subject to temporary
requisition of use by any Governmental Authority or has been condemned, or taken
in any proceeding similar to a condemnation proceeding, nor is there now pending
any condemnation, expropriation, requisition or similar proceeding against the
Real Property or any portion thereof. Neither the Company nor Subsidiary has
received any written notice that any such proceeding is contemplated, and, to
the Sellers' Knowledge, no such proceeding is currently being threatened or
contemplated.

             (f) All utilities, including without limitation, power, gas,
electricity, sewer, water and telephone, enter the Real Property upon and are
operated through valid public or private easements and rights-of-way and all
excess surface water runoff or drainage from such property flows or runs off the
property through valid public or private easements and rights-of-way; all
installation, connection and hook up charges for such utilities have been paid
in full; all permits and approvals for use of such utilities have been obtained
from all Governmental Authorities or other entities regulating the use thereof;
and there is sufficient water, sewer, gas and electricity available to the Real
Property to properly service the intended use thereof.

             (g) No Person (other than Buyer) has any right or option to acquire
the Real Property, or any part thereof, or any interest therein, from the
Company or Subsidiary. Neither the Company nor Subsidiary has entered into any
agreement with any Person granting the right to use, occupy or possess the Real
Property.

             (h) The Company is not a "foreign person" within the meaning of
Section 1445(f) of the Code.

         4.8 Intellectual Property.

(a) The Company, Filtration Systems or Subsidiary, owns or is licensed for, and
in any event possesses sufficient and legally enforceable rights with respect
to, all Intellectual Property that is or has been used or exploited in, or that
may be necessary to conduct

                                       17

<PAGE>

the business of the Company, Filtration Systems and Subsidiary as it is
presently conducted and is proposed to be conducted. Schedule 4.8(a) sets forth
for the Intellectual Property owned by the Company, Filtration Systems and
Subsidiary, and includes a complete and correct list or copy (where applicable)
of all (i) patents and patent applications, (ii) trademark and service mark
registrations and applications therefor, (iii) material unregistered trademarks
and service marks, (iv) domain names, (v) copyright registrations and
applications therefor, (vi) material unregistered copyrights, and (vii) a
written description of all trade secrets or "know-how" indicating for each,
where applicable: (1) the jurisdiction, (2) the patent, registration, or
application number, (3) the date issued, and (4) the date filed. Sellers have
delivered to Buyer copies of all documentation which they, the Company,
Filtration Systems or Subsidiary possesses relating to each item set forth on
Schedule 4.8(a).

             (b) With respect to each item of Intellectual Property owned by
Company, Filtration Systems and Subsidiary identified on Schedule 4.8(a), the
Company or Subsidiary, as applicable, possess all right, title and interest in
and to the item, free and clear of any Lien. With respect to each item of
Intellectual Property identified on Schedule 4.8(a) that the Company, Filtration
Systems or Subsidiary is licensed or authorized to use, the license, sublicense,
agreement or permission covering such item (i) is legal, valid, binding,
enforceable and in full force and effect and will not be affected by
consummation of the transactions contemplated by this Agreement, and (ii) has
not been breached by any party thereto.

             (c) The Intellectual Property owned, licensed, used or exploited by
the Company, Filtration Systems and Subsidiary, is valid and subsisting, in full
force and effect, and has not been cancelled, expired, or abandoned. All
drawings for parts used to manufacture products sold by the Company and
Subsidiary are current and adequate to be used to manufacture such products. No
claim has been made, asserted, or threatened, or is pending against the Company,
Filtration Systems or Subsidiary based upon, challenging or seeking to deny or
restrict the use or exploitation by the Company, Filtration Systems or
Subsidiary of any of the Intellectual Property owned or licensed by the Company,
Filtration Systems or Subsidiary. None of the Intellectual Property owned,
licensed, used or exploited by the Company, Filtration Systems or Subsidiary is
the subject of (i) any patent interference, reissue, or reexamination proceeding
(ii) any trademark opposition or cancellation proceeding or (iii) or any other
action seeking to modify, restrict, or terminate the rights of the Company,
Filtration Systems or Subsidiary in the Intellectual Property. Except as
provided on Schedule 4.8(c), there are no actions that must be taken by the
Company, Filtration Systems or Subsidiary within 180 days of the Closing Date,
including the payment of any registration, maintenance or renewal fees or the
filing of any documents, applications, certificates or responses to office
actions issued by the U.S. Patent and Trademark Office or a similar foreign
government agency for the purposes of obtaining, maintaining, perfecting, or
preserving or renewing any of the Intellectual Property.

             (d) The consummation of the transactions contemplated by this
Agreement will not result in the termination or impairment of any of the
Intellectual Property owned by the

                                       18

<PAGE>

Company, Filtration Systems or Subsidiary and will not require the consent of
any Governmental Authority or third party in respect of such Intellectual
Property.

             (e) Except as set forth on Schedule 4.8(e), there are no
settlements, forbearances to sue, consents, judgments, or orders or similar
obligations which (i) restrict the rights of the Company, Filtration Systems or
Subsidiary to use any Intellectual Property, (ii) restrict the business of the
Company, Filtration Systems or Subsidiary in order to accommodate a third
party's Intellectual Property or (iii) permit third parties to use any
Intellectual Property owned by the Company, Filtration Systems or Subsidiary.
The Company, Filtration Systems and Subsidiary have not licensed or sublicensed
their rights in any Intellectual Property and no royalties, honoraria or other
fees are payable by the Company, Filtration Systems or Subsidiary for the use of
or right to use any Intellectual Property.

             (f) To the extent indicated in Schedule 4.8(a), such Intellectual
Property has been duly registered in, filed in, or issued by, the offices
indicated in Schedule 4.8(a). In each case where a registration or patent or
application for registration or patent listed in Schedule 4.8(a) is held by
assignment, the assignment has been duly recorded with the governmental office
from which the original registration or patent issued or before which the
application for registration or patent is pending. The Company, Filtration
Systems and Subsidiary have fully complied with the patent marking requirements
of the U.S. Patent Act and corresponding marking requirements in foreign
jurisdictions and has at all times used other applicable designations (e.g.,
"(R)") for the Intellectual Property in accordance with the legal requirements
for such use and in such a manner as to prevent defenses of innocent
infringement of the Intellectual Property.

             (g) Except as set forth on Schedule 4.8(g), none of the Company,
Filtration Systems or Subsidiary has received any notice of a claim and, to the
Sellers' Knowledge, there is no threatened claim, against the Company,
Filtration Systems or Subsidiary asserting that any of the Intellectual Property
infringes or violates the rights of any Person. None of the Company, Filtration
Systems or Subsidiary has within the last two years given any notice to any
Person asserting infringement by such Person of any of the Intellectual
Property.

             (h) None of the following conflicts with or otherwise infringes or
misappropriates the rights or property of any third party: (i) the products or
services provided by the Company. Filtration Systems and Subsidiary, (ii) the
business conducted by the Company, Filtration Systems and Subsidiary, and (iii)
the use or exploitation of the Intellectual Property. No claim has been made,
asserted or threatened, or is pending against the Company, Filtration Systems or
Subsidiary alleging that any of (i), (ii) or (iii) conflict with or otherwise
infringe or misappropriate the rights or property of any third party.

             (i) Schedule 4.8(i) identifies all disclosures of Intellectual
Property to third parties made pursuant to non-disclosure agreements that
protect the confidentiality of such Intellectual Property and restrict the use
of such Intellectual Property to an identified purpose.

                                       19

<PAGE>

Schedule 4.8(i) identifies those former and current employees and consultants of
the Company, Filtration Systems and Subsidiary who have executed agreements
relating to the assignment of any rights to Intellectual Property to the
Company. Each of the Company's, Filtration System's and Subsidiary's current and
former employees have acknowledged their obligations to maintain the
confidentiality of confidential information and to only use such information for
Company purposes by executing a written acknowledgment evidencing receipt of the
Company employee handbook or similar documentation and such obligations are
valid and enforceable under applicable Laws.

             (j) With respect to each trade secret and "know-how" of the Company
and Subsidiary, the documentation relating to such trade secret and "know-how"
is current, accurate and sufficient in detail and content to identify and
explain it and to allow its full and proper use without reliance on the
knowledge or memory of any individual. The Company and Subsidiary have taken all
reasonable precautions to protect the secrecy, confidentiality and value of all
trade secrets and "know-how". The trade secrets and "know-how" are not part of
the public knowledge or literature and, to the Sellers' Knowledge, have not and
are not being used, divulged or appropriate either for the benefit of any person
or entity (other than the Company and Subsidiary) or to the detriment of the
Company and Subsidiary.

         4.9 Environmental Matters.

             (a) Except as set forth on Schedule 4.9(a), the Company and
Subsidiary are each in compliance with all Environmental Laws applicable to
their use of the Real Property.

             (b) Neither the Company nor Subsidiary has generated, manufactured,
refined, transported, treated, stored, handled, disposed, transferred, produced
or processed any Hazardous Materials, except in compliance with all applicable
Environmental Laws and in a manner that would not give rise to liabilities or
obligations under Environmental Laws or the common law, and, as of the date of
this Agreement, there has been no Release of any Hazardous Material at, on, or
in, the vicinity of the Real Property, except in compliance with Environmental
Laws and in a manner that would not give rise to liability or obligations under
Environmental Laws or the common law.

             (c) As of the date of this Agreement, neither the Company nor
Subsidiary has (i) received notice under the provisions of any Environmental
Law; (ii) received any request for information, demand letter, or formal
complaint or claim under any Environmental Law; or (iii) been subject to, or to
the Sellers' Knowledge threatened with, any governmental or citizen action with
respect to any Environmental Law.

             (d) Except as set forth on Schedule 4.9(d), there currently are
effective all Permits required under any Environmental Law that are necessary
for the Company's and Subsidiary's activities and operations at the Real
Property. The Company and Subsidiary are and have been in compliance with all
such Permits; and, to the extent required by Environmental

                                       20

<PAGE>

Laws, the Company and Subsidiary have made or will make, prior to Closing,
timely and sufficient application for the extension, reissuance or renewal of
such Permits.

             (e) All material expenses related to environmental liabilities and
compliance with Environmental Laws and Permits or authorizations required
hereunder accrued and recorded by the Company and Subsidiary on its books for
the 2002, 2003 and 2004 fiscal years are included in the Financial Statements.

             (f) No underground storage tanks, polychlorinated byphenyls, or
friable asbestos materials now exist or, to the Sellers' Knowledge, have existed
on the Real Property.

             (g) Sellers have provided Buyer with true and complete copies of
any environmental reports, correspondence to and from Governmental Authorities
and other documents in their possession or control that relate to Environmental
Claims, the Company's and Subsidiary's compliance with Environmental Laws and
Permits issued under Environmental Laws, or to the Environmental Condition of
the Real Property, and any other property on which the Company, Subsidiary or
any predecessor has conducted business.

             (h) There are no facts, circumstances, conditions or occurrences
resulting from the Company's or Subsidiary's business, or to the Sellers'
Knowledge, any predecessor's conduct of business and, to the Sellers' Knowledge,
any other such facts, circumstances, conditions or occurrences, that could
reasonably be anticipated (i) to form the basis of an Environmental Claim or
other claim relating to Hazardous Materials, (ii) to interfere with or prevent
continued compliance by the Company and Subsidiary with Environmental Laws and
environmental Permits, or (iii) to cause the Real Property to be subject to any
restrictions on ownership or occupancy under any Environmental Law.

         4.10 Insurance. Schedule 4.10 sets forth, as of the date of this
Agreement, all policies of insurance covering the Company and Subsidiary and
their respective businesses, including but not limited to director and officer
insurance, and indicates whether such policies are claims made or occurrence
based. All such policies are in full force and effect. All premiums with respect
to such insurance policies covering all periods up to and including the Closing
Date have been paid and no notice of cancellation or termination has been
received with respect to any such policy. Such policies are valid, outstanding,
and enforceable and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. The insurance
policies to which the Company or Subsidiary is a party are sufficient for
compliance with all requirements of law and for all agreements to which the
Company or Subsidiary is a party. There are no outstanding claims by the Company
or Subsidiary under any such insurance policies except for routine claims under
worker's compensation and Employee Plans. Other than refusals or coverage
limitations relating solely to the general nature of the Company's or
Subsidiary's business operations, neither the Company nor Subsidiary has been
refused any insurance with respect to its assets or operations nor has its
coverage been limited by any insurance carrier to which it has applied for any
such insurance or with which it has carried

                                       21

<PAGE>

insurance during the thirty-six (36) months immediately prior to the date of
this Agreement. The Company and Subsidiary have each timely and properly given
all notices required to have been given by the Company or Subsidiary to any
insurance company, and no insurance company has asserted in writing that any
claim is not covered by the applicable policy relating to such claim.

         4.11 Labor Matters.

             (a) The Company is not a party to or subject to any collective
bargaining agreements, and, as of the date hereof, to the Sellers' Knowledge, no
labor union or other collective bargaining unit represents or claims to
represent any of the Company's employees.

             (b) There is no union campaign being conducted to solicit cards
from employees to authorize a union to request a National Labor Relations Board
certifications election with respect to the Company's employees.

             (c) There are no unfair labor practice charges or complaints, or
any current union representation questions, involving employees or former
employees of the Company pending against the Company before the National Labor
Relations Board or similar foreign entity; there is no labor strike, lockout,
organized slowdown or organized work stoppage in effect or, to the Sellers'
Knowledge, threatened against the Company; and there has been no charge of
discrimination filed against or threatened against the Company with the Equal
Employment Opportunity Commission or similar governmental body.

             (d) The Company hires temporary labor or other subcontract labor at
their facilities only through temporary employment agencies. No part-time
employee works more than 40 hours in any week.

             (e) Schedule 4.11(e) sets forth the name, job title, and total
compensation (including bonuses, commissions or incentive compensation) for each
of the last two calendar years of each employee of the Company or Subsidiary as
of the date of this Agreement whose annual W-2 compensation for the calendar
year exceeded $50,000 (the "Company Employees"). Except for the Seller's
Representative and Bob Burkholder, none of the Company Employees have notified
the Company or Subsidiary or have been notified by the Company or Subsidiary
that he or she will cancel, has canceled or otherwise will terminate such
employee's relationship with the Company or Subsidiary. None of the Company
Employees are subject to any secrecy or non-competition agreement or any other
agreement or restriction of any kind that would impede in any way the ability of
such employee to carry out fully all activities of such employee in furtherance
of the business or operations of the Company or Subsidiary.

             (f) The Company has paid in full to each Company Employee all
wages, salaries, commissions, bonuses, benefits, and other compensation due to
such employees or otherwise arising under any policy, practice agreement, plan,
program, statute or other law. Neither the Company nor Subsidiary is liable for
any severance pay or other payments to any

                                       22

<PAGE>

employee or former employee arising from the termination of employment, and
neither the Company, Subsidiary nor the Buyer will have any liability under any
benefit or severance policy, practice, agreement, change-in-control or other
plan, or program which exists or arises, or may be deemed to exist or arise,
under any applicable law or otherwise, as a result of or in connection with the
transactions contemplated by this Agreement or as a result of the termination by
the Company or Subsidiary of any employee on or before the Closing Date.

             (g) The Company is not liable for any post-retirement benefits to
any Company Employee or former employee.

             (h) Schedule 4.11(h) sets forth the historical loss runs of all
workers' compensation claims in the past two (2) years with respect to the
Company together with a current loss run of workers' compensation claims.

             (i) No Company Employee is on or subject to any layoff, short-term
or long-term disability, workers compensation claim or other leave of absence,
except as set forth on Schedule 4.11(i).

             (j) The Company and Subsidiary have complied with applicable laws,
executive orders, rules and regulations relating to employment, civil rights and
equal employment opportunities, including, the Civil Rights Act of 1964, Title
VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, and Title I
of the American with Disabilities Act.

             (k) The Company is and at all times during the past five (5) years
has been in compliance with the terms and provisions of the Immigration Reform
and control Act of 1986, (the "Immigration Act"). With respect to each
"employee" (as defined in 8 C.F.R. 274a.1(f)) of the Company and Subsidiary for
whom compliance with the Immigration Act is required, the Company or Subsidiary
has on file a true, accurate and complete copy of (i) each employee's Form I-9
(Employment Eligibility Verification Form), and (ii) all other records or
documents required to be retained pursuant to the Immigration Act. The Company
has not been cited, fined, or served with a Notice of Intent to Fine or with a
Cease and Desist Order, nor to the Sellers' Knowledge has any action or
administrative proceeding been initiated or threatened against the Company by
the Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.

             (l) The Company has given all notices required under COBRA to all
employees of the Company who were terminated or laid off on or prior to Closing.

             (m) The Company's facility is maintained and operated in
substantial compliance with the Occupational Safety and Health Act of 1970
("OSHA") and any similar state statute, rule or regulation. During the past five
years, the Company has not been subject to an investigation by the U. S.
Department of Labor, litigation over compliance with such rules

                                       23

<PAGE>
and regulations or subject to any fine, penalty or citation relating to or
arising out of a violation or alleged violation of OSHA and any similar state
statute and such rules and regulations

         4.12 Employee Benefit Plans.

             (a) Schedule 4.12(a) sets forth a complete list of (i) all
"employee benefit plans," as defined in Section 3(3) of ERISA and (ii) all other
severance pay, salary continuation, club membership, stock option, welfare,
insurance, fringe benefit, retirement, pension, profit sharing or deferred
compensation plans, contracts, programs, funds, or arrangements of any kind to
which the Company or Subsidiary makes or is required to make payments,
transfers, or contributions in respect of Company Employees (all of the above
together with the Bonus Plans (as defined below) being hereinafter individually
or collectively referred to as "Employee Plan" or "Employee Plans,"
respectively).

             (b) Copies of the following materials have been delivered or made
available to Buyer: (i) all current plan documents for each Employee Plan
(including any trust, insurance and/or other funding agreements) or, in the case
of an unwritten Employee Plan, a written description thereof, (ii) all
determination letters from the Internal Revenue Service ("IRS") with respect to
any of the Employee Plans, (iii) all current summary plan descriptions,
summaries of material modifications, annual reports, and summary annual reports,
and (iv) the Form 5500 for the most recent year for each Employee Plan.

             (c) The Company maintains bonus plans and long term incentive plans
listed on Schedule 4.12(c) (the "Bonus Plans"). All obligations under such Bonus
Plans have been fully accrued for and are reflected on the 2004 Financial
Statements or Interim Financial Statements, as applicable.

             (d) Each Employee Plan has been maintained, operated, funded and
administered in substantial compliance with its terms and any related documents
or agreements and in substantial compliance with all applicable laws, including,
without limitation, the provisions of ERISA, the Code and all notice and other
requirements of the Health Insurance Portability and Accountability Act of 1996
("HIPAA") and with obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). Each applicable Employee Plan
has been and is currently in compliance with Section 404(c) of ERISA.

             (e) Each Employee Plan intended to be qualified under Section
401(a) of the Code has heretofore been determined by the IRS to be so qualified,
and nothing has occurred, whether by action or failure to act, which has
resulted in or could cause the loss of such qualification; and each trust
created thereunder has heretofore been determined by the IRS to be exempt from
tax under the provisions of Section 501(a) of the Code.

                                       24

<PAGE>

             (f) (i) Neither the Company nor Subsidiary has any unfunded
liabilities in connection with any of the Employee Plans; (ii) all
contributions, premium payments and other payments due from the Company or
Subsidiary to or under such Employee Plans have been paid in a timely manner and
(iii) all additional contributions, premium payments and other payments due on
or before the Closing Date shall have been paid by that date.

             (g) There is no litigation, disputed claim (other than routine
claims for benefits), governmental proceeding, audit, inquiry or investigation
pending, or to the Sellers' Knowledge, threatened, with respect to any Employee
Plan, its related assets or trusts, or any fiduciary, administrator or sponsor
of such Employee Plan.

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

             (i) None of the Company, Subsidiary or any affiliate (within the
meaning of ERISA Section 4001 or Code Section 414) has ever sponsored or had any
obligation with respect to, and no Employee Plan is currently (i) a single
employer plan that is subject to Title IV of ERISA, or (ii) an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA, that provides benefits to or
on behalf of any person following retirement or other termination of employment
(except to the extent required by Section 4980B of the Code).

             (j) Neither the Company nor Subsidiary has ever contributed to a
"Multi-Employer Plan" as defined in Section 3(3) of ERISA.

             (k) Each Employee Plan which is a "group health plan" (as defined
in Code Section 5000(b)(1)) has complied and will comply at all times (whether
before or on the Closing Date) in all respects with the applicable requirements
of ERISA, the Code, and any applicable state law, including ERISA Sections 601
through 734, Code Sections 498B and 9801 through 9833 and all related
regulations thereunder.

             (l) With respect to each Employee Plan which is an "employee
pension benefit plan" (as defined in ERISA Section 3(2)):

                 (i) no event has occurred and no condition exists relating to
any such Employee Plan that would subject the Company, Subsidiary or Buyer to
any tax under Code Sections 4972 or 4979, or to any liability under ERISA
Section 502;

                 (ii) to the extent applicable, no such Employee Plan has
experienced any "accumulated funding deficiency" (as defined in Code Section
412), whether or not waived, at any time;

                 (iii) no such Employee Plan is subject to Title IV of ERISA;
and

                                       25

<PAGE>

                 (iv) no such Employee Plan is a "multiemployer plan" (as
defined in ERISA Section 3(37)).

             (m) The consummation of the transactions contemplated by this
Agreement will not:

                 (i) entitle any Company Employee or former employee of the
Company or Subsidiary to severance pay, unemployment compensation or similar
payment;

                 (ii) accelerate the time of any payment or vesting or increase
the amount of any compensation due to, or in respect of, any current or former
employee of the Company or Subsidiary; or

                 (iii) constitute or involve the breach of fiduciary
responsibility within the meaning of ERISA Section 502(l) or otherwise violate
Part 4 of Subtitle B of Title I of ERISA.

             (n) Except as provided on Schedule 4.12(n), all employees of
Subsidiary participate only in government offered benefit plans.

         4.13 Material Contracts.

             (a) As of the date of this Agreement, the Company or Subsidiary is
a party to the following Contracts (whether written or oral) (the "Material
Contracts"):

                 (i) Contracts related to Employee Plans listed on Schedule
4.12(a);

                 (ii) Contracts related to insurance listed on Schedule 4.10;

                 (iii) The Intellectual Property agreements listed on Schedule
4.8(e);

                 (iv) The following Contracts set forth in Schedule 4.13(a)(iv):

                      (A) Each partnership, joint venture, joint development,
OEM or technology exchange agreement;

                      (B) Agreements limiting the right of the Company or
Subsidiary to engage in or compete with any Person in any business or in any
geographical area;

                      (C) Each sales representative agreement and each
distributor or reseller agreement;

                      (D) Each agreement under which the Company or Subsidiary
has conferred a power of attorney;

                                       26

<PAGE>

                      (E) Each Debt Agreement;

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

                      (G) Contracts which contain minimum purchase conditions or
requirements or other terms that restrict or limit the purchasing or selling
relationships of the Company, Filtration Systems or Subsidiary;

                      (H) Operating leases;

                      (I) Contracts relating to any outstanding commitment for
capital expenditures of the Company or Subsidiary in excess of $100,000;

                      (J) Any agreement under which payment is required for any
change of control in the Company or Subsidiary, or any agreement pursuant to
which any payment has been made since January 1, 2004 relating to any potential
change of control of the Company or Subsidiary;

                      (K) Nondisclosure agreements to which the Company or
Subsidiary is a party;

                      (L) Purchase and sale agreements under which
indemnification claims may still be made;

                      (M) Any other agreement that requires the Company or
Subsidiary to make payments equal to more than $15,000 per annum;

                      (N) Open purchase orders, purchase commitments, sales
orders and sales
commitments greater than $50,000 entered into in the ordinary course of
business;

                      (O) Current employment agreements, consulting agreements
or other employee or similar agreements with any employee of the Company or
Subsidiary and other similar arrangements or understandings not terminable at
the will of the Company or Subsidiary without penalty;

                      (P) Any current agreement with any manufacturer, supplier
or customer with respect to price commitments, surcharges, discounts,
allowances, chargebacks or refunds, rebates or retroactive price adjustments;

                      (Q) Any agreement pursuant to which the Company or
Subsidiary warehouses inventory; and

                                       27

<PAGE>

                      (R) Any current agreement entered into since January 1,
2004 (other than for the purchase of machinery and equipment in the ordinary
course of business), relating to the acquisition or disposition of businesses,
product lines or a material amount of assets.

             (b) All purchase orders and commitments and all sales orders and
commitments of the Company and Subsidiary have been entered into in the ordinary
course of business consistent with past practices.

             (c) No default or, to the Sellers' Knowledge, alleged default or
any event which, with the lapse of time or with the election of any Person other
than the Company or Subsidiary, could become a default exists under any Material
Contract. Each Material Contract is now valid, in full force and effect and
enforceable in accordance with its terms and the Company or Subsidiary, as
applicable, has fulfilled in all material respects, or taken all action
reasonably necessary to enable it to fulfill when due, all its obligations under
such Material Contracts. Notwithstanding the foregoing, each Material Contract
with a Person other than a Person located in the United States may be subject to
any overriding aspects of laws of jurisdictions outside of the United States,
however, in the past five years, no such Material Contract nor any term thereof
has been found to be unenforceable on such basis.

             (d) Sellers have provided to Buyer copies of all of the agreements
and documents listed on Schedule 4.13(a) if written, or a written description of
the foregoing if oral.

         4.14 Legal Proceedings, Etc. Except as set forth in Schedule 4.14,
there are no Actions pending, or, to the Sellers' Knowledge, overtly threatened
against or affecting the Company or Subsidiary with the amount in controversy in
excess of $10,000, which seeks injunctive or other equitable relief, which is
before or by any Governmental Authority or which would be expected to prevent
the consummation of the transactions contemplated hereby. Neither the Company
nor Subsidiary is subject to any Order.

         4.15 Permits. Schedule 4.15 contains a complete list of all Permits
issued to the Company or Subsidiary that are currently used by the Company or
Subsidiary in connection with their respective businesses. Each of the Company
and Subsidiary are in compliance in all material respects with all such Permits,
all of which Permits are in full force and effect; provided that disclosure
regarding Permits issued under Environmental Laws is made pursuant to Section
4.9 of this Agreement.

         4.16 Taxes.

             (a) The Company has duly made an election pursuant to Subchapter S
of the Code and at all times since such election has qualified as an "S
corporation", as defined in Section 1361(a)(1) of the Code through the Closing
Date. Neither the Company, Filtration Systems nor Subsidiary has taken any
action that could jeopardize the tax classification of the

                                       28

<PAGE>

Company obtained pursuant to the S corporation election. Purafil Mfg. Co., Inc.,
a Georgia corporation which had been wholly owned by the Company, has been
administratively dissolved and has not conducted business of any kind whatsoever
since the Company's election pursuant to Subchapter S of the Code.

             (b) The Company and Subsidiary have each filed all Tax Returns
required to be filed under applicable laws and regulations and have paid or
withheld all Taxes shown thereon as due and owing. All such Tax Returns were
correct and complete in all respects and all such Tax Returns were prepared in
substantial compliance with all applicable laws and regulations. Schedule
4.16(b) contains a complete and accurate list of all Taxing Authorities with
which the Company or Subsidiary is required to file Tax Returns.

             (c) Neither the Company nor Subsidiary has agreed to any extension
or waiver of the statute of limitations applicable to any Tax Return, or agreed
to any extension of time with respect to any Tax assessment or deficiency, which
period (after giving effect to such extension or waiver) has not yet expired.
All Taxes due and owing by the Company or Subsidiary (whether or not shown on
any Tax Return) have been paid.

             (d) Neither the Company nor Subsidiary is a party to any Tax
allocation or sharing agreement.

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

             (f) There are no Liens for unpaid Taxes on the assets of the
Company or Subsidiary.

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

             (h) Neither the Company nor Subsidiary (i) has been a member of an
affiliated group of corporations within the meaning of Section 1504 of the Code
(other than a group the common parent of which is the Company), or (ii) has any
liability for Taxes of any Person (other than the Company and Subsidiary) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law) as a transferee or successor, by contract, or otherwise.

             (i) No deficiencies for any Tax have been proposed, asserted or
assessed in writing by any taxing authority against the Company or Subsidiary,
none of the Tax Returns of the Company or Subsidiary currently is being audited
nor has the Company or Subsidiary received written notice from any Taxing
Authority of any intention to open an audit.

                                       29

<PAGE>

             (j) No claim has been made by a Taxing Authority in a jurisdiction
where the Company or Subsidiary does not file Tax Returns that it is or may be
subject to taxation by the jurisdiction.

             (k) Neither the Company nor Subsidiary is a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in the payment of (i) any "excess parachute payment" within
the meaning of Code Section 280G (or any corresponding provision of state, local
or foreign Tax law) and (ii) any amount that will not be fully deductible as a
result of Code Section 162(m) (or any corresponding provision of state, local or
foreign Tax law). Neither the Company nor Subsidiary has been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii).

             (l) Except as disclosed on Schedule 4.16(l), neither the Company
nor Subsidiary will be required to include any 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 (A) change in method
of accounting for a taxable period ending on or prior to the Closing date; (B)
"closing agreement" as described in Code ss.7121 (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date; (C) intercompany transaction or excess loss account
described in Treasury Regulations under Code ss.1502 (or any corresponding or
similar provision of state, local or foreign income Tax law); (D) installment
sale or open transaction disposition made on or prior to the Closing Date; or
(E) prepaid amount received on or prior to the Closing Date.

             (m) None of the assets of the Company or Subsidiary is subject to a
"safe harbor lease" under Section 168(f)(8) of the Code, as in effect
immediately prior to the Tax Equity and Fiscal Responsibility Act of 1982 (or
comparable federal, state or foreign law or regulations).

             (n) The Company or Subsidiary will not be liable for any Tax under
Section 1374 of the Code in connection with the deemed sale of the Company's
assets caused by the Section 338(h)(10) election contemplated by this Agreement.
Except as set forth on Schedule 4.16(n), the Company and Subsidiary each have
not, in the ten (10) years prior to the date of this Agreement (i) acquired
assets from another corporation in a transaction in which the tax basis for the
acquired assets was determined by reference to the tax basis of the acquired
assets in the hands of the transferor, or (ii) acquired shares of the capital
stock of any corporation which is a qualified Subchapter S subsidiary.

         4.17 Transactions with Shareholders, Officers, Directors, Etc. Except
as disclosed on Schedule 4.17, and other than accrued but unpaid salary due from
the end of the last pay period, there are no amounts owing from the Company or
Subsidiary to any present or former shareholder, officer, director or employee
of the Company or Subsidiary, nor are there any amounts owing from any such
person to the Company or Subsidiary, nor have there been since

                                       30

<PAGE>

January 1, 2004, or are there currently pending any transactions between the
Company or Subsidiary and any such person.

         4.18 Brokers. Except for SunTrust Robinson Humphrey, no broker, finder
or similar agent has been employed by or on behalf of the Company or Subsidiary,
and no Person with which the Company or Subsidiary has had any dealings or
communications of any kind is entitled to any brokerage commission, finder's fee
or any similar compensation, in connection with this Agreement or the
transactions contemplated hereby.

         4.19 Inventory. All of the inventory of the Company and Subsidiary is
suitable, usable and, in the case of finished goods and products, saleable at
applicable prices and, in the case of raw materials and work in process,
properly valued under GAAP at no less than the values reflected in the Financial
Statements in the ordinary course of business. There is no consigned inventory.
Except as disclosed in Schedule 4.19, all inventory of the Company and
Subsidiary is located at the Real Property.

         4.20 Accounts Receivable; Accounts Payable.

             (a) The accounts receivable reflected on the Financial Statements
(i) are bona fide accounts receivable created in the ordinary and usual course
of business in connection with bona fide transactions and consistent with past
practice, (ii) are outstanding as set forth on the aging schedules made
available to Buyer, and (iii) are fully collectible when due at their face
amounts, subject to reserves reflected on such Financial Statements.

             (b) The accounts payable reflected on the Financial Statements (i)
are bona fide accounts payable created in the ordinary and usual course of
business in connection with bona fide transactions and consistent with past
practice, and (ii) are not past due, have not been discounted (other than in the
ordinary course of business), and have been paid in accordance with the past
practices of the Company or Subsidiary, as the case may be.

         4.21 Suppliers. Schedule 4.21 sets forth a list of all of the suppliers
of materials and services to the Company and Subsidiary in amounts in excess of
$50,000 during the 12 months ended October 30, 2004. No such supplier has
decreased materially or, to the Sellers' Knowledge, threatened to decrease or
limit materially, its provision of services or supplies to the Company or
Subsidiary. To the Sellers' Knowledge, there has been no and there is currently
no threatened termination, cancellation or limitation of, or any material
modification or change in, the Company's or Subsidiary's business relationships
with any supplier of materials or services in an amount in excess of $50,000 per
year.

         4.22 Customers. Schedule 4.22 sets forth a list of the 15 largest
customers of the Company and Subsidiary in terms of sales during the 12 months
ended October 30, 2004. To the Sellers' Knowledge and other than in the ordinary
course of business and consistent with past practices (including the periodic
bidding processes with regard to projects), there has been no

                                       31

<PAGE>

and there is currently no threatened termination, cancellation or limitation of,
or any material modification or change in, the Company's or Subsidiary's
business relationships with any customer accounting for revenues in an amount in
excess of $50,000 per year. Except as set forth on Schedule 4.22, neither the
Company nor Subsidiary has any customer which accounted for more than 5% of its
sales during such fiscal year.

         4.23 Effect of Transaction. To the Sellers' Knowledge, no supplier,
employee or customer or other Person having a material business relationship
with the Company or Subsidiary has informed the Company or Subsidiary that such
Person intends to change the relationship because of the purchase and sale of
the Shares, nor, to the Sellers' Knowledge, does any such supplier, employee,
customer or other Person have such intent. No key customer or other Person
having a material business relationship with the Company or Subsidiary has
informed the Company or Subsidiary that such customer or Person intends to
change the relationship because of the transactions contemplated hereby, nor, to
the Sellers' Knowledge, does any such customer or Person have such intent. To
the Sellers' Knowledge, the consummation of the transactions contemplated by
this Agreement will not adversely affect the relationship with any customer.

         4.24 Compliance with Laws. Except with respect to compliance with
Environmental Laws, which is addressed in Section 4.9 or compliance with certain
laws governing Employee Plans, which is addressed in Section 4.12, other than as
provided on Schedule 4.24, the Company and Subsidiary:

             (a) are in material compliance with all Laws and Orders applicable
to its business or employees conducting its business; and

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

         4.25 Absence of Certain Commercial Practices. None of the Company,
Subsidiary, any director, officer, agent, employee or other person acting on
behalf of the Company or Subsidiary has in violation of any Law: (a) given or
agreed to give any gift or similar benefit of more than nominal value to any
customer, supplier, governmental employee or official or any other person who is
or may be in a position to help or hinder the Company or Subsidiary or assist in
connection with any proposed transaction, which gift or similar benefit, if not
given in the past, might have adversely affected the business or prospects of
the Company or Subsidiary, or which, if not continued in the future, might
adversely affect the business or prospects of the Company or Subsidiary, or (b)
used any corporate or other funds for unlawful contributions, payments, gifts,
or entertainment, or made any unlawful expenditures relating to political
activity to governmental officials or others or established or maintained any
unlawful or unrecorded funds. Neither the Company, Subsidiary, nor any director,
officer, agent, employee or other

                                       32

<PAGE>

person acting on behalf of the Company or Subsidiary has, accepted or received
any unlawful contributions, payments, gifts, entertainment or expenditures. The
Company and Subsidiary maintain such books, records and accounts of transactions
and maintain a system of internal accounting controls sufficient to meet the
applicable requirements of the Foreign Corrupt Practices Act.

         4.26 No Competing Business; Total Assets. No Seller, nor any officer or
director of the Company or Subsidiary, has any direct or indirect equity
interest in any Person that competes with or conducts any business similar to
that of the Company or Subsidiary. No Seller nor any officer or director of the
Company or Subsidiary owns any assets (tangible or intangible) used in the
conduct of the Business anywhere in the world.

         4.27 Warranties; Product Liability. Schedule 4.27 contains a complete
and accurate list of any express warranties given by the Company or Subsidiary
covering or relating to any of its products or services, including those related
to warranty obligations. Neither the Company nor the Subsidiary provides any
express or other warranty with regard to equipment media refills. Schedule 4.27
also contains a complete and accurate list of the claims experience of the
Company and Subsidiary with respect to warranty and product liability claims
against the Company or Subsidiary for the last two years. All costs related to
warranty, product and customer service claims against, or expenses incurred by
the Company and Subsidiary are reflected in the Financial Statements. There are
no liabilities of the Company or Subsidiary, fixed or contingent, asserted and
arising out of or based upon incidents occurring on or before the date of this
Agreement with respect to:

             (a) any product liability or any similar claim that relates to any
of the products sold by the Company or Subsidiary to others;

             (b) the delivery of faulty service by the Company or Subsidiary;

             (c) any claim (whether or not covered by insurance) against the
Company or Subsidiary for the breach of any express or implied product warranty,
or any similar claim that relates to any product sold or service delivered by
the Company or Subsidiary;

             (d) any recall or investigation of any product sold by the Company
or Subsidiary.

         4.28 Bank Accounts. Schedule 4.28 sets forth a complete and correct
list of each account with any bank, trust company, securities broker or other
financial institution with which the Company or Subsidiary has any account and
all safe deposit boxes maintained by the Company or Subsidiary, the identifying
numbers or symbols thereof, and the name of each person authorized to draw
thereon or to have access thereto.

         4.29 No Material Misstatements or Omissions. Neither this Agreement nor
any schedules, exhibits or other documents to be furnished to Buyer pursuant
hereto will contain any

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<PAGE>

untrue statement of a material fact or omit to state a material fact necessary
to make the factual statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.

         ARTICLE V        REPRESENTATIONS AND WARRANTIES OF EACH SELLER

       Each Seller severally represents and warrants to Buyer as follows:

         5.1 Authority, Validity and Effect; No Conflicts, Required Filings and
Consents.

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

             (b) Seller represents and warrants that all persons executing this
Agreement on behalf of said party (i) have full authority to do so, (ii) are not
bound by any agreement, or under any other disability, which would prevent them
from doing so, and (iii) if they are individuals, are of legal age.

             (c) Neither the execution and delivery of this Agreement by Seller,
nor the consummation by Seller of the transactions contemplated herein, nor
compliance by Seller with any of the provisions hereof, will (i) conflict with
or result in a breach of any provisions of any operating agreement, certificate
of incorporation, bylaws or similar organizational document of Seller (if not an
individual), (ii) constitute or result in the breach of any term, condition or
provisions of, or constitute a default under any contract or agreement to which
such Seller is a party, or (iii) violate any Order or Law applicable to such
Seller or any of their respective properties or assets.

             (d) No Consent is required to be obtained by Seller for the
consummation by Seller of the transactions contemplated in this Agreement.

             (e) This Agreement has been duly and validly executed and delivered
by Seller and constitutes a valid and binding agreement of Seller in accordance
with its terms, except as limited by the General Enforceability Exceptions.

         5.2 Title to Shares. Seller owns the Shares free and clear of all Liens
as set forth on Schedule 4.1(b) and upon the consummation of the transactions
contemplated hereby, Seller will

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<PAGE>

transfer good and valid title to such Shares to Buyer free and clear of all
Liens. Schedule 4.1(b) reflects all of the shares owned by such Seller in the
Company or Subsidiary.

         5.3 Filtration Systems, Inc. William Weiller owns all of the
outstanding equity interests in Filtration Systems, Inc. free and clear of all
Liens, and upon the consummation of the transactions contemplated hereby,
William Weiller shall transfer good and valid title to such equity interests to
the Company free and clear of all Liens. Such transfer will not (i) conflict
with or result in a breach of any provisions of any operating agreement,
certificate of incorporation, bylaws or similar organizational document of
Filtration Systems, Inc., the Company, or the Subsidiary, (ii) constitute or
result in the breach of any term, condition or provisions of, or constitute a
default under any contract or agreement to which Filtration Systems, Inc., the
Company, or the Subsidiary is a party, (iii) violate any Order or Law applicable
to Filtration Systems, Inc., the Company, or the Subsidiary or any of such
entity's respective properties or assets; or (iv) violate the tax classification
of the Company obtained pursuant to the S corporation election.

         5.4 Broker. Except for SunTrust Robinson Humphrey, no broker, finder or
similar agent has been employed by or on behalf of Seller, and no Person with
which Seller has had any dealings or communications of any kind is entitled to
any brokerage commission, finder's fee or any similar compensation, in
connection with this Agreement or the transactions contemplated hereby.

         5.5 Taxes. No Seller has taken any action that could jeopardize the tax
classification of the Company obtained pursuant to the S corporation election.
If Seller is not a resident of Georgia, such Seller has executed an agreement,
for all periods ending on or prior to the Closing Date, in which such Seller
agrees to pay Georgia income tax on their proportionate part of the
corporation's Georgia taxable income under Section 48-7-21(b)(7)(8) of the
Georgia Income Tax Act and Regulations 560-7-3-06(6).

             ARTICLE VI       REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to Sellers that the following
representations and warranties are true and correct.

         6.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.

         6.2 Authority Relative to this Agreement. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly authorized by the Board of
Directors of Buyer, and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement or to consummate the transactions
contemplated

                                       35

<PAGE>

by this Agreement or thereby. This Agreement has been duly and validly executed
and delivered by Buyer and this Agreement constitutes a valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
subject to the General Enforceability Exceptions.

                   6.3 Consents and Approvals; No Violation.

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

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

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

         6.5 Investment Intent. The Shares are being purchased by Buyer for its
own account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
and the rules and regulations promulgated thereunder. Buyer acknowledges that it
is informed as to the risks of the transactions contemplated hereby and of
ownership of the Shares. Buyer acknowledges that the Shares have not been
registered under the Securities Act or the Exchange Act or any state or foreign
securities laws and that the Shares may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of unless such sale, transfer,
offer, pledge, hypothecation or other disposition is pursuant to the terms of an
effective registration statement under the Securities Act and are registered
under any applicable state or foreign securities laws or pursuant to an
exemption from registration under the Securities Act or the Exchange Act and any
applicable state or foreign securities laws.

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

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<PAGE>

                      ARTICLE VII COVENANTS OF THE PARTIES

         7.1 Further Assurances. Subject to the terms and conditions of this
Agreement, each of the parties agrees to use its commercially reasonable
efforts, at its own expense, to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.

         7.2 Cooperation in Litigation. If the Company, Subsidiary, Sellers or
Buyer shall require the participation of officers and employees employed by the
other to aid in the defense or settlement of litigation or claims by third
parties, and so long as there exists no conflict of interest between the
parties, the parties shall use their commercially reasonable efforts to make
such officers and employees available to participate in such defense, provided
that the party requiring the participation of such officers or employees shall
pay all reasonable out-of-pocket costs, charges and expenses arising from such
participation.

         7.3 Noncompetition, Nonsolicitation and Nondisparagement.

             (a) Noncompetition. For a period of five (5) years after the
Closing Date, each Seller agrees that it shall not, anywhere in the world in
which the Company, Subsidiary or Buyer is currently engaged in the Business,
directly or indirectly invest in, own, manage, operate, finance, control,
advise, render services to or guarantee the obligations of any Person engaged in
or planning to become engaged in the Business; provided, however, that Sellers
may in the aggregate purchase or otherwise acquire up to (but not more than)
three percent (3%) of any class of the securities of any Person (but may not
otherwise participate in the activities of such Person) if such securities are
listed on any national or regional securities exchange or have been registered
under Section 12(g) of the Exchange Act.

             (b) Nonsolicitation. For a period of five (5) years after the
Closing Date, no Seller shall directly or indirectly:

                 (i) solicit the business of any Person who is a customer of
Buyer;

                 (ii) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, employee, consultant or other business
relation of Buyer to cease doing business with Buyer, to deal with any
competitor of Buyer or in any way interfere with its relationship with Buyer;

                 (iii) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, employee, consultant or other business
relation of the Company or Subsidiary on the Closing Date or within the year
preceding the Closing Date to cease doing business with Buyer, to deal with any
competitor of Buyer or in any way interfere with its relationship with Buyer; or

                                       37

<PAGE>

                 (iv) hire, retain or attempt to hire or retain any employee or
independent contractor of Buyer or in any way interfere with the relationship
between Buyer and any of its employees or independent contractors.

             (c) Nondisparagement. After the Closing Date, no Seller will
disparage the Company, Buyer or any of Buyer's Affiliates, stockholders,
directors, officers, employees or agents.

             (d) Modification of Covenant. If a final judgment of a court or
tribunal of competent jurisdiction determines that any term or provision
contained in Section 7.3(a) through (c) is invalid or unenforceable, then the
parties agree that the court or tribunal will have the power to reduce the
scope, duration or geographic area of the term or provision, to delete specific
words or phrases or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision. This
Section 7.3 will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. This Section 7.3 is reasonable and
necessary to protect and preserve Buyer's legitimate business interests and the
value of the Company and Subsidiary and to prevent any unfair advantage
conferred on Sellers.

         7.4 Section 338(h)(10) Election.

             (a) Sellers and Buyer agree that they shall jointly make or cause
to be made the election under Section 338(h)(10) of the Code on Form 8023 (and
any corresponding election under state or local law where available) with
respect to the Company and Subsidiary as a result of the purchase of the Shares
under this Agreement (the "Section 338 Election"). Sellers will include any
income, gain, loss, deduction or other tax items resulting from the Section 338
Election on their Tax returns to the extent required by applicable law. Sellers
also shall pay any Tax imposed on the Company or Subsidiary attributable to
making the Section 338 Election, including (i) any Tax imposed under Code
Section 1374, (ii) any Tax imposed under Reg. Section 1.338(h)(10)-1T and
(d)(5), or (iii) any state, local or foreign Tax imposed on the Company's or
Subsidiary's gains.

             (b) As soon after the Closing Date as is practicable and in any
event not later than 30 days after the Closing Date, the Buyer shall complete a
final Form 8023 (and all required attachments) and any similar forms required to
be filed in order to effect the Section 338 Election under state or local law
and shall present such forms to the Sellers' Representative for approval (which
approval shall not be unreasonably withheld or delayed) promptly after their
completion. For purposes of the Section 338 Election, the aggregate amount of
(i) the Purchase Price, as adjusted pursuant to Section 2.3, and (ii) the
liabilities of the Company or Subsidiary shall be allocated to the assets of the
Company and Subsidiary for all purposes (including tax and financial accounting
purposes) in a manner consistent with the methodology set forth on Exhibit C. If
there is a dispute concerning the application of such methodology to the final
Section 338 Election forms, Buyer and the Sellers' Representative shall attempt
to resolve such dispute and if

                                       38

<PAGE>

they have not done so within thirty days prior to any filing deadline, all
unresolved items shall be submitted to the Reviewing Accountants for resolution
in accordance with such methodology. The parties shall direct the Reviewing
Accountants to resolve the dispute within twenty days of submission or as soon
thereafter as practicable. The Reviewing Accountants' determination shall be
final and binding on the parties, and judgment on such determination may be
entered in any court having jurisdiction. Sellers, jointly and severally, and
Buyer shall each be responsible for one-half of the fees and expenses of the
Reviewing Accountants under this Section.

             (c) Sellers shall cooperate with Buyer in filing such election
forms and Buyer shall take any other actions that are necessary for making or
perfecting the elections and Buyer shall execute the Form 8023 and such other
applicable election forms.

             (d) Buyer and Sellers shall report all transactions pursuant to
this Agreement consistent with the Section 338 Election, except where required
otherwise by applicable state law, and shall take no position contrary thereto
unless required to do so pursuant to a "determination" within the meaning of
Section 1313 of the Code. Sellers shall pay any and all Taxes attributable to
the making of the Section 338 Election ("Section 338 Election Taxes") and shall
indemnify Buyer and the Company or Subsidiary, as the case may be, against any
Loss (as defined in Section 8.3) relating to such Taxes.

             (e) The parties agree that a violation of the provisions of this
Section 7.4 is a proper subject of injunctive relief.

         7.5 Taxes.

             (a) Sellers' Representative shall prepare or cause to be prepared
and file or cause to be filed all Tax Returns for state or federal income Taxes
for the Company and Subsidiary for all periods ending on or prior to the Closing
Date which are filed after the Closing Date and shall pay all Taxes shown as due
thereon. Sellers' Representative shall permit Buyer to review and comment on
each such Tax Return described in the preceding sentence prior to filing.

             (b) Buyer shall prepare and file all Tax Returns for Taxes (other
than income Taxes as provided in Section 7.5(a)) for the Company and Subsidiary
for all periods ending on or prior to the Closing Date which are filed after the
Closing Date and shall pay all Taxes shown as due thereon; provided that Sellers
shall reimburse Buyer for any Taxes of the Company and Subsidiary with respect
to such periods within fifteen (15) days after payment by Buyer or the Company
and Subsidiary of such Taxes to the extent such Taxes are not reflected in the
reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown on
the Working Capital Report.

             (c) Buyer, Sellers, the Company and Subsidiary shall cooperate
fully and provide any necessary information, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Section 7.5 and any audit, litigation

                                       39

<PAGE>

or other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Sellers agree (A) to retain all books and records with respect to Tax
matters pertinent to the Company and Subsidiary relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Sellers, any extensions
thereof) of the respective taxable period, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Company and
Subsidiary or Sellers, as the case may be, shall allow the other party to take
possession of such books and records.

             (d) With respect to the Tax Returns to be prepared by Seller's
Representative pursuant to Section 7.5(a), Buyer shall, as soon as reasonably
available in the ordinary course of business, deliver to Sellers' Representative
the unaudited combined balance sheet of the Company and Subsidiary as of
December 31, 2004, and the related unaudited combined income statement for the
two-month period then ended (the "December 2004 Financial Statements"). In no
event shall Buyer deliver the December 2004 Financial Statements later than 10
Business Days following the last Business Day of such period. The information
reflected on such December 2004 Financial Statements shall not, however, be
deemed in any respect to provide information or evidence in connection with the
preparation of the Closing Working Capital Report and Buyer and Sellers'
Representative acknowledge that such December 2004 Financial Statements when
initially provided shall be preliminary in nature and subject to change.

             (e) Buyer and Sellers further agree, upon request, to use their
best efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce, or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).

         7.6 Appointment of Sellers' Representative.

             (a) Each of the Sellers hereby irrevocably appoints the Sellers'
Representative as its true and lawful attorney-in-fact, to act as his, her or
its representative under this Agreement and, as such, to act, as such Seller's
agent (with full power of substitution), to take such action on such Seller's
behalf with respect to all matters relating to this Agreement and the related
documents and all transactions contemplated by this Agreement and the related
documents. All actions taken on Sellers' behalf by the Sellers' Representative
shall be binding and enforceable on and against Sellers and each of their
respective beneficiaries, heirs, personal representatives, successors and
assigns and Buyer shall be entitled to rely, and shall be fully protected in
relying, upon any actions taken, or statements made, by the Sellers'
Representative as the representative and agent of all of Sellers.

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<PAGE>

             (b) The Sellers' Representative designated herein accepts the
appointment as the initial Sellers' Representative and the authorization set
forth in this subsection. The Sellers' Representative shall not have any duties
or responsibilities except those expressly set forth in this Agreement, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Agreement or shall otherwise exist against
the Sellers' Representative.

             (c) The Sellers' Representative shall be entitled to rely, and
shall be fully protected in relying, upon any statements furnished to him by any
Seller or Buyer, or any other evidence deemed by the Sellers' Representative to
be reliable, and the Sellers' Representative shall be entitled to act on the
advice of counsel selected by him. The Sellers' Representative shall be fully
justified in failing or refusing to take any action under this Agreement unless
he has received such advice or concurrence of such other Sellers as he deems
appropriate or he has been expressly indemnified to his satisfaction by Sellers
appointing him severally, according to their respective ownership percentages of
the Shares, against any and all liability and expense that the Sellers'
Representative may incur by reason of taking or continuing to take any such
action.

             (d) The Sellers' Representative shall be entitled to retain counsel
and to incur such expenses as the Sellers' Representative deems to be necessary
or appropriate in connection with the performance of their obligations under
this Agreement, and all such fees and expenses (including reasonable attorneys'
fees and expenses) incurred by the Sellers' Representative shall be borne by
Sellers pro rata according to their respective ownership percentages of the
Shares.

             (e) To the extent this Agreement provides that Sellers shall be
jointly and severally liable to personally pay any cost, expense or other
liability, Sellers shall share such payment ratably in accordance with their
respective ownership percentages of the Shares, and shall reimburse each other
as necessary to give effect to the intent of this provision.

             (f) The Sellers' Representative shall serve until the earlier of
his resignation, death or legal incapacity. Upon the resignation, death or legal
incapacity of the Sellers' Representative the Sellers holding a majority of the
non-voting stock of the Company as of the date of this Agreement shall select a
new Sellers' Representative who may resign, be removed or replaced in such a
manner as the selecting Sellers agree. Each time a new Sellers' Representative
is appointed pursuant to this Agreement, such Person shall accept such position
in writing.

             (g) The selecting Sellers shall notify Buyer of each change of
Sellers' Representative. Until Buyer receives the foregoing notice, it shall be
entitled to assume that the prior Person acting as the Sellers' Representative
is still the duly authorized Sellers' Representative.

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<PAGE>
         7.7 Company Employees.

             (a) Offers of Employment. Effective as of the Closing Date, Buyer
shall cause the Company to continue the employment of each Company Employee
other than those listed on Schedule 7.7 ("Employees") at a comparable base
salary or at comparable base wages as in effect immediately prior to the Closing
Date. Nothing in this Agreement shall require the Buyer to continue to employ
any of the Employees, or to maintain the compensation of any Employee at any
particular level, for any specified period following the Closing Date or prevent
the Buyer from terminating any of the Employees after the Closing Date.

             (b) Individual Account Plans. Each Employee who is a participant in
the Purafil, Inc. 401(k) Profit Sharing Plan ("Company 401(k) Plan"), shall, at
the option of Buyer, either continue to participate in the Company 401(k) Plan
or become eligible to participate in the Kaydon Corporation Employee Stock
Ownership & Thrift Plan or equivalent ("Buyer 401(k) Plan") as soon as
practicable after the Closing Date. If the Company 401(k) Plan is terminated,
the Company shall permit each Employee to elect a direct rollover of the portion
of his or her account balance that is eligible for rollover under a Company
savings program to the Buyer 401(k) Plan. The Buyer shall cause the Buyer 401(k)
Plan to accept the direct rollover of the Employees' benefits in cash and, if
applicable, promissory notes that are not accelerated from the Company 401(k)
Plan.

         (c) Employee Benefits.

                 (i) The Buyer shall, at its option, either maintain Company
employee benefit plans in effect as of the Closing Date or extend to each
Employee existing Buyer employee benefit plans (the "Buyer Plans") that provide
benefits to such Employee comparable to those benefits provided by Buyer to its
similarly situated employees immediately prior to the Closing Date. Nothing in
this Agreement shall require the Buyer to maintain the benefits of any Employee
at any particular level for any specified period following the Closing Date. The
Buyer shall cause the Company to give full credit for each Employee's period of
service with the Company prior to the Closing Date under any Buyer Plan in which
any Employee is eligible to participate for all purposes, including, but not
limited to, entitlement for holidays, sick days, vacations, severance, waiting
periods and vesting; provided that the Buyer is not required to give past
service credit for benefit accrual purposes under any qualified plan that is a
defined benefit pension plan sponsored by the Buyer.

                 (ii) The Buyer shall, at its option, either maintain Company
welfare benefit plans in effect as of the Closing Date or extend to each
Employee existing Buyer welfare benefit plans (the "Buyer Welfare Plans") that
provide benefits to such Employee comparable to those benefits provided by Buyer
to its similarly situated employees immediately prior to the Closing Date. In
the event the Buyer elects to extend to Employees the Buyer Welfare Plans, for
purposes of each Buyer Welfare Plan providing medical benefits to any Employee,
the Buyer shall cause all pre-existing condition exclusions and actively-at-work
requirements of such plans to be waived for such Employee and his or her covered
dependents (other than waiting periods that are already in effect with respect
to such Employees and dependents under the Company's

                                       42

<PAGE>

plans that have not been satisfied as of the Closing Date). With respect to
Buyer Welfare Plans in which benefits are subject to co-payments, deductibles or
similar thresholds, the Buyer or one of its Affiliates will take any and all
required actions necessary to give full credit for all co-payments and
deductibles satisfied prior to the Closing Date in the same plan year as if
there had been a single continuous employer.

         7.8 Federal Tax on Deposit. Buyer covenants and agrees to pay to
William Weiller any Federal Tax on deposit as of the close of business on the
Closing Date. Such amount shall be paid no later than ten (10) Business Days
following the date Buyer receives a refund of any such Federal Tax.

         7.9 Survey. Buyer shall obtain a current ALTA survey of the owned Real
Property as soon as practicable and in any event, not later than ninety (90)
days after the Closing Date. Buyer and Seller shall use commercially reasonable
efforts to resolve to their mutual satisfaction the items set forth in items 3,
4 and 5 of Schedule 8.1(f) and if so resolved as to any item, such item shall be
deemed deleted from Schedule 8.1(f) (without any impact on Sellers' obligations
under Section 8.1(a)). Buyer and Seller agree, however, that as to any of such
items 3, 4 or 5 of Schedule 8.1(f) as to which they do not reach a mutual
resolution, such item shall remain on Schedule 8.1(f).

                        ARTICLE VIII   INDEMNIFICATION

         8.1 Indemnification by Sellers. Subject to the limitations of Section
8.7, Sellers, jointly and severally, shall indemnify and hold harmless Buyer,
its officers, directors, employees and agents (collectively, the "Buyer
Indemnified Parties"), from and against any and all Losses (as defined in
Section 8.3), arising out of, based upon or resulting from:

             (a) any breach of any representation or warranty of Sellers which
is contained in or made pursuant to this Agreement;

             (b) any breach or nonfulfillment by Sellers of any of their
covenants, agreements or other obligations contained in or made pursuant to this
Agreement;

             (c) any Loss arising out of (i) any failure to pay Taxes pursuant
to the Section 338 Election contemplated by Section 7.4, (ii) any Tax liability
pursuant to Section 7.5(b), (iii) any corporate-level Tax resulting from or
related to the transactions disclosed on Schedule 4.16(n); or (iv) any liability
arising out of any defect in the Company's classification as an "S corporation"
under the Code;

             (d) any Loss resulting from any claim brought by a Seller in
connection with the transactions contemplated by this Agreement, including, but
not limited to, claims with respect to distribution of the Purchase Price or
authorization of the transactions contemplated by this Agreement;

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<PAGE>

             (e) any Loss arising out of those liabilities under Environmental
Laws identified on Schedule 4.9; and

             (f) any Loss arising out of the matters identified on Schedule
8.1(f).

         8.2 Indemnification by Buyer. Subject to the limitations of Section
8.7, Buyer shall indemnify and hold harmless Sellers from and against any and
all Losses (as defined in Section 8.3) arising out of, based upon or resulting
from:

             (a) any breach of any representation or warranty of Buyer which is
contained in or made pursuant to this Agreement; and

             (b) any breach or nonfulfillment by Buyer of any of its covenants,
agreements or other obligations contained in or made pursuant to this Agreement;

         8.3 Definition of Losses and Legal Expenses. For purposes of this
Article VIII, "Loss" or "Losses" shall mean and include damages, liabilities and
claims by or to the person entitled to indemnification (an "Indemnified Party"),
including all reasonable fees, costs and expenses related thereto, including any
and all of the Indemnified Party's Legal Expenses. As used in this Agreement,
"Legal Expenses" shall mean the fees, costs and expenses reasonably incurred by
the Indemnified Party in investigating, preparing for, defending against or
providing evidence, producing documents or taking other action with respect to,
any threatened or asserted claim, prior to assumption of control of the defense
of such claim by the person that is obligated to provide such indemnification
(an "Indemnifying Party").

         8.4 Third Party Claims.

             (a) Promptly after receipt of notice of the commencement of any
action or claim by a third party in respect of which the Indemnified Party may
seek indemnification under this Agreement, the Indemnified Party shall promptly
notify the Indemnifying Party, or in the case of a Seller as an Indemnifying
Party, for purposes of this Section 8.4, the Sellers' Representative. The
Indemnifying Party shall be entitled to control the defense of such action;
provided, however, that:

                 (i) the Indemnified Party shall be entitled to participate in
the defense of such action or claim and to employ counsel at its own expense to
assist in the handling of such action or claim;

                 (ii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party (with such approval not to be unreasonably
withheld) prior to appointing counsel;

                                       44

<PAGE>

                 (iii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into any settlement of such
action or claim, or ceasing to defend against such action or claim (with such
approval not to be unreasonably withheld);

                 (iv) no Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to each Indemnified Party
of a release from all liability in respect of such action or claim; and

                 (v) the Indemnifying Party shall not be entitled to control
(but shall be entitled to participate at its own expense in the defense of), and
the Indemnified Party shall be entitled to have sole control over, the defense
or settlement of any action or claim to the extent the claim seeks an
injunction, non-monetary or other equitable relief against the Indemnified Party
which, if successful, would in the judgment of the Indemnified Party materially
interfere with the business, operations, assets, condition (financial or
otherwise) or prospects of the Indemnified Party.

             (b) After written notice by the Indemnifying Party to the
Indemnified Party of its election to assume control of the defense of any such
action or claim, the Indemnifying Party shall not be liable to such Indemnified
Party hereunder for any Legal Expenses subsequently incurred by such Indemnified
Party in connection with the defense of any such action or claim. If the
Indemnifying Party does not assume control of the defense of such action or
claim as provided in this Section, then the Indemnified Party shall have the
right to defend such action or claim in such manner as it may deem appropriate
at the cost and expense of the Indemnifying Party, and the Indemnifying Party
will promptly reimburse the Indemnified Party for such costs and expenses in
accordance with this Article VIII.

         8.5 Procedure Relating to Other Claims. In the event that any
Indemnified Party should have a claim under Article VIII that does not involve a
claim by a third party being asserted against or sought to be collected from the
Indemnified Party, the Indemnified Party shall deliver notice of such claim with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to notify the Indemnifying Party shall not relieve any liability under
this Article VIII, except to the extent that the ability to defend such claim or
demand shall have been actually prejudiced as a result of such failure. If the
Indemnifying Party disputes the liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved in accordance with the terms of
this Agreement.

         8.6 Subrogation. If the Indemnifying Party shall be obligated to
indemnify the Indemnified Party pursuant to this Agreement, then the
Indemnifying Party shall, upon payment of such indemnity in full, be subrogated
to all rights of the Indemnified Party with respect to the actions or claims to
which such indemnification relates.

                                       45

<PAGE>

         8.7 Limitations On Indemnification Obligations. The obligations of the
parties to make indemnification payments pursuant to Section 8.1 and Section 8.2
are limited as follows:

             (a) Sellers shall have no liability for indemnification unless and
until, and only to the extent that, the aggregate amount of all Losses for which
indemnification is sought by Buyer exceeds $250,000 (the "Indemnification
Deductible Cap");

             (b) Sellers shall have no liability for indemnification to the
extent that the amount of all payments made by Sellers on account of Losses
exceeds $4,150,000 (the "Indemnification Cap");

             (c) Buyer shall have no liability for indemnification unless and
until, and only to the extent that, the aggregate amount of all Losses for which
indemnification is sought by Seller exceeds the Indemnification Deductible Cap;
and

             (d) Buyer shall have no liability for indemnification to the extent
that the amount of all payments made by Buyer on account of Losses exceeds the
Indemnification Cap.

         Notwithstanding anything to the contrary in this Agreement, the
Indemnification Deductible Cap and the Indemnification Cap shall not apply to
(i) any breach by Sellers of the representations and warranties in Section 4.1
(Organization of the Companies; Qualification; Capitalization.), Section 4.2
(Authority; No Violation or Consent), Section 4.3 (No Subsidiaries or
Investments), Section 4.16(a) (Taxes-Subchapter S) Section 4.17 (Transactions
with Shareholders, Officers, Directors, Etc.) and Section 4.18 (Brokers), (ii)
any breach by a Seller of the representations and warranties in Article V
(Representations and Warranties of each Seller), (iii) any liability resulting
from fraud, or (iv) any liability arising pursuant to Section 8.1(c), (d), (e),
or (f) of this Agreement; provided further, however, that for purposes of any
indemnification claim arising under Section 8.1(e), an "Indemnification Cap"
shall apply but shall be deemed to be $10,000.

         8.8 Payment for Indemnity Claims. Subject to the limitations of
Sections 8.7 and 8.9, if applicable, Buyer will have the right to receive the
amount of any Losses incurred by Buyer from any third-party claim or any claim
against Sellers under Section 8.1 that has been finally determined by agreement
or by a court of competent jurisdiction from the Escrow Funds, as provided in
the Escrow Agreement. The term "Escrow Funds" for purposes of this Article VIII
shall mean the Escrow Fund decreased by (A) any releases of the Escrow Fund
pursuant to the terms of the Escrow Agreement; and (B) the fees and expenses of
the Escrow Agent under the Escrow Agreement. With respect to Losses which are
not subject to the Indemnification Cap, the Sellers shall remain jointly and
severally liable for any such Losses.

         8.9 Survival.

             (a) Except as otherwise set forth in this Agreement, the
representations, warranties, covenants and agreements contained in this
Agreement, or in any Schedule,

                                       46

<PAGE>

certificate, document or statement delivered pursuant to this Agreement, shall
survive until eighteen (18) months following the Closing Date and shall be
deemed to have been relied upon and shall not be affected in any respect by the
Closing, any investigation conducted by any party or by any information which
any party may receive.

             (b) Notwithstanding the foregoing, the representations and
warranties of Sellers contained in (x) Section 4.1 (Organization of the
Companies; Qualification; Capitalization.), Section 4.2 (Authority; No Violation
or Consent), Section 4.3 (No Subsidiaries or Investments), Section 4.17
(Transactions with Shareholders, Officers, Directors, Etc.) and Section 4.18
(Brokers) and (y) Article V (Representations and Warranties of each Seller)
shall survive indefinitely after the Closing Date, and (ii) the representations
and warranties of Sellers contained in Section 4.9 (Environmental Matters),
Section 4.12 (Employee Benefit Plans) and Section 4.16 (Taxes) shall survive
until the expiration of the applicable statute of limitations (or extensions or
waivers thereof). The liability of any party under Article VIII shall not
terminate with respect to any claim, whether or not fixed as to liability or
liquidated as to amount, with respect to which such party has been given written
notice prior to the date on which it would otherwise terminate.

             (c) Except as set forth in Articles IV and V, no representations,
warranties or guarantees have been, are being or will be made by Sellers as to
the quality, condition, character, size, quantity, type, earnings, revenues,
expenses, suitability or value of the Business or the Shares and ALL
REPRESENTATIONS, WARRANTIES OR GUARANTEES IMPLIED OR OTHERWISE CREATED UNDER ANY
APPLICABLE LAW, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, ARE EXPRESSLY DISCLAIMED BY SELLERS; provided that the
foregoing shall not be deemed to limit any claim by Buyer for fraud.

                          ARTICLE IX   MISCELLANEOUS

         9.1 Construction and Interpretation. The parties have participated
jointly in the negotiation and drafting of this Agreement. If 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. In addition:

             (a) Each definition in this Agreement includes the singular and the
plural, and references to any gender include the other gender where appropriate.

             (b) Any reference to any federal, state, local or foreign statute
or law shall be deemed to also to refer to all rules and regulations promulgated
under such statute or law, unless the context requires otherwise. References to
any statute or regulation mean such statute or regulation as amended at the time
and include any successor legislation or regulation.

                                       47

<PAGE>

             (c) The word "including" means "including, but not limited to." The
word "or" is not exclusive. The headings to the Articles and Sections are for
convenience of reference and shall not affect the meaning or interpretation of
this Agreement.

             (d) Unless otherwise provided for in this Agreement, references to
Articles, Sections, Exhibits and Schedules mean the Articles, Sections, Exhibits
and Schedules of this Agreement. The Exhibits and Schedules are incorporated by
reference into and shall be deemed a part of this Agreement.

             (e) All references to dollar amounts in this Agreement shall be
references to United States Dollars unless otherwise provided.

             (f) In computing any time period provided for in this Agreement,
the first day of the time period shall not be counted but the last day of the
time period shall be counted. Any action required to be taken on a particular
day must be taken before 5:00 p.m., Eastern Time on that day.

             (g) All accounting terms used in this Agreement which are not
expressly defined in this Agreement shall have the respective meanings given to
them in accordance with GAAP on the date of this Agreement.

         9.2 Expenses. Except as otherwise provided for in this Agreement (i)
Buyer shall pay its own fees and expenses (including the fees of any attorneys,
accountants, environmental consultants or others engaged by Buyer), and (ii)
Sellers shall pay their own fees and expenses (including the fees of any
attorneys, accountants, investment bankers, environmental consultants or others
engaged by such Sellers), incurred in connection with this Agreement and the
transactions contemplated by this Agreement, whether or not such transactions
are consummated. After the Closing, Sellers, jointly and severally, shall be
obligated to reimburse the Company and Subsidiary for the entire amount of any
such fees and expenses that are not paid at or prior to the Closing Date. Such
obligations shall survive indefinitely after the Closing, shall not be subject
to any of the limitations set forth in Article VIII, and shall not be counted
toward any caps set forth in Article VIII.

         9.3 Notices. All notices or other communications required or permitted
under this Agreement shall be sufficiently given if in writing and (a) hand
delivered, including delivery by courier services, (b) sent by facsimile with
confirmation or (c) sent by certified mail, return receipt requested, postage
prepaid addressed to the recipient at the address stated below, or to such other
address as the party concerned may substitute by written notice to the other.

                                       48

<PAGE>
         If to the Sellers:

                  c/o William Weiller
                  226 Center Avenue
                  Santa Rosa Beach, FLA 32459
                  Attention:  William Weiller
                  Fax:
                       ------------------

         With a copy to:

                  Alston & Bird
                  One Atlantic Center
                  1201 West Peachtree St.
                  Atlanta, GA  30309-3424
                  Attention:  Timothy Perry
                  Fax:  (404) 253-8262

         If to the Buyer:

                  Kaydon Corporation
                  315 East Eisenhower Parkway, Suite 300
                  Ann Arbor, Michigan  48108
                  Attention:  Brian P. Campbell, President
                  Fax:  (734) 747-6928

         With a copy to:

                  Dykema Gossett PLLC
                  2723 South State Street, Suite 400
                  Ann Arbor, Michigan 48104
                  Attention:  Barbara A. Kaye
                  Fax:  (734) 214-7676

         All notices hand delivered will be deemed received on the day of
         delivery. All notices forwarded by certified mail, return receipt
         requested, will be deemed received on the date two (2) days (excluding
         Saturdays, Sundays and legal holidays when the U.S. mail is not
         delivered) immediately following the date of deposit in the U.S. mail;
         except, however, if the signed return receipt indicating the date upon
         which the notice was actually received is a different date, in which
         case the date that such notice was received will be deemed to be the
         date that the return receipt is signed. Addresses may be changed by
         giving notice of such change in the manner provided herein. Unless and
         until such written notice is received, the last address given will be
         deemed to continue in effect for all purposes.

         9.4 Assignment. This Agreement and all of the provisions of this
Agreement shall be binding upon and inure to the benefit of all parties and
their respective successors and permitted

                                       49

<PAGE>

assigns, and the provisions of Article VIII of this Agreement shall inure to the
benefit of the indemnified parties referred to therein; provided, however, that
neither this Agreement nor any of the rights, interests, or obligations under
this Agreement may be assigned by any of the parties without the prior written
consent of the other parties, except that Buyer may assign this Agreement and
such rights, interests and obligations to a wholly owned direct or indirect
subsidiary of Buyer (provided that such assignment shall not relieve Buyer of
its obligations under this Agreement).

         9.5 Entire Agreement.

             (a) This Agreement, including any and all documents referenced
herein as constituting continuing and effective agreements between or among any
party and other parties or their representatives, contains the entire agreement
and understanding between the parties with respect to the subject matter herein
identified and merges and integrates any and all previous and contemporaneous
implied agreements (in fact or law), negotiations, representations, covenants,
promises, conditions, and understandings made by or between the parties
concerning such matters, including those made by or between the representatives
of one party to another party or its representatives. In this regard, the
parties expressly acknowledge that, in entering into this Agreement, they are
not relying, nor have they relied, upon any previous or contemporaneous implied
agreements (in fact or in law), negotiations, representations, covenants,
promises, conditions, or understandings, either oral or written, by another
party or its representatives that is not expressly set forth in the terms of
this Agreement. Moreover, the parties further acknowledge that, except for the
representations expressly set forth in this Agreement, in entering into this
Agreement, they are not relying, and have not relied, upon the accuracy of any
other representation concerning the subject matter hereof which another party or
their representatives may have made prior to, or contemporaneously with, this
Agreement, and they fully assume the risk that any such representation may have
been, or is, inaccurate, in part or in full.

             (b) The parties represent that they understand the contents of this
Agreement, they have had the opportunity to consult with independent counsel,
and they execute this Agreement without coercion on the part of anyone, as their
own free act and deed.

         9.6 Counterparts. This Agreement may be executed with counterpart
signature pages or in two or more counterparts (including facsimile
transmissions of such signature pages), all of which shall be considered one and
the same agreement and each of which shall be deemed an original.

         9.7 Governing Law. This Agreement shall be governed by the laws of the
United States and the State of Michigan (regardless of the laws that might be
applicable under principles of conflicts or choice of law) as to all matters
including matters of validity, construction, effect and performance. Any action
involving this Agreement shall be brought and maintained solely

                                       50

<PAGE>
in a court of the State of Michigan or a federal court sitting in the Eastern
District of Michigan, Southern Division.

         9.8 Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected thereby and this Agreement will be construed and enforced as if
such invalid, illegal or unenforceable provisions had not been included in this
Agreement. To the extent permitted by applicable law, each party waives any
provision of law which renders any provision of this Agreement invalid, illegal
or unenforceable in any respect.

         9.9 Third Parties. Nothing in this Agreement shall be deemed to be for
the benefit of, or enforceable by or on behalf of any party, including any
employee or former employee of the Company or Subsidiary, any dependent or
beneficiary of any such employee, any organization, any obligee, owner or holder
of any obligation or liability, other than the parties and any Indemnified
Party.

         9.10 Consent to Jurisdiction and Service of Process. Except as
otherwise provided in this Agreement, the parties hereto hereby submit to the
jurisdiction of the courts of Michigan or the courts of the United States
District Court located in the State of Michigan in respect of the interpretation
and enforcement of the provisions of this Agreement and any related agreement,
certificate or other document delivered in connection herewith and hereby waive,
and agree not to assert, any defense in any action, suit or proceeding for the
interpretation or enforcement of this Agreement and any related agreement,
certificate or other document delivered in connection herewith, that they are
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in such courts or that this Agreement may not be enforced
in or by such courts or that their property is exempt or immune from execution,
that the suit, action or proceeding is brought in an inconvenient forum, or that
the venue of the suit, action or proceeding is improper. Service of process with
respect thereto may be made upon Buyer or Sellers by mailing a copy thereof by
registered or certified mail, postage prepaid, to such party at its address as
provided in Section 9.3 hereof.

         9.11 Schedules

             (a) The disclosures in the Schedules must relate only to the
representations and warranties in the Section of this Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement except with respect to any disclosure on a particular Schedule which,
as of the Closing Date, includes information in such detail as would make it
readily apparent to a reasonable Person that such disclosure also relates to
another specific representation or warranty. The content of the documents
referenced in Schedule 4.9, Schedule 4.12, and Schedule 4.13 is deemed
incorporated by reference into such Schedules as if attached thereto.

                                       51

<PAGE>
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Schedules (other than an exception
expressly set forth as such in the Schedules with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.

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

                                       52

<PAGE>
 The parties executed this Stock Purchase Agreement as of the day and
year first above written.

                          KAYDON  CORPORATION

                          By:      /s/ Peter C. DeChants
                                   ---------------------------------------------
                                   Peter C. DeChants, Vice President-
                                   Corporate Development and Treasurer

                                   SELLERS

                                   /s/ William Weiller
                                   ---------------------------------------------
                                   William Weiller

                                   /s/ William Weiller
                                   ---------------------------------------------
                                   Mark Weiller, by William Weiller as
                                   attorney-in-fact

                                   /s/ William Weiller
                                   ---------------------------------------------
                                   Pia Weiller Crook, by William Weiller as
                                   attorney-in-fact

                                   /s/ William Weiller
                                   ---------------------------------------------
                                   Andrew Weiller, by William Weiller as
                                   attorney-in-fact

                                   /s/ William Weiller
                                   ---------------------------------------------
                                   Christian Weiller, by William Weiller as
                                   attorney-in-fact

                                   /s/ William Weiller
                                   ---------------------------------------------
                                   Nicholas Weiller, by William Weiller as
                                   attorney-in-fact

                     [Signatures Continue on Following Page]

                                       53

<PAGE>
                                   SELLERS' REPRESENTATIVE

                                   /s/ William Weiller
                                   ---------------------------------------------
                                   William Weiller

                                       54

<PAGE>

                                                                 EXECUTION COPY

                         TABLE OF EXHIBITS AND SCHEDULES

<TABLE>

EXHIBITS
<S>                     <C>
Exhibit A               Escrow Agreement
Exhibit B               Normal Working Capital
Exhibit C               Purchase Price Allocation
Exhibit D               Designated Account

SCHEDULES

Schedule 2.2(a)         Seller Purchase Price Allocation
Schedule 3.2(k)         Directors' and Officers' Resignations
Schedule 3.2(l)         Assumed Leases
Schedule 3.2(m)         Employment Agreements
Schedule 4.1(a)         Jurisdiction Qualifications
Schedule 4.1(b)         Capitalization
Schedule 4.3(b)         Filtration Systems, Inc.
Schedule 4.4(c)         Internal 2004 Financial Statements
Schedule 4.4(e)         Books and Records
Schedule 4.4(g)         Assets and Liabilities Books and Records
Schedule 4.5            Undisclosed Liabilities
Schedule 4.6(a)         Conduct of Business in Ordinary Course
Schedule 4.6(c)         Distributions to Shareholders
Schedule 4.6(f)         Asset Purchases
Schedule 4.7(a)         Real Property
Schedule 4.7(b)         Tangible PersonalProperty
Schedule 4.7(c)         Liens
Schedule 4.8(a)         Intellectual Property
Schedule 4.8(c)         Actions to Be Taken Within 180 Days
Schedule 4.8(e)         Intellectual Property Settlements, Consents, Judgments, etc.
Schedule 4.8(g)         Intellectual Property Claims
Schedule 4.8(i)         Non-Disclosure Agreements
Schedule 4.9(a)         Environmental Matters
Schedule 4.9(d)         Environmental Permits
Schedule 4.10           Insurance
Schedule 4.11(e)        Company Employees
Schedule 4.11(h)        Workers' Compensation
Schedule 4.11(i)        Layoffs, Disability, Leaves of Absence and Other Claims
Schedule 4.12(a)        Employee Benefit Plans
Schedule 4.12(c)        Bonus Plans
Schedule 4.12(n)        Subsidiary Employees
Schedule 4.13(a)(iv)    Material Contracts
Schedule 4.14           Legal Proceedings
</TABLE>

<PAGE>
<TABLE>

<S>                     <C>
Schedule 4.15           Permits
Schedule 4.16(b)        Taxing Authorities
Schedule 4.16(l)        Income or Deduction Modifications
Schedule 4.16(n)        Share and Asset Acquisitions
Schedule 4.17           Transactions with Shareholders, Officers, Directors, Etc.
Schedule 4.19           Consigned Inventory
Schedule 4.21           Suppliers
Schedule 4.22           Customers
Schedule 4.24           Compliance with Laws
Schedule 4.27           Warranties; Product Liability
Schedule 4.28           Bank Accounts
Schedule 7.7(a)         Excluded Employees
Schedule 8.1(f)         Indemnification by Sellers
</TABLE>

THE REGISTRANT AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY OMITTED EXHIBIT OR
SCHEDULE TO THE COMMISSION UPON REQUEST.

                                       56exv10w1

 

Exhibit 10.1

Supplemental Executive Retirement Plan II

Master Plan Document

      

      

      

Effective December 30, 2004

 

 

Supplemental Executive Retirement Plan II

Master Plan Document

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Purpose
	 	 	 	 	1	 
	ARTICLE 1
	 	Definitions	 	 	1	 
	ARTICLE 2
	 	Selection, Enrollment, Eligibility	 	 	6	 
	2.1
	 	Selection by Committee	 	 	6	 
	2.2
	 	Enrollment Requirements	 	 	7	 
	2.3
	 	Eligibility; Commencement of Participation	 	 	7	 
	2.4
	 	Termination of Participation and/or Contributions	 	 	7	 
	ARTICLE 3
	 	Company Contribution/Crediting/Taxes	 	 	7	 
	3.1
	 	Annual Company Contribution Amount	 	 	7	 
	3.2
	 	Vesting	 	 	8	 
	3.3
	 	Crediting/Debiting of Account Balance	 	 	10	 
	3.4
	 	FICA and Other Taxes	 	 	11	 
	ARTICLE 4
	 	Unforeseeable Financial Emergencies	 	 	12	 
	4.1
	 	Withdrawal Payout for Unforeseeable Financial Emergencies	 	 	12	 
	ARTICLE 5
	 	Retirement Benefit	 	 	12	 
	5.1
	 	Retirement Benefit	 	 	12	 
	5.2
	 	Payment of Retirement Benefit	 	 	12	 
	5.3
	 	Death Prior to Completion of Retirement Benefit	 	 	13	 
	ARTICLE 6
	 	Pre-Retirement Survivor Benefit	 	 	14	 
	6.1
	 	Pre-Retirement Survivor Benefit	 	 	14	 
	6.2
	 	Payment of Pre-Retirement Survivor Benefit	 	 	14	 
	ARTICLE 7
	 	Termination Benefit	 	 	14	 
	7.1
	 	Termination Benefit	 	 	14	 
	7.2
	 	Payment of Termination Benefit	 	 	14	 
	7.3
	 	Death Prior to Completion of Retirement Benefit	 	 	15	 
	ARTICLE 8
	 	Disability Benefit	 	 	15	 
	8.1
	 	Continued Eligibility; Disability Benefit	 	 	15	 
	ARTICLE 9
	 	Beneficiary Designation	 	 	15	 

-i-

 

Supplemental Executive Retirement Plan II

Master Plan Document

	 	 	 	 	 	 	 
	9.1
	 	Beneficiary	 	 	15	 
	9.2
	 	Beneficiary Designation; Change; Spousal Consent	 	 	16	 
	9.3
	 	Acknowledgement	 	 	16	 
	9.4
	 	No Beneficiary Designation	 	 	16	 
	9.5
	 	Doubt as to Beneficiary	 	 	16	 
	9.6
	 	Discharge of Obligations	 	 	16	 
	ARTICLE 10
	 	Leave of Absence	 	 	16	 
	10.1
	 	Paid Leave of Absence	 	 	16	 
	10.2
	 	Unpaid Leave of Absence	 	 	17	 
	ARTICLE 11
	 	Termination, Amendment or Modification	 	 	17	 
	11.1
	 	Termination	 	 	17	 
	11.2
	 	Amendment	 	 	17	 
	11.3
	 	Plan Agreement	 	 	18	 
	11.4
	 	Effect of Payment	 	 	18	 
	ARTICLE 12
	 	Administration	 	 	18	 
	12.1
	 	Committee Duties	 	 	18	 
	12.2
	 	Agents	 	 	18	 
	12.3
	 	Binding Effect of Decisions	 	 	18	 
	12.4
	 	Indemnity of Committee	 	 	18	 
	12.5
	 	Employer Information	 	 	19	 
	ARTICLE 13
	 	Other Benefits and Agreements	 	 	19	 
	13.1
	 	Coordination with Other Benefits	 	 	19	 
	ARTICLE 14
	 	Claims Procedures	 	 	19	 
	14.1
	 	Presentation of Claim	 	 	19	 
	14.2
	 	Notification of Decision	 	 	19	 
	14.3
	 	Review of a Denied Claim	 	 	20	 
	14.4
	 	Decision on Review	 	 	20	 
	14.5
	 	Legal Action	 	 	20	 
	ARTICLE 15
	 	Trust	 	 	20	 
	15.1
	 	Establishment of the Trust	 	 	20	 
	15.2
	 	Interrelationship of the Plan and the Trust	 	 	20	 
	15.3
	 	Distributions from the Trust	 	 	21	 
	15.4
	 	Investment of Trust Assets	 	 	21	 

-ii-

 

Supplemental Executive Retirement Plan II

Master Plan Document

	 	 	 	 	 	 	 
	15.5
	 	No Claim on Trust Assets	 	 	21	 
	ARTICLE 16
	 	Miscellaneous	 	 	21	 
	16.1
	 	Status of Plan	 	 	21	 
	16.2
	 	Unsecured General Creditor	 	 	21	 
	16.3
	 	Employer’s Liability	 	 	21	 
	16.4
	 	Nonassignability	 	 	22	 
	16.5
	 	Not a Contract of Employment	 	 	22	 
	16.6
	 	Furnishing Information	 	 	22	 
	16.7
	 	Terms	 	 	22	 
	16.8
	 	Captions	 	 	22	 
	16.9
	 	Governing Law	 	 	22	 
	16.10
	 	Notice	 	 	22	 
	16.11
	 	Successors	 	 	23	 
	16.12
	 	Spouse’s Interest	 	 	23	 
	16.13
	 	Validity	 	 	23	 
	16.14
	 	Incompetent	 	 	23	 
	16.15
	 	Court Order	 	 	23	 
	16.16
	 	Distribution in the Event of Taxation	 	 	23	 
	16.17
	 	Legal Fees To Enforce Rights After Change in Control	 	 	24	 
	16.18
	 	Unvested Account Balances Under Prior Plan	 	 	25	 

-iii-

 

Supplemental Executive Retirement Plan II

Master Plan Document

MGM MIRAGE

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II

Effective December 30, 2004

Purpose

     The purpose of this Plan is to provide specified benefits to a select group of management and
highly compensated Employees who contribute materially to the continued growth, development and
future business success of MGM MIRAGE, a Delaware corporation, and its subsidiaries that sponsor
this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

ARTICLE 1

Definitions

     For purposes of this Plan, unless otherwise clearly apparent from the context, the following
phrases or terms shall have the following indicated meanings:

	1.1  	“Account Balance” shall mean the sum of (a) and (b) less the sum of (c) and (d):

	 	(a)  	The sum of the Participant’s Annual Company Contribution Amounts.
	 
	 	(b)  	Amounts credited or debited in accordance with all the applicable crediting
provisions of this Plan that relate to the Participant’s Account Balance.
	 
	 	(c)  	Any forfeitures under Section 3.2.
	 
	 	(d)  	All distributions made to the Participant or the Participant’s Beneficiary
pursuant to this Plan. The Account Balance shall be a bookkeeping entry only and shall
be utilized solely as a device for the measurement and determination of the amounts to
be paid to a Participant, or the Participant’s designated Beneficiary, pursuant to this
Plan.

	1.2  	“Annual Company Contribution Amount” shall mean, for any one Plan Year, the amount determined
in accordance with Section 3.1.
	 
	1.3  	“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated
in accordance with Article 9, that are entitled to receive benefits under this Plan upon the
death of a Participant or the death of a predecessor Beneficiary receiving benefits under the
Plan.
	 
	1.4  	“Beneficiary Designation Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to designate one or
more Beneficiaries.
	 
	1.5  	“Board” shall mean the board of directors of the Company.
	 
	1.6  	“Change in Control” shall mean the first to occur of any of the following events:

	 	(a)  	Any “person” or “group” of persons (as such terms are used in Section 13 and
14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), other
than Tracinda Corporation, Kirk Kerkorian, members of the immediate family of Kirk
Kerkorian, the heirs and legatees of Kirk Kerkorian and trusts or other entities for
the benefit of such

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persons or affiliates of such persons (as such term “affiliates” is defined in the
rules promulgated by the Securities and Exchange Commission), becomes the beneficial
owner (as that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the Company’s capital stock entitled to
vote generally in the election of directors. (For the avoidance of doubt, as of the
date of the adoption of this Plan, Tracinda Corporation and its sole shareholder,
Kirk Kerkorian, are the beneficial owners of in excess of fifty percent (50%) of the
Company’s capital stock);

	 	(b)  	At any time, individuals who, at the date of the adoption of this Plan,
constitute the Board, and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a transaction
described in clause (a), (c), (d) or (e) of this Section 1.6) whose election by the
Board or nomination for election by the Company’s shareholders was approved by a
majority vote of either (1) the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for election
was previously so approved, or (2) the members of the Company’s Executive Committee
then still in office who either were members at the beginning of the period or whose
election or nomination for election to the Executive Committee was previously so
approved by the directors or the Executive Committee, cease for any reason to
constitute at least a majority of the Board;
	 
	 	(c)  	Any consolidation or merger of the Company, other than a consolidation or
merger of the Company in which the holders of the common stock of the Company
immediately prior to the consolidation or merger hold more than fifty percent (50%) of
the common stock of the surviving corporation immediately after the consolidation or
merger;
	 
	 	(d)  	Any liquidation or dissolution of the Company; or
	 
	 	(e)  	The sale or transfer of all or substantially all of the assets of the Company
to parties that are not within a “controlled group of corporations” (as defined in Code
Section 1563) in which the Company is a member.

	1.7  	“Claimant” shall have the meaning set forth in Section 14.1.
	 
	1.8  	“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.
	 
	1.9  	“Committee” shall mean the committee described in Article 12.
	 
	1.10  	“Company” shall mean MGM MIRAGE, a Delaware corporation, and any successor to all or
substantially all of the Company’s assets or business.
	 
	1.11  	“Compensation” shall mean the Participant’s cash base salary relating to services performed
during any calendar year, whether or not paid in such calendar year or included on the Federal
Income Tax Form W-2 for such calendar year, excluding bonuses and incentive payments, fringe
benefits, stock options, relocation expenses, non-monetary awards, automobile and other
allowances paid to a Participant for employment services rendered (whether or not such
allowances are included in the Employee’s gross income). Compensation shall be calculated
before reduction for compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of any Employer and shall be calculated to
include amounts

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not otherwise included in the Participant’s gross income under Code Section 125, 402(e)(3),
402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all
such amounts will be included in compensation only to the extent that, had there been no
such plan, the amount would have been payable in cash to the Employee.

	1.12  	“Deduction Limitation” shall mean the following described limitation on a benefit that may
otherwise be distributable pursuant to the provisions of this Plan. Except as otherwise
provided, this limitation shall be applied to all distributions that are “subject to the
Deduction Limitation” under this Plan. If an Employer determines in good faith prior to a
Change in Control that there is a reasonable likelihood that any compensation paid to a
Participant for a taxable year of the Employer would not be deductible by the Employer solely
by reason of the limitation under Code Section 162(m), then to the extent deemed necessary by
the Employer to ensure that the entire amount of any distribution to the Participant pursuant
to this Plan prior to the Change in Control is deductible, the Employer may defer all or any
portion of a distribution under this Plan. Any amounts deferred pursuant to this limitation
shall continue to be credited/debited with additional amounts in accordance with Section 3.3,
even if such amount is being paid out in installments. The amounts so deferred and amounts
credited thereon shall be distributed to the Participant or the Participant’s Beneficiary (in
the event of the Participant’s death) at the earliest possible date, as determined by the
Employer in good faith, on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during which the distribution is made will
not be limited by Section 162(m). Notwithstanding the foregoing, the Committee shall
interpret this Section in a manner that is consistent with Code Section 409A and the
regulations thereunder, including without limitation guidance issued in connection with that
Section.
	 
	1.13  	“Disability” shall mean that a Participant (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less
than 12 months, as certified by a licensed physician, or (ii) is receiving income replacement
benefits for a period of not less than 3 months under an accident and health plan covering
employees of the Participant’s Employer by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, as certified by a licensed physician in each
case.
	 
	1.14  	“Disability Benefit” shall mean the benefit set forth in Article 8.
	 
	1.15  	“Disclosure of Confidential Information” shall mean, for purposes of this Plan, a
Participant’s willful disclosure or use of any “Confidential Information” (as defined below)
(except (i) in connection with regularly assigned duties for any Employer, (ii) as consented
to in writing by any Employer or (iii) under legal compulsion) at any time during or following
the term of employment, directly or indirectly, for any purpose whatsoever, whether or not
such Confidential Information was acquired while the Participant was engaged in the Employers’
affairs and regardless of by whom such Confidential Information was generated, either by the
Participant or others in the employ of the Employers, or outside the Employers. For purposes
of this Plan, “Confidential Information” shall mean confidential information, not generally
known to the public and which was not already in the rightful possession of the person to whom
it is disclosed,

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of a special and unique nature and value pertaining to the business of the Employers and
relating to such matters as, without limitation, the Employers’ patents, copyrights,
employee data, proprietary information, trade secrets, inventions, software, systems,
procedures, manuals, processes, applications, business practices and agreements, financial
information, research and development, marketing strategies, know-how and lists of customers
(which are deemed for all purposes confidential and proprietary).

	1.16  	“Election Form” shall mean the form established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to make an election under the Plan.
	 
	1.17  	“Employee” shall mean a person who is an employee of any Employer.
	 
	1.18  	“Employer(s)” shall mean the Company and/or any of its subsidiaries (now in existence or
hereafter formed or acquired) that have been selected by the Board to participate in the Plan
and have adopted the Plan as a sponsor.
	 
	1.19  	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended
from time to time.
	 
	1.20  	“Months of Continuous Service” shall mean, subject to the next sentence, the total number of
continuous full calendar months that a Participant has been employed by one or more Employers
(any partial calendar month of employment shall not be counted). Despite the foregoing, any
employment prior to January 1, 1994, with one or more Employers shall not be taken into
account for purposes of calculating Months of Continuous Service. Further, any Termination of
Employment before Retirement, death or Disability and a subsequent re-employment with any
Employer shall cause the calculation of Months of Continuous Service to begin again based on
the date of re-employment, and service prior to such re-employment shall be disregarded.
Notwithstanding the immediately previous sentence, the Committee, in its sole discretion, may
allow Months of Continuous Service prior to a Termination of Employment to be counted after a
re-employment. During any period of Disability or unpaid leave of absence, a Participant
shall not be credited with additional Months of Continuous Service.
	 
	1.21  	“Months of Plan Participation” shall mean the total number of continuous full months a
Participant has been a Participant in the Plan, starting with the Participant’s Plan Entry
Date.
	 
	1.22  	“Participant” shall mean any Employee (i) who is selected to participate in the Plan, (ii)
who elects to participate in the Plan, (iii) who signs a Plan Agreement, an Election Form and
a Beneficiary Designation Form, (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who commences participation in
the Plan, and (vi) whose Plan Agreement has not terminated. A spouse or former spouse of a
Participant, as such, shall not be treated as a Participant in the Plan or have an account
balance under the Plan, even if the Participant has an interest in the Participant’s benefits
under the Plan in accordance with Article 5 or 6 of the Plan, or as a result of applicable law
or property settlements resulting from legal separation or divorce.

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	1.23  	“Plan” shall mean the Company’s Supplemental Executive Retirement Plan II, which shall be
evidenced by this instrument and by each Plan Agreement, as they may be amended from time to
time.
	 
	1.24  	“Plan Agreement” shall mean a written agreement, as may be amended from time to time, which
is entered into by and between an Employer and a Participant. Each Plan Agreement executed by
a Participant and the Participant’s Employer shall provide for the entire benefit to which
such Participant is entitled under the Plan; should there be more than one Plan Agreement, the
Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all
previous Plan Agreements in their entirety and shall govern such entitlement. The terms of
any Plan Agreement may be different for any Participant, and any Plan Agreement may provide
additional benefits not set forth in the Plan or limit the benefits otherwise provided under
the Plan; provided, however, that any such additional benefits or benefit limitations must be
agreed to by both the Employer and the Participant.
	 
	1.25  	“Plan Entry Date” shall mean the date on which a Participant first commences participation in
the Plan, as determined by the Committee in its sole discretion.
	 
	1.26  	“Plan Year” shall mean January 1 of each calendar year, beginning on or after January 1,
2005, and continuing through December 31 of such calendar year.
	 
	1.27  	“Pre-Retirement Survivor Benefit” shall mean the benefit set forth in Article 6.
	 
	1.28  	“Quarterly Installment Method” shall mean quarterly installment payments over the number of
quarters selected by the Participant in accordance with this Plan or as specified in the Plan,
calculated as follows: the vested Account Balance of the Participant shall be calculated as of
the close of business on the last business day of the calendar quarter in which the
Participant becomes entitled to a quarterly installment payment under this Plan. The
quarterly installment shall be calculated by multiplying this balance by a fraction, the
numerator of which is one, and the denominator of which is the remaining number of quarterly
payments due the Participant. By way of example, if the Participant elects 40 quarters, the
first payment shall be 1/40 of the vested Account Balance, calculated as described in this
definition. For the following calendar quarter, the payment shall be 1/39 of the vested
Account Balance, calculated as described in this definition.
	 
	1.29  	“Reasonable Cause” shall mean a voluntary termination of employment by the Participant
following: (i) any action by the Participant’s Employer which results in a material diminution
in the Participant’s position, authority, duties or responsibilities to the Employer,
including for this purpose any change in the Participant’s employment location that is more
than 60 miles from the Participant’s location at the time of any Change in Control, or (ii)
any reduction in the Participant’s compensation not agreed to by the Participant; provided
that, in either case, an isolated, insubstantial, and inadvertent failure or action not taken
in bad faith and which is promptly remedied after notice by the Participant to the
Participant’s Employer shall not be deemed to be “Reasonable Cause”.
	 
	1.30  	“Retirement”, “Retire(s)” or “Retired” shall mean separation from service from all Employers
for any reason other than an authorized leave of absence, death or Disability on or after the

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attainment of (i) age sixty-five (65) or (ii) age fifty-five (55) with one hundred twenty
(120) Months of Continuous Service.

	 	1.31  	“Retirement Benefit” shall mean the benefit set forth in Article 5.
	 
	 	1.32  	“Termination Benefit” shall mean the benefit set forth in Article 7.
	 
	 	1.33  	“Termination for Cause” shall mean, for purposes of this Plan, that the Participant’s
Employers, acting in good faith and based upon the information then known to them, after due
inquiry, terminate the Participant’s employment with all Employers because the Participant (i)
has been convicted of a felony or other crime involving moral turpitude, (ii) has acted or
failed to act in connection with the Participant’s employment in such manner as would
constitute gross negligence or willful misconduct, (iii) has continued and habitual use of
narcotics or alcohol that materially impairs the Participant’s performance of the
Participant’s employment duties or (iv) has otherwise acted or failed to act in a manner which
constitutes grounds for termination for cause (or the equivalent) as defined in any written
employment agreement between the Participant and an Employer (other than a Participant’s death
or Disability).
	 
	 	1.34  	“Termination of Employment” shall mean the separation from service with all Employers,
voluntarily or involuntarily, for any reason other than Retirement, Disability, death or an
authorized leave of absence.
	 
	 	1.35  	“Trust” shall mean one or more trusts established pursuant to Section 15.1.
	 
	 	1.36  	“Unforeseeable Financial Emergency” shall mean severe financial hardship to a Participant
resulting from an illness or accident of the Participant, the Participant’s spouse, or a
dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the
Participant’s property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant, as
determined in the sole discretion of the Committee consistent with Code Section 409A.

ARTICLE 2

Selection, Enrollment, Eligibility

	2.1  	Selection by Committee. Participation in the Plan shall be limited to a select group
of management and highly compensated Employees, as determined by the Committee in its sole
discretion. From that group, the Committee shall select, in its sole discretion, Employees to
participate in the Plan. In addition, the Committee shall have the right, in its sole
discretion, with respect to an Employee who has commenced participation in the Plan to (i)
discontinue making any additional contributions to the Plan for and on behalf of that
Participant, and/or (ii) immediately distribute the Participant’s then vested Account Balance
as a Termination Benefit and terminate the Participant’s participation in the Plan. The
payment of any amount under this Section 2.1 shall be subject to the Deduction Limitation.
Notwithstanding the foregoing, the Committee shall interpret this Section in a manner that is
consistent with Code Section 409A and the regulations thereunder, including without limitation
guidance issued in connection with that Section.

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	2.2  	Enrollment Requirements. As a condition to participation, each selected Employee
shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a
Beneficiary Designation Form. In addition, the Committee shall establish from time to time
such other enrollment requirements as it determines in its sole discretion are necessary.
	 
	2.3  	Eligibility; Commencement of Participation. Provided an Employee selected to
participate in the Plan has met all enrollment requirements set forth in this Plan and
required by the Committee, including returning all required documents to the Committee, that
Employee shall commence participation in the Plan as of the first day of the calendar quarter
following the calendar quarter in which the Employee completes all enrollment requirements
(which may occur prior to the effective date of this Plan).
	 
	2.4  	Termination of Participation and/or Contributions. If the Committee determines in
good faith that a Participant no longer qualifies as a member of a select group of management
or highly compensated employees, as membership in such group is determined in accordance with
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the right, in its
sole discretion, to (i) discontinue making any additional contributions to the Plan for and on
behalf of that Participant, and/or (ii) immediately distribute the Participant’s then vested
Account Balance as a Termination Benefit and terminate the Participant’s participation in the
Plan. The payment of any amount under this Section 2.4 shall be subject to the Deduction
Limitation. Notwithstanding the foregoing, the Committee shall interpret this Section in a
manner that is consistent with Code Section 409A and the regulations thereunder, including
without limitation guidance issued in connection with that Section.

ARTICLE 3

Company Contribution/Crediting/Taxes

	3.1  	Annual Company Contribution Amount. For a Participant, the Annual Company
Contribution Amount shall be calculated for each Plan Year in the following manner:

	 	(a)  	The Participant’s projected Months of Continuous Service until age 65 (which
shall not exceed 360 months) shall be calculated assuming that the first Month of
Continuous Service is the Participant’s Plan Entry Date (and if the Participant
experiences a Termination of Employment and is rehired, the first day of the rehire,
rather than the original date of employment shall be used, unless the Committee, in its
sole discretion, determines otherwise) and (ii) the Participant’s employment with at
least one Employer will continue until the Participant reaches age 65. (The Committee,
in its sole discretion, may award Months of Continuous Service for employment service
with an Employer prior to the Plan Entry Date, provided that any such award shall not
exceed 84 months.) The number of months so calculated shall be divided by 12, rounding
the number to two decimal places. (For example, if a Participant turns age 40 on the
Participant’s Plan Entry
Date and has been granted by the Committee 60 months of continuous service prior to
commencing participation in the Plan, the Participant’s Months of Continuous Service
shall be 360 and that number shall be divided by 12, with a result of 30.)

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	 	(b)  	The result in (a) above shall be multiplied by 2%.
	 
	 	(c)  	The result in (b) above shall have 5% added to it. (As a note of
clarification, this percentage is subject to vesting under Section 3.2(a)(i) and shall
be shown on periodic benefit statements as unvested until vesting occurs and represents
an additional benefit for 60 Months of Continuous Service starting with the
Participant’s Plan Entry Date.)
	 
	 	(d)  	The result in (c) above shall be multiplied by the “Applicable Percentage”
found in the Table attached to this Plan as Schedule A. The “Applicable Percentage”
shall correspond to the Participant’s age, stated in complete months (using the
Participant’s birthday and monthly anniversary dates of that birthday to determine
complete months), on the Participant’s Plan Entry Date.
	 
	 	(e)  	The result in (d) above shall be multiplied by the Participant’s Compensation
for the applicable Plan Year. In this regard, for the first year of the Participant’s
Plan participation, Compensation shall be the Participant’s Compensation as of the
Participant’s Plan Entry Date, adjusted to take into account only the Compensation to
be paid from the Plan Entry Date to the end of the Plan Year. For subsequent Plan
Years, Compensation shall be the Participant’s Compensation, determined as of the first
day of the Plan Year. Despite the foregoing, should a Participant receive a
Compensation increase during any calendar quarter of Plan participation, the above
computations in this Section 3.1 will be recalculated to take into account, for the
purpose of calculating the installment contribution for that calendar quarter and any
subsequent calendar quarter during the Plan Year, the Compensation increase.
	 
	 	(f)  	The result in (e) above shall be the Annual Company Contribution Amount and
that amount shall be credited to the Participant’s Account Balance as follows. For the
first year of Plan participation, it shall be credited in equal installments on the
first business day of each calendar quarter that follows the calendar quarter to which
the installment payment relates. For subsequent Plan Years, the Annual Company
Contribution Amount shall be credited to the Participant’s Account Balance in equal
quarterly installments on the first business day of each calendar quarter that follows
the calendar quarter to which the installment payment relates; provided, however, that
if a Participant is not employed by an Employer as of the last day of a calendar
quarter, the portion of the Annual Company Contribution Amount that otherwise would be
credited to the Participant’s Account Balance for that calendar quarter shall not be
credited. Despite the foregoing, no contribution shall be made for any calendar
quarter after the calendar quarter in which a Participant reaches age 65.

	3.2  	Vesting.

	 	(a)  	Except as otherwise provided in this Section 3.2:

	 	(i)  	A Participant shall vest in that portion of a Participant’s
Account Balance that represents the 5% additional benefit provided for in
Section 3.1(c), plus earnings thereon, upon the Participant’s attainment of both
(1) sixty (60) Months of Plan Participation and (2) one hundred and twenty (120)
Months of Continuous

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Service. If a Participant does not vest in accordance with
the immediately preceding sentence, for purposes of determining the
Participant’s vested Account Balance under this Plan, the contributions credited
to the Participant’s Account Balance under Section 3.1, starting with the first
Plan Year in which the Participant commences participation in the Plan, shall be
calculated without the addition of 5% in Section 3.1(c) and earnings thereon.
For purposes of this Section 3.2(a) only, the Committee, in its sole discretion,
may award a Participant with extra Months of Continuous Service, not to exceed
84 months.

	 	(ii)  	A Participant shall vest in the Participant’s remaining Account
Balance (i.e., the portion not described in (i) above) upon the attainment of
thirty-six (36) Months of Plan Participation.
	 
	 	(iii)  	In the event of a Participant’s death or Disability, a
Participant’s Account Balance shall immediately become 100% vested (if it is not
already vested in accordance with the above vesting schedules). In addition, if
a Change in Control occurs and, within two years of the date of that Change in
Control, the Participant is terminated by the Participant’s Employer without
cause (i.e., other than for a Termination for Cause), or the Participant
terminates the Participant’s employment for Reasonable Cause, then the
Participant’s Account Balance shall immediately become 100% vested (if it is not
already vested in accordance with the above vesting schedules).

	 	(b)  	Notwithstanding subsection (a) above, the vesting schedule for a Participant’s
Account Balance shall not be accelerated to the extent that the Committee determines
that such acceleration would cause the deduction limitations of Section 280G of the
Code to become effective. In the event that all of a Participant’s Account Balance is
not vested pursuant to such a determination, the Participant may request independent
verification of the Committee’s calculations with respect to the application of Section
280G. In such case, the Committee must provide to the Participant within 15 business
days of such a request an opinion from a nationally recognized accounting firm selected
by the Participant (the “Accounting Firm”). The opinion shall state the Accounting
Firm’s opinion that any limitation on the vested percentage hereunder is necessary to
avoid the limits of Section 280G and contain supporting calculations. The reasonable
cost of such opinion shall be paid for by the Company.
	 
	 	(c)  	Notwithstanding any other provision of this Section 3.2:

	 	(i)  	If a Participant is Terminated for Cause, the Participant shall
forfeit that portion of the Participant’s Account Balance that represents (1)
the Annual Company Contribution Amount under Section 3.1, plus earnings thereon,
for the Plan Year in which such termination takes place, and (2) the Annual
Company Contribution
Amounts under Section 3.1, plus earnings thereon, credited during the two Plan
Years immediately preceding the Plan Year in which such termination takes
place.

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	 	(ii)  	If a Participant (1) Discloses Confidential Information at any
time, (2) participates at any time in any action that has a direct, substantial
and adverse effect on the reputation or business of any Employer, or (3) within
two years after the Participant’s Termination of Employment accepts a position
of employment with a Competitor of any Employer, the Participant shall forfeit
the Participant’s entire unpaid Account Balance. A “Competitor” shall be any
employer or person who is in the same primary business or provides the same
primary services as those primarily conducted or provided by the Company and all
other Employers, considered as a single enterprise, as reasonably determined by
the Committee. Despite the foregoing, if within two years following a Change in
Control, a Participant accepts a position of employment with a Competitor of any
Employer, the Participant shall not forfeit the Participant’s unpaid vested
Account Balance as a result of accepting such a position.
	 
	 	(iii)  	Notwithstanding (i) or (ii) immediately above, the Committee, in
its sole and absolute discretion, may waive, limit or condition any such
forfeiture of benefits.

	 	(d)  	Any amount not vested under this Section 3.2 when a Participant would otherwise
first become entitled to the payment of a benefit under this Plan shall be forfeited
and debited against the Participant’s Account Balance.

	3.3  	Crediting/Debiting of Account Balances. In accordance with, and subject to, the
rules and procedures that are established from time to time by the Committee, in its sole
discretion, amounts shall be credited or debited to a Participant’s Account Balance in
accordance with the following rules:

	 	(a)  	Election of Measurement Funds. A Participant, in connection with the
Participant’s initial participation in the Plan, shall elect, on the Election Form, one
or more Measurement Fund(s) (as described in Section 3.3(c)) to be used to determine
the additional amounts to be credited or debited to the Participant’s Account Balance.
A Participant may (but is not required to) elect to add or delete one or more available
Measurement Fund(s) to be used to determine the additional amounts to be credited or
debited to the Participant’s Account Balance, or to change the portion of the
Participant’s Account Balance allocated to each previously or newly elected Measurement
Fund. A Participant may elect to make such a change by submitting an Election Form,
whether written or electronic (as determined by the Committee from time to time and in
its sole discretion), to the Committee. Any election so made and accepted by the
Committee shall apply no later than the third business day following the Committee’s
acceptance of the election. Any such election shall continue to apply, unless
subsequently changed in accordance with this Section 3.3(a).
	 
	 	(b)  	Proportionate Allocation. In making any election described in Section
3.3(a), the Participant shall specify on the Election Form, in increments of one
percentage point (1%), the percentage of the Participant’s Account Balance to be allocated to a
Measurement Fund (as if the Participant were making an investment in that Measurement
Fund with that portion of the Participant’s Account Balance).

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	 	(c)  	Measurement Funds. A Participant may elect one or more measurement
funds (the “Measurement Funds”) from among those selected by the Committee for the
purpose of crediting or debiting additional amounts to the Participant’s Account
Balance. As necessary, the Committee may, in its sole discretion, discontinue,
substitute or add Measurement Funds. Each such action will take effect as of the first
day of the calendar quarter that follows by thirty (30) days or more the day on which
the Committee gives Participants advance written notice of such change. In selecting
the Measurement Funds that are available from time to time, neither the Committee nor
any Employer shall be liable to any Participant for such selection or adding, deleting
or continuing any available Measurement Fund.
	 
	 	(d)  	Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be reasonably determined by the
Committee. A Participant’s Account Balance shall be credited or debited on a daily
basis based on the performance of each Measurement Fund selected by the Participant.
	 
	 	(e)  	No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Measurement Funds are to be used for
measurement purposes only, and a Participant’s election of any such Measurement Fund,
the allocation to the Participant’s Account Balance thereof, the calculation of
additional amounts and the crediting or debiting of such amounts to a Participant’s
Account Balance shall not be considered or construed in any manner as
an actual investment of the Participant’s Account Balance in any such Measurement Fund.
In the event that the Company or the Trustee (as that term is defined in the Trust),
in its sole discretion, decides to invest funds in any or all of the Measurement Funds,
no Participant shall have any rights in or to such investments themselves. Without
limiting the foregoing, a Participant’s Account Balance shall at all times be a
bookkeeping entry only and shall not represent any investment made on the Participant’s
behalf by the Company or the Trust; and the Participant shall at all times remain an
unsecured creditor of the Company.
	 
	 	(f)  	Employer Discretion. Notwithstanding the foregoing provisions of this
Section 3.3, the Committee shall retain the overriding discretion regarding the
Participant’s designation of Measurement Funds under this Section 3.3. If a
Participant fails to designate any Measurement Fund under this Section 3.3, the
Participant shall be deemed to have elected the money market fund, or such other fund
as determined from time to time by the Committee in its sole discretion.
	 
	 	(g)  	Selection Results. The Participant shall bear full responsibility for
all results associated with the Participant’s selection of Measurement Funds under this
Section 3.3, and the Employers shall have no responsibility or liability with respect
to the Participant’s selection of such Measurement Funds.

	3.4  	FICA and Other Taxes.

	 	(a)  	Company Contribution Amounts. When a Participant becomes vested in the
Participant’s Account Balance, the Participant’s Employer(s) shall withhold from the

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	 	   	Participant’s salary and/or bonus, in a manner determined by the Employer(s), the
Participant’s share of FICA and other employment taxes. If necessary, the Committee
may reduce the vested portion of the Participant’s Account Balance in order to comply
with this Section 3.4.
	 
	 	(b)  	Distributions. The Participant’s Employer(s), or the Trustee of the
Trust, shall withhold from any payments made to a Participant under this Plan all
federal, state and local income, employment and other taxes required to be withheld by
the Employer(s), or the Trustee of the Trust, in connection with such payments, in
amounts and in a manner to be determined in good faith in the sole discretion of the
Employer(s) and the Trustee of the Trust.

ARTICLE 4

Unforeseeable Financial Emergencies

	4.1  	Withdrawal Payout for Unforeseeable Financial Emergencies. If the Participant
experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee
to receive a partial or full payout from the Plan. The payout shall not exceed the lesser of
the Participant’s vested Account Balance, calculated as if such Participant were receiving a
Termination Benefit, or the amount necessary to satisfy the Unforeseeable Financial Emergency
plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of the participant’s
assets (to the extent the liquidation of such assets would not itself cause severe financial
hardship). If, subject to the sole discretion of the Committee, the petition for a payout
is approved, any payout shall be made within 60 days of the date of approval. The payment of
any amount under this Section 4.1 shall be subject to the Deduction Limitation.

ARTICLE 5

Retirement Benefit

	5.1  	Retirement Benefit. Subject to the Deduction Limitation, a Participant who Retires
shall receive, as a Retirement Benefit, the Participant’s vested Account Balance.

	5.2  	Payment of Retirement Benefit.

	 	(a)  	Retirement At or After Age 65. If a Participant Retires at or after
age 65, the Participant shall commence receiving the Participant’s Retirement Benefit
no earlier than six months after the Participant’s Retirement and no later than 60 days
after that six month anniversary, as elected by the Participant, either in a lump sum or in installments
of up to 80 quarters pursuant to the Quarterly Installment Method. The Participant,
in connection with the Participant’s commencement of participation in the Plan, will
elect on an Election Form how the Participant is to receive the Participant’s
Retirement Benefit as set forth in the immediately preceding sentence. The
Participant may change once the

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	 	   	Participant’s election to an allowable alternative
payout period by submitting a new Election Form to the Committee, provided that (i)
the election cannot take effect until at least 12 months after the date on which the
election is made, (ii), the payment with respect to which such election is made must
be deferred for a period of 5 years from the date such payment would otherwise have
been made, (iii) the election cannot accelerate the payment of such benefit and (iv)
the election is accepted by the Committee in its sole discretion. Subject to the
prior sentence, the Election Form most recently accepted by the Committee shall
govern the payout of the Retirement Benefit. If the Participant does not make any
election with respect to the payment of the Retirement Benefit, then such benefit
shall be payable in a lump sum. Any payment made shall be subject to the Deduction
Limitation.
	 
	 	(b)  	Retirement Before Age 65. If a Participant Retires before reaching age
65, then no earlier than 60 days after the last day of the calendar quarter in which
the second anniversary of the Participant’s Retirement falls (the “Second Anniversary
of Retirement”), the Participant shall commence receiving the Participant’s Retirement
Benefit, as elected by the Participant, either in a lump sum or in installments of up
to 80 quarters pursuant to the Quarterly Installment Method. A Participant, in
connection with the Participant’s commencement of participation in the Plan, will elect
on an Election Form how the Participant is to receive the Participant’s Retirement
Benefit as set forth in the immediately preceding sentence. The Participant may change
the Participant’s election once to an allowable alternative payout period by submitting
a new Election Form to the Committee, provided that (i) the election cannot take effect
until at least 12 months after the date on which the election is made, (ii), the
payment with respect to which such election is made must be deferred for a period of 5
years from the date such payment would otherwise have been made, (iii) the election
cannot accelerate the payment of such benefit and (iv) the election is accepted by the
Committee in its sole discretion. Subject to the prior sentence, the Election Form
most recently accepted by the Committee shall govern the payout of the Retirement
Benefit. If the Participant does not make any election with respect to the payment of
the Retirement Benefit, then such benefit shall be payable in a lump sum, starting
within 60 days after the Participant’s Second Anniversary of Retirement. Any payment
made shall be subject to the Deduction Limitation.

	5.3  	Death Prior to Completion of Retirement Benefit. If a Participant dies after
Retirement but before the Retirement Benefit is paid in full, the Participant’s unpaid
Retirement Benefit payments shall continue and shall be paid to the Participant’s Beneficiary
(a) over the remaining number of quarters and in the same amounts as that benefit would have
been paid to the Participant had the Participant survived, or (b) in a lump sum, if requested by the Beneficiary and if allowed under Code Section 409A
and the regulations thereunder, as determined in the sole discretion of the Committee, that
is equal to the Participant’s unpaid remaining vested Account Balance.

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ARTICLE 6

Pre-Retirement Survivor Benefit

	6.1  	Pre-Retirement Survivor Benefit. Subject to the Deduction Limitation, the
Participant’s Beneficiary shall receive a Pre-Retirement Survivor Benefit equal to the
Participant’s vested Account Balance if the Participant dies before the Participant Retires,
experiences a Termination of Employment or suffers a Disability.

	6.2  	Payment of Pre-Retirement Survivor Benefit. A Participant, in connection with the
Participant’s commencement of participation in the Plan, will elect on an Election Form
whether the Pre-Retirement Survivor Benefit shall be received by the Participant’s Beneficiary
in a lump sum or in installments of up to 80 quarters pursuant to the Quarterly Installment
Method. The Participant may change this election once to an allowable alternative payout
period by submitting a new Election Form to the Committee, provided that (i) the election
cannot take effect until at least 12 months after the date on which the election is made, (ii)
the election cannot accelerate the payment of such benefit and (iii) the election is accepted
by the Committee in its sole discretion. Subject to the prior sentence, the Election Form most
recently accepted by the Committee prior to the Participant’s death shall govern the payout of
the Participant’s Pre-Retirement Survivor Benefit. If a Participant does not make any
election with respect to the payment of the Pre-Retirement Survivor Benefit, then such benefit
shall be paid in a lump sum. Despite the foregoing, if the Participant’s vested Account
Balance at the time of the Participant’s death is less than $25,000 and if allowed under Code
Section 409A and the regulations thereunder, as determined in the sole discretion of the
Committee, payment of the Pre-Retirement Survivor Benefit may be made, in the sole discretion
of the Committee, in a lump sum or in installments of up to 20 quarters pursuant to the
Quarterly Installment Method. The lump sum payment shall be made, or installment payments
shall commence, no later than 60 days after the last day of the calendar quarter in which the
Committee is provided with proof that is satisfactory to the Committee of the Participant’s
death. Any payment made shall be subject to the Deduction Limitation.

ARTICLE 7

Termination Benefit

	7.1  	Termination Benefit. Subject to the Deduction Limitation, the Participant shall
receive a Termination Benefit, which shall be equal to the Participant’s vested Account
Balance if a Participant experiences a Termination of Employment prior to the Participant’s
Retirement, death or Disability.

	7.2  	Payment of Termination Benefit. No earlier than 60 days after the last day of the
calendar quarter in which the second anniversary of the Participant’s Termination of Employment falls, the Participant shall commence receiving
the Participant’s Termination Benefit in installments, based on 12 quarters, using the
Quarterly Installment Method. If allowed under Code Section 409A and the regulations
thereunder, as determined in the sole discretion of the Committee, the Committee, may cause
the Termination Benefit to be paid in a lump sum or in installments

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	   	pursuant to the
Quarterly Installment Method of up to 120 months. Any payment made shall be subject to the
Deduction Limitation.

	7.3  	Death Prior to Completion of Termination Benefit. If a Participant dies after the
Participant’s Termination of Employment but before the Termination Benefit is paid in full,
the Participant’s unpaid Termination Benefit payments shall continue and shall be paid to the
Participant’s Beneficiary (a) over the remaining number of quarters and in the same amounts as
that benefit would have been paid to the Participant had the Participant survived, or (b) in a
lump sum, if requested by the Beneficiary and if allowed under Code Section 409A and the
regulations thereunder, as determined in the sole discretion of the Committee, that is equal
to the Participant’s unpaid remaining vested Account Balance.

ARTICLE 8

Disability Benefit

	8.1  	Continued Eligibility; Disability Benefit. A Participant suffering a Disability
shall, for benefit purposes under this Plan, continue to be considered to be employed, and
shall be eligible for the benefits provided for in Article 4, 5, 6 or 7 in accordance with the
provisions of those Articles. However, during any period of Disability, no additional Months
of Continuous Service shall be awarded to the Participant. Notwithstanding the above, subject
to Code Section 409A and the regulations thereunder, as determined in the sole discretion of
the Committee, the Committee shall have the right to, in its sole and absolute discretion and
for purposes of this Plan only, and must in the case of a Participant who is otherwise
eligible to Retire, deem the Participant to have experienced a Termination of Employment, or
in the case of a Participant who is eligible to Retire, to have Retired, at any time (or in
the case of a Participant who is eligible to Retire, as soon as practicable) after such
Participant is determined to be suffering a Disability, in which case the Participant shall
receive a Disability Benefit equal to the Participant’s vested Account Balance at the time of
the Committee’s determination; provided, however, that should the Participant otherwise have
been eligible to Retire, the Participant shall be paid in accordance with Article 5. The
Disability Benefit shall be paid in a lump sum within 60 days of the Committee’s exercise of
such right, provided that, and to the extent required by Code Section 409A and the regulations
thereunder, if any such payment would otherwise be paid within six months of the Participant’s
Retirement or Termination of Employment, any such payment shall not be paid until after the
end of such six month period Any payment made shall be subject to the Deduction Limitation.

ARTICLE 9

Beneficiary Designation

	9.1  	Beneficiary. Each Participant shall have the right, at any time, to designate the
Participant’s Beneficiary(ies) (both primary as well as contingent) to receive any benefits
payable under the Plan to a beneficiary upon the death of a Participant or the death of a
predecessor Beneficiary receiving benefits under the Plan. The Beneficiary designated under
this Plan may be the same

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	   	as or different from the Beneficiary designation under any other
plan of an Employer in which the Participant participates.

	9.2  	Beneficiary Designation; Change; Spousal Consent. A Participant shall designate the
Participant’s Beneficiary by completing and signing the Beneficiary Designation Form, and
returning it to the Committee or its designated agent. A Participant shall have the right to
change a Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time
to time. If a married Participant names someone other than the Participant’s spouse as a
primary Beneficiary, a spousal consent, in the form designated by the Committee, must be
signed by that Participant’s spouse and returned to the Committee. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed
shall be canceled. The Committee shall be entitled to rely on the last Beneficiary
Designation Form filed by the Participant and accepted by the Committee prior to the
Participant’s death.

	9.3  	Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received and acknowledged in writing by the Committee or its designated agent.

	9.4  	No Beneficiary Designation. If a Participant fails to designate a Beneficiary as
provided in Sections 9.1, 9.2 and 9.3 or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the Participant’s benefits, then the
Participant’s designated Beneficiary shall be deemed to be the Participant’s surviving spouse.
If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid
to a Beneficiary shall be payable to the executor or personal representative of the
Participant’s estate.

	9.5  	Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary
to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in
its discretion, to cause the Participant’s Employer to withhold such payments until this
matter is resolved to the Committee’s satisfaction.

	9.6  	Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary
shall fully and completely discharge all Employers and the Committee from all further
obligations under this Plan with respect to the Participant, and that Participant’s Plan
Agreement shall terminate upon such full payment of benefits.

ARTICLE 10

Leave of Absence

	10.1  	Paid Leave of Absence. If a Participant is authorized by the Participant’s Employer
for any reason to take a paid leave of absence from the employment of the Employer, the
Participant shall continue to be considered employed by the Employer and shall continue to
accrue Months of Continuous Service during the continuation of such leave of absence.

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	10.2  	Unpaid Leave of Absence. If a Participant is authorized by the Participant’s
Employer for any reason to take an unpaid leave of absence from the employment of the
Employer, the Participant shall continue to be considered employed by the Employer, but the
Participant shall not accrue additional Months of Continuous Service.

ARTICLE 11

Termination, Amendment or Modification

	11.1  	Termination. Although each Employer anticipates that it will continue the Plan for
an indefinite period of time, there is no guarantee that any Employer will continue the Plan
or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves
the right, in its sole discretion, to discontinue its sponsorship of the Plan and/or to
terminate the Plan at any time with respect to any or all of its participating Employees, by
action of its board of directors. Following a Termination of the Plan, Participant Account
Balances shall remain in the Plan until the Participant becomes eligible for the benefits
provided in Articles 4, 5, 6, 7, or 8 in accordance with the provisions of those Articles.
The Termination of the Plan shall not adversely affect any Participant or Beneficiary who has
become entitled to the payment of any benefits under the Plan as of the date of termination.
Despite the foregoing, if allowed under Code Section 409A and the regulations thereunder, as
determined in the sole discretion of the Committee, distributions under the following
sentences will be applicable to the extent so allowed. Upon the termination of the Plan with
respect to any Employer, the Plan Agreements of the affected Participants who are employed by
that Employer shall terminate and their vested Account Balances, determined as if they had
experienced a Termination of Employment on the date of Plan termination or, if Plan
termination occurs after the date upon which a Participant was eligible to Retire, then with
respect to that Participant as if the Participant had Retired on the date of Plan termination,
shall be paid to the Participants as follows: Prior to a Change in Control, if the Plan is
terminated with respect to all of its Participants, an Employer shall have the right, in its
sole discretion, and notwithstanding any elections made by the Participant, to pay such
benefits in a lump sum or in installments of up to 60 quarters pursuant to the Quarterly
Installment Method, with amounts credited and debited during the installment period as
provided herein. If the Plan is terminated with respect to less than all of its Participants,
an Employer shall be required to pay such benefits in a lump sum. After a Change in Control,
the Employer shall be required to pay such benefits in a lump sum.

	11.2  	Amendment. The Committee may, at any time in its sole discretion, amend or modify
the Plan in whole or in part with respect to any Employer by the action of its board of
directors; provided, however, that: (i) no amendment or modification shall be effective to
decrease or restrict the value of a Participant’s vested Account Balance in existence at the
time the amendment or modification is made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the amendment or modification or, if the
amendment or modification occurs after the date upon which the Participant was eligible to
Retire, the Participant had Retired as of the effective date of the amendment or modification,
and (ii) no amendment or modification of this Section 11.2 shall be effective. The amendment
or

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	   	modification of the Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date of the amendment or modification; provided, however, that the Committee shall have the right in its sole
discretion, if allowed under Code Section 409A and the regulations thereunder, to accelerate
installment payments by paying the vested Account Balance in a lump sum or in installments
using fewer quarters pursuant to the Quarterly Installment Method.

	11.3  	Plan Agreement. Despite the provisions of Section 11.1 and 11.2, if a Participant’s
Plan Agreement contains benefits or limitations that are not in this Plan document, the
Employer may only amend or terminate such provisions with the consent of the Participant.

	11.4  	Effect of Payment. The full payment of the applicable benefit under Article 4, 5, 6,
7 or 8 of the Plan shall completely discharge all obligations to a Participant and the
Participant’s designated Beneficiary under this Plan and the Participant’s Plan Agreement
shall terminate.

ARTICLE 12

Administration

	12.1  	Committee Duties. Except as otherwise provided in this Article 12, this Plan shall
be administered by a Committee which shall consist of the Board, or such committee as the
Board shall appoint from time to time. Members of the Committee may be Participants under
this Plan and need not be members of the Board. The Committee shall also have the discretion
and authority to (i) make, amend, interpret, and enforce all appropriate rules and regulations
for the administration of this Plan and the governance of the Committee and (ii) decide or
resolve any and all questions, including interpretations of this Plan, as may arise in
connection with the Plan. Any individual serving on the Committee who is a Participant shall
not vote or act on any matter relating solely to himself or herself. When making a
determination or calculation, the Committee shall be entitled to rely on information furnished
by a Participant or the Company.

	12.2  	Agents. In the administration of this Plan, the Committee may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit (including
acting through a duly appointed representative) and may from time to time consult with
counsel who may be counsel to any Employer. The Company shall pay all expenses of such
agents.

	12.3  	Binding Effect of Decisions. The decision or action of the Committee with respect to
any question arising out of or in connection with the administration, interpretation or
application of the Plan and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the Plan.

	12.4  	Indemnity of Committee. All Employers shall indemnify, defend and hold harmless each
member of the Committee, and any Employee to whom the duties of the Committee may be
delegated, against any and all claims, losses, damages, expenses or liabilities, including
reasonable attorneys’ fees and court costs, arising from any action or failure to act with
respect to this Plan, except in the case of willful misconduct by such member of the Committee
or such Employee.

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	12.5  	Employer Information. To enable the Committee to perform its functions, the Company
and each Employer shall supply full and timely information to the Committee on all matters
relating to the compensation of its Participants, the date and circumstances of the
Retirement, Disability, death or Termination of Employment of its Participants, and such other
pertinent information as the Committee may reasonably require.

ARTICLE 13

Other Benefits and Agreements

	13.1  	Coordination with Other Benefits. The benefits provided for a Participant and
Participant’s Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the Participant’s Employer.
The Plan shall supplement and shall not supersede, modify or amend any other such plan or
program except as may otherwise be expressly provided.

ARTICLE 14

Claims Procedures

	14.1  	Presentation of Claim. Any Participant or Beneficiary of a deceased Participant
(such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the
Committee a written claim for a determination with respect to the amounts distributable to
such Claimant from the Plan. If such a claim relates to the contents of a notice received by
the Claimant, the claim must be made within 60 days after such notice was received by the
Claimant. All other claims must be made within 180 days of the date on which the event that
caused the claim to arise occurred. The claim must state with particularity the determination
desired by the Claimant.

	14.2  	Notification of Decision. The Committee shall consider a Claimant’s claim within a
reasonable time, and shall notify the Claimant in writing:

	 	(a)  	that the Claimant’s requested determination has been made, and that the claim
has been allowed in full; or
	 
	 	(b)  	that the Committee has reached a conclusion contrary, in whole or in part, to
the Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:

	 	(i)  	the specific reason(s) for the denial of the claim, or any part
of it;
	 
	 	(ii)  	specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
	 
	 	(iii)  	a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation of why such
material or information is necessary; and

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	 	(iv)  	an explanation of the claim review procedure set forth in Section
14.3.

	14.3  	Review of a Denied Claim. Within 60 days after receiving a notice from the Committee
that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly
authorized representative) may file with the Committee a written request for a review of the
denial of the claim. Thereafter, but not later than 30 days after the review procedure began,
the Claimant (or the Claimant’s duly authorized representative):

	 	(a)  	may review pertinent documents;
	 
	 	(b)  	may submit written comments or other documents; and/or
	 
	 	(c)  	may request a hearing, which the Committee, in its sole discretion, may grant.

	14.4  	Decision on Review. The Committee shall render its decision on review promptly, and
not later than 60 days after the filing of a written request for review of the denial, unless
a hearing is held or other special circumstances require additional time, in which case the
Committee’s decision must be rendered within 120 days after such date. Such decision must be
written in a manner calculated to be understood by the Claimant, and it must contain:

	 	(a)  	specific reasons for the decision;
	 
	 	(b)  	specific reference(s) to the pertinent Plan provisions upon which the decision
was based; and
	 
	 	(c)  	such other matters as the Committee deems relevant.

	14.5  	Legal Action. A Claimant’s compliance with the foregoing provisions of this Article
14 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect
to any claim for benefits under this Plan.

ARTICLE 15

Trust

	15.1  	Establishment of the Trust. The Company shall establish the Trust, with sub-trusts
for each Employer. Each Employer shall at least annually transfer over to the Trust such
assets as the Employer determines, in its sole discretion, are necessary to provide, on a
present value basis, for its respective future liabilities created with respect to the Annual
Company Contribution Amounts for such Employer’s Participants for all periods prior to the
transfer, as well as any debits and credits to the Participants’ Account Balance for all
periods prior to the transfer, taking into consideration the value of the assets in the trust
at the time of the transfer. Such assets shall be allocated to the respective sub-trust of
each contributing Employer.

	15.2  	Interrelationship of the Plan and the Trust. The provisions of the Plan and the Plan
Agreement shall govern the rights of a Participant to receive distributions pursuant to the
Plan. The provisions of the Trust shall govern the rights of the Employers, Participants and
the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at
all times remain liable to carry out its obligations under the Plan with respect to its
Participants. In this

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	   	regard, if a Participant has been employed by only one Employer, such
Employer shall be responsible for the total amounts credited to such Participant’s Account
Balance under this Plan. If a Participant has been employed by more than one Employer, each
Employer shall be responsible only for the amounts credited to the Participant’s Account
Balance by such Employer.

	15.3  	Distributions from the Trust. Each Employer’s obligations under the Plan may be
satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such
distribution shall reduce the Employer’s obligations under this Plan.

	15.4  	Investment of Trust Assets. The Trustee of the Trust shall be authorized, upon
written instructions received from the Committee or investment manager appointed by the
Committee, to invest and reinvest the assets of the Trust in accordance with the applicable
Trust Agreement.

	15.5  	No Claim on Trust Assets. A Participant shall have no preferred claim on, or any
beneficial interest in, any assets of the Trust. Any assets held by the Trust shall be
subject to the claims of general creditors of each Employer that is the grantor of the Trust
under federal and state law in the event of the Employer’s “insolvency” (i.e., the Employer is
unable to pay its debts as they become due or is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code), but only with respect to the assets of the Trust
held for the benefit of Participants employed or formerly employed by such Employer.

ARTICLE 16

Miscellaneous

	16.1  	Status of Plan. The Plan is intended to be a plan that is not qualified within the
meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group of management
or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1 In addition, the Plan is intended to comply with Code Sections 409A(a)(1) to (4) and
(b)(1) to (2). The Plan shall be administered and interpreted in a manner consistent with
those foregoing intents. Should any provision of this Plan not comply those provisions of
Code Section 409A listed above, that provision shall have no affect on the remaining parts of
this Plan and this Plan shall be construed and enforced as if such provision had never been
inserted herein.

	16.2  	Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors
and assigns shall have no legal or equitable rights, interests or claims in any property or
assets of an Employer. For purposes of the payment of benefits under this Plan, any and all
of an Employer’s assets shall be, and remain, the general, unpledged unrestricted assets of
the Employer. An Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

	16.3  	Employer’s Liability. An Employer’s liability for the payment of benefits shall be
defined only by the Plan and the Plan Agreement, as entered into between the Employer and a
Participant. An

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	   	Employer shall have no obligation to a Participant under the Plan except as
expressly provided in the Plan and the Participant’s Plan Agreement.

	16.4  	Nonassignability. Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are expressly declared to
be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or any other
person, be transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property
settlement or otherwise.

	16.5  	Not a Contract of Employment. The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between any Employer and the Participant. Such
employment is hereby acknowledged to be an “at will” employment relationship that can be
terminated at any time for any reason, or no reason, with or without cause, and with or
without notice, unless otherwise expressly provided in a written employment agreement.
Nothing in this Plan shall be deemed to give a Participant the right to be retained in the
service of any Employer, or to interfere with the right of any Employer to discipline or
discharge the Participant at any time.

	16.6  	Furnishing Information. A Participant or the Participant’s Beneficiary will
cooperate with the Committee by furnishing any and all information requested by the Committee
and take such other actions as may be requested in order to facilitate the administration of
the Plan and the payments of benefits hereunder, including but not limited to taking such
physical examinations as the Committee may deem necessary.

	16.7  	Terms. Whenever any words are used herein in the masculine, they shall be construed
as though they were in the feminine in all cases where they would so apply; and whenever any
words are used herein in the singular or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in all cases where they would so
apply.

	16.8  	Captions. The captions of the articles, sections and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of any of its
provisions.

	16.9  	Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and
interpreted according to the internal laws of the State of Nevada, without regard to its
conflicts of laws principles.

	16.10  	Notice. Any notice or filing required or permitted to be given to the Committee
under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or
certified mail, to the address below:

Secretary of the MGM MIRAGE SERP Plan Committee

3600 Las Vegas Blvd So.

Las Vegas, NV 89109

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	 	   	Such notice shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or certification.

	 	   	Any notice or filing required or permitted to be given to a Participant under this Plan
shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known
address of the Participant.

	16.11  	Successors. The provisions of this Plan shall bind and inure to the benefit of the
Participant’s Employer and its successors and assigns and the Participant and the
Participant’s designated Beneficiaries. No other person shall be a third-party beneficiary or
acquire any rights under this Plan.

	16.12  	Spouse’s Interest. The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant shall automatically pass to the Participant
and shall not be transferable by such spouse in any manner, including but not limited to such
spouse’s will, nor shall such interest pass under the laws of intestate succession.

	16.13  	Validity. In case any provision of this Plan shall be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never
been inserted herein.

	16.14  	Incompetent. If the Committee determines in its discretion that a benefit under
this Plan is to be paid to a minor, a person declared incompetent or a person incapable of
handling the disposition of that person’s property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the care and custody of such
minor, incompetent or incapable person. The Committee may require proof of minority,
incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the account of the Participant
and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of
any liability under the Plan for such payment amount.

	16.15  	Court Order. The Committee is authorized to make any payments directed by court
order in any action in which the Plan or the Committee has been named as a party. In
addition, if a court determines that a spouse or former spouse of a Participant has an
interest in the Participant’s benefits under the Plan in connection with a property settlement
or otherwise, the Committee, in its sole discretion, shall have the right, notwithstanding any
election made by a Participant, to immediately distribute the spouse’s or former spouse’s
interest in the Participant’s benefits under the Plan to that spouse or former spouse.
Notwithstanding the foregoing, the Committee shall interpret this provision in a manner that
is consistent with Code Section 409A and other applicable tax law, including but not limited
to guidance issued after the effective date of this Plan.

	16.16  	Distribution in the Event of Taxation.

	 	(a)  	In General. If, for any reason, all or any portion of a Participant’s
benefits under this Plan becomes taxable to the Participant prior to receipt, a
Participant may petition the Committee before a Change in Control, or the Trustee of
the Trust after a Change in

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	 	   	Control, for a distribution of that portion of the
Participant’s benefit that has become taxable. Upon the grant of such a petition,
which grant shall not be unreasonably withheld (and, after a Change in Control, shall
be granted), a Participant’s Employer shall distribute to the Participant immediately
available funds in an amount equal to the taxable portion of the Participant’s benefit
(which amount shall not exceed a Participant’s unpaid vested Account Balance under the
Plan). If the petition is granted, the tax liability distribution shall be made within
90 days of the date when the Participant’s petition is granted. Such a distribution
shall affect and reduce the benefits to be paid under this Plan. Notwithstanding the
foregoing, the Committee shall interpret this provision in a manner that is consistent
with Code Section 409A and other applicable tax law, including but not limited to
guidance issued after the effective date of this Plan.
	 
	 	(b)  	Trust. If the Trust terminates in accordance with its terms and
benefits are distributed from the Trust to a Participant in accordance therewith, the
Participant’s benefits under this Plan shall be reduced to the extent of such
distributions.

	16.17  	Legal Fees To Enforce Rights After Change in Control. The Company and each Employer
is aware that upon the occurrence of a Change in Control, the Board or the board of directors
of a Participant’s Employer (which might then be composed of new members) or a shareholder of
the Company or the Participant’s Employer, or of any successor corporation, might cause or
attempt to cause, the Company, the Participant’s Employer or such successor to refuse to
comply with its obligations under the Plan and might cause or attempt to cause the Company or
the Participant’s Employer to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these circumstances, the purpose of the
Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to
any Participant that the Company, the Participant’s Employer or any successor corporation has
failed to comply with any of its obligations under the Plan or any agreement thereunder or, if
the Company, such Employer or any other person takes any action to declare the Plan void or
unenforceable or institutes any litigation or other legal action designed to deny, diminish or
to recover from any Participant the benefits intended to be provided (collectively, the
“Dispute”), then the Company and the Participant’s Employer shall pay, if the Participant
prevails in the Dispute, the Participant’s reasonable legal fees and court costs actually
incurred by the Participant in the initiation or defense of the Dispute, whether by or against
the Company or the Participant’s Employer or any director, officer, shareholder or other
person affiliated with the Company, the Participant’s Employer or any successor thereto.

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	16.18  	Unvested Account Balances Under Prior Plan. If a Participant participated in the
MGM MIRAGE Supplemental Executive Retirement Plan, effective as of January 1, 2000, and all or
a part of the Participant’s account balance under that plan is unvested as of December 31,
2004, that unvested balance will be transferred to this Plan in accordance with Code Section
409A and the regulations thereunder, and such balance shall be administered in accordance with
the provisions of this Plan, provided, however, that the vesting of that balance shall be
based on the applicable vesting schedule(s) under that prior plan, which vesting provisions
are incorporated herein by reference.

IN WITNESS WHEREOF, the Company has signed this Plan document effective as of December 30, 2004.

	 	 	 	 	 
	 	“Company”

MGM MIRAGE, a Delaware corporation

 	 
	 	   	/s/
Gary
N. Jacobs	 
	 	By:  	Gary
N. Jacobs	 
	 	Title:  	Executive
Vice President and General Counsel	 

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SCHEDULE A

 

 

 

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