10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
	For the fiscal year ended October 29, 2005
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
	For the transition period from           to          .

Commission file number: 333-38223

ARGO-TECH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	31-1521125
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
23555 Euclid Avenue, Cleveland, Ohio (Address of Principal Executive Offices)	44117 (Zip Code)

Registrant’s telephone number, including area code:

(216) 692-6000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

      Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes o          No þ

      Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.     Yes þ          No o

      Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     þ

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.     Large accelerated filer o          Accelerated filer o          Non-accelerated filer þ

      Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes o          No þ

      No established published trading market exists for the registrant’s common stock, par value $0.01 per share. As of January 26, 2006, 1 share of the registrant’s common stock was outstanding and held by AT Holdings Corporation.

DOCUMENTS INCORPORATED BY REFERENCE

None

INDEX TO ANNUAL REPORT ON FORM 10-K

Table of Contents

		Page
PART I:
Item 1.	Business		1
Item 1A.	Risk Factors		8
Item 1B.	Unresolved Staff Comments		15
Item 2.	Properties		15
Item 3.	Legal Proceedings		16
Item 4.	Submission of Matters to a Vote of Security Holders		16
PART II:
Item 5.	Market for Registrant’s Common Equity, Related Stockholder		16
	Matters and Issuer Purchases of Equity Securities
Item 6.	Selected Financial Data		16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		32
Item 8.	Financial Statements and Supplementary Data		32
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		32
Item 9A.	Controls and Procedures		32
PART III:
Item 10.	Directors and Executive Officers of the Registrant		34
Item 11.	Executive Compensation		35
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		46
Item 13.	Certain Relationships and Related Transactions		47
Item 14.	Principal Accountant Fees and Services		49
PART IV:
Item 15.	Exhibits and Financial Statement Schedules		50
Exhibit 2.1 Agreement and Plan of Merger
Exhibit 2.2 First Amendment to Agreement and Plan of Merger
Exhibit 4.2 First Supplemental Indenture
Exhibit 10.6 Employment Agreement of Michael S. Lipscomb
Exhibit 10.7 Employment Agreement of Paul R. Keen
Exhibit 10.9 Rabbi Trust Amendment
Exhibit 10.16 Fourth Amend/Employee Stock/Trust Agreement
Exhibit 10.17 Fifth Amend/Employee Stock/Trust Agreement
Exhibit 10.20 Second Amend/Employee Stock/Excess Benefits
Exhibit 10.30 Fourth Amended and Restated Credit Agreement
Exhibit 10.42 Form of Professional Services Agreement
Exhibit 10.47 Form of Unit Grant
Exhibit 10.48 Form of Amendment and Waiver
Exhibit 10.49 Form of Change of Control Agreement
Exhibit 10.50 Non Solicitation and Conidentiality Agreement
Exhibit 12.1 Computation of Ratio of Earnings
Exhibit 24.1 Powers of Attorney
Exhibit 31.1 Certification of Chairman, President and CEO
Exhibit 31.2 Certification of Vice President and CEO
Exhibit 32 Certification of CEO and CFO

ARGO-TECH CORPORATION

PART I

Item 1. Business.

      Argo-Tech Corporation, a Delaware corporation (“we,” “us” or “Argo-Tech”), was formed in 1986 to acquire the Power Accessories Division of TRW Inc. (“TRW”). Today, we are a global designer, manufacturer and servicer of high performance fuel flow devices and systems. We operate in two business segments, Aerospace and Industrial. The Aerospace segment consists of aircraft engine fuel pumps and other engine products, commercial and military products and systems found on a plane’s airframe, and aerial refueling pumps and related equipment. The Industrial segment includes ground fueling nozzles, hoses and other ground fueling components, an automated fuel management system, cryogenic pumps and nozzles and the operation of a business park in Cleveland, Ohio. Financial information by business segment can be found in Note 14 to the audited consolidated financial statements included elsewhere in this report.

      Our principal executive offices are located at 23555 Euclid Avenue, Cleveland, Ohio 44117, and our telephone number is (216) 692-6000. We also maintain a website at www.argo-tech.com. However, information on our website is not part of this report.

Recent Developments

      On September 13, 2005, we entered into a merger agreement (as amended, the “Merger Agreement”) with our parent, AT Holdings Corporation (“Holdings”), V.G.A.T. Investors, LLC (“VGAT”), Vaughn Merger Sub., Inc. and GreatBanc Trust Company, as trustee of the Argo-Tech Corporation Employee Stock Ownership Plan (the “ESOP”). The members of VGAT include Vestar Capital Partners IV, L.P. and investment affiliates of Greenbriar Equity Group LLC (collectively, the “Sponsors”). On October 28, 2005, pursuant to the Merger Agreement, Vaughn Merger Sub, Inc. merged with and into Holdings (the “Merger”), with Holdings surviving as a wholly owned subsidiary of VGAT.

      Under the terms of the Merger Agreement, VGAT purchased all of the equity interests of Holdings for $175.9 million. The purchase price per share or per share equivalent in cash for each Holdings stockholder or derivative holders was $201.25. $8.5 million of the merger purchase price otherwise owing to such stockholders and derivative holders was deposited in an escrow account to secure certain indemnification obligations of such stockholders and derivative holders.

      In connection with the Merger:

•  we entered into an amended and restated credit facility (the “Amended Credit Facility”), which became effective upon the completion of the Merger and provides for aggregate borrowings by us of up to approximately $59.1 million, comprised of:

•  senior secured term loans of approximately $19.1 million, consisting of the term loans outstanding ($14.1 million) on the effective date of the Amended Credit Facility plus an additional $5.0 million term loan extended on such effective date; and

•  loans under a senior secured revolving credit facility in an aggregate principal amount not to exceed $40.0 million.

•  Holdings privately placed $67 million in aggregate principal amount at maturity ($42.6 million gross proceeds) of its 11³/4% senior discount notes due 2012;

•  we obtained the consents from holders of our 9¹/4% senior notes to

•  amend the indenture governing our 9¹/4% senior notes to (i) modify the covenant in the indenture that limits Restricted Payments (as defined in the indenture) to permit us to make distributions of up to $5.0 million to Holdings in connection with the Merger and (ii) modify the covenant in the indenture relating to financial reporting obligations to provide that if Holdings executes and delivers an unconditional guarantee to us and the trustee with respect to all obligations and liabilities under

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	the indenture, then the financial reports and other information required by that covenant may be provided by Holdings; and
•	waive our obligation under the change of control covenant of the indenture governing our 91/4% senior notes to make a Change of Control Offer (as defined in such indenture) as a result of the ownership by the Sponsors of Holdings following the Merger.

•  the Sponsors made an equity investment of approximately $108.8 million in VGAT;

•  certain members of our management contributed an aggregate of 41,760 shares of Holdings common stock to VGAT in exchange for Class A Units of VGAT;

•  certain members of our management rolled over certain of their options to purchase Holdings common stock so that those options remained outstanding as options to purchase Class A Units of VGAT following completion of the Merger;

•  unaffiliated third parties made an equity investment of approximately $2.4 million in VGAT;

•  Holdings entered into separate professional services agreements with each of the Sponsors pursuant to which the Sponsors will provide strategic financial planning, advisory and consulting services to Holdings in exchange for an annual fee of $375,000 to each Sponsor. In addition, in connection with the Sponsors arranging equity and debt financing for the Merger, they received a one-time transaction fee at the closing of the Merger of approximately $5.4 million in the aggregate (with approximately $2.7 million being paid to each Sponsor). See “Item 13. Certain Relationships and Related Transactions — Professional Services Agreements” for a description of this agreement;

•  the Sponsors, the unaffiliated third parties investing in VGAT and the members of management who contributed Holdings common stock to VGAT in exchange for Class A Units of VGAT and/or held options to purchase Class A Units of VGAT following the Merger entered into a securityholders agreement related to their ownership interests in VGAT, including voting agreements regarding representation on the management committee of VGAT, restrictions on transfer of units of VGAT and rights to participate in transfers by others, and customary registration rights. See “Item 13. Certain Relationships and Related Transactions — Securityholders Agreements” for a description of these agreements;

•  Michael S. Lipscomb, our Chairman, President, Chief Executive Officer and Director, and Paul R. Keen, our Executive Vice President, General Counsel and Secretary, entered into new employment agreements. These employment agreements replaced all existing employment, stay pay and severance agreements that Mr. Lipscomb and Mr. Keen previously had in place and govern any post-Merger severance payments Mr. Lipscomb or Mr. Keen are entitled to receive. See “Item 11. Executive Compensation — Employment Arrangements Following the Merger” for a description of the new employment agreements;

•  Frances S. St. Clair, our former Executive Vice President and Chief Financial Officer, resigned effective upon completion of the Merger and entered into a non-solicitation and confidentiality agreement with VGAT, which provides for a two-year period in which she cannot solicit any employee, customer, supplier or other specified individual, cannot disclose any confidential information as defined in the non-solicitation and confidentiality agreement and assigns to us intellectual property created during her employment;

•  Holdings redeemed all outstanding shares of its Series B Convertible Redeemable Preferred Stock; and

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•  the warrant held by J.P. Morgan Partners (SBIC), LLC, to purchase 46,025 shares of Holdings common stock was cancelled in exchange for a portion of the merger consideration.

The Merger closed on October 28, 2005.

Aerospace segment

      We are the world’s leading supplier of main engine fuel pumps to the commercial aircraft industry and a leading supplier of main engine fuel pumps to the military. Main engine fuel pumps are precision mechanical pumps that maintain the flow of fuel to the engine at a precise rate and pressure. The main engine fuel pumps are installed in over 60% of large commercial aircraft in service today. We are also a leading supplier of commercial and military airframe products and systems, which are used to transfer fuel to an engine and control fuel between tanks. In addition, we are a leading global supplier of military aerial refueling pumps and related equipment.

      During the long life cycle of aircraft containing our products, we earn significant aftermarket revenue from repair and overhaul sales. On average, a commercial aircraft will experience five to six main engine fuel pump overhauls over its 30-year life span.

Industrial segment

      We are the leading supplier of ground fueling components and automated fuel management systems used at airports throughout the world. In addition, we design and supply in-tank pumps and nozzles for liquid natural gas (“LNG”), liquid propane gas and other cryogenic fluids, as well as specialty military and hose for aerospace, chemical transfer and marine applications.

      We operate an aerospace certified materials laboratory and a business park in Cleveland, Ohio, where we maintain our headquarters and primary production facilities.

Products

Aerospace

      Main Engine Fuel Pumps. Main engine fuel pumps are precision mechanical pumps, mounted to the aircraft’s engines, that maintain the flow of fuel to the engine at a precise rate and pressure. These pumps consist of an aluminum body which is cast by certified subcontractors. We then machine the casting, manufacture a variety of other components, assemble the final product and perform rigorous testing at our Cleveland facility.

      Our main engine fuel pumps are used across the full spectrum of commercial engine designs. We are the sole source supplier of main engine fuel pumps for all CFM56 series engines, the most popular series of large commercial aircraft engines used today. The CFM56 series engines power all Boeing 737 and certain of the Airbus A-318, A-319, A-320, A-321 and A-340 aircraft. We are also the sole source supplier of main engine fuel pumps for all engines used on the Boeing 777 aircraft, including the new longer range Boeing 777, and on all regional jets manufactured by Bombardier and Embraer having seating capacity for at least 70 passengers. In addition, we are the sole source supplier of the main engine fuel pump for the General Electric GEnx engines to be used on the Boeing 787, Airbus A-350 and Boeing 747-8 aircraft.

      Our products include large regional and business jet applications, including the main engine fuel pumps used on the BR700 series engine, which is used on the high-end Bombardier Global Express, the Gulfstream Aerospace Corporation V aircraft and the Boeing 717. We supply main engine fuel pumps for the GE CF34-8 engine, which is used on the Bombardier CRJ700 and CRJ900 regional and business aircraft and the Embraer ERJ-170, a 70 passenger regional jet. We also supply main engine fuel pumps for the GE CF34-10 engine, which is used on the Embraer ERJ-190, the EuroProp International TP400 engine, which is used on the European A400M military troop transport aircraft, the SNECMA/NPO Saturn SM146 engine, which is used on a Russian regional jet, and the new ARJ 21 regional jet to be manufactured by AVIC I Commercial Aircraft Co. Ltd. in China.

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      Airframe Products. Fuel pumps and other airframe fuel transfer control systems in the airframe are necessary to transfer fuel to the engine systems and to maintain aircraft balance by shifting fuel between tanks. We design and manufacture complete fuel systems and fuel subsystems such as refuel/defuel, engine feed and fuel level control. We also design and manufacture a wide variety of fuel components consisting of boost and transfer fuel pumps, fuel flow proportioners and airframe valves, adapters, nozzles and caps. These systems and components are used for fueling, storing, transferring and engine feed functions during ground and flight operations. We are the fuel system supplier for the Eclipse 500, a new generation of business jet manufactured by Eclipse Aviation Corporation, as well as for the Adam A700, the Javelin and the Northrop-Grumman X47 Joint Unmanned Combat Aircraft System.

      Aerial Refueling Systems. Aerial refueling systems permit military aerial tankers to refuel fighter, bomber and other military aircraft while in flight. We are a major supplier of components for aerial refueling systems, which are produced only for military applications. Aerial refueling components we manufacture, including pumps, hose and couplers, are installed in the refueling systems of 100% of U.S. designed military aircraft equipped with aerial refueling capability.

Industrial

      Ground Fueling Products. Ground fueling systems are used to transfer fuel from underground fuel tanks and ground fueling trucks to the fuel receptacle of the aircraft. We manufacture various ground fueling hydrants, couplers and nozzles for commercial and military airports around the world, as well as specialty hose. We also manufacture digital pressure control valves. These valves incorporate a microprocessor to enhance fuel flow control and allow for accurate measurement of pressure at the delivery receptacle thereby optimizing the fuel flow and pressure. We also sell fuel management systems, including the Argo-Tech-developed AvR2000 Aviation Refueling Management System, which is used at nearly 200 sites worldwide.

      Cryogenic Products. We design and supply high performance submerged motor pumps for cryogenic gases and fluids. We have also introduced LNG nozzles and receptacles for use on alternative fuel vehicles. We believe these products position us favorably in this emerging market.

Aftermarket sales

      Aftermarket sales comprise the largest component of our business and consist primarily of spare parts sales and overhaul, retrofit, repair and technical support to commercial and military customers worldwide.

Customers

Aerospace

      Original Equipment Manufacturer (“OEM”) customers for our aerospace products include the world’s major aircraft engine manufacturers: General Electric, Honeywell, Pratt & Whitney (including Pratt & Whitney Canada), Rolls-Royce (including Rolls-Royce Allison and Rolls-Royce Deutschland), Hispano-Suiza and Williams International Corp. Customers for Argo-Tech’s airframe pumps and valves include Airbus, Boeing, Cessna, Gulfstream, Lockheed Martin, Northrop Grumman, Raytheon and various U.S. government agencies. Orders for military components can be directly received from government entities and through customers such as Boeing, General Electric, Lockheed Martin and Pratt & Whitney. Our aftermarket customers include all major aircraft and engine repair facilities and all major airlines. Currently, the total number of airline and third party customers for our spare parts, overhaul and repair exceeds 200.

Industrial

      Most commercial ground fueling products are sold to customers through independent distributors, while military ground fueling products are usually sold directly to the government. Customers in the domestic markets include a variety of airlines, airports and various fixed base operators. In international markets, our ground fueling products are purchased by several oil companies, including ExxonMobil, Royal Dutch Shell and several state-run oil companies and airport authorities. Our cryogenic pump customer base includes

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shipping vessels operated by domestic and foreign carriers, liquefied gas ship loading terminal owners, liquefied gas receiving terminals, petrochemical plants, Samsung and other large architectural and engineering companies worldwide, electric power generation companies and alternate fuel vehicle fleet operators.

      Upsilon International Corporation and two other related entities, as distributors of certain of our products to foreign customers, accounted for approximately 12% of our net revenues for fiscal 2005. See “Item 13. Certain Relationships and Related Transactions — Distribution Agreements.” No other customer accounted for more than 10% of our net revenues during this period.

Sales and Marketing

      OEM customers in both the Aerospace and Industrial segments select suppliers primarily on the basis of custom design capabilities, product quality and performance, prompt delivery, price and aftermarket support. We believe that we meet these requirements in a timely, responsive manner, which has resulted in an extensive installed base of components and substantial aftermarket revenues.

      We market and sell our OEM and aftermarket products through a combination of direct marketing, internal sales personnel, independent manufacturing representatives and U.S. and international distributors. We supply main engine fuel pump spare parts directly to domestic airlines and third-party overhaul shops, while foreign customers that purchase main engine fuel pump products receive their spare parts through Upsilon International Corporation, which operates a distribution facility in Torrance, California.

      For fiscal 2005, 2004 and 2003, customer revenues from the United States were $117.2 million, $107.1 million and $94.0 million, respectively, and foreign customer revenues were $95.4 million, $80.2 million and $66.7 million, respectively.

Suppliers and Raw Materials

      We use a certified supplier program that demands a commitment to 100% quality and on-time deliveries. Supplier performance is measured by our comprehensive supplier rating system. Currently, our supplier base includes approximately 800 companies.

      Our largest supplier expenditure relates to outsourcing of component machining. We have derived significant savings by taking advantage of advances in machining technologies and by coordinating engineering with our suppliers. Agreements are in place with our key long term suppliers that provide most of the outside supplier component machining.

      Aluminum castings used in the manufacture of main engine fuel pumps are the highest volume raw material supplied to us. Key long term certified suppliers provide the majority of these castings. We also buy quantities of steel bar stock to produce gears and shafts from multiple producers. However, CPM-10V, a powdered metal essential for the manufacture of certain of our main engine fuel pumps, is a proprietary product available only from Crucible Specialty Metals. We do not have a contractual arrangement with Crucible Specialty Metals; we purchase CPM-10V pursuant to standard purchase orders. Another material has been identified as an alternative to CPM-10V, but that material has not yet been certified by our customers.

Manufacturing, Repair and Overhaul

      We have five manufacturing, repair and overhaul facilities:

•  a 150 acre business park in Cleveland, Ohio;

•  a 9.2 acre facility in Costa Mesa, California;

•  an 85,000 square foot facility in Tucson, Arizona;

•  a 6,000 square foot facility in Inglewood, California; and

•  a 3,500 square foot facility in Henley-on-Thames, England.

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      In the Aerospace segment, main engine fuel pumps and some models of our airframe fuel pumps are manufactured, repaired and overhauled at our Cleveland, Ohio facility. The remaining Aerospace segment products are manufactured, repaired and overhauled in our Costa Mesa facility. The Inglewood, California facility is exclusively an overhaul and repair shop for our main engine fuel pump products.

      In the Industrial segment, all products are manufactured in the Costa Mesa facility with three exceptions: (i) hose products, which are manufactured in our Tucson facility; (ii) the AvR2000 airport fuel management system, which is produced at our Henley-on-Thames, England facility; and (iii) industrial and marine gas turbine products, which are manufactured at our Cleveland facility. Repair and overhaul of Industrial segment products is conducted in our Cleveland and Costa Mesa facilities.

      Most of the products at our Cleveland facility are manufactured internally. This facility houses our senior management and the majority of our Aerospace engineering and design staff, sales team and production and main distribution facilities. This facility is organized around manufacturing “cells” that produce bearings, gears, housings and shafts for assembly. By creating cells, the necessary people, machinery, materials and methods are focused on distinct products and processes. Each manufacturing cell includes members from each of the Manufacturing, Quality, Production Control, Statistical Process Control and Manufacturing Engineering disciplines. Our design engineering staff is also organized into cells which correspond to and complement the manufacturing cells. The manufacturing and engineering cells work together to achieve the timely design and production of our products.

      In contrast to our substantial reliance on internal manufacturing of products in Cleveland, we outsource most of the machining and pre-assembly production of products in Costa Mesa to external providers. However, we do maintain internal equipment capacity at our Costa Mesa facility, which enables us to produce small quantity, quick turn components to reduce setup/breakdown times on smaller jobs and for the manufacturing control of key parts. We have lowered the cost of products manufactured in Costa Mesa by outsourcing capital intensive tasks such as casting and machining, while completing final assembly and testing on the premises.

      Most of the hose products sold by our Tucson facility are manufactured internally. The software relating to the AvR2000 airport fuel management system is written internally at our Henley-on-Thames facility, while the hardware relating to the system is sourced from two third parties.

      In addition to our manufacturing facilities, we maintain sophisticated testing facilities at our Cleveland and Costa Mesa locations. These testing facilities allow for simulation of typical conditions and stresses that will be experienced by our products during use. Our products are also thoroughly tested for design compliance, performance and durability. To facilitate quality control and product development, we maintain a sophisticated chemistry and metallurgy laboratory at our Cleveland facility.

      We have obtained and preserved its quality management system certifications. ISO-9001:2000 and AS 9100 Revision A certifications are recognized by most of our customers, as well as by the Federal Aviation Administration and U.S. government supply organizations.

Intellectual Property

      We rely on intellectual property, including a number of trade secrets, trademarks and patented and unpatented technology, to operate our business. We will continue to dedicate technical resources toward the further development of proprietary products and processes to maintain our competitive position in the markets we serve. Although we consider our intellectual property rights to be valuable, we do not believe that the loss of any such rights would have a material adverse effect on us.

Government Regulations

      The commercial aerospace industry is highly regulated by the Federal Aviation Administration in the United States, the Joint Aviation Authorities in Europe and the Civil Aviation Authority in England, while the military aerospace industry is governed by military quality (MIL or ISO-9000) specifications. We are required to be certified by one or more of these entities and, in some cases, by individual OEMs, in order to

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engineer and service parts and components used in specific aircraft models. We must also satisfy the requirements of our customers, including OEMs and airlines, that are subject to Federal Aviation Administration regulations, and provide these customers with products that comply with the government regulations applicable to commercial flight operations. In addition, the Federal Aviation Administration requires that various maintenance routines be performed on aircraft components. We currently satisfy or exceed these maintenance standards in our repair and overhaul activities. We maintain repair stations approved by the Federal Aviation Administration at our Cleveland, Ohio, Costa Mesa, California and Inglewood, California facilities.

      Our aviation and metals operations are also subject to a variety of worker and community safety laws. The Occupational Safety and Health Act of 1970 (“OSHA”), mandates general requirements for safe workplaces for all employees. In addition, OSHA provides special procedures and measures for the handling of certain hazardous and toxic substances. We believe that our operations are in material compliance with OSHA’s health and safety requirements.

Competition

      Competition among aerospace component manufacturers is based on engineered solutions, product quality, customer support, pricing and on-time delivery. Competitors in the Aerospace segment are primarily divisions of large corporations. Virtually all of our competitors have significantly greater financial resources than we do. Our primary competitors in the Aerospace segment include Eaton, Goodrich, Hamilton Sundstrand, Intertechnique and Parker-Hannifin. In the Industrial segment, competition varies by product, but is typically based on engineered solutions, price, product quality and on-time delivery. Our primary competitors in the Industrial segment include Ebara, Nikkiso and Meggitt.

Backlog

      We believe that unfilled orders are not necessarily an indicator of future shipment levels of our products. As customers demand shorter lead times and flexibility in delivery schedules, they have also revised their purchasing practices. As a result, notification of firm orders may occur only within 30 to 60 days of delivery. In addition, due to the government funding process, backlog can vary on a period-to-period basis depending on the stage of completion of the contracts represented by such backlog. Therefore, we believe that the backlog of unfilled orders at fiscal year end cannot be relied upon as a valid indication of our sales or profitability in a subsequent year.

Development Expense Trends

      In connection with new aerospace product development programs, we incur significant research and development expenditures to design, test and qualify main engine fuel pumps and accessories for engine and airframe OEMs. Research and development expenditures are expensed as incurred, and such expenses are expected to continue at historical levels. Research and development expense was $12.8 million, $11.9 million and $9.5 million for fiscal 2005, 2004 and 2003, respectively.

Employees

      As of December 23, 2005, we had 729 full-time employees, of which 416 are salaried and 313 are hourly. The 186 hourly employees located at our Cleveland facility are represented by the UAW under a collective bargaining agreement that will expire on March 31, 2008.

Environmental Matters

      Our operations are subject to a number of national, state and local environmental laws in the United States and other countries, and to regulation by government agencies, including the U.S. Environmental Protection Agency. Among other matters, these regulatory authorities impose requirements that regulate the emission, discharge, generation, management, transportation and disposal of pollutants and hazardous substances. These authorities may require response actions to hazardous substances which may be or have

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been released to the environment, and require us to obtain and maintain permits in connection with our operations. This extensive regulatory framework imposes significant compliance burdens and risks.

      Although we seek to maintain our operations and facilities in compliance with applicable environmental laws, there can be no assurance that we have no violations, or that changes in such laws, regulations or interpretations of such laws or in the nature of our operations will not require us to make significant additional expenditures to ensure compliance in the future. Currently, we do not believe that we will have to make material capital expenditures for our operations to comply with environmental laws or regulations of which we are aware, or to incur material costs for environmental remediation during the 2006 fiscal year.

      Our Cleveland facility is currently the subject of environmental remediation activities. The cost of these activities is the responsibility of TRW, now a subsidiary of Northrop Grumman, under the terms of the purchase agreement by which we acquired TRW’s Power Accessories Division in 1986. Remediation has been underway since 1989 and is expected to continue for the foreseeable future. TRW has funded all necessary remediation costs, and while there can be no assurance, we expect that TRW will continue to do so in the future. We estimate that TRW has spent in excess of $15 million for environmental remediation at our Cleveland facility. Although the TRW remediation has been reasonably comprehensive and covers, among other things, groundwater at the facility, there may be areas of contamination at our Cleveland facility that are not being addressed by TRW.

      The TRW purchase agreement also requires TRW to indemnify us for:

•  costs associated with third party environmental claims relating to environmental conditions arising from activities conducted by TRW during its operation of its Power Accessories Division that have not been conducted by us after our purchase of the assets of the division in 1986; and

•  until October 19, 2006, a portion of the costs associated with third party environmental claims arising from activities conducted by both TRW and us, the portion of the costs to be paid by each party being determined based on the length of time each party conducted the activity giving rise to the claim. After that date, we are responsible for all such costs.

      We have received no third party environmental claims relating to the Cleveland facility.

      In March 1986, a two thousand gallon underground storage tank was removed from our Costa Mesa facility. Petroleum hydrocarbon soil contamination was discovered during the removal of the tank, prompting the Orange County Health Care Agency to require a site assessment. Subsequent site investigations revealed that groundwater underlying the site is impacted by trichloroethene and perchloroethylene. In 1990, the Regional Water Quality Control Board issued a Cleanup and Abatement Order to J.C. Carter Company, Inc. (which we acquired in 1997 and now operate as a wholly-owned subsidiary named Argo-Tech Corporation Costa Mesa) relating to the investigation and remediation of groundwater contamination. By virtue of our acquisition of Carter, Carter’s responsibility for satisfying the cleanup order could affect us. However, we have obtained indemnification from Carter’s selling stockholders for, among other things, all costs and expenses related to satisfaction of the order. As a result, since our acquisition of Carter, we have not paid any material portion of these costs and expenses. This indemnification does not expire. However, there can be no assurance that the indemnification obligations with respect to the cleanup order will continue to be satisfied by the selling stockholders. See “Item 1A. Risk Factors — We have potential exposure resulting from environmental matters.”

Item 1A. Risk Factors.

      From time to time, information we provide, statements by our employees or information included in our filings with the Securities and Exchange Commission may contain forward-looking statements that are not historical facts. Those statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, and our future performance, operating results, financial position and liquidity, are subject to a variety of factors that could materially affect results, including those described below. Any forward-looking statements made in this report or otherwise speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of

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results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

      You should carefully consider each of the risks and uncertainties we describe below and all of the other information in this report. The risks and uncertainties we describe below are not the only ones we face. Additional risks and uncertainties of which we are currently unaware or that we currently believe to be immaterial may also adversely affect our business.

Our sales and earnings are dependent on conditions in the airline industry, and a significant or prolonged downturn in the airline industry or a future terrorist attack would decrease the airline industry’s demand for our products and reduce our sales.

      Financial losses and reduced schedules in the U.S. airline industry have resulted, and will continue to result, in reduced orders and delivery delays of new commercial aircraft, parking and retirement of older aircraft (eliminating those aircraft from maintenance needs and making spare parts from those aircraft available) and delays in airlines’ purchases of aftermarket parts and service as maintenance is deferred. The weakness in the U.S. airline industry may continue with several carriers filing for bankruptcy protection, which may result over a period of years in contraction in the number of aircraft in the U.S. fleet and less demand for our products. In fiscal 2005, strength in the global aviation industry, particularly in China and the Middle East, has partially offset weakness in the U.S. aviation industry, but there can be no assurance that this trend will continue. This will continue to depress Argo-Tech’s Aerospace segment sales of aftermarket components and reduce our income and cash flow until such time as conditions in the commercial aerospace industry improve.

      The recovery of the global aviation industry and any recovery in the U.S. aerospace industry continues to depend on continuing improvement in the U.S. and global economies. Additionally, the occurrence of future terrorist attacks, the impact of the war in Iraq, continuing and further increases in fuel costs and further outbreaks of infectious diseases such as the Severe Acute Respiratory Syndrome (SARS) virus in 2003 could delay these recoveries. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the adverse impact that these factors have had on our results of operations.

The aerospace industry is subject to significant government regulation and oversight and failure to comply with these regulations could increase the cost of operating our business.

      The aerospace industry is highly regulated in the United States and in other countries. We must be certified or accepted by the Federal Aviation Administration, the United States Department of Defense and similar agencies in foreign countries and by individual OEMs in order to sell and service parts and components used in specific aircraft models. If material certifications, authorizations or approvals are revoked or suspended, our operations will be adversely affected. In the future, new and more demanding government regulations may be adopted or industry oversight may be increased. We may have to incur significant additional costs to achieve compliance with new regulations or to reacquire a revoked or suspended approval, which could reduce our profitability.

We compete with a number of established companies, virtually all of which have significantly greater financial, technological and marketing resources than we do. We may not be able to compete effectively with these companies, which could adversely affect our business and financial condition.

      The aerospace industry is a highly competitive global industry that has experienced significant consolidation in recent years. This consolidation has caused, and its continuation will continue to amplify, the pricing pressures discussed in the risk factor below regarding the concentration of customers for our products. Our continuous improvement program to enhance operating efficiencies may not achieve cost savings and operational improvements or if those savings and improvements are not sufficient, we may not be able to compete favorably in the future with other larger, consolidated competitors. Competition among aerospace component manufacturers is based on engineered solutions, product quality, customer support, pricing and on-time delivery. In the Industrial segment, competition varies by product, but is typically based on engineered

9

solutions, price, product quality and on-time delivery. We may not be able to compete with our competitors, which are typically divisions of large corporations that have significantly greater financial resources than we do. In addition, some suppliers have obtained, and continue to obtain, PMA from the Federal Aviation Administration to manufacture and sell various Argo-Tech components in the aerospace aftermarket, which has increased the level of competition in this significant portion of our business. While we have attempted to respond to this competition, a significant increase in PMA certifications, either domestically or abroad, for our products would have an adverse effect on our results of operations.

If we are unable to meet future capital requirements or to continue our research and development activities, or recoup some of our capital and research and development expenditures, our competitive position may suffer.

      In securing new business, we are typically required to expend significant amounts of capital for engineering, research and development, tooling and other costs. Generally, we seek to recoup these costs through pricing and aftermarket revenues over time, but we may be unsuccessful due to competitive pressures and other market constraints, or due to the terms of our contracts. Although we believe that we will be able to fund these expenditures through cash flow from operations and borrowings under our credit facility, we cannot assure that we will have adequate funds to make all the necessary capital and research and development expenditures or that the amount of future expenditures will not be materially in excess of our anticipated expenditures. If we are unable to make necessary capital and research and development expenditures or to continue our research and development activities, our business and our competitive position will materially suffer.

      In addition, there are a limited number of commercial main engine fuel pump platforms launched each year. Because these programs result in long-term supply contracts and generate significant aftermarket revenues during the long lifetime of the program, it is very important to our business and future profitability that we are named the main engine fuel pump supplier on some of these programs. If the programs we are selected on are not successful or if actual orders are less than our estimates, our business and competitive position would suffer.

There are a limited number of customers for certain products, and the loss of a significant customer would reduce demand for our products and reduce our sales and cash flows.

      Because of the importance of a few large customers and the high degree of concentration of OEMs in the aerospace industry, our business is exposed to a high degree of risk related to customer concentration. In fiscal 2005, our ten largest customers accounted for approximately 49.3% of our net revenues. A loss of significant business from, or adverse performance by, any of these customers would be harmful to our cash flows.

      Due to the relatively small number of customers in the aerospace industry, customers, particularly OEM customers, are often able to influence prices and other terms of sale for certain of our products. There is substantial and continuing pressure from OEMs in the aerospace industry to reduce costs, including costs associated with outside suppliers like us. We attempt to resist downward pricing pressure, while trying to preserve our business relationships with these customers, but we are not always successful. At the same time, it is difficult for us to offset these downward pricing pressures through alternative, less costly sources of raw materials as discussed below under “— Our business and profitability is affected by the price and continuity of supply of certain necessary raw materials and component parts.” We cannot assure you that we will not be materially and adversely affected by these substantial and continuing pricing pressures.

We have fixed-price contracts with some of our customers, and we bear the risk of costs in excess of our estimates.

      We have entered into multi-year, fixed-price contracts with some of our OEM customers, where we have agreed to supply our products for a fixed price and, accordingly, realize all the benefit or detriment resulting from any decreases or increases in the costs of making these products. Sometimes we accept a fixed-price contract for a product that we have not yet produced, which increases the risks of delays or costs in excess of

10

our estimates. The costs that we incur in fulfilling these contracts may vary substantially from our original estimates.

      Most of our contracts do not permit us to recover for increases in raw material, energy or other input prices, taxes, labor costs or other inflationary effects, although some contracts provide for renegotiation to address certain material adverse changes. Any increase in those costs is likely to have an adverse effect on our results of operations.

A significant portion of our sales is, and is expected to continue to be, from government contracts that are subject to reductions in defense spending, government regulation and risks particular to government contracts. The termination of any of our government contracts would reduce demand for our products and reduce our sales.

      Approximately 35% of our sales in fiscal 2005 were related to U.S. designed military products. In addition, foreign military sales are affected by U.S. government regulations, regulations by the purchasing foreign government and political uncertainties in the U.S. and abroad. The U.S. defense budget has fluctuated in recent years. Although we have experienced increased military sales as a result of military actions in Iraq and Afghanistan, there can be no assurance that the U.S. defense budget will not decline or that sales of defense-related items to foreign governments will continue at present levels. A significant disruption or decline in U.S. military expenditures in the future would materially decrease our military sales. In addition, we are subject to risks particular to contracts with the U.S. government. These risks include the ability of the U.S. government to unilaterally:

•  suspend us from receiving new contracts pending resolution of alleged violations of procurement laws or regulations;

•  terminate existing contracts, with or without cause, at any time;

•  reduce the value of existing contracts;

•  audit our contract-related costs and fees, including allocated indirect costs; and

•  control or potentially prohibit the export of our products, technology or other data.

Any unexpected termination of a significant government contract would reduce our sales and profitability.

A large and growing portion of our revenue is derived from international sources, which exposes us to additional uncertainty.

      Approximately 44.9% of our fiscal 2005 net revenue was derived from shipments to destinations outside of the United States and Canada. Sales outside of the United States and Canada are subject to other various risks, including:

•  governmental embargoes or foreign trade restrictions on anti-dumping duties;

•  changes in U.S. and foreign governmental regulations;

•  tariffs;

•  other trade barriers;

•  the potential for nationalization of enterprises;

•  economic downturns;

•  inflation;

•  environmental laws and regulations;

•  political, economic and social instability; and

•  difficulties in receivable collections and dependence on foreign personnel and foreign unions.

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Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry.

      We are substantially leveraged. As of October 29, 2005, the principal and interest owing on our indebtedness was $269.1 million, excluding the fair market value adjustment of our 9¹/4% senior notes required by purchase accounting under generally accepted accounting principles in connection with the Merger. Our substantial degree of leverage could have important consequences, including the following:

•  it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes;

•  a substantial portion of our cash flows from operations will be dedicated to payments on our indebtedness and will not be available for other purposes, including our operations, capital expenditures and future business opportunities;

•  the debt service requirements of our indebtedness could make it more difficult for us to satisfy our financial obligations, including those related to the notes;

•  certain of our borrowings, including borrowings under the credit facility, are, and are expected to continue to be, at variable rates of interest, exposing us to the risk of increased interest rates;

•  it may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that have less debt; and

•  it may increase our vulnerability to a downturn in general economic conditions or in our business, and may make us unable to carry out capital spending and research and development activities that are important to our growth.

Two majority holders control our parent company.

      The Sponsors, through their majority ownership of VGAT, have the indirect power to elect our directors, to appoint members of management and to approve all actions requiring the approval of the holders of our common stock, including adopting amendments to our certificate of incorporation and approving mergers, acquisitions or sales of all or substantially all of our assets. In addition, significant decisions affecting our capital structure, including decisions to issue additional capital stock, implement stock repurchase programs and declare dividends, will require the approval of the Sponsors.

      The interests of the Sponsors could conflict with the interests of our debtholders. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of the Sponsors as our ultimate controlling stockholders might conflict with debtholders’ interests. The Sponsors also may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to our debtholders. For example, the Sponsors could cause us to make acquisitions that increase the amount of indebtedness that is secured or senior to our existing debt or sell revenue generating assets, which may potentially impair our ability to make payments under the existing debt. Furthermore, the Sponsors may in the future own businesses that directly or indirectly compete with ours. They may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.

We depend on the skill and experience of our senior management.

      Our success depends upon the efforts, abilities, experience and expertise of our senior management team. Our senior managers have extensive experience in our industry and with our business products and customers. There is competition for these kinds of personnel in the aerospace industry. In connection with the Merger, certain of our senior managers retired or otherwise left our employ. For example, Frances St. Clair, Executive Vice President, Chief Financial Officer and Director of Holdings and Argo-Tech, resigned as an officer and director of Holdings and Argo-Tech effective upon completion of the Merger. The failure to retain and/or

12

recruit additional or substitute senior managers and/or other key employees could have a material adverse effect on us.

Our operations depend on maintaining a skilled work force and any interruption in the work force at our facilities or those of OEMs and their suppliers could have a material adverse effect on our results of operations and financial condition.

      Because we maintain a relatively small inventory of finished goods, and because the aerospace industry operates on relatively long production lead times, an interruption of our work force due to strikes, work stoppages, shortages of appropriately skilled production and professional workers or other interruption could materially and adversely impact our results of operations.

      Our operations are highly dependent on an educated and trained work force. All of our hourly employees at our Cleveland facility are represented by the United Auto Workers (“UAW”) union under a collective bargaining agreement that will expire on March 31, 2008.

      Many OEMs and their suppliers also have unionized work forces. Work stoppages or slowdowns experienced by OEMs or their suppliers could result in slowdowns or closures of assembly plants where our products are included in assembled aircraft. Any interruption experienced by OEMs or their suppliers could result in cancellations, reductions or delays in orders by our customers, which could reduce demand for our products and reduce our sales.

Our business and profitability is affected by the price and continuity of supply of certain necessary raw materials and component parts.

      We rely on one supplier for CPM-10V, a powdered metal used in the manufacture of certain pump components. If we were unable to obtain adequate supplies of CPM-10V at commercially reasonable prices, our operations relating to these pump components would be interrupted. Increased costs associated with supplied materials or components could increase our costs of production and could reduce our profitability if we are unable to make corresponding increases in the prices of our products. We maintain a relatively small inventory of raw materials and component parts, and our business would suffer if supply is reduced or terminated by our suppliers. Although we believe that alternative suppliers, or alternate materials or components, could be identified, the lengthy and expensive Federal Aviation Administration and OEM certification process associated with aerospace products could prevent efficient replacement of a material or supplier and could have a negative effect on our business and profitability.

We depend on our Cleveland, Ohio and Costa Mesa, California facilities.

      We believe that our success to date has been, and future results of operations will be, dependent in large part upon our ability to manufacture and deliver products promptly upon receipt of orders and to provide prompt and efficient service to our customers. As a result, any disruption of our day-to-day operations could have a material adverse effect on our business, customer relations and profitability. Our Cleveland, Ohio and Costa Mesa, California facilities are the primary production, research and marketing facilities for our products, and the Cleveland facility also serves as our corporate headquarters. These functions are critical to our business, and a fire, flood, earthquake or other disaster or condition that damaged or destroyed either of those facilities could disable them. Any such damage to, or other condition interfering with the operation of, these facilities would have a material adverse effect on our business, financial position and results of operations.

We have potential exposure resulting from environmental matters.

      Our business operations and facilities are subject to a number of federal, state, local and foreign laws and regulations that govern the discharge of pollutants and hazardous substances into the air and water as well as the handling, storage and disposal of such materials and other environmental matters. Compliance with such laws is a significant obligation for us at each of our facilities. We would be subject to serious consequences, including fines and other sanctions, and limitations on our operations due to changes to, or revocations of, the

13

environmental permits applicable to our facilities if we fail to comply. Environmental laws and regulations where we operate may become more strict in the future. This could result in increased compliance costs and increased risk of fines and sanctions for violations.

      Under certain environmental laws, liability associated with investigation or remediation of hazardous substances can arise at a broad range of properties, including properties currently or formerly operated by an entity, as well as properties to which an entity sent hazardous substances or wastes for treatment, storage, or disposal. Costs and other obligations can arise from claims for toxic torts, natural resources and other damages, as well as the investigation and clean up of contamination at such properties. Under certain environmental laws, such liability may be imposed jointly and severally, so a party may be responsible for more than its proportionate share and may even be responsible for the entire liability at issue. The extent of any such liability can be difficult to predict.

      Our operations at some of our properties involve hazardous materials. Our Cleveland and Costa Mesa facilities are currently the subject of environmental remediation regarding contamination resulting from the operations of our predecessors. Those predecessors have indemnified us for substantially all such remediation costs at each site. We cannot assure you, however, that those parties will continue to satisfy their indemnification obligations or that we would not be ultimately responsible at either or both of these sites for potentially significant environmental liabilities. In addition, we cannot assure you that additional contamination, either at one or both of these sites or at other locations, will not be identified in the future that could result in significant liabilities and obligations to us.

We have a potential risk of product liability and warranty claims.

      Our operations expose us to potential liabilities for personal injury or death as a result of the failure of an aircraft component that has been designed, manufactured or serviced by us, or the irregularity or failure of metal products we have processed or distributed. In an effort to improve operating margins, some customers have delayed the replacement of parts beyond our recommended lifetime, which may undermine aircraft safety and increase our risk of liability.

      We believe that our liability insurance is adequate to protect us from future product liability claims. However, we cannot assure you that we will not experience any material product liability losses in the future, that we will not incur significant costs to defend such claims or that our insurance coverage will be adequate if claims were to arise. A successful claim brought against us in excess of our available insurance coverage may have a material adverse effect on our business. In addition, our liability coverage may become more restrictive and/or increasingly costly, and there can be no assurance that we will be able to maintain insurance coverage in the future at an acceptable cost or at all.

      In the ordinary course of our business, contractual disputes over warranties can arise. In most cases, financial responsibility for warranty costs is contractually retained by our customer so long as the customers’ specifications are met, but we may nonetheless be subjected to requests for cost sharing or pricing adjustments as a part of our commercial relationship with the customer.

We may be unable to identify attractive acquisition candidates, successfully integrate our acquired operations or realize the intended benefits of our acquisitions.

      One of our business strategies is to pursue targeted complementary product line or business acquisition opportunities. We intend to evaluate potential acquisitions and engage in discussions with acquisition candidates. We cannot assure that suitable acquisition candidates will be identified and acquired in the future or that we will be able to accomplish our strategic objectives as a result of any acquisition. Our ability to finance acquisitions may be constrained by our high degree of leverage. Our credit facility, our 9¹/4% senior notes and the terms of our parent company’s senior discount notes may significantly limit our ability to make acquisitions and incur indebtedness in connection with the acquisitions. We cannot assure you that our acquisition strategies will be successfully received by customers or achieve their intended benefits. We will encounter various risks in acquiring other product lines or businesses, including the possible inability to

14

integrate an acquired product line or business into our operations, diversion of management’s attention and unanticipated problems or liabilities, some or all of which could adversely affect us.

We have only a limited ability to protect our intellectual property rights, which are important to our success.

      Our success depends, in part, upon our ability to protect our proprietary technology and other intellectual property. We rely upon a combination of trade secrets, confidentiality policies, nondisclosure and other contractual arrangements and patent, copyright and trademark laws to protect our intellectual property rights. The steps we take in this regard may not be adequate to prevent or deter challenges, reverse engineering or infringement or other violation of our intellectual property, and we may not be able to detect unauthorized use or take appropriate and timely steps to enforce our intellectual property rights. In addition, the laws of some countries may not protect and enforce our intellectual property rights to the same extent as the laws of the United States.

Our inability to lease space in our Cleveland, Ohio business park would adversely affect our results of operations and cash flows.

      Our results of operations and cash flows would be adversely affected if we were to become unable to continue leasing a significant portion of our Cleveland, Ohio business park. We currently lease approximately 64% of the available leasable space at our business park. Our ability to sustain our current and historical occupancy levels depends on many factors, including the condition of the industrial economy in Northeast Ohio. The Cleveland real estate market has been impacted by a continuing local economic downturn. In addition, one tenant did not renew its lease with respect to a portion of its leased space and has moved out. As a result, we expect our net revenues and Adjusted EBITDA will decrease by approximately $1.6 million and $0.6 million, respectively, for fiscal 2006 from fiscal 2005. Currently, we are unable to determine whether we will be able to lease such space on favorable terms or at all. Our failure to lease space in our business park on favorable terms or at all would adversely affect our results of operations and cash flows.

Item 1B. Unresolved Staff Comments.

      Not applicable.

Item 2. Properties.

      We own and operate a 150-acre business park in Cleveland, Ohio, which includes 1.8 million square feet of engineering, manufacturing and office space. We occupy approximately 475,000 square feet for our main engine and airframe fuel pump businesses and lease approximately 800,000 square feet of the facility to third parties. Beginning in January 2006, we expect to lease approximately 650,000 square feet of the facility to third parties. We believe that this facility’s machinery, plants and offices are in satisfactory operating condition. We also believe that we have sufficient capacity to meet our foreseeable future needs without significant additional capital expenditures.

      We also own a 9.2-acre facility in Costa Mesa, California, which encompasses 165,000 covered square feet. We manufacture certain of our Aerospace airframe and aerial refueling products and accessories, and Industrial ground fueling and cryogenic products equipment at this facility. We believe that our Costa Mesa facility has sufficient capacity to permit further growth in those product lines without significant additional capital expenditures.

      Our leased facility in Tucson, Arizona encompasses approximately 85,000 square feet and includes available space for expansion. We manufacture specialty industrial hose for aerospace, chemical transfer and marine applications at this facility. We believe this facility has sufficient capital and capacity to permit further growth in those product lines without significant additional capital expenditures.

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      Our Inglewood, California leased facility occupies approximately 6,000 square feet. Its primary purpose is to repair and overhaul main engine fuel pumps owned by airline customers. Inglewood’s assets include test stands for testing fuel pumps after overhaul and a small machine shop for simple rework of pump components.

      A leased facility at Henley-on-Thames, England occupies approximately 3,500 square feet. Its primary activities are the design, development and support of aviation refueling management systems.

Item 3. Legal Proceedings.

      We are not presently involved in any material legal proceedings. However, during the ordinary course of business, we are, from time to time, threatened with, or may become a party to, legal actions and other proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

      No matter was submitted to a vote of Holdings, our sole stockholder, during the fourth quarter of fiscal year 2005.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

      We are a wholly owned subsidiary of Holdings. Neither Holdings nor Argo-Tech has any equity securities that trade in an established public trading market or otherwise.

      We paid cash dividends totaling $3.1 million and $57.6 million to Holdings in fiscal years 2005 and 2004, respectively. Our ability to pay dividends to Holdings in the future is limited by the terms of the indenture pursuant to which our 9¹/4% senior notes were issued and the Amended Credit Facility. The indenture and credit facility contain certain optional and mandatory redemption features and other financial covenants, including restrictions on our ability to incur additional indebtedness, pay dividends or make other restricted payments to Holdings. However, the indenture permits certain payments to Holdings for, among other things, corporate administrative expenses not to exceed $500,000 per fiscal year and specified tax obligations.

      We have no equity compensation plans under which our securities are authorized for issuance.

Item 6. Selected Financial Data.

      The following table sets forth Argo-Tech’s selected historical consolidated financial data for the fiscal years 2001 through 2005, which have been derived from Argo-Tech’s audited consolidated financial statements for those periods. Argo-Tech’s fiscal year ends on the last Saturday in October and is identified according to the calendar year in which it ends. For example, the fiscal year ended October 29, 2005 is referred to as “fiscal 2005.” The 2004 fiscal year consisted of a 53-week period. All of the other fiscal years presented consisted of 52-week periods.

      The Merger closed on October 28, 2005. Operating results and cash flow information presented herein are considered “Predecessor” financial information. Balance sheet information as of October 30, 2004, October 25, 2003, October 26, 2002 and October 27, 2001 is also considered “Predecessor” financial information. The balance sheet information as of October 29, 2005 reflects a new basis of accounting incorporating the fair value adjustments made in recording the Merger while prior periods are presented using the historical cost basis of the Company. The information presented below should be read in conjunction with “Item 7.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this report.

		Fiscal Year Ended
					Predecessor			Predecessor			Predecessor			Predecessor
		October 29,			October 30,			October 25,			October 26,			October 27,
		2005			2004			2003			2002			2001
		(Dollars in thousands)
Operating results
	Net revenues	$	212,595		$	187,328		$	160,726		$	155,303		$	173,208
	Gross profit		87,740			78,125			66,191			66,634			79,033
	Selling, general and administrative		35,514			31,166			26,417			23,359			23,094
	Research and development		12,814			11,934			9,525			11,722			10,265
	Amortization of intangibles		3,414			3,414			3,414			3,721			7,515
	Merger expense		24,473			—			—			—			—
	Income from operations		11,525			31,611			26,835			27,832			38,159
	Interest expense		25,601			22,705			21,257			21,434			24,534
	Debt extinguishment expense		—			12,961			—			—			—
	Other, net		(109	)		(95	)		(529	)		(97	)		(51	)
	Income tax provision (benefit)		(7,768	)		(3,499	)		1,579			569			2,876
	Net income (loss)	$	(6,199	)	$	(461	)	$	4,528		$	5,926		$	10,800
Balance sheet data (at end of period):
	Cash and cash equivalents	$	13,889		$	15,857		$	14,057		$	17,769		$	8,057
	Total assets		588,506			254,262			255,797			260,333			273,574
	Working capital		73,324			41,963			34,934			33,352			35,904
	Total debt		269,062			264,813			219,349			235,045			253,380
	Debt fair market value adjustment(1)		10,000			—			—			—			—
	Redeemable ESOP stock, net(2)		—			40,957			14,612			8,835			13,994
	Stockholder’s equity/(deficiency)(3)		160,796			(110,976	)		(29,928	)		(31,633	)		(42,119	)
Other data:
	Adjusted EBITDA(4)	$	51,567		$	44,893		$	36,867		$	38,447		$	54,066
	Adjusted EBITDA margin(5)		24.3	%		24.0	%		22.9	%		24.8	%		31.2	%
	Net cash flows provided by operating activities	$	193		$	33,230		$	15,673		$	30,724		$	18,063
	Net cash flows used in investing activities		(4,376	)		(3,056	)		(1,939	)		(1,785	)		(1,885	)
	Net cash flows provided by (used in) financing activities		2,215			(28,374	)		(17,446	)		(19,227	)		(13,295	)
	Depreciation and amortization of intangibles and deferred financing fees		8,224			9,175			10,053			10,387			15,214
	Capital expenditures		4,376			3,056			1,939			1,785			1,885
	Ratio of earnings to fixed charges(6)		—			—			1.3	x		1.3	x		1.6	x

(1)  Represents the estimated amount to adjust the $250,000,000 of the 9¹/4% senior notes to fair market value as of the closing date of the Merger, which will be amortized over the remaining life of the 9¹/4% senior notes. The unamortized amount of the fair market value adjustment has been added to the principal amount of the 9¹/4% senior notes for presentation in our financial statements.

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(2)	Redeemable ESOP Stock has been excluded from stockholder’s equity/(deficiency) due to the ability of holders of the ESOP Stock to “put,” subject to certain restrictions, the shares of ESOP Stock to Argo-Tech at the most recent valuation of our independent consulting firm. As a result of the Merger this requirement no longer exists.
(3)	Includes a dividend of $57.6 million to Holdings made in the third quarter of fiscal 2004 from the proceeds of our 91/4% senior notes.
(4)	“EBITDA” is net income plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA further adjusted to exclude ESOP compensation expense, amortization of purchase accounting, non-cash compensation/benefit cost, debt extinguishment expense, non-cash compensation expense related to granting of SARs on March 1, 2005, non-recurring Merger expense and a fixed asset write-off. EBITDA and Adjusted EBITDA do not represent, and should not be considered as alternatives to, net income or cash flows provided by operating activities, as determined by Generally Accepted Accounting Principles (“GAAP”), and our calculations thereof may not be comparable to that reported by other companies. EBITDA and Adjusted EBITDA are included in this report because they are a basis upon which we assess our liquidity position and because certain covenants in our borrowing arrangements are tied to similar measures. We also believe that it is widely accepted that EBITDA and Adjusted EBITDA provide useful information regarding a company’s ability to service and/or incur indebtedness. This belief is based on our negotiations with our lenders who have indicated that the amount of indebtedness we will be permitted to incur will be based, in part, on our EBITDA and our Adjusted EBITDA. EBITDA and Adjusted EBITDA do not take into account our working capital requirements, debt service requirements, tax payments, capital expenditures and other commitments and, accordingly, are not necessarily indicative of amounts that may be available for discretionary use. We believe that inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors.

		Fiscal Year Ended
					Predecessor			Predecessor		Predecessor		Predecessor
		October 29,			October 30,			October 25,		October 26,		October 27,
		2005			2004			2003		2002		2001
		(Dollars in thousands)
Net income (loss)		$	(6,199	)	$	(461	)	$	4,528	$	5,926	$	10,800
Add:
	Depreciation and amortization		7,069			7,213			7,601		8,329		13,074
	Interest expense(a)		25,601			22,705			21,257		21,434		24,534
	Income tax provision (benefit)		(7,768	)		(3,499	)		1,579		569		2,876
EBITDA		$	18,703		$	25,958		$	34,965	$	36,258	$	51,284
Add:
	ESOP compensation expense(b)		5,040			4,851			1,874		1,344		2,091
	Amortization of purchase accounting(c)		—			—			28		259		4
	Non-cash compensation/benefit cost(d)		3,351			1,123			—		586		526
	Debt extinguishment expense(e)		—			12,961			—		—		—
	Merger expense(f)		24,473
Fixed asset write-off			—			—			—		—		161
Adjusted EBITDA		$	51,567		$	44,893		$	36,867	$	38,447	$	54,066

(a)	Interest expense includes the amortization of deferred financing fees.
(b)	Represents the value of the shares committed to be released by the ESOP trustee under the ESOP’s provisions for allocation to participants and recognized as a non-cash compensation expense, excluding ESOP compensation expense of $3,413 recorded in connection with the Merger and included in Merger expense.

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(c)	Represents the incremental depreciation relating to plant and equipment written up to its fair market value under purchase accounting applied to the acquisition of Argo-Tech Corporation Costa Mesa (formerly J.C. Carter Company, Inc.). Such amortization is included in cost of sales.
(d)	In fiscal year 2001, this represents the non-cash expense related to the remeasurement of the stock option plans whose expiration date was extended. In fiscal year 2002, this represents the non-cash expense related to a salary early retirement program. In fiscal year 2004, this represents the non-cash compensation expense related to our ESOP Excess Benefit Plan. In fiscal year 2005, this represents $404 of non-cash compensation expense related to our ESOP Excess Benefit Plan, $2,521 of non-cash compensation expense related to the granting of SARs and $426 of non-cash expense related to the hourly employee early retirement program.
(e)	Represents the write-off of deferred financing fees associated with the refinancing of our 85/8% senior subordinated notes and the amendment and restatement of our credit agreement in June 2004, amounts paid for the tender, consent and redemption of our senior subordinated notes and the recognition of the remaining accretion on a portion of our senior subordinated notes that were issued at a discount.
(f)	Represents non-recurring expense associated with the Merger consisting of stock compensation cost, ESOP Excess Benefit Plan cost, and severance and stay payments.

      The following table reconciles Adjusted EBITDA to net cash flow from operating activities:

					Predecessor			Predecessor			Predecessor			Predecessor
		October 29,			October 30,			October 25,			October 26,			October 27,
		2005			2004			2003			2002			2001
		(Dollars in thousands)
	Adjusted EBITDA	$	51,567			44,893			36,867			38,447			54,066
	Change in operating assets and liabilities		(6,376	)		8,424			(590	)		14,973			(6,559	)
	Interest expense		(25,601	)		(22,705	)		(21,257	)		(21,434	)		(24,534	)
	Merger expense		(24,473	)
	Income tax benefit (provision)		7,768			3,499			(1,579	)		(569	)		(2,876	)
	All other adjustments		(2,692	)		(881	)		2,232			(693	)		(2,034	)
Net cash provided by operating activities		$	193		$	33,230		$	15,673		$	30,724		$	18,063

(5)

Adjusted EBITDA margin is computed as Adjusted EBITDA as a percentage of net revenues.

(6)

For purposes of determining the ratio of earnings available to cover fixed charges, earnings consist of income before taxes plus fixed charges. Fixed charges consist of interest on indebtedness including amortization of deferred financing fees and fixed loan guarantee fees. No ratio is presented for the fiscal years ended October 29, 2005 and October 30, 2004 as the earnings for those periods were $13,967,000 and $3,960,000 less than the fixed charges, respectively.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

      The following discussion of financial condition and results of operations should be read together with “Selected Financial Data,” Argo-Tech’s consolidated financial statements and the notes to those statements and other financial information included elsewhere in this report. Is this section references to “Argo-Tech,” “the Company,” “we,” “us”, or “our” are to Argo-Tech Corporation, together with its subsidiaries. References to “Holdings” are to AT Holdings Corporation, which holds all of the outstanding capital stock of Argo-Tech. The Merger closed on October 28, 2005. Any operating results or cash flow information presented herein is considered “Predecessor” financial information. Balance sheet information as of October 30, 2004 and October 25, 2003 is also considered “Predecessor” financial information. The balance sheet information as of October 29, 2005 reflects a new basis of accounting incorporating the fair value adjustments made in recording the Merger while prior periods are presented using the historical cost basis of the Company. This report contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those indicated in the forward-looking statements. See Risk Factors in Item 1A for more information regarding forward-looking statements.

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Overview

      We are a global designer, manufacturer and servicer of high performance fuel flow devices and systems. We operate in two business segments, Aerospace and Industrial. The Aerospace segment consists of aircraft engine fuel pumps and other engine products, commercial and military products and systems found on a plane’s airframe, and aerial refueling pumps and related equipment. The Industrial segment includes ground fueling nozzles, hoses and other ground fueling components, an automated fuel management system, cryogenic pumps and nozzles and the operation of a business park in Cleveland, Ohio. The Corporate segment primarily includes expenses not specifically identified or charged to the operating business segments for measurement of operating performance. These expenses include, but are not limited to, certain depreciation, early retirement expenses, and compensation related to SARs. Financial information by business segment can be found in Note 14 to the audited consolidated financial statements included elsewhere in this report.

      In fiscal 2005, the Aerospace segment generated approximately 73% of our net revenues and the Industrial segment generated approximately 27% of our net revenues. Approximately 66% of the aerospace revenues were derived from sales to commercial OEMs and commercial aftermarket customers, while military revenues represented approximately 34% of our aerospace revenues. Approximately 63% of the industrial revenues were derived from sales to commercial customers, while military customers represented approximately 37% of our industrial revenues.

      In fiscal 2005, sales to commercial OEMs represented approximately 26% of our commercial aerospace revenues. As is customary in the commercial aerospace industry, we incur substantial costs, for which we are generally not reimbursed, to design, test and qualify original equipment for OEMs. Once qualified, OEM products generally are sold at or below the cost of production in anticipation of receiving orders for commercial spare parts and overhaul activities at significantly higher margins. Most of our OEM sales are on a sole source basis; therefore, in most cases, we are the only OEM certified provider of these parts in the aftermarket. On average, a commercial aircraft will experience five to six main engine fuel pump overhauls over its 30-year life span. We have over 50 years of experience in most of our product lines which allows us to benefit from a large existing installed base.

      In contrast to the practice in the commercial aerospace industry, we are generally reimbursed for the design, test and qualification costs of equipment used on military aircraft. Military original equipment shipments generally are sold at cost plus a reasonable profit. Due to lower aircraft utilization, military aftermarket sales are less significant than commercial aftermarket sales. Aftermarket margins for military products are at a level higher than military original equipment shipments.

      The following is management’s discussion and analysis of certain significant factors which have affected Argo-Tech’s financial position and operating results during the periods presented in the accompanying consolidated financial statements. Argo-Tech’s fiscal year ends on the last Saturday of October and is identified according to the calendar year in which it ends

Recent Developments

Merger

      On October 28, 2005, Holdings consummated a merger with Vaughn Merger Sub, Inc. (“Vaughn”) in which Vaughn merged with and into Holdings (the “Merger”), with Holdings surviving as a wholly owned subsidiary of V.G.A.T. Investors, LLC (“VGAT”). Effective upon the completion of the Merger, Argo-Tech and Holdings entered into the Fourth Amended and Restated Credit Agreement (the “Amended Credit Facility”), dated as of September 13, 2005. The Amended Credit Facility provides for aggregate borrowings by Argo-Tech of up to approximately $59.1 million, comprised of senior secured loans of approximately $19.1 million, consisting of the term loans outstanding ($14.1 million) on the effective date of the Amended Credit Facility plus an additional $5.0 million term loan and loans under a senior secured revolving credit facility (the “Revolving Loans”) in an aggregate principal amount not to exceed $40.0 million. All loans under the Amended Credit Facility will mature on June 23, 2009.

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      On October 6, 2005, Argo-Tech commenced a solicitation (the “Solicitation”) of consents from holders of the 9¹/4% Senior Notes (the “Notes”) to modify the covenant in the Indenture dated June 23, 2004, by and among Argo-Tech, the guarantors named therein and The Bank of New York Trust Company, N.A. (formerly known as BNY Midwest Trust Company), as trustee (the “Indenture”) that (i) limits Restricted Payments (as defined in the Indenture) to permit Argo-Tech to make distributions of up to $5.0 million to Holdings in connection with the Merger, (ii) relates to the financial reporting obligations to provide that if Holdings executes and delivers an unconditional guarantee to Argo-Tech and the trustee with respect to all obligations and liabilities under the Indenture, then the financial reports and other information required by that covenant may be provided by Holdings (together, the “Indenture Amendments”), and (iii) waives the requirement that Argo-Tech make a Change of Control Offer (as defined in the Indenture) as a result of the Merger. The Solicitation expired on October 26, 2005. $172,240,000, or 68.9%, in aggregate principal amount of the Notes consented to the proposed amendments and waiver and Argo-Tech entered into a First Supplemental Indenture (the “Supplemental Indenture”) to the Indenture. As a result of the change in control of Holdings that occurred on October 28, 2005 in connection with the Merger, a Change of Control (as defined in the Indenture) occurred. Accordingly, on November 1, 2005, the Company made a Change of Control Offer, pursuant to which Argo-Tech offered to repurchase, for cash, all or part of the Notes, as to which a valid consent and waiver was not delivered in the Solicitation, at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest. No Notes were tendered and the Change of Control Offer expired at 5 pm on December 1, 2005.

      The cash merger consideration of approximately $164.7 million paid to Holdings’ former common stockholders, holders of in-the-money stock options and stock appreciation rights and the holder of the warrant to purchase Holdings common stock (including merger related expenses of approximately $4.6 million borne by the former stockholders of Holdings and excluding $11.2 million fair value of stock and stock options rolled over in connection with the Merger) and acquisition and financing fees and expenses of approximately $11.5 million was financed by: (1) an investment of $111.2 million by V.G.A.T. Investors, LLC, (2) $5.0 million term loan under the Amended Credit Facility, (3) $42.6 million of proceeds from the issuance by Holdings of $67.0 million in aggregate principal amount at maturity of 11³/4% Senior Discount Notes due 2012 and (4) the use of existing cash balances. The interest on the Senior Discount Notes, under an Indenture by and between Holdings and The Bank of New York Trust Company, will accrue in the form of an increase in the accreted value of such notes prior to October 15, 2009. Thereafter, cash interest will accrue and be payable semiannually on April 15 and October 15 of each year, commencing on April 15, 2010, at a rate of 11³/4%. These notes will be unsecured and will rank equally in right of payment with all Holdings’ existing and future senior debt and senior to all its existing and future subordinated debt. The Holdings notes will be effectively subordinated in right of payment to all Holdings’ existing and future secured debt, including its guarantee of debt under the Amended Credit Facility, to the extent of the value of the assets securing such debt. In addition, the Holdings notes will be structurally subordinated to all existing and future debt of Holdings’ existing and future subsidiaries, including Argo-Tech and Argo-Tech’s subsidiaries.

      The Merger was accounted for as a purchase and preliminary fair value adjustments to the Company’s assets and liabilities were recorded as of the date of the Merger. The Company is in the process of obtaining third-party valuations of certain tangible and intangible assets; thus, the allocation of the purchase price to the Company’s assets and liabilities is subject to adjustment.

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      The following table summarizes the preliminary fair values assigned to the Company’s assets and liabilities in connection with the Merger (in thousands):

Assets:
	Current assets	$	130,491
	Property, plant and equipment		41,970
	Goodwill		200,152
	Intangible assets		214,440
	Other assets		2
	Total assets	$	587,055
Liabilities:
	Current liabilities	$	56,313
	Long-term debt		264,063
	Other noncurrent liabilities		92,230
	Total liabilities		412,606
Purchase price allocated to Company		$	174,449

      The following table summarizes the unaudited, consolidated pro forma results of operations of the Company, as if the Merger had occurred at the beginning of each period presented (in thousands):

	Year ended			Year ended
	October 29,			October 30,
	2005			2004
Net sales	$	212,595		$	187,328
Loss from operations		(13,310	)		(17,936	)
Net loss		(19,716	)		(23,254	)

      The pro forma results of operations include the effects of the: (i) inventory purchase accounting adjustments that will be charged to cost of sales in the year following the transactions as the inventory on hand as of the date of the transactions is sold, (ii) additional amortization expense that will be recognized from the identifiable intangible assets recorded in accounting for the transactions, (iii) additional depreciation expense resulting from the write-up of the carrying value of property, plant and equipment to fair value, (iv) amortization of the write-up of the Notes to fair market value over the remaining life of the loan, (v) additional interest expense related to the increase in the Term Loan and related amortization expense and (vi) excluding expenses related to the Merger (discussed below). This pro forma information is not necessarily indicative of the results that actually would have been obtained if the transactions had occurred as of the beginning of the periods presented and is not intended to be a projection of future results.

      The Company’s results of operations for the period ended October 29, 2005 include a one-time charge of $24.5 million ($15.2 million after tax) that was recorded as a result of the Merger and consists primarily of stock compensation costs, ESOP excess benefit plan, severance and stay payments in connection with the Merger.

ESOP

      We established our Employee Stock Ownership Plan (the “ESOP”) on May 17, 1994 by purchasing 420,000 shares of common stock of Holdings with the proceeds of a $16.8 million ten-year loan funded through a credit facility that was refinanced on July 18, 1997. The term of the loan ended on April 28, 2004 and the loan was repaid in full. We contributed 21,000 shares of Holdings common stock to the plan in October 2004 and contributed 42,000 shares in September 2005. All of these 63,000 shares had been repurchased by Argo-Tech from plan participants who exercised their put option rights under the plan. The ESOP, which includes approximately 225 of our salaried employees, represented an ownership interest in

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Holdings of approximately 54% prior to the Merger (as defined below). GAAP requires that non-cash ESOP compensation expense and a corresponding increase in shareholders’ equity be recorded annually as shares held by the ESOP are allocated to participants and the loan made to the ESOP is repaid. GAAP also requires that this non-cash ESOP compensation expense be added back to net income in the determination of cash flow from operations. The aggregate amount of such non-cash ESOP compensation expense was $8.5 million (of which $3.4 million is included in Merger expense), $4.9 million and $1.9 million for fiscal 2005, fiscal 2004 and fiscal 2003, respectively. In fiscal 2005, 2004 and 2003, we were required to repurchase an aggregate of approximately $3.8 million, $0.6 million and $0.3 million, respectively, of redeemable ESOP stock which we purchased using available cash. Upon completion of the Merger, (i) the ESOP was amended to no longer be an employee stock ownership plan, (ii) the ESOP no longer held any Holdings common stock, and (iii) no additional shares of Holdings common stock will be contributed to it. Following completion of the Merger, we adopted an amendment to our 401(k) plan for salaried employees under which we will make cash contributions currently estimated to be approximately $1.3 million per year, in place of the obligation to repurchase shares of redeemable ESOP stock discussed above.

Stock Appreciation Rights (SARs)

      On March 1, 2005, we granted 45,200 SARs to certain full-time employees of Argo-Tech and its subsidiaries. Our directors and executive officers did not participate in the plan. The total number of SARs which could be granted pursuant to the amended 2004 Stock Appreciation Rights Plan, which was approved by the Board of Directors on December 7, 2004, could not exceed 50,000, except to the extent of certain authorized adjustments. The SARs vested 33¹/3% on the grant date and on each of the next two anniversary dates of the initial date (the date the value of the SAR is determined by the Board). Once vested and upon the earliest of: termination of employment for reasons other than cause, a change of control or ten years from the initial date, each SAR entitled the holder to a cash payment equal to the increase, if any, in the value of one share of Holdings common stock from the initial date to the date of payment. There is $2.5 million of SAR expense included in selling, general and administrative expenses for fiscal 2005. The Merger constituted a change of control under the SARs, and the holders of the SARs received a portion of the merger consideration in exchange for the cancellation of their SARs. The cancellation of the SARs resulted in additional compensation expense of $4.6 million in fiscal year 2005, which is included in Merger expense.

Refinancing

      On June 23, 2004, we issued the 9¹/4% Senior Notes and completed a refinancing of substantially all of our outstanding indebtedness and capital structure by:

•  purchasing through a tender offer our outstanding $195.0 million aggregate principal amount of senior subordinated notes due 2007, together with a premium of approximately $5.5 million and accrued and unpaid interest of approximately $4.0 million, and redeeming any of these notes that were not tendered;

•  redeeming all of Holdings’ outstanding Series A Cumulative Exchangeable Redeemable Preferred Stock at 100% of the $30.0 million liquidation preference, together with accrued and unpaid dividends of $27.6 million; and

•  restating $19.8 million of term loans outstanding under our then-existing senior credit facility, together with accrued and unpaid interest of $0.1 million.

The above transactions and the payment of associated fees and expenses are collectively referred to in this report as the “Refinancing.”

Argo Tracker

      Argo Tracker Corporation, another subsidiary of Holdings, owns an asset tracking technology that is currently in development. Argo-Tech provides the funding for the development of this technology through dividends to Holdings. Dividends to Holdings for these development expenses in fiscal 2005 and 2004 were $3.1 million and $0.9 million, respectively. These dividends were within the restrictions governing Argo-Tech’s

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ability to pay dividends or make other restricted payments to Holdings contained in both the indenture governing the 9¹/4% Senior Notes and the senior credit facility.

Other

      Following the September 11, 2001 terrorist attacks, the commercial aerospace industry experienced a significant downturn in both the OEM and aftermarket sectors. The major commercial airlines reduced their flying capacity by retiring older aircraft, parking underutilized aircraft and canceling or delaying the delivery of new aircraft. Additionally, many airlines deferred maintenance, which reduced the need for aftermarket services. The commercial aerospace industry continued its recovery in fiscal 2005. During fiscal 2005, commercial OEM and aftermarket revenues increased 15.8% and 15.9%, respectively compared to 2004. We anticipate that commercial OEM and aftermarket revenues will increase modestly in 2006. Military aerospace revenues increased 3.2% in fiscal 2005 due to demand for aftermarket products and services due to increased production on several OEM programs. We anticipate military revenues will remain steady in 2006. We also expect increased Industrial revenues in 2006 due to higher demand for our ground fueling and cryogenic products.

      Our fiscal year 2006 revenues and cash flows are forecasted to be higher than fiscal year 2005 due to continued improvement in the commercial aerospace industry and improved performance in our cryogenic products business, partially offset by increased development expenses related to new programs. We believe that we will be able to maintain our liquidity and remain in compliance with our debt covenants.

      This section includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. There can be no assurances that our current outlook will prove to be correct.

Critical Accounting Policies

      Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which enable the fair presentation of our financial position and results of operations. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies reflect its more significant estimates and assumptions used in the preparation of its consolidated financial statements.

      Revenue Recognition. Revenues are generally recognized when goods are shipped or services provided, at which time title and risk of loss passes to the customer. Substantially all sales are made pursuant to firm, fixed-price purchase orders received from customers. We have executed long-term supply agreements with certain of our OEM customers. These agreements require us to supply all the amounts ordered by the customers during the term of the agreements (generally three to five years) at specified prices. Under certain of these agreements, we expect to incur losses. Provisions for estimating losses on these contracts are made in the period in which such losses are identified based on cost and pricing information and estimated future shipment quantities provided by the customer. The cumulative effect of revisions to estimated losses on contracts is recorded in the accounting period in which the amounts become known and can be reasonably estimated. Such revisions could occur at any time there are changes to estimated future revenues or costs. Revenue from certain fixed price engineering contracts for which costs can be reliably estimated are recognized based on milestone billings. Variations in actual labor performance, changes to estimated profitability and final contract settlements may result in revisions to the cost estimates. Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the period of revision. We record estimated reductions to revenue for volume-based incentives based on expected customer activity for the applicable period. Revisions for volume-based incentives are recorded in the accounting period in which such estimates can be reasonably determined. We have a history of making reasonably dependable estimates

24

for estimated losses on contracts; however, due to uncertainties inherent in the estimation process, it is possible that actual results may vary from the estimates and the differences could be material.

      Valuation of Accounts Receivable and Allowance for Doubtful Accounts. We evaluate the collectibility of our trade receivables based on a combination of factors. We regularly analyze our customer accounts, and when we become aware of a specific customer’s inability to meet its financial obligation to us, such as in the case of bankruptcy filings, we immediately record a bad debt expense and reduce the related receivable to the amount we reasonably believe is collectible. We estimate the allowance for doubtful accounts based on the aging of the accounts receivable, customer creditworthiness and historical experience. Our estimate of the allowance amounts includes amounts for specifically identified losses and a general amount for estimated losses. The determination of the amount of the allowance for doubtful accounts is subject to significant of judgment and estimation by management. If circumstances change or economic conditions deteriorate, our estimates of the recoverability of receivables could be further adjusted.

      Valuation of Inventories. Our inventory purchases and commitments are made in order to build inventory to meet future shipment schedules based on forecasted demand for our products. Inventories are stated at the lower of cost or market, with cost being determined on the first-in, first-out, or FIFO, method. Periodically, we perform a detailed assessment of inventory, which includes a review of, among other factors, historical sales activity, future demand requirements, product life cycle and development plans and quality issues. Based on this analysis, we record provisions for potentially obsolete or slow-moving inventory to reflect inventory at net realizable value. These provisions could vary significantly, either favorably or unfavorably, from actual requirements based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen, or did not exist, when the valuation allowances were established.

      Valuation of Goodwill and Intangible Assets. The Merger has resulted in significant amounts of identifiable intangible assets and goodwill. Intangible assets other than goodwill are recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed or exchanged, regardless of our intent to do so. Intangible assets, such as goodwill, that have an indefinite useful life are not amortized. All other intangible assets are amortized over their estimated useful lives. We review goodwill and purchased intangible assets for impairment annually, or whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Our asset impairment review is based on estimates of the fair value of the assets, cash flow projections and appropriate discount rates. The determination of future cash flows is based on the Company’s long-range planning forecasts. This approach uses our estimates of future market growth and forecasted revenue and costs. If different assumptions were used in these plans, the related cash flows used in measuring impairment could be different and the recognition of an impairment loss might be required. When impairment is identified, the carrying amount of the asset is reduced to its estimated fair value.

      Pensions and Post-retirement Plan Assumptions. We have two noncontributory defined benefit pension plans for qualifying hourly and salary employees and a postretirement health care benefit plan for qualifying hourly retirees and their dependents. We account for our defined benefit plans in accordance with SFAS No. 87, No. 106 and No. 132(R), which requires amounts recognized in the financial statements to be determined on an actuarial basis. We are required to make assumptions regarding such variables as the expected long-term rate of return on assets and the discount rate, which are used to determine service cost and interest cost to arrive at pension income or expense for the year. We are also required to make assumptions for the long-term health care cost trend rates for our post-retirement health care benefit plan. The estimated cost and benefits of the noncontributory defined benefit pension plans and the postretirement health care plan are determined by an independent actuary using various actuarial assumptions, including, but not limited to, assumptions on demographic factors such as retirement, mortality and turnover. We have analyzed the rate of return on assets used and determined that this rate is reasonable based on the plans’ historical performance relative to the overall markets. The discount rate assumption is consistent with prior years and is based on changes in the prevailing market long-term interest rates at the measurement date. If any of our assumptions were to change, our benefit plan expenses would also change. An increase/decrease in the discount rate, assuming no other changes in the estimates, reduces/increases the amount of the accumulated benefit obligation and the related required expense. A detailed discussion of Argo-Tech’s pensions and post-

25

retirement plans can be found in Note 11 to the audited consolidated financial statements included elsewhere in this report.

      Purchase Accounting. The Merger (See “— Recent Developments”) was accounted for as a purchase and preliminary fair value adjustments to the Company’s assets and liabilities were recorded as of the date of the Merger. The Company is in the process of obtaining third-party valuations of certain tangible and intangible assets; thus, the allocation of VGAT’s investment to the Company’s assets and liabilities is subject to adjustment.

Results of Operations

      The following table presents, for the periods indicated, selected items in our consolidated statements of income as a percentage of net revenues:

	Fiscal Year Ended
	Predecessor			Predecessor			Predecessor
	October 29,			October 30,			October 25,
	2005			2004			2003
Net revenues		100.0	%		100.0	%		100.0	%
Gross profit		41.2			41.7			41.2
Selling, general and administrative		16.7			16.6			16.5
Research and development		6.0			6.4			5.9
Amortization of intangible assets		1.6			1.8			2.1
Merger expense		11.5			—			—
Income from operations		5.4			16.9			16.7
Interest expense		12.0			12.1			13.2
Debt extinguishment expense		—			6.9			—
Other, net		—			—			0.3
Income/(loss) before income taxes		(6.6	)		(2.1	)		3.8
Income tax provision/(benefit)		(3.7	)		(1.9	)		1.0
Net income/(loss)		(2.9	)%		(0.2	)%		2.8	%

Fiscal 2005 Compared with Fiscal 2004

      Net revenues for fiscal 2005 increased $25.3 million, or 13.5%, to $212.6 million from $187.3 million in fiscal 2004. This increase was primarily due to an increase in aerospace revenues of $15.7 million and a $9.6 million increase in industrial revenues. The increase in aerospace revenues was attributable to an increase of $14.1 million of commercial aerospace revenues and an increase of $1.6 million in military revenues. Commercial OEM revenues increased $3.7 million, or 15.8%, to $27.2 million and commercial aftermarket revenues increased $10.3 million, or 15.9%, to $75.3 million in fiscal 2005. Commercial OEM revenues increased primarily due to increased engine build rates resulting in increased pump requirements from our customers. Commercial aftermarket revenues increased primarily due to an increase in MRO services along with an increase in demand for spare parts. Military revenues increased primarily due to an increase in OEM and aftermarket main engine and airframe component revenues, partially offset by a reduction in revenues related to OEM airframe development programs as more of the airframe components moved from development into production. Industrial revenues increased $9.6 million, primarily attributable to an increase in cryogenic pump and ground fueling revenues, offset by a slight decrease in business park revenues.

      Aerospace gross profit for fiscal 2005 increased $6.9 million, or 10.9%, to $70.2 million from $63.3 million for fiscal 2004. The increase in gross profit is primarily attributable to an increase in sales, partially offset by a slight increase in manufacturing costs and non-cash compensation expense associated with the ESOP. Aerospace gross margin decreased to 45.3% for fiscal 2005 from 45.5% for fiscal 2004. The decrease in gross margin is primarily attributable to the dilutive effect of higher commercial OEM sales. Industrial gross profit

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for fiscal 2005 increased $2.7 million, or 17.8%, to $17.8 million from $15.2 million for fiscal 2004, primarily as a result of increased cryogenic pump and ground fueling revenues and a decrease in manufacturing costs for our cryogenic pump products. Gross margin decreased to 30.9% for fiscal 2005 from 31.4% for fiscal 2004, primarily attributable to the dilutive effect of increased cryogenic pump revenues as a percent of total industrial revenues.

      Selling, general and administrative expenses for fiscal 2005 increased $4.3 million, or 13.8%, to $35.5 million from $31.2 million for fiscal 2004. The increase in selling, general and administrative expenses is primarily related to an increase in non-cash compensation expenses associated with our SAR plan, the ESOP and ESOP Excess Benefit Plan, increased marketing expenses, increased incentive compensation and non-cash expense for an hourly employee early retirement program. The SAR plan and hourly early retirement expenses were recorded in our Corporate business segment. Selling, general and administrative expenses as a percentage of net revenues increased to 16.7% for fiscal 2005 from 16.6% for fiscal 2004 primarily due to the increased expenses discussed above offset by the increase in net revenues.

      Research and development expenses for fiscal 2005 increased $0.9 million, or 7.6%, to $12.8 million from $11.9 million for fiscal 2004. The increase in research and development expenses is due to a decrease in customer paid development expenses. Research and development expenses as a percentage of net revenues decreased from 6.4% for fiscal 2004 to 6.0% for fiscal 2005 primarily due to the increase in net revenues discussed above.

      Amortization of intangible assets for 2005 of $3.4 million was unchanged compared to $3.4 million for fiscal 2004. Amortization of intangible assets as a percentage of net revenues decreased from 1.8% for fiscal 2004 to 1.6% for fiscal 2005 due to the increase in net revenues discussed above.

      Merger expense of $24.5 million for fiscal 2005 represents a one-time charge that was recorded as a result of the Merger and consists primarily of stock compensation costs, ESOP Excess Benefit Plan costs, severance and stay payments.

      Income from operations for fiscal 2005 decreased $20.1 million, or 63.6%, to $11.5 million from $31.6 million for fiscal 2004. As a percentage of revenues, income from operations for fiscal 2005 decreased to 5.4% from 16.9% for fiscal 2004. The decrease in income from operations was primarily due to one-time expenses related to the Merger and increased selling, general and administrative expenses, partially offset by increased Aerospace and Industrial revenues and the improved financial performance in our cryogenic pump products.

      Interest expense for fiscal 2005 increased $2.9 million, or 12.8%, to $25.6 million from $22.7 million for fiscal 2004 primarily due to the increase in borrowing and interest rate related to the $250.0 million of 9¹/4% senior notes issued in June 2004, which was partially offset by lower outstanding borrowings under our credit facility and lower amortization of deferred financing fees.

      Debt extinguishment expense of $13.0 million was incurred in fiscal 2004. The expense consists of the write-off of $6.1 million of deferred financing fees associated with the refinancing of our 8⁵/8% senior subordinated notes and the amendment and restatement of our credit agreement, $5.5 million for the tender, consent and redemption fees associated with the refinancing of the 8⁵/8% senior subordinated notes and recognition of the remaining accretion of $1.3 million on a portion of the 8⁵/8% senior subordinated notes that were issued at a discount.

      The income tax benefit was $7.8 million for fiscal 2005 as compared to a benefit of $3.5 million for fiscal 2004. The increase in the income tax benefit is primarily due to an increase in pre-tax loss primarily due to one-time expenses related to the Merger offset by the non-recurring debt extinguishment expense in fiscal 2004.

      Argo-Tech incurred a net loss of $6.2 million for fiscal 2005 compared to a loss of $0.5 million for fiscal 2004 primarily as a result of the factors referred to above.

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Fiscal 2004 Compared with Fiscal 2003

      Net revenues for fiscal 2004 increased $26.6 million, or 16.6%, to $187.3 million from $160.7 million for fiscal 2003. This change was due to an increase in aerospace revenues of $16.9 million and a $9.7 million increase in industrial revenues. The increase in aerospace revenues was attributable to an increase of $10.9 million in commercial revenues and an increase of $6.0 million in military revenues. Commercial OEM revenues increased $2.3 million, or 11.4%, to $22.5 million and commercial aftermarket revenues increased $8.6 million, or 15.3%, to $64.9 million. Commercial OEM revenues increased primarily as a result of an increase in pump requirements from our customers. Commercial aftermarket revenues increased primarily due to increases in repair and overhaul services and demand for spare parts. Military revenues increased primarily due to revenue related to increased sales on a variety of OEM and aftermarket main engine fuel pumps and components as well as an increase in revenues related to airframe components on various OEM and OEM development programs, partially offset by a decrease in aftermarket revenues related to airframe components. Industrial revenues increased $9.7 million, primarily attributable to an increase of $8.0 million in ground fueling revenues, of which $6.2 million was attributable to military sales, and $1.9 million in cryogenic pump revenues, offset by a slight decrease in business park revenues.

      Aerospace gross profit for fiscal 2004 increased $9.8 million, or 18.3%, to $63.3 million from $53.5 million for fiscal 2003. Gross margin increased to 45.8% for fiscal 2004 from 44.2% for fiscal 2003. The increase in gross profit and gross margin is primarily attributable to an increase in higher margin commercial aerospace aftermarket revenues, an increase in military revenues and an increase in operating efficiencies at both our Cleveland and Costa Mesa facilities, partially offset by an increase in non-cash costs associated with ESOP compensation.

      Industrial gross profit for fiscal 2004 increased $2.2 million, or 16.9%, to $15.2 million from $13.0 million in fiscal 2003. The increase in gross profit was attributable to an increase in ground fueling revenues partially offset by a decrease in cryogenic gross profit, attributable to an increase in manufacturing costs. Gross margin decreased to 31.0% in fiscal 2004 from 33.0% in fiscal 2003 primarily attributable to an increase in manufacturing costs for our cryogenic pump products partially offset by a favorable sales mix of ground fueling products.

      Selling, general and administrative expenses for fiscal 2004 increased $4.8 million, or 18.2%, to $31.2 million from $26.4 million for fiscal 2003. The increase in selling, general and administrative expenses of $4.8 million was related to increased non-cash costs associated with ESOP compensation, increased incentive compensation, and increased marketing costs, including commissions and royalties. Selling, general and administrative expenses as a percentage of net revenues increased to 16.6% for fiscal 2005 from 16.5% for fiscal 2004 primarily due to the increased expenses discussed above partially offset by the increase in net revenues.

      Research and development expenses for fiscal 2004 increased $2.4 million, or 25.3%, to $11.9 million from $9.5 million for fiscal 2003. The increase in research and development expenses is due to a decrease in customer paid development expenses. Research and development expenses as a percentage of net revenues increased to 6.4% for fiscal 2004 from 5.9% for fiscal 2003 primarily due to the increase in development expense offset by the increase in net revenues discussed above.

      Amortization of intangible assets for 2004 of $3.4 million was unchanged compared to $3.4 million for fiscal 2003. Amortization of intangible assets as a percentage of net revenues decreased from 2.1% for fiscal 2004 to 1.8% for fiscal 2003 due to the increase in net revenues discussed above.

      Income from operations for fiscal 2004 increased $4.8 million, or 17.9%, to $31.6 million from $26.8 million in fiscal 2003. As a percent of revenues, income from operations for fiscal 2004 increased to 16.9% from 16.7% in fiscal 2003. These increases were primarily due to increased sales of higher margin commercial aerospace aftermarket revenues, an increase in military revenues and an increase in ground fueling revenues, partially offset by an increase in cryogenic pump manufacturing costs and higher operating expenses.

      Interest expense for fiscal 2004 increased $1.5 million, or 7.1%, to $22.7 million from $21.2 million in fiscal 2003 due to a higher outstanding borrowing and interest rate on the $250.0 million 9¹/4% Senior Notes

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issued in June 2004, which was partially offset by lower outstanding borrowing and interest rates on our credit facility.

      Debt extinguishment expense of $13.0 million was incurred in fiscal 2004. The expense is for the write-off of $6.1 million of deferred financing fees associated with the refinancing of our 8⁵/8% senior subordinated notes and the amendment and restatement of our credit agreement, $5.5 million for the tender, consent and redemption fees associated with the refinancing of the 8⁵/8% senior subordinated notes and recognition of the remaining accretion of $1.3 million on a portion of the 8⁵/8% senior subordinated notes that were issued at a discount.

      The income tax benefit was $3.5 million for fiscal 2004 as compared to a provision of $1.6 million in fiscal 2003. This decrease in income tax is primarily due to a decrease in pre-tax income and a lower estimated effective tax rate in the current year due to the debt extinguishment expenses. A reconciliation of the income tax provision can be found in Note 11 to the audited consolidated financial statements included elsewhere in this report.

      Net income for fiscal 2004 decreased $5.0 million to a loss of $.5 million from income of $4.5 million in fiscal 2003, primarily due to the revenue and expense factors discussed above.

Export Sales

      Substantially all of our export sales are denominated in U.S. dollars. Export sales for fiscal years 2005, 2004, and 2003 were $95.4 million, $80.2 million and $66.7 million, respectively. Sales to Europe for fiscal years 2005, 2004 and 2003 were $42.2 million, $32.8 million and $30.4 million, respectively. Sales to the Pacific Rim for fiscal years 2005, 2004 and 2003 were $35.5 million, $26.0 million and $25.3 million, respectively. Export sales to all other regions, individually less than 10%, were $17.7 million, $21.4 million and $11.0 million for fiscal years 2005, 2004 and 2003, respectively.

Liquidity and Capital Resources

      We are a holding company that receives all of its operating income from its subsidiaries. As a result, our primary source of liquidity for conducting business activities and servicing our indebtedness has been cash flows from our subsidiaries’ operating activities.

      In connection with the Merger, the Company amended and restated its credit agreement and, after scheduled repayments of $0.7 million, has a $19.1 million Term Loan Facility and has available a $40.0 million Revolving Credit Facility. The unused balance of the Revolving Credit Facility ($31.6 million at October 29, 2005 after reduction of $8.4 million for letters of credit) is subject to a .50% commitment fee. The Credit Facility and Term Loan mature on June 23, 2009. The Amended Credit Facility is collateralized by substantially all of the tangible assets of the Company (including the capital stock of Holdings). The Amended Credit Facility contains a number of covenants that, among other things, limit the Company’s ability to incur additional indebtedness, pay dividends, prepay subordinated indebtedness, dispose of certain assets, create liens, make capital expenditures, make certain investments or acquisitions and otherwise restrict corporate activities. In addition, the Company has the right to request (but no lender is committed to provide) additional term loans and revolving commitments under such facilities, subject to the satisfaction of customary conditions, including being in compliance with the financial covenants in the credit agreement after giving effect, on a pro forma basis, to any such incremental borrowing. The Amended Credit Facility contains no restrictions on the ability of the Company’s subsidiaries to make distributions to the Company. The Amended Credit Facility also requires the Company to comply with certain financial ratios and tests, under which the Company is required to achieve certain financial and operating results. The Company was in compliance with the covenants at October 29, 2005. Interest was calculated, at the Company’s choice, using an alternate base rate (“ABR”) or the London Interbank Offered Rate (“LIBOR”), plus a supplemental percentage determined by the ratio of debt to adjusted EBITDA. The interest rate for fiscal year 2005 was 1.00% plus ABR or 2.50% plus LIBOR.

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      At October 29, 2005, the Company had outstanding $250.0 million 9¹/4% Senior Notes due 2011. Interest on the Notes is payable semiannually on June 1 and December 1 of each year. The Senior Notes will mature on June 1, 2011. In connection with the Merger, the 9¹/4% Senior Notes were written up $10.0 million, to $260.0 million, their fair market value. The Senior Notes are unsecured and rank equally with all our existing and future senior debt and rank senior to all our existing and future subordinated debt. The Senior Notes will be effectively subordinated to all our existing and future secured debt to the extent of the value of the assets securing such debt. The Senior Notes are subject to certain limitations and restrictions which the Company has not exceeded at October 29, 2005.

      As a result of the Refinancing, long-term debt at October 30, 2004 consisted of $14.8 million principal amount of term loans and $250.0 million principal amount of senior notes. Scheduled payments of $6.2 million were made on the term loans in fiscal 2004. At October 30, 2004, there were no outstanding borrowings on the revolving credit facility, and we had available, after $5.8 million in letters of credit, $24.2 million under our revolving credit facility.

      The following table presents, for the periods indicated, certain information for the cash flows of the Company (in thousands):

			Fiscal Year Ended
			Predecessor			Predecessor			Predecessor
			Fiscal Year			Fiscal Year			Fiscal Year
			Ended			Ended			Ended
			October 29,			October 30,			October 25,
			2005			2004			2003
Cash Flows Provided By (Used In):
	Operating Activities		$	193		$	33,230		$	15,673
	Investing Activities			(4,376	)		(3,056	)		(1,939	)
	Financing Activities			2,215			(28,374	)		(17,446	)
		Increase (decrease) in cash and cash equivalents	$	(1,968	)	$	1,800		$	(3,712	)

      Cash Flows from Operating Activities. For fiscal 2005, $0.2 million of cash was provided by operating activities compared to $33.2 million of cash provided by operating activities in fiscal 2004. The decrease is primarily a result of cash outlays made in connection with the one-time expenses related to the Merger together with increases in working capital to support higher aerospace revenues and new cryogenic pump orders partially offset by an increase in accrued liabilities due to higher tax withholding related to the compensation expense for the Merger and higher accrued interest. Cash provided by operating activities for fiscal 2004 increased $17.5 million, to $33.2 million, from $15.7 million in fiscal 2003 primarily as a result of an increase in income from operations and a net favorable change in operating assets and liabilities.

      Cash Used In Investing Activities. Net cash used in investing activities was $4.4 million, $3.1 million and $1.9 million for fiscal years 2005, 2004 and 2003, respectively, for expenditures for the purchase of property, plant and equipment. These expenditures reflect a normal amount of capital investments necessary to maintain our efficiency and manufacturing capabilities.

      Cash Flows from Financing Activities. Cash provided by financing activities for fiscal 2005 was $2.2 million compared to cash used in financing activities of $28.4 million in fiscal 2004. The cash generated from financing activities in fiscal 2005 primarily resulted from $5.0 million of additional borrowing on our term loan and $6.4 million in a contribution from Holdings to pay expenses related to the Merger offset by $1.4 million of financing fees related to the Merger, $3.8 million of stock repurchased from former ESOP participants, a $3.1 million dividend to Holdings to fund the development of Argo Tracker and $0.7 million to repay long-term debt. Cash used in financing activities for fiscal 2004 was $28.4 million, primarily as a result of the issuance of $250.0 million of senior notes, offset by our Refinancing transactions. These transactions included (i) the purchase of $195 million of our 8⁵/8% senior subordinated notes, (ii) a dividend to Holdings for the redemption of all of Holdings’ outstanding Series A Cumulative Exchangeable Redeemable Preferred Stock, (iii) scheduled repayments and the restatement of our credit facility and (iv) payment of transaction fees and expenses. Cash used in financing activities for fiscal 2003 was $17.4 million, which was primarily used

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to make scheduled repayments of long-term debt and payment of financing related fees associated with amending our credit agreement.

      Capital Expenditures. Our capital expenditures for fiscal years 2005, 2004 and 2003 totaled $4.4 million, $3.1 million and $1.9 million, respectively, which were related in each year to maintaining existing facilities and equipment and systems to support current operating activities. We expect to incur capital expenditures of approximately $5.5 million in fiscal year 2006 relating to the continued maintenance of facilities, equipment and systems to support current operating activities. Capital expenditures are financed with cash generated from operations. We currently have no material commitments for capital expenditures.

      We do not enter into derivative contracts for trading or speculative purposes. We have no derivative financial instruments.

      Contractual Cash Obligations. The following is a summary of contractual and other long-term cash obligations as of October 29, 2005:

	Payment Due By Period
									2010 and
	2006		2007		2008		2009		Thereafter		Total
	(Dollars in millions)
Term Loans	$	0.7	$	0.8	$	3.6	$	14.0	$	—	$	19.1
91/4% Senior Notes		—		—		—		—		250.0		250.0
Operating leases		0.3		0.2		0.1		0.1		—		0.7
Other long-term obligations*		26.1		26.0		26.2		25.7		60.4		164.4
Total contractual and other long-term cash obligations	$	27.1	$	27.0	$	29.9	$	39.8	$	310.4	$	434.2

*  Represents interest payments on the Term Loans (at an assumed average interest rate of 6.5%) and the 9¹/4% Senior Notes, estimated funding for retirement and other post-employment benefits and other long-term commitments.

      Our primary future uses of cash from operating activities will consist of debt service and capital expenditures. We believe that cash flows from operations will provide adequate funds for our working capital needs, planned capital expenditures and debt service obligations. Our ability to fund our operations, make planned capital expenditures, and to make scheduled payments on our indebtedness depends on our future operating performance and cash flows. We may need to refinance all or a portion of our indebtedness on or before maturity. There can be no assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. These items are subject to prevailing conditions and to financial, business, and other factors, some of which are beyond our control. Any future acquisitions, joint ventures or other similar transactions will likely require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.

      Off-Balance Sheet Arrangements. The Company does not have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition.

New Accounting Standards

      In November 2004, the FASB issued SFAS No. 151, “Inventory Costs,” which is an amendment of Accounting Research Bulletin (“ARB”) No. 43, Chapter 4, “Inventory Pricing.” This statement clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges. The provisions of this statement become effective for the Company’s fiscal year beginning October 30, 2005. Management believes the adoption of this statement will not have a material effect on Argo-Tech’s consolidated financial position or results of operations.

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      In December 2004, the FASB issued SFAS No. 123(R), “Share Based Payment,” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Argo-Tech will adopt the provisions of this statement for the Company’s fiscal year beginning October 30, 2005 using the modified prospective method. Management has not determined the effect the adoption of this statement will have on Argo-Tech’s consolidated financial position or results of operations.

      In June 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS”) No. 154. This statement changes the requirements for the accounting for, and reporting of, a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 is effective for accounting changes and a correction of errors made in fiscal years beginning after December 15, 2005. Early adoption of this standard is permitted for accounting changes and correction of errors made in fiscal years beginning after June 1, 2005. Management has determined that adoption of this statement will not have an impact on Argo-Tech’s consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

      In the ordinary course of operations, Argo-Tech’s major market risk exposure is to changing interest rates. Argo-Tech’s exposure to changes in interest rates relates primarily to its long term debt obligations. At October 29, 2005, Argo-Tech had fixed rate debt of $250.0 million at 9¹/4% and variable rate debt under our credit facility of $19.1 million, calculated at Argo-Tech’s choice using an ABR or LIBOR, plus a supplemental percentage determined by the ratio of debt to EBITDA. The variable rate is not to exceed ABR plus 1.25% or LIBOR plus 2.75%. Argo-Tech does not enter into derivative contracts for trading or speculative purposes. A 10% fluctuation in interest rates would not materially affect Argo-Tech’s financial condition, results of operations or cash flows.

Item 8. Financial Statements and Supplementary Data.

      The response to this item is submitted in a separate section of this report following the signature page.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

      There were no changes in, or disagreements with, accountants on accounting and financial disclosure.

Item 9A. Controls and Procedures.

      (a) Disclosure Controls and Procedures.

      The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Argo-Tech’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of Argo-Tech’s disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”), and have concluded that, as of the Evaluation Date, such controls and procedures were effective at ensuring that required information will be disclosed in Argo-Tech’s reports filed under the Exchange Act.

      (b) Change in Internal Controls.

      There were no changes in Argo-Tech’s internal control over financial reporting during the fiscal quarter ended October 29, 2005 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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      (c) Sarbanes-Oxley Act — Section 404 Compliance.

      Section 404 of the Sarbanes-Oxley Act requires management of any company that is required to file periodic reports under Section 13(a) or 15(d) of the Securities Exchange Act to report on, and its independent auditors to attest to, such company’s internal control over financial reporting. Although Argo-Tech is a voluntary filer of periodic reports, to comply with covenants under the indenture governing its 9¹/4% senior notes, Argo-Tech anticipates complying with these reporting and attestation requirements beginning with the fiscal year ending October 27, 2007 (which is the first period for which it would be required to comply with such provisions if it was required to file such periodic reports) and is actively continuing its ongoing internal process of documenting, testing and evaluating the effectiveness of its internal control over financial reporting utilizing outside assistance.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

      The following table sets forth certain information concerning our directors and executive officers. Directors serve until their successors are elected at each annual meeting. Officers hold office until their successors are elected and qualified.

Name	Age		Position
Michael S. Lipscomb		59	Chairman, President, Chief Executive Officer and Director
Paul R. Keen		56	Executive Vice President, General Counsel and Secretary
John S. Glover		57	Vice President and Chief Financial Officer
John Daileader		41	Director
Reginald L. Jones, III		46	Director
Jeffrey W. Long		49	Director
Kathleen Moran		39	Director
Daniel S. O’Connell		51	Director
John R. Woodard		41	Director

      Michael S. Lipscomb has been Chairman, President & Chief Executive Officer since 1994. Mr. Lipscomb joined TRW’s corporate staff in February 1981 and was made Director of Operations for the Power Accessories Division in 1985. Mr. Lipscomb was named Vice President of Operations when Argo-Tech was formed in 1986, becoming President in 1990 and Chairman and Chief Executive Officer in 1994. Mr. Lipscomb has also served as a director of Argo-Tech and Holdings since 1990.

      Paul R. Keen is Executive Vice President, General Counsel and Secretary. Mr. Keen was named Vice President and General Counsel in 1987, became Secretary in December 1990 and was promoted to Executive Vice President in December 2003. Prior to 1987, he spent the majority of his career with TRW as Senior Counsel, Securities and Finance and as primary legal counsel to two operating groups. Mr. Keen served as a Director of Argo-Tech from April 1999 until the closing of the Merger. Mr. Keen served as a member of the Board of Directors of Holdings from September 2003 to September 2004.

      John S. Glover was promoted to Vice President and Chief Financial Officer in December 2005. Mr. Glover was Vice President Finance and Information Systems with Argo-Tech Corporation (Costa Mesa), a wholly owned subsidiary of the Company, since November 2000. He was also Acting General Manager of the Carter Cryogenic Products Division of Argo-Tech Corporation (Costa Mesa) from June 2004 to June 2005.

      John Daileader has served as a Director of Argo-Tech and Holdings since December 20, 2005. Mr. Daileader was named a Managing Director of Greenbriar Equity Group LLC, a private equity group, in December 2004. From February 2002 through December 2004, he was a Principal of Greenbriar. From 1998 through June 2001, he was a Principal with JPMorgan Partners.

      Reginald L. Jones, III has served as a Director of Argo-Tech and Holdings since December 20, 2005. Mr. Jones is Managing Partner of Greenbriar Equity Group LLC, a position he has held since co-founding the firm in December 1999. Previously, he was Global Head of Goldman Sachs’ transportation banking group. He is also a Director of Active Aero Group, a full service air cargo and air charter company, and Electro-Motive Diesel, Inc., one of two U.S. original equipment manufacturers of diesel-electric locomotives.

      Jeffrey W. Long has served as a Director of Argo-Tech and Holdings since December 20, 2005. Mr. Long is Managing Director of Vestar Capital Partners, a private equity group, and joined Vestar Capital Partners in 2005. Prior to joining Vestar Capital Partners, Mr. Long served as a Consultant for McKinsey and Company for more than 12 years. Mr. Long received a BS, US Military Academy at West Point; Diplome, Institut d’Etudes politiques de Paris; MPA Kennedy School, Harvard; MMAS, Command and General Staff College, Ft Leavenworth, KS.

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      Kathleen Moran has served as a Director of Argo-Tech and Holdings since December 20, 2005. Ms. Moran joined Greenbriar Equity Group LLC in 1999 as Chief Financial Officer, a position she still holds. In December 2004, she was appointed a Managing Director of Greenbriar.

      Daniel S. O’Connell has served as a Director of Argo-Tech and Holdings since December 20, 2005. Mr. O’Connell founded Vestar Capital Partners in April 1988 and has served as its Chief Executive Officer since that time. Prior to founding Vestar Capital Partners, Mr. O’Connell served as a Managing Director and Co-Head of the Management Buyout Group at The First Boston Corporation. Mr. O’Connell currently serves as a Director of Birds Eye Foods, Inc., Solo Cup Company and St. John Knits International, Inc.

      John R. Woodard has served as a Director of Argo-Tech and Holdings since December 20, 2005. Mr. Woodard is a Managing Director of Vestar Capital Partners and is the co-head of Vestar’s industrial practice. He joined Vestar Capital Partners in 1998. Between March 1996 and February 1998, he served as a Managing Director in the private equity practice of The Blackstone Group, an investment and advisory firm. From April 1990 to March 1996, Mr. Woodard was a Vice President of Vestar Capital Partners. Mr. Woodard is currently a Director of Consolidated Container Holdings, LLC, Duff & Phelps, LLC, and Solo Cup Company.

Board Committees

      Argo-Tech does not maintain committees of its board of directors. The board of directors of Holdings maintains an audit committee and a compensation committee. The Board of Directors of Argo-Tech has not determined whether any of its members qualify as an “audit committee financial expert” within the meaning of Item 401(h)(2) of Regulation S-K.

Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Senior Financial Officers

      We have adopted a code of ethics for our senior financial officers that include the Chief Executive Officer, the Chief Financial Officer, and other members of Argo-Tech’s financial leadership team. A copy of the code of ethics is available without charge, by request to: General Counsel, Argo-Tech Corporation, 23555 Euclid Avenue, Cleveland OH 44117. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of our code of ethics through filing a current report on Form 8-K for such events.

Item 11. Executive Compensation.

Board Compensation

      Since 1999, Argo-Tech has not compensated its directors. Prior to the Merger, Holdings paid its directors a quarterly fee of $3,000 plus $4,000 and reasonable out-of-pocket expenses for each board meeting attended. Fees paid to Mr. Lipscomb, Ms. St. Clair and Mr. Keen for service on the board of Holdings are included in the “Annual Compensation” table below. Neither Argo-Tech nor Holdings intends to pay directors’ fees for the foreseeable future.

Employment Arrangements Following the Merger

      In connection with the closing of the Merger, Mr. Lipscomb and Mr. Keen entered into new employment agreements. These employment agreements provide for, among other things:

•  an initial term of three years with automatic renewals for one-year terms unless Argo-Tech or the executive gives written notice of election not to renew at least 90 days prior to the expiration of the applicable employment period;

•  an annual base salary of $543,828 (Mr. Lipscomb) and $279,926 (Mr. Keen), which will be increased annually by no less than a percentage equal to the percentage increase, if any, in the Consumer Price Index in the prior twelve-month period;

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•  participation in (i) bonus arrangements, as determined by the Compensation Committee of the Argo-Tech Board of Directors, and (ii) employee benefit plans that are provided or made available by Argo-Tech to its senior executive officers;

•  four weeks of paid vacation per calendar year, prorated in the case of a partial year;

•  upon termination because of death or disability, the executive (or the executive’s estate) will receive an amount equal to (i) the executive’s salary through the date of termination plus (ii) a pro rata portion of the executive’s bonus for such year;

•  upon termination by Argo-Tech without cause (as defined in the agreement) or by the executive for good reason (as defined in the agreement) and subject to the executive’s compliance with the non-competition, non-solicitation and ownership of intellectual property provisions of the agreements, the executive will receive an amount equal to his current annual salary and bonus for the preceding fiscal year payable over the one-year period following termination as well as continuing health care coverage until the earlier of (i) one year following his departure and (ii) the date he becomes eligible for comparable coverage under health plans of any successor employer;

•  prohibitions against Mr. Lipscomb and Mr. Keen from competing with Argo-Tech or its subsidiaries or soliciting employees of Argo-Tech or its subsidiaries (both during employment and for a period of two years thereafter); and

•  payments intended to make them whole for any excise tax liability they incur due to their receipt of certain payments treated as being contingent upon a change in control in connection with the Merger under Section 280G of the Code.

These employment agreements replaced all pre-Merger employment, stay pay and severance agreements that Mr. Lipscomb and Mr. Keen had in place and govern any post-Merger severance payments Mr. Lipscomb and Mr. Keen are entitled to receive.

      In connection with the Merger, Mr. Glover entered into a change in control agreement with Argo-Tech. Under that agreement, if, in connection with or within six months of a Change in Control (as defined in the agreement) of Argo-Tech, Mr. Glover is terminated other than for cause (as defined in the agreement), Disability (as defined in the agreement) or death or voluntarily terminates his employment for Good Reason (as defined in the agreement), he will be entitled to receive severance payments equal to (a) his then current base salary and annual bonus for the preceding fiscal year and (b) continuing health care coverage until the earlier of (i) one year following his departure and (ii) the date he becomes eligible for comparable coverage under health plans of any successor employer.

Incentive Compensation Following the Merger

Incentive Units

      VGAT has three authorized classes of units of limited liability company interests, designated Class A Units, Class B Units and Class C Units. The Class B Units of VGAT (the “Class B Units”) and the Class C Units of VGAT (the “Class C Units” and, together with the Class B Units, the “Incentive Units” and, together with the Class A Units of VGAT and the Class B Units, the “Units”) are voting limited liability company interests and are available for issuance to employees, directors and service providers of and to Holdings and its subsidiaries for incentive purposes. In connection with the Merger, Mr. Lipscomb was granted 7,671 Class B Units of VGAT and 7,671 Class C Units of VGAT, and Mr. Keen was granted 1,705 Class B Units of VGAT and 1,705 Class C Units of VGAT.

      The Incentive Units entitle the holders to distributions in excess of a floor amount, which amount will be established based on the fair market value of the equity of Holdings (i) as of the closing of the Merger after giving effect to the Merger, for Incentive Units that are issued at the closing of the Merger, and (ii) as of the date of issuance, for Incentive Units that are issued after the Merger, in each case such that the Incentive Units will qualify as profits interests under the Code and the regulations promulgated thereunder.

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      Approximately 55% of each class of the authorized Incentive Units were issued to members of management as of the closing of the Merger. The remaining 45% is reserved for issuance to employees, directors and service providers of and to Holdings and its subsidiaries.

      The Class B Units are subject to time-vesting requirements. Twenty percent of the Class B Units will vest effective as of the end of each fiscal year commencing at the end of fiscal 2006, so long as the holder of such Class B Units remains continuously employed by Holdings or any of its subsidiaries from the closing of the Merger until the end of each such fiscal year. Notwithstanding the foregoing, in the event that a holder’s employment with Holdings or any of its subsidiaries is terminated following October 31, 2006 other than by Holdings for cause or voluntarily by the holder, such holder’s Class B Units shall vest on a daily basis.

      The Class C Units are subject to performance-vesting requirements. For each fiscal year commencing with fiscal 2006, 20% of the Class C Units will be eligible to vest effective upon a sale of VGAT if the holder of such Class C Units remains continuously employed by Holdings or any of its subsidiaries from the closing of the Merger until the end of each such fiscal year (the “Time Criteria”). Upon a sale of VGAT, all Class C Units for which the Time Criteria has been satisfied will vest if each of the Sponsors receives a cash-on-cash return on the aggregate capital invested in VGAT that is equal to the greater of (i) an annualized internal rate of return of at least 25% on its aggregate equity investment in VGAT and (ii) at least 2.5 times the amount of its aggregate equity investment in VGAT (the “Performance Criteria”).

      Upon termination of employment with Holdings or any of its subsidiaries for any reason, all of a holder’s unvested Class B Units and Class C Units for which the Time Criteria has not been satisfied will be immediately forfeited. Any Class C Units held for which the Time Criteria has been satisfied will remain eligible for vesting upon a sale of VGAT if the Performance Criteria is satisfied. In addition, with respect to certain employees that have executed or will execute change of control agreements with VGAT, if such employee engages in a competitive activity during such employee’s employment with VGAT and its subsidiaries or at any time during the first year following termination of their employment, all Class B and Class C Units, whether vested or unvested, shall be immediately forfeited, and all other securities of VGAT or Holdings held by such person will be subject to repurchase within one year at cost.

Current Benefit Plans Continuing Following the Merger

      Salaried Pension Plan. Our Salaried Pension Plan was established on May 28, 1987, effective November 1, 1986. Prior to July 1, 1994, our regular, permanent salaried employees not covered by collective bargaining agreements were eligible to participate in this plan on their date of hire. Participation in the plan was closed to any person who was not a participant on June 30, 1994, and all benefit accruals ceased as of the close of business on June 30, 1994. The benefits of participants in the Salaried Pension Plan who were employees on June 30, 1994 became fully vested (to the extent otherwise non-vested) as of the close of business on June 30, 1994. Employee contributions were neither required nor permitted.

      Under the Salaried Pension Plan, the normal retirement age is 65. The normal monthly retirement benefit is 1.25% of a participant’s final average monthly compensation multiplied by the participant’s years of benefit service. Compensation earned after June 30, 1994, and service performed after June 30, 1994, are not taken into account in determining a participant’s benefit under the Salaried Pension Plan. Final average monthly compensation means the average monthly compensation (computed before withholdings, deductions for taxes or other purposes and salary reduction amounts under the Salaried Savings Plan (as defined and discussed below)) paid or payable to the participant for the five calendar years which produce the highest such average, determined as if the participant’s employment terminated on June 30, 1994 (or, if earlier, the date the participant’s employment actually terminated or the participant ceased to be within the class of employees eligible to participate in the Salaried Pension Plan). If a participant ceased to be within the class of employees eligible to participate or a participant’s employment terminated (or is deemed to have terminated) prior to July 1 of a calendar year, that calendar year is not taken into account for purposes of determining final average monthly compensation. A participant’s vested benefit cannot be less than the participant’s vested benefit (if any) calculated as of October 31, 1989 under the Salaried Pension Plan’s prior pension formula, which was integrated with Social Security.

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      The Code limits the maximum annual retirement benefit payable under the Salaried Pension Plan and the maximum amount of annual compensation that can be taken into account in calculating benefits under the Salaried Pension Plan.

      At retirement, based on benefits accrued as of June 30, 1994, the monthly retirement benefits payable to each of the individuals named in the “Annual Compensation” table below are:

	Monthly
Name	Benefit
Michael S. Lipscomb	$	1,799.32
Paul R. Keen		1,188.83
Frances S. St. Clair		411.56

      The benefits shown above are in the form of a single life annuity commencing as of the first day of the month after the participant attains age 65. Benefits may commence at any time after age 55 if the participant had at least five years of service when the participant’s employment terminated. Actuarial reductions would apply for early commencement and for payment in the form of a joint and survivor annuity.

      The normal form of payment under the Salaried Pension Plan is a single life annuity or, if the participant is married, the 50% joint and survivor annuity. However, participants may elect payment of retirement benefits under several joint and survivor forms of payment, subject to the requirement that a married participant obtain spousal consent to elect another form of payment, another contingent annuitant or both, as applicable.

      This plan was amended on October 28, 2004, effective for the 2003 calendar year. The amendment resulted from legislative changes related to the time and manner of distributions, the determination of the amount to be distributed each year, the requirements for annuity distributions commencing during the participant’s lifetime, and the requirements for minimum distributions where the participant dies before the date the distribution begins.

      Salaried Savings Plan. Our Employee Savings Plan for salaried employees (the “Salaried Savings Plan”) has been in place since May 1, 1987. Regular, permanent salaried employees who have completed at least three months of service are eligible to participate in the plan. All assets of the plan are held in trust with National City Institutional Trust and Investment Services serving as Trustee. Participants may elect to have “tax-deferred” (401(k) compensation reduction) contributions made to the plan of up to 40% of their eligible compensation. Participants may also elect to have after-tax contributions made to the Salaried Savings Plan of up to 20% of their eligible compensation. In addition, participants over the age of 50 are allowed to make catch-up contributions (up to $3,000 in 2004 and $4,000 in 2005). Employer matching contributions to the plan ceased on July 1, 1994. For periods before July 1, 1994, the Salaried Savings Plan provided for employer matching contributions as follows: Basic matching contributions of 25% of each participant’s tax-deferred contributions not in excess of 3% of compensation and discretionary additional matching contributions of a percentage (within the range of 0% and 125% established for each fiscal year (the “plan year”)) of each participant’s tax-deferred contributions not in excess of 3% of compensation. A participant’s benefit under the plan is the balance of the participant’s accounts attributable to tax-deferred contributions, after-tax contributions and the vested balance of the participant’s accounts attributable to employer matching contributions. Tax-deferred contributions and after-tax contributions are always 100% vested. Participants (including former employees) whose accounts attributable to employer matching contributions had not been forfeited prior to November 1, 1994, became, to the extent otherwise nonvested, 100% vested. Distributions from the plan are made in the form of lump-sum cash payments, installment payments or partial payments.

      The Code limits the maximum annual contributions that can be made to the Salaried Savings Plan and the maximum amount of annual compensation that can be taken into account in calculating contributions to the Salaried Savings Plan. Contributions for a plan year on behalf of certain highly compensated individuals may also be limited to comply with the Code’s nondiscrimination requirements.

      Benefits are generally payable after a participant’s employment terminates. A participant who is an employee may, however, apply for an in-service distribution of all or a portion of the participant’s vested

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account balance after attainment of age 59¹/2 or in the event of a hardship (as defined in the Salaried Savings Plan). A participant may apply for an in-service distribution of after-tax contributions at any age and for any reason. A participant may apply for a loan of up to 50% of the participant’s vested account balance (subject to a $50,000 maximum) under the Salaried Savings Plan.

      Following completion of the Merger, we adopted an amendment to the Salaried Savings Plan under which we will make cash contributions equal to 3% of a participants eligible compensation and will provide an additional contribution of 50% of each participants’ tax-deferred contributions not in excess of 8% of compensation.

      Executive Life Insurance Plan. Our executive life insurance plan permits certain officers and key employees to obtain life insurance benefits in addition to those generally provided to salaried employees. The level of coverage provided to such officers and key employees consists of basic term and whole life insurance coverage equal to three times the individual’s salary.

      Management Incentive Plan. We have in effect a plan pursuant to which officers and other key management employees may receive cash bonuses paid upon (1) the achievement of specified cash flow goals in the preceding fiscal year and (2) individual performance. The amounts of such bonus awards are approved by the Compensation Committee of Holdings.

Historical director and executive compensation

      The following table sets forth, for fiscal 2005, 2004 and 2003, certain information about the compensation paid to or accrued by Holdings for the Chief Executive Officer and each of Argo-Tech’s other executive officers during those years (the “Named Executives”):

		Annual Compensation
								All Other
		Fiscal						Compensation
Name and Principal Position		Year		Salary		Bonus		(1)(2)(3)
Michael S. Lipscomb(4)			2005	$	522,906	$	458,583	$	1,132,011	(5)
	Chairman, President and		2004		484,170		346,181		38,426
	Chief Executive Officer		2003		461,112		225,023		50,475
Paul R. Keen(4)			2005		269,160		141,982		648,314	(6)
	Executive Vice President,		2004		258,804		142,342		29,074
	General Counsel and Secretary		2003		246,480		83,310		12,806
Frances S. St. Clair(7)			2005		252,804		133,354		637,000	(8)
	Executive Vice President and		2004		236,250		129,938		10,503
	Chief Financial Officer		2003		225,000		76,050		23,582

(1)	Other annual compensation did not exceed the lesser of $50,000 or 10% of salary plus bonus of any of the Named Executives in fiscal 2003, 2004 or 2005 except as noted in footnotes 5, 6 and 8.
(2)	The amounts listed consist of the value of life insurance provided by us for the benefit of the Named Executives in excess of the value of life insurance provided by us for the benefit of all other salaried employees. For Mr. Lipscomb, the amounts listed also include $26,000 for fiscal 2005, $32,000 for fiscal 2004 and $27,000 for fiscal 2003 paid as Holdings directors’ fees. For Mr. Keen, the amounts listed also include $25,000 for fiscal 2004 and $7,000 for fiscal 2003 paid as Holdings directors’ fees. For Ms. St. Clair, the amounts listed also include $26,000, $7,000 and $20,000 for fiscal 2005, 2004 and 2003, respectively, paid as Holdings directors’ fees.
(3)	The amounts listed do not reflect payments received as stockholders and/or derivative holders of Holdings on account of the Merger that are described in “Item 13. Certain Relationships and Related Transactions — Interests of Certain Argo-Tech Directors and Officers in the Merger — Payments to Executive Officers and Directors of Argo-Tech as a Result of the Merger.”
(4)	Upon the completion of the Merger, Mr. Lipscomb and Mr. Keen entered into new employment agreements with Argo-Tech, which replaced all existing employment, stay pay and severance agreements

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they had entered into with Argo-Tech. For a discussion of these agreements, see “— Employment Arrangements Following the Merger.”

(5)	This amount includes $869,094 Mr. Lipscomb received under his 1986 employment agreement and $217,274 he received under his stay pay and severance agreement because the Merger constituted a change in control under those agreements.
(6)	This amount includes $538,320 Mr. Keen received under his 1989 employment agreement and $102,876 he received under his stay pay and severance agreement because the Merger constituted a change in control under those agreements.
(7)	Effective as of the closing of the Merger on October 28, 2005, Ms. St. Clair resigned as an officer and director of Holdings and Argo-Tech.
(8)	This amount includes $604,830 Ms. St. Clair received under her stay pay and severance agreement because the Merger constituted a change in control under that agreement.

      Stay Pay and Severance Agreements. Argo-Tech had entered into a stay pay and severance agreement with each of Mr. Lipscomb, Mr. Keen and Ms. St. Clair in June 1996. The Board of Directors believed that these agreements benefited Holdings by securing the continued services of key management personnel and by enabling management to perform their duties and responsibilities without the distracting uncertainty generally associated with a change in control. The completion of the Merger resulted in a change in control for purposes of these agreements. As described above under “— Employment Arrangements Following the Merger,” Mr. Lipscomb and Mr. Keen entered into new employment agreements with Argo-Tech, which replaced all existing employment, stay pay and severance agreements they had previously entered into with Argo-Tech.

      The agreements provided that, if a change in control (as defined in the agreements) occurred and the executive remained employed by Holdings on a full-time basis through the effective date of the change in control, the executive would receive a single lump sum “stay payment” equal to 25% of the sum of the highest annual base salary and the highest bonus amount received by the executive in the preceding five years.

      The agreements also provided that if an executive’s full-time employment was terminated without cause (as defined in the agreements), either before or after a change in control occurred, or upon a voluntary termination of employment by an executive upon the reduction of his or her base salary by 5% or more, if the reduction is not a result of a company policy to reduce the salaries of a substantial number of officers or employees, or if the executive ceases to be employed in a position involving substantially the same level of responsibility or duties as performed by the executive on the date the agreement was executed (a “Qualifying Voluntary Termination”), the executive would receive a basic severance payment. The payment would consist of a single lump sum equal to the sum of the highest annual base salary and the highest bonus amount received by the executive in the preceding five years.

      Additional payments will be made to the executive in the event that a change in control occurred and the executive’s employment was terminated without cause within the six-month period following the effective date of such change in control, or upon a Qualifying Voluntary Termination within that period. The executive would receive additional severance payments equal to the amount he or she would have received had employment continued, at the same intervals and at the same rate of base salary the executive was receiving during the month preceding termination, until the six-month anniversary of the effective date of the change in control. These additional severance payments, if paid, would be in addition to the basic severance payment and the stay payment described above.

      Each executive was entitled to several other benefits contained in the agreements, including:

•  life, health, medical/hospital, dental, and vision insurance benefits for a period of 12 months in the event that an executive’s full-time employment is terminated without cause or upon a Qualifying Voluntary Termination, either before or after a change in control occurred, subject to a reduction of such benefits to the extent comparable benefits are actually received from another employer during the twelve-month period; and

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•  gross-up payments to cover any excise tax imposed by Section 4999 of the Code upon any payment made to the executive under the agreements, subject to certain limitations.

We agreed to be solely responsible for any and all attorneys’ fees and related expenses incurred by the executive in the event that we fail to comply with our obligations under the agreements.

      Trust Agreement. Argo-Tech entered into an additional stay pay agreement with Mr. Lipscomb on February 13, 1989. This agreement initially provided for a lump sum payment to Mr. Lipscomb of $263,000 on January 1, 2007, or, if earlier, upon Mr. Lipscomb’s voluntary or involuntary termination of full-time employment with Argo-Tech, with or without cause (as defined in the stay pay agreement). Pursuant to the terms of the agreement, the lump sum amount was subject to an annual increase corresponding to the increase in Mr. Lipscomb’s annual base salary, but not in excess of twenty percent annually. In order to set aside funds for the payment of this amount, Argo-Tech entered into a trust agreement on October 28, 1994, which established an irrevocable grantor trust for the benefit of Mr. Lipscomb as the beneficiary. The assets held by the trust include the original deposit of principal, in the amount of $344,055, and any other contributions made by Holdings, at its option. These trust assets are to be disposed of by the trustee when certain conditions in Mr. Lipscomb’s stay pay agreement occur or when the trustee is directed by two officers of Holdings, other than Mr. Lipscomb, to dispose of the assets.

      On November 22, 2002, Argo-Tech amended the trust agreement to provide Mr. Lipscomb with the ability to direct the investment of the funds held in trust. Pursuant to this amendment, Mr. Lipscomb bears the risk of diminution in value of the trust fund, and Argo-Tech is not liable to make-up any shortfall between the amounts held in trust and the amounts due under the stay pay agreement. If the amount disbursed by the trustee exceeds the amount to which Mr. Lipscomb or his qualifying successor is entitled under the stay pay agreement, Mr. Lipscomb or his qualifying successor is entitled to retain such excess. The trust assets and any income earned on those assets remain at all times subject to the claims of our general creditors under state and federal law.

      The stay pay agreement also provides for the payment of attorneys’ fees if enforcement of the stay pay agreement becomes necessary, and contains certain restrictions on certain types of competitive activity by Mr. Lipscomb. The benefits provided by the trust and the stay pay agreement and the trust agreement are in addition to the benefits provided under Mr. Lipscomb’s stay pay and severance agreement described above and Mr. Lipscomb’s employment agreement.

      In connection with the Merger, the trust document was amended to provide for a payment of all the trust funds upon a change in control of Holdings, which included the completion of the Merger. The amount distributed to Mr. Lipscomb pursuant to this arrangement upon completion of the Merger was $981,693.

      Employment Agreements. Argo-Tech had also entered into employment agreements with Mr. Lipscomb and Mr. Keen in 1986 and 1989, respectively, which were amended on May 1, 2005. The agreements provided, among other things, for a cash payment of severance benefits upon a change in control (as defined in the employment agreements). As described above under “— Employment Arrangements Following the Merger,” Mr. Lipscomb and Mr. Keen entered into new employment agreements with Argo-Tech, which replaced all existing employment, stay pay and severance agreements they had previously entered into with Argo-Tech.

      In the event of a termination without cause, Mr. Lipscomb was entitled to receive his salary, bonuses and benefits for a period of twelve months. In the event of a change in control, Mr. Lipscomb was entitled to receive a single lump sum payment equal to the value of all salary received during the twelve-month period immediately preceding the change in control.

      Mr. Keen was entitled to receive, in the event of such a termination or change in control, a single lump sum payment equal to twenty-four months of his base salary, in an amount calculated from the base salary in effect for the full month immediately preceding the date of termination or change in control. In the event of a termination of employment without cause, Mr. Keen was entitled to receive life, health, medical/hospital, dental and vision insurance benefits for a period of twelve months following a termination, subject to a reduction of such benefits to the extent comparable benefits were actually received from another employer

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during the twelve-month period. Mr. Keen’s agreement also provided for the payment of attorneys’ fees if enforcement of the agreement becomes necessary and contains restrictions on certain competitive activities by Mr. Keen.

      The benefits provided by these additional agreements were provided in addition to the benefits and payments provided under the severance stay pay and severance agreements and Mr. Lipscomb’s trust agreement.

      The completion of the Merger resulted in a change in control under the employment agreements, and therefore Mr. Lipscomb was entitled to receive an amount equal to one year’s base salary and bonus and Mr. Keen was entitled to receive an amount equal to two year’s base salary under their respective agreements.

      Nonqualified Deferred Compensation Agreement. Argo-Tech also entered into nonqualified deferred compensation agreements with Mr. Lipscomb, Ms. St. Clair and Mr. Keen that also provide for the payment of severance benefits upon the termination of employment with Argo-Tech for any reason. The amount of such severance benefit is equal to Argo-Tech’s policy interest (as defined in the collateral assignment split dollar insurance agreement between Argo-Tech and the executive) in the life insurance policies owned by the executives for which Argo-Tech pays the premiums. In general, the policy interest represents the amount of insurance premiums paid by Argo-Tech on behalf of the executives. The severance benefit is payable within 30 days following the executive’s termination of employment.

Current Benefit Plans Terminated Following the Merger

      Employee Stock Ownership Plan. The ESOP was established on May 17, 1994. Participants in the ESOP were Argo-Tech’s salaried employees at the Cleveland, Ohio and Inglewood, California facilities, who were not members of a collective bargaining unit. GreatBanc Trust Company served as the plan’s trustee, and held all of its assets in trust. Upon completion of the Merger, (i) the ESOP was amended to no longer be an employee stock ownership plan, (ii) the ESOP no longer held any Holdings common stock, and (iii) no additional shares of AT Holdings common stock will be contributed to it. Following completion of the Merger, we adopted an amendment to our 401(k) plan for salaried employees under which we will make cash contributions equal to 3% of a participants eligible compensation and will provide an additional contribution of 50% of each participants tax-deferred contributions not in excess of 8% of compensation in place of the obligation to repurchase shares of redeemable ESOP stock.

      On May 17, 1994, the trustee purchased 420,000 shares of common stock of Holdings with the proceeds of a $16.8 million loan from us to the ESOP. The term of the loan ended on April 28, 2004, and the loan was repaid in full. The interest rate for the loan was fixed for the ten-year term at 7.16% per year. The purchase price for the Holdings common stock was $40 per share.

      The shares of Holdings common stock purchased by the ESOP with the proceeds of the loan were held in a suspense account and released to eligible participants on a pro rata basis as loan principal payments were made. Shares released from the plan for each plan year were allocated to each eligible participant’s account based on the ratio of each such participant’s eligible compensation to the total eligible compensation of all eligible participants. Forfeitures of the accounts of non-vested participants were reallocated among eligible participants in the same manner as shares of Holdings common stock released from the suspense account.

      For each of the plan years ended October 31, 2002 and October 31, 2003, 42,000 shares of Holdings common stock were released from the suspense account. In the plan year ending October 31, 2004, 21,000 shares of Holdings common stock were released. The loan was repaid in full in April 2004, and as a result, no shares of Holdings common stock remain in the suspense account for release in future plan years.

      We were also permitted to make additional discretionary contributions to the ESOP. We contributed 21,000 shares of Holdings common stock to the plan in October 2004 and contributed 42,000 shares in September 2005. All of these 63,000 shares had been repurchased by Argo-Tech from ESOP participants who exercised their put option rights under the plan. These rights are described below.

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      Participants who terminated employment prior to the Merger may elect to receive the shares of qualifying employer securities credited to their accounts. After attaining age 55 with 10 or more years of participation in the ESOP, participants may also elect to receive a maximum of 50% of their vested shares over a six-year period. Participants vest in their plan accounts 20% per year of service, and service prior to the effective date of the plan counts for this purpose. Participants were fully vested after five years of continuous service. Allocated shares vest immediately for participants who terminate due to retirement (at 65 years of age), permanent disability, or death. A participant could require us to purchase qualifying employer securities received from the plan at the value the stock then has, as determined for plan purposes (a “put option”). Shares of qualifying employer securities distributed from the plan were subject to a “right of first refusal” in favor of us or the ESOP at the value the stock then has, as determined annually by an independent financial consulting firm based on our performance and financial condition. The put option and right of first refusal no longer apply.

      Voting rights on and decisions whether to tender or exchange shares of qualifying employer securities held in the ESOP were “passed through” to participants. Each participant was entitled to direct the plan’s trustee as to the voting of (1) shares of qualifying employer securities credited to the participant’s account and (2) a proportionate part of the unallocated shares of qualifying employer securities held in the suspense account and shares of qualifying employer securities allocated to participants’ accounts as to which no direction is received by the plan’s trustee. In the event of a tender or exchange offer for qualifying employer securities held in the plan, each participant was entitled to direct the plan’s Trustee whether to tender or exchange shares of qualifying employer securities held in the plan in a manner similar to the voting directions described above.

      Because the employer’s contributions to the ESOP were not fixed, benefits payable under the plan could not be estimated.

      For the plan year ended October 29, 2005, the number of shares of Holdings common stock allocated under the ESOP to the accounts of the Named Executives were:

	Shares Allocated
	Year Ended		Cumulative to
Name	October 29, 2005		October 29, 2005
Michael S. Lipscomb		551.3366		5,108.7361
Paul R. Keen		551.3366		5,108.7361
Frances S. St. Clair		551.3366		5,059.7717

      GAAP requires that any third party borrowing by the ESOP be reflected as a liability on our statement of financial condition. Since the plan borrowed from us, the obligation is not treated as an asset of ours, but was deducted from shares of stock held by the ESOP. If the plan purchased newly issued shares of Holdings common stock, total shareholders’ equity would neither increase nor decrease.

      The Internal Revenue Service has issued a determination letter dated March 26, 2003, that the ESOP is qualified under Section 401(a) of the Code and is an employee stock ownership plan under Section 4975(e)(7) thereof. A new determination letter application was filed with the Internal Revenue Service in light of the termination of the ESOP. Contributions to the plan and allocations to the accounts of eligible participants thereunder were subject to applicable limitations imposed under the Code. The plan is subject to the requirements of the Employee Retirement Income Security Act of 1974, as amended, known as “ERISA,” and the regulations thereunder.

      On December 15, 2005, ESOP participants, including the Named Executives other than Ms. St. Clair (who will receive a distribution as a terminated employee), were permitted to elect a cash distribution of up to 50% of their ESOP accounts, net of amounts paid into the $8.5 million escrow account under the Merger Agreement. The total value of all ESOP accounts, net of escrow amounts, will be paid to participants upon Internal Revenue Service approval of the termination of the ESOP. Amounts in respect of the escrow account will be paid to participants as soon as practicable after receipt of such funds from the escrow account agent upon termination of the escrow under the Merger Agreement.

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      Employee Stock Ownership Plan Excess Benefit Plan. Argo-Tech maintained the ESOP Excess Benefit Plan, an unfunded non-qualified plan that at all times was deemed invested in Holdings common stock. This plan was for certain highly compensated employees participating in the ESOP and provided benefits that were not permitted to be provided to such employees under the ESOP because of limitations under the Code applicable to tax-qualified plans. Benefits under this plan vested in the same manner as benefits under the ESOP and distributions from the plan were, subject to certain restrictions, made in whole or fractional shares of Holdings common stock at the same time or times as benefits under the ESOP are distributable, or in the case of benefits with respect to qualifying employer securities subject to the put option under the ESOP, at the time the plan participant exercised (or was deemed to have exercised) a hypothetical “put option” under the plan.

      Pursuant to an amendment to the ESOP Excess Benefit Plan, the ESOP Excess Benefit Plan was terminated effective as of the closing date of the Merger, and all amounts accrued under the plan were paid to participants in a single lump-sum cash payment. Argo-Tech maintains a bookkeeping account for amounts credited to the accounts of plan participants. For the plan year ended October 29, 2005, the amounts credited to the accounts of the Named Executives were:

	Equivalent Shares Credited
	Year Ended		Cumulative to
Name	October 29, 2005		October 29, 2005
Michael S. Lipscomb		1,718.6596		11,192.9153
Paul R. Keen		397.7742		2,872.0394
Frances S. St. Clair		330.6695		1,982.2305

Incentive stock option plans.

Aggregate Option/ SAR Exercises in Last Fiscal Year

and Fiscal Year End Option/ SAR Values

							Number of
							Securities			Value of
							Underlying			Unexercised
							Unexercised			in-the-Money
							Options/SARs			Options at
							at FY-end			FY-end($)
			Shares
	Exercise		Acquired		Value		Exercisable/			Exercisable/
Name	Price		on Exercise		Realized(1)		Unexercisable			Unexercisable
Michael S. Lipscomb	$	10.00		8,670	$	914,598		—/—			—/ —
		40.00		6,125		462,376		—/—			—/ —
		100.11		4,000		61,520		—/—			—/ —
		49.79		18,926		1,243,438		—/—			—/ —
Paul R. Keen	$	10.00		—		380,591		—/—			—/ —
		40.00		—		445,056		—/—			—/ —
		100.11		—		141,599		1,400/—	(2)		141,599/—
		49.79		—		1,013,735		3,600/—	(2)		545,263/—
Frances St. Clair	$	10.00		—		571,843		—/—			—/ —
		40.00		—		445,056		—/—			—/ —
		100.11		—		141,599		—/—			—/ —
		49.79		—		1,013,735		—/—			—/ —

(1)	Values include cash received for cancellation of options in connection with the Merger. In connection with the consummation of the Merger, the then existing options held by the named executive officers were cashed out or exchanged for options to purchase certain rollover securities described in Item 13.
(2)	Upon the completion of the Merger, these options became options to purchase Class A Units of VGAT.

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      1991 Performance Stock Option Plan. The 1991 Performance Stock Option Plan provided for option grants for the purchase of Holdings common stock. The exercise price of each option was $10.00 per share. All of the options available under this plan were granted and have been amended by Holdings’ Compensation Committee, upon the recommendation of our Board of Directors, and with the consent of the optionees in June 2001, to extend the expiration date to November 9, 2011. All of the options granted under this plan became fully vested in January 1999 and were cancelled in exchange for the right to receive cash payments in the Merger. Upon completion of the Merger, this plan was terminated.

      1991 Management Incentive Stock Option Plan. The 1991 Management Incentive Stock Option Plan provided for option grants for the purchase of Holdings common stock. The exercise price of each option was $10.00 per share. All of the options available under this plan were granted and have been amended by Holdings’ Compensation Committee, upon the recommendation of our Board of Directors, and with the consent of the optionees in June 2001, to extend the expiration date to November 9, 2011. All of the options granted under this plan became fully vested in January 1999 and were cancelled in exchange for the right to receive cash payments in the Merger. Upon completion of the Merger, this plan was terminated.

      1998 Equity Replacement Stock Option Plan. The 1998 Equity Replacement Stock Option Plan (as amended June 12, 2001) was established to provide for option grants for the purchase of Holdings common stock. The exercise price of each option was $40.00 per share. The options were granted to each person who was a participant in the 1997 Stock Appreciation Rights Plan in exchange for, and in cancellation of, all of the rights of each such participant under the 1997 Stock Appreciation Rights Plan, which was terminated in 1999. These options, which were granted by Holdings’ Compensation Committee upon the recommendation of our Board of Directors and amended by Holdings’ Board of Directors on December 7, 2004, expire on January 2, 2015. All of the options granted under this plan were fully vested upon issuance and were cancelled in exchange for the right to receive cash payments in the Merger. Upon completion of the Merger, this plan was terminated.

      1998 Incentive Plan. The 1998 Incentive Plan was established to provide option grants for the purchase of Holdings common stock, at prices that may be more than, less than or equal to the fair market value of the shares, as Holdings’ Board or Compensation Committee determined at the time of grant. Options were granted by Holdings’ Compensation Committee upon the recommendation of our Board of Directors. There were three option grants under the 1998 Incentive Plan, the first in 1999 with an exercise price of $100.11, the second in 2001 with an exercise price of $69.18 and the third in 2002 with an exercise price of $49.79. None of the Named Executives received option grants in 2001. The option agreement governing the options granted in 1999 provided that such options vest in 20% increments over five successive years. For any year in which the EBITDA of Argo-Tech exceed 105% of the target EBITDA, an additional 13¹/3% of the optioned shares vested. Effective November 2, 2000 all holders of options granted in 1999 agreed to the cancellation of the portion of the 1999 options which were not vested at such date. Pursuant to the plan, such cancelled options were available for new grants. The option agreement governing the options granted under the plan in September 2001 and March 2002 provided for vesting as follows: 33.3% at the time of issuance and 33.3% on the anniversary date of the grant over the next two years. All options granted under the plan expired ten years from the date of grant. In the event that Holdings common stock became registered or traded on a national exchange or in the event of a sales transaction (as defined in the plan) or the involuntary termination (as defined in the agreement), all options would have become exercisable in full. All options granted under this plan, except for certain rollover securities described in Item 13, were cancelled in exchange for the right to receive cash payments in the Merger. Upon completion of the Merger, this plan was terminated.

Compensation Committee Interlocks and Insider Participation

      Argo-Tech’s Board of Directors functions as its compensation committee. Mr. Lipscomb, Ms. St. Clair and Mr. Keen were members of the Board of Directors and executive officers of Argo-Tech during Argo-Tech’s fiscal year ended October 29, 2005.

      None of Argo-Tech’s executive officers serves as a director or member of the compensation committee of another entity, one of whose executive officers serves as a member of the Board of Directors of Argo-Tech.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

      Argo-Tech is a wholly-owned subsidiary of Holdings, which owns the only outstanding share of Argo-Tech’s common stock, par value $.01 per share. VGAT beneficially owns all of the outstanding common stock of Holdings. The following table sets forth the ownership of VGAT’s Class A Units, Class B Units and Class C Units, on a combined basis, as of January 24, 2006 by:

•  each person known to Argo-Tech to be the beneficial owner of more than 5% of VGAT’s units;

•  each director of Argo-Tech;

•  each of the Named Executives; and

•  all of the Argo-Tech directors and executive officers as a group.

      On January 24, 2006, there were 594,466 Class A Units of VGAT, 18,580 Class B Units of VGAT and 18,580 Class C Units of VGAT outstanding. As of January 24, 2006, the vesting criteria of the Class B Units and Class C Units had not been met, and accordingly, the Class B Units and Class C Units were not entitled to vote on any matters presented to unitholders of VGAT.

				Immediately
		Number of		Exercisable
		Class A Units		Options to
		Beneficially		Purchase Class A				Percent of Total
Name of Beneficial Owner		Owned		Units(1)		Total		Class A Units
Greenbriar Equity Group LLC			269,743		—		269,743		45.4	%
	555 Theodore Fremd Avenue
	Rye, NY 10580
Vestar Capital Partners IV, L.P.			269,743		—		269,743		45.4	%
	245 Park Avenue
	41st Floor
	New York, NY 10167
Michael S. Lipscomb+			37,221		—		37,221		6.3	%
Paul R. Keen			4,039		5,000		9,039		1.5	%
John S. Glover			—		2,600		2,600		*
John Daileader(2)+			269,743		—		269,743		45.4	%
Reginald L. Jones, III(3)+			269,743		—		269,743		45.4	%
Jeffrey W. Long(4)+			269,743		—		269,743		45.4	%
Kathleen Moran(5)+			269,743		—		269,743		45.4	%
Daniel S. O’Connell(6)+			269,743		—		269,743		45.4	%
John R. Woodard(7)+			269,743		—		269,743		45.4	%
Directors and Executive Officers as a Group			580,746		7,600		588,346		97.7	%

* Less than 1%

+  Director of Argo-Tech

(1)	Includes options to purchase VGAT Class A Units exercisable within 60 days of January 24, 2006.
(2)	Mr. Daileader may be deemed to beneficially own the units beneficially owned by Greenbriar and its affiliated entities because of his relationship with Greenbriar and its affiliated entities and because Mr. Daileader was appointed to Argo-Tech’s Board of Directors at the request of Greenbriar. Mr. Daileader disclaims any beneficial ownership of the units owned by Greenbriar and its affiliates.
(3)	Mr. Jones may be deemed to beneficially own the units beneficially owned by Greenbriar and its affiliated entities because of his relationship with Greenbriar and its affiliated entities and because Mr. Jones was appointed to Argo-Tech’s Board of Directors at the request of Greenbriar. Mr. Jones disclaims any beneficial ownership of the units owned by Greenbriar and its affiliates.

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(4)	Mr. Long may be deemed to beneficially own the units beneficially owned by Vestar and its affiliated entities because of his relationship with Vestar and its affiliated entities and because Mr. Long was appointed to Argo-Tech’s Board of Directors at the request of Vestar. Mr. Long disclaims any beneficial ownership of the units owned by Vestar and its affiliates.
(5)	Ms. Moran may be deemed to beneficially own the units beneficially owned by Greenbriar and its affiliated entities because of her relationship with Greenbriar and its affiliated entities and because Ms. Moran was appointed to Argo-Tech’s Board of Directors at the request of Greenbriar. Ms. Moran disclaims any beneficial ownership of the units owned by Greenbriar and its affiliates.
(6)	Mr. O’Connell may be deemed to beneficially own the units beneficially owned by Vestar and its affiliated entities because of his relationship with Vestar and its affiliated entities and because Mr. O’Connell was appointed to Argo-Tech’s Board of Directors at the request of Vestar. Mr. O’Connell disclaims any beneficial ownership of the units owned by Vestar and its affiliates.
(7)	Mr. Woodard may be deemed to beneficially own the units beneficially owned by Vestar and its affiliated entities because of his relationship with Vestar and its affiliated entities and because Mr. Woodard was appointed to Argo-Tech’s Board of Directors at the request of Vestar. Mr. Woodard disclaims any beneficial ownership of the units owned by Vestar and its affiliates.

Item 13. Certain Relationships and Related Transactions.

Transactions with Officers

      Loan agreements. Mr. Keen entered into recourse loan agreements with Holdings in December 1990 and July 1997. As of October 28, 2005 and immediately prior to the completion of the Merger, the amount of indebtedness outstanding under the agreements was $312,595.64. Each loan was originally due October 30, 2005 and accrued interest at 6.75% annually. Each loan was amended on December 1, 2004 to extend the maturity until October 20, 2010 and to accrue interest at 5.0% annually. Because the loans were with Holdings and Holdings is not an issuer (as defined in the Sarbanes-Oxley Act of 2002), the modification of these loans did not violate Section 402 of that act. These loans were secured by Holdings common stock. Mr. Keen had entered into a pledge agreement and promissory note with Holdings in connection with these loans. Upon completion of the Merger, these loans were paid in full with the merger consideration received from the stock securing the loans.

      Mr. Lipscomb also entered into a loan agreement on the same terms with Holdings. He repaid the balance of such loans on August 24, 2005. The largest amount of indebtedness outstanding since the beginning of fiscal 2005 was $592,116.66.

Securityholders Agreement

      Immediately prior to the completion of the Merger, VGAT entered into a securityholders agreement with the Sponsors, the unaffiliated third parties investing in VGAT and certain members of management who made an equity investment in VGAT by rolling over some or all of their equity interests in Holdings. This agreement provides that VGAT’s management committee and the board of directors of Holdings will be comprised of our chief executive officer and an equal number of representatives designated by each of the Sponsors, with such Sponsor representatives constituting a majority of the entire committee or board, as applicable. The agreement also provides that each securityholder will vote its voting securities to elect to the management committee of VGAT and the board of directors of Holdings or comparable body of Holdings and each of its subsidiaries the persons designated by the Sponsors. Pursuant to the terms of this agreement, each of the parties agrees to vote their voting securities as directed by the Sponsors for the approval of certain corporate transactions submitted to a vote of securityholders. The voting provisions of this agreement terminate in connection with an initial public offering of VGAT or any of its subsidiaries, if required by the managing underwriter.

      The securityholders agreement also provides that neither Sponsor may transfer its securities of VGAT without the approval of the other Sponsor and that the management unitholders are generally restricted from transferring their securities, subject to certain exceptions. Management holders, however, are granted the right to participate in any proposed transfer by either Sponsor.

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      In addition, the securityholders agreement contains provisions with respect to registration rights that provide each of the Sponsors the right to request registration of their securities on Form S-1 or any similar long-form registration statement or, if available, registrations on Form S-2 or S-3 or any similar short-form registration statement, each at VGAT’s expense. In the event that the Sponsors make such a demand request registration, all other parties to the securityholders agreement will be entitled to participate in such registration, subject to certain limitations. The agreement also provides securityholders with customary piggyback registration rights with respect to other registrations by VGAT.

      Finally, at any time following the sixth anniversary of the completion of the Merger, each of the Sponsors shall have the right to cause VGAT to redeem their respective interests in it. If VGAT fails to redeem such interests, the Sponsors shall have the right to cause VGAT to consummate an initial public offering, a company sale or a refinancing to effectuate such redemption.

Professional Services Agreements

      Upon the completion of the Merger, Holdings entered into separate professional services agreements with affiliates of each of the Sponsors. Pursuant to these agreements, each of the Sponsors will assist in strategic financial planning and certain advisory and consulting services, and will each receive an annual fee of approximately $375,000. It is anticipated that Argo-Tech will pay its share of the cost of these services. In addition, the Sponsors will be paid transaction fees, in reasonable and customary amounts, for investment banking services rendered in transactions that Holdings or its subsidiaries may enter into from time to time. Upon the consummation of the Transactions, each of the Sponsors was paid a onetime transaction fee of approximately $2.7 million in connection with the Sponsors’ arranging equity and debt financing for the Merger and related transactions, as well as paid the Sponsors’ out-of-pocket expenses. These agreements will terminate upon the consummation of an initial public offering by Holdings or one of its subsidiaries or upon such time the Sponsor that is party to the agreement holds less than 30% of the securities of VGAT that it held immediately after the completion of the Merger.

Interests of Certain Argo-Tech Directors and Officers in the Merger

      Rollover of Holdings Common Stock. As a condition to VGAT’s obligation to complete the Merger, VGAT required each of the following Named Executives to contribute that number of their shares of Holdings common stock indicated below to VGAT in exchange for Class A Units of VGAT and to rollover certain of their options to purchase shares of Holdings common stock so that those options remained outstanding as options to purchase Class A Units of VGAT following the completion of the Merger:

		Common		Common
		Shares		Shares to be		Options		Options to
		Currently		Contributed		Currently		Remain
Name		Held(1)		to VGAT		Held		Outstanding
Michael S. Lipscomb			59,744		37,721		—		—
Paul R. Keen			12,027		4,039		12,843		5,000
Frances S. St. Clair			5,812		—		13,843		—
	Total		77,583		41,760		26,686		5,000

(1)  Excludes shares held through the ESOP.

      The Class A Units of VGAT and options to purchase Class A Units to be held by Mr. Lipscomb and Mr. Keen will be subject to the securityholders agreement described above under “— Securityholders Agreement.”

      Indemnification of Directors and Officers. Holdings purchased directors’ and officers’ liability insurance tail coverage covering each current or former director or officer of Holdings and its subsidiaries with respect to claims arising from facts or events that occurred prior to the Merger closing and for a period of six years thereafter.

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      Payments to Executive Officers and Directors of Argo-Tech as a Result of the Merger. The following table outlines the cash payments each executive officer and director of Holdings immediately prior to the completion of the Merger received in connection with the Merger based on the merger consideration of $201.252 per share and not taking into account pro rata adjustment for the funds held in escrow related to possible indemnification claims:

		Common Shares
		Cashed Out				Options Cashed Out				SERP Shares(1)				Stay Pay/
														Severance
Name		Number		$		Number		$		Number		$		Payments(2)		Total(3)
Michael Lipscomb			22,023	$	4,432,173		—	$	—		11,193	$	2,252,597	$	1,086,368	$	7,771,138
Frances St. Clair			5,812		1,169,677		13,843		2,172,233		1,982		398,928		604,830		4,345,668
Paul R. Keen			7,988		1,607,601		7,843		1,294,119		2,872		578,004		641,196		4,120,920
	Total		35,823	$	7,209,451		21,686	$	3,466,352		16,047	$	3,229,529	$	2,332,394	$	16,237,726

(1)	This information includes 2005 awards under the ESOP Excess Benefit Plan.
(2)	Because Mr. Lipscomb and Mr. Keen entered into new employment agreements with Argo-Tech, which replaced all existing employment, stay pay and severance agreements they had entered into, the amount of their payments listed in this column do not include any severance payments. Ms. St. Clair resigned as an officer and director of Holdings and Argo-Tech effective upon completion of the Merger. Accordingly, her amount in this column reflects an additional $509,144 to which she was entitled under her existing agreement.
(3)	The amounts included in this table for Mr. Lipscomb, Ms. St. Clair and Mr. Keen do not reflect the 5,108, 5,059 and 5,108 shares, respectively, they owned through the ESOP.

Distribution agreements

      Upsilon International Corporation, which we sometimes refer to as “UIC,” was appointed the exclusive distributor of our engine fuel pump and certain air frame products manufactured at our Cleveland, Ohio facility, first in 1990 with respect to the Japanese market, and in 1994 for the entire international market under a long-term distribution agreement. Effective December 15, 2000, UIC was also appointed an Argo-Tech non-exclusive sales agent for engine overhaul and repair and certain other product support agreements. UIC is owned by YC International, Inc., which is under the control of Mr. Masashi Yamada, who was a stockholder of Holdings through his control of YC International and AT Holdings, LLC before the completion of the Merger. We believe that this distribution agreement was entered into on terms and conditions customary for the industry in all respects with the exception of the contract term of 50 years with respect to UIC’s distribution activities, and termination provisions relating to such distribution activities which are more favorable to UIC than industry norm. The agreement provides for a 15% discount from Argo-Tech catalog prices on all purchases of our products by UIC and a sales commission of 5% on international overhaul and repair business obtained by us after December 15, 2000. For fiscal 2005, sales by UIC accounted for approximately 11.0% of our net revenues. In addition, two entities controlled by Mr. Yamada serve as distributors in the Japanese military market for products manufactured by Argo-Tech Corporation Costa Mesa. For fiscal 2005, sales to these entities accounted for approximately 1.0% of our net revenues.

Item 14. Principal Accountant Fees and Services.

Audit Fees

      Deloitte & Touche billed the Company an aggregate of approximately $255,000 in fees for professional services rendered in connection with the audit of the Company’s annual consolidated financial statements and reviews of the consolidated financial statements included in its quarterly reports during the fiscal year ended October 29, 2005 and $247,000 in fees for professional services rendered in connection with the audit of the Company’s annual consolidated financial statements and reviews of the consolidated financial statements included in its quarterly reports during the fiscal year ended October 30, 2004.

49

Audit-Related Fees

      Audit-related fees for the fiscal years ended October 29, 2005 and October 30, 2004 billed by D&T were approximately $232,000 and $150,000, respectively, for assurance and related service provided to management in connection with the audit of Argo-Tech’s employee benefit plans, reviews of documents filed with the SEC and assistance and consultation provided in relation to the Merger.

Tax Fees

      Tax fees for the fiscal years ended October 29, 2005 and October 30, 2004 billed by D&T were approximately $173,000 and $92,000, respectively, for assistance and consultation provided to the Company in connection with tax compliance matters, tax planning matters and consultation provided in relation to the Merger.

All Other Fees

      Deloitte & Touche billed the Company an aggregate of approximately $21,000 and $154,000 during the fiscal year ended October 29, 2005 and October 30, 2004, respectively, in fees for professional services, including amending certain tax returns, in connection with the completion of a research and development tax incentive project.

Audit Committee Pre-Approval Policy

      The Audit Committee of Holdings has established a policy to delegate authority to the CEO to approve any audit or permissible non-audit services not in excess of $25,000. The Audit Committee pre-approves, on an individual basis, all audit and permissible non-audit services estimated to be in excess of $25,000 provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

      (a)(1) Financial Statements

      The following consolidated financial statements of the Company are included in a separate section of this report following the signature page:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of October 29, 2005 and October 30, 2004 (Predecessor)

Consolidated Statements of Net Income (Loss) for the Fiscal Years ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)

Consolidated Statements of Shareholder’s Equity/(Deficiency) for the Fiscal Years ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)

Consolidated Statements of Cash Flows for the Fiscal Years ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)

Notes to Consolidated Financial Statements for the Fiscal Years ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)

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      (a)(2) Financial Statement Schedules

      The following financial statement schedule is included in a separate section of this report following the signature page:

      Valuation and Qualifying Account for the Fiscal Years ended October 29, 2005, October 30, 2004 and October 25, 2003

(a)(3)  Exhibits

Exhibit
Number			Description of Exhibit (and document from which incorporated by reference, if applicable)
	2	.1*	Agreement and Plan of Merger, dated September 13, 2005, by and among AT Holdings Corporation, Argo-Tech, GreatBanc Trust Company, as Trustee for the Argo-Tech Corporation Employee Stock Ownership Plan, V.G.A.T. Investors, LLC and Vaughn Merger Sub, Inc.
	2	.2*	Amendment No. 1 to Agreement and Plan of Merger, dated as of October 26, 2005, by and among AT Holdings Corporation, Argo-Tech, Great Banc Trust Company, as Trustee for the Argo-Tech Corporation Employee Stock Ownership Plan, V.G.A.T. Investors, LLC and Vaughn Merger Sub, Inc.
	3	.1	Restated Certificate of Incorporation of Argo-Tech, dated April 16, 1999 (incorporated herein by reference to Exhibit 3.1 of Argo-Tech’s registration statement on form S-4/ A filed April 23, 1999, SEC File No. 333-73179)
	3	.2	Restated By-Laws of Argo-Tech dated April 16, 1999 (incorporated herein by reference to Exhibit 3.2 of Argo-Tech’s registration statement on Form S-4/ A filed April 23, 1999, SEC File No. 333-73179)
	4	.1	Indenture dated June 23, 2004, between Argo-Tech, the Subsidiary Guarantors signatory thereto and BNY Midwest Trust Company, as Trustee, relating to the 91/4% Senior Notes due 2010 (the form of which is included in such Indenture) (incorporated herein by reference to Exhibit 4.1 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 31, 2004, SEC File No. 333-38223)
	4	.2*	First Supplemental Indenture, dated October 25, 2005, to the Indenture, dated June 23, 2004, between Argo-Tech, the Subsidiary Guarantors signatory thereto and BNY Midwest Trust Company, as Trustee, relating to the 91/4% Senior Notes due 2010
	10	.1+	Form of Stay Pay and Severance Agreement dated June 6, 1996, between Argo-Tech and certain Executive Officers of Argo-Tech (Michael S. Lipscomb, Frances S. St. Clair, and Paul R. Keen) (incorporated herein by reference to Exhibit 10.1 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223) (superceded by Exhibits 10.6, 10.52 and 10.7, respectively)
	10	.2+	Employment Agreement dated October 15, 1986 between Argo-Tech and Michael S. Lipscomb (incorporated herein by reference to Exhibit 10.3 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223) (superceded by Exhibit 10.6)
	10	.3+	Employment Agreement dated February 13, 1989 between Argo-Tech and Paul R. Keen (incorporated herein by reference to Exhibit 10.2 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223 (superceded by Exhibit 10.7)
	10	.4+	Amendment, dated May 1, 2005, to Employment Agreement, dated October 15, 1986, between Argo-Tech and Michael S. Lipscomb (incorporated herein by reference to Exhibit 10.1 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 30, 2005, SEC File No. 333-38223) (superceded by Exhibit 10.6)
	10	.5+	Amendment, dated May 1, 2005, to Employment Agreement dated February 13, 1989 between Argo-Tech and Paul R. Keen (incorporated herein by reference to Exhibit 10.2 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 30, 2005, SEC File No. 333-38223) (superceded by Exhibit 10.7)
	10	.6+*	Employment Agreement, dated October 28, 2005, between Argo-Tech and Michael S. Lipscomb
	10	.7+*	Employment Agreement, dated October 28, 2005, between Argo-Tech and Paul R. Keen

51

Exhibit
Number			Description of Exhibit (and document from which incorporated by reference, if applicable)
	10	.8+	Argo-Tech Corporation Trust Agreement dated October 28, 1994 between Argo-Tech and Society National Bank, as Trustee, relating to the Employment Agreement dated October 15, 1986 between Argo-Tech and Michael S. Lipscomb (incorporated herein by reference to Exhibit 10.4 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.9+*	Rabbi Trust Amendment, dated October 25, 2005, to the Argo-Tech Corporation Trust Agreement dated October 28, 1994 between Argo-Tech and National City Bank, N.A. (as successor to Society National Bank), as Trustee, relating to the Employment Agreement dated October 15, 1986 between Argo-Tech and Michael S. Lipscomb
	10	.10+	Argo-Tech Corporation Salaried Pension Plan, dated November 1, 1995 (incorporated herein by reference to Exhibit 10.5 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.11+	First Amendment to Argo-Tech Corporation Salaried Pension Plan (incorporated herein by reference to Exhibit 10.6 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.12+	Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, dated May 17, 1994 (incorporated herein by reference to Exhibit 10.7 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.13+	First Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, dated October 26, 1994 (incorporated herein by reference to Exhibit 10.8 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.14+	Second Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, dated May 9, 1996 (incorporated herein by reference to Exhibit 10.9 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.15+	Third Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, dated July 18, 1997 (incorporated herein by reference to Exhibit 10.10 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.16+*	Fourth Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, dated as of September 15, 2005
	10	.17+*	Fifth Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, dated as of October 25, 2005
	10	.18+	Argo-Tech Corporation Employee Stock Ownership Plan Excess Benefit Plan, dated May 17, 1994 (incorporated herein by reference to Exhibit 10.11 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.19+	First Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan Excess Benefit Plan (incorporated herein by reference to Exhibit 10.34 of Argo-Tech’s registration statement on Form S-4 filed March 2, 1999, SEC File No. 333-73179)
	10	.20+*	Second Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan Excess Benefit Plan
	10	.21+	AT Holdings Corporation Stockholders’ Agreement, dated December 17, 1998 (incorporated herein by reference to Exhibit 10.12 of Argo-Tech’s Annual Report on Form 10-K for the year ended October 30, 1999, SEC File No. 333-38223)
	10	.22+	AT Holdings Corporation 1998 Supplemental Stockholders’ Agreement, dated December 17, 1998 (incorporated herein by reference to Exhibit 10.13 of Argo-Tech’s Annual Report on Form 10-K for the year ended October 30, 1999, SEC File No. 333-38223)
	10	.23+	Form of Management Incentive Compensation Plan for key employees of Argo-Tech (incorporated herein by reference to Exhibit 10.19 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)

52

Exhibit
Number			Description of Exhibit (and document from which incorporated by reference, if applicable)
	10	.24+	1991 Management Incentive Stock Option Plan, as amended, dated May 16, 1994 (incorporated herein by reference to Exhibit 10.20 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.25+	Amendment to the 1991 Management Incentive Stock Option Plan, as amended, dated June 12, 2001 (incorporated herein by reference to Exhibit 10.3 of Argo-Tech’s Quarterly Report on Form 10-Q for the quarter ended July 28, 2001, SEC File No. 333-38223)
	10	.26+	Form of Stock Option Agreement in connection with the Management Incentive Stock Option Plan, as amended, between Argo-Tech and each member of Argo-Tech’s Executive Staff (incorporated herein by reference to Exhibit 10.21 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.27+	1991 Performance Stock Option Plan, as amended, dated May 16, 1997 (incorporated herein by reference to Exhibit 10.22 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.28	Third Amended and Restated Credit Facility, dated June 23, 2004, by and among Argo-Tech Corporation, the Guarantors party thereto, the Lenders party thereto and National City Bank, as administrative agent (incorporated herein by reference to Exhibit 10.1 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 31, 2004, SEC File No. 333-38223) (superceded by Exhibit 10.30)
	10	.29	First Amendment, dated as of January 19, 2005, to Third Amended and Restated Credit Agreement, dated as of June 23, 2004, by and among Argo-Tech Corporation, AT Holdings Corporation, National City Bank, as administrative agent and an issuing bank, JPMorgan Chase Bank, as an issuing bank with respect to existing letters of credit issued thereunder and the other lenders signatory thereto. (incorporated herein by reference to Exhibit 10.1 of Argo-Tech’s current report on Form 8-K filed January 21, 2005, SEC File No. 333-38223) (superceded by Exhibit 10.30)
	10	.30*	Fourth Amended and Restated Credit Agreement, dated September 13, 2005, by and among Argo- Tech Corporation, the Guarantors party thereto, the Lenders party thereto and National City Bank, as administrative agent
	10	.31	Distributorship Agreement, dated December 24, 1990, between Argo-Tech, Yamada Corporation and Vestar Capital Partners, Inc. (incorporated herein by reference to Exhibit 10.25 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.32	Japan Distributorship Agreement, dated December 24, 1990, between Argo-Tech, Aerotech World Trade Corporation, Yamada Corporation, Yamada International Corporation and Vestar Capital Partners, Inc. (incorporated herein by reference to Exhibit 10.26 of Argo-Tech’s Registration Statement on Form S-1, filed October 17, 1997, SEC File No. 333-38223)
	10	.33	Stock Purchase Agreement, dated August 1, 1997, between Argo-Tech, J.C. Carter Company, Inc., Robert L. Veloz, Individually and as Trustee, Marlene J. Veloz, Individually and as Trustee, Edith T. Derbyshire, Individually and as Trustee, Harry S. Derbyshire, Individually and as Trustee, Michael Veloz, Katherine Canfield and Maureen Partch, as Trustee (incorporated herein by reference to Exhibit 10.27 of Argo-Tech’s Registration Statement on Form S-1/ A, filed November 26, 1997, SEC File No. 333-38223)
	10	.34	Prism Prototype Retirement Plan & Trust & 401(k) Profit Sharing Plan Adoption Agreement, dated November 1, 1994 (incorporated herein by reference to Exhibit 10.28 of Argo-Tech’s Registration Statement on Form S-1/ A, filed November 26, 1997, SEC File No. 333-38223)
	10	.35	Prism Prototype Retirement Plan and Trust (incorporated herein by reference to Exhibit 10.29 of Argo-Tech’s Registration Statement on Form S-1/ A, filed November 26, 1997, SEC File No. 333-38223)
	10	.36	Agreement of Purchase and Sale between Agnem Holdings, Inc. and TRW Inc. dated as of August 5, 1986 (incorporated herein by reference to Exhibit 10.30 of Argo-Tech’s Registration Statement on Form S-1/ A, filed November 26, 1997, SEC File No. 333-38223)

53

Exhibit
Number			Description of Exhibit (and document from which incorporated by reference, if applicable)
	10	.37+	AT Holdings Corporation/ Argo-Tech Corporation 1998 Equity Replacement Stock Option Plan (incorporated herein by reference to Exhibit 10.32 of Argo-Tech’s registration statement on Form S-4 filed March 2, 1999, SEC File No. 333-73179)
	10	.38+	Amendment to the AT Holdings Corporation/ Argo-Tech Corporation 1998 Equity Replacement Stock Option Plan dated June 12, 2001 (incorporated herein by reference to Exhibit 10.2 of Argo-Tech’s Quarterly Report on Form 10-Q for the quarter ended July 28, 2001, SEC File No. 333-38223)
	10	.39+	Form of Stock Option Agreement in connection with the AT Holdings Corporation/ Argo-Tech Corporation 1998 Equity Replacement Stock Option Plan (incorporated herein by reference to Exhibit 10.33 of Argo-Tech’s registration statement on Form S-4 filed March 2, 1999, SEC File No. 333-73179)
	10	.40+	Amendment, dated November 22, 2002, to Argo-Tech Corporation Trust Agreement, dated October 28, 1994 (incorporated herein by reference to Exhibit 10.36 of Argo-Tech’s annual report on Form 10-K for the year ended October 26, 2002, SEC File No. 333-38223)
	10	.41	Distribution Agreement, dated April 1, 2003, between Argo-Tech Corporation and Yamada Corporation (incorporated herein by reference to Exhibit 10.34 of Argo-Tech’s registration statement on Form S-4 filed September 23, 2004, SEC File No. 333-119227)
	10	.42*	Form of Professional Services Agreement, dated October 28, 2005, between AT Holdings Corporation and Vestar Capital Partners/ Greenbriar Equity Group LLC
	10	.43+	Collateral Assignment Split Dollar Insurance Agreement, dated January 1, 1996, between Argo-Tech and Michael S. Lipscomb (incorporated herein by reference to Exhibit 10.3 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 30, 2005, SEC File No. 333-38223)
	10	.44+	Collateral Assignment Split Dollar Insurance Agreement, dated January 1, 1996, between Argo-Tech and Paul R. Keen (incorporated herein by reference to Exhibit 10.4 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 30, 2005, SEC File No. 333-38223)
	10	.45+	Collateral Assignment Split Dollar Insurance Agreement, dated January 1, 1996, between Argo-Tech and Frances S. St. Clair (incorporated herein by reference to Exhibit 10.5 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 30, 2005, SEC File No. 333-38223)
	10	.46	Nonqualified Deferred Compensation Agreement, dated December 28, 1995, between Argo-Tech and Frances S. St. Clair (incorporated herein by reference to Exhibit 10.6 of Argo-Tech’s quarterly report on Form 10-Q for the quarter ended July 30, 2005, SEC File No. 333-38223)
	10	.47+*	Form of Incentive Unit Grant Agreement, dated October 28, 2005
	10	.48+*	Form of Amendment of Rollover Options and Waiver of Merger Consideration
	10	.49+*	Change in Control Agreement, dated October 28, 2005, between Argo-Tech and John S. Glover
	10	.50+*	Non-Solicitation and Confidentiality Agreement, dated as of October 28, 2005, between AT Holdings Corporation and Frances S. St. Clair
	12	.1*	Statement Regarding Computation of Ratios
	21	.1	List of Subsidiaries (incorporated herein by reference to Exhibit 21.1 of Argo-Tech’s registration statement on Form S-4 filed September 23, 2004, SEC File No. 333-119227)
	24	.1*	Powers of Attorney
	31	.1*	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2*	Certification by Chief Financial Officers pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

54

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Argo-Tech Corporation has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on the 27th day of January 2006.

ARGO-TECH CORPORATION

By:  /s/ Paul R. Keen

Name: Paul R. Keen

Title: Executive Vice President, General Counsel and Secretary

      Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been duly signed by the following persons on behalf of the registrant in the capacities and on the date indicated.

* Michael S. Lipscomb		Director, Chairman, President and Chief Executive Officer (Principal Executive Officer)	January 27, 2006
* John S. Glover		Vice President and Chief Financial Officer (Principal Financial Officer)	January 27, 2006
* Paul A. Sklad		Controller (Principal Accounting Officer)	January 27, 2006
* John Daileader		Director	January 27, 2006
* Reginald L. Jones, III		Director	January 27, 2006
* Jeffrey W. Long		Director	January 27, 2006
* Kathleen Moran		Director	January 27, 2006
* Daniel S. O’Connell		Director	January 27, 2006
* John R. Woodard		Director	January 27, 2006
By:	/s/ Paul R. Keen (Paul R. Keen, as Attorney-in-fact)

*  The undersigned, by signing his name hereto, does sign and execute this report pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as Exhibit 24 on behalf of the registrant.

55

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d)

of the Act by Registrants

Which Have Not Registered Securities Pursuant to Section 12 of the Act

      The registrant has not sent to security holders any annual report to security holders covering the registrant’s last fiscal year or any proxy statement, form of proxy or other proxy soliciting materials.

56

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

ANNUAL REPORT ON FORM 10-K:

FISCAL YEAR ENDED OCTOBER 29, 2005

ITEM 8 AND ITEM 15(a)(1)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX

	Page
Financial Statements:
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of October 29, 2005 and October 30, 2004 (Predecessor)		F-3
Consolidated Statements of Net Income/(Loss) for the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)		F-4
Consolidated Statements of Shareholder’s Equity/(Deficiency) for the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)		F-5
Consolidated Statements of Cash Flows for the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)		F-6
Notes to Consolidated Financial Statements for the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)		F-7 – F-30
Supplementary Data:
Valuation and Qualifying Accounts for the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003 (Predecessor)		F-31

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholder and Board of Directors

of Argo-Tech Corporation and subsidiaries

(a wholly-owned subsidiary of AT Holdings Corporation)

      We have audited the accompanying consolidated balance sheets of Argo-Tech Corporation and subsidiaries (a wholly-owned subsidiary of AT Holdings Corporation) (the “Company”) as of October 29, 2005 and October 30, 2004 (Predecessor), and the related consolidated statements of net income/(loss), shareholder’s equity/(deficiency), and cash flows for each of the three years in the period ended October 29, 2005 (Predecessor). Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Argo-Tech Corporation and subsidiaries as of October 29, 2005 and October 30, 2004 (Predecessor), and the results of their operations and their cash flows for each of the three years in the period ended October 29, 2005 (Predecessor), in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio

January 24, 2006

F-2

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

CONSOLIDATED BALANCE SHEETS

October 29, 2005 and October 30, 2004

					Predecessor
			2005		2004
			(In thousand,
			except share data)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	13,889	$	15,857
	Receivables, net			40,319		29,013
	Income tax receivable			3,630		1,203
	Inventories, net			70,965		28,557
	Deferred income taxes and prepaid expenses			1,688		6,245
		Total current assets		130,491		80,875
PROPERTY AND EQUIPMENT, net of accumulated depreciation				41,970		23,213
GOODWILL				200,152		110,059
INTANGIBLE ASSETS, net of accumulated amortization				214,440		31,502
OTHER ASSETS				1,453		8,613
Total Assets			$	588,506	$	254,262
LIABILITIES AND SHAREHOLDER’S EQUITY/(DEFICIENCY)
CURRENT LIABILITIES:
	Current portion of long-term debt		$	750	$	750
	Accounts payable			8,736		9,396
	Accrued liabilities			47,681		28,766
		Total current liabilities		57,167		38,912
LONG-TERM DEBT, net of current maturities				278,312		264,063
DEFERRED INCOME TAXES				75,120		7,747
OTHER NONCURRENT LIABILITIES				17,111		13,559
		Total Liabilities		427,710		324,281
REDEEMABLE ESOP STOCK				—		40,957
SHAREHOLDER’S EQUITY/(DEFICIENCY):
	Common Stock, $.01 par value, authorized 3,000 shares; 1 share issued and outstanding			—		—
	Paid-in capital			160,796		—
	Accumulated other comprehensive loss			—		(3,315	)
	Accumulated equity/ (deficit)			—		(107,661	)
		Total shareholder’s equity/(deficiency)		160,796		(110,976	)
Total Liabilities and Shareholder’s Equity/(Deficiency)			$	588,506	$	254,262

The accompanying notes to consolidated financial statements are an integral part of these statements.

F-3

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

CONSOLIDATED STATEMENTS OF NET INCOME/(LOSS)

For the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003

		Predecessor
		2005			2004			2003
		(In thousands)
Net revenues		$	212,595		$	187,328		$	160,726
Cost of revenues			124,855			109,203			94,535
	Gross profit		87,740			78,125			66,191
Selling, general and administrative			35,514			31,166			26,417
Research and development			12,814			11,934			9,525
Amortization of intangible assets			3,414			3,414			3,414
Merger expense			24,473			—			—
	Operating expenses		76,215			46,514			39,356
Income from operations			11,525			31,611			26,835
Interest expense			25,601			22,705			21,257
Debt extinguishment expense			—			12,961			—
Other, net			(109	)		(95	)		(529	)
Income/(loss) before income taxes			(13,967	)		(3,960	)		6,107
Income tax (benefit)/provision			(7,768	)		(3,499	)		1,579
Net income/(loss)		$	(6,199	)	$	(461	)	$	4,528

The accompanying notes to consolidated financial statements are an integral part of these statements.

F-4

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY/(DEFICIENCY)

For the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003

						Accumulated
	Common		Paid-In			Comprehensive			Accumulated
	Stock		Capital			Income/ (Loss)			Deficit			Total
	(In thousands)
BALANCE, OCTOBER 26, 2002 (Predecessor)	$	—	$	—		$	(3,235	)	$	(28,398	)	$	(31,633	)
Net income										4,528			4,528
Reduction minimum pension liability							973						973
Accretion of redeemable ESOP stock										(3,903	)		(3,903	)
Dividend										(226	)		(226	)
Foreign currency translation adjustment							119						119
Activity related to stock options										4			4
Other, net										210			210
BALANCE, OCTOBER 25, 2003 (Predecessor)	$	—	$	—		$	(2,143	)	$	(27,785	)	$	(29,928	)
Net loss										(461	)		(461	)
Additional minimum pension liability							(1,179	)					(1,179	)
Accretion of redeemable ESOP stock										(23,918	)		(23,918	)
Contributed redeemable ESOP stock										2,425			2,425
Dividend										(59,046	)		(59,046	)
Change in ESOP excess benefit plan										1,123			1,123
Foreign currency translation adjustment							7						7
Other, net										1			1
BALANCE, OCTOBER 30, 2004 (Predecessor)	$	—	$	—		$	(3,315	)	$	(107,661	)	$	(110,976	)
Net loss										(6,199	)		(6,199	)
Additional minimum pension liability							(125	)					(125	)
Accretion of redeemable ESOP stock										(32,255	)		(32,255	)
Contributed redeemable ESOP stock										8,453			8,453
Tax benefit on exercise of non-qualified stock options				938									938
Dividend										(7,019	)		(7,019	)
Change in ESOP excess benefit plan										404			404
Foreign currency translation adjustment							(68	)					(68	)
Other, net										(11	)		(11	)
BALANCE, OCTOBER 28, 2005 (Predecessor)	$	—	$	938		$	(3,508	)	$	(144,288	)	$	(146,858	)
Elimination of historical shareholder’s deficiency				(938	)		3,508			144,288			146,858
Investment from AT Holdings				160,796									160,796
BALANCE, OCTOBER 29, 2005	$	—	$	160,796		$	—		$	—		$	160,796

The accompanying notes to consolidated financial statements are an integral part of these statements.

F-5

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003

			Predecessor
			2005			2004			2003
			(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income/(loss)		$	(6,199	)	$	(461	)	$	4,528
	Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
	Depreciation			3,655			3,799			4,187
	Amortization of intangible assets and deferred financing costs			4,569			5,375			5,866
	Accretion of bond discount			—			219			304
	Debt extinguishment expense			—			12,961			—
	Non-cash stock option expense			841			—			—
	Compensation expense recognized in connection with employee stock ownership plan (ESOP)			8,453			4,851			1,874
	Compensation expense recognized in connection with ESOP excess benefit plan			—			1,123			—
	Deferred pension cost			—			(912	)		731
	Deferred income taxes			(4,750	)		(2,150	)		(1,227	)
	Changes in operating assets and liabilities:
		Receivables		(13,732	)		1,619			(4,010	)
		Inventories		(2,111	)		(2,856	)		(578	)
		Prepaid expenses		(430	)		(135	)		(348	)
		Accounts payable		(700	)		2,142			2,002
		Accrued and other liabilities		10,672			7,640			2,220
		Other, net		(75	)		15			124
	Net cash provided by operating activities			193			33,230			15,673
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures			(4,376	)		(3,056	)		(1,939	)
	Net cash used in investing activities			(4,376	)		(3,056	)		(1,939	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Sale of senior notes			—			250,000			—
	Purchase of senior subordinated notes			—			(200,571	)		—
	Borrowing of long-term debt			5,000			15,000			—
	Repayment of long-term debt			(750	)		(26,038	)		(16,000	)
	Payment of financing related fees			(1,390	)		(7,719	)		(1,224	)
	Transaction related cash received from AT Holdings			6,374			—			—
	Purchase of AT Holdings stock from former ESOP participants			(3,886	)		(567	)		(273	)
	Dividend to AT Holdings			(3,133	)		(58,479	)		—
	Other, net			—			—			51
	Net cash provided by (used in) financing activities			2,215			(28,374	)		(17,446	)
CASH AND CASH EQUIVALENTS:
Net increase (decrease) for the period				(1,968	)		1,800			(3,712	)
Balance, beginning of period				15,857			14,057			17,769
Balance, end of period			$	13,889		$	15,857		$	14,057

The accompanying notes to consolidated financial statements are an integral part of these statements.

F-6

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended October 29, 2005, October 30, 2004 and October 25, 2003

1. BASIS OF PRESENTATION

      The principal operations of Argo-Tech Corporation (a wholly-owned subsidiary of AT Holdings Corporation (“Holdings”)) and its subsidiaries (“Argo-Tech” or the “Company”) include the design, manufacture and distribution of aviation products, primarily aircraft fuel pumps. In addition, Argo-Tech leases a portion of its Cleveland, Ohio manufacturing facility to other parties. Argo-Tech’s fiscal year ends on the last Saturday in October. The fiscal year ended October 30, 2004 consisted of 53 weeks and the fiscal years ended October 29, 2005 and October 25, 2003 consisted of 52 weeks. Prior to the Merger, Argo-Tech was obligated to fulfill certain obligations of Holdings to purchase Holdings’ common stock in accordance with the provisions of the Argo-Tech Corporation Employee Stock Ownership Plan. As a result, that obligation has been reflected in its financial statements. Certain reclassifications have been made in the prior years’ financial statements to conform to the current year presentation.

      Argo-Tech Corporation is a parent holding company and all of its domestic subsidiaries guarantee Argo-Tech’s senior notes issued in June 2004. Argo-Tech also has two wholly-owned, non-guarantor foreign subsidiaries which have inconsequential assets, liabilities and equity. Argo-Tech has no outside assets, liabilities or operations apart from its wholly-owned subsidiaries. The senior notes (Note 13) are fully, unconditionally, jointly and severally guaranteed by the guarantor subsidiaries, and therefore, separate financial statements of the guarantor subsidiaries will not be presented. Management has determined that the information presented by such separate financial statements is not material to investors.

2. MERGER

      On October 28, 2005, Holdings consummated a merger with Vaughn Merger Sub, Inc. (“Vaughn”) in which Vaughn merged with and into Holdings (the “Merger”), with Holdings surviving as a wholly owned subsidiary of V.G.A.T. Investors, LLC (“VGAT”). Effective upon the completion of the Merger, Argo-Tech and Holdings entered into the Fourth Amended and Restated Credit Agreement (the “Amended Credit Facility”), dated as of September 13, 2005. The Amended Credit Facility provides for aggregate borrowings by Argo-Tech of up to approximately $59.1 million, comprised of senior secured loans of approximately $19.1 million, consisting of the term loans outstanding ($14.1 million) on the effective date of the Amended Credit Facility plus an additional $5.0 million term loan and loans under a senior secured revolving credit facility (the “Revolving Loans”) in an aggregate principal amount not to exceed $40.0 million. All loans under the Amended Credit Facility will mature on June 23, 2009.

      On October 6, 2005, Argo-Tech commenced a solicitation (the “Solicitation”) of consents from holders of the 9¹/4% Senior Notes (the “Notes”) to modify the covenant in the Indenture dated June 23, 2004, by and among Argo-Tech, the guarantors named therein and The Bank of New York Trust Company, N.A. (formerly known as BNY Midwest Trust Company), as trustee (the “Indenture”) that (i) limits Restricted Payments (as defined in the Indenture) to permit Argo-Tech to make distributions of up to $5.0 million to Holdings in connection with the Merger, (ii) relates to the financial reporting obligations to provide that if Holdings executes and delivers an unconditional guarantee to Argo-Tech and the trustee with respect to all obligations and liabilities under the Indenture, then the financial reports and other information required by that covenant may be provided by Holdings (together, the “Indenture Amendments”), and (iii) waives the requirement that Argo-Tech make a Change of Control Offer (as defined in the Indenture) as a result of the Merger. The Solicitation expired on October 26, 2005 whereby $172,240,000, or 68.9%, in aggregate principal amount of the Notes consented to the proposed amendments and waiver and Argo-Tech entered into a First Supplemental Indenture (the “Supplemental Indenture”) to the Indenture. As a result of the change in control of Holdings that occurred on October 28, 2005 in connection with the Merger, a Change of Control (as defined in the Indenture) occurred. Accordingly, on November 1, 2005, the Company made a Change of

F-7

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Control Offer, pursuant to which Argo-Tech offered to repurchase, for cash, all or part of the Notes, as to which a valid consent and waiver was not delivered in the Solicitation, at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest. No Notes were tendered and the Change of Control Offer expired at 5 pm on December 1, 2005. The cash merger consideration of approximately $164.7 million paid to Holdings’ former common stockholders, holders of in-the-money stock options and stock appreciation rights and the holder of the warrant to purchase Holdings common stock (including merger related expenses of approximately $4.6 million borne by the former stockholders of Holdings and excluding $11.2 million fair value of stock and stock options rolled over in connection with the Merger) and acquisition and financing fees and expenses of approximately $11.5 million was financed by: (1) an investment of $111.2 million by V.G.A.T. Investors, LLC, (2) $5.0 million term loan under the Amended Credit Facility, (3) $42.6 million of proceeds from the issuance by Holdings of $67.0 million in aggregate principal amount at maturity of 11³/4% Senior Discount Notes due 2012 and (4) the use of existing cash balances. The interest on the Senior Discount Notes, under an Indenture by and between Holdings and The Bank of New York Trust Company, will accrue in the form of an increase in the accreted value of such notes prior to October 15, 2009. Thereafter, cash interest will accrue and be payable semiannually on April 15 and October 15 of each year, commencing on April 15, 2010, at a rate of 11³/4%. These notes will be unsecured and will rank equally in right of payment with all Holdings’ existing and future senior debt and senior to all its existing and future subordinated debt. The Holdings notes will be effectively subordinated in right of payment to all Holdings’ existing and future secured debt, including its guarantee of debt under the Amended Credit Facility, to the extent of the value of the assets securing such debt. In addition, the Holdings notes will be structurally subordinated to all existing and future debt of Holdings’ existing and future subsidiaries, including Argo-Tech and Argo-Tech’s subsidiaries.

      The Merger was accounted for as a purchase and preliminary fair value adjustments to the Company’s assets and liabilities were recorded as of the date of the Merger. The Company is in the process of obtaining third-party valuations of certain tangible and intangible assets; thus, the allocation of the purchase price to the Company’s assets and liabilities is subject to adjustment.

      The following table summarizes the preliminary fair values assigned to the Company’s assets and liabilities in connection with the Merger (in thousands):

Assets:
	Current assets	$	130,491
	Property, plant and equipment		41,970
	Goodwill		200,152
	Intangible assets		214,440
	Other assets		2
	Total assets	$	587,055
Liabilities:
	Current liabilities	$	56,313
	Long-term debt		264,063
	Other noncurrent liabilities		92,230
	Total liabilities		412,606
Purchase price allocated to Company		$	174,449

F-8

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table summarizes the unaudited, consolidated pro forma results of operations of the Company, as if the Merger had occurred at the beginning of each period presented (in thousands):

	Year Ended			Year Ended
	October 29,			October 30,
	2005			2004
Net sales	$	212,595		$	187,328
Loss from operations		(13,310	)		(17,936	)
Net loss		(19,716	)		(23,254	)

      The pro forma results of operations include the effects of the: (i) inventory purchase accounting adjustments that will be charged to cost of sales in the year following the transactions as the inventory on hand as of the date of the transactions is sold, (ii) additional amortization expense that will be recognized from the identifiable intangible assets recorded in accounting for the transactions, (iii) additional depreciation expense resulting from the write-up of the carrying value of property, plant and equipment to fair value, (iv) amortization of the write-up of the Notes to fair market value over the remaining life of the loan, (v) additional interest expense related to the increase in the Term Loan and related amortization expense and (vi) excluding expenses related to the Merger (discussed below). This pro forma information is not necessarily indicative of the results that actually would have been obtained if the transactions had occurred as of the beginning of the periods presented and is not intended to be a projection of future results.

      The Company’s results of operations for the period ended October 29, 2005 include a one-time charge of $24.5 million ($15.2 million after tax) that was recorded as a result of the Merger and consists primarily of stock compensation costs, ESOP excess benefit plan and severance and stay payments in connection with the Merger.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Principles of Consolidation — The consolidated financial statements include the accounts of the Company. All material intercompany accounts and transactions between the wholly-owned subsidiaries have been eliminated.

      As a result of the Merger (see Note 2), the accompanying consolidated financial statements include fair value adjustments to assets and liabilities, including inventory, goodwill, intangible assets, property, plant and equipment, accrued liabilities, deferred taxes and long-term debt. Accordingly, the accompanying consolidated financial statements for periods prior to the Merger are labeled as “Predecessor” financial statements.

      Cash Equivalents — Cash equivalents represent short-term investments with an original maturity of three months or less.

      Receivables — The Company evaluates the collectibility of its trade receivables based on a combination of factors. The Company regularly analyzes its customer accounts, and when it becomes aware of a specific customer’s inability to meet its financial obligation to us, such as in the case of bankruptcy filings, the Company immediately records a bad debt expense and reduces the related receivable to the amount it reasonably believes is collectible. The Company estimates the allowance for doubtful accounts based on the aging of the accounts receivable, customer creditworthiness and historical experience. Its estimate of the allowance includes amounts for specifically identified losses and a general amount for estimated losses. If circumstances change or economic conditions deteriorate, the Company’s estimates of the recoverability of receivables could be further adjusted.

      Inventories — The Company’s inventory purchases and commitments are made in order to build inventory to meet future shipment schedules based on forecasted demand for our products. Prior to the

F-9

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

merger, inventories are stated at the lower of cost or market, with cost being determined on the first-in, first-out, or FIFO, method. Periodically, the Company performs a detailed assessment of inventory, which includes a review of, among other factors, historical sales activity, future demand requirements, product life cycle and development plans and quality issues. Based on this analysis, the Company records provisions for potentially obsolete or slow-moving inventory to reflect inventory at net realizable value. These provisions could vary significantly, either favorably or unfavorably, from actual requirements based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen, or did not exist, when the valuation allowances were established.

      Property and Equipment — Prior to the Merger, property and equipment are stated at cost and are depreciated using the straight-line or an accelerated method over their estimated useful lives as follows:

Buildings and improvements	7 to 30  years
Equipment	3 to 10  years

      Goodwill and Intangible Assets — Goodwill and identified intangible assets are recorded at fair value on the date of acquisition. Intangible assets other than goodwill are recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed or exchanged, regardless of our intent to do so. Intangible assets, such as goodwill, that have an indefinite useful life are not amortized. All other intangible assets are amortized over their estimated useful lives. The Company reviews goodwill and purchased intangible assets for impairment annually, or whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The asset impairment review assesses the fair value of the assets based on the future cash flows the assets are expected to generate. This approach uses the Company’s estimate of future market growth, forecasted revenue and costs and appropriate discount rates. When impairment is identified, the carrying amount of the asset is reduced to its estimated fair value.

      Intangible assets are amortized on a straight-line basis over their estimated economic lives as follows:

Contracts	10 Years
Spare Parts Annuity	20 Years
Patents	5-16  Years

      Deferred Financing Costs — The costs of obtaining financing are included in Other Assets in the consolidated balance sheets and are amortized over the terms of the financing. The cost balance at October 29, 2005 and October 30, 2004 was $1,451,000 and $7,719,000, respectively. The amortized cost is included in interest expense in the consolidated statements of net income/ (loss). Accumulated amortization at October 30, 2004 was $376,000.

      Redeemable Stock — Redeemable ESOP Stock has been excluded from Shareholder’s Equity/ (Deficiency) due to the ability of the holders of Holdings common stock to “put”, subject to certain restrictions, the shares to the Company. The increase/ (decrease) in the Redeemable ESOP Stock has been recorded in Accumulated Deficit. As a result of the Merger, this requirement no longer exists.

      Foreign Currency Translation — Assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at the current rate of exchange, while revenues and expenses are translated at the average exchange rate during the year. Adjustments from translating foreign subsidiaries’ financial statements are excluded from the consolidated statements of net income/ (loss) and are reported as a component of shareholder’s equity/ (deficiency).

      Revenue Recognition — Revenues are generally recognized when goods are shipped or services provided, at which time title and risk of loss passes to the customer. Substantially all sales are made pursuant to firm,

F-10

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

fixed-price purchase orders received from customers. We have executed long-term supply agreements with certain of our OEM customers. These agreements require Argo-Tech to supply all the amounts ordered by the customers during the term of the agreements (generally three to five years) at specified prices. Under certain of these agreements, we expect to incur losses. Provisions for estimating losses on these contracts are made in the period in which such losses are identified based on cost and pricing information and estimated future shipment quantities provided by the customer. The cumulative effect of revisions to estimated losses on contracts is recorded in the accounting period in which the amounts become known and can be reasonably estimated. Such revisions could occur at any time there are changes to estimated future revenues or costs. Revenue from certain fixed price engineering contracts for which costs can be reliably estimated are recognized based on milestone billings. Variations in actual labor performance, changes to estimated profitability and final contract settlements may result in revisions to the cost estimates. Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the period of revision. We record estimated reductions to revenue for volume-based incentives based on expected customer activity for the applicable period. Revisions for volume-based incentives are recorded in the accounting period in which such estimates can be reasonably determined.

      Stock Options — Prior to the Merger, the Company had four stock-based compensation plans. The Company applies Accounting Principals Board (“APB”) Opinion 25 and related Interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized for its fixed stock option plans. Had compensation cost for the Company’s four stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of Statement of Financial Accounting Standard (“SFAS”) No. 123, the Company’s net income/(loss) for the fiscal years ended 2005, 2004 and 2003 would have been adjusted to the pro forma amount indicated below (in thousands):

	Predecessor
	October 29,			October 30,			October 25,
	2005			2004			2003
Net income/(loss) — As reported	$	(6,199	)	$	(461	)	$	4,528
Compensation cost based on the fair value method (after tax)					(76	)		(254	)
Net income/(loss) — Pro forma	$	(6,199	)	$	(537	)	$	4,274

      Effective upon completion of the Merger on October 28, 2005, the Board of Directors of Argo-Tech terminated the four stock-based compensation plans. In connection with the Merger, VGAT authorized two classes of incentive units of limited liability company interests.

      Income Taxes — Income taxes are accounted for under the asset and liability approach, which can result in recording tax provisions or benefits in periods different than the periods in which such taxes are paid or benefits realized. Expected tax benefits from temporary differences that will result in deductible amounts in future years and from carryforwards, if it is more likely than not that such tax benefits will be realized, are recognized currently.

      Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-11

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4. OTHER BALANCE SHEET INFORMATION

      The major components of the following balance sheet captions were (in thousands):

					Predecessor
			October 29,		October 30,
			2005		2004
Accrued liabilities:
	Salaries and accrued compensation		$	11,961	$	9,843
	Payroll taxes			7,638
	Accrued interest			9,635		8,222
	Accrued warranty			2,073		2,084
	Deferred and other income taxes			7,052		810
	Other			9,322		7,807
		Total	$	47,681	$	28,766
Other noncurrent liabilities:
	Accrued post retirement benefits		$	14,852	$	11,397
	Other			2,259		2,162
		Total	$	17,111	$	13,559

5. RECEIVABLES

      Receivables consist of the following (in thousands):

						Predecessor
			October 29,			October 30,
			2005			2004
Amounts billed — net of allowance for uncollectible amounts of $459 and $310			$	39,193		$	29,280
Amounts unbilled (principally commercial customers):
	Net reimbursable costs incurred on uncompleted contracts			1,776			3,514
	Billings to date			(650	)		(3,781	)
		Total unbilled — net		1,126			(267	)
Net receivables			$	40,319		$	29,013

F-12

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6. INVENTORIES

      Inventories consist of the following (in thousands):

					Predecessor
		October 29,			October 30,
		2005			2004
Finished goods		$	5,401		$	2,686
Work-in-process and purchased parts			68,895			28,963
Raw materials and supplies			706			776
	Total		75,002			32,425
Reserve for excess and obsolete inventory			(4,037	)		(3,868	)
Inventories — net		$	70,965		$	28,557

7. INTANGIBLE ASSETS

      The following is a summary of intangible assets, other than goodwill (in thousands):

							Predecessor
			October 29, 2005				October 30, 2004
			Gross		Accumulated		Gross		Accumulated
			Amount		Amortization		Amount		Amortization
Intangible Assets:
	Contracts		$	20,870	$	—	$	17,100	$	12,115
	Customer relationships			193,090		—		38,200		11,896
	Patents			480		—		387		174
		Total	$	214,440	$	—	$	55,687	$	24,185

      Amortization expense recorded on the intangible assets for each of the fiscal years ended October 29, 2005, October 30, 2004 and October 25, 2003 was $3.4 million. The estimated amortization expense for fiscal years 2006 through 2010 is $11.8 million. The weighted-average amortization period for contracts is 10 years, customer relationships is 20 years and patents is 9 years.

8. GOODWILL

      Argo-Tech adopted SFAS No. 142, “Goodwill and Other Intangible Assets” as of October 28, 2001. Under this statement, goodwill and other intangibles determined to have an indefinite life are no longer amortized; however, these assets are to be reviewed for impairment on a periodic basis. Argo-Tech completed its transitional impairment test for goodwill during the second fiscal quarter of 2002 using a present value of future cash flows valuation method. This process did not result in any impairment being recorded upon the adoption of SFAS No. 142. Goodwill is subject to an impairment test at least annually thereafter. The Company’s goodwill is primarily allocated to its Aerospace segment.

F-13

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9. PROPERTY AND EQUIPMENT

      Owned Property — Property and equipment owned by the Company consists of the following (in thousands):

				Predecessor
		October 29,		October 30,
		2005		2004
Land and land improvements		$	7,071	$	7,663
Buildings and building equipment			25,205		34,548
Machinery and equipment			7,214		41,694
Office and automotive equipment			1,187		8,504
Construction-in-progress			1,293		1,325
	Total		41,970		93,734
Accumulated depreciation			—		(70,521	)
Total — net		$	41,970	$	23,213

      Property Leased to Others — The Company leases certain portions of its facility in Euclid, Ohio. The leases have been accounted for as operating leases whereby revenue is recognized as earned over the lease terms. The cost of property leased to others is included in property and equipment and is being depreciated over its estimated useful life. It is not practical to determine the cost of the property that is being leased to others or the related amount of accumulated depreciation. In addition, the Company has separate service contracts with its tenants under which the Company provides maintenance, telecommunications and various other services.

      Total rental revenue under the property leases and service contracts is included in “Net revenues” and was as follows for the fiscal years ended 2005, 2004 and 2003 (in thousands):

		Predecessor
		2005		2004		2003
Minimum contractual amounts under property leases		$	3,811	$	4,126	$	4,498
Service contracts revenue based on usage			687		828		774
	Total	$	4,498	$	4,954	$	5,272

      Future minimum rentals under the noncancelable property leases and service contracts at October 29, 2005 are (in thousands): $2,419 in 2006, $1,572 in 2007, $719 in 2008, $81 in 2009, and $59 in 2010.

10. PRODUCT WARRANTY

      The Company accrues for warranty obligations for products sold based on management estimates of the amount that may be required to settle such potential obligations. These estimates are prepared with support from our sales, engineering, quality and legal functions. This accrual, which is reviewed in detail on a regular basis, is based on several factors: past experience, current claims, production changes and various other

F-14

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

considerations. The following table presents a reconciliation of changes in the product warranty liability (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Beginning balance	$	2,084		$	2,130
Accruals for warranties issued		20			20
Accruals for pre-existing warranties (including changes in estimate)		756			780
Warranty claims settled		(787	)		(846	)
Ending balance	$	2,073		$	2,084

11. EMPLOYEE BENEFIT PLANS

      Employee Stock Ownership Plan — Prior to the merger, the Company had an Employee Stock Ownership Plan (ESOP) to provide retirement benefits to qualifying, salaried employees. The ESOP grants to participants in the plan certain ownership rights in, but not possession of, the common stock of Holdings held by the Trustee of the Plan. Shares of common stock were allocated annually to participants in the ESOP pursuant to a prescribed formula. The value of the shares committed to be released by the Trustee under the Plan’s provisions for allocation to participants was recognized as an expense of $8,453,000, $4,851,000 and $1,874,000 for the fiscal years ended 2005, 2004 and 2003, respectively. The cost of the shares acquired for the ESOP that are not committed to be released to participants is shown as a contra-account, “Unearned ESOP shares”. In September 2005, the Company contributed 42,000 shares of Holdings common stock to the plan. These shares were repurchased by Argo-Tech from plan participants who exercised their put option rights under the plan. These rights are described below.

      Summary information regarding ESOP activity consists of the following:

				Predecessor
	October 29,			October 30,
	2005			2004
Allocated shares	$	441,000		$	399,000
Shares released for allocation(a)		42,000			42,000
Total ESOP shares		483,000			441,000
Repurchased shares received as distributions		(121,971	)		(86,366	)
Repurchased shares in connection with the Merger		(361,029	)		—
Total available ESOP shares		—			354,634
Fair market value of unearned ESOP shares	$	—		$	—

(a) Includes contributed shares.

      All of the cash and shares acquired for the ESOP are owned and held in trust by the ESOP.

      The stock of Holdings is not listed or traded on an active stock market and market prices are, therefore, not available. Annually, an independent financial consulting firm determined the fair market value based upon the Company’s performance and financial condition.

      The Company provided an “internal market” for stockholders through its purchase of their shares of common stock. Participants in the Company’s ESOP who have left the Company or are employees eligible for

F-15

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

stock diversification have the right to require the Company, within a specified period, to repurchase shares of stock received as distributions under the ESOP at fair market value. For each year presented, the total available ESOP shares are multiplied by the fair market value of the common stock and shown as “Redeemable ESOP Stock” on the Balance Sheet.

      The Company maintains a supplemental employee retirement plan, an unfunded plan that at all times will be deemed invested in Holdings common stock. This plan is for employees participating in the ESOP in respect of reduction to allocations to their accounts because of limitations under the tax code applicable to tax-qualified plans. Benefits under this plan vest in the same manner as benefits under the ESOP and distributions from the plan will, subject to certain restrictions, be made in whole or fractional shares of Holdings common stock at the same time or times as benefits under the ESOP are distributable, or in the case of benefits with respect to qualifying employer securities subject to the put option under the ESOP, at the time the plan participant exercises (or is deemed to have exercised) a hypothetical “put option” under the plan.

      Pension and Savings Plans — The Company has two noncontributory defined benefit pension plans for qualifying hourly and salary employees. A plan covering salaried employees provides pension benefits that are based on the employees’ compensation and years of service. The future accrual of benefits was terminated in connection with the formation of the ESOP. A plan covering hourly employees provides benefits of stated amounts for each year of service. The Company’s funding policy is to contribute actuarially determined amounts allowable under Internal Revenue Service regulations. The Company also sponsors three employee savings plans, which cover substantially all of the Company’s employees. The plan covering Argo-Tech Corporation Costa Mesa employees provides for a match of participating employees’ contributions. The Company’s contribution, recognized as expense was approximately $678,000, $560,000 and $488,000 in fiscal years 2005, 2004 and 2003 respectively.

      The Company uses an October 31st measurement date for its defined benefit pension plans.

      A summary of the components of net periodic pension cost for the pension plans for the fiscal years ended 2005, 2004 and 2003 is as follows (in thousands):

	Predecessor
	2005			2004			2003
Service cost — benefits earned during the period	$	371		$	279		$	277
Interest cost on projected benefit obligation		1,383			1,324			1,299
Expected return on plan assets		(1,868	)		(1,756	)		(1,491	)
Net amortization and deferral		410			348			384
Net periodic pension cost		296			195			469
Curtailment loss		369			—			—
Special termination benefits		57			—			—
Net periodic pension cost after settlements	$	722		$	195		$	469

F-16

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table sets forth the change in projected benefit obligation (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Benefit obligation at beginning of year	$	22,977		$	20,809
Service cost		371			279
Interest cost		1,383			1,324
Benefits paid		(1,002	)		(923	)
Actuarial (gain)/loss		(251	)		16
Change in plan provisions		542			—
Change due to assumptions		686			58
Curtailment loss		369			—
Special termination benefits		57			—
Change in discount rate		—			1,414
Benefit obligation at end of year	$	25,132		$	22,977

      The following table sets forth the change in plan assets (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Fair value of plan assets at beginning of year	$	21,112		$	19,974
Actual return on plan assets		1,828			1,876
Employer contributions		132			185
Benefits paid		(1,002	)		(923	)
Fair value of plan assets at end of year	$	22,070		$	21,112

      The following table sets forth the funded status of the plans (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Funded status	$	(3,062	)	$	(1,865	)
Unrecognized net loss		—			5,512
Unrecognized prior service cost		—			380
Net amount recognized	$	(3,062	)	$	4,027

F-17

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table shows the development of the prepaid (accrued) pension cost prior to reflection of additional minimum liability (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Prepaid pension cost at the beginning of the year	$	4,027		$	4,037
Net periodic pension cost		(722	)		(195	)
Employer contributions		132			185
Purchase accounting adjustment		(6,499	)		—
Prepaid (accrued) pension cost at the end of the year	$	(3,062	)	$	4,027

      Amounts recognized in the consolidated balance sheets consist of (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Accrued benefit liability	$	(3,062	)	$	(1,865	)
Intangible asset		—			380
Accumulated other comprehensive loss		—			5,512
Net amount recognized	$	(3,062	)	$	4,027

      The following table sets forth additional information of the plans (in thousands):

			Predecessor
	October 29,		October 30,
	2005		2004
Accumulated benefit obligation at the end of the year	$	25,132	$	22,977
Increase (decrease) in minimum liability included in other comprehensive income		209		1,966

      The weighted average assumptions used to determine net periodic pension cost as well as the funded status are:

	Predecessor
	2005		2004		2003
Discount rate		6.00%		6.00%		6.50%
Expected long-term rate of return on plan assets		9.00%		9.00%		9.00%

      The following table sets forth the weighted-average asset allocations, by asset category:

				Assets at
						Predecessor
		Target		October 29,		October 30,
Asset Category		Allocation		2005		2004
Equity securities			60% - 70%		62.0%		61.2%
Debt securities			30% - 40%		36.7%		38.3%
Cash			0% - 10%		1.3%		0.5%
	Total				100.0%		100.0%

F-18

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The expected long-term rate of return for the plans’ assets is based on the expected return of each of the above categories, weighted based on the median of the target allocation for each class. Based on respective market indices, equity securities are expected to return 8% to 10% over the long-term, while cash and fixed income is expected to return between 4% and 6%. The committee expects that the plans’ asset manager will provide a modest (1% to 2% per annum) premium to the respective market benchmark indices.

      The plans’ investment policy is to provide a long-term investment return greater than the actuarial assumptions, maximize investment return commensurate with appropriate levels of risk and comply with the Employee Retirement Income Security Act of 1974 (ERISA) by investing the funds in a manner consistent with ERISA’s fiduciary standards.

      The Company expects to contribute $1,064,000 to the plans for the fiscal year ending October 31, 2006.

      The following benefit payments, which reflect expected future service, are expected to be paid for the fiscal years ending (in thousands):

October 31, 2006	$	1,134
October 31, 2007		1,124
October 31, 2008		1,162
October 31, 2009		1,210
October 31, 2010		1,263
October 31, 2011 to October 31, 2015		8,076

      Other Postretirement Benefits — The Company provides certain postretirement health care benefits to qualifying hourly retirees and their dependents.

      The Company uses an October 31st measurement date for its postretirement health care benefit.

      The net postretirement benefit cost for the fiscal years ended 2005, 2004 and 2003 includes the following components (in thousands):

		Predecessor
		2005		2004		2003
Service cost		$	241	$	179	$	187
Interest cost			883		881		804
Net amortization and deferral			139		135		23
	Net postretirement benefit cost	$	1,263	$	1,195	$	1,014

F-19

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table sets forth the change in projected benefit obligation (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Benefit obligation at beginning of year	$	14,476		$	14,519
Service cost		241			179
Interest cost		883			881
Benefits paid		(552	)		(492	)
Plan participant contributions		150			133
Actuarial (gain)/loss		399			(1,315	)
Change in plan provisions		—			(472	)
Change in assumptions		(245	)		—
Change in discount rate		—			1,043
Benefit obligation at end of year	$	15,352		$	14,476

      The actuarial (gain)/ loss in fiscal 2004 includes an actuarial gain of $1,824 due to the Medicare Rx subsidy.

      The following table sets forth the change in plan assets (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Fair value of plan assets at beginning of year	$	—		$	—
Benefits paid		(552	)		(492	)
Employer contributions		402			359
Plan participant contributions		150			133
Fair value of plan assets at end of year	$	—		$	—

      The following table sets forth the funded status of the plans (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Benefit obligation	$	(15,352	)	$	(14,476	)
Unrecognized prior service cost		—			(472	)
Unrecognized net (gain) loss		—			3,151
Accrued benefit cost	$	(15,352	)	$	(11,797	)

F-20

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table shows the development of the accrued postretirement benefit cost (in thousands):

				Predecessor
	October 29,			October 30,
	2005			2004
Accrued postretirement benefit cost at the beginning of the year	$	(11,797	)	$	(10,961	)
Net periodic postretirement benefit cost		(1,263	)		(1,195	)
Claim payments		402			359
Purchase accounting adjustment		(2,694	)		—
Accrued postretirement benefit cost at the end of the year	$	(15,352	)	$	(11,797	)

      The weighted-average assumption used to determine net periodic postretirement benefit cost and benefit obligations is:

	2005		2004
Discount rate		6.00%		6.00%

      The assumed health care cost trend rates are as follows:

	2005			2004
Health care cost trend rate assumed for next year		7.50	%		8.00	%
Ultimate rate		5.00	%		5.00	%
Year ultimate rate is valued		2011			2011

      The Company expects the following contributions to be made to the plan for the fiscal year ending October 31, 2006 (in thousands):

Expected employer contributions	$	487
Expected plan participant contributions	$	162

      The following benefit payments (employer portion only), which reflect expected future service, are expected to be paid for the fiscal years ending (in thousands):

October 31, 2006	$	487
October 31, 2007		551
October 31, 2008		614
October 31, 2009		677
October 31, 2010		740
October 31, 2011 to October 31, 2015		4,208

      Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A one-percentage-point change in assumed health care cost trend rates would have the following effects (in thousands):

	1% point		1% point
	Increase		Decrease
Effect on service and interest cost	$	210	$	(168	)
Effect on postretirement benefit obligation	$	2,632	$	(2,139	)

F-21

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Appreciation Rights (SARs)

      On March 1, 2005, the Company granted 45,200 SARs to certain full-time employees of the Company and its subsidiaries. Its directors and executive officers did not participate in the plan. The total number of SARs which could be granted pursuant to the amended 2004 Stock Appreciation Rights Plan, which was approved by the Board of Directors on December 7, 2004, could not exceed 50,000, except to the extent of certain authorized adjustments. The SARs vested 33¹/3% on the grant date and on each of the next two anniversary dates of the initial date (the date the value of the SAR is determined by the Board). Once vested and upon the earliest of: termination of employment for reasons other than cause, a change of control or ten years from the initial date, each SAR entitled the holder to a chase payment equal to the increase, if any, in the value of one share of Holdings common stock from the initial date to the date of payment. There is $2.5 million of SAR expense included in selling, general and administrative expenses for fiscal 2005. The Merger constituted a change of control under the SARs, and the holders of the SARs received a portion of the merger consideration in exchange for the cancellation of their SARs. The cancellation of the SARs resulted in additional compensation expense of $4.6 million in fiscal year 2005, which is included in Merger expense.

12. INCOME TAXES

      The income tax provision/(benefit) consists of the following for the fiscal years ended 2005, 2004 and 2003 (in thousands):

			Predecessor
			2005			2004			2003
Current tax provision/(benefit):
	Federal		$	(3,039	)	$	(1,273	)	$	2,134
	State and local			21			(76	)		672
		Total		(3,018	)		(1,349	)		2,806
Deferred tax benefit				(4,750	)		(2,150	)		(1,227	)
Income tax provision/(benefit)			$	(7,768	)	$	(3,499	)	$	1,579

      The difference between the recorded income tax provision/(benefit) and the amounts computed using the statutory U.S. Federal income tax rates are as follows (in thousands):

	Predecessor
	2005			2004			2003
Income tax provision at statutory rate	$	(4,889	)	$	(1,346	)	$	2,137
State tax provision — net of federal benefits		(468	)		80			391
Extraterritorial income		(1,490	)		(1,403	)		(829	)
R&D credit		(748	)		(590	)		(252	)
ESOP		—			539			66
Settlement of tax examination and reserve adjustment		(451	)		(720	)		—
Other — net		278			(59	)		66
Income tax provision/(benefit)	$	(7,768	)	$	(3,499	)	$	1,579

      During the fiscal years ended 2005, 2004 and 2003 the Company paid (net of refunds received) approximately $1.0 million, $1.3 million and $1.7 million in income taxes, respectively.

F-22

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The components of the Company’s net deferred tax asset/(liability) are as follows (in thousands):

						Predecessor
			October 29,			October 30,
			2005			2004
Current:
	Inventory		$	(13,784	)	$	1,374
	Employee benefits			1,496			1,361
	Warranty			798			815
	Engineering reserves			699			1,329
	Net operating loss carryforward			3,727			—
	Other reserves			201			694
		Total current		(6,863	)		5,573
Long-term:
	Hourly retiree medical			5,534			4,420
	Accrued pension benefit			689			846
	Employee benefits			—			500
	Property and equipment			(7,696	)		(584	)
	Intangible assets			(79,332	)		(12,866	)
	Senior notes			3,600			—
	R&D tax credit carryforward			1,721			—
	Other — net			364			(63	)
		Total long-term		(75,120	)		(7,747	)
Net deferred tax liability			$	(81,983	)	$	(2,174	)

      The temporary difference described above principally represent differences between the tax bases of assets (principally inventory, property and equipment, and intangible assets) or liabilities (principally related to employee benefits and loss reserves) and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled, respectively. The Company has net federal operating loss carryforwards totaling approximately $9.8 million available to reduce future taxable income and has recorded a deferred tax asset. The Company has not provided any valuation allowance with respect to this asset, as it believes its realization is more likely than not. This determination is primarily based upon our expectation that future operations will be sufficiently profitable to utilize the operating loss carryforwards.

F-23

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

13. DEBT

      Summary — The Company’s long-term debt consists of the following (in thousands):

					Predecessor
		October 29,			October 30,
		2005			2004
Term loans		$	19,062		$	14,813
Revolving credit facility			—			—
Senior notes			260,000			250,000
	Total borrowings		279,062			264,813
Current maturities			(750	)		(750	)
Long-term portion		$	278,312		$	264,063

      Credit Facility and Term Loans — In connection with the Merger, the Company amended and restated its credit agreement and has a $19.1 million Term Loan Facility and has available a $40.0 million Revolving Credit Facility. The unused balance of the Revolving Credit Facility ($31.6 million at October 29, 2005 after reduction of $8.4 million for letters of credit) is subject to a .50% commitment fee. The Credit Facility and Term Loan mature on June 23, 2009. The Credit Facility is collateralized by substantially all of the tangible assets of the Company (including the capital stock of Holdings). The Credit Facility contains a number of covenants that, among other things, limit the Company’s ability to incur additional indebtedness, pay dividends, prepay subordinated indebtedness, dispose of certain assets, create liens, make capital expenditures, make certain investments or acquisitions and otherwise restrict corporate activities. The Credit Facility contains no restrictions on the ability of the Company’s subsidiaries to make distributions to the Company. The Credit Facility also requires the Company to comply with certain financial ratios and tests, under which the Company is required to achieve certain financial and operating results. The Company was in compliance with the covenants at October 29, 2005. Interest was calculated, at the Company’s choice, using an alternate base rate (ABR) or LIBOR, plus a supplemental percentage determined by the ratio of debt to adjusted EBITDA. The interest rate for fiscal year 2005 was 1.00% plus ABR or 2.50% plus LIBOR.

      Senior Notes — At October 29 2005, the Company had outstanding $250.0 million 9¹/4% Senior Notes due 2011. Interest on the Notes is payable semiannually on June 1 and December 1 of each year. The Senior Notes will mature on June 1, 2011.

      In connection with the Merger, the 9¹/4% Senior Notes were written up $10.0 million, to $260.0 million, their fair market value and will be amortized over the remaining life of the notes.

      The Senior Notes are unsecured and rank equally with all our existing and future senior debt and rank senior to all our existing and future subordinated debt. The Senior Notes will be effectively subordinated to all our existing and future secured debt to the extent of the value of the assets securing such debt. The Senior Notes are subject to certain limitations and restrictions which the Company has not exceeded at October 29, 2005.

F-24

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Annual Maturities and Interest Payments — The maturities of the Company’s long-term debt during each of the next five fiscal years are as follows (in thousands):

Fiscal Year		Amount
2006		$	750
2007			750
2008			3,562
2009			14,000
2010			—
2011 and thereafter			250,000
	Total	$	269,062

      Total interest paid during the fiscal years ended 2005, 2004 and 2003 was $24.4 million, $20.7 million and $18.5 million, respectively.

      Debt Extinguishment Expense — The Company incurred $12.9 million of debt extinguishment expense in fiscal 2004 for the write-off of $6.1 million of deferred financing fees associated with the refinancing of our 8⁵/8% senior subordinated notes and the amendment and restatement of our credit agreement, $5.5 million for the tender, consent and redemption fees associated with the refinancing of the 8⁵/8% senior subordinated notes and recognition of the remaining accretion of $1.3 million on a portion of the 8⁵/8% senior subordinated notes that were issued at a discount.

14. SEGMENT INFORMATION

      The Company operates in two business segments, Aerospace and Industrial. The Aerospace segment includes the design, manufacture, distribution, repair and overhaul of aviation products consisting of aircraft engine fuel pumps, fuel flow related products and systems found on a plane’s airframe, and aerial refueling pumps and related equipment. The Industrial segment includes the design, manufacture and distribution of industrial pumps, ground fueling valves and related components, industrial marine cryogenic pumps and nozzles for transferring liquefied natural gas and operation of a business park in Cleveland, Ohio where the Company maintains its headquarters and one of its production facilities.

      The Company evaluates the performance of its segments based primarily on operating profit before amortization of deferred financing fees and other identified intangibles, interest expense, interest income, other miscellaneous fees and income taxes.

F-25

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table presents revenues and other financial information by business segment (in thousands):

2005 Predecessor

	Aerospace		Industrial		Corporate			Consolidated
Customer revenues	$	154,842	$	57,753	$	—		$	212,595
Operating profit (loss)		38,501		4,138		(3,227	)		39,412
Amortization of intangible assets									3,414
Merger expenses									24,473
Income from operations									11,525
Interest expense									25,601
Other, net									(109	)
Loss before tax								$	(13,967	)
Capital expenditures		2,661		1,715					4,376
Depreciation		2,043		1,245		367			3,655
Compensation expense recognized in connection with employee stock ownership plan		7,821		632					8,453

2004 Predecessor

	Aerospace		Industrial		Corporate			Consolidated
Customer revenues	$	138,177	$	49,151	$	—		$	187,328
Operating profit (loss)		34,584		761		(320	)		35,025
Amortization of intangible assets									3,414
Income from operations									31,611
Interest expense									22,705
Debt extinguishment expense									12,961
Other, net									(95	)
Loss before tax								$	(3,960	)
Capital expenditures		1,789		1,267					3,056
Depreciation		2,168		1,231		400			3,799
Compensation expense recognized in connection with employee stock ownership plan		4,270		581					4,851

F-26

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2003 Predecessor

	Aerospace		Industrial		Corporate			Consolidated
Customer revenues	$	121,278	$	39,448	$	—		$	160,726
Operating profit (loss)		28,484		2,157		(392	)		30,249
Amortization of intangible assets									3,414
Income from operations									26,835
Interest expense									21,257
Other, net									(529	)
Income before tax								$	6,107
Capital expenditures		1,194		745					1,939
Depreciation		2,503		1,280		404			4,187
Compensation expense recognized in connection with employee stock ownership plan		1,652		222					1,874

15. RELATED PARTY TRANSACTIONS

      Upsilon International Corporation (“UIC”) is the exclusive distributor of Argo-Tech engine fuel pump and certain airframe product manufactured at our Cleveland, Ohio facility and is a non-exclusive sales agent for engine overhaul and repair for the entire international market under a long-term distribution agreement. UIC is owned by YC International, Inc., a former stockholder of Holdings, which is also under the control of a former stockholder of Holdings. We believe that this distribution agreement was entered into on terms and conditions customary for the industry in all respects with the exception of the contract term and termination provisions, which are more favorable to UIC than industry norm. The dollar amount of transactions for each of the last three fiscal years can be found in Note 16. Amounts owed to Argo-Tech by UIC under normal terms and conditions as of October 29, 2005, October 30, 2004 and October 25, 2003 were $4.0 million, $2.0 million and $3.7 million, respectively.

16. MAJOR CUSTOMERS AND EXPORT SALES

      During the fiscal years ended 2005, 2004 and 2003, the Company had revenues in excess of 10% from only one customer (in thousands):

	Predecessor
	2005		2004		2003
Upsilon International Corporation	$	23,478	$	20,326	$	19,321

      During the fiscal years ended 2005, 2004 and 2003, export sales to foreign customers were comprised of the following (in thousands):

		Predecessor
		2005		2004		2003
Europe		$	42,238	$	32,823	$	30,371
Pacific Rim			35,430		26,003		25,279
All others (individually less than 10%)			17,702		21,379		11,041
	Total	$	95,370	$	80,205	$	66,691

F-27

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

17. FAIR VALUE OF FINANCIAL INSTRUMENTS

      The Company has various financial instruments, including cash and short-term investments and long-term debt. The Company has determined the estimated fair value of these financial instruments by soliciting available market information and utilizing appropriate valuation methodologies, which require judgment. The Company believes that the carrying values of the short-term investments, Senior Notes and Term Loans approximates their fair value. The Company does not enter into derivative contracts for trading or speculative purposes. A 10% fluctuation in interest rates would not materially affect Argo-Tech’s financial condition, result of operations or cash flow.

18. STOCK OPTIONS

      Prior to the merger, the Company had four stock-based compensation plans:

      1991 Performance Stock Option Plan — The 1991 Performance Stock Option Plan provides for option grants for the purchase of Holdings’ common stock. The exercise price of each option is $10.00 per share. All of the options under this plan became fully vested in January 1999. Effective upon completion of the Merger, the Board of Directors of Argo-Tech terminated the option plan. All of the options outstanding under this plan were cancelled in exchange for the right to receive cash payments of equal value in the Merger.

      1991 Management Incentive Stock Option Plan — The 1991 Management Incentive Stock Option Plan provides for option grants for the purchase of Holdings’ common stock. The exercise price of each option is $10.00 per share. All of the options under this plan became fully vested in January 1999. All of the options outstanding under this plan were cancelled in exchange for the right to receive cash payments of equal value in the Merger.

      1998 Equity Replacement Stock Option Plan — The 1998 Equity Replacement Stock Option Plan was established to provide for option grants for the purchase of Holdings’ common stock. The exercise price of each option is $40.00 per share. All of the options under this plan were fully vested upon issuance. All of the options outstanding under this plan were cancelled in exchange for the right to receive cash payments of equal value in the Merger.

      1998 Incentive Plan — The 1998 Incentive Plan was established to provide option grants for the purchase of Holdings’ common stock, at prices that may be more than, less than, or equal to the fair market value of the shares, as the Board or Compensation Committee of Holdings may determine at the time of grant. There have been three option grants under the 1998 Incentive Plan, the first in 1999 with an exercise price of $100.11, the second in 2001 with an exercise price of $69.18 and the third in 2002 with an exercise price of $49.79. The option agreement governing the options granted in 1999 provides that such options vest in 20% increments over five successive years. For any year in which the EBITDA of the company exceeds 105% of the target EBITDA, an additional 13¹/3% of the optioned shares will vest. Effective November 2, 2000 all holders of options granted in 1999 agreed to the cancellation of the portion of the 1999 options which were not vested at such date. Pursuant to the plan, such cancelled options are available for new grants. The option agreement governing the options granted under the plan in September 2001 and March 2002 provides for vesting as follows: 33.3% at the time of issuance and 33.3% on the anniversary date of the grant over the next two years. All options granted under the plan expire ten years from the date of grant. In the event that Holdings’ common stock becomes registered or traded on a national exchange or in the event of a change in control, all options will become exercisable in full. All of the options outstanding under this plan were cancelled in exchange for the right to receive cash payments of equal value in the Merger.

      Incentive Units — In connection with the Merger, VGAT authorized two classes of incentive units of limited liability company interests designated Class B Units and Class C Units. The incentive units issued on the date of the Merger entitle the holders to distributions in excess of a floor amount, which is $201.25, the fair

F-28

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

market value of the equity of Holdings as of the date of the Merger. The Class B Units are subject to time-vesting requirements. Twenty percent of the Class B Units will vest effective as of the end of each fiscal year. If a holder’s employment is terminated following October 31, 2006 other than by Holdings for cause or voluntarily by the holder, such holder’s Class B Units subject to vesting in the year of termination will vest on a daily basis. Class C Units are subject to performance-vesting requirements. For each fiscal year beginning with fiscal 2006, 20% of the Class C Units will be eligible to vest effective upon the sale of VGAT and the attainment of certain performance criteria.

      The fair value of each option and incentive unit grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in 2001, 2002 and 2005 respectively: risk-free interest rates of 5.0%, 4.875% and 4.35% and expected lives of 10 years for each of the option plan grants and 7 years for the incentive units. Holdings does not pay a dividend.

      A summary of the status of the Company’s stock option plans as of October 29, 2005, October 30, 2004 and October 25, 2003, and changes during the years ending on those dates is presented below:

	2005 Predecessor
				Weighed Average
	Shares			Exercise Price
Outstanding at beginning of year		127,923		$	49.91
Granted		37,160			201.25
Exercised		(37,721	)		44.39
Cancelled		(90,202	)		52.22
Outstanding at end of year		37,160			201.25
Options exercisable at year-end		—			—
Weighted average fair value of options granted during the year	$	75.96

	2004 Predecessor
				Weighed Average
	Shares			Exercise Price
Outstanding at beginning of year		133,713		$	50.20
Granted		—			—
Exercised		(4,000	)		49.79
Cancelled		(1,790	)		71.77
Outstanding at end of year		127,923			49.91
Options exercisable at year-end		127,923			49.91
Weighted average fair value of options granted during the year	$	—

	2003 Predecessor
				Weighed Average
	Shares			Exercise Price
Outstanding at beginning of year		137,027		$	50.53
Granted		—			—
Exercised		(390	)		10.00
Cancelled		(2,924	)		71.08
Outstanding at end of year		133,713			50.20
Options exercisable at year-end		115,175			50.27
Weighted average fair value of options granted during the year	$	—

F-29

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

19. CONTINGENCIES

      Environmental Matters — The soil and groundwater at the Company’s Euclid, Ohio facility and the Costa Mesa, California facility contain elevated levels of certain contaminants which are currently in the process of being removed and/or remediated. Because the Company has certain indemnification rights from former owners of the facilities for liabilities arising from these or other environmental matters, in the opinion of the Company’s management, the ultimate outcome is not expected to materially affect the Company’s financial condition, results of operations or liquidity.

      Other Matters — The Company is subject to various legal actions and other contingencies. In the opinion of the Company’s management, after reviewing the information which is currently available with respect to such matters and consulting with the Company’s legal counsel, any liability which may ultimately be incurred with respect to these additional matters is not expected to materially affect the Company’s financial condition, results of operations or liquidity.

      Approximately 25% of the Company’s workforce is covered by a collective bargaining agreement.

20. NEW ACCOUNTING STANDARDS

      In November 2004, the FASB issued SFAS No. 151, “Inventory Costs,” which is an amendment of Accounting Research Bulletin (“ARB”) No. 43, Chapter 4, “Inventory Pricing.” This statement clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges. The provisions of this statement become effective for the Company’s fiscal year beginning October 30, 2005. Management believes the adoption of this statement will not have a material effect on Argo-Tech’s consolidated financial position or results of operations.

      In December 2004, the FASB issued SFAS No. 123(R), “Share Based Payment,” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Argo-Tech will adopt the provisions of this statement for the Company’s fiscal year beginning October 30, 2005 using the modified prospective method. Management has not determined the effect the adoption of this statement will have on Argo-Tech’s consolidated financial position or results of operations.

      In June 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS”) No. 154. This statement changes the requirements for the accounting for, and reporting of, a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 is effective for accounting changes and a correction of errors made in fiscal years beginning after December 15, 2005. Early adoption of this standard is permitted for accounting changes and correction of errors made in fiscal years beginning after June 1, 2005. Management has determined that adoption of this statement will not have an impact on Argo-Tech’s consolidated financial statements.

F-30

ARGO-TECH CORPORATION AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

21. OTHER COMPREHENSIVE INCOME/(LOSS)

      Other comprehensive income/(loss) includes foreign currency translation adjustments and deferred pension income/(expense) (in thousands).

		Predecessor
		2005			2004			2003
Net income/(loss)		$	(6,199	)	$	(461	)	$	4,528
Other comprehensive income/(loss):
	Foreign currency translation adjustment		(68	)		7			119
	Deferred pension income/(expense)		(208	)		(1,966	)		1,622
	Other comprehensive income/(loss) before tax		(276	)		(1,959	)		1,741
	Income tax (provision)/benefit related to other comprehensive income/(loss)		83			787			(649	)
	Other comprehensive income/(loss) net of tax		(193	)		(1,172	)		1,092
	Comprehensive income/(loss)	$	(6,392	)	$	(1,633	)	$	5,620

F-31 EX-2.1 2 l18081aexv2w1.htm EXHIBIT 2.1 AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

AT HOLDINGS CORPORATION

ARGO-TECH CORPORATION

GREATBANC TRUST COMPANY,

AS TRUSTEE FOR THE ARGO-TECH CORPORATION

EMPLOYEE STOCK OWNERSHIP PLAN

V. G. A. T. INVESTORS, LLC

VAUGHN MERGER SUB, INC.

Dated as of September 13, 2005

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS			1
Section 1.1.	Certain Definitions		1
Section 1.2.	Interpretation		16
Section 1.3.	Actions Simultaneous		17
ARTICLE II THE MERGER			17
Section 2.1.	The Merger		17
Section 2.2.	Effective Time		17
Section 2.3.	Closing of the Merger		17
Section 2.4.	Effects of the Merger		19
Section 2.5.	Organizational Documents		19
Section 2.6.	Board of Directors		19
Section 2.7.	Officers		19
Section 2.8.	Effect of the Merger on the Outstanding Securities of the Company; Exchange Procedures; and Treatment of Options		19
Section 2.9.	Pre-Closing Determination of Merger Consideration		23
Section 2.10.	Wire Transfer Instructions and Payments		23
Section 2.11.	Withholding Rights; Certain Taxes		25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY			26
Section 3.1.	Organization		26
Section 3.2.	Subsidiaries		26
Section 3.3.	Authorization		27
Section 3.4.	Capitalization		28
Section 3.5.	Governmental Consents and Approvals		28
Section 3.6.	Litigation		28
Section 3.7.	Compliance with Laws		29
Section 3.8.	No Violations		29
Section 3.9.	Property		30
Section 3.10.	Tangible Assets		31
Section 3.11.	Financial Information; Liabilities; SEC Filings		31
Section 3.12.	Taxes		32
Section 3.13.	Employment Benefits		35
Section 3.14.	Transactions with Affiliates		37
Section 3.15.	Assumptions or Guaranties of Indebtedness of Other Persons		37
Section 3.16.	Loans to Other Persons		37
Section 3.17.	Absence of Certain Changes		37
Section 3.18.	Labor Relations		39
Section 3.19.	Insurance		40
Section 3.20.	Books and Records		40

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		Page
Section 3.21.	Material Contracts		40
Section 3.22.	Environmental Matters		42
Section 3.23.	Intellectual Property		43
Section 3.24.	List of Government Contracts, Subcontracts and Bids		45
Section 3.25.	Compliance, Performance, Termination and Breach of Government Contracts		45
Section 3.26.	Internal Controls, Audits and Investigations		46
Section 3.27.	Debarment, Suspension and Exclusion		46
Section 3.28.	Absence Of Unlawful Payments		47
Section 3.29.	Compliance with Customs & International Trade Laws		47
Section 3.30.	Customers and Suppliers		48
Section 3.31.	Warranties		48
Section 3.32.	Operations of the Company		48
Section 3.33.	Company Expenses and Closing Dividends/Investments		48
Section 3.34.	Required Vote of Company Stock		49
Section 3.35.	State Takeover Laws		49
Section 3.36.	No Brokers or Finders		49
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ESOP			49
Section 4.1.	Organization		49
Section 4.2.	Authorization; Enforceability		49
Section 4.3.	Noncontravention		50
Section 4.4.	Brokers’ Fees		50
Section 4.5.	Company Shares		50
Section 4.6.	Litigation		50
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB			51
Section 5.1.	Organization		51
Section 5.2.	Authorization		51
Section 5.3.	Governmental Consents and Approvals; No Conflict or Violation		51
Section 5.4.	Commitments		52
Section 5.5.	Compliance with Law		52
Section 5.6.	No Brokers or Finders		52
ARTICLE VI COVENANTS			53
Section 6.1.	Conduct of Business of the Company		53
Section 6.2.	Access to Information		55
Section 6.3.	HSR Act Approvals		56
Section 6.4.	Approvals and Consents		57
Section 6.5.	Proxy Statement		57
Section 6.6.	Stockholders Meeting		57
Section 6.7.	Additional Agreements; Commercially Reasonable Efforts		58
Section 6.8.	ESOP Matters		58
Section 6.9.	Public Announcements		59

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		Page
Section 6.10.	Notification of Certain Matters		60
Section 6.11.	No Solicitations		60
Section 6.12.	Financing Cooperation		61
Section 6.13.	Indemnification, Exculpation and Insurance		61
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER			62
Section 7.1.	Conditions to Each Party’s Obligation to Effect the Merger		62
Section 7.2.	Conditions to the Obligation of the Company		63
Section 7.3.	Conditions to the Obligations of Parent and Acquisition Sub		64
ARTICLE VIII INDEMNIFICATION			66
Section 8.1.	Indemnification by the Equity Holders		66
Section 8.2.	Indemnification by Parent		66
Section 8.3.	Notice of Claims		67
Section 8.4.	Third Party Claims		67
Section 8.5.	Distributions From Escrow		68
Section 8.6.	Limitations and Requirements		68
ARTICLE IX TERMINATION; AMENDMENT; WAIVER			70
Section 9.1.	Termination		70
Section 9.2.	Effect of Termination		71
Section 9.3.	Fees and Expenses		71
Section 9.4.	Amendment		72
Section 9.5.	Extension; Waiver		72
ARTICLE X TAX MATTERS			72
Section 10.1.	Tax Sharing Agreements		72
Section 10.2.	Transfer Taxes		72
ARTICLE XI MISCELLANEOUS			72
Section 11.1.	Entire Agreement; Assignment		72
Section 11.2.	Validity		73
Section 11.3.	Notices		73
Section 11.4.	Governing Law		74
Section 11.5.	Consent to Jurisdiction		74
Section 11.6.	WAIVER OF JURY TRIAL		75
Section 11.7.	Parties in Interest		75
Section 11.8.	Specific Performance		75
Section 11.9.	Counterparts		75
Section 11.10.	Negotiation of Agreement		75

iii

SCHEDULES

Schedule 1.1(b)	Proportionate Shares
Schedule 2.8(d)	Treatment of Options, SARs and the Warrant
Schedule 3.1	Organization
Schedule 3.2	Subsidiaries
Schedule 3.4	Capitalization
Schedule 3.5	Governmental Consents and Approvals
Schedule 3.6	Litigation
Schedule 3.7	Compliance with Laws
Schedule 3.8	No Violations
Schedule 3.9(a)	Owned Real Property
Schedule 3.9(b)	Leased Real Property
Schedule 3.11(b)	Liabilities
Schedule 3.11(c)	SEC Reports
Schedule 3.12(c)	Tax Returns
Schedule 3.12(e)	Tax Sharing Agreements
Schedule 3.12(f)	Jurisdiction
Schedule 3.13(a)	Employee Benefits
Schedule 3.13(g)	ERISA
Schedule 3.13(i)	Employee Welfare Benefit Plan
Schedule 3.13(l)	Foreign Plans
Schedule 3.14	Transactions with Affiliates
Schedule 3.15	Assumptions or Guaranties of Indebtedness
Schedule 3.16	Loans by the Company
Schedule 3.17	Absence of Certain Changes
Schedule 3.18(a)	Labor Relations
Schedule 3.18(b)	Employment Contracts
Schedule 3.19	Insurance
Schedule 3.21	Material Contracts
Schedule 3.22	Environmental Matters
Schedule 3.23(a)	Intellectual Property
Schedule 3.23(c)	IP Litigation
Schedule 3.23(e)	IP Systems
Schedule 3.24	Government Contracts
Schedule 3.25	Compliance re Government Contracts and Bids
Schedule 3.26	Internal Controls, Audits and Investigations
Schedule 3.29	Customs and International Trade
Schedule 3.30	Customers and Suppliers
Schedule 3.31	Warranties
Schedule 3.32	Operations of the Company
Schedule 3.36	Brokers’ Fees
Schedule 6.1	Conduct of Business
Schedule 6.4	Material Approvals and Consents
Schedule 6.13	Indemnification, Exculpation and Insurance
Schedule 7.3(c)	Company Consents
Schedule 7.3(f)	Individuals Executing Equity and Incentive Agreements
Schedule 7.3(g)(i)	Individuals Executing Employment Agreements

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Schedule 7.3(g)(ii)	Current Employment Agreements to be Terminated
Schedule 7.3(h)(i)	Individuals Executing Change of Control Agreements
Schedule 7.3(h)(ii)	Current Change of Control Agreements to be Terminated
Schedule 7.3(i)	Individuals Executing Non-Solicitation Agreements

v

EXHIBITS

Exhibit A	Bond Term Sheet
Exhibit B	Credit Agreement Amendment
Exhibit C	Escrow Agreement
Exhibit D	Rollover Securities
Exhibit E	Equity Term Sheet
Exhibit F	Form of Letter of Transmittal
Exhibit G	Equity Commitment Letters
Exhibit H	Form of Change of Control Agreement
Exhibit I	Form of Employment Agreement
Exhibit J	Form of Non-Solicitation Agreement
Exhibit K	ESOP Counsel Opinion

vi

AGREEMENT AND PLAN OF MERGER

          THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of September 13, 2005, is by and among AT HOLDINGS CORPORATION, a Delaware corporation (the “Company”), Argo-Tech Corporation, a Delaware corporation (“Argo-Tech”), The Argo-Tech Corporation Employee Stock Ownership Plan and Trust (the “ESOP”), acting herein through GreatBanc Trust Company in its capacity as trustee of the ESOP (the “Trustee”), V. G. A. T. Investors, LLC, a Delaware limited liability company (“Parent”), and Vaughn Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Acquisition Sub”).

RECITALS:

          A. Parent has formed Acquisition Sub for the purpose of merging it with and into the Company and acquiring the Company as a wholly-owned subsidiary of Parent.

          B. The respective boards of directors of Parent, Acquisition Sub, the Company and Argo-Tech have deemed it advisable and in the best interests of their respective corporations and stockholders that Parent, Acquisition Sub and the Company engage in a business combination.

          C. The boards of directors of the Company, Argo-Tech, Parent (on its own behalf and as the sole stockholder of Acquisition Sub), and Acquisition Sub have each adopted this Agreement and approved the Merger (as defined below), upon the terms and subject to the conditions set forth in this Agreement;

A G R E E M E N T

          NOW THEREFORE, in consideration of the respective covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

          Section 1.1. Certain Definitions. As used herein, the initially capitalized terms below shall have the following meanings. Any such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

          “Action” means any action, claim, suit, litigation, proceeding (whether legal, administrative or arbitrative), labor dispute, governmental audit, inquiry, criminal prosecution, investigation, condemnation, expropriation or unfair labor practice charge or complaint.

          “Acquisition Sub” has the meaning set forth in the preamble.

          “Agreement” has the meaning set forth in the preamble.

          “Affiliate” means, with respect to any Person, any other Person which directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with such Person; provided that, in the case of an individual, the term “Affiliate” means (i) the individual’s spouse, (ii) the members of the immediate family of the individual (including parents, siblings and children) and (iii) any non-natural Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with any of the foregoing individuals.

          “Alternative Transaction” means, with respect to the Company and its Subsidiaries, any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving (a) the sale of any material assets of the Company and its Subsidiaries, taken as a whole, other than sales of assets in the Ordinary Course, (b) the issuance or sale of Capital Stock of the Company or of any Subsidiary, other than (i) pursuant to the ESOP plan documents, (ii) pursuant to any outstanding option, warrant or other right to acquire Capital Stock, or (iii) in the event of any termination of this Agreement, pursuant to any options issued to employees or directors for compensatory purposes after the date of such termination, or (c) a merger, consolidation, recapitalization or similar transaction involving the Company or any Subsidiary. The term “Alternative Transaction” shall not include any sale of Carter Ground Fueling, Ltd. or any spin-off or distribution of Argo Tracker Corporation to any of the shareholders of the Company.

          “Argo-Tracker Disposition” means the (i) sale of all of the outstanding capital stock of Argo-Tracker Corporation (whether by merger, consolidation or otherwise), or (ii) the sale or conveyance of all or substantially all of the assets of Argo-Tracker Corporation.

          “Audited Financial Statements” means the audited consolidated balance sheet of Argo-Tech and its Subsidiaries at October 30, 2004, October 25, 2003 and October 26, 2002, and the audited consolidated statements of operations, stockholder’s equity and cash flows of Argo-Tech and its Subsidiaries for the years then ended, together with the notes and schedules thereto.

          “Basket” has the meaning set forth in Section 8.6(a).

          “Board” means the board of directors of the Company.

          “Bond Term Sheet” means the term sheet attached hereto as Exhibit A which sets forth the proposed terms of the sale of $50 million of gross proceeds of the Company’s Senior Discount Notes due 2012, to be arranged by JP Morgan Securities Inc. as placement agent.

          “Business Day” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in the State of New York.

          “Buyer Indemnitee” has the meaning set forth in Section 8.1.

          “Cap” has the meaning set forth in Section 8.6(b).

          “Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of, or any securities convertible into or exercisable for, capital stock of a corporation, or any and all equivalent ownership interests in a Person (other than a

2

corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights (including voting rights) or options to purchase or other arrangements or rights to acquire any of the foregoing, including any rights in respect of any change in the value of or with respect to the economic attributes of any of the foregoing, including stock appreciation rights and similar instruments.

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

          “Cash Merger Consideration” means an amount equal to the Merger Consideration without regard to clauses (a)(iv), (a)(v) and (a)(vi) of the definition thereof, minus the Preferred Redemption Amount.

          “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended.

          “Certificate” has the meaning set forth in Section 2.8(a)(iii).

          “Change of Control Obligations” means all amounts (plus any associated withholding Taxes or any Taxes required to be paid by the Company or any Subsidiary with respect thereto and any payments made to “gross-up” the recipient for any Tax liability) which the Company or any of its Subsidiaries are obligated to pay, under any “change of control”, termination, salary continuation, retention, severance or other similar plan, agreement or arrangement (including, without limitation, amounts payable by the Company pursuant to employment agreements and stay pay agreements entered into with senior management), to the extent such payment obligation has accrued as of, or accrues simultaneously with, the consummation of the Merger, but excluding for the avoidance of doubt obligations under any employment agreement or change of control agreement being entered into as a condition to the Closing pursuant to Section 7.3(f) and Section 7.3(g).

          “Claim” has the meaning set forth in Section 8.3.

          “Claim Notice” has the meaning set forth in Section 8.3.

          “Claim Undertaking” has the meaning set forth in Section 8.4(a).

          “Closing” has the meaning set forth in Section 2.3(a).

          “Closing Adjustment Statement” has the meaning set forth in Section 2.9.

          “Closing Company Expenses” has the meaning set forth in Section 2.9.

          “Closing Date” has the meaning set forth in Section 2.3(a).

3

          “Closing Dividends/Investments” means (i) any Company Dividends paid during the period beginning on July 29, 2005 and ending as of the Effective Time, and (ii) any investments made by the Company in Argo-Tracker Corporation in excess of $1,000,000 during the period beginning on July 29, 2005 and ending as of the Effective Time whether in the form of contribution to or purchase of equity, debt or otherwise.

          “Closing Payout Percentage” means 1.00 minus the quotient determined by dividing the Escrow Amount by the Cash Merger Consideration, expressed as a percentage.

          “COBRA” means Part 6 of Subtitle B of Title I of ERISA, Code Section 4980B, and any similar state Law.

          “Code” means the Internal Revenue Code of 1986, as amended and the Treasury regulations promulgated thereunder.

          “Common Stock” means the common stock, $0.001 par value per share, of the Company.

          “Company” has the meaning set forth in the preamble.

          “Company Dividend” means any dividend or other distribution of cash, property or assets by the Company to its stockholders.

          “Company Expenses” means all fees, expenses and other similar amounts arising from the provision of services prior to the Closing that have been or are expected to be incurred prior to the Closing or in connection with the Closing on behalf of the Company in connection with the process leading to, and the preparation, negotiation and execution of, this Agreement and the consummation of the transactions contemplated hereby, including the Merger, including the following: (i) the fees and disbursements of, or other similar amounts charged by, counsel to the Company, (ii) the fees and expenses of, or other similar amounts charged by, the Stockholders’ Representative and any accountants, agents, financial advisors, consultants and experts employed by the Company, (iii) any Change of Control Obligations, (iv) any ESOP Transaction Expenses (such ESOP Transaction Expenses to exclude up to $150,000 of additional fees incurred by or payable to the Trustee in order to provide the determination set forth in Section 7.1(f)), (v) the out-of-pocket expenses, if any, of the Company and (vi) any other fee, expense or other similar amount deemed to be a “Company Expense” hereunder pursuant to Section 2.8(c)(i) hereof. The term “Company Expenses” shall not include any fee, expense or other similar amount arising from or incurred in connection with the actions or transactions described in Sections 6.12, 6.13(b) or 7.1(d) for which the Company provides to Parent prior to Closing a schedule of the amounts thereof and reasonably satisfactory evidence that such amounts arise from such activities.

          “Company Group” has the meaning set forth in Section 6.11.

          “Company Intellectual Property” has the meaning set forth in Section 3.23(b).

          “Company Stock” means the Common Stock and the Preferred Stock.

4

          “Company Stock Options” has the meaning set forth in Section 2.8(d)(i).

          “Contract” means any contract, indenture, note, bond, lease, commitment or other arrangement or understanding, whether oral or written.

          “Control” means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise (the terms “Controlled by” and “under common Control with” shall have correlative meanings).

          “Costa Mesa Indemnity Agreement” has the meaning set forth in Section 3.22(g).

          “Court Order” means any judgment, decision, consent decree, injunction, ruling or order of any Governmental Authority that is binding on any Person or its property under applicable law.

          “Credit Agreement” means that certain Third Amended and Restated Credit Agreement, dated as of June 23, 2004, between the Company, National City Bank, as Administrative Agent, and the other signatories thereto, as amended.

          “Credit Agreement Amendment” means that certain Fourth Amended and Restated Credit Agreement, dated the date hereof, between the Company and the Required Lenders (as defined in the Credit Agreement), a copy of which is set forth as Exhibit B attached hereto.

          “Customs & International Trade Laws” means any law, statute, executive order, regulation, rule, permit, license, directive, order, decree, ordinance, award, or other decision or requirement having the force or effect of law, of any arbitrator, court, government or government agency or instrumentality (domestic or foreign), concerning the importation of merchandise, the export or reexport of products (including technology and services), the terms and conduct of international transactions, and making or receiving international payments, including but not limited to the Tariff Act of 1930 as amended and other laws and programs administered or enforced by the United States Customs Service and its successor agencies, the Export Administration Act of 1979 as amended, the Export Administration Regulations, the International Emergency Economic Powers Act as amended, the Arms Export Control Act, the International Traffic in Arms Regulations, any other export controls administered by an agency of the United States government, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”), Executive Orders of the President regarding embargoes and restrictions on transactions with designated entities (including countries, terrorists, organizations and individuals), the embargoes and restrictions administered by the United States Office of Foreign Assets Control, the Money Laundering Control Act of 1986 as amended, requirements for the marking of textiles and wearing apparel, prohibitions or restrictions on the importation of merchandise made with the use of slave or child labor, the Foreign Corrupt Practices Act as amended, the antiboycott regulations administered by the United States Department of Commerce, the antiboycott regulations administered by the United States Department of the Treasury, legislation and regulations of the United States and other countries implementing the North American Free

5

Trade Agreement, antidumping and countervailing duty laws and regulations, and laws and regulations adopted by the governments or agencies of other countries concerning the ability of U.S. persons to own businesses or conduct business in those countries, restrictions by other countries on holding foreign currency or repatriating funds, or otherwise relating to the same subject matter as the United States statutes and regulations described above.

          “Damages” has the meaning set forth in Section 8.1.

          “Default” means (a) any violation, breach or default or (b) the occurrence of an event that, with the passage of time, the giving of notice or both, would constitute a violation, breach or default.

          “Dissenting Shares” has the meaning set forth in Section 2.8(a)(iv).

          “DGCL” has the meaning set forth in Section 2.1.

          “DOJ” has the meaning set forth in Section 6.3.

          “EBITDA” means, with respect to Argo-Tech and its Subsidiaries, for any period, an amount (determined by reference to the Financial Statements for such period) equal to the (a) consolidated net income for such period, plus (b) the sum of (i) interest, fees and other charges accrued on account of Funded Debt during such period, (ii) income taxes accrued during such period, (iii) depreciation for such period, and (iv) amortization of intangible assets for such period, in each case to the extent deducted in calculating consolidated net income for such period, minus (c) the sum of (i) interest income for such period and (ii) all non-cash items that have the effect of increasing consolidated net income for such period, in each case to the extent included in calculating consolidated net income for such period.

          “Effective Time” has the meaning set forth in Section 2.2.

          “Employee Benefit Plan” means each “employee benefit plan” (as such term is defined in ERISA Section 3(3)) and each other benefit plan, program, agreement or arrangement of any kind that the Company or any of its Subsidiaries maintains or sponsors, or to which the Company or any of its Subsidiaries contributes or has any obligation to contribute, or with respect to which the Company or any of its Subsidiaries has any current or potential liability or obligation, including, for the avoidance of doubt, any agreement or arrangement to pay any amount to any officer or employee of the Company or its Subsidiaries, even if only one officer or employee is the recipient of such amount.

          “Encumbrance” means any claim, lien, pledge, option, charge, easement, security interest, deed of trust, mortgage, conditional sales agreement, right of first refusal or any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership or other right of third parties, voluntarily incurred or arising by operation of law, and includes any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.

          “Environmental Claim” means any written claim, action, investigation or notice by any Person alleging liability on the part of the Company or its Subsidiaries (including,

6

without limitation, liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence, Release or threatened Release of any Hazardous Materials and petroleum compounds at any location, whether or not owned or operated by the Company or its Subsidiaries, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

          “Environmental Laws” shall mean all federal, state, local and foreign statutes, regulations, ordinances and similar provisions having the force or effect of law, all judicial and administrative orders and determinations, and all common law, concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Materials.

          “Environmental Permit” means any permit, license, authorization, certificate, filing, notice, submittal, or approval relating to or required by Environmental Law.

          “Equity Commitment Letters” has the meaning set forth in Section 5.4.

          “Equity Holders” means the holders of Company Stock, In-the-Money Options, SARs, SERP Awards and Warrant Shares prior to the Effective Time.

          “Equity Holder Indemnitee” has the meaning set forth in Section 8.2.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any rulings and regulations thereunder.

          “ERISA Affiliate” means any Person that at any relevant time is considered a single employer with the Company or any of its Subsidiaries under Code Section 414.

          “Escrow Account” has the meaning set forth in Section 2.10(b).

          “Escrow Agent” has the meaning set forth in Section 2.10(b).

          “Escrow Agreement” means that certain Escrow Agreement to be entered into by and among Parent, Escrow Agent, the Trustee and the Stockholders’ Representative, in substantially the form of Exhibit C.

          “Escrow Amount” has the meaning set forth in Section 2.10(b)(v).

          “ESOP” has the meaning set forth in the preamble.

          “ESOP Financial Advisor” means Houlihan Lokey Howard & Zukin Financial Advisors, Inc..

          “ESOP Transaction Expenses” means all expenses incurred for the direct benefit of the ESOP or as a result of the ESOP’s legal status in connection with the transactions

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contemplated hereby, including fees and expenses of the Trustee and the ESOP Advisor, Morgan Lewis, legal advisor to the Trustee, and the costs of obtaining the Fairness Opinion (including, but not limited to, any real estate appraisals).

          “Excluded Shares” has the meaning set forth in Section 2.8(a)(ii).

          “External Investigation” has the meaning set forth in Section 3.26.

          “Fairness Opinion” means the final form of an opinion of the ESOP Financial Advisor, to be dated and delivered at the Closing, to the effect that, as of the Closing, the transactions contemplated by this Agreement and by the other Transaction Documents are fair to the ESOP from a financial point of view and the consideration to be paid to the ESOP is not less than fair market value as determined under ERISA.

          “Financial Statements” means the Audited Financial Statements and the Interim Financial Statements.

          “FTC” has the meaning set forth in Section 6.3.

          “Funded Debt” means, without duplication, (a) any obligations of the Company or any of its Subsidiaries for borrowed money or in respect of loans and advances (including all obligations for principal, interest, premiums, penalties, fees, expenses and breakage costs), (b) any obligations of the Company or any of its Subsidiaries evidenced by any note, bond, debenture or other similar instrument or debt security, (c) all Capitalized Lease Obligations of the Company or any of its Subsidiaries, (d) any obligations of the Company or any of its Subsidiaries for the deferred purchase price of property, goods or services (excluding trade payables) and (e) all obligations of the types described in clauses (a) through (d) above of any Person other than the Company or any of its Subsidiaries, the payment of which is guaranteed, directly or indirectly, by the Company or any of its Subsidiaries.

          “GAAP” means United States generally accepted accounting principles consistently applied throughout the periods covered thereby.

          “Government Bid” means any bid, offer, proposal or response to solicitation which, if accepted or awarded, would result in the establishment of a Government Contract;

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

          “Governmental Authority” or “Governmental Entity” means any foreign, federal, state, municipal, national, local or other governmental department, court, commission, board, bureau, agency or instrumentality or political subdivision thereof, or any entity or officer exercising executive, legislative or judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case, whether of the United States or any

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other country, or a state, territory or possession thereof, or the District of Columbia, in each case having jurisdiction over the applicable Person.

          “Hazardous Material” means any substance, material or waste that is characterized, classified or designated under any Environmental Law as hazardous, toxic, a pollutant, or a contaminant or words of similar meaning or effect, including without limitation, petroleum and its by-products, asbestos, and polychlorinated biphenyls.

          “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

          “Improvements” has the meaning set forth in Section 3.9(d).

          “Indebtedness” means, without duplication, (a) any obligations of the Company or any of its Subsidiaries for borrowed money or in respect of loans and advances (including all obligations for principal, interest, premiums, penalties, fees, expenses and breakage costs), (b) any obligations of the Company or any of its Subsidiaries evidenced by any note, bond, debenture or other similar instrument or debt security, (c) all Capitalized Lease Obligations of the Company or any of its Subsidiaries, (d) any obligations of the Company or any of its Subsidiaries secured by an Encumbrance against any of their respective assets, (e) all obligations of the Company or any of its Subsidiaries for bankers’ acceptance or similar credit transactions issued for the account of the Company or any of its Subsidiaries and all obligations of the Company or any of its Subsidiaries under performance bonds, (f) any obligations of the Company or any of its Subsidiaries under any currency or interest rate swap, hedge or similar protection device, (g) any obligations of the Company or any of its Subsidiaries under any letters of credit, bonds or surety obligations, (h) any obligations of the Company or any of its Subsidiaries for the deferred purchase price of property, goods or services and (i) all obligations of the types described in clauses (a) through (h) above of any Person other than the Company or any of its Subsidiaries, the payment of which is guaranteed, directly or indirectly, by the Company or any of its Subsidiaries.

          “Indemnified Officers” has the meaning set forth in Section 6.13(b).

          “Indemnified Party” has the meaning set forth in Section 8.3.

          “Indemnifying Party” has the meaning set forth in Section 8.3.

          “Indemnity Agreements” has the meaning set forth in Section 3.22(g).

          “Indenture” means that certain indenture, dated as of June 23, 2004, by and between Argo-Tech and BNY Midwest Trust Company as trustee, pursuant to which Argo-Tech issued 9.25% Senior Notes due 2011.

          “Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents and patent rights (including utility model rights, design rights and industrial property rights), patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions,

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extensions, and reexaminations thereof; (b) all trademarks, service marks, trade dress, logos, slogans, trade names, business names, corporate names, and Internet domain names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection with any of the foregoing; (c) all works of authorship, mask works and other copyrightable works, all copyrights, mask work rights, and moral rights, and all applications, registrations, and renewals in connection therewith; (d) all trade secrets and other confidential and proprietary information (including ideas, research and development, know-how, formulas, processes, algorithms, industrial models, architectures, compositions, layouts, manufacturing and production processes and techniques, methodologies, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals); (e) all software (including source code, executable code, data, databases, Internet sites, firmware, and related documentation); (f) all other proprietary and intellectual property rights; (g) all rights to sue for past, present and future infringement or misappropriation of or other conflict with any of the foregoing; and (h) all copies and tangible embodiments or descriptions of any of the foregoing (in whatever form or medium).

          “Interim Financial Statements” means the unaudited consolidated balance sheet of Argo-Tech and its Subsidiaries at July 29, 2005 (the “Most Recent Balance Sheet”), and the unaudited consolidated statements of operations, stockholder’s equity and cash flows of Argo-Tech and its Subsidiaries for the nine-month period then ended, and the unaudited consolidated balance sheet of Argo-Tech and its Subsidiaries and the related unaudited consolidated statements of operations, stockholder’s equity and cash flows for each monthly period ending after July 29, 2005 and before the Closing delivered to Parent from time to time pursuant to Section 6.2(b) hereof.

          “In-the-Money Options” means each Company Stock Option outstanding immediately prior to the Effective Time which has an exercise price per share that is less than the Per Share Common Consideration (determined, for purposes of this definition only, without regard to clauses (a)(iv), (a)(v) and (a)(vi) of the definition of Merger Consideration).

          “Knowledge” of the Company and its Subsidiaries means the actual knowledge or the knowledge one would be expected to have after reasonable inquiry and investigation with respect to matters within the scope of one’s employment and/or assigned duties, of each of Michael Lipscomb, Paul R. Keen, David Loney, Francis St. Clair, Paul Sklad, Frank Dubey, Richard T. Walker, John S. Glover, James Cunningham, Catherine M. Kupec, Lance Schroeder, Chris Michael and Robert Eichhorn.

          “Landlord Leases” means all written leases, licenses or other agreements pursuant to which the Company or any Subsidiary conveys or grants to any Person a leasehold estate in, or the right to use or occupy, any Owned Real Property or portion thereof, including the right to all security deposits and other amounts and instruments deposited with or on behalf of the Company or any Subsidiary thereunder.

          “Law” means any United States or non-United States statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order.

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          “Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company or any Subsidiary.

          “Leases” means all leases, subleases, licenses, concessions and other agreements (written or oral) pursuant to which the Company or any Subsidiary holds any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of the Company or any Subsidiary thereunder.

          “Material Adverse Effect” means any change, event, condition or development, either individually or in the aggregate with all other changes, events, conditions or developments, that has had or would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), operating results or relationships of the Company and its Subsidiaries, taken as a whole, or the ability of the Company to consummate the transactions contemplated hereby, excluding any such effect resulting from or arising out of the execution and performance of this Agreement or the announcement thereof.

          “Material Contracts” has the meaning set forth in Section 3.21(t).

          “Merger” has the meaning set forth in Section 2.1.

          “Merger Certificate” has the meaning set forth in Section 2.2.

          “Merger Consideration” means an amount equal to:

          (a) the sum of (i) $173,000,000 plus (ii) all cash proceeds from the exercise of any Company stock options during the period from July 29, 2005 through and including the date prior to the Closing Date plus (iii) all repayments on loans owed by employees of the Company or its Subsidiaries to the Company during the period from July 29, 2005 through and including the Closing Date plus (iv) the Option Exercise Amount plus (v) the Warrant Exercise Amount plus (vi) the aggregate SAR Initial Value of all SARs outstanding immediately prior to the Effective Time, minus

          (b) the sum of (i) Closing Company Expenses plus (ii) Closing Dividends/Investments.

          “Merger Fund” means the account, maintained by the Paying Agent, in which the following amounts will be deposited: (a) the aggregate Per Share Common Consideration to be paid to each of the Equity Holders and (b) any amounts released from the Escrow Account to the Paying Agent pursuant to the terms hereof.

          “Notes” has the meaning set forth in Section 7.3(j).

          “Option Exercise Amount” means an amount equal to the sum of the exercise price of each share of Common Stock issuable upon exercise of all In-the-Money Options.

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          “Ordinary Course” means the ordinary course of the Company’s and its Subsidiaries’ business, consistent with the past customs and practice of the Company and its Subsidiaries.

          “Organizational Documents” means, with respect to any Person other than a natural person, the documents by which such Person was organized (such as a certificate of incorporation, certificate of limited partnership or articles of incorporation or articles of organization, and including, without limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of such Person (such as by-laws, a partnership agreement or an operating, limited liability or members agreement (but shall not include any stockholders agreement relating to such Person)).

          “Outside Date” has the meaning set forth in Section 9.1(b).

          “Parent” has the meaning set forth in the preamble.

          “Parent Class A Units” has the meaning set forth in Section 7.3(q).

          “Paying Agent” has the meaning set forth in Section 2.8(c)(i).

          “Per In-the-Money Option Consideration” means the excess, if any, of the Per Share Common Consideration over the exercise price per share of Common Stock subject to such In-the-Money Option.

          “Per SAR Consideration” means the excess, if any, of the Per Share Common Consideration over the SAR Initial Value of such SAR.

          “Per SERP Award Consideration” means for each SERP Award, an amount equal to the Per Share Common Consideration.

          “Per Share Common Consideration” means an amount equal to the quotient of (a) the Merger Consideration minus the Preferred Redemption Amount, divided by (b) the sum of (i) the aggregate number of shares of Common Stock issued and outstanding immediately prior to the Effective Time (including any shares issued or issuable prior to the Effective Time to the ESOP), (ii) the aggregate number of shares of Common Stock issuable upon exercise of In-the-Money Options and the Warrant immediately prior to the Effective Time and (iii) the number of notional shares of Common Stock attributable to all SARs and SERP Awards outstanding immediately prior to the Effective Time.

          “Per Share Merger Consideration” means an amount equal to the quotient of (a) the Merger Consideration, divided by (b) the sum of (i) the aggregate number of shares of Common Stock issued and outstanding immediately prior to the Effective Time (including any shares issued or issuable prior to the Effective Time to the ESOP), (ii) the aggregate number of shares of Common Stock issuable upon exercise of In-the-Money Options and the Warrant immediately prior to the Effective Time, (iii) the number of notional shares of Common Stock attributable to all SARs and SERP Awards outstanding immediately prior to the Effective Time, and (iv) the aggregate number of shares of Preferred Stock outstanding immediately prior to the Effective Time.

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          “Per Warrant Share Consideration” means the excess, if any, of the Per Share Common Consideration over the exercise price per share of Common Stock subject to the Warrant.

          “Permits” means all permits and licenses, certificates of inspection, approvals, consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations issued to, or required to be obtained or maintained by, the Company and its Subsidiaries by a Governmental Authority related to, or necessary for the operation of, the business of the Company and its Subsidiaries as currently conducted, including all applications therefor, correspondence with a Governmental Authority pertaining thereto, and any amendment, modification, limitation, condition or renewal thereof; provided, however that the term “Permits” shall not include any Environmental Permits.

          “Permitted Encumbrances” shall mean with respect to each Owned Real Property and Leasehold Improvement (as the case may be): (A) real estate taxes, assessments and other governmental levies, fees or charges imposed with respect to such Real Property which are not due and payable as of the Closing Date; (B) mechanics liens and similar liens for labor, materials or supplies provided with respect to such Real Property incurred in the ordinary course of business for amounts which are not due and payable and which shall be paid in full and released at closing; (C) zoning, building codes and other land use Laws regulating the use or occupancy of such Real Property or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such Real Property which are not violated by the current use or occupancy of such Real Property or the operation of the Company’s business thereon; and (D) Encumbrances granted or created pursuant to the Credit Agreement (as amended by the Credit Agreement Amendment) or the Indenture; and (E) easements, covenants, conditions, restrictions and other similar matters of record affecting title to such Real Property which do not or would not materially impair the use or occupancy of such Real Property in the operation of the Company’s business conducted thereon.

          “Person” means any person or entity, whether an individual, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture or Governmental Authority.

          “Personal Property” means all machinery, equipment, furniture, motor vehicles, other miscellaneous supplies, tools, fixed assets and other tangible personal property owned or leased by or used by the Company or a Subsidiary.

          “Preferred Redemption Amount” means an amount equal to the sum of (i) the aggregate consideration paid by the Company to redeem the Preferred Stock pursuant to Section 5(c) of the Certificate of Designations for the Preferred Stock plus (ii) the aggregate amount of Preferred Stockholder Bonuses.

          “Preferred Stock” means the Series B preferred stock, $0.01 par value per share, of the Company.

          “Preferred Stockholder Bonuses” means bonuses to be paid by the Company prior to the Closing Date, to holders of the Preferred Stock that are currently employed by the

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Company in an amount for each such Preferred Stock holder equal to (subject to any withholding for Taxes) the Per Share Merger Consideration less the redemption price per share of Preferred Stock provided for in Section 5(c)(ii) of the Certificate of Designations for the Preferred Stock.

          “Proportionate Share” means, with respect to each Equity Holder, the percentage set forth next to such Person’s name on Schedule 1.1(b) hereto to be delivered prior to Closing pursuant to Section 2.9.

          “Real Property” has the meaning set forth in Section 3.7(c).

          “Release” means any release, spill, emission, discharge, leading, pumping, injection, deposit, disposal, dispersal, leaching or migration into or out of the indoor or outdoor environment (including, without limitation, ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property currently or formerly owned or operated by the Company or its Subsidiaries, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or property.

          “Required Stockholder Approval” has the meaning set forth in Section 2.3(c).

          “Rollover Amount” means, with respect to any Rollover Holder, (i) with respect to shares of Common Stock, the number of shares of Common Stock held by such holder included in the Rollover Securities multiplied by the Per Share Common Consideration, and (ii) with respect to options, the aggregate Per-In-the-Money Option Consideration represented by the options of such holder included in the Rollover Securities.

          “Rollover Escrow Amount” means with respect to any Rollover Holder, an amount equal to the Rollover Amount of such holder’s Rollover Securities multiplied by the quotient determined by dividing the Escrow Amount by the Cash Merger Consideration.

          “Rollover Holder” means each Equity Holder whose name is set forth on Exhibit D hereto.

          “Rollover Securities” means, with respect to any Rollover Holder, the shares of Common Stock or In-the-Money Options set forth opposite such holder’s name of Exhibit D hereto.

          “Sarbanes-Oxley Act” has the meaning set forth in Section 3.11(d).

          “SAR Initial Value” means the initial value of a SAR as set forth in the agreement or other award document pursuant to which such SAR was issued.

          “SAR Plans” has the meaning set forth in Section 2.8(d)(i).

          “SARs” means all stock appreciation rights outstanding immediately prior to the Effective Time granted by the Company or its Subsidiaries pursuant to any SAR Plans.

          “SERP Award” means a book entry credit made on behalf of any SERP Plan participant representing the right to receive one share of Common Stock.

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          “SERP Plan” means the Argo-Tech Corporation Employee Stock Ownership Plan Excess Benefit Plan, established as of May 17, 1994, and amended by the First Amendment to the Argo-Tech Corporation Employee Stock Ownership Plan Excess Benefit Plan effective as of December 17, 1998.

          “Stock Plans” has the meaning set forth in Section 2.8(d)(i).

          “Stockholders’ Agreement” means, collectively, (a) the Stockholders’ Agreement, made as of December 17, 1998, by and among the Company, AT Holdings, LLC, YC International, Inc., Sunhorizon International, Inc., Chase Venture Capital Associates, L.P., David Chrencik, Yoichi Fujiki, Paul R. Keen, Michael S. Lipscomb and Frances St. Clair and (b) the Supplemental Stockholders’ Agreement, dated as of December 17, 1998, by and among the Company, Argo-Tech and Key Trust Company of Ohio, N.A., in its capacity as Trustee of the ESOP.

          “Stockholders’ Representative” has the meaning set forth in Section 6.7(b).

          “Subsidiary” means a corporation or other entity (i) of which more than 50% of the voting power or value of the Capital Stock is owned, directly or indirectly, by the Company or (ii) whose financial condition, results of operations and cash flows are consolidated with the financial condition, results of operations and cash flows of the Company and its Subsidiaries in the Financial Statements.

          “Superior Proposal” means any bona fide written offer for a direct or indirect acquisition or purchase of more than 67% of the Company Stock or assets, or any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company and having such effect (a) which provides for consideration on a per share basis to the Company’s stockholders with a value exceeding the consideration payable hereunder, and (b) which, considering all relevant factors (including taking into account, among other things, the likelihood of such offer resulting in a consummated transaction), is on terms that the Board determines in its good faith judgment (after receiving the advice of its financial advisors, which financial advisors shall be of nationally or regionally recognized reputation) to be no less favorable to the Company’s Stockholders than the transactions as contemplated by this Agreement.

          “Surviving Corporation” has the meaning set forth in Section 2.1.

          “Taxing Authority” shall mean any governmental agency, board, bureau, body, person, department or authority of any United States federal, state or local jurisdiction or any non-United States jurisdiction, having or purporting to exercise jurisdiction with respect to any Tax.

          “Tax” or “Taxes” means (i) any United States federal, state or local or any non-United States net or gross income, gross receipts, net proceeds, corporation, capital gains, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs, capital stock, franchise, profits, withholding, national insurance, social security (or similar), unemployment, disability, real property, personal property, sales, inheritance, use, transfer, registration, value

15

added, alternative or add-on minimum, estimated or other taxes, assessments, duties, fees, levies or other governmental charges of any kind whatever, whether disputed or not, including any interest, penalty or additional amount related thereto; (ii) any liability for or in respect of the payment of any amount of a type described in clause (i) of this definition as a result of being a member of an affiliated, combined, consolidated, unitary or other group for Tax purposes; or (iii) any liability for or in respect of the payment of any amount described in clauses (i) or (ii) of this definition as a transferee or successor, by contract or otherwise.

          “Tax Return” means any return, declaration, report, claim for refund, information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

          “Tracker Technology Dispute” has the meaning set forth in Section 8.1.

          “Transaction Documents” means this Agreement, the Merger Certificate, the Escrow Agreement and the Credit Agreement Amendment.

          “Transfer Taxes” means transfer, documentary, sales and use, stamp or other similar Taxes, if any, arising out of or in connection with the transactions contemplated by this Agreement.

          “Trustee” has the meaning set forth in the preamble.

          “TRW Indemnity Agreement” has the meaning set forth in Section 3.22(g).

          “Unlawful Payment” has the meaning set forth in Section 3.28.

          “Warrant” means that certain warrant issued by the Company in favor of J.P. Morgan Partners (SBIC), LLC pursuant to a Preferred Stock and Warrant Purchase Agreement, dated as of December 17, 1998 between the Company and J.P. Morgan Partners (SBIC), LLC, as amended.

          “Warrant Exercise Amount” means an amount equal to the sum of the exercise price of each share of Common Stock issuable upon exercise of the Warrant.

          “Warrant Shares” means such number of shares of Company Stock as are issuable upon exercise of the Warrant.

          “Wire Transfer Instructions” has the meaning set forth in Section 2.10(a).

          Section 1.2. Interpretation. In this Agreement, unless otherwise specified or where the context otherwise requires:

          (a) the headings of particular provisions of this Agreement are inserted for convenience only and will not be construed as a part of this Agreement or serve as a limitation or expansion on the scope of any term or provision of this Agreement;

          (b) words importing any gender shall include other genders;

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          (c) words importing the singular only shall include the plural and vice versa;

          (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation;”

          (e) the words “hereby,” “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement;

          (f) references to “Articles,” “Exhibits,” “Annexes,” “Sections” or “Schedules” shall be to Articles, Exhibits, Sections or Schedules of or to this Agreement; and

          (g) references to any Person include the successors and permitted assigns of such Person.

          Section 1.3. Actions Simultaneous. Except as otherwise agreed to by the parties in writing, all actions to be taken and all documents to be executed and delivered by all parties at the Closing shall be deemed to have been taken and executed and delivered simultaneously and no actions shall be deemed to have been taken nor shall any documents be deemed to have been executed and delivered until all actions have been taken and all documents have been executed and delivered.

ARTICLE II
THE MERGER

          Section 2.1. The Merger. At the Effective Time and upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), Acquisition Sub shall be merged with and into the Company (the “Merger”). Following the Merger, the Company shall continue as the surviving corporation (the “Surviving Corporation”) and the separate corporate existence of Acquisition Sub shall cease.

          Section 2.2. Effective Time. Subject to the terms and conditions set forth in this Agreement, a Certificate of Merger in customary form reasonably acceptable to Parent and the Company (the “Merger Certificate”) shall be duly executed and acknowledged by the Company and the Acquisition Sub and thereafter delivered to the Secretary of State of the State of Delaware for filing pursuant to the DGCL on the Closing Date. The Merger shall become effective at such time as a properly executed and certified copy of the Merger Certificate is duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL or such later time as Parent and the Company may agree upon and set forth in the Merger Certificate (such time as the Merger becomes effective, the “Effective Time”).

          Section 2.3. Closing of the Merger.

          (a) The closing of the Merger (the “Closing”) will take place at a time and on a date (the “Closing Date”) to be specified by the parties, which shall be no later than the second Business Day after satisfaction of the latest to occur of the conditions set forth in Article VII (other than any such conditions which by their nature cannot be satisfied until the Closing Date,

17

which shall be required to be so satisfied or (to the extent permitted by applicable law) waived on the Closing Date), at the offices of Kirkland & Ellis LLP, Citigroup Center, 153 East 53^rd Street, New York, New York 10022, unless another time, date or place is agreed to in writing by the parties hereto.

          (b) At the Closing, Parent shall deliver to the Company: (i) a certificate, duly executed by an authorized executive officer of Parent, dated the Closing Date, certifying that the conditions specified in Sections 7.2(a) through (c) have been fulfilled; (ii) a certificate, duly executed by an authorized Secretary or Assistant Secretary of Parent, dated the Closing Date, to the effect that: (A) (1) the Organizational Documents of the Parent and Acquisition Sub attached to such certificate are correct and complete, and were in full force and effect in the form as attached to such certificate on the date of adoption of the resolutions referred to in clause (3) below, (2) no amendment to such Organizational Documents of either Parent or Acquisition Sub has occurred since the date of adoption of the resolutions referred to in clause (3) below, and (3) the resolutions adopted by the respective boards of directors (or other similar body) of Parent and Acquisition Sub authorizing this Agreement and the transactions contemplated hereby, including the Merger, were duly adopted at a duly convened meeting thereof, at which a quorum was present and acting throughout, or by unanimous written consent, and such resolutions, as attached to such certificate, are true, correct and complete, remain in full force and effect, and have not been amended, rescinded or modified; and (B) the respective officers of Parent and Acquisition Sub executing this Agreement and the other Transaction Documents to be executed and delivered by Parent or Acquisition Sub pursuant to this Agreement are incumbent officers of Parent or Acquisition Sub, as applicable, and the specimen signatures on such certificate are their genuine signatures; and (iii) such other instruments and agreements as may be reasonably requested by the Company.

          (c) At the Closing, the Company shall deliver to Parent: (i) a certificate, duly executed by an authorized executive officer of the Company, dated the Closing Date, certifying that the conditions specified in Sections 7.1(c) through (g) and Sections 7.3(a) through (t) (in each case, to the extent such conditions relate to the Company) have been fulfilled; (ii) a certificate, duly executed by the Trustee, dated the Closing Date, certifying that the conditions specified in Sections 7.1(c) through (h) and Sections 7.3(a) through (t) (in each case, to the extent such conditions relate to the ESOP) have been fulfilled; (iii) a certificate, duly executed by an authorized Secretary or Assistant Secretary of the Company, dated the Closing Date, to the effect that: (A) (1) the Organizational Documents of the Company attached to such certificate are correct and complete, and were in full force and effect in the form as attached to such certificate on the date of adoption of the resolutions referred to in clause (3) below, (2) no amendment to the Organizational Documents has occurred since the date of adoption of the resolutions referred to in clause (3) below, (3) the resolutions adopted by the Board and the stockholders of the Company, authorizing this Agreement and the transactions contemplated hereby, including the Merger, were duly adopted by the unanimous approval of the Board by and the vote of (x) such number of stockholders as is required by the Organizational Documents of the Company and the DGCL and (y) each Person (other than the ESOP) who, together with its Affiliates, holds in excess of 10% of the issued and outstanding Common Stock as of the date of this Agreement has voted in favor of the Merger (the “Required Stockholder Approval”), and such resolutions, as attached to such certificate, are true, correct and complete, remain in full force and effect, and have not been amended, rescinded or modified; and (B) the Company’s officers executing this

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Agreement and the Transaction Documents to be executed and delivered by the Company pursuant to this Agreement are incumbent officers and the specimen signatures on such certificate are their genuine signatures; (iv) as requested by Parent in writing no later than four Business Days before the Closing with respect to such directors, resignation letters from directors of the Company and each Subsidiary resigning as a director of such entity effective as of the Effective Time; and (v) a certification by the Company that meets the requirements of Treasury regulation Section 1.1445-2(c)(3), dated within 30 days prior to the Closing Date.

          Section 2.4. Effects of the Merger. The Merger shall have the effects set forth in the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Acquisition Sub shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Acquisition Sub shall become the debts, liabilities and duties of the Surviving Corporation.

          Section 2.5. Organizational Documents. Effective upon and as part of the Merger, the certificate of incorporation of the Company shall be amended in its entirety to be the same as the certificate of incorporation of Acquisition Sub in effect immediately prior to the Effective Time, and as so amended, shall be the certificate of incorporation of the Surviving Corporation following the Merger until thereafter amended in accordance with applicable law, provided that such certificate of incorporation shall be amended hereby as of the Effective Time to change the name of the Surviving Corporation to “AT Holdings Corporation.” The bylaws of Acquisition Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation at and immediately after the Effective Time, until thereafter amended in accordance with applicable law as provided therein and under the DGCL.

          Section 2.6. Board of Directors. The directors of Acquisition Sub at the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Organizational Documents of the Surviving Corporation until such director’s successor is duly elected or appointed and qualified.

          Section 2.7. Officers. The officers of the Company at the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the Organizational Documents of the Surviving Corporation until such officer’s successor is duly elected or appointed and qualified.

          Section 2.8. Effect of the Merger on the Outstanding Securities of the Company; Exchange Procedures; and Treatment of Options.

          (a) Effect on Capital Stock.

               (i) Common Stock of Acquisition Sub. As of the Effective Time, each share of common stock, $0.01 par value per share, of Acquisition Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid and nonassessable share of common stock, $0.01 par value per share, of the Surviving Corporation so that, immediately following the Effective Time, Parent will be the holder of all of the issued and outstanding shares of Capital Stock of the Surviving Corporation.

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               (ii) Cancellation of Treasury Stock and Company Stock Owned by Parent or Acquisition Sub. As of the Effective Time, each share of Company Stock that is owned by Parent or Acquisition Sub or held in the treasury of the Company (collectively, the “Excluded Shares”) shall be canceled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor.

               (iii) Cancellation, Retirement and Conversion of Common Stock. As of the Effective Time, each share of Common Stock (other than Excluded Shares and Dissenting Shares) issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be canceled and retired and shall convert into the right to receive in cash from the Surviving Corporation upon surrender of the certificate or the affidavit described in Section 2.8(c)(vii) (the “Certificate”) an amount equal to the Per Share Common Consideration attributable to the shares of Common Stock represented by such Certificate as adjusted pursuant to Section 2.12 and Section 8.5. As of the Effective Time, each holder of a Certificate shall cease to have any rights with respect thereto (except for the right to receive the Per Share Common Consideration plus any amounts payable pursuant to Section 2.12 and Section 8.5 for each share of Common Stock held by such holder upon surrender of such holder’s Certificate (and any rights such holder may have by operation of law)) as described above.

               (iv) Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, each share of Common Stock that is issued and outstanding immediately prior to the Effective Time and that is held by an Equity Holder who was entitled to and has validly demanded appraisal rights in accordance with Section 262 of the DGCL (“Dissenting Shares”) shall not be converted into the right to receive the Per Share Common Consideration plus any amounts payable pursuant to Section 2.12 and Section 8.5 unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost such holder’s appraisal rights under the DGCL but instead shall be converted into the right to receive payment from the Surviving Corporation with respect to such Dissenting Shares in accordance with the DGCL. If any such holder shall have failed to perfect or shall have effectively withdrawn or lost such right, each share of Common Stock held by such holder shall be converted into the right to receive the Per Share Common Consideration plus any amounts payable pursuant to Section 2.12 and Section 8.5. The Company shall give prompt notice to Parent of any demands, attempted withdrawals of such demands and any other instruments served pursuant to the DGCL received by the Company for appraisal of shares of Common Stock, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, settle, offer to settle, or approve any withdrawal of any such demands.

          (b) Rollover of Securities. Immediately prior to the Effective Time, each Rollover Holder who will rollover Common Stock shall contribute his Rollover Securities that are shares of Common Stock to Parent and Parent shall issue (and shall provide satisfactory evidence of such issuance to each Rollover Holder), in consideration of the contribution of such Rollover Securities to Parent, the number of Class A Units of Parent equal to the aggregate Rollover Amount attributable to such holder’s Rollover Securities that are shares of Common Stock divided by the agreed upon purchase price for such units. Such contribution and issuance shall constitute a transaction which is part of an integrated plan with the acquisition of Capital

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Stock of Parent in exchange for the contribution of cash to Parent pursuant to the Equity Commitment Letters and, with respect to Rollover Securities that are shares of Common Stock, is intended to qualify as a tax free contribution pursuant to Section 351 of the Code. In addition, each Rollover Holder who is rolling over Rollover Securities that are In-the-Money Options shall execute and deliver to Parent and the Company prior to Closing a waiver of such Person’s right to receive any amounts that would otherwise be payable pursuant to this Agreement with respect to such In-the-Money Options and as the result thereof such In-the-Money Options will not be cancelled as otherwise contemplated by the terms of this Agreement and no amounts will be paid to the holder in respect thereof pursuant to this Agreement. The agreements pursuant to which such In-the-Money Options were issued to such Rollover Holder will be amended in accordance with the terms and conditions set forth on the Equity Term Sheet attached as Exhibit E hereto.

          (c) Exchange of Certificates.

               (i) Paying Agent. Prior to the Effective Time, the Company shall appoint a bank or other financial institution reasonably acceptable to Parent to act as paying agent (the “Paying Agent”) for the payment of the Merger Fund. At the Effective Time, Parent shall deposit with the Paying Agent (i) the aggregate amount to be paid to the holders of Common Stock pursuant to the provisions of Section 2.10(b) hereof, and (ii) the aggregate amount to be paid to the holder of the Warrant pursuant to the provisions of Section 2.10(b) hereof. The Paying Agent shall, pursuant to irrevocable instructions of the Surviving Corporation given on the Closing Date, make payments of the aggregate Per Share Common Consideration out of the Merger Fund. Following the Effective Time, amounts may from time to time be paid-in to the Merger Fund for distribution to the Company’s former Equity Holders, as provided for herein. All fees and expenses relating to the retention of and provision of services by the Paying Agent pursuant to the transactions contemplated by this Agreement will be deemed to be “Company Expenses” hereunder.

               (ii) Exchange Procedures. Promptly after the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail or deliver to each Person who was, at the Effective Time, a holder of record of Common Stock, a letter of transmittal substantially in the form attached hereto as Exhibit F (a “Letter of Transmittal”) containing instructions for use by holders of Common Stock to effect the exchange of each of their shares of Common Stock for the Merger Consideration that such holder is entitled to receive pursuant to this Agreement. As soon as practicable after the Effective Time, each holder of an outstanding Certificate or Certificates shall, upon surrender to the Paying Agent of such Certificate or Certificates and such letter of transmittal duly executed and completed in accordance with the instructions thereto (together with such other documents as the Paying Agent may reasonably request) and acceptance thereof by the Paying Agent (or, if such shares are held in book-entry or other uncertificated form, upon the entry through a book-entry transfer agent of the surrender of such shares on a book-entry account statement (it being understood that any references herein to “Certificates” shall be deemed to include references to book-entry account statements relating to the ownership of shares of Common Stock)), be entitled to an amount of cash (payable by check) equal to the Per Share Common Consideration plus any amounts payable pursuant to Section 2.12 and Section 8.5 for each share of Common Stock represented by such Certificate or Certificates. The Paying Agent shall accept such Certificates upon compliance with such reasonable terms and conditions as the Paying Agent may impose to effect an orderly exchange

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thereof in accordance with normal exchange practices. Until surrendered as contemplated by this Section 2.8(c)(ii), after the Effective Time, each Certificate shall be deemed to represent only the right to receive the Per Share Common Consideration plus any amounts payable pursuant to Section 2.12 and Section 8.5 for each share of Common Stock represented by such Certificate. No interest will be paid or will accrue on any cash payable from the Merger Fund.

               (iii) No Further Ownership Rights in Common Stock Exchanged for Cash. All cash paid upon the surrender or exchange of Certificates representing shares of Common Stock in accordance with the terms of this Agreement shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Common Stock exchanged for cash theretofore represented by such Certificates, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Common Stock which were issued and outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for transfer, they shall be cancelled and exchanged as provided in this Section 2.8.

               (iv) Termination of Merger Fund. Any portion of the Merger Consideration in the Merger Fund which remains undistributed to the holders of Certificates for 180 days after the Effective Time (or with respect to amounts contributed to the Merger Fund following the Effective Time, 180 days after the date of such contribution) shall be delivered to the Surviving Corporation, and any holders of Certificates who have not theretofore complied with this Section 2.8 shall thereafter look only to the Surviving Corporation and only as general creditors thereof for payment of the Merger Consideration that such holder is entitled to receive pursuant to this Agreement, subject to escheat and abandoned property and similar Laws.

               (v) No Liability. None of Parent, the Surviving Corporation or the Paying Agent shall be liable to any Person in respect of any cash from the Merger Fund properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

               (vi) Investment of Merger Fund. The Paying Agent shall invest any cash in the Merger Fund, as directed by the Surviving Corporation. Any interest and other income resulting from such investments shall be paid to the Surviving Corporation.

               (vii) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration that the holder of such Certificate is entitled to receive pursuant to this Agreement.

          (d) Treatment of Options, SARs, SERP Awards and the Warrant.

               (i) A list showing each of the Company’s stock option plans, programs and arrangements (collectively, the “Stock Plans”) and outstanding options to acquire shares of Common Stock under the Stock Plans or otherwise (the “Company Stock Options”), including the name of the Stock Plan under which such options were issued, the holders thereof, the number of shares subject thereto, the exercise prices thereof, the dates of scheduled vesting

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thereof and the terms thereof that require acceleration of such vesting by virtue of the Merger is set forth on Schedule 2.8(d). A list showing each of the Company’s stock appreciation rights plans, programs and arrangements (collectively, the “SAR Plans”) and outstanding SARs granted under the SAR Plans or otherwise (the “SARs”), including the name of the SAR Plan under which such SARs were granted, the holders thereof, the dates of scheduled vesting thereof and the terms thereof that require acceleration of such vesting by virtue of the Merger is set forth on Schedule 2.8(d). A list showing each SERP Award outstanding granted under the SERP Plan, the holder thereof, and the dates of scheduled vesting thereof and the terms thereof that require acceleration of such vesting by virtue of the Merger is set forth on Schedule 2.8(d).

               (ii) At, or immediately prior to, the Effective Time the Company shall take all actions necessary, and obtain all consents necessary, so that, except for any Rollover Securities: (1) all outstanding Company Options, SARs, SERP Awards and the Warrant (whether or not then vested or exercisable) shall be cancelled in exchange for the right to receive the amounts payable in respect of such Company Options, SARs, SERP Awards and the Warrant pursuant to Sections 2.10 and Section 2.12, as such amounts may be adjusted pursuant to Article VIII and (2) the Stock Plans, SAR Plans, SERP Plan and the Warrant shall be terminated as of the Effective Time, and the provisions in any other agreement or arrangement providing for the issuance, transfer or grant of any Capital Stock of the Company or any interest in respect of any Capital Stock of the Company shall be terminated as of the Effective Time.

               (iii) The Company shall take such actions to ensure that following the Effective Time no holder of a Company Stock Option, Warrant, SERP Award or SAR or any participant in or a party to any Stock Plan or SAR Plan, the SERP Plan or other agreement or arrangement providing for the issuance, transfer or grant of any Capital Stock of the Company or any interest in respect of any Capital Stock of the Company shall have any right thereunder to acquire any Capital Stock or any interest in respect of any Capital Stock of the Surviving Corporation.

          Section 2.9. Pre-Closing Determination of Merger Consideration         . On such day as is five days prior to the Closing Date, the Company shall deliver to Parent a statement prepared in accordance with the books and records of the Company and its Subsidiaries immediately prior to the Effective Time (the “Closing Adjustment Statement”) setting forth (i) all Company Expenses incurred or paid (or to be incurred or paid) during the period beginning on July 29, 2005 and ending immediately prior to the Effective Time (the “Closing Company Expenses”), (ii) the amount of Closing Dividends/Investments, (iii) all repayments on loans owed by employees of the Company or its Subsidiaries to the Company during the period from July 29, 2005 through and including the Closing Date, (iv) all cash proceeds from the exercise of any Company stock options during the period from July 29, 2005 through and including the date prior to the Closing Date, and (v) Schedule 1.1(b).

          Section 2.10. Wire Transfer Instructions and Payments.

          (a) Wire Transfer Instructions. No later than three Business Days prior to the Closing, the Company shall designate in writing the accounts to which the payments set forth in this Section 2.10 shall be made, which payments (other than those payable under Sections 2.10(b)(ii), 2.10(b)(iv), and 2.10(b)(v), which shall be paid by check through the Company’s

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payroll system) shall be made by wire transfer of immediately available funds (the “Wire Transfer Instructions”).

          (b) Payments of Merger Consideration. At the Effective Time, subject to Section 2.11, Parent will pay (or cause to be paid) the amounts set forth below, to the account (or accounts) designated for such payment (or payments) in the Wire Transfer Instructions:

               (i) to the Paying Agent, an amount equal to (i) the aggregate Per Share Common Consideration of all outstanding shares of Common Stock (other than shares of Common Stock that are Rollover Securities), multiplied by the Closing Payout Percentage, minus (ii) the aggregate Rollover Escrow Amount attributable to all shares of Common Stock that are Rollover Securities, for use in the payment to each holder of Common Stock that has executed and delivered a Letter of Transmittal of an amount equal to the Closing Payout Percentage multiplied by the Per Share Common Consideration attributable to the shares of Common Stock (other than shares of Common Stock that are Rollover Securities) held by such holder of Common Stock minus, in the case of any Rollover Holder, the Rollover Escrow Amount that is attributable to such holder’s shares of Common Stock that are Rollover Securities;

               (ii) to each holder of In-the-Money Options, an amount equal to the Closing Payout Percentage multiplied by the Per In-the-Money Option Consideration attributable to such holder’s In-the-Money Options (other than In-the-Money Options that are Rollover Securities) minus, in the case of any Rollover Holder, the Rollover Escrow Amount that is attributable to such holder’s In-the-Money Options that are Rollover Securities; provided that if a Rollover Holder is rolling over all of such holder’s In-the-Money Options pursuant to Section 2.8(b), then the Rollover Escrow Amount attributable to such holder’s In-the-Money Options that are Rollover Securities shall be deducted from the proceeds such holder would receive pursuant to Section 2.10(b)(iv) below rather than the proceeds payable under this Section 2.10(b)(ii);

               (iii) to the Paying Agent, an amount equal to the aggregate Per Warrant Share Consideration multiplied by the Closing Payout Percentage, for use in the payment to the holder of the Warrant (provided that the holder has executed and delivered a Letter of Transmittal) of an amount equal to the Closing Payout Percentage multiplied by the Per Warrant Share Consideration attributable to the holder’s Warrant;

               (iv) to the holders of SARs, an amount equal to the Closing Payout Percentage multiplied by the Per SAR Consideration attributable to such holder’s SARs;

               (v) to the holders of SERP Awards, an amount equal to the Closing Payout Percentage multiplied by the Per SERP Award Consideration for each SERP Award held by such holder; and

               (vi) $8,500,000 (the “Escrow Amount”) to Bank of New York or such other bank as Parent and the Stockholders’ Representative may jointly select (the “Escrow Agent”), which amount shall be held in an account (the “Escrow Account”) and be administered by the Escrow Agent pursuant to the terms and conditions of the Escrow Agreement.

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          (c) Payment of Company Expenses. At the Effective Time on the Closing Date, as part of the Merger Consideration, in addition to the amounts set forth in Section 2.10(b) above Parent will pay (or cause to be paid) on behalf of the Company or any Subsidiary to the account (or accounts) designated for such payment (or payments) in the Wire Transfer Instructions an amount equal to any portion of the Closing Company Expenses that will be paid off at Closing to such creditors.

          Section 2.11. Withholding Rights; Certain Taxes. Each of the Paying Agent and the Company, the Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration or any other payments otherwise payable to any Person pursuant to this Article II such amounts as it determines in good faith that is required to deduct and withhold with respect to the making of such payment under any provision of any Law or applicable regulation with respect to Taxes. If the Paying Agent, the Company, the Surviving Corporation or Parent, as the case may be, so withholds any such amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Person in respect of which the Paying Agent, the Company, the Surviving Corporation or Parent, as the case may be, made such deduction and withholding.

          Section 2.12. Distribution of Proceeds from Argo-Tracker Disposition.

          (a) Promptly following the consummation of any Argo-Tracker Disposition or liquidation of Argo-Tracker Corporation pursuant to Section 6.7(c), the Surviving Corporation shall distribute the net proceeds of such disposition or liquidation (“Argo-Tracker Proceeds”) as follows:

               (i) If the Argo-Tracker Proceeds are less than or equal to $3,000,000, all Argo-Tracker Proceeds will be retained by the Surviving Corporation and not distributed;

               (ii) If the Argo-Tracker Proceeds are greater than $3,000,000, but less than or equal to $9,000,000, then the Surviving Corporation shall retain $3,000,000 and pay or cause to be paid (in accordance with Section 2.12(b) below) to each Equity Holder its Proportionate Share of all Argo-Tracker Proceeds in excess of $3,000,000, as additional consideration hereunder; and

               (iii) If the Argo-Tracker Proceeds are greater than $9,000,000, then the Surviving Corporation will retain $3,000,000, distribute $6,000,000 as contemplated in clause (ii) above and distribute all proceeds in excess of $9,000,000 (“Excess Proceeds”) as follows:

                    (A) 20% of all Excess Proceeds will be paid to management employees of Argo-Tracker Corporation (and management employees of the Surviving Corporation whose responsibilities include activities related to Argo-Tracker Corporation), in such amounts as may be determined by the board of directors of the Argo-Tracker Corporation;

                    (B) 53.33% of all Excess Proceeds will be paid, or caused to be paid (in accordance with Section 2.12(b) below) to the Equity Holders as additional consideration hereunder, with each Equity Holder receiving its Proportionate Share thereof; and

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               (C) 26.67% of all Excess Proceeds will be retained by the Surviving Corporation.

          (b) With respect to Equity Holders that hold shares of Common Stock or the Warrant, the aggregate Proportionate Share of all Argo-Tracker Proceeds payable pursuant to Section 2.12(a) above in respect of such holders’ Common Stock and Warrants shall be delivered to the Paying Agent by wire transfer pursuant to the Wire Transfer Instructions for the benefit of such Equity Holders (and the Paying Agent will promptly pay to each such holder the amount to which it is entitled pursuant to Section 2.12(a) above with respect to such holder’s Common Stock and the Warrant). With respect to Equity Holders that hold In-the-Money Options, SARs, or SERP Awards, the Proportionate Share of all Argo-Tracker Proceeds payable pursuant to Section 2.12(a) above in respect of such holder’s In-the-Money Options, SARs or SERP Awards will be paid by check through the Surviving Corporation’s payroll system. In addition, all Argo-Tracker Proceeds distributed to officers of Argo-Tracker Corporation pursuant to Section 2.12(a)(iii)(A) above will be paid by check through the Surviving Corporation’s payroll system.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company hereby represents and warrants to each of Parent and Acquisition Sub as of the date hereof and as of the Closing Date as follows:

          Section 3.1. Organization. The Company is duly incorporated, validly existing and in good standing under the laws of the State of Delaware with requisite corporate power and authority to conduct its business as it is currently being conducted and to own or lease, as applicable, its properties and assets. The Company is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary except where the failure to so qualify or be in good standing would not be material and adverse to the Company and its Subsidiaries taken as a whole. Copies of the Company’s Organizational Documents heretofore made available to Parent, are correct and complete as of the date hereof, and the Company is not in default under or in violation of any provision of its Organizational Documents in any material respect. Schedule 3.1 lists the jurisdictions in which the Company is qualified to do business as a foreign corporation.

          Section 3.2. Subsidiaries.

          (a) Except as set forth on Schedule 3.2, the Company does not have any Subsidiaries and does not, directly or indirectly, own any interest in any other corporation, partnership, limited liability company, limited partnership, joint venture or other business association or entity, foreign or domestic. Except as set forth on Schedule 3.2, neither the Company nor any of its Subsidiaries owns or has any right to acquire, directly or indirectly, any outstanding capital stock of, or other equity interests in, any Person.

          (b) Each Subsidiary is an entity as specified on Schedule 3.2, duly organized, validly existing and in good standing under the laws of its jurisdiction specified on Schedule 3.2, with all requisite power and authority to conduct its business as it is currently being conducted

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and to own or lease, as applicable, its properties and assets. Each Subsidiary is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary except where the failure to so qualify or be in good standing would not be material and adverse to the Company and its Subsidiaries taken as a whole. Copies of the Organizational Documents of each Subsidiary, and all amendments thereto, heretofore made available to Parent, are correct and complete as of the date hereof, and none of the Subsidiaries are in default under or in violation of any provision of their respective Organizational Documents in any material respect. Schedule 3.2 lists the jurisdictions in which each Subsidiary is organized and qualified to do business as a foreign entity.

          (c) The authorized Capital Stock of each of the Subsidiaries as of the date hereof is as set forth on Schedule 3.2. All issued and outstanding Capital Stock of each of the Subsidiaries is duly authorized and validly issued, fully paid and nonassessable. The identity of the holders of the Capital Stock of each of the Subsidiaries and the percentage of their fully-diluted ownership of the Capital Stock of each of the Subsidiaries as of the date hereof is set forth on Schedule 3.2, and such holders hold of record and own beneficially all of the outstanding Capital Stock of each of the Subsidiaries, free and clear of any restrictions on transfer (other than restrictions under the Securities Act of 1933, as amended and state securities laws), or Encumbrances other than Permitted Encumbrances.

          (d) There are no outstanding rights, options, warrants, conversion rights or similar agreements, commitments or understandings for the purchase or acquisition from any Subsidiary of any Capital Stock of such Subsidiary. There are no (i) agreements of any kind which obligate any of the Subsidiaries to issue, purchase, redeem or otherwise acquire any of its outstanding Capital Stock, including statutory or contractual preemptive rights or rights of first refusal with respect to the Capital Stock of such Subsidiary, (ii) stock appreciation rights, phantom stock or similar plans or rights pursuant to which any Subsidiary has any obligations, or (iii) voting trusts, proxies, or similar agreements to which the Company or any Subsidiary is a party with respect to the Capital Stock of any Subsidiary. No bonds, debentures, notes or other instruments or evidence of Indebtedness having the right to vote (or are convertible into, or exercisable or exchangeable for, securities having the right to vote) on any matters on which any Subsidiary’s stockholders may vote are issued or outstanding.

          Section 3.3. Authorization. Subject to obtaining the Required Stockholder Approval, the Company has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement and the Transaction Documents to which it is a party, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly approved by the Board. Except for the Required Stockholder Approval, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby. Subject to obtaining the Required Stockholder Approval, this Agreement and the other Transaction Documents to which the Company or any of its Subsidiaries is a party have been, or will be, duly executed and delivered by the Company or such Subsidiary (as applicable) and, assuming the due

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authorization, execution and delivery hereof and thereof by each of the other parties hereto and thereto, are, or will be, the valid and binding obligation of the Company or each such Subsidiary, as applicable, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable law.

          Section 3.4. Capitalization. The authorized Capital Stock of the Company consists of 3,938,785 shares of Common Stock and 1,000,000 shares of Preferred Stock, $0.01 par value per share. Schedule 3.4 sets forth the identity of each holder of Capital Stock of the Company, along with the number of shares of Capital Stock of the Company held by such holder (and, in the case of each holder of Company Stock Options, the exercise price therefor); provided that immediately prior to the Effective Time (i) the number of shares of Common Stock outstanding (as well as the number of shares of Common Stock held of record by the ESOP) will be 42,000 shares greater than as set forth on Schedule 3.4 and (ii) the number of SERP Awards outstanding will be 2,500 greater than as set forth on Schedule 3.4. All the outstanding shares of Capital Stock of the Company have been duly authorized, are validly issued and are fully paid and non-assessable. Except as otherwise set forth on Schedule 3.4, there are no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of Capital Stock or other equity interest in the Company, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Company is a party or of which the Company has Knowledge and relating to the issuance or sale of any Capital Stock of the Company, any such convertible or exchangeable securities or any such rights, warrants or options, and there are no outstanding or authorized stock appreciation, phantom unit, profit participation or other similar rights outstanding. Except as otherwise set forth on Schedule 3.4 or as set forth in the Stockholders’ Agreement, the Credit Agreement (as amended by the Credit Agreement Amendment), or the Indenture, there are no restrictions on the transfer of shares of Capital Stock of the Company other than those imposed by relevant state and federal securities laws. Except as set forth on Schedule 3.4 or as set forth in the Stockholders’ Agreement, no holder of any security of the Company is entitled to preemptive or similar statutory or contractual rights, either arising pursuant to any agreement or instrument to which the Company is a party, or which are otherwise binding upon the Company.

          Section 3.5. Governmental Consents and Approvals. Except as set forth on Schedule 3.5 and for (a) filings, Permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, state securities laws or the HSR Act, and (b) the filing and recordation of the Merger Certificate as required by the DGCL, no material consent, approval, Permit, authorization or written notice of, declaration to or filing or registration with, any Governmental Authority is required to be made or obtained by the Company or any of its Subsidiaries in connection with the execution, delivery and performance by the Company of this Agreement or the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

          Section 3.6. Litigation.

          (a) Except as set forth on Schedule 3.6, (i) none of the Company nor any of its Subsidiaries is subject to any outstanding Court Order and (ii) there is no material Action,

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pending or, to the Knowledge of the Company, threatened, nor has there been any material Action within the past three years, against the Company, the Subsidiaries or any of their respective assets, or to the Knowledge of the Company, against any director, officer, member of management or holder of greater than 5% of the Capital Stock of the Company or any of its Subsidiaries (on an as-converted basis) and with respect to any such 5% holder in any way relates to the Company or such Person’s interests therein. None of the Actions or Court Orders listed on Schedule 3.6 could reasonably be expected to (a) either individually or in the aggregate result in liability of the Company or any of its Subsidiaries in an amount or value in excess of $500,000 or otherwise be material and adverse to the Company or any Subsidiary, (b) call into question the validity of this Agreement, any other Transaction Document or any action taken or to be taken pursuant hereto or thereto or (c) prevent the consummation of the transactions contemplated by this Agreement or any other Transaction Document (and for the avoidance of doubt, any such liability in excess of $500,000 would constitute a breach of this representation notwithstanding the disclosure of such Action or Court Order on Schedule 3.6).

          (b) Except as set forth on Schedule 3.6, since January 1, 2002, none of the Company nor any of its Subsidiaries has entered into any settlement agreement with respect to any Action (or threatened Action) involving a payment or provision of other consideration in an amount or value in excess of $250,000 by the Company or any Subsidiary, whether or not covered by insurance or otherwise subject to indemnification or that had consequences that were otherwise material to the Company or any Subsidiary.

          Section 3.7. Compliance with Laws.

          (a) Except as set forth on Schedule 3.7, each of the Company and its Subsidiaries is (a) in compliance and for the past three years has been in compliance in all material respects with all Laws applicable to its properties and assets and (b) not in, and has not been at any time in the past three years, in Default of any Court Order, and neither the Company nor any of its Subsidiaries has received a written notice at any time in the past three years alleging any material failure to comply with any Law. For the avoidance of doubt, no representation or warranty is made in this Section 3.7 with respect to (a) Taxes, which are covered by Section 3.12, (b) Environmental Laws, which are covered by Section 3.22 and (c) ERISA, which is covered by Section 3.13.

          (b) The Company and its Subsidiaries currently have and have had for the past three years all material Permits which are required for the operation of their respective businesses as presently conducted. All material Permits that the Company and Subsidiaries currently have will be available for use by the Surviving Corporation and its subsidiaries immediately after the Effective Time. Neither the Company nor any Subsidiary is in material Default (and no event has occurred which, with notice or the lapse of time or both, would constitute a material Default) of any term, condition or provision of any material Permit to which it is a party. No written notices have been received by the Company or any of its Subsidiaries at any time in the past three years alleging the failure to hold any material Permit.

          Section 3.8. No Violations. Except as set forth in Schedule 3.8, neither the execution and delivery of this Agreement or the other Transaction Documents, nor the consummation of any of the transactions contemplated hereby or thereby by the Company or the

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performance by the Company and its Subsidiaries of their obligations hereunder and thereunder, will, subject to obtaining the consents listed on Schedule 3.8 (a) violate, conflict with, or result in a breach or Default under any provision of the Organizational Documents of the Company or any Subsidiary, (b) violate in any material respect any Laws applicable to the Company or any Subsidiary, or (c) result in a material violation or breach by the Company or any Subsidiary of, conflict in any material respect with, constitute (with or without due notice or lapse of time or both) a Default by the Company or any Subsidiary or give rise to any right of termination, cancellation, payment or acceleration under, or result in the creation of any Encumbrance (other than Permitted Encumbrance) upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, license, franchise, Permit, or other Material Contract to which the Company or any Subsidiary is a party, or by which the Company or any Subsidiary or any of their respective properties or assets may be bound.

          Section 3.9. Property.

          (a) Schedule 3.9(a) sets forth the address of all real property owned including all land owned by the Company or any of its Subsidiaries (together with all buildings, structures, improvements and fixtures located thereon, and all easements and other rights and interests appurtenant thereto, the “Owned Real Property”). With respect to each Owned Real Property: (i) the Company or its Subsidiaries (as the case may be) has good and marketable indefeasible fee simple title to such Owned Real Property, free and clear of all Encumbrances, except Permitted Encumbrances; (ii) except as set forth in Schedule 3.9(a), Company or its Subsidiaries has not leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof; and (iii) other than the right of Parent or Acquisition Sub pursuant to this Agreement, there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein. Neither the Company nor any Subsidiary is a party to any agreement or option to purchase any real property or interest therein.

          (b) Schedule 3.9(b) sets forth the address of all real property leased by the Company or any of its Subsidiaries (together with all leasehold and subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company or any of its Subsidiaries (the “Leased Real Property”), and a true and complete list of all Leases and Landlord Leases (including all amendments, extensions, renewals, guaranties and other agreements with respect thereto) for each such Leased Real Property (including the date and name of the parties to such Lease or Landlord Lease, as the case may be). The Company has made available to Parent a true and complete copy of each such Lease, and neither the Company nor any of its Subsidiaries is party to any oral Lease or oral arrangement that if it were written would be a Landlord Lease. Except as set forth in Schedule 3.9(b), with respect to each of the Leases and Landlord Leases set forth on such schedule: (i) such Lease or Landlord Lease is valid, binding, enforceable and in full force and effect; (ii) the Company’s or any Subsidiary’s possession and quiet enjoyment of the Leased Real Property under such Lease has not been disturbed, and to the Knowledge of the Company, there are no material disputes with respect to such Lease; (iii) neither the Company nor any Subsidiary is, nor to the Knowledge of the Company is any other party to any Lease or Landlord Lease in material breach or Default under such Lease or Landlord Lease, and to the

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Knowledge of the Company no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute a material breach or Default; (iv) no security deposit or portion thereof deposited with respect to such Lease or Landlord Lease has been applied in respect of a breach or Default under such Lease or Landlord Lease which has not been redeposited in full; (v) neither the Company nor any Subsidiary owes, any brokerage commissions or finder’s fees with respect to any such Lease or Landlord Lease; and (vi) other than pursuant to the Credit Agreement (as amended by the Credit Agreement Amendment) or the Indenture, the Company or any Subsidiary has not collaterally assigned or granted any other security interest in such Lease or Landlord Lease or any interest therein.

          (c) The Owned Real Property identified in Schedule 3.9(a), the Leased Real Property identified in Schedule 3.9(b) and the Improvements (collectively, the “Real Property”) comprise all of the real property used or intended to be used in, or otherwise related to, the Company’s business.

          (d) All buildings, structures, improvements, fixtures, building systems and equipment, and all components thereof, included in the Owned Real Property (the “Improvements”) are sufficient for the operation of the Company’s business. To the Knowledge of the Company, there are no material structural deficiencies or latent defects affecting any of the Improvements and, to the Company’s Knowledge, there are no facts or conditions affecting any of the Improvements which in either case would, individually or in the aggregate, interfere in any material respect with the use or occupancy of the Improvements or any portion thereof in the operation of the Company’s business.

          Section 3.10. Tangible Assets. The Company and its Subsidiaries own or lease all buildings, Improvements, machinery, equipment, and other tangible assets necessary for the conduct of their business as presently conducted. Any such material tangible asset is free from any material defects (patent and latent) and in all material respects is in good operating condition and repair (subject to normal wear and tear), and is suitable for the purposes for which it presently is used.

          Section 3.11. Financial Information; Liabilities; SEC Filings.

          (a) The Company heretofore has delivered to Parent correct and complete copies of the Audited Financial Statements and all Interim Financial Statements prepared prior to the date hereof. The Interim Financial Statements were prepared on a basis, and using principles, consistent with the preparation of the Audited Financial Statements. All Financial Statements (including the notes thereto) (i) have been prepared in accordance with GAAP (except for the absence of footnotes and subject to normal year-end adjustments on the Financial Statements that are unaudited, which adjustments will not be material either individually or in the aggregate), consistently applied throughout such Financial Statements and the periods covered thereby in accordance with past custom and practice of the Company, (ii) fairly and accurately present, in all material respects, the financial position of the Company as of the respective dates thereof, results of operations, cash flows and changes in financial position of the Company for each of the periods then ended, and (iii) are consistent with the books and records of the Company and its Subsidiaries in all material respects (which books and records are correct and complete in all material respects).

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          (b) The Most Recent Balance Sheet accurately reflects all liabilities of the Company required to be reflected in accordance with GAAP. Except as disclosed on Schedule 3.11(b), since the date of the Most Recent Balance Sheet the Company has not incurred any liability other than in the Ordinary Course (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of a Regulation), to the effect that if such liability existed as of the date of the Most Recent Balance Sheet such liability would have been required to be set forth on such balance sheet in accordance with GAAP.

          (c) Except as set forth on Schedule 3.11(c) since January 1, 2002, Argo-Tech has made all filings with the U.S. Securities and Exchange Commission (the “SEC”) that it has been required to make under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (such reports collectively, the “Public Reports”) and pursuant to the terms of the Indenture. Each of the Public Reports as of its date has complied with the Securities Act or the Exchange Act, as applicable, and the rules promulgated thereunder or pursuant thereto in all material respects. None of the Public Reports, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, except to the extent that a Public Report listed on Schedule 3.11(c) was corrected by a Public Report subsequently filed with the SEC and identified as the correcting Public Report on Schedule 3.11(c).

          (d) Each required form, report and document containing financial statements that the Company has filed with or submitted to the SEC since July 31, 2002 was accompanied by the certifications required to be filed or submitted by the Company’s chief executive officer and chief financial officer pursuant to the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated under such act or the Exchange Act (collectively, the “Sarbanes-Oxley Act”), and no such certificate has been modified or withdrawn. A copy of each such certificate has been made available to Parent. Neither the Company nor any of its officers has received notice from any Governmental Authority questioning or challenging the accuracy, completeness, content, form or manner of filing or submission of such certifications.

          Section 3.12. Taxes.

          (a) Tax Returns; Payment of Taxes. The Company and each of its Subsidiaries have duly and timely filed (or, in the case of Tax Returns due between the date hereof and the Closing Date, will duly and timely file) all Tax Returns that it was required to file. All such Tax Returns are correct and complete in all respects. All Taxes owed by the Company or any of its Subsidiaries (whether or not shown on any Tax Return) have been duly and timely paid or reserved for on the Financial Statements (or, if due between the date hereof and the Closing Date, will be duly and timely paid or reserved for). Neither the Company nor any of its Subsidiaries currently is the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by a Taxing Authority in a jurisdiction where neither the Company nor any of it Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no security interests in any of the assets of the Company or any of its Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax. All claims and elections that have been made by the Company or any of its Subsidiaries are

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valid and have been made within the applicable time limits. None of the claims or elections is in dispute and none of the claims or elections will be withdrawn.

          (b) Withholding. The Company and each of its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any Person.

          (c) Additional Taxes; Past Returns. There is no dispute or claim concerning any Tax liability of the Company or any of its Subsidiaries claimed or raised by any Taxing Authority in writing or as to which the Company or any of its Subsidiaries has Knowledge. Neither the Company nor any of its Subsidiaries has received from any Taxing Authority any payment to which it was not entitled nor has the Company or any of its Subsidiaries received any Tax assessment in which its Tax liability is understated. Schedule 3.12(c) lists all (i) United States federal, state and local income or corporation Tax Returns filed with respect to the Company or any of its Subsidiaries for any taxable period which ended on or after January 1, 2001 and (ii) non-United States income or corporation Tax Returns filed with respect to the Company or any of its Subsidiaries for any taxable period which ended on or after January 1, 1998, indicates those Tax Returns that have been audited and indicates those Tax Returns that currently are the subject of audit, inquiry or other examination. The Company has made available to Parent correct and complete copies of all material Tax Returns filed by and all examination reports and statements of deficiencies assessed against or agreed to by the Company or any of its Subsidiaries since January 1, 2001 with respect to any material United States, federal, state or local Tax Returns and since January 1, 1998 with respect to any material non-United States Tax Returns.

          (d) Statute of Limitations. Neither the Company nor any of its Subsidiaries has waived (or is subject to a waiver of) any statute of limitations in respect of any Tax or has agreed to (or is subject to) any extension of time with respect to a Tax assessment or deficiency.

          (e) Tax sharing Agreements. Other than an agreement or arrangement described in Schedule 3.12(e), neither the Company nor any of its Subsidiaries is a party to any Tax allocation, Tax sharing or other similar agreement.

          (f) Miscellaneous. Neither the Company nor any of its Subsidiaries has filed a consent under former Section 341(f) of the Code concerning collapsible corporations. Except as otherwise set forth on Schedule 3.12(f), neither the Company nor any of its Subsidiaries has made any payments, is obligated to make any payments, or is a party to any agreement that under certain circumstances could obligate it to make any payments, that will not be deductible under Section 280G of the Code (or any similar provision of state, local or foreign law). Neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Except as otherwise set forth on Schedule 3.12(f), the Company and each of its Subsidiaries has disclosed on its United States federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income tax within the meaning of Section 6662 of the Code. Except as otherwise set forth on Schedule 3.12(f), neither the Company nor any of its Subsidiaries has any liability for the Taxes of any Person other than itself under Section 1.1502-6 of the Treasury Regulations (or any

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similar provision of state, local or foreign law) as a transferee or successor, by contract or otherwise.

          (g) Tax Reserves. The unpaid Taxes of the Company and its Subsidiaries, being current Taxes not yet due and payable, (a) as of July 29, 2005 did not exceed the amount of the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and tax income) set forth on the face of the Interim Financial Statements (rather than in any notes thereto) and (b) as of the Closing Date, will not exceed the amount of that reserve, as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries in filing their Tax Returns.

          (h) Tax Records. The Company and each of its Subsidiaries (to the extent required by law) has preserved and retained in its possession complete and accurate records relating to its Tax affairs (including, without limitation, payroll and value-added tax records and records relating to transfer pricing) and the Company and each of its Subsidiaries has sufficient records relating to past events to calculate for Tax purposes the gain or loss that would arise on the disposal or realization of any asset owned by it at the date of this Agreement or acquired by it after that date but on or prior to Closing.

          (i) Pre-Closing Items. Neither the Company nor any of its Subsidiaries 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:

(i) change in method of accounting for a taxable period ending on or prior to the Closing Date;

(ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date;

(iii) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law);

(iv) installment sale or open transaction disposition made on or prior to the Closing Date; or

(v) prepaid amount received on or prior to the Closing Date.

          (j) Section 355. Neither the Company nor any of its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code.

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          Section 3.13. Employment Benefits.

          (a) Schedule 3.13(a) sets forth a complete and correct list of each Employee Benefit Plan. Except as set forth on Schedule 3.13(a), neither the Company nor any of its Subsidiaries has any payment obligation to any Person under any plan, agreement or arrangement which payment obligation is due or payable, or shall become due or payable, as a result of the consummation of the transactions contemplated hereby.

          (b) Each Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered in all material respects in accordance with the terms of such Employee Benefit Plan and the terms of any applicable collective bargaining agreement and complies in form and in operation in all material respects with the applicable requirements of ERISA, the Code, and all other applicable Laws. The ESOP is a duly organized and validly existing trust.

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

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

          (e) Each Employee Benefit Plan that is intended to meet the requirements of a “qualified plan” under Code Section 401(a) has received a favorable determination letter from the Internal Revenue Service, and nothing has occurred that could adversely affect the qualified status of any such Employee Benefit Plan. Each such Employee Benefit Plan has been timely amended to comply with the provisions of the legislation commonly referred to as “GUST” and “EGTRRA” and submitted to the Internal Revenue Service for a determination letter that takes the GUST amendments into account within the GUST remedial amendment period.

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

          (g) Except as set forth on Schedule 3.13(g), none of the Company, any of its Subsidiaries, or any ERISA Affiliate maintains, sponsors, contributes to, or has any current or potential liability under (or with respect to) any “defined benefit plan” (as defined in ERISA Section 3(35)), or any “multiemployer plan” (as defined in ERISA Section 3(37)), or otherwise has any current or potential liability under Title IV of ERISA. No asset of the Company or any of its Subsidiaries is subject to any Encumbrance under ERISA or the Code. There has been no

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application for or waiver of the minimum funding standards imposed by ERISA Section 302 and Code Section 412 with respect to any Employee Benefit Plan; no Employee Benefit Plan has an “accumulated funding deficiency” within the meaning of Code Section 412; and there has been no “reportable event” (within the meaning of Section 4043 of ERISA) with respect to any Employee Benefit Plan.

          (h) There have been no non-exempt prohibited transactions (as defined in ERISA Section 406 or Code Section 4975) with respect to any Employee Benefit Plan. No fiduciary (as defined in ERISA Section 3(21)) has any liability or obligation for any breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any Employee Benefit Plan. No action, suit, proceeding, hearing, audit or investigation with respect any Employee Benefit Plan (other than routine claims for benefits) is pending or, to the Knowledge of the Company, threatened, and to the Knowledge of the Company, there is no basis for any such action, suit, proceeding, hearing, audit or investigation.

          (i) Except as set forth on Schedule 3.13(i), neither the Company nor any of its Subsidiaries maintains, contributes to or has an obligation to contribute to, or any liability or obligation with respect to, the provision of medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated directors, officers, employees or contractors of the Company or any of its Subsidiaries (or any spouse or other dependent thereof) other than in accordance with COBRA.

          (j) All “employer securities” (as defined in ERISA Section 407(d)(1)) at any time held by the ESOP have at all times been “employer securities” as defined in Code Section 409(l) and “qualifying employer securities” as defined in Code Section 4975(e)(8) and ERISA Section 407(d)(5). Neither the ESOP nor any fiduciary (as defined in ERISA Section 3(21)) of the ESOP has at any time engaged in any non-exempt prohibited transaction (as defined in ERISA Section 406 or Code Section 4975) with respect to the ESOP; the ESOP has at all times been maintained in form and in operation in compliance with Code Section 401(a) and Code Section 4975, and any transaction to which the ESOP was at any time a party involving the purchase, sale or exchange of any security complied in all respects with the applicable requirements of ERISA and the Code, including ERISA Section 3(18).

          (k) Neither the Company nor any of its Subsidiaries has, since October 3, 2004, (i) granted to any Person an interest in a nonqualified deferred compensation plan (as defined in Code Section 409A(d)(1)) which interest has been or, upon the lapse of a substantial risk of forfeiture with respect to such interest, will be subject to the Tax imposed by Code Section 409A(a)(1)(B) or (b)(4)(A), or (ii) modified the terms of any nonqualified deferred compensation plan in a manner that could cause an interest previously granted under such plan to become subject to the Tax imposed by Code Section 409A(a)(1)(B) or (b)(4).

          (l) Schedule 3.13(l) contains a complete and correct list of each benefit plan, program, agreement or arrangement with respect to which the Company or any of its Subsidiaries has any current or potential obligation or liability relating to the provision of benefits to any current or former employee, officer, director or contractor of the Company or any of its Subsidiaries residing or working outside the United States (each, a “Foreign Plan”). Each

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Foreign Plan has been maintained, funded and administered in accordance with its terms and the requirements of all applicable Laws, and no Foreign Plan has any unfunded or underfunded liabilities.

          Section 3.14. Transactions with Affiliates. Except as set forth on Schedule 3.14, no officer, director or Affiliate of the Company or, to the Knowledge of the Company, any Affiliate of any such individual or entity is a consultant, competitor, creditor, debtor, customer, distributor, supplier or vendor of, or is a party to any material contract or agreement with, the Company or any Subsidiary. Except as set forth on Schedule 3.14, no officer, director or Affiliate of the Company or, to the Knowledge of the Company, any Affiliate of any such individual or entity owns any direct or indirect interest in any material asset used in connection with the business of the Company and its Subsidiaries.

          Section 3.15. Assumptions or Guaranties of Indebtedness of Other Persons. Except as set forth on Schedule 3.15, neither the Company nor any of its Subsidiaries has assumed, guaranteed, endorsed or otherwise become directly or contingently liable on (including, without limitation, liability by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor or otherwise to assure the creditor against loss) any Indebtedness of any other Person that is outstanding as of the date of this Agreement.

          Section 3.16. Loans to Other Persons. Except as set forth on Schedule 3.16, the Company has not made any loan or advance to any Person which is outstanding on the date of this Agreement, nor is the Company obligated or committed to make any such loans or advances, other than outstanding loans or advances to employees in the Ordinary Course not exceeding $250,000 in the aggregate.

          Section 3.17. Absence of Certain Changes. Except as set forth on Schedule 3.17 or as otherwise contemplated or permitted by, or as a consequence of, this Agreement, since October 31, 2004, (a) there has not occurred any event, circumstance or fact that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect, (b) except for the process that gave rise to this Agreement and the process related to a potential sale of Carter Ground Fueling Ltd., the Company and each of the Subsidiaries has conducted its respective business in all material respects in the Ordinary Course, and (c) there has not been:

          (a) any amendment to the Organizational Documents of the Company or its Subsidiaries;

          (b) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) on any class of Capital Stock of the Company, or any redemption or repurchase by the Company of shares of its Capital Stock;

          (c) any split, combination, reclassification, or other modification of the terms of, or any issuance, sale or disposal of, the Capital Stock of the Company or any of the Subsidiaries;

          (d) (i) other than in the Ordinary Course, any sale, transfer, pledge, license or other disposition by the Company or any of the Subsidiaries of any of their respective material

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assets, (ii) Encumbrance (other than Permitted Encumbrances) created with respect to any of their respective material assets, or (iii) damage, distribution or casualty loss, in each case, exceeding $250,000 in the aggregate, whether or not covered by insurance;

          (e) except (i) as required by Law or as required by Contracts or plans entered into or in existence on or prior to the date of this Agreement and disclosed to Parent pursuant to this Agreement and (ii) normal increases in salary and wages in the Ordinary Course, any increase in the salary or other compensation payable to any of the officers, directors, employees or consultants of the Company or any of its Subsidiaries, or the payment or commitment to pay any bonus, or other additional salary or compensation to any of the officers, directors, employees or consultants of the Company or any of its Subsidiaries, other than customary compensation increases awarded to its employees which have been awarded in the Ordinary Course;

          (f) any adoption, material amendment, material modification, or termination of any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or any such action taken with respect to any other Employee Benefit Plan) except as required by Law;

          (g) any authorization for issuance, issuance, sale, delivery or grant of any options, warrants, subscriptions or other rights for any class of Capital Stock of the Company or any Subsidiary, or any securities convertible into or exchangeable or exercisable for shares of any class of Capital Stock of the Company or any Subsidiary (except for the issuance of Capital Stock of the Company in connection with the exercise of any Company Stock Option or the Warrant);

          (h) any incurrence of, or commitment to incur, any capital expenditure in excess of $150,000 individually, or $1,700,000 in the aggregate;

          (i) any acquisition by merger, consolidation or acquisition of stock of any Person or any business of any other Person or any acquisition of a portion of the assets of any Person involving more than $250,000 other than purchases of assets in the Ordinary Course;

          (j) any settlement or compromise regarding any pending or threatened suit, action or claim, the settlement or compromise of which provides for covenants that restrict the Company’s or its Subsidiaries’ ability to operate or compete or use any Intellectual Property or provides for the payment of money or performance that in either case would reasonably be expected to involve value in excess of $250,000;

          (k) any discharge or satisfaction of any material Encumbrance, or obligation or liability in excess of $100,000 individually or $500,000 in the aggregate, other than current liabilities payable in the Ordinary Course;

          (l) any adoption of a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Subsidiary (other than the Merger);

          (m) any incurrence of Indebtedness not disclosed in the Financial Statements (in each case, determined in accordance with GAAP), this Agreement or the Schedules to this

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Agreement, or issuance of any note, bond or other debt security or any assumption, guarantee, endorsement or other accommodation of any obligations of any other Person, or any loan or advance made to any Person;

          (n) other than compensation paid in the Ordinary Course, any transaction or other arrangement with, or payment to any officer, director, or Affiliate of the Company or, to the Knowledge of the Company, any Affiliate of any such individual or entity, or any amendment or termination of any arrangement with any such Person, or any cancellation or waiver of any debts, loans, advances or claims with any such Person, in each case with a value, individually or in the aggregate, in excess of $100,000;

          (o) any waiver of any material benefits of, or modification of any material terms of, any confidentiality, standstill, non-solicitation or similar agreement to which the Company or any Subsidiary is a party;

          (p) any action (or failure to take any action) by the Company that would reasonably be expected to result in the loss lapse, abandonment, invalidity or unenforceability of any material Intellectual Property;

          (q) any new Tax election made or any change to any Tax election, any change of annual accounting period, any adoption of or change in any accounting method, settlement of any Tax claim or assessment relating to the Company or any of its Subsidiaries, the entering into of any closing agreement, the surrender of any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any of its Subsidiaries, or any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would reasonably have been expected to have the effect of increasing the Tax liability of the Company or any of its Subsidiaries for any period ending after the Closing Date or decreasing any Tax attribute of the Company or any of its Subsidiaries existing on the Closing Date;

          (r) any agreement or commitment entered into by the Company or any of the Subsidiaries to do any act described in clauses (a) through (q) above.

          Section 3.18. Labor Relations.

          (a) Except as disclosed on Schedule 3.18(a) attached hereto, with respect to the Company and each of its Subsidiaries: (i) there is no collective bargaining agreement or relationship with any labor organization; (ii) to the Knowledge of the Company no executive or manager (A) has expressed an intent to terminate their employment prior to the Closing or in connection with the Merger, or (B) is a party to any confidentiality, non-competition, proprietary rights or other such agreement between such employee and any other Person besides the Company or its Subsidiaries, as applicable, that would be material to the performance of such employee’s employment duties, or the ability of the Company and/or the applicable Subsidiary to conduct their business; (iii) within the past 3 years no labor organization or group of employees has filed any representation petition or made any written or oral demand for recognition; (iv) to the Knowledge of the Company, within the past 3 years no union organizing or decertification

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efforts were underway or threatened; (v) within the past 3 years no labor strike, work stoppage, slowdown, or other material labor dispute has occurred, and none is underway or, to the Knowledge of the Company, threatened; (vi) there are no pending workman’s compensation liabilities, matters or experience that, individually would reasonably be expected to result in liability in excess of $100,000 or collectively in excess of $500,000; and (vii) there is no material employment-related charge, complaint, grievance, investigation or obligation of any kind, pending or to the Knowledge of the Company, threatened in any forum, relating to an alleged material violation or material breach by the Company or its Subsidiaries of any Law, or Contract.

          (b) Except as disclosed on Schedule 3.18(b), (i) there are no employment contracts or severance agreements with any employees of the Company or its Subsidiaries, and, (ii) there are no written personnel policies, rules or procedures applicable to employees of the Company or the its Subsidiaries.

          (c) With respect to this transaction, any notice required under any law or collective bargaining agreement has been, or prior to the Closing will be, given, and all bargaining obligations with any employee representative have been, or prior to the Closing will be, satisfied. Within the past three years, neither the Company nor any of its Subsidiaries has implemented any plant closing or layoff of employees that would implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign, state or local law, regulation or ordinance (collectively, the “WARN Act”), and no such action will be implemented without advance notification to Parent.

          Section 3.19. Insurance. Schedule 3.19 contains a correct and complete list and description (including the name of the insurer, amount and type of coverage) of all material policies or binders of insurance maintained by the Company or any of its Subsidiaries, including any such policies or binders with respect to the business, assets or the employees of the Company or any of its Subsidiaries. All such insurance coverage is in full force and effect, no written notice of cancellation, non-renewal, termination, premium increase or change in coverage has been received with respect thereto and to the Company’s Knowledge there is no existing Default by any insured thereunder. The Company has not received any notice of a premium audit with respect to such policies. The Company and its Subsidiaries have complied in all material respects with the provisions of such policies. All premiums and other amounts due on such policies have been paid. Schedule 3.19 sets forth a list or description of each claim made under any such policy during the prior three years involving or which would reasonably be expected to involve an amount in excess of $250,000.

          Section 3.20. Books and Records. The Company has made available to Parent copies of all minute books and all other existing records of any meeting of the Board of the Directors (and any committee thereof), each of which is complete and correct in all material respects. All books and records relating to the business of the Company required by Governmental Authorities, are complete and correct in all material respects.

          Section 3.21. Material Contracts. Except as contemplated by this Agreement and as set forth on Schedule 3.21, neither the Company nor its Subsidiaries is a party to or otherwise bound or affected by any oral or written:

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          (a) customer contracts involving payments in excess of $500,000 in the aggregate or otherwise entered into outside of the Ordinary Course;

          (b) supplier contracts involving payments in excess of $500,000 in the aggregate or otherwise entered into outside of the Ordinary Course;

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

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

          (e) collective bargaining or similar agreements;

          (f) agreement or indenture relating to the borrowing of money or to the mortgaging or pledging of, or otherwise placing an Encumbrance on, any material asset, or any guarantee therefor;

          (g) contract, agreement, license, or release with respect to the license, transfer, disposition, or agreement not to sue with respect to, or enforce, any material Intellectual Property (other than licenses for mass-marketed computer software with a replacement cost and/or annual license fee of less than $100,000);

          (h) stockholders agreement (other than the Stockholders’ Agreement which shall be terminated at or prior to the Effective Time), registration rights agreement, voting agreement, voting trust agreement or similar agreements to which the Company or any Subsidiary is subject;

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

          (j) Lease of personal property by the Company or a Subsidiary involving annual payments in excess of $100,000;

          (k) agreement concerning a partnership or joint venture or minority equity investment, or relating to loans or advances to any Person, other than loans and advances to employees made in the Ordinary Course;

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          (l) instrument or agreement whereby the Company or any Subsidiary grants any other Person a power of attorney outside the Ordinary Course or indemnifies outside the Ordinary Course any other Person against loss or liability;

          (m) agreement concerning confidentiality or non-competition other than confidentiality agreements entered into by the Company in a commercial context in the Ordinary Course;

          (n) agreement with any officer, director, stockholder or Affiliate of the Company;

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

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

          (q) other contract or group of related contracts with the same party involving more than $500,000 and continuing over a period of more than six months from the date or dates thereof (including renewals or extensions optional with another party), which contract or group of contracts is not terminable by the Company or any Subsidiary without penalty upon notice of 30 days, or less (collectively, all agreements listed, or required to be listed on Schedule 3.21 pursuant to (a) through (p) of this Section 3.21 are referred to as the “Material Contracts”).

          Each Material Contract is in full force and effect and is valid and enforceable by and against the Company or a Subsidiary and, to the Knowledge of the Company, each Material Contract is valid and enforceable against the other parties thereto, in each case in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting enforcement of creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable law. Neither the Company nor any Subsidiary is in Default under any Material Contract, nor has it received notice of any material Default under any such Material Contract.

          Section 3.22. Environmental Matters. Except as set forth on Schedule 3.22:

          (a) The Company and each Subsidiary has complied and is in compliance in all material respects with all Environmental Laws, including without limitation all Environmental Permits.

          (b) The Company nor any Subsidiary has not received any written notice, report or other information regarding any actual or alleged material violation of Environmental Laws, or any material liabilities or potential liabilities (contingent or otherwise), including

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without limitation any investigatory, remedial or corrective obligations, arising under Environmental Laws.

          (c) There are no existing or past actions, activities, circumstances, conditions, events or incidents, including, the Release or threatened Release of any Hazardous Material that would form the basis of any material Environmental Claim against the Company or any of its Subsidiaries.

          (d) The Company and each of its Subsidiaries have not, either expressly or by operation of law, assumed or undertaken any material liability, including without limitation any obligation for corrective or remedial action, of any other person relating to Environmental Laws.

          (e) Neither the Company, its Subsidiaries nor any predecessor or affiliate of the Company or any of its Subsidiaries has manufactured, sold, marketed, installed or distributed products containing asbestos, and Seller has no material liability (contingent or otherwise) with respect to the presence or alleged presence of asbestos or asbestos-containing material in any product or at any property or facility.

          (f) To its Knowledge, the Company has furnished to Buyer all environmental audits, reports and other material environmental documents which are in its possession or under its reasonable control relating to its or its affiliates or predecessors past or current properties, facilities or operations.

          (g) The Company and/or its Subsidiaries are parties to (i) the Agreement of Purchase and Sale Between AGNEM Holdings, Inc. and TRW, Inc., dated as of August 5, 1986, including without limitation all rights with respect to environmental conditions at the facility located in Cleveland, Ohio as are described in a claim letter filed by the Company against TRW, Inc., dated October 19, 1988 (“TRW Indemnity Agreement”), and (ii) the Stock Purchase Agreement by and among J.C. Carter Company, Inc. and Argo-Tech, dated August 1, 1997, with respect to the facility in Costa Mesa, California, including without limitation the indemnity for matters set forth on Schedule 9.1 to such Agreement (“Costa Mesa Indemnity Agreement” and, together with the TRW Indemnity, the “Indemnity Agreements”). The Indemnity Agreements are in full force and effect and are valid and enforceable by the Company or a Subsidiary against the other parties thereto, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting enforcement of creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable law. All of the Company’s or its Subsidiaries’ rights relating to the Indemnity Agreements shall be available to the Surviving Corporation or its Subsidiaries following the Closing on the same terms and to the same extent as such rights were available to the Company or its Subsidiaries prior to the Closing, without the need for any assignment, transfer, consent or other action by the Company or other party to the Indemnity Agreements or any other Person.

          Section 3.23. Intellectual Property.

          (a) Schedule 3.23(a) contains a complete and accurate list of all of the following that are owned or used by the Company or any of its Subsidiaries: (i) all issuances, registrations and applications for Intellectual Property (including Internet domain names); (ii) all

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computer software (other than mass-marketed software with a replacement cost and/or annual license fee of less than $100,000); (iii) all trade, corporate or business names; and (iv) all material unregistered trademarks, service marks, logos and slogans, in each case identifying whether such assets are owned or licensed.

          (b) The Company and its Subsidiaries own and possess, free and clear of all Encumbrances (other than Permitted Encumbrances), all right, title and interest in and to, or has the right to use pursuant to a valid and enforceable written license, all Intellectual Property necessary or used for the operation of their respective businesses as presently conducted (together with the Intellectual Property owned by the Company and its Subsidiaries, collectively, the “Company Intellectual Property”). All of the material Company Intellectual Property is valid and subsisting and in full force and effect. No loss of any of the material Company Intellectual Property is reasonably foreseeable.

          (c) Except as set forth on Schedule 3.23(c), (i) there are no claims (including office actions) against the Company or its Subsidiaries that were either made within the past three (3) years, are presently pending or, to the Knowledge of the Company, threatened, contesting the validity, use, ownership, enforceability or registrability of any of the Company Intellectual Property, and, to the Knowledge of the Company, there is no reasonable basis for any such claim; (ii) neither the Company nor its Subsidiaries have infringed, misappropriated or otherwise conflicted with, in any material respect, and the operation of their respective businesses as currently conducted and as proposed to be conducted does not infringe, misappropriate or otherwise conflict with, in any material respect, any Intellectual Property of other Persons and the Company is not aware of any facts which indicate a likelihood of any of the foregoing and the Company has not received any notices regarding any of the foregoing (including, any demands or offers to license any Intellectual Property from any other Person); and (iii) to Knowledge of the Company, no third party has infringed, misappropriated or otherwise conflicted with any of the Company Intellectual Property. All of the Company Intellectual Property shall be owned or available for use by the Surviving Corporation and its Subsidiaries immediately after the Closing on terms and conditions identical to those under which the Company or its Subsidiaries owned or used the Company Intellectual Property immediately prior to the Closing. The Company Intellectual Property is not subject to any outstanding consent, settlement, decree, order, injunction, judgment or ruling restricting the use thereof.

          (d) All past and present employees of, and consultants to, the Company and its Subsidiaries who have or have had any role in the creation or development or licensing of Intellectual Property have entered into agreements pursuant to which such employee or consultant agrees to protect the confidential information of the Company and assign to the Company all Intellectual Property developed by such employee or consultant in the course of his or her relationship with the Company, without further consideration or any restrictions or obligations on the use of such Intellectual Property whatsoever.

          (e) The computer systems, including the software, hardware, networks and interfaces used in the conduct of the Company’s and its Subsidiaries’ respective businesses (collectively, “Systems”) are sufficient for the immediate needs of the Company and its Subsidiaries. Except as set forth in Schedule 3.23(e), all material Systems, other than software,

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are owned and operated by and are under the control of the Company and its Subsidiaries and are not wholly or partly dependent on any facilities which are not under the ownership, operation or control of the Company or any of its Subsidiaries.

          Section 3.24. List of Government Contracts, Subcontracts and Bids. Schedule 3.24 sets forth a current, complete and accurate list of all Government Contracts involving payments in excess of $500,000 that are currently active in performance (or have been active in performance in the past but have not been closed after receiving final payment, or have been active in performance for the three (3) years prior to the Closing Date) and to which either the Company or its Subsidiaries is a party. This schedule accurately reports for each such Government Contract the contractor, the customer, the contract number, as well as the Company’s or Subsidiary’s best estimate of the total value. Each Government Contract listed in the schedule is in full force and effect and is valid and enforceable against the Company or a Subsidiary in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting enforcement of creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable law. The Company has made available to Parent complete and correct copies of all such Government Contracts listed in such schedule. Except as set forth in Schedule 3.24, no Government Contract listed in the schedule was awarded on the basis of any qualification as a “small business,” “small disadvantaged business,” protégé status, or other preferential status (including but not limited to disadvantaged-business, minority-owned business, women-owned business or other business status based on ownership or control, or participation in or qualification under other preferential status programs, such as the Historically Underutilized Business Zone program or participation under Section 8(a) of the Small Business Act or similar preferences). Schedule 3.24 also sets forth a current, accurate and complete list of each of the unexpired Government Bids involving payments in excess of $500,000 which the Company or its Subsidiaries have submitted to a Governmental Entity.

          Section 3.25. Compliance, Performance, Termination and Breach of Government Contracts. With respect to any and all Government Contracts and Government Bids to which either of the Company or its Subsidiaries are or have been a party, except as set forth in Schedule 3.25, at all times during the three (3) year period prior to the Closing Date:

          (a) the Company and each of its Subsidiaries are, and have been, in compliance with all material terms and conditions of each Government Contract (including but not limited to all provisions and requirements incorporated expressly, by reference or by operation of applicable laws);

          (b) the Company and each of its Subsidiaries are, and have been, in compliance in all material respects with all requirements of applicable laws pertaining to each Government Contract and Government Bid and all requirements of Governmental Entities regarding such applicable laws with respect to each Government Contract and Government Bid;

          (c) no Government Contract has been the subject of a termination for default, and neither the Company nor any of its Subsidiaries have received any written demand for cure or show cause regarding performance of a Government Contract or any written (or, to the Knowledge of the Company, oral) notice of or claim for or assertion of a condition of default, a

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breach of contract, a violation of any applicable laws, or a violation of a contract requirement (including but not limited to all provisions and requirements incorporated expressly, by reference or by operation of law therein) in connection with a Government Contract or Government Bid, whether from a Government Entity or from any prime contractor, subcontractor, vendor or other third party;

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

          (e) neither the Company nor its Subsidiaries has violated in any material respect any applicable laws or administrative or contractual restriction concerning the employment of (or discussions concerning possible employment with) current or former officials or employees of a Governmental Entity (regardless of the branch of government), including but not limited to the so-called “revolving door” restrictions set forth at 18 U.S.C. § 207 or similar provisions under state or local laws;

          Section 3.26. Internal Controls, Audits and Investigations.

          (a) Neither the Company nor any of its Subsidiaries is currently being nor has it in the past 3 years been audited by any Governmental Entity, except in the Ordinary Course or as is customary in the industry or as provided by applicable regulations, or, to the Knowledge of the Company, is being investigated by any Government Entity, nor to the Knowledge of the Company, has such audit or investigation been threatened.

          (b) Except as set forth on Schedule 3.26, during the past 3 years neither the Company nor any of its Subsidiaries has been under administrative, civil or criminal investigation, indictment or criminal information, or audit by a Governmental Entity with respect to any deficient performance, mischarging, misstatement or omission or other alleged irregularity, arising under or relating to any Government Contract or Government Bid (an “External Investigation”).

          Section 3.27. Debarment, Suspension and Exclusion.

          (a) During the past three (3) years, neither the Company nor any of its Subsidiaries has been the subject of a debarment, suspension or exclusion from participation in programs funded by any Governmental Entity or in the award of any government contract, nor have any of them been listed on any list of parties excluded from participation in government-funded programs nor, to the Knowledge of the Company has any such debarment, suspension or exclusion proceeding or proposed listing been initiated or threatened in the past three (3) years.

          (b) No determination has been made by a Governmental Entity that either the Company or any of its Subsidiaries is nonresponsible or ineligible for award of a government contract within the past three (3) years, nor to the Knowledge of the Company do any circumstances exist that would reasonably be expected to warrant the institution of debarment, suspension or exclusion proceedings or any finding of nonresponsibility or ineligibility with respect either the Company or any of its Subsidiaries in the future.

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          Section 3.28. Absence Of Unlawful Payments.

          (a) Neither the Company nor any of its Subsidiaries has, within the past three (3) years, (i) used any funds of either the Company or any of its Subsidiaries or any of their predecessors, partners, Affiliates, principals, officers, for unlawful contributions, payments, gifts or entertainment, or (ii) made any unlawful expenditures relating to political activity to government officials or others (any payment pursuant to (i) or (ii) hereinafter referred to as an “Unlawful Payment”), nor has either of the Company or its Subsidiaries received written notice of any Unlawful Payment. The Company and its Subsidiaries have reasonably adequate financial controls to prevent such Unlawful Payments. Neither the Company nor any of its Subsidiaries, to the actual knowledge of the persons listed in the definition of “Knowledge” in Section 1.1 hereto, has accepted or received any unlawful contributions, payments, gifts or expenditures.

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

          Section 3.29. Compliance with Customs & International Trade Laws. Except as set forth on Schedule 3.29:

          (a) Each of the Company and its Subsidiaries is in compliance in all material respects with all applicable Customs & International Trade Laws, and at no time since January 1, 2003 has either the Company or its Subsidiaries committed any material violation of the Customs & International Trade Laws;

          (b) Each of the Company and its Subsidiaries is not subject to any civil or criminal investigation, litigation, audit, compliance assessment, focused assessment, penalty proceeding or assessment, liquidated damages proceeding or claim, forfeiture or forfeiture action, assessment of additional duty for failure to properly mark imported merchandise, notice to properly mark merchandise or return merchandise to Customs custody, claim for additional customs duties or fees, denial order, suspension of export privileges, government sanction, or any other action, proceeding or claim by a Governmental Authority involving or otherwise relating to any alleged or actual violation of the Customs & International Trade Laws or relating to any alleged or actual underpayment of customs duties, fees, taxes or other amounts owed pursuant to the Customs & International Trade Laws, and each of the Company and its Subsidiaries has paid all material customs duties and fees and brokerage fees owed for merchandise imported by them or imported on their behalf into the United States; and

          (c) Each of the Company and its Subsidiaries has not made or provided any material false statement or omission to any Governmental Authority or to any purchaser of products, in connection with the importation of merchandise, the valuation or classification of imported merchandise, the duty treatment of imported merchandise, the eligibility of imported merchandise for favorable duty rates or other special treatment, country-of-origin marking, NAFTA Certificates, marking and labeling requirements for textiles and apparel, other

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statements or certificates concerning origin, quota or visa rights, export licenses or other export authorizations, U.S.-content requirements, licenses or other approvals required by a foreign government or agency, or any other requirement relating to the Customs & International Trade Laws.

          Section 3.30. Customers and Suppliers. Schedule 3.30 lists the ten (10) largest customers (based on net revenue received by the Company and its Subsidiaries) and the ten (10) largest suppliers (based on payments made by the Company and its Subsidiaries) of the Company and its Subsidiaries (on a consolidated basis) for each of the most recently completed fiscal year and the current fiscal year-to-date as well as the ten (10) largest customers and the ten (10) largest suppliers of each division of the Company and its Subsidiaries. Opposite the name of each such customer is the approximate percentage of consolidated net sales attributable to such customer. Except as set forth on Schedule 3.30, since December 31, 2004, (a) no customer listed on Schedule 3.30 has indicated that it shall stop, or materially decrease the rate of, buying products and services from the Company or any of its Subsidiaries, and (b) no supplier listed on Schedule 3.30 has indicated that it shall stop, or materially decrease the rate of, supplying materials, products or services to the Company or any of its Subsidiaries.

          Section 3.31. Warranties. The accrual for warranty claims (a) set forth on the Financial Statements for the fiscal quarter ended July 29, 2005, as reported in Argo-Tech’s most recently unaudited financial statement filed with the SEC, and (b) set forth on Argo-Tech’s books and records as of the date hereof, adequately reflect an amount required for satisfaction of warranty related liabilities due in respect of goods sold or services rendered by Argo-Tech and its Subsidiaries prior to each such date, as applicable. Neither the Company nor its Subsidiaries have agreed to provide any express product or service warranties other than (i) standard warranties, the terms of which have been provided to Parent and identified as the Company’s standard warranties, (ii) warranties for parts, components and original equipment that expressly provide that cure is to be effected by repair or replacement of the defective or noncomplying products and (iii) other warranties that, individually or in the aggregate, will not, if material claims are made thereunder, be materially adverse to the Company and its Subsidiaries taken as a whole. Except as set forth on Schedule 3.31, there are no pending, and during the past three (3) years there have been no material warranty claims made by any third parties with respect to any product manufactured or sold by the Company or its Subsidiaries before the Closing Date.

          Section 3.32. Operations of the Company. Except as set forth on Schedule 3.32, other than holding all of the equity share capital of Argo-Tech and Argo-Tracker Corporation, the Company has no other material assets, and is not, and never has been, engaged in any other business activities, and does not have any material liabilities (whether accrued, contingent, unliquidated, absolute, determined, determinable, due or to become due, asserted or unasserted or otherwise) and has not in the past employed, and does not currently employ, any employees.

          Section 3.33. Company Expenses and Closing Dividends/Investments. Except as set forth on the Closing Adjustment Statement, the Company has not paid or incurred any Company Expenses and has not paid or made any Closing Dividends/Investments from the period beginning on July 29, 2005 and ending immediately prior to the Effective Time. The Company has delivered to Parent or attached to the Closing Adjustment Statement all invoices from all Persons to whom any Closing Expenses have been or are to be paid.

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          Section 3.34. Required Vote of Company Stock. The affirmative vote of the holders of a majority of the outstanding shares of Common Stock is required to adopt this Agreement. No other vote of the holders of Company Stock is required by law, the Organizational Documents of the Company or otherwise (other than pursuant to the terms of this Agreement) in order for the Company to consummate the Merger and the transactions contemplated by this Agreement.

          Section 3.35. State Takeover Laws. The Board has, to the extent such statute is applicable, taken all action (including appropriate approvals of the Board) necessary to exempt Parent, Acquisition Sub and their respective Subsidiaries and affiliates, the Merger, this Agreement and the transactions contemplated hereby from Section 203 of the DGCL. To the Knowledge of the Company, no other state takeover statutes are applicable to the Merger, this Agreement or the transactions contemplated hereby.

          Section 3.36. No Brokers or Finders. Except as set forth on Schedule 3.36, no Person had, has or will have, as a result of the consummation of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon the Parent, Acquisition Sub, the Surviving Corporation, the Company or any Subsidiary of the Company for any commission, fee or other compensation as a finder or broker because of any act or omission by the Company or any of its Subsidiaries or any of their respective agents prior to the Closing.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ESOP

          The ESOP represents and warrants to the Parent and the Acquisition Sub that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date. The ESOP makes no representations or warranties, express or implied, other than those set forth herein.

          Section 4.1. Organization. The Trustee is an Illinois corporation validly existing and in good standing under the laws of the State of Illinois and has full corporate power and authority to serve as trustee for the ESOP.

          Section 4.2. Authorization; Enforceability. The execution, delivery and performance by the ESOP of this Agreement and the other Transaction Documents to which it is a party and the consummation by the ESOP of the transactions relating to the Merger contemplated herein and therein are within the ESOP’s powers and have been duly authorized by all necessary action on the part of the ESOP. The ESOP has full power and authority to hold the Company Stock owned by it and to execute and deliver this Agreement and the other Transaction Documents to which the ESOP is a party and to perform the ESOP’s obligations hereunder and thereunder relating to the Merger. This Agreement constitutes, and each other agreement or instrument executed and delivered or to be executed and delivered by the ESOP pursuant to this Agreement or the other Transaction Documents will, upon such execution and delivery constitute, the valid and legally binding obligation of the ESOP, enforceable in accordance with its terms and conditions, except as the enforceability thereof may be limited by ERISA or any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights generally, and by general principles of equity.

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The ESOP is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority to consummate the transactions contemplated by this Agreement and the other Transaction Documents.

          Section 4.3. Noncontravention. Neither the execution and the delivery of this Agreement by the ESOP or the other Transaction Documents to which the ESOP is a party, nor the ESOP’s performance of its obligations hereunder or thereunder, including consummation of the transactions contemplated hereby or thereby, will (i) violate any constitution, statute, regulation, rule, injunction, order, ruling, charge, or other restriction of any Governmental Authority to which the ESOP is subject, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the ESOP is a party or by which the ESOP is bound or to which any of the ESOP’s assets is subject, (iii) result in the imposition or creation of an Encumbrance upon or with respect to the Capital Stock or assets of the ESOP or the Company or its Subsidiaries or (iv) violate any provision of the trust or other governing documents of the ESOP.

          Section 4.4. Brokers’ Fees. The ESOP has no liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement or the other Transaction Documents for which the Parent, the Acquisition Sub, the Company, its Subsidiaries or the Company’s stockholders (including the ESOP), or its and their respective officers, directors, employees, agents, representatives and Affiliates could become liable or obligated.

          Section 4.5. Company Shares. As of the date hereof, the ESOP holds of record 319,029 shares of Common Stock free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), Taxes, Encumbrances, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands, except to the extent that ESOP plan participants and their beneficiaries may have the right to demand the distribution of Common Stock upon termination of service or the exercise of diversification rights under the terms of the ESOP plan document, ERISA or the Code. The ESOP is not a party to any option, warrant, purchase right, or other contract or commitment that could require the ESOP to sell, transfer, or otherwise dispose of any capital stock of the Company or any of its Subsidiaries (other than this Agreement), except to the extent that ESOP plan participants and their beneficiaries may have the right to demand the distribution of Common Stock upon termination of service or the exercise of diversification rights under the terms of the ESOP plan document, ERISA or the Code. The ESOP is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Company or any of its Subsidiaries, except to the extent that ESOP plan participants and their beneficiaries may have the right to direct the Trustee regarding the voting of such shares under the terms of the ESOP plan document, ERISA or the Code.

          Section 4.6. Litigation. There are no actions, suits, proceedings, arbitrations, investigations, audits or claims against the ESOP pending or, to the knowledge of the Trustee, threatened, nor are there any judgments, decrees or orders against or binding upon the ESOP relating to or affecting the ESOP’s ability to consummate the transactions contemplated by this Agreement and by the other Transaction Documents.

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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB

          Parent and Acquisition Sub hereby represent and warrant to the Company and the stockholders of the Company, as of the date hereof and as of the Closing Date as follows:

          Section 5.1. Organization. Each of Parent and Acquisition Sub is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to conduct its business as it is currently being conducted and to own or lease, as applicable, its assets. Each of Parent and Acquisition Sub is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary, except where the failure to be so qualified or in good standing would not reasonably be expected to have a material adverse effect on the ability of Parent or Acquisition Sub to consummate the transactions contemplated this Agreement and the other Transaction Documents (to the extent a party thereto). Copies of the Organizational Documents of Acquisition Sub, and all amendments thereto, heretofore made available to the Company, are accurate and complete as of the date hereof. Each of Parent and Acquisition Sub was formed for the purpose of consummating the Merger and has not conducted any business other than the activities related to the transactions contemplated by this Agreement.

          Section 5.2. Authorization. Each of Parent and Acquisition Sub has all requisite power and authority, and has taken all action necessary, to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The execution and delivery by each of Parent and Acquisition Sub of this Agreement and the other Transaction Documents to which it is a party and the consummation by Parent and Acquisition Sub of the transactions contemplated hereby and thereby have been duly approved by the boards of directors (or similar governing body) of Parent and Acquisition Sub and by Parent as the sole stockholder of Acquisition Sub. No other proceedings on the part of Parent or Acquisition Sub are necessary to authorize this Agreement and the other Transaction Documents to which it is a party and the transactions contemplated hereby and thereby. This Agreement and the other Transaction Documents to which it is a party have been, or will be, duly executed and delivered by each of Parent and Acquisition Sub and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, are, or will be, the legal, valid and binding obligations of each of Parent and Acquisition Sub, enforceable against each in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable law.

          Section 5.3. Governmental Consents and Approvals; No Conflict or Violation.

          (a) Except for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, state securities laws or the HSR Act and except for the filing and recordation of the Merger Certificate as required by the DGCL, no

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consent, approval, authorization of or notice of, declaration to or filing or registration with, any Governmental Authority is required to be made or obtained by Parent, Acquisition Sub or any of their Affiliates in connection with the execution, delivery and performance by Parent and Acquisition Sub of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

          (b) Neither the execution, delivery or performance of this Agreement or the other Transaction Documents nor the consummation of the transactions contemplated hereby or thereby, by Parent or Acquisition Sub, will (i) violate or conflict with any provision of the Organizational Documents of Parent or Acquisition Sub, (ii) violate, conflict with, or result in or constitute a Default under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent, or Acquisition Sub is a party or by which Parent, Acquisition Sub or any of their assets may be bound or (iii) violate, conflict with, contravene or give any Person the right to exercise any remedy or obtain any relief under, any Court Order or Law, except in the case of each of clauses (ii) and (iii) above, for such violations, Defaults, terminations or accelerations which would not reasonably be expected to have, either individually or in the aggregate, a material adverse effect on the ability of Parent or Acquisition Sub to consummate the transactions contemplated this Agreement and the other Transaction Documents (to the extent a party thereto).

          Section 5.4. Commitments. Parent has received binding commitments from Vestar Capital Partners IV, L.P. and Greenbriar Equity Group LLC to purchase equity securities of Parent, which commitments, together with the debt financing under the Credit Agreement Amendment and Bond Term Sheet, and the Management Rollover, will be sufficient to pay the Merger Consideration as required by this Agreement. Copies of the equity commitment letters are set forth as Exhibit G attached hereto (the “Equity Commitment Letters”) and a copy of the Bond Term Sheet is set forth as Exhibit A attached hereto.

          Section 5.5. Compliance with Law. Each of Parent and Acquisition Sub is in compliance with all Laws and Court Orders which would materially affect its ability to perform its obligations hereunder and under the other Transaction Documents (to the extent a party thereto). There is no Action pending or, to the knowledge of Parent and Acquisition Sub, threatened against Parent or Acquisition Sub that may affect their respective abilities to perform their respective obligations hereunder and under the other Transaction Documents (to the extent a party thereto).

          Section 5.6. No Brokers or Finders. No Person had, has or will have, as a result of the consummation of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon the Company, any of its Subsidiaries or any Equity Holder for any commission, fee or other compensation as a finder or broker because of any act or omission by the Parent or Acquisition Sub or any of their respective agents.

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ARTICLE VI
COVENANTS

          Section 6.1. Conduct of Business of the Company. Except as otherwise expressly provided in or contemplated by this Agreement or as described on Schedule 6.1, during the period from the date hereof through the Effective Time or the earlier termination of this Agreement in accordance with its terms, the Company will conduct its business and its and its Subsidiaries’ operations in the Ordinary Course and use all commercially reasonable efforts to preserve intact its and its Subsidiaries’ current business organizations and its and its Subsidiaries’ relationships with employees, customers, suppliers and others having business relationships and dealings with them, other than those changes that occur in the Ordinary Course. Without limiting the generality of the foregoing, except as otherwise expressly provided in or contemplated by this Agreement or as described on Schedule 6.1, during the period from the date hereof through the Effective Time or the earlier termination of this Agreement in accordance with its terms, the Company will not, and will not permit its Subsidiaries to, without the prior written consent of Parent:

          (a) amend the Organizational Documents of the Company or its Subsidiaries;

          (b) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property) on any class of Capital Stock of the Company or its Subsidiaries, or redeem or repurchase any shares of Capital Stock of the Company or its Subsidiaries; provided that the Company may make investments in Argo-Tracker Corporation (and for the avoidance of doubt, to the extent such investments exceed $1,000,000, they will be deemed Closing Dividends/Investments hereunder);

          (c) split, combine, reclassify or otherwise modify the terms of or issue, sell or dispose of the Capital Stock of the Company or any of its Subsidiaries;

          (d) sell, transfer, license, assign, pledge or otherwise dispose of any material assets of the Company and its Subsidiaries or create an Encumbrance (other than a Permitted Encumbrance) with respect to any of its material assets, or fail to maintain, or permit the loss, lapse or abandonment of, any material Company Intellectual Property;

          (e) except (i) as required by Law or as required by Contracts or plans entered into or in existence on or prior to the date of this Agreement which have been disclosed to Parent pursuant to this Agreement and (ii) normal increases in salary and wages in the Ordinary Course, increase the salary or other compensation payable to any of the employees (including its executive officers or directors) or consultants of the Company or any of its Subsidiaries, or pay or commit to pay any bonus or other additional salary or compensation to any of the employees (including its executive officers or directors) or consultants of the Company or any of its Subsidiaries;

          (f) adopt, amend, or modify, or terminate any bonus, profit sharing, incentive, severance, or collective bargaining agreement or other plan, contract or commitment for the benefit of any of its directors, officers, and employees (or take any such action with respect to any other Employee Benefit Plan) except as required by Law;

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          (g) make or agree to make any distributions or other payments to the ESOP or the SERP or purchase any Capital Stock from the ESOP or from participants of the ESOP, except as required by Law or the ESOP plan documents, or as is necessary to satisfy the diversification requirements under the Code, or relating to the Company’s contribution to the ESOP and the SERP Plan for the plan year ended October 28, 2005; provided that if the Company or any of its Subsidiaries purchases any shares from the ESOP or makes any contributions or distributions of cash or assets of the Company to the ESOP that are not reserved for on the Most Recent Balance Sheet, such amounts paid to the ESOP pursuant to such purchase, contribution or distribution (which in the case of any assets contributed or distributed to the ESOP, shall be equal to the fair value of such assets as of the date of such contribution or distribution) shall be deducted from the Merger Consideration;

          (h) authorize for issuance, issue, sell, deliver or grant Capital Stock of the Company or any Subsidiary or any options, warrants, subscriptions or other rights therefor, or any securities convertible into or exchangeable or exercisable for shares of any class of Capital Stock of the Company or any Subsidiary (except for the issuance of Capital Stock of the Company in connection with the exercise of Company Stock Options);

          (i) incur, or commit to incur, any new capital expenditure in excess of $1,700,000 in the aggregate;

          (j) acquire, by merger, consolidation or acquisition of stock, any business of any other Person or acquire a portion of the assets of any Person involving more than $250,000 (other than purchases of assets in the Ordinary Course);

          (k) settle or compromise any pending or threatened suit, action or claim, the settlement or compromise of which provides for covenants that restrict the Company’s or its Subsidiaries’ ability to operate or compete or provides for the payment of money or performance that in either case would reasonably be expected to involve value in excess of $250,000;

          (l) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Subsidiary (other than the Merger);

          (m) implement any employee layoffs that would reasonably be expected to implicate the WARN Act.

          (n) (i) incur or assume any long-term or short-term debt or issue any debt securities, except for borrowings under existing lines of credit in the Ordinary Course, (ii) assume, guarantee, endorse or otherwise become liable or responsible, whether directly, contingently or otherwise, for the obligations of any other Person or (iii) make any loans, advances or capital contributions to or investments in any other Person, except for customary loans or advances to employees, in each case in the Ordinary Course;

          (o) change any of the Company’s or its Subsidiaries’ current cash management or working capital practices (it being understood that the use of cash to reduce Indebtedness of the Company or its Subsidiaries will not result in a breach of this Agreement by the Company), accounting methods, principles or practices utilized by the Company or the

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Subsidiaries write down the value of any assets not in the Ordinary Course or in excess of $100,000 individually or $250,000 in the aggregate or write off any accounts receivable not in the Ordinary Course or in excess of $100,000 individually or $250,000 in the aggregate;

          (p) discharge or satisfy any material Encumbrance, or obligation or liability in excess of $250,000, other than current liabilities payable in the Ordinary Course;

          (q) other than compensation paid in the Ordinary Course, enter into any transaction or other arrangement with, or make any payment to any officer, director, stockholder or Affiliate of the Company or, to the Knowledge of the Company, any Affiliate of any such individual or entity, or amend, modify or terminate any arrangement with any such Person, or cancel or waive any debts, loans, advances or claims with any such Person, in each case with a value, individually or in the aggregate, in excess of $100,000;

          (r) waive any material benefits of, or modify any terms of, any confidentiality, standstill, non-solicitation or similar agreement to which the Company or any Subsidiary is a party;

          (s) cancel or waive any right material to the operation of the Company’s business;

          (t) delay or postpone in any material respect the payment of accounts payable or other liabilities outside the Ordinary Course or in excess of $250,000 individually or $100,000 in the aggregate;

          (u) make or change any Tax election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company or any of its Subsidiaries, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any of its Subsidiaries, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would reasonably be expected to have the effect of increasing in any material respect the Tax liability of the Company or any of its Subsidiaries for any period ending after the Closing Date or decreasing in any material respect any Tax attribute of the Company or any of its Subsidiaries existing on the Closing Date; or

          (v) take or agree in writing or otherwise to take any of the actions described in Sections 6.1(a) through (u) or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect in all material respects.

          Section 6.2. Access to Information.

          (a) Between the date hereof and the Effective Time or the earlier termination of this Agreement in accordance with its terms, the Company will, and will cause its Subsidiaries to, provide Parent, Acquisition Sub and their authorized representatives and Parent’s financing sources with all information (financial or otherwise) concerning the Company and its

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Subsidiaries reasonably requested, including, upon reasonable prior notice and during normal business hours, access to the properties and assets of the Company and its Subsidiaries and their personnel, representatives, books and records, contracts and Tax Returns; provided, that Parent and Acquisition Sub agree that such access will give due regard to minimizing interference with the operations, activities and employees of the Company and its Subsidiaries.

          (b) Between the date hereof and the Effective Time or the earlier termination of this Agreement in accordance with its terms, the Company shall furnish to Parent and its authorized representatives monthly unaudited financial statements within thirty 30 days following the end of each fiscal month and such other financial and operating data and other information with respect to the Company and its Subsidiaries as Parent, Acquisition Sub and their authorized representatives and Parent’s financing sources may from time to time reasonably request.

          (c) Notwithstanding anything to the contrary in this Agreement, nothing in this Section 6.2 shall require the Company or its Affiliates to disclose any information to Parent if such disclosure would be in violation of applicable Laws or contractual obligations.

          Section 6.3. HSR Act Approvals. In connection with this Agreement and the transactions contemplated hereby, to the extent required by the HSR Act, each of the parties hereto (other than the ESOP) shall comply within ten (10) days of the date of this Agreement with the notification and reporting requirements of the HSR Act and thereafter use all commercially reasonable efforts to obtain termination of the waiting period under the HSR Act, including seeking early termination of the waiting period under the HSR Act. Parent and the Company will file or cause to be filed as promptly as practicable with the United States Federal Trade Commission (“FTC”) and the United States Department of Justice (“DOJ”) any supplemental information that may be requested pursuant to the HSR Act. Parent and Company will each (i) use commercially reasonable efforts to comply as expeditiously as possible with all lawful requests of Governmental Bodies for additional information and documents pursuant to the HSR Act, (ii) not (A) unreasonably extend any waiting period under the HSR Act or (B) enter into any agreement with any Governmental Body not to consummate the transactions contemplated by this Agreement, except with the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed, and (iii) cooperate with the other party and use all commercially reasonable efforts to cause the lifting or removal of any temporary restraining order, preliminary injunction or other order that may be entered into in connection with the transactions contemplated by this Agreement. Parent shall pay, at the time of such filing, all fees associated with any filing under or pursuant to the HSR Act. After the HSR Act filing has been made, each of Parent and the Company shall keep the other party informed of any material communication thereafter received by such party from, or given by such party to, the FTC, the DOJ or any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding this Agreement or any of the transactions contemplated hereby and permit the other party, through its legal advisors, to (A) consult with each other in advance of any meeting or conference with the FTC, the DOJ or any such other Governmental Authority or (B) in connection with any proceeding by a private party, consult with each other in advance of any meeting or conference with such private party.

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          Section 6.4. Approvals and Consents. Each of the parties shall, as applicable to such party, make all filings with and provide all notices to all appropriate Governmental Authorities and obtain all consents, waivers, approvals, authorizations or orders, including all regulatory rulings and approvals of any Governmental Authority required in connection with the consummation of this Agreement and the other Transaction Documents or the transactions contemplated hereby or thereby. Without limiting the generality of the foregoing, the Company shall obtain all consents, waivers, approvals, authorizations and orders set forth on Schedule 6.4. Subject to the terms and conditions of this Agreement, in taking such actions or making any such filings, the parties hereto shall use their respective commercially reasonable efforts to assemble, prepare and file any information (and, as needed, to supplement such information) as may be reasonably necessary in order to obtain, as promptly as possible, all consents and approvals required to be obtained from any Governmental Authority or other third party in order to execute, deliver and perform this Agreement in accordance with its terms and conditions. In the event that the Company or its Affiliates shall fail to obtain any such approval or consent described above, it shall use all commercially reasonable efforts, and shall take any such actions reasonably requested by Parent, to minimize any adverse effect upon Parent, the Surviving Corporation or their respective Affiliates resulting, or which would reasonably be expected to result after the Effective Time, from the failure to obtain such approval or consent.

          Section 6.5. Proxy Statement. Promptly after the execution and delivery of this Agreement, the Company shall prepare and distribute to the Equity Holders a proxy statement in accordance with, and containing all such information as is required by, all applicable provisions of the DGCL (including the notice and meeting requirements in Sections 222 and the Appraisal Rights Notice requirements of 262 of the DGCL), relating to the adoption of this Agreement and the approval of the transactions contemplated hereby, including, without limitation, the Merger (together with any amendments thereof or supplements thereto, the “Proxy Statement”). The Proxy Statement shall include the recommendation of the Board in favor of approval and adoption of this Agreement and the Merger, except to the extent the Board, in accordance with Section 6.11(c), shall have withdrawn or modified its approval or recommendation of this Agreement or the Merger. The Proxy Statement shall be distributed by the Company to the Equity Holders no later than the thirtieth (30^th) calendar day following the date hereof. The Proxy Statement shall be prepared in accordance with, and comply with in all respects, all applicable provisions of the DGCL and shall not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and in the event that the Company discovers subsequent to delivery of the Proxy Statement to the Equity Holders that the Proxy Statement misstates a material fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Company shall promptly deliver to each Equity Holder an amendment, supplement or modification to the Proxy Statement detailing such misstatement or such omitted fact as required by the DGCL. The Company shall provide Parent and Acquisition Sub with a reasonable opportunity to review and comment on the Proxy Statement and any amendments, supplements or modifications thereof prior to distribution to the Equity Holders.

          Section 6.6. Stockholders Meeting. Within sixty (60) calendar days from the date hereof, the Company shall duly call, give notice of, convene and hold a meeting of the Equity Holders (the “Stockholders Meeting”) for the purpose of voting on the adoption and

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approval of this Agreement and the Merger and, through its Board, will recommend to the Equity Holders adoption and approval of this Agreement and the Merger, except to the extent that the Board shall have withdrawn or modified its approval or recommendation of this Agreement and the Merger as permitted by Section 6.11(c). Except to the extent that the Board shall have withdrawn or modified its approval or recommendation as aforesaid, the Company will use its reasonable best efforts to solicit from the Equity Holders proxies in favor of adoption and approval of this Agreement and the Merger.

          Section 6.7. Additional Agreements; Commercially Reasonable Efforts.

          (a) Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all commercially reasonable efforts to take or cause to be taken all actions and to do or cause to be done all things reasonably necessary, proper or advisable under applicable Laws or otherwise to consummate and make effective this Agreement and the transactions contemplated hereby. If at any time after the Effective Time any further action is necessary to carry out the purposes of this Agreement, the proper officers and directors of each party hereto shall take, upon reasonable request, all such necessary action.

          (b) Prior to Closing, the Company shall appoint and authorize a representative of the Equity Holders, reasonably acceptable to Parent (the “Stockholders’ Representative”) to act, in conjunction with the Trustee, as the agent and attorney-in-fact to act on behalf of the Equity Holders in connection with and to facilitate the consummation of the transactions contemplated hereby and the resolution of any disputes that may arise hereunder. Such Stockholders’ Representative shall have agreed in writing, in such form as is reasonably acceptable to Parent, to be bound by the terms and conditions contained herein applicable to the Stockholders’ Representative.

          (c) To the extent not prohibited under any agreement governing the Indebtedness of the Parent, the Surviving Corporation or any Subsidiary of the Surviving Corporation, following the Closing, Parent shall cause the Surviving Corporation to invest up to $2,000,000 in the aggregate in Argo-Tracker Corporation, as necessary to fund the operation of Argo-Tracker Corporation; provided that Parent shall not be required to cause the Surviving Corporation to invest more than $1,000,000 in the aggregate in Argo-Tracker Corporation during any 90-day period. Parent and the Surviving Corporation shall use commercially reasonable efforts to effectuate an Argo-Tracker Disposition within 18 months of the Effective Time. In the event that an Argo-Tracker Disposition is not effectuated prior to the end of such period, Parent and the Surviving Corporation shall promptly cause Argo-Tracker Corporation to be liquidated in accordance with Section 275 of the DGCL. Any net proceeds resulting from the disposition or liquidation of Argo-Tracker Corporation shall be distributed as provided in Section 2.12.

          Section 6.8. ESOP Matters.

          (a) The Company shall use all commercially reasonable efforts to deliver to the Trustee for dissemination by the Trustee to the ESOP’s participants an information statement (the “Information Statement”) regarding the Merger, this Agreement and the transactions contemplated hereby. The Information Statement shall be prepared and distributed in accordance with, and comply with in all respects, and contain all such information as is required

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by, all applicable requirements of ERISA and the DGCL (including but not limited to Section 222 of the DGCL), and shall not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. In the event that the Company discovers subsequent to dissemination of the Information Statement to the ESOP’s participants that the Information Statement misstates a material fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or does not comply with applicable requirements of ERISA and the DGCL, the Company shall promptly notify the Trustee, and, at the Trustee’s request, deliver to the Trustee an amendment, supplement or modification to the Information Statement detailing such misstatement or such omitted fact or non-compliance with ERISA and/or the DGCL as required by applicable Law.

          (b) Immediately prior to the Closing and effective as of the Closing Date, the Company shall amend the ESOP to provide that (i) it is no longer an “employee stock ownership plan” within the meaning of Section 4975 of the Code, (ii) it shall no longer permit distributions to participants in the form of “qualifying employer securities” and (iii) the ESOP is terminated. As soon as reasonably practicable thereafter, the Company shall submit an application in a form reasonably acceptable to Parent to the appropriate District Director of the Internal Revenue Service (the “IRS”) requesting a favorable determination with respect to the amendment and termination of the ESOP (the “IRS Approval”). The submission to the IRS shall disclose that it is the intention of the Company to maintain the trust fund which forms a part of the ESOP until all amounts have been distributed from the Escrow Account. Between the date of Closing and obtaining IRS Approval, in addition to distributions from the ESOP for distributions to participants and beneficiaries in the ordinary course, as required by the terms of the ESOP and the Code, the Company may amend the ESOP to permit distributions to participants prior to obtaining IRS Approval of up to 50% of their ESOP account balances at the time of Closing.

          (c) The Trustee shall request that the ESOP Financial Advisor prepare and deliver the Fairness Opinion to the Trustee, and the Trustee, the Company and the Parent shall fully cooperate with the ESOP Financial Advisor in connection with the preparation and delivery thereof and shall promptly comply with any inquiries or requests for additional information from the ESOP Financial Advisor in connection therewith.

          (d) Prior to Closing, the Company shall take or cause to be taken all such actions as may be necessary to legally (i) terminate the SERP Plan effective as of the Closing and (ii) amend the SERP Plan to provide that, on the Closing Date, all benefits that have been accrued under the SERP Plan to the SERP Plan participants shall be paid in the form of a single, lump-sum cash payment.

          Section 6.9. Public Announcements. On and after the date hereof and through the Effective Time or the earlier termination of this Agreement in accordance with its terms, the Company, on behalf of itself and its Subsidiaries, and the Stockholders’ Representative, on the one hand, and Acquisition Sub and Parent, on the other hand, shall consult with each other before any party hereto shall issue any press releases or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby, and none of the parties shall issue any press release or make any public statement prior to obtaining the other parties’ written approval, which approval shall not be unreasonably withheld or delayed, except that no

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such approval shall be necessary to the extent disclosure may be required by this Agreement or applicable Law.

          Section 6.10. Notification of Certain Matters. Prior to the Effective Time or the earlier termination of this Agreement in accordance with its terms, the Company shall give prompt written notice to Parent of (i) the existence or occurrence, or failure to occur, of any fact or event of which it has Knowledge that would cause any representation or warranty of the Company contained in this Agreement or in any other Transaction Document to be untrue or inaccurate if it is qualified by materiality or in all material respects if it is not so qualified at any time from the date of this Agreement to the Closing assuming such representation or warranty is made at such time; (ii) the failure of the Company to comply with or satisfy any covenant to be complied with by it hereunder; (iii) any written notice or other written communication from any Person alleging that the consent or approval of such Person is or may be required in connection with the transactions contemplated by this Agreement or the other Transaction Documents; and (iv) any written notice or other written communication from any Governmental Authority in connection with the transactions contemplated by this Agreement.

          Section 6.11. No Solicitations.

          (a) Immediately after the execution of this Agreement, the Company shall terminate and cease and shall cause its officers, directors, agents, Affiliates and representatives (such Persons collectively shall be referred to as the “Company Group”) to terminate and cease, all discussions and negotiations that may then be ongoing by any of them with respect to an Alternative Transaction. From the date hereof through the earlier of (a) the Closing or (b) the termination of this Agreement in accordance with its terms, the Company shall not, and shall cause each member of the Company Group not to (i) agree to, approve, endorse or recommend any Alternative Transaction or enter into any letter of intent or written or oral agreement or understanding with any Person (other than Parent or its Affiliates, representatives and agents and any other Person Parent designates) regarding an Alternative Transaction; (ii) solicit, initiate, enter into or continue any negotiations or discussions with any Person (other than Parent or its Affiliates, representatives and agents and any other person Parent designates) or take any other action for the purpose of facilitating, any inquiries or the making of any proposal or offer that constitutes, or may reasonably be expected to lead to, an Alternative Transaction; or (iii) except as otherwise required by Law, this Agreement or in connection with current obligations to the Company’s existing lenders, provide any non-public financial or other confidential or proprietary information regarding the Company or any Subsidiary (including this Agreement and any other materials containing Parent’s proposal to consummate the Merger and any other financial information, projections or proposals regarding the Company) to any Person (other than to Parent or its Affiliates, representatives and agents and any other person Parent designates) whom the Company knows, or has reason to believe, would have any interest in participating in an Alternative Transaction. The Company agrees to (x) immediately notify Parent if any member of the Company Group receives any indication of interest, request for information or offer in respect of an Alternative Transaction, and inform the other party that the Company is bound by the exclusivity provisions of this Agreement without mentioning Parent (or its representatives or Affiliates), (y) promptly communicate to Parent in reasonable detail the terms of any such indication, request or proposal and the identity of the Person making such indication, request or

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proposal, and (z) promptly provide Parent with copies of all written communications relating to any such indication, request or proposal.

          (b) Notwithstanding anything to the contrary in Section 6.11(a) above, the Board may furnish information to, and enter into discussions with, a Person who has made an unsolicited, written, bona fide proposal or offer regarding an Alternative Transaction, and the Board has (i) determined, in its good faith judgment (after consulting with its financial advisor, which financial advisors shall be of nationally or regionally recognized reputation), that such proposal or offer constitutes or is reasonably likely to lead to a Superior Proposal, (ii) determined, in its good faith judgment after consulting with its outside legal counsel, that, in light of such proposal or offer, the failure to furnish such information or enter into discussions would constitute a breach of its fiduciary duties under applicable Law, (iii) provided written notice to Parent of its intent to furnish information or enter into discussions with such Person at least 24 hours prior to taking any such action, (iv) obtained from such Person an executed confidentiality agreement on terms no less favorable to the Company than those contained in the confidentiality agreements between the Company and Vestar Capital Partner IV, L.P. and between the Company and Greenbriar Equity Group LLC, each dated April 7, 2005, and (v) Company has complied with its disclosure requirements to Parent under Section 6.11(a).

          (c) Except as otherwise provided in this Section 6.11(c), neither the Board nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent, the approval or recommendation of the Board or any such committee of this Agreement or the Merger or (ii) approve or recommend, or propose to approve or recommend, any Alternative Transaction. Notwithstanding the foregoing, the Board, to the extent required by its fiduciary obligations, as determined in good faith by a majority of the members thereof (after consultation with outside legal counsel), may approve or recommend a Superior Proposal and withdraw or modify its approval or recommendation of this Agreement or the Merger in connection therewith.

          Section 6.12. Financing Cooperation. The Company agrees to provide, and will cause each of the Subsidiaries and its and their respective officers, employees and advisors to provide, all cooperation reasonably necessary in connection with the arrangement of any financing to be consummated contemporaneously with the Closing (including the Credit Agreement Amendment) and the consents described in Section 7.3(i), including participation in meetings, due diligence sessions, cooperating in the preparation of offering memoranda, private placement memoranda, prospectuses and similar documents, obtaining, as may be reasonably requested by Parent, comfort letters of accountants and taking such other actions as are reasonably necessary to be taken by the Company in connection with obtaining the financing contemplated by the Credit Agreement Amendment or any replacement or substitution therefor and the consents described in Section 7.3(i) therefor, provided that Parent shall use reasonable efforts not to materially interfere with the duties of such officers, employees and advisors.

          Section 6.13. Indemnification, Exculpation and Insurance.

          (a) Parent hereby agrees that it will not (i) cause the Surviving Corporation to or permit the Surviving Corporation to cause or allow its subsidiaries to amend or modify the director and officer indemnification provisions in the Surviving Corporation’s or its Subsidiaries’

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Organizational Documents or (ii) amend or revoke any indemnification agreement between the Company or any Subsidiary and any director or officer currently in effect and listed on Schedule 6.13, in each case, in any way that diminishes or adversely affects the indemnification or exculpation provisions provided therein or herein.

          (b) Prior to the Effective Time, the Company shall purchase a policy of directors’ and officers’ liability insurance extended reporting (tail) coverage covering each Person who is currently or has been prior to the date hereof an officer or director of the Company or any of its Subsidiaries (the “Indemnified Officers”) with respect to claims arising from facts or events that occurred on or prior to the Effective Time for a period of six years thereafter.

          (c) In the event Parent or the Surviving Corporation or any of their respective Subsidiaries, successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each case, proper provision shall be made that the successors and assigns of Parent or the Surviving Corporation or such subsidiary thereof, as the case may be, honor the indemnification and other obligations set forth in this Section 6.13.

ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER

          Section 7.1. Conditions to Each Party’s Obligation to Effect the Merger. The respective obligations of each party hereto to consummate, or cause to be consummated, the transactions contemplated hereby are subject to the satisfaction at or before the Effective Time of the following conditions:

          (a) no Law or Court Order shall have been enacted, entered, promulgated or enforced by any Governmental Authority which prohibits, restrains, enjoins, restricts or makes illegal the consummation of the Merger;

          (b) any waiting period applicable to the Merger under the HSR Act shall have terminated or expired and any other notices or approvals required to have been given to or obtained from any Governmental Authority prior to the Effective Time with respect to this Agreement and the transactions contemplated hereby shall have been either filed or received and shall be in full force and effect.

          (c) the Company shall have obtained the Required Stockholder Approval;

          (d) the Trustee shall have received the Fairness Opinion of the ESOP Financial Advisor and a copy of such Fairness Opinion shall have been delivered to Parent;

          (e) the Trustee shall have (i) determined to not demand appraisal rights pursuant to Section 262 of the DGCL with respect to all the Company Stock held by the ESOP; (ii) determined that the directions received from the ESOP participants with respect to the pass-through of voting rights pursuant to the ESOP are proper and were given (A) without coercion from the Company or Argo-Tech and (B) upon full and proper information; (iii) determined that, as directed trustee, it is appropriate under ERISA for the Trustee to follow the directions of the

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ESOP participants with respect to the voting of the Company Stock held by the ESOP and following such participant directions is prudent and not inconsistent with ERISA;

          (f) the Trustee shall have (i) determined, in the exercise of its independent fiduciary discretion under ERISA, which, for the avoidance of doubt, shall not be in the capacity of a directed trustee of the ESOP, that the consummation by the ESOP of the transactions contemplated by this Agreement and by the other Transaction Documents is prudent, is for the exclusive purpose of providing benefits to participants and beneficiaries of the ESOP, and does not constitute a prohibited transaction or otherwise violate ERISA, (ii) determined that the consummation by the ESOP of the transactions contemplated by this Agreement and the other Transaction Documents in no other respects violates the Trustee’s fiduciary obligations, and (iii) provided the Parent a certificate from the Trustee dated as of the Closing Date describing the process by which it has determined, and stating that it has in fact determined, in the exercise of its independent fiduciary discretion under ERISA, which, for the avoidance of doubt, shall not be in the capacity of a directed trustee of the ESOP, that the consummation by the ESOP of the transactions contemplated by the Agreement and by the other Transaction Documents is prudent, is for the exclusive purpose of providing benefits to participants and beneficiaries of the ESOP, does not constitute a prohibited transaction or otherwise violate ERISA and in no other respects violates the Trustee’s fiduciary obligations; and

          (g) the Company and Argo-Tracker Corporation shall have entered into agreements that govern the Company’s investment in Argo-Tracker Corporation that reflect the terms contemplated by that certain letter agreement dated August 26, 2005, by and among the Company, Greenbriar Equity Group, LLC and Vestar Capital Partners IV, L.P. and contain such other terms and conditions as are reasonably acceptable to Parent and the Company.

          Section 7.2. Conditions to the Obligation of the Company. The obligation of the Company to consummate, or cause to be consummated, the transactions contemplated hereby is subject to the satisfaction (or waiver by the Company) at or before the Effective Time of the following conditions:

          (a) the representations and warranties of Parent and Acquisition Sub contained in this Agreement shall be true and correct as of the Effective Time with the same effect as if made at and as of the Effective Time (except to the extent such representations and warranties specifically related to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date), it being understood that (i) any inaccuracies in such representations and warranties shall be disregarded if the circumstances giving rise to such inaccuracies (considered collectively) do not constitute and could not reasonably be expected to lead to or result in a Material Adverse Effect on Parent and Acquisition Sub and (ii) for purposes of determining whether such representations and warranties are true and correct, all “Material Adverse Effect” qualifications and any other materiality qualifications (whether qualitative or quantitative, other than those qualifications specifically referring to a certain dollar amount) in such representations and warranties shall be disregarded;

          (b) each of the covenants and obligations of Parent and Acquisition Sub to be performed at or before the Effective Time pursuant to the terms of this Agreement shall have been duly performed or complied with in all material respects at or before the Effective Time;

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          (c) the Escrow Agreement shall have been executed by Parent and delivered to the Company; and

          (d) No Person shall have commenced or overtly threatened to commence any Action challenging or seeking to recover a material amount of damages from the Company’s shareholders in connection with the Merger

          Section 7.3. Conditions to the Obligations of Parent and Acquisition Sub. The respective obligations of Parent and Acquisition Sub to consummate, or cause to be consummated, the transactions contemplated hereby are subject to the satisfaction (or waiver by Parent and Acquisition Sub) at or before the Effective Time of the following conditions:

          (a) the representations and warranties of the Company contained in this Agreement shall be true and correct at and as of the Effective Time with the same effect as if made at and as of the Effective Time (except to the extent such representations and warranties specifically related to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date), it being understood that (i) any inaccuracies in such representations and warranties shall be disregarded if the circumstances giving rise to such inaccuracies (considered collectively) do not constitute and could not reasonably be expected to lead to or result in a Material Adverse Effect on the Company and its Subsidiaries taken as a whole and (ii) for purposes of determining whether such representations and warranties are true and correct, all “Material Adverse Effect” qualifications and any other materiality qualifications (whether qualitative or quantitative, other than those qualifications specifically referring to a certain dollar amount) in such representations and warranties shall be disregarded;

          (b) each of the covenants and obligations of the Company to be performed or complied with at or before the Effective Time pursuant to the terms of this Agreement shall have been duly performed or complied with in all material respects at or before the Effective Time;

          (c) the Company shall have obtained the consents or approvals listed on Schedule 7.3(c) and shall have delivered to Parent reasonably satisfactory evidence thereof;

          (d) no Governmental Authority shall have commenced or overtly threatened to commence any Action challenging or seeking to recover a material amount of damages from the Parent, Merger Sub or the Company in connection with the Merger or seeking to prohibit or limit the exercise by Parent of any material right pertaining to its ownership of Capital Stock of the Surviving Corporation;

          (e) the Escrow Agreement shall have been executed by the Escrow Agent and the Stockholders’ Representative and delivered to Parent;

          (f) the individuals listed on Schedule 7.3(f) shall have entered into equity ownership and incentive arrangements contemplated by the term sheet attached hereto as Exhibit E;

          (g) the individuals set forth on Schedule 7.3(g)(i) shall have entered into employment agreements with Argo-Tech Corporation substantially in the form attached hereto as

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Exhibit I, which employment agreements shall replace the agreements listed on Schedule 7.3(g)(ii), and the agreements listed on Schedule 7.3(g)(ii) shall have been terminated.

          (h) the individuals listed on Schedule 7.3(h)(i) shall have entered into change of control agreements with the Argo-Tech Corporation substantially in the form attached hereto as Exhibit H, which change of control agreements shall replace the change of control, stay-or-pay or other similar agreements listed on Schedule 7.3(h)(ii) and the agreements listed on Schedule 7.3(h)(ii) shall have been terminated.

          (i) the individuals listed on Schedule 7.3(i) shall have entered into non-solicitation and confidentiality agreements, as applicable, with the Parent substantially in the form attached hereto as Exhibit J;

          (j) receipt by Parent of (i) the consent of the holders of at least 90% of Argo-Tech Corporation’s 9.25% Senior Notes (the “Notes”) outstanding under the Indenture to the effect that such holder will waive its right under the Indenture to require Argo-Tech to repurchase such holder’s Notes following the Effective Time pursuant to Section 3.10 of the Indenture, and (ii) the consent of holders of at least a majority of the Notes to allow a one time dividend by Argo-Tech Corporation of up to $3,000,000 that would not be charged against the restricted payments basket set forth in the Indenture, in each case obtained on terms and conditions reasonably satisfactory to Parent;

          (k) EBITDA for the twelve month period ended on the last day of the period covered by the most recent monthly unaudited financial statement delivered to Parent pursuant to Section 6.2(b) prior to the Effective Time shall not be less than $40.1 million;

          (l) Funded Debt of the Company and its Subsidiaries outstanding immediately prior to the Effective Time shall not exceed $278,000,000 in the aggregate;

          (m) holders of not more than 3% of the total number of shares of Common Stock outstanding immediately prior to the Effective Time shall have properly demanded appraisal rights pursuant to Section 262 of the DGCL;

          (n) Parent and/or one or more of its Affiliates shall have obtained debt financing in amounts contemplated by the Credit Agreement Amendment and the Bond Term Sheet on the terms and conditions set forth therein and pursuant to definitive documentation containing such terms and conditions, or such other terms and conditions as are satisfactory to Parent in its sole discretion;

          (o) No Material Adverse Effect shall have occurred;

          (p) Parent shall have received from each of counsel to the ESOP and ESOP counsel to the Company, the final form of an opinion, to be delivered at Closing, covering the matters set forth with respect to such counsel in Exhibit K attached hereto, in form otherwise satisfactory to the Parent, addressed to the Parent and dated as of the Closing Date;

          (q) Parent shall have received written evidence, reasonably satisfactory to Parent, that the Company has taken or caused to be taken all such actions as may be necessary to

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legally terminate the SERP Plan effective as of the Closing and to legally amend the SERP Plan to provide that, on the Closing Date, all accrued benefits thereunder shall be paid to SERP Plan participants in the form of a single, lump-sum cash payment;

          (r) the Company shall have redeemed all of the issued and outstanding Preferred Stock for the Preferred Redemption Amount;

          (s) each Rollover Holder shall have (i) contributed his Rollover Securities that are shares of Common Stock to Parent, or have entered into an amendment to the agreement pursuant to which his Rollover Securities that are In-The-Money Options were issued to him, in each case as is contemplated by Section 2.8(b), and (ii) executed and delivered to Parent and the Company a waiver of such Person’s right to receive any amounts that would otherwise be payable pursuant to this Agreement with respect to the Common Stock or In-the-Money Options being rolled over; and

          (t) the Company shall have entered into a management services agreement with Parent or one or more of Parent’s Affiliates, containing such terms and conditions as are reasonably acceptable to Parent.

ARTICLE VIII
INDEMNIFICATION

          Section 8.1. Indemnification by the Equity Holders. Subject to Section 8.6, from and after the Closing, each of the Equity Holders shall indemnify and hold harmless, Parent, Acquisition Sub, the Surviving Corporation, each Subsidiary, their respective Affiliates, shareholders, agents and representatives and persons serving as officers, directors or employees thereof, and each of such parties’ respective successors, executors, administrators, estates, heirs and permitted assigns (individually, a “Buyer Indemnitee” and, collectively, the “Buyer Indemnitees”), from and against and in respect of any and all liabilities, obligations, losses, damages, claims, deficiencies, settlements, arbitration awards, interest, lost profits, Taxes, fines, penalties, costs, charges or other expenses, including reasonable fees and disbursements of attorneys, experts, consultants and other representatives in connection with any investigation, defense, prosecution or settlement of any matter as to which indemnification is sought (collectively, “Damages”), which any Buyer Indemnitee may suffer, incur or become subject to, arising out of, based upon or as a result of (a) any breach or nonperformance of any of the covenants or other agreements made by the Company in this Agreement; (b) the complaint filed on January 13, 2005, by Mizar Technologies, LLC (“Mizar”) and Brian J. Davis, the owner of Mizar in the Court of Common Pleas in Cuyahoga County, Ohio against the Company and Argo-Tracker Corporation (the “Tracker Technology Dispute”) and any other litigation matter or dispute involving or related to the same or related facts and circumstances that gave rise to the Tracker Technology Dispute; or (c) any inaccuracy in or breach of the representations and warranties made by the Company in this Agreement set forth in Sections 3.4, 3.6, 3.12, 3.13, 3.14, 3.23, 3.25, 3.26, 3.27, 3.31, 3.33 and 3.36.

          Section 8.2. Indemnification by Parent. From and after the Closing, Parent and Surviving Corporation shall indemnify and hold the Equity Holders, their respective Affiliates, shareholders, agents and representatives and persons serving as officers, directors or employees

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thereof, and each of such parties’ respective successors, executors, administrators, estates, heirs and permitted assigns (individually, an “Equity Holder Indemnitee” and, collectively, the “Equity Holder Indemnitees”) harmless from and against any and all Damages which any Equity Holder Indemnitee may suffer, incur or become subject to arising out of, based upon, or as a result of (a) any breach or nonperformance of any of the covenants or other agreements made by Parent, Acquisition Sub or the Surviving Corporation in this Agreement or (b) any inaccuracy in or breach of the representations and warranties made by Parent or Acquisition Sub in this Agreement.

          Section 8.3. Notice of Claims. Any party seeking indemnification pursuant to this Article VIII (the “Indemnified Party”) shall notify the other party or parties from whom such indemnification is sought (the “Indemnifying Party”) of the Indemnified Party’s assertion of such claim for indemnification (a “Claim”) and, to the extent reasonably practicable, the extent of the Damages that such Indemnified Party believes are indemnifiable (a “Claim Notice”), but the failure to do so shall not relieve the Indemnifying Party from any liability except to the extent that the Indemnifying Party is actually prejudiced by the failure or delay in giving such notice. The Indemnified Party shall thereupon give the Indemnifying Party reasonable access to the books, records and assets of the Indemnified Party which evidence or support such claim or the act, omission or occurrence giving rise to such claim and the right, upon reasonable prior notice during normal business hours, to interview any appropriate personnel of the Indemnified Party related thereto.

          Section 8.4. Third Party Claims.

          (a) Each Indemnified Party shall promptly notify the Indemnifying Party of the assertion by any third party of any claim with respect to which the indemnification set forth in this Article VIII relates (which shall also constitute the notice required by Section 8.3), but the failure to do so shall not relieve the Indemnifying Party from any liability except to the extent that the Indemnifying Party is actually prejudiced by the failure or delay in giving such notice. The Indemnifying Party shall have the right, upon notice to the Indemnified Party within ten (10) Business Days after the receipt of any such notice, to undertake the defense of or, with the consent of the Indemnified Party (which consent shall not unreasonably be withheld), to settle or compromise such claim (the “Claim Undertaking”), provided that (i) such claim is solely for monetary damages, does not seek an injunction or other equitable relief as a primary remedy, and is not a criminal claim, (ii) the Indemnifying Party has the capacity to indemnify the Indemnified Party for the Damages related to such claim, (iii) the Indemnified Party will not be exposed to greater liability due to the Claim Undertaking and (iv) the Indemnifying Party conducts the Claim Undertaking in a manner reasonably satisfactory to the Indemnified Party.

          (b) The election by the Indemnifying Party, pursuant to sub-paragraph (a) above, to undertake the defense of a third party claim shall not preclude the party against which such claim has been made also from fully participating or continuing to participate in such defense, so long as such party bears its own legal fees and expenses for so doing; provided that the Indemnifying Party shall bear the fees and expenses of such separate counsel (i) to the extent that the Indemnified Party concludes reasonably based upon written advice of counsel that a conflict of interest exists between the Indemnified Party and the Indemnifying Party, (ii) if the named parties to any such action (including any impleaded parties) include both such

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Indemnified Party and the Indemnifying Party and such Indemnified Party shall have been advised in writing by counsel that there may be one or more material legal defenses available to the Indemnified Party which are not available to the Indemnifying Party, or available to the Indemnifying Party, but the assertion of which would be materially adverse to the interest of the Indemnified Party or (iii) if the Indemnified Party reasonably concludes that the Indemnifying Party’s defense of such third party claim is not being conducted in a diligent manner.

          Section 8.5. Distributions From Escrow.

          (a) In the event that, following Closing, any Buyer Indemnitee incurs Damages for which it believes it is entitled to indemnification from the Equity Holders in accordance with this Article VIII, then Parent’s and the Equity Holders’ respective rights and obligations with respect to any such Claim shall be governed by the Escrow Agreement;

          (b) On such date as is the 12-month anniversary of the Closing Date, all amounts held in escrow, less any portion of such amounts subject to any outstanding unresolved Claim Notice delivered on or prior to such date, shall be disbursed to the Paying Agent in accordance with the terms of the Escrow Agreement. Parent and the Stockholders’ Representative shall send a joint disbursement notice to Escrow Agent pursuant to the terms of the Escrow Agreement instructing Escrow Agent to disburse to the Paying Agent the Escrow Amount to which Parent and the Equity Holders are entitled. Upon receipt of such funds, the Paying Agent shall promptly distribute to each Equity Holder its Proportionate Share thereof.

          Section 8.6. Limitations and Requirements. Notwithstanding any other provision hereof:

          (a) The Equity Holders shall not be liable to the Buyer Indemnitees with respect to any claim for indemnification pursuant to clause (b) or clause (c) of Section 8.1 of this Agreement unless and until the aggregate amount of all Damages of the Buyer Indemnitees that would otherwise be indemnifiable hereunder exceeds $1,000,000 (the “Basket”); provided, that each individual claim shall only be counted towards the Basket if such claim amount exceeds $25,000, whereupon the full amount of all Damages in excess of the Basket and up to the Cap (as defined below) shall be recoverable by the Buyer Indemnitees, subject to clause (b) below, provided that the Basket shall not apply towards any breach of the representations and warranties set forth in Sections 3.4 or 3.33. Parent shall not be liable to the Equity Holders with respect to any claim for indemnification pursuant to clause (b) of Section 8.2 of this Agreement unless and until the aggregate amount of all Damages of the Stockholder’s Representative that would otherwise be indemnifiable hereunder exceeds the Basket, whereupon the full amount of all Damages in excess of the Basket and up to the Cap shall be recoverable by the Equity Holders, subject to clause (b) below.

          (b) In no event shall the aggregate amount of liability of the Equity Holders to the Buyer Indemnitees with respect to all claims for indemnification pursuant to Section 8.1 of this Agreement exceed $8,500,000 (the “Cap”). In no event shall the aggregate amount of such liability of Parent to the Equity Holders with respect to any claim for indemnification pursuant to clause (b) of Section 8.2 of this Agreement exceed the Cap.

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          (c) The representations and warranties of the Company, the ESOP and the Parent and Acquisition Sub contained in this Agreement shall survive the Closing for the applicable period set forth in this Section 8.6(c), and any and all Claims under this Article VIII arising out of the inaccuracy or breach of any representation or warranty of the Company or Parent must be made prior to the termination of the applicable survival period. All of the representations and warranties of the Company referenced in Section 8.1(b) or of Parent and Acquisition Sub contained in this Agreement shall expire on such date that is the 12-month anniversary of the Closing Date (or if such day is not a Business Day, then on the first Business Day thereafter). None of the representations and warranties of the ESOP or of the Company contained in this Agreement (other than those representations and warranties of the Company referenced in Section 8.1(b)) shall survive the Closing. Notwithstanding any other provision of this Section 8.6(c), so long as a Buyer Indemnitee or Equity Holder Indemnitee provides a Claim Notice with respect to a Claim on or before the expiration of the applicable periods set forth in this Section 8.6(c), such Buyer Indemnitee or Equity Holder Indemnitee shall be entitled to pursue its rights to indemnification with respect to such Claim after the expiration of the applicable periods set forth in this Section 8.6(c).

          (d) In the absence of fraud (i) each party’s indemnification obligations under this Article VIII shall be the other parties’ sole and exclusive remedy from and after the Closing with respect to any claim for Damages arising from this Agreement, and (ii) each Buyer Indemnitee’s sole recourse with respect to Claims made under this Article VIII shall be the Escrow Amount.

          (e) For the purposes of this Article VIII, in determining whether there has been a breach of a representation or warranty, or the amount of any Damages related to a breach of a representation or warranty, the qualifications as to the materiality of such matters (or words of similar import) (including “Material Adverse Effect”) set forth in the representations and warranties shall be disregarded. The amount of any claim for indemnification payable under this Article VIII shall be reduced by any insurance proceeds (net of increased premiums or retentions related to such recovery) and any Tax benefit actually received on account thereof. Each party hereto agrees to promptly make a claim against any applicable insurance policy (other than the ESOP, which does not have an applicable insurance policy) with respect to any amount payable under this Article VIII.

          (f) In no event shall any party be liable for indirect, special, incidental, consequential or punitive damages of any character in connection with this Agreement. The term “consequential damages” shall include, but not be limited to, loss of anticipated profits, business interruption, loss of revenue, cost of capital, loss or damage to property or equipment, or loss of reputation.

          (g) Each party agrees to use commercially reasonable efforts to minimize all Damages for which it may seek indemnification from any other party pursuant to this Article VIII, and consistent with the foregoing to minimize the amount of such indemnification obligation by reasonably pursuing in its judgment the maximum possible insurance recovery or recovery from other available sources with respect to such Damages and nothing herein will in any way diminish any party’s common law duty to mitigate its Damages.

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ARTICLE IX
TERMINATION; AMENDMENT; WAIVER

          Section 9.1. Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time:

          (a) by mutual written consent of Parent and the Company authorized by their respective boards of directors (or similar governing body) at any time prior to the Closing;

          (b) by Parent and Acquisition Sub or the Company if (i) any United States Governmental Authority shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action is or shall have become nonappealable, or (ii) the Merger has not been consummated by December 15, 2005 (the “Outside Date”); provided, that no party may terminate this Agreement pursuant to this clause (ii) if such party’s failure to fulfill any of its obligations under this Agreement shall have been the reason that the Effective Time shall not have occurred on or before said date.

          (c) by the Company if (i) there shall have been a breach of any representation or warranty on the part of Parent or Acquisition Sub set forth in this Agreement, or if any such representation or warranty of Parent or Acquisition Sub shall have become untrue, in either case such that the conditions set forth in Section 7.2(a) would be incapable of being satisfied by the Outside Date or (ii) there shall have been a breach in any material respect by Parent or Acquisition Sub of any of their respective covenants or agreements hereunder, and Parent or Acquisition Sub, as the case may be, has not cured such breach within 20 Business Days after written notice by the Company thereof; provided, that the Company has not breached any of its obligations hereunder; or

          (d) by Parent and Acquisition Sub (i) there shall have been a breach of any representation or warranty on the part of the Company set forth in this Agreement, or if any such representation or warranty of the Company shall have become untrue, in either case such that the conditions set forth in Section 7.3(a) would be incapable of being satisfied by the Outside Date; or (ii) there shall have been a breach in any material respect by the Company of its covenants or agreements hereunder, and the Company or has not cured such breach within 20 Business Days after written notice by Parent or Acquisition Sub thereof; provided, that neither Parent or Acquisition Sub has breached any of its respective obligations hereunder;

          (e) by Parent and Acquisition Sub if, since October 31, 2004, there shall have been any Material Adverse Effect;

          (f) by the Company or Parent if the Company receives a Superior Proposal and resolves to accept or accepts such Superior Proposal; provided that the Company’s right to terminate this Agreement pursuant to this Section 9.1(f) is conditioned upon the Company having first provided three (3) days’ prior written notice to Parent of its decision to accept such Superior Proposal, and during such three (3) day period negotiated with Parent in good faith to amend this Agreement such that the terms hereof are superior to such Superior Proposal; or

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          (g) by Parent and Acquisition Sub or the Company if the Company has failed to obtain the Required Stockholders Approval, or by Parent or Acquisition Sub if the Company has failed to call a Stockholders Meeting within 30 days following the date hereof or has failed to hold a meeting within 60 days following the date hereof.

          Section 9.2. Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become void and have no effect, except for the provisions of this Section 9.2, Section 6.9 relating to public announcements, Section 9.3 relating to fees and expenses, Section 11.4 relating to governing law, Section 11.5 relating to consent to jurisdiction and Section 11.6 relating to waiver of jury trials, and except that such termination shall not relieve any party then in breach of any representation, warranty, covenant or agreement contained herein from liability with respect to such breach. In the event of any termination of this Agreement under circumstances in which any amounts are due and payable to JP Morgan Securities, Inc. under the Bond Term Sheet, all such amounts shall be promptly paid by Parent to JP Morgan Securities, Inc. or reimbursed to the Company in the event such amounts have already been paid; provided, that all such amounts shall be included in “Parent Expenses” as defined below.

          Section 9.3. Fees and Expenses.

          (a) Except as otherwise expressly provided in this Agreement or the other Transaction Documents, each of the parties hereto will bear all legal, accounting, investment banking and other expenses incurred by it or on its behalf in connection with any due diligence investigation, or the negotiation, execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby.

          (b) If Parent and Acquisition Sub or the Company terminates this Agreement for any reason other than a termination by (i) the Company under Section 9.1(c) or (ii) by either party under Section 9.1(b)(ii) if at the time of such termination all of the conditions to Closing, other than the condition set forth in Section 7.3(n), shall have been satisfied, and, within 12 months following such termination, the Company enters into an agreement with respect to an Alternative Transaction, then the Company shall pay to Parent within three (3) Business Days after consummation of such Alternative Transaction, an amount equal to (i) a fee equal to $12,900,000 (the “Fee”), which amount shall be payable in immediately available funds, plus (ii) Parent’s and its Affiliates’ actual and reasonable out of pocket expenses incurred in connection with the transactions contemplated hereby, including in connection with preparing and negotiating this Agreement, carrying out its due diligence review of the Company and the Company’s assets and liabilities (including, without limitation, in connection with each of the foregoing, regulatory filing fees, due diligence costs, title and survey costs, reasonable attorneys’, accounting and any other professional fees and expenses) (collectively, the “Parent Expenses”); provided that in no event shall the Parent Expenses owed by the Company to Parent pursuant to this Section 9.3(b) exceed $1.5 million in the aggregate.

          (c) At the Effective Time, Argo-Tech shall pay or reimburse Parent for all Parent Expenses incurred in connection with the Merger and the other transactions contemplated by this Agreement.

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          Section 9.4. Amendment. This Agreement may be amended only by an instrument in writing signed on behalf of the parties hereto.

          Section 9.5. Extension; Waiver. At any time prior to the Effective Time, each party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document, certificate or writing delivered pursuant hereto or (c) waive compliance by the other party with any of the agreements or conditions contained herein. Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in an instrument, in writing, signed on behalf of such party. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights.

ARTICLE X
TAX MATTERS

          Section 10.1. Tax Sharing Agreements. Any Tax sharing agreement or arrangement between any Person and the Company or its Subsidiaries shall be terminated as of the Effective Time and, after the Effective Time, the Company and its Subsidiaries shall not be bound thereby or have any liability thereunder.

          Section 10.2. Transfer Taxes. Any Transfer Taxes of Parent, the Company or any Subsidiaries arising out of or in connection with the transactions contemplated by this Agreement shall be paid by Parent when due, and Parent shall, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes. If required by applicable law, the Company shall reasonably cooperate in the preparation, execution and filing of, all Tax Returns, applications or other documents regarding any Transfer Taxes that become payable in connection with the Merger.

ARTICLE XI
MISCELLANEOUS

          Section 11.1. Entire Agreement; Assignment. This Agreement (including the Schedules hereto) and the other Transaction Documents (a) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between (or among) the parties with respect to the subject matter hereof, including that certain letter agreement, dated August 26, 2005, by and among the Company, Greenbriar equity Group LLC and Vestar Capital Partners IV, L.P. and (b) shall not be assigned by operation of law or otherwise; provided, however, that upon notice to the Company and the Stockholders’ Representative and without releasing Parent and Acquisition Sub from any of their obligations or liabilities hereunder, Parent and Acquisition Sub may assign or delegate any or all of their respective rights or obligations under this Agreement (i) to any Affiliate of Parent or Acquisition Sub or, (ii) after the Closing Date, to any Person with or into which Parent, Acquisition Sub or any parent company of Parent merges or consolidates, or to whom Parent sells substantially all of the assets of the Company and its Subsidiaries or a majority of the outstanding capital stock of the Surviving Corporation; provided, however, that Parent, or the surviving corporation into which Parent merges or consolidates or the Person to whom Parent sells the assets or stock of the Surviving Corporation,

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remains primarily liable for its obligations hereunder and such surviving corporation has sufficient assets to consummate the transactions contemplated herein.

          Section 11.2. Validity. If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and, to such end, the provisions of this Agreement are agreed to be severable.

          Section 11.3. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by confirmed facsimile, by nationally-recognized overnight courier or by registered or certified mail (postage prepaid, return receipt requested) to each other party as follows:

if to Parent, Acquisition Sub or the Surviving Corporation:	V.G.A.T. Investors, LLC c/o Vestar Capital Partners IV, L.P. 245 Park Avenue New York, NY 10167 Telecopier:(212) 808-4922 Attention: John Woodard, Managing Director and Attention: General Counsel
with a copy (which shall not constitute notice to any of Parent, Acquisition Sub or the Surviving Corporation) to:	Kirkland & Ellis LLP Citigroup Center 153 East 53rd Street New York, NY 10022 Telecopier: (212) 446-4900 Attention: Michael Movsovich, Esq.
if to the Company or Argo-Tech to:	AT Holdings Corporation 23555 Euclid Avenue Cleveland, OH 44117 Telecopier:(216) 579-0212 Attention: Michael Lipsomb and Paul R. Keen Esq.

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with a copy (which shall not constitute notice to the Company) to:	Jones Day North Point 901 Lakeside Avenue Cleveland, OH 44114
	Telecopier: (216) 579-0212 Attention: Charles W. Hardin, Jr., Esq.
If to the ESOP or the ESOP Trustee to:	GREATBANC TRUST COMPANY 1301 West 22nd Street Suite 800 Oak Brook, IL 60523 Telecopier: (630) 571-0599 Attention: Marilyn M. Marchetti
With a copy (which shall not constitute notice to the ESOP or ESOP Trustee) to:	Morgan, Lewis & Bockius LLP 77 West Wacker Driver 6th Floor Chicago, IL 60601 Telecopier: (312) 324-1001 Attention: David Ackerman, Esq.

or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

          Section 11.4. Governing Law. This Agreement, and all claims arising in whole or in part out of, related to, based upon, or in connection herewith or the subject matter hereof will be governed by and construed and enforced in accordance with the domestic substantive laws of the State of New York for contracts made and to be performed solely within such state, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.

          Section 11.5. Consent to Jurisdiction. Each party to this Agreement, by its execution hereof, hereby (a) irrevocably submits to the exclusive jurisdiction of the United States District Court located in the State of New York, County of New York for the purpose of any and all actions, suits or proceedings arising in whole or in part out of, related to, based upon or in connection with this Agreement or the subject matter hereof, (b) waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (c) agrees not to commence any such action other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such

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action to any court other than one of the above-named courts, whether on the grounds of forum non conveniens or otherwise. Each party hereby (x) consents to service of process in any such action in any manner permitted by New York law; (y) agrees that service of process made in accordance with clause (x) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 11.3 hereof, will constitute good and valid service of process in any such action; and (z) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (x) or (y) does not constitute good and valid service of process.

          Section 11.6. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE OR IN PART UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.6 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

          Section 11.7. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns and, except as provided in Article II and Section 6.11, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

          Section 11.8. Specific Performance. The parties hereby acknowledge and agree that the failure of any party to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part in accordance with the terms and conditions of this Agreement to consummate the Merger, will cause irreparable injury to the other parties, for which damages, even if available, will not be an adequate remedy. Accordingly, each party hereby consents to the issuance of injunctive relief by any court of competent jurisdiction to compel performance of such party’s obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder.

          Section 11.9. Counterparts. This Agreement may be executed by facsimile in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

          Section 11.10. Negotiation of Agreement. Each of the parties acknowledges that it has been represented by independent counsel of its choice throughout all negotiations that have preceded the execution of this Agreement and that it has executed the same with consent and upon the advice of said independent counsel. Each party and its counsel cooperated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto will be deemed the work product of the parties and may not be construed

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against any party by reason of its preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against the party that drafted it is of no application and is hereby expressly waived.

[Signature Pages Follow]

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          IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf as of the day and year first above written.

AT HOLDINGS CORPORATION
By:	/s/ Michael S. Lipscomb
	Name: Michael S. Lipscomb
	Title: President and CEO
ARGO-TECH CORPORATION
By:	/s/ Michael S. Lipscomb
	Name: Michael S. Lipscomb
	Title: President and CEO
GREATBANC TRUST COMPANY, IN ITS CAPACITY AS TRUSTEE OF THE ARGO-TECH CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
By:	/s/ Marilyn Marchetti
	Name: Marilyn Marchetti
	Title: Senior Vice President
V.G.A.T. INVESTORS, LLC
By:	/s/ John Woodard
	Name: John Woodard
	Title:
VAUGHN MERGER SUB, INC.
By:	/s/ John Woodard
	Name: John Woodard
	Title:

EX-2.1

Exhibit 2.1

EX-2.2

EXHIBIT 2.2

FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER

     THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this “Amendment”) is made and entered into as of October 26, 2005 by and among AT HOLDINGS CORPORATION, a Delaware corporation (the “Company”), ARGO-TECH CORPORATION, a Delaware corporation (“Argo-Tech”), GREATBANC TRUST COMPANY, an Illinois corporation (the “Trustee”), in its capacity as trustee for The Argo-Tech Corporation Employee Stock Ownership Plan, V.G.A.T. INVESTORS, LLC, a Delaware limited liability company (“Parent”), and VAUGHN MERGER SUB, INC., a Delaware corporation (“Acquisition Sub”).

     WHEREAS, the Company, Argo-Tech, the Trustee, Parent and Acquisition Sub are parties to that certain Agreement and Plan of Merger, dated as of September 13, 2005 (the “Original Agreement,” and, as modified by this Amendment, the “Agreement”), pursuant to which Parent is to acquire the Company through the merger of Acquisition Sub with and into the Company; and

     WHEREAS, the parties wish to amend the Original Agreement in the respects, and only in the respects, set forth herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

     ARTICLE 1. Defined Terms. Capitalized terms used herein and not defined shall have the respective meanings given to such terms in the Original Agreement.

     ARTICLE 2. Amendments to Original Agreement and Disclosure Schedules.

          2.1 Amendment to Section 1.1. Section 1.1 of the Original Agreement is hereby amended by inserting therein the following definition immediately prior to the definition of “Rollover Amount”:

     “Restricted Subsidiary” shall have the meaning set forth in the Indenture.”

          2.2 Amendment to Section 2.3. Section 2.3 of the Original Agreement is hereby amended by deleting clauses (i) and (ii) in the first sentence of paragraph (c) thereof and replacing such clauses with the following in substitution therefor:

“(i) a certificate, duly executed by an authorized executive officer of the Company, dated the Closing Date, certifying that the conditions specified in Sections 7.1(c) through (f) and Sections 7.3(a) through (t) (in each case, to the extent such conditions relate to the Company) have been fulfilled; (ii) a certificate, duly executed by the Trustee, dated the Closing Date, certifying that the conditions specified in Sections 7.1(c) through (f) and Sections 7.3(a) through (t) (in each case, to the extent such conditions relate to the ESOP) have been fulfilled;”

          2.3 Amendments to Section 2.8.

     (a) Paragraph (b) of Section 2.8 of the Original Agreement is hereby amended by deleting the second sentence thereof in its entirety and replacing it with the following in substitution therefor:

“Such contribution and issuance is intended to qualify as a tax free contribution pursuant to Section 721 of the Code.”

     (b) Paragraph (c) of Section 2.8 of the Original Agreement is hereby further amended by adding a new subparagraph (viii) at the end thereof, which shall read as follows:

“(viii) Notwithstanding the foregoing provisions of this paragraph (c) and the provisions of subparagraphs (b)(i) and (b)(iii) of Section 2.10(b), the Company may, prior to the Closing and in lieu of appointment of a Paying Agent as provided for herein, distribute the Letters of Transmittal directly to the holders of Common Stock and the Warrant and, in such event, the Company, as agent for Parent, following receipt by the Company of such portion of the Merger Consideration from Parent, shall cause the portion of the Merger Consideration payable to each such Equity Holder at the Effective Time to be transmitted to such Equity Holder promptly following the later of the Effective Time and receipt by the Company of an executed Letter of Transmittal from such Equity Holder, in each case, in accordance with the delivery instructions provided by the Equity Holders with such Letters of Transmittal.”

          2.4 Amendments to Section 2.12.

     (a) Paragraph (a) of Section 2.12 of the Original Agreement is hereby amended by deleting the first four lines thereof in their entirety and replacing them with the following:

“(a) Promptly following the consummation of any Argo-Tracker Disposition or liquidation of Argo-Tracker Corporation pursuant to Section 6.7(c), the Surviving Corporation shall distribute any proceeds of such disposition or liquidation, net of all Taxes and transaction expenses (“Argo-Tracker Proceeds”), as follows:”

     (b) Paragraph (a) of Section 2.12 of the Original Agreement is hereby further amended by adding the phrase “, less applicable withholding of Tax,” immediately following the phrase “20% of all Excess Proceeds” in the first line of subparagraph (iii)(A) thereof.

     (c) Paragraph (b) of Section 2.12 of the Original Agreement is hereby deleted in its entirety and replaced with the following in substitution therefor:

“(b) With respect to Equity Holders that hold shares of Common Stock or the Warrant, the aggregate Proportionate Share of all Argo-Tracker Proceeds payable

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pursuant to Section 2.12(a) above in respect of such holders’ Common Stock and Warrants shall, if a Paying Agent is appointed by the Company pursuant to Section 2.8 above, be delivered to the Paying Agent by wire transfer pursuant to the Wire Transfer Instructions for the benefit of such Equity Holders (and the Paying Agent will promptly pay to each such holder the amount to which it is entitled pursuant to Section 2.12(a) above with respect to such holder’s Common Stock and the Warrant) and, if a Paying Agent is not so appointed, then the respective Proportionate Shares of Argo-Tracker Proceeds payable in respect of Common Stock and Warrants shall be paid by the Surviving Corporation directly to such Equity Holders in accordance with the wire transfer instructions provided by such Equity Holders with their respective Letters of Transmittal. With respect to Equity Holders that hold In-the-Money Options, SARs, or SERP Awards, the Proportionate Share of all Argo-Tracker Proceeds payable pursuant to Section 2.12(a) above in respect of such holder’s In-the-Money Options, SARs or SERP Awards will be paid by check through the Surviving Corporation’s payroll system. In addition, all Argo-Tracker Proceeds distributed to officers of Argo-Tracker Corporation pursuant to Sections 2.12(a)(iii)(A) and (B) above will be paid by check through the Surviving Corporation’s payroll system. For the avoidance of doubt, Equity Holders shall have no rights with respect to Argo-Tracker other than the right to receive a portion of the Argo-Tracer Proceeds upon the disposition or liquidation of Argo-Tracker as described in this Section 2.12, and under no circumstances will any Equity Holder be deemed to own, have any interest in or other rights with respect to (including rights to vote or receive dividends), any shares of capital stock of Argo-Tracker.”

          2.5 Amendments to Section 6.1.

     (a) Paragraph (b) of Section 6.1 of the Original Agreement is hereby deleted in its entirety and replaced with the following in substitution therefor:

“(b) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property) on any class of Capital Stock of the Company or its Subsidiaries, or redeem or repurchase any shares of Capital Stock of the Company or its Subsidiaries, provided that Restricted Subsidiaries shall be permitted to declare, set aside and pay dividends or other distributions on shares of their Capital Stock to Argo-Tech and to other Restricted Subsidiaries;”

     (b) Paragraph (d) of Section 6.1 is hereby deleted in its entirety and replaced with the following in substitution therefor:

“(d) sell, transfer, license, assign, pledge or otherwise dispose of any material assets of the Company and its Subsidiaries or create an Encumbrance (other than a Permitted Encumbrance) with respect to any of its material assets, or fail to maintain, or permit the loss, lapse or abandonment of, any material Company Intellectual Property, provided that Restricted Subsidiaries shall be permitted to make transfers of their respective property or assets to Argo-Tech or to other Restricted Subsidiaries;”

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     (c) Paragraph (n) of Section 6.1 is hereby amended by deleting clause (iii) thereof and replacing it with the following in substitution therefor:

“(iii) make any loans, advances or capital contributions to or investments in any other Person, except for loans or advances to employees, in each case in the Ordinary Course, and except for loans or advances made by Restricted Subsidiaries to Argo-Tech or to other Restricted Subsidiaries, provided that the Company may make investments in Argo-Tracker Corporation (and for the avoidance of doubt, to the extent such investments exceed $1,000,000, they will be deemed Closing Dividends/Investments hereunder);”

     (d) Paragraph (p) of Section 6.1 is hereby deleted in its entirety and replaced with the following in substitution therefor:

“(p) discharge or satisfy any material Encumbrance, or obligation or liability in excess of $250,000, other than current liabilities payable in the Ordinary Course, and other than obligations owed by a Restricted Subsidiary to Argo-Tech or to another Restricted Subsidiary;”

          2.6 Amendment to Section 7.1. Section 7.1 of the Original Agreement is hereby amended by deleting paragraph (g) thereof in its entirety.

          2.7 Amendment to Section 8.5. Section 8.5 of the Original Agreement is hereby amended by deleting paragraph (b) thereof in its entirety and replacing it with the following in substitution therefor:

“On such date as is the 12-month anniversary of the Closing Date, all amounts held in escrow, less any portion of such amounts subject to any outstanding unresolved Claim Notice delivered on or prior to such date, shall be disbursed in accordance with the terms of the Escrow Agreement.”

     ARTICLE 3. Miscellaneous.

          3.1 Governing Law. This Amendment, and all claims arising in whole or in part out of, related to, based upon, or in connection herewith or the subject matter hereof will be governed by and construed and enforced in accordance with the domestic substantive laws of the State of New York for contracts made and to be performed solely within such state, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.

          3.2 Consent to Jurisdiction. Each party to this Amendment, by its execution hereof, hereby (a) irrevocably submits to the exclusive jurisdiction of the United States District Court located in the State of New York, County of New York for the purpose of any and all actions, suits or proceedings arising in whole or in part out of, related to, based upon or in connection with this Amendment or the subject matter hereof, (b) waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or

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otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Amendment or the subject matter hereof may not be enforced in or by such court, and (c) agrees not to commence any such action other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action to any court other than one of the above-named courts, whether on the grounds of forum non conveniens or otherwise. Each party hereby (x) consents to service of process in any such action in any manner permitted by New York law; (y) agrees that service of process made in accordance with clause (x) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 11.3 of the Agreement, will constitute good and valid service of process in any such action; and (z) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (x) or (y) does not constitute good and valid service of process.

          3.3 WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE OR IN PART UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS AMENDMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 3.3 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

          3.4 Headings. The section headings hereof are for convenience of reference only and are to be given no effect in the construction, interpretation or effect hereof.

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

          3.6 Notices. Any notices to be given under this Amendment shall be given pursuant to Section 11.3 of the Agreement, which is hereby incorporated by reference.

[Signatures appear on the following page.]

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     IN WITNESS WHEREOF, the undersigned have caused this First Amendment to Agreement and Plan of Merger to be duly executed and delivered as of the date first above written.

AT HOLDINGS CORPORATION
By:	/s/ Michael S. Lipscomb
	Name:	Michael S. Lipscomb
	Title:	President and CEO
ARGO-TECH CORPORATION
By:	/s/ Michael S. Lipscomb
	Name:	Michael S. Lipscomb
	Title:	President and CEO
GREATBANC TRUST COMPANY, IN ITS CAPACITY AS TRUSTEE OF THE ARGO- TECH CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
By:	/s/ Marilyn Marchetti
	Name:	Marilyn Marchetti
	Title:	Senior Vice President
V.G.A.T. INVESTORS, LLC
By:	/s/ Steven Silver
	Name:	Steven Silver
	Title:	Vice President
VAUGHN MERGER SUB, INC.
By:	/s/ Steven Silver
	Name:	Steven Silver
	Title:	Vice President

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EX-4.2

EXHIBIT 4.2

FIRST SUPPLEMENTAL INDENTURE

          THIS FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of October 25, 2005, is made by and among Argo-Tech Corporation, a Delaware corporation (the “Company”), Argo-Tech Corporation (Aftermarket), a Delaware corporation (“Aftermarket”), Argo-Tech Corporation (HBP), a Delaware corporation (“HBP”), Argo-Tech Corporation (OEM), a Delaware corporation (“OEM”), Argo-Tech Corporation Costa Mesa, a California corporation (“Costa Mesa”) and Durodyne, Inc., an Arizona corporation (“Durodyne,” and together with Aftermarket, HBP, OEM and Costa Mesa, the “Subsidiary Guarantors”), and BNY Midwest Trust Company, an Illinois trust company organized under the laws of the State of Illinois (the “Trustee”), as Trustee.

RECITALS:

     A. The Company, the Subsidiary Guarantors, and the Trustee are parties to an Indenture dated as of June 23, 2004 (the “Indenture”).

     B. Pursuant to the Indenture, the Company issued and the Trustee authenticated and delivered an aggregate principal amount of $250,000,000 of the Company’s 9¹/4% Senior Notes due 2011.

     C. Section 9.2 of the Indenture provides, among other things, that with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (the “Requisite Consents”), the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities, subject to certain exceptions specified in Section 9.2 of the Indenture.

     D. On October 6, 2005, the Company mailed a Consent Solicitation Statement (as amended, modified, or supplemented, the “Solicitation Statement”) to each Holder.

     E. The Company has obtained the Requisite Consents to amend the Indenture in certain respects (the “Proposed Amendments”).

     F. This Supplemental Indenture has been duly authorized by all necessary corporate action on the part of the Company and the Subsidiary Guarantors.

     G. The Company has delivered, or caused to be delivered, to the Trustee an Officers’ Certificate and an Opinion of Counsel meeting the requirements of Section 9.6 of the Indenture.

     NOW THEREFORE, each party agrees for the benefit of the other parties and for the equal and ratable benefit of all Securityholders, as follows:

AGREEMENT:

     Section 1. Definitions. Capitalized terms used in this Supplemental Indenture and not otherwise defined herein have the meanings given to them in the Indenture.

     Section 2. Amendments.

     2.1 Amendment of Certain Sections of the Indenture. Subject to Section 3.1 hereof, the Indenture is hereby amended in the following respects:

(a) Section 3.3 of the Indenture is hereby amended to read in its entirety as follows:

     SECTION 3.3. Limitation on Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries, directly or indirectly, to:

(1) declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) except:

(a)	dividends or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock of the Company; and
(b)	dividends or distributions payable to the Company or a Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of common Capital Stock on a pro rata basis);

(2)	purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect parent of the Company held by Persons other than the Company or a Restricted Subsidiary (other than in exchange for Capital Stock of the Company (other than Disqualified Stock));
(3)	purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations or Guarantor Subordinated Obligations (other than the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement); or
(4)	make any Restricted Investment in any Person;

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(any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) shall be referred to herein as a “Restricted Payment”), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:

(a)	a Default shall have occurred and be continuing (or would result therefrom); or
(b)	the Company is not able to Incur an additional $1.00 of Indebtedness pursuant to the first paragraph under Section 3.2 after giving effect, on a pro forma basis, to such Restricted Payment; or
(c)	the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date (excluding the Restricted Payments permitted by clauses (1), (2), (3), (4), (7), (8), (9)(a), (9)(c), (9)(d), (9)(e), 9(g) and (11) of the following paragraph only) would exceed the sum of:

(i)	50% of Consolidated Net Income for the period (treated as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are in existence (or, in case such Consolidated Net Income is a deficit minus 100% of such deficit);
(ii)	100% of the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to the Issue Date (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of the Company or an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination);
(iii)	the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company or its Restricted Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair market value of any other property, distributed by the Company upon such conversion or exchange); and

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(iv) the amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries in any Person resulting from:

(A)	repurchases or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to an unaffiliated purchaser, repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to the Company or any Restricted Subsidiary; or
(B)	the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary,

which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Consolidated Net Income.

     The provisions of the preceding paragraph shall not prohibit:

(1)

any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock, Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that the Net Cash Proceeds from such sale of Capital Stock will be excluded from clause (c)(ii) of the preceding paragraph;

(2)

any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Company or any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Guarantor Subordinated Obligations made by exchange for or out of the proceeds of the substantially concurrent sale of Guarantor Subordinated Obligations that, in each case, is permitted to be Incurred

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	pursuant to Section 3.2 and that in each case constitutes Refinancing Indebtedness;
(3)	any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Company or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to Section 3.2 and that in each case constitutes Refinancing Indebtedness;
(4)	so long as no Default or Event of Default has occurred and is continuing, any purchase or redemption of Subordinated Obligations or Guarantor Subordinated Obligations of a Subsidiary Guarantor from Net Available Cash to the extent permitted under Section 3.5 below;
(5)	dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision;
(6)	so long as no Default or Event of Default has occurred and is continuing,

(a)

the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of the Company or any Restricted Subsidiary or any parent of the Company held by any existing or former directors, employees or officers of the Company or Holdings or any Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate employees; provided that such redemptions or repurchases pursuant to this clause shall not exceed $3.5 million in the aggregate during any calendar year (with amounts not being used in any calendar year being carried forward to subsequent calendar years; provided that the aggregate amount in any calendar year may not exceed $10.0 million);

(b)

the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock of the Company, any Restricted Subsidiary or Holdings held by any existing or former directors, employees or officers of the Company or Holdings or any Subsidiary of the Company or their assigns, estates or heirs, made by exchange for Subordinated Obligations of the Company in connection with the repurchase provisions of the Company’s Employee Stock Ownership Plan and Trust Agreement, as amended, as in effect on the Issue Date and only to the extent of amounts mandatorily required to be purchased, redeemed, acquired, cancelled or retired by such Employee Stock Ownership Plan and Trust Agreement, as amended, as in effect on the Issue Date; and

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(c) loans or advances to employees or directors of the Company or Holdings or any Subsidiary of the Company the proceeds of which are used to purchase Capital Stock of the Company or Holdings, in an aggregate principal amount not in excess of $1.0 million at any one time outstanding; provided, however, that the Company and its Subsidiaries shall comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith relating to such loans and advances;

(7)	so long as no Default or Event of Default has occurred and is continuing, the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued in accordance with the terms of this Indenture to the extent such dividends are included in the definition of “Consolidated Interest Expense”;
(8)	repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof;
(9)	cash dividends or loans to Holdings in amounts equal to:

(a)	the amounts required for Holdings to pay any Federal, state or local income taxes to the extent that such income taxes are directly attributable to the income of the Company and its Restricted Subsidiaries;
(b)	to the extent of amounts actually received by the Company from its Unrestricted Subsidiaries, the amounts required for Holdings to pay any Federal, state or local income taxes to the extent that such income taxes are directly attributable to the income of such Unrestricted Subsidiaries;
(c)	the amounts required for Holdings to pay franchise taxes and other fees required to maintain its legal existence;
(d)	an amount not to exceed $0.5 million in any fiscal year to permit Holdings to pay its corporate overhead expenses Incurred in the ordinary course of business, and to pay salaries or other compensation of employees who perform services for both Holdings and the Company;
(e)	an amount not to exceed $57.6 million to enable Holdings to redeem all of the outstanding shares of Holdings’ Series A Cumulative Exchangeable Redeemable Preferred Stock on the Issue Date;
(f)	the amounts required to enable Holdings to effect any transaction permitted under clause (6) of this paragraph, to the extent permitted by such clause, in lieu of the Company or any Restricted Subsidiary; and
(g)	an amount not to exceed $5.0 million in connection with the consummation of the Agreement and Plan of Merger, dated September 13,

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2005, by and among Holdings, V.G.A.T. Investors, LLC, Vaughn Merger Sub, Inc., the Company and GreatBanc Trust Company, as Trustee of the Argo-Tech Corporation Employee Stock Ownership Plan and Trust.

(10)

the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (i) at a purchase price not greater than 101% of the principal amount of such Subordinated Obligation in the event of a Change of Control in accordance with provisions similar to Section 3.10 or (ii) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to Section 3.5; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Company has made the Change of Control Offer or Asset Disposition Offer, as applicable, as provided in such covenant with respect to the Securities and has completed the repurchase or redemption of all Securities validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer; and

(11)

Restricted Payments in an amount not to exceed $5.0 million.

     The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value is estimated in good faith by the Board of Directors of the Company to exceed $20.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 3.3 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture.

(b) Section 3.11 of the Indenture is hereby amended to read in its entirety as follows:

          SECTION 3.11. SEC Reports. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, to the extent permitted by the Exchange Act, the Company shall file with the SEC, and make available to the Trustee and the registered Holders of the Securities, the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that are specified in Sections 13 and 15(d) of the Exchange Act within the time periods specified therein. In the event that the Company is not permitted to file such reports, documents and information with the SEC pursuant to the Exchange Act, the Company shall nevertheless make available such Exchange Act information to the Trustee and the Holders of the Securities as if the Company were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act within the time periods specified therein.

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     In addition, if at any time Holdings (1) Guarantees the obligations and liabilities of the Company hereunder (there being no obligation of Holdings to do so), (2) holds no material assets other than cash, Cash Equivalents, the Capital Stock of Argo Tracker Corporation, a wholly owned subsidiary of Holdings, and the Capital Stock of the Company or of any direct or indirect parent entity of the Company that only engages in similar activities (and performs the related incidental activities associated with such ownership) and (3) complies with the requirements of Rule 3-10 of Regulation S-X promulgated by the SEC (or any successor provision), the reports, documents and information required to be furnished to the Trustee and the registered Holders of the Securities pursuant to this covenant may, at the option of the Company, be furnished by and be those of Holdings rather than the Company.

     If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraphs shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes to the financial statements and in Management’s Discussion and Analysis of Results of Operations and Financial Condition, of the financial condition and results of operations of the Company and its Restricted Subsidiaries.

     2.2 Amendment of Certain Provisions of the Securities. Subject to Section 3.1 hereof, the Securities are hereby amended or are deemed to have been amended in the following respects: The provisions in the Securities corresponding to the provisions in the Indenture that are amended by virtue of Section 2.1 hereof are correspondingly amended in the Securities to the same extent as the Indenture is amended by Section 2.1 hereof.

     Section 3. Miscellaneous.

     3.1 Effect of Supplemental Indenture. Upon the execution and delivery of this Supplemental Indenture by the Company, the Subsidiary Guarantors, and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Supplemental Indenture shall form a part of the Indenture for all purposes, and every Securityholder holding Securities that have been heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby; provided, however, that Sections 2.1 and 2.2 hereof will not become operative unless and until the Sale, as such term is defined in the Solicitation Statement that was provided to Securityholders in connection with the Company’s solicitation of consents (the “Solicitation”) of such Securityholders to the Proposed Amendments, is consummated and the other conditions to the Solicitation are satisfied or waived.

     3.2 Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions of the Indenture shall remain in full force and effect.

     3.3 Indenture and Supplemental Indenture Construed Together. This Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this Supplemental Indenture shall henceforth be read and construed together.

     3.4 Confirmation and Preservation of the Indenture. The Indenture as supplemented by this Supplemental Indenture is in all respects confirmed and preserved.

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     3.5 Conflict with Trust Indenture Act. If any provision of this Supplemental Indenture limits, qualifies, or conflicts with any provision of the Trust Indenture Act of 1939, as amended (the “Act”), that is required under such Act to be part of and govern any provision of this Supplemental Indenture, the provision of such Act shall control. If any provision of this Supplemental Indenture modifies or excludes any provision of the Act that may be so modified or excluded, the provisions of the Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Supplemental Indenture, as the case may be.

     3.6 Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of the Company and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or adequacy of this Supplemental Indenture.

     3.7 Certain Duties and Responsibilities of the Trustee. In entering into this Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, whether or not elsewhere herein so provided, including specifically the Trustee’s rights to indemnification contained in Section 7.7 of the Indenture.

     3.8 Separability Clause. In case any provision of this Supplemental Indenture shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     3.9 Effect of Headings. The Section and Subsection headings herein are for convenience only and shall not affect the construction hereof.

     3.10 Benefits of Supplemental Indenture. Nothing in this Supplemental Indenture, the Indenture, or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder, and the Securityholders, any benefit of any legal or equitable right, remedy, or claim under the Indenture, this Supplemental Indenture, or the Securities.

     3.11 Successors and Assigns. All covenants and agreements in this Supplemental Indenture by the Company shall bind its successors and permitted assigns, whether so expressed or not.

     3.12 Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.

     3.13 Counterparts. This Supplemental Indenture may be executed in counterparts (including by means of facsimile signature pages), each of which shall be an original, but all such counterparts shall together constitute one and the same instrument.

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[Remainder of Page Blank – Signature Page Follows]

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     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date and the year first written above.

ARGO-TECH CORPORATION

ARGO-TECH CORPORATION (HBP)

ARGO-TECH CORPORATION (OEM)

ARGO-TECH CORPORATION

(AFTERMARKET)

ARGO-TECH CORPORATION COSTA MESA

DURODYNE, INC.

By:	/s/ Paul R. Keen
	Name: Paul R. Keen
	Title: Vice President

BNY MIDWEST TRUST COMPANY
By:	/s/ J. Bartolini
	Name:	J. Bartolini
	Title:	Vice President

EX-10.6

EXHIBIT 10.6

EMPLOYMENT AGREEMENT

     AGREEMENT, dated as of the 28th day of October, 2005, by and among Argo-Tech Corporation, a Delaware corporation (the “Company”), and Michael S. Lipscomb (the “Executive”).

     WHEREAS, the Company desires to employ the Executive and the Executive is willing to accept employment with the Company, all on the terms and conditions set forth below;

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1. Employment Period. Subject to the terms and conditions of this Agreement, including Section 3, the Company hereby agrees to employ the Executive, and the Executive hereby accepts employment with the Company, for the period commencing on the date hereof (the “Effective Date”) and ending as provided in the next sentence (such period, the “Employment Period”). The Employment Period shall end on the third anniversary of the date hereof; provided, that the Employment Period shall automatically be renewed for successive one-year periods, unless the Company or Executive gives the other party written notice of the election not to renew the Employment Period at least 90 days prior to the expiration of the Employment Period; provided, however, the Employment Period shall be subject to early termination as provided in Section 3 hereof.

     2. Terms of Employment.

     (a) Position and Duties. During the Employment Period, the Executive shall serve as Chief Executive Officer of the Company with the appropriate authority, duties and responsibilities as are customarily attendant to such position at other similarly situated companies with significant private equity ownership, subject, in all instances, to the general supervisory power of the Company’s board of directors (the “Board”) under applicable corporate law. During the Employment Period, the Executive shall serve as a member of the management committee of V.G.A.T. Investors, LLC (“Parent”) and the Board. Upon the termination or expiration of the Employment Period, Executive shall resign as a member of the management committee, board of directors or any equivalent body of Parent and its subsidiaries, as the case may be and such obligation to resign shall survive the termination of this Agreement.

          (i) During the Employment Period, Executive shall report solely and directly to the Board and excluding any periods of vacation and sick leave to which the Executive is entitled, Executive agrees to devote substantially all of his business time and attention to the business and affairs of the Company and to use the Executive’s reasonable best efforts to perform faithfully and efficiently the duties and responsibilities assigned to Executive hereunder; provided that Executive shall be entitled to serve on the board of directors of Argo-Tracker Corporation to the extent that the management committee of Parent determines in its reasonable discretion that such service does not materially detract from the Executive’s performance of his duties hereunder.

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          (ii) The Executive represents and warrants to the Company (A) that he is able to enter into this Agreement, that his ability to enter into this Agreement and to fully perform his duties of employment are not limited to or restricted by any agreements, understandings instruments, orders, judgments or decrees to which Executive is a party or by which he is bound, (B) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person, and (C) upon the execution and delivery of this Agreement by the Employer, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. For the purposes of this Agreement, the term “person” means any natural person, corporation, partnership, limited liability partnership, limited liability company, or any other entity of any nature.

     (b) Compensation.

          (i) Annual Base Salary. The Executive shall receive an annual base salary (as in effect from time to time, the “Annual Base Salary”) of $543,828, which Annual Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices. The Annual Base Salary will be subject to periodical review in accordance with Company policy, and the Executive’s Base Salary shall be increased annually by no less than a percentage equal to the percentage increase, if any, in the Consumer Price Index in the prior twelve month period.

          (ii) Annual Bonus. During the Employment Period, the Executive shall participate in such bonus arrangements as may be approved by the Compensation Committee of the Board (the “Compensation Committee”) based on performance criteria relating to the Company’s and the Executive’s performance to be determined by the Board on an annual basis (the aggregate of all payments made under such bonus arrangements being herein referred to as the “Annual Bonus”).

          (iii) Employee Benefit Plans. During the Employment Period, except as otherwise expressly provided herein, the Executive shall be entitled to participate in all compensation, incentive, employee benefit, welfare and other plans, practices, policies and programs and fringe benefits (collectively, “Employee Benefit Plans”) that are provided or made available by the Company generally to senior executive officers of the Company.

          (iv) Vacation. During the Employment Period, Executive shall be entitled to four (4) weeks of paid vacation during each calendar year, pro-rated, in the case of any partial year, for the actual number of days the Executive was employed by the Company during such calendar year.

          (v) Gross Up Payment. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined (as hereafter provided) that any payment by the Company to or for the benefit of the Executive made as a result of the termination by the Company without Cause of Executive’s employment with the Company and its Subsidiaries, whether paid pursuant to the terms of this Agreement or otherwise (a “Payment”), would, in connection with the change of control of the Company occurring as a result of the merger (the “Merger”) of Vaughn Merger Sub, Inc., with and into AT Holdings Corporation which was consummated on the date hereof (and not in connection with any

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subsequent change of control of the Company that occurs at any time following the consummation of the Merger), be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties are hereafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment or payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment shall be in an amount such that, after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment, such amount to be used to satisfy such Excise Tax. The Company and the Executive each shall cooperate with the other in connection with the determination of the amount of any Gross-Up Payment provided for herein. Such cooperation shall include without limitation providing the other party access to and copies of any books, records and documents in the possession of the Company or the Executive, as the case may be, that are reasonably requested by the other party.

     3. Termination of Employment.

     (a) Death, Disability or Non-renewal. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period or upon non-renewal of the Employment Period by the Company or Executive as provided in Section 1 above. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of “Disability” set forth below), it may give to the Executive written notice in accordance with Section 7(c) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the receipt of such notice by the Executive (the “Disability Effective Date”). For purposes of this Agreement, “Disability” shall mean a determination by the Board in its good faith judgment with input from appropriate medical personnel that Executive is unable to substantially perform his job responsibilities as a result of chronic illness, physical, mental or any other disability for a period of 180 days or more in any 365 consecutive day period. The Executive shall co-operate and make himself available for any medical examination reasonably required by the Company with respect to any determination of the Disability of the Executive.

     (b) With or Without Cause. The Company may terminate the Executive’s employment during the Employment Period with or without Cause. Any election by the Company to not renew the Employment Period pursuant to Section 1 will be deemed to be a termination by the Company without Cause. For purposes of this Agreement, “Cause” shall mean:

     (i) Executive is indicted or charged with, or pleads guilty or nolo contendere to, (A) a felony or (B) a crime involving moral turpitude that is either materially detrimental to the Company or that which brings the Company into public disgrace or disrepute;

     (ii) in carrying out his duties hereunder, the Executive engages in conduct that constitutes gross neglect or willful misconduct;

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          (iii) the Executive engages in willful misconduct resulting in or intended to result in direct personal gain to Executive at the Company’s expense or that brings the Company into public disgrace or disrepute, or the Executive has made, or is aware of, any material and knowing misrepresentation to Parent or any of its subsidiaries in any Transaction Document (as defined in that certain Agreement and Plan of Merger, dated the date hereof, by and among Parent, the Company, AT Holdings Corporation, Greatbanc Trust Company, Vaughn Merger Sub, Inc. and Paul R. Keen, as Stockholders’ Representative);

          (iv) the Executive breaches any material provision of this Agreement (including Section 5 hereof) or breaches in any material respect any Company policy governing employee conduct in the workplace, including without limitation, policies relating to the use of illicit drugs, alcohol abuse and sexual harassment, and such breach has not been cured prior to 30 days following notice from the Company;

          (v) the Executive’s repeated refusal to perform duties or responsibilities as reasonably directed by the Board in writing; or

          (vi) the Executive’s material breach of a fiduciary obligation to the Company or a material breach of any confidentiality or non-competition obligations.

     (c) Good Reason. The Executive’s employment may be terminated by the Executive with or without Good Reason. Any election by Executive to not renew the Employment Period pursuant to Section 1 will be deemed to be a termination by the Executive without Good Reason. For purposes of this Agreement, “Good Reason” shall mean a termination by Executive of his employment on thirty (30) days’ written notice given by him to the Company following the occurrence of any of the following events, which notice shall be given within 10 days following Executive becoming aware of such occurrence, without his express prior written consent, unless all grounds for termination shall have been fully cured prior to thirty (30) days after he gives notice to the Company requesting cure:

          (i) any failure of the Company to continue Executive as Chief Executive Officer of the Company;

          (ii) any material diminution in Executive’s responsibilities or authorities under this Agreement or the assignment to Executive of duties that are materially inconsistent with, or materially impair his ability to perform, the duties then assigned to him; or any change in the reporting structure so that Executive is required to report to any person other than the Board;

          (iii) any material breach by the Company of any of its obligations under this Agreement which has not been cured prior to 30 days following notice from Executive of such breach; or

          (iv) any failure of the Company to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of its business or assets within thirty (30) days after any reconstruction, amalgamation, combination, merger, consolidation, sale, liquidation, dissolution or similar transaction.

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     (d) Notice of Termination. Any termination by the Company or by the Executive shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 7(c) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

     (e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company other than for Disability, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, (ii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be, (iii) if the Executive’s employment is terminated by the Executive, the Date of Termination shall be thirty days after the giving of such notice by the Executive; provided that following receipt of such notice, the Company may elect to immediately terminate the Executive’s employment hereunder and such termination will still be deemed to be a termination by Executive, however, the Date of Termination shall be deemed to be date the Company terminates his employment and (iv) if the Executive’s employment is terminated as a result of non-renewal of the Employment Period by the Company or the Executive pursuant to Section 1, the last day of the then current Employment Period.

     4. Obligations of the Company upon Termination.

     (a) Death or Disability. If, during the Employment Period the Executive’s employment shall terminate on account of death or Disability the Company shall pay to the Executive or his estate:

          (i) the Executive’s Annual Base Salary through the Date of Termination within 30 days after the Date of Termination and, at the time it would otherwise be due to be paid, any Annual Bonus for any fiscal year of the Company that has ended prior to the year in which such termination occurs (“Prior Year’s Bonus”) to the extent not theretofore paid; and

          (ii) an amount equal to the product of (x) the Annual Bonus that would have been paid to the Executive for such fiscal year and (y) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is 365, to the extent not theretofore paid (such amount, the “Accrued Bonus”), at such time as the Annual Bonus would have been paid in the ordinary course;

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          (iii) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive or his estate or beneficiaries (A) a cash lump sum amount equal to the product of (x) the Executive’s Annual Base Salary and (y) a fraction, the numerator of which is the number of Executive’s accrued but unused vacation days and the denominator of which is 365 (the “Accrued Vacation Amount”) and (B) any other amounts (including any unreimbursed business expenses) or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies through the Date of Termination (the Accrued Vacation Amount and such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

     (b) By the Company for Cause; By the Executive Other than for Good Reason. If the Executive’s employment is terminated for Cause or the Executive terminates his employment without Good Reason during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive, to the extent not previously paid, (i) his Annual Base Salary through the Date of Termination, (ii) his Prior Year’s Bonus and (iii) the Other Benefits.

     (c) By the Company Other than for Cause, Death or Disability; By the Executive for Good Reason. If, during the Employment Period the Executive’s employment is terminated by the Executive for Good Reason or by the Company other than for Cause, other than on account of death or Disability:

          (i) subject to continued compliance by the executive of the covenants set forth in Section 5 hereof, the Company shall pay to the Executive:

     (A) the Executive’s Annual Base Salary through the Date of Termination within 30 days after the Date of Termination and any Prior Year’s Bonus to the extent not theretofore paid; and

     (B) the amount equal to the sum of the Executive’s current Annual Base Salary and Annual Bonus for the preceding fiscal year, payable over the one year period following termination in regular equal installments in accordance with the Company’s general payroll practices;

          (ii) the Company shall provide the Executive with the Other Benefits; and

          (iii) the Company shall provide the Executive continued coverage under the Company’s group health plans until the earlier of (x) the first anniversary of the Date of Termination and (y) the date Executive becomes eligible for comparable coverage under health plans of any successor employer (and, for the avoidance of doubt, the termination date for COBRA purposes will be the first anniversary of the Date of Termination).

     (d) Release. The severance payments and such benefits to be provided by the Company pursuant to this Section 4 shall (i) be in lieu of any other payments by the Company to Executive and (ii) be subject to Executive’s execution (other than in the case of Executive’s death) of a release agreement in substantially the form attached hereto as Exhibit A,

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     5. Noncompetition; Nonsolicitation; Etc. Executive acknowledges that in the course of his employment with the Company he will become familiar with the Company’s and its subsidiaries’ trade secrets and other confidential information concerning the Company and such subsidiaries (collectively, the “Confidential Information”) and that his services will be of special, unique and extraordinary value to the Company and its subsidiaries. Therefore, Executive agrees and acknowledges that:

     (a) Noncompetition. During the Non-Competition Period (as defined below), Executive shall not, directly or indirectly, either for himself or for any other individual, corporation, partnership, joint venture or other entity, participate in any business (including, without limitation, any division, group or franchise of a larger organization) anywhere in the Non Competition Area (defined below) which engages or which proposes to engage in the promotion, development, sale, distribution or production of (i) any aircraft engine fuel pumps, (ii) commercial and military airframe products and services, (iii) aerial refueling pumps, (iv) ground fueling components, (v) fuel management systems, (vi) cryogenic pumps, or (vii) any products or product lines that compete with any of the foregoing or other products or product lines of the Company at any time during the Executive’s employment with the Company or at the time of Executive’s termination of employment with the Company. For purposes of this Agreement, the term “participate in” shall include, without limitation, having any direct or indirect interest in any corporation, partnership, joint venture or other entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any individual, corporation, partnership, joint venture and other business entity (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise). The obligations and covenants contained in this Section 5(a) shall endure so long as Employee is employed by the Company and for a period of two years thereafter. (the “Non-Competition Period”) For the purposes of this Agreement, “Non Competition Area” means anywhere in the world. Notwithstanding the above, Executive shall not be prohibited from owning up to 3% of the outstanding stock of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

     (b) Nonsolicitation. During the Non-Competition Period, Executive shall not directly or indirectly (i) induce or attempt to induce any employee of the Company or any of its subsidiaries to leave the employ of the Company or such subsidiary, or in any way interfere with the relationship between the Company or any subsidiary and any employee thereof, including inducing or attempting to induce any union, employee or group of employees to interfere with the business or operations of the Company or its subsidiaries, (ii) hire any person who was an employee of the Company or any subsidiary unless at least twelve months has elapsed since the termination of such employee’s employment with the Company or any subsidiary, as the case may be, or (iii) induce or attempt to induce any customer, supplier, distributor, franchisee, licensee or other business relation of the Company or any subsidiary to cease doing business with the Company or such subsidiary, or in any way interfere with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and the Company or any subsidiary.

     (c) Confidentiality.

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          (i) The continued success of the Company and its subsidiaries and other affiliates depends upon the use and protection of a large body of confidential and proprietary information, including, without limitation, confidential and proprietary information now existing or to be developed in the future. “Confidential Information” will be defined to include all information of any sort (whether merely remembered or embodied in a tangible or intangible form or medium) that is (i) related to the Company’s or its subsidiaries’ or other affiliates’ prior, current or potential business or operations and (ii) not generally or publicly known. Confidential Information includes, without limitation, the information, observations and data of the Company and its subsidiaries and other affiliates including, without limitation, designs, drawings, photographs and other works and reports (including, without limitation, all Company Works); programs, software, source code, object code, diagrams, flow charts, manuals, documentation and databases; know-how, data, designs, specifications, improvements, inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice; all technology and trade secrets; information concerning development, acquisition or investment opportunities in or reasonably related to the Company’s or its subsidiaries’ or other affiliates’ business or industry of which Executive is aware or becomes aware during the term of his/her employment, the persons or entities that are current, former or prospective suppliers or customers of any one or more of them during Executive’s employment with the Company; development, transition and transformation plans, methodologies and methods of doing business, strategic, marketing and expansion plans, including plans regarding planned and potential sales, pricing and cost information, financial and business plans, employee, customer and supplier lists and telephone numbers, locations of sales representatives, new and existing programs and services, prices and terms, customer service, integration processes, requirements and costs of providing service, support and equipment; and all similar and related information in whatever form or medium.

          (ii) Executive shall not disclose or use for his own account any of such Confidential Information, except as reasonably necessary for the performance of his duties under this Agreement, without the prior written consent of the Board, unless and to the extent that any Confidential Information (i) becomes generally known to and available for use by the public other than as a result of Executive’s breach or actions in violation of this Agreement or other improper acts or omissions to act or otherwise (ii) is required to be disclosed pursuant to any applicable law or court order, provided, however that, Executive must give Company prompt written notice of any such legal requirement, disclose no more information than is so required and seek confidential treatment where available, and cooperate fully with all efforts by the Company to obtain a protective order or similar confidentiality treatment for such information. Upon the termination of Executive’s employment hereunder, or at any other time the Company may request in writing, Executive agrees to deliver to the Company all memoranda, notes, plans, records, reports, notebooks (and similar repositories of or containing Confidential Information) and other documents (and all copies, summaries and extracts thereof, in whatever form or medium) relating to the business or operations of the Company or its subsidiaries or other affiliates or that otherwise constitute Confidential Information, and at any time thereafter, if any such materials are brought to Executive’s attention or Executive discovers them in his possession or control, Executive shall deliver such materials to the Company immediately upon such notice or discovery

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     (d) Inventions and Patents. If Executive creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, whether patentable or unpatentable and whether or not reduced to practice, know-how, data, processes, methods, programs, systems, materials, documents or other work product or other intellectual property, either alone or in conjunction with third parties, at any time during Executive’s employment by or engagement with the Company (“Works”), to the extent that such Works were created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of such employment or engagement and/or relate to the business or operations, or actual or demonstrably anticipated research or development, of the Company or its subsidiaries or other affiliates (collectively, the “Company Works”), Executive shall promptly and fully disclose such Company Works to the Company. Any copyrightable work falling within the definition of Company Works shall be deemed a “work made for hire” as such term is defined in 17 U.S.C. § 101. Executive hereby (i) irrevocably assigns, transfers and conveys, to the extent permitted by applicable law, all right, title and interest in and to the Company Works on a worldwide basis (including, without limitation, rights under patent, copyright, trademark, trade secret, unfair competition and related laws) to the Company or such other entity as the Company shall designate, to the extent ownership of any such rights does not automatically vest in the Company under applicable law and (ii) waives any moral rights therein to the fullest extent permitted under applicable law. Executive agrees that he will not use any Company Works for his personal benefit, the benefit of a competitor, or for the benefit of any other person or entity other than the Company. Executive agrees to execute any further documents and take any further actions requested by the Company to assist it in validating, effectuating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of its rights hereunder.

     (e) Enforcement. The parties to this Agreement hereby agree and stipulate that (i) the restrictions contained in this Agreement are reasonable and necessary in order to protect the Company’s and its subsidiaries’ legitimate business interests and (ii) in the event of any breach or violation of this Agreement or of any provision hereof by Executive, the Company and its subsidiaries will have no adequate remedy at law and will suffer irreparable loss and damage thereby. The parties hereby further agree and stipulate that in the event of any such breach or violation, either threatened or actual, the Company’s and its subsidiaries’ rights shall include, in addition to any and all other rights available to the Company and its subsidiaries at law or in equity, the right to seek and obtain any and all injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to prohibit, bar, and restrain any and all such breaches or violations by Executive. The prevailing party to any legal action, arbitration or other proceeding commenced in connection with enforcing any provision of this Section 5, including without limitation, obtaining the injunctive relief provided by this Section 5 shall be entitled to recover all court costs, reasonable attorneys’ fees, and related expenses incurred by such party. Executive further agrees that no bond need be filed in connection with any request by the Company and its subsidiaries for a temporary restraining order or for temporary or preliminary injunctive relief.

     (f) Additional Acknowledgments. Executive acknowledges that the provisions of this Section 5 are in consideration of: (i) employment with the Company, (ii) the issuance of certain limited liability company interests of V.G.A.T. Investors, LLC to the Executive and (iii) additional good and valuable consideration as set forth in this Agreement. In

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addition, Executive acknowledges (i) that the business of the Company and its subsidiaries is international in scope and without geographical limitation and (ii) notwithstanding the state of incorporation or principal office of the Company or any of its subsidiaries, or any of their respective executives or employees (including the Executive), it is expected that the Company will have business activities and have valuable business relationships within its industry throughout the world. Executive acknowledges that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Executive by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of the Company and its subsidiaries now existing or to be developed in the future. Executive expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

     6. Successors.

     (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

     (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

     7. Miscellaneous.

     (a) This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of New York applicable to contracts entered into and to be performed solely within such State without regard to choice of law considerations. The parties hereto hereby waive, to the fullest extent by applicable law, any right to trial by jury with respect to any action or proceeding arising out of or relating to this Agreement.

     (b) Any disputes with regard to this Agreement that is not resolved by mutual agreement, other than as provided in Section 5(e) hereof, shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without limitation, legal fees and fees of any experts) and out-of-pocket expenses.

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     (c) all notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally recognized overnight courier, or sent via facsimile to the recipient with telephonic confirmation by the sending party. Such notices, demands and other communications will be sent to the address indicated below:

If to the Executive:

Michael S. Lipscomb
23555 Euclid Avenue
Euclid, OH 44117

If to the Company:

Argo-Tech Corporation
c/o Vestar Capital Partners IV, L.P.
245 Park Avenue, 41^st Floor
New York, New York 10167
Telecopy: (212) 808 4922
Attention: John Woodard
                   General Counsel

and

c/o Greenbriar Equity Group LLC
555 Theodore Fremd Avenue
Rye, New York 10580
Telecopy: (914) 925-9699
Attention: Reginald L. Jones
                   John Daileader

with a copies (which shall not constitute notice to the Company) to:

Kirkland & Ellis LLP
Citigroup Center
153 East 53^rd Street
New York, NY 10022
Telecopy: (212) 446-4900
Attention: Michael Movsovich, Esq.
                   Christopher Neumann, Esq.

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or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

     (d) Subject to the provisions of Section 4(c), there shall be no limitation on the ability of the Company to terminate the Executive at any time with or without Cause.

     (e) Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

     (f) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

     (g) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

     (h) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

     (i) From and after the Effective Date this Agreement shall supersede any other employment agreement between the parties with respect to the subject matter hereof.

* * * * * * * * *

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     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

/s/ Michael S. Lipscomb
MICHAEL S. LIPSCOMB
ARGO-TECH CORPORATION
By:	/s/ Paul P. Keen
Title:	Vice President

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Exhibit A

FORM OF RELEASE AGREEMENT

     In consideration of receipt of severance payments and benefits as set forth in Section 4 of the Employment Agreement, dated as of October ___, 2005, by and between Argo-Tech Corporation (the “Company”) and Michael S. Lipscomb (the “Employment Agreement”), I, Michael S. Lipscomb, hereby release and discharge the Company, and each of its employees, officers, directors, stockholders, agents, subsidiaries and other affiliates from, and waive any and all claims, demands, damages, causes of action or suits (collectively, “Claims”) of any kind or nature whatsoever that I may have had or may now have against any of them (including, without limitation, any Claims arising out of or related to my employment with the Company or the termination thereof), whether arising under contract, tort, statute or otherwise, and whether I know of the claim or not, including, without limitation, Claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay for Equal Work Act, and any other applicable federal, state or local statutes, rules, codes, or ordinances. Notwithstanding anything herein to the contrary this release does not cover (i) my rights to the severance payments and benefits provided in Section 4 of the Employment Agreement; (ii) my rights to any vested or accrued benefits or rights under the applicable terms of Company plans, programs, or arrangements; (iii) any Claim by me to enforce the rights arising under or preserved by the Employment Agreement that survive expressly survive termination of my employment; (iv) any Claim by me to enforce indemnification rights as provided in the Company’s articles of incorporation; and (v) my rights in my capacity as an equity holder of V.G.A.T. Investors, LLC and/or AT Holdings Corporation unless such right is terminated by its terms due to the termination of my employment with the Company.

     I have not, and shall not hereafter, institute any lawsuit of any kind whatsoever, or file any complaint or charge, against the Company or any of its former or present employees, officers, directors, stockholders, agents, subsidiaries, or affiliates, and any of their successors or assigns, under any federal, state or local statute, rule, regulation or principle of common law growing out of events released hereunder. I shall not seek employment or reemployment with the Company. I acknowledge that I have had at least 21 days to review and consider this release agreement before accepting it. I have been advised to consult with an attorney before signing this release agreement.

     This release agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of New York applicable to contracts entered into and to be performed solely within such State without regard to choice of law considerations. The parties hereto hereby waive, to the fullest extent by applicable law, any right to trial by jury with respect to any action or proceeding arising out of or relating to this Agreement.

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Michael S. Lipscomb

Dated:

     Acknowledged and Agreed as of

     ____________, ___:

ARGO-TECH CORPORATION

By:
	Name: Title:

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EX-10.7

EXHIBIT 10.7

EMPLOYMENT AGREEMENT

     AGREEMENT, dated as of the 28th day of October, 2005, by and among Argo-Tech Corporation, a Delaware corporation (the “Company”), and Paul R. Keen (the “Executive”).

     WHEREAS, the Company desires to employ the Executive and the Executive is willing to accept employment with the Company, all on the terms and conditions set forth below;

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1. Employment Period. Subject to the terms and conditions of this Agreement, including Section 3, the Company hereby agrees to employ the Executive, and the Executive hereby accepts employment with the Company, for the period commencing on the date hereof (the “Effective Date”) and ending as provided in the next sentence (such period, the “Employment Period”). The Employment Period shall end on the third anniversary of the date hereof; provided, that the Employment Period shall automatically be renewed for successive one-year periods, unless the Company or Executive gives the other party written notice of the election not to renew the Employment Period at least 90 days prior to the expiration of the Employment Period; provided, however, the Employment Period shall be subject to early termination as provided in Section 3 hereof.

     2. Terms of Employment.

     (a) Position and Duties. During the Employment Period, the Executive shall serve as Executive Vice President and General Counsel of the Company with the appropriate authority, duties and responsibilities as are customarily attendant to such position at other similarly situated companies with significant private equity ownership, subject, in all instances, to the general supervisory power of the Company’s board of directors (the “Board”) under applicable corporate law.

          (i) During the Employment Period, Executive shall report solely and directly to the Chief Executive Officer of the Company (the “CEO”) and excluding any periods of vacation and sick leave to which the Executive is entitled, Executive agrees to devote substantially all of his business time and attention to the business and affairs of the Company and to use the Executive’s reasonable best efforts to perform faithfully and efficiently the duties and responsibilities assigned to Executive hereunder.

          (ii) The Executive represents and warrants to the Company (A) that he is able to enter into this Agreement, that his ability to enter into this Agreement and to fully perform his duties of employment are not limited to or restricted by any agreements, understandings instruments, orders, judgments or decrees to which Executive is a party or by which he is bound, (B) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person, and (C) upon the execution and delivery of this Agreement by the Employer, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. For the purposes of

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this Agreement, the term “person” means any natural person, corporation, partnership, limited liability partnership, limited liability company, or any other entity of any nature.

     (b) Compensation.

          (i) Annual Base Salary. The Executive shall receive an annual base salary (as in effect from time to time, the “Annual Base Salary”) of $279,926, which Annual Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices. The Annual Base Salary will be subject to periodical review in accordance with Company policy, and the Executive’s Base Salary shall be increased annually by no less than a percentage equal to the percentage increase, if any, in the Consumer Price Index in the prior twelve month period.

          (ii) Annual Bonus. During the Employment Period, the Executive shall participate in such bonus arrangements as may be approved by the Compensation Committee of the Board (the “Compensation Committee”) based on performance criteria relating to the Company’s and the Executive’s performance to be determined by the Board on an annual basis (the aggregate of all payments made under such bonus arrangements being herein referred to as the “Annual Bonus”).

          (iii) Employee Benefit Plans. During the Employment Period, except as otherwise expressly provided herein, the Executive shall be entitled to participate in all compensation, incentive, employee benefit, welfare and other plans, practices, policies and programs and fringe benefits (collectively, “Employee Benefit Plans”) that are provided or made available by the Company generally to senior executive officers of the Company.

          (iv) Vacation. During the Employment Period, Executive shall be entitled to four (4) weeks of paid vacation during each calendar year, pro-rated, in the case of any partial year, for the actual number of days the Executive was employed by the Company during such calendar year.

          (v) Gross Up Payment. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined (as hereafter provided) that any payment by the Company to or for the benefit of the Executive made as a result of the termination by the Company without Cause of Executive’s employment with the Company and its Subsidiaries, whether paid pursuant to the terms of this Agreement or otherwise (a “Payment”), would, in connection with the change of control of the Company occurring as a result of the merger (the “Merger”) of Vaughn Merger Sub, Inc., with and into AT Holdings Corporation which was consummated on the date hereof (and not in connection with any subsequent change of control of the Company that occurs at any time following the consummation of the Merger), be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties are hereafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment or payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment shall be in an amount such that, after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the

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Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment, such amount to be used to satisfy such Excise Tax. The Company and the Executive each shall cooperate with the other in connection with the determination of the amount of any Gross-Up Payment provided for herein. Such cooperation shall include without limitation providing the other party access to and copies of any books, records and documents in the possession of the Company or the Executive, as the case may be, that are reasonably requested by the other party.

     3. Termination of Employment.

     (a) Death, Disability or Non-renewal. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period or upon non-renewal of the Employment Period by the Company or Executive as provided in Section 1 above. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of “Disability” set forth below), it may give to the Executive written notice in accordance with Section 7(c) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the receipt of such notice by the Executive (the “Disability Effective Date”). For purposes of this Agreement, “Disability” shall mean a determination by the Board in its good faith judgment with input from appropriate medical personnel that Executive is unable to substantially perform his job responsibilities as a result of chronic illness, physical, mental or any other disability for a period of 180 days or more in any 365 consecutive day period. The Executive shall co-operate and make himself available for any medical examination reasonably required by the Company with respect to any determination of the Disability of the Executive.

     (b) With or Without Cause. The Company may terminate the Executive’s employment during the Employment Period with or without Cause. Any election by the Company to not renew the Employment Period pursuant to Section 1 will be deemed to be a termination by the Company without Cause. For purposes of this Agreement, “Cause” shall mean:

          (i) Executive is indicted or charged with, or pleads guilty or nolo contendere to, (A) a felony or (B) a crime involving moral turpitude that is either materially detrimental to the Company or that which brings the Company into public disgrace or disrepute;

          (ii) in carrying out his duties hereunder, the Executive engages in conduct that constitutes gross neglect or willful misconduct;

          (iii) the Executive engages in willful misconduct resulting in or intended to result in direct personal gain to Executive at the Company’s expense or that brings the Company into public disgrace or disrepute, or the Executive has made, or is aware of, any material and knowing misrepresentation to V.G.A.T. Investors, LLC (“Parent”) or any of its subsidiaries in any Transaction Document (as defined in that certain Agreement and Plan of Merger, dated the date hereof, by and among Parent, the Company, AT Holdings Corporation, Greatbanc Trust Company, Vaughn Merger Sub, Inc. and Paul R. Keen, as Stockholders’ Representative);

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          (iv) the Executive breaches any material provision of this Agreement (including Section 5 hereof) or breaches in any material respect any Company policy governing employee conduct in the workplace, including without limitation, policies relating to the use of illicit drugs, alcohol abuse and sexual harassment, and such breach has not been cured prior to 30 days following notice from the Company;

          (v) the Executive’s repeated refusal to perform duties or responsibilities as reasonably directed by the CEO or the Board in writing; or

          (vi) the Executive’s material breach of a fiduciary obligation to the Company or a material breach of any confidentiality or non-competition obligations.

     (c) Good Reason. The Executive’s employment may be terminated by the Executive with or without Good Reason. Any election by Executive to not renew the Employment Period pursuant to Section 1 will be deemed to be a termination by the Executive without Good Reason. For purposes of this Agreement, “Good Reason” shall mean a termination by Executive of his employment on thirty (30) days’ written notice given by him to the Company following the occurrence of any of the following events, which notice shall be given within 10 days following Executive becoming aware of such occurrence, without his express prior written consent, unless all grounds for termination shall have been fully cured prior to thirty (30) days after he gives notice to the Company requesting cure:

          (i) any failure of the Company to continue Executive as Executive Vice President and General Counsel of the Company;

          (ii) any material diminution in Executive’s responsibilities or authorities under this Agreement or the assignment to Executive of duties that are materially inconsistent with, or materially impair his ability to perform, the duties then assigned to him; or any change in the reporting structure so that Executive is required to report to any person other than the CEO;

          (iii) any material breach by the Company of any of its obligations under this Agreement which has not been cured prior to 30 days following notice from Executive of such breach; or

          (iv) any failure of the Company to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of its business or assets within thirty (30) days after any reconstruction, amalgamation, combination, merger, consolidation, sale, liquidation, dissolution or similar transaction.

     (d) Notice of Termination. Any termination by the Company or by the Executive shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 7(c) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than

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thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

     (e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company other than for Disability, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, (ii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be, (iii) if the Executive’s employment is terminated by the Executive, the Date of Termination shall be thirty days after the giving of such notice by the Executive; provided that following receipt of such notice, the Company may elect to immediately terminate the Executive’s employment hereunder and such termination will still be deemed to be a termination by Executive, however, the Date of Termination shall be deemed to be date the Company terminates his employment and (iv) if the Executive’s employment is terminated as a result of non-renewal of the Employment Period by the Company or the Executive pursuant to Section 1, the last day of the then current Employment Period.

     4. Obligations of the Company upon Termination.

     (a) Death or Disability. If, during the Employment Period the Executive’s employment shall terminate on account of death or Disability the Company shall pay to the Executive or his estate:

          (i) the Executive’s Annual Base Salary through the Date of Termination within 30 days after the Date of Termination and, at the time it would otherwise be due to be paid, any Annual Bonus for any fiscal year of the Company that has ended prior to the year in which such termination occurs (“Prior Year’s Bonus”) to the extent not theretofore paid; and

          (ii) an amount equal to the product of (x) the Annual Bonus that would have been paid to the Executive for such fiscal year and (y) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is 365, to the extent not theretofore paid (such amount, the “Accrued Bonus”), at such time as the Annual Bonus would have been paid in the ordinary course;

          (iii) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive or his estate or beneficiaries (A) a cash lump sum amount equal to the product of (x) the Executive’s Annual Base Salary and (y) a fraction, the numerator of which is the number of Executive’s accrued but unused vacation days and the denominator of which is 365 (the “Accrued Vacation Amount”) and (B) any other amounts (including any unreimbursed business expenses) or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies through the Date of Termination (the

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Accrued Vacation Amount and such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

     (b) By the Company for Cause; By the Executive Other than for Good Reason. If the Executive’s employment is terminated for Cause or the Executive terminates his employment without Good Reason during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive, to the extent not previously paid, (i) his Annual Base Salary through the Date of Termination, (ii) his Prior Year’s Bonus and (iii) the Other Benefits.

     (c) By the Company Other than for Cause, Death or Disability; By the Executive for Good Reason. If, during the Employment Period the Executive’s employment is terminated by the Executive for Good Reason or by the Company other than for Cause, other than on account of death or Disability:

          (i) subject to continued compliance by the executive of the covenants set forth in Section 5 hereof, the Company shall pay to the Executive:

     (A) the Executive’s Annual Base Salary through the Date of Termination within 30 days after the Date of Termination and any Prior Year’s Bonus to the extent not theretofore paid; and

     (B) the amount equal to the sum of the Executive’s current Annual Base Salary and Annual Bonus for the preceding fiscal year, payable over the one year period following termination in regular equal installments in accordance with the Company’s general payroll practices;

          (ii) the Company shall provide the Executive with the Other Benefits; and

          (iii) the Company shall provide the Executive continued coverage under the Company’s group health plans until the earlier of (x) the first anniversary of the Date of Termination and (y) the date Executive becomes eligible for comparable coverage under health plans of any successor employer (and, for the avoidance of doubt, the termination date for COBRA purposes will be the first anniversary of the Date of Termination).

     (d) Release. The severance payments and such benefits to be provided by the Company pursuant to this Section 4 shall (i) be in lieu of any other payments by the Company to Executive and (ii) be subject to Executive’s execution (other than in the case of Executive’s death) of a release agreement in substantially the form attached hereto as Exhibit A,

     5. Noncompetition; Nonsolicitation; Etc. Executive acknowledges that in the course of his employment with the Company he will become familiar with the Company’s and its subsidiaries’ trade secrets and other confidential information concerning the Company and such subsidiaries (collectively, the “Confidential Information”) and that his services will be of special, unique and extraordinary value to the Company and its subsidiaries. Therefore, Executive agrees and acknowledges that:

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     (a) Noncompetition. During the Non-Competition Period (as defined below), Executive shall not, directly or indirectly, either for himself or for any other individual, corporation, partnership, joint venture or other entity, participate in any business (including, without limitation, any division, group or franchise of a larger organization) anywhere in the Non Competition Area (defined below) which engages or which proposes to engage in the promotion, development, sale, distribution or production of (i) any aircraft engine fuel pumps, (ii) commercial and military airframe products and services, (iii) aerial refueling pumps, (iv) ground fueling components, (v) fuel management systems, (vi) cryogenic pumps, or (vii) any products or product lines that compete with any of the foregoing or other products or product lines of the Company at any time during the Executive’s employment with the Company or at the time of Executive’s termination of employment with the Company. For purposes of this Agreement, the term “participate in” shall include, without limitation, having any direct or indirect interest in any corporation, partnership, joint venture or other entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any individual, corporation, partnership, joint venture and other business entity (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise). The obligations and covenants contained in this Section 5(a) shall endure so long as Employee is employed by the Company and for a period of two years thereafter. (the “Non-Competition Period”) For the purposes of this Agreement, “Non Competition Area” means anywhere in the world. Notwithstanding the above, Executive shall not be prohibited from owning up to 3% of the outstanding stock of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

     (b) Nonsolicitation. During the Non-Competition Period, Executive shall not directly or indirectly (i) induce or attempt to induce any employee of the Company or any of its subsidiaries to leave the employ of the Company or such subsidiary, or in any way interfere with the relationship between the Company or any subsidiary and any employee thereof, including inducing or attempting to induce any union, employee or group of employees to interfere with the business or operations of the Company or its subsidiaries, (ii) hire any person who was an employee of the Company or any subsidiary unless at least twelve months has elapsed since the termination of such employee’s employment with the Company or any subsidiary, as the case may be, or (iii) induce or attempt to induce any customer, supplier, distributor, franchisee, licensee or other business relation of the Company or any subsidiary to cease doing business with the Company or such subsidiary, or in any way interfere with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and the Company or any subsidiary.

     (c) Confidentiality.

          (i) The continued success of the Company and its subsidiaries and other affiliates depends upon the use and protection of a large body of confidential and proprietary information, including, without limitation, confidential and proprietary information now existing or to be developed in the future. “Confidential Information” will be defined to include all information of any sort (whether merely remembered or embodied in a tangible or intangible form or medium) that is (i) related to the Company’s or its subsidiaries’ or other affiliates’ prior, current or potential business or operations and (ii) not generally or publicly known. Confidential Information includes, without limitation, the information, observations and

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data of the Company and its subsidiaries and other affiliates including, without limitation, designs, drawings, photographs and other works and reports (including, without limitation, all Company Works); programs, software, source code, object code, diagrams, flow charts, manuals, documentation and databases; know-how, data, designs, specifications, improvements, inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice; all technology and trade secrets; information concerning development, acquisition or investment opportunities in or reasonably related to the Company’s or its subsidiaries’ or other affiliates’ business or industry of which Executive is aware or becomes aware during the term of his/her employment, the persons or entities that are current, former or prospective suppliers or customers of any one or more of them during Executive’s employment with the Company; development, transition and transformation plans, methodologies and methods of doing business, strategic, marketing and expansion plans, including plans regarding planned and potential sales, pricing and cost information, financial and business plans, employee, customer and supplier lists and telephone numbers, locations of sales representatives, new and existing programs and services, prices and terms, customer service, integration processes, requirements and costs of providing service, support and equipment; and all similar and related information in whatever form or medium.

          (ii) Executive shall not disclose or use for his own account any of such Confidential Information, except as reasonably necessary for the performance of his duties under this Agreement, without the prior written consent of the Board, unless and to the extent that any Confidential Information (i) becomes generally known to and available for use by the public other than as a result of Executive’s breach or actions in violation of this Agreement or other improper acts or omissions to act or otherwise (ii) is required to be disclosed pursuant to any applicable law or court order, provided, however that, Executive must give Company prompt written notice of any such legal requirement, disclose no more information than is so required and seek confidential treatment where available, and cooperate fully with all efforts by the Company to obtain a protective order or similar confidentiality treatment for such information. Upon the termination of Executive’s employment hereunder, or at any other time the Company may request in writing, Executive agrees to deliver to the Company all memoranda, notes, plans, records, reports, notebooks (and similar repositories of or containing Confidential Information) and other documents (and all copies, summaries and extracts thereof, in whatever form or medium) relating to the business or operations of the Company or its subsidiaries or other affiliates or that otherwise constitute Confidential Information, and at any time thereafter, if any such materials are brought to Executive’s attention or Executive discovers them in his possession or control, Executive shall deliver such materials to the Company immediately upon such notice or discovery

     (d) Inventions and Patents. If Executive creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, whether patentable or unpatentable and whether or not reduced to practice, know-how, data, processes, methods, programs, systems, materials, documents or other work product or other intellectual property, either alone or in conjunction with third parties, at any time during Executive’s employment by or engagement with the Company (“Works”), to the extent that such Works were created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of such employment or engagement and/or relate to the business or operations, or actual or demonstrably anticipated research or development, of the

8

Company or its subsidiaries or other affiliates (collectively, the “Company Works”), Executive shall promptly and fully disclose such Company Works to the Company. Any copyrightable work falling within the definition of Company Works shall be deemed a “work made for hire” as such term is defined in 17 U.S.C. § 101. Executive hereby (i) irrevocably assigns, transfers and conveys, to the extent permitted by applicable law, all right, title and interest in and to the Company Works on a worldwide basis (including, without limitation, rights under patent, copyright, trademark, trade secret, unfair competition and related laws) to the Company or such other entity as the Company shall designate, to the extent ownership of any such rights does not automatically vest in the Company under applicable law and (ii) waives any moral rights therein to the fullest extent permitted under applicable law. Executive agrees that he will not use any Company Works for his personal benefit, the benefit of a competitor, or for the benefit of any other person or entity other than the Company. Executive agrees to execute any further documents and take any further actions requested by the Company to assist it in validating, effectuating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of its rights hereunder.

     (e) Enforcement. The parties to this Agreement hereby agree and stipulate that (i) the restrictions contained in this Agreement are reasonable and necessary in order to protect the Company’s and its subsidiaries’ legitimate business interests and (ii) in the event of any breach or violation of this Agreement or of any provision hereof by Executive, the Company and its subsidiaries will have no adequate remedy at law and will suffer irreparable loss and damage thereby. The parties hereby further agree and stipulate that in the event of any such breach or violation, either threatened or actual, the Company’s and its subsidiaries’ rights shall include, in addition to any and all other rights available to the Company and its subsidiaries at law or in equity, the right to seek and obtain any and all injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to prohibit, bar, and restrain any and all such breaches or violations by Executive. The prevailing party to any legal action, arbitration or other proceeding commenced in connection with enforcing any provision of this Section 5, including without limitation, obtaining the injunctive relief provided by this Section 5 shall be entitled to recover all court costs, reasonable attorneys’ fees, and related expenses incurred by such party. Executive further agrees that no bond need be filed in connection with any request by the Company and its subsidiaries for a temporary restraining order or for temporary or preliminary injunctive relief.

     (f) Additional Acknowledgments. Executive acknowledges that the provisions of this Section 5 are in consideration of: (i) employment with the Company, (ii) the issuance of certain limited liability company interests of V.G.A.T. Investors, LLC to the Executive and (iii) additional good and valuable consideration as set forth in this Agreement. In addition, Executive acknowledges (i) that the business of the Company and its subsidiaries is international in scope and without geographical limitation and (ii) notwithstanding the state of incorporation or principal office of the Company or any of its subsidiaries, or any of their respective executives or employees (including the Executive), it is expected that the Company will have business activities and have valuable business relationships within its industry throughout the world. Executive acknowledges that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Executive by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of the Company and its subsidiaries now existing or to be developed in

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the future. Executive expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

6. Successors.

     (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

     (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

     7. Miscellaneous.

     (a) This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of New York applicable to contracts entered into and to be performed solely within such State without regard to choice of law considerations. The parties hereto hereby waive, to the fullest extent by applicable law, any right to trial by jury with respect to any action or proceeding arising out of or relating to this Agreement.

     (b) Any disputes with regard to this Agreement that is not resolved by mutual agreement, other than as provided in Section 5(e) hereof, shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without limitation, legal fees and fees of any experts) and out-of-pocket expenses.

     (c) all notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally recognized overnight courier, or sent via facsimile to the recipient with telephonic confirmation by the sending party. Such notices, demands and other communications will be sent to the address indicated below:

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If to the Executive:

Paul R. Keen
22775 Shaker Blvd.
Shaker Heights, OH 44122-2655

If to the Company:

Argo-Tech Corporation
c/o Vestar Capital Partners IV, L.P.
245 Park Avenue, 41^st Floor
New York, New York 10167
Telecopy: (212) 808 4922
Attention: John Woodard
                   General Counsel

and

c/o Greenbriar Equity Group LLC
555 Theodore Fremd Avenue
Rye, New York 10580
Telecopy: (914) 925-9699
Attention: Reginald L. Jones
                   John Daileader

with a copies (which shall not constitute notice to the Company) to:

Kirkland & Ellis LLP
Citigroup Center
153 East 53^rd Street
New York, NY 10022
Telecopy: (212) 446-4900
Attention: Michael Movsovich, Esq.
                   Christopher Neumann, Esq.

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

     (d) Subject to the provisions of Section 4(c), there shall be no limitation on the ability of the Company to terminate the Executive at any time with or without Cause.

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     (e) Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

     (f) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

     (g) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

     (h) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

     (i) From and after the Effective Date this Agreement shall supersede any other employment agreement between the parties with respect to the subject matter hereof.

* * * * * * * * *

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     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

/s/ Paul R. Keen
PAUL R. KEEN
ARGO-TECH CORPORATION
By:	/s/ Michael S. Lipscomb
Title:	President

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Exhibit A

FORM OF RELEASE AGREEMENT

     In consideration of receipt of severance payments and benefits as set forth in Section 4 of the Employment Agreement, dated as of October ___, 2005, by and between Argo-Tech Corporation (the “Company”) and Paul R. Keen (the “Employment Agreement”), I, Paul R. Keen, hereby release and discharge the Company, and each of its employees, officers, directors, stockholders, agents, subsidiaries and other affiliates from, and waive any and all claims, demands, damages, causes of action or suits (collectively, “Claims”) of any kind or nature whatsoever that I may have had or may now have against any of them (including, without limitation, any Claims arising out of or related to my employment with the Company or the termination thereof), whether arising under contract, tort, statute or otherwise, and whether I know of the claim or not, including, without limitation, Claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay for Equal Work Act, and any other applicable federal, state or local statutes, rules, codes, or ordinances. Notwithstanding anything herein to the contrary this release does not cover (i) my rights to the severance payments and benefits provided in Section 4 of the Employment Agreement; (ii) my rights to any vested or accrued benefits or rights under the applicable terms of Company plans, programs, or arrangements; (iii) any Claim by me to enforce the rights arising under or preserved by the Employment Agreement that survive expressly survive termination of my employment; (iv) any Claim by me to enforce indemnification rights as provided in the Company’s articles of incorporation; and (v) my rights in my capacity as an equity holder of V.G.A.T. Investors, LLC and/or AT Holdings Corporation unless such right is terminated by its terms due to the termination of my employment with the Company.

     I have not, and shall not hereafter, institute any lawsuit of any kind whatsoever, or file any complaint or charge, against the Company or any of its former or present employees, officers, directors, stockholders, agents, subsidiaries, or affiliates, and any of their successors or assigns, under any federal, state or local statute, rule, regulation or principle of common law growing out of events released hereunder. I shall not seek employment or reemployment with the Company. I acknowledge that I have had at least 21 days to review and consider this release agreement before accepting it. I have been advised to consult with an attorney before signing this release agreement.

     This release agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of New York applicable to contracts entered into and to be performed solely within such State without regard to choice of law considerations. The parties hereto hereby waive, to the fullest extent by applicable law, any right to trial by jury with respect to any action or proceeding arising out of or relating to this Agreement.

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Paul R. Keen

Dated:

     Acknowledged and Agreed as of

     ____________, ___:

ARGO-TECH CORPORATION

By:
	Name: Title:

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EX-10.9

EXHIBIT 10.9

Amendment

to

Argo-Tech Corporation Trust Agreement

and

Michael S. Lipscomb Stay Pay Agreement

     This Amendment (the “Amendment”) to the Argo-Tech Corporation Trust Agreement dated October 28, 1994, as amended November 22, 2002 (the “Rabbi Trust”), and to the Stay Pay Agreement dated February 13, 1989 (the “Stay Pay Agreement”) between Argo-Tech Corporation (HBP), formerly known as Argo-Tech Corporation (“Argo-Tech”), and Michael S. Lipscomb (the “Beneficiary”) is by and between Argo-Tech and the Beneficiary.

     WHEREAS, the Beneficiary and Argo-Tech entered into the Stay Pay Agreement;

     WHEREAS, Argo-Tech executed the Rabbi Trust which trust was intended to secure amounts due under the Stay Pay Agreement;

     WHEREAS, AT Holdings Corporation (“Holdings”), the parent of Argo-Tech, has entered into an Agreement and Plan of Merger dated as of September 13, 2005 (the “Merger Agreement”) by and among Holdings, Argo-Tech Corporation, GreatBanc Trust Company, in its capacity as trustee for the Argo-Tech Corporation Employee Stock Ownership Plan, V.G.A.T. Investors, LLC (“Parent”), and Vaughn Merger Sub, Inc. (“Acquisition Sub”), as amended, whereby Parent is to acquire Holdings through the merger of Acquisition Sub with and into Holdings; and

     WHEREAS, Argo-Tech and the Beneficiary wish to amend the Rabbi Trust and the Stay Pay Agreement so that the amount of assets held under the Rabbi Trust shall be paid to Beneficiary at the Closing under the Merger Agreement and, upon such payment, the Rabbi Trust shall immediately terminate.

          NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

1.1 Amendment. The Stay Pay Agreement and the Rabbi Trust are hereby amended to provide for a payment to the Beneficiary or Successor from the assets of the Trust in an amount equal to the amount of assets then held under the Trust upon the occurrence of the Closing under the Merger Agreement. Such payment shall be made as soon as reasonably possible after the Trustee’s receipt of an affidavit executed by an officer of Argo-Tech other than the Beneficiary stating that such Closing has occurred. Immediately upon Beneficiary’s receipt of such payment,

	the Rabbi Trust and the Stay Pay Agreement shall be terminated without any further action of the parties.
1.2	Effective Date. This Amendment shall be effective October 25, 2005.
1.3	Cancellation. If the Trustee shall not have made the payment described in Section 1.2 above prior to December 20, 2005, this Amendment shall be of no further force and effect whatsoever.
1.4	Force and Effect. Except as provided for herein, the Stay Pay Agreement and the Rabbi Trust shall remain in full force and effect in accordance with their terms until their termination in accordance with the last sentence of Section 1.1 above.

ARGO-TECH CORPORATION (HBP)
By:	/s/ Paul R. Keen
Its:	Vice President
ARGO-TECH CORPORATION
By:	/s/ Frances S. St.Clair
Its:	Vice President
NATIONAL CITY BANK, N.A.
By:	/s/ Christian Brown
Its:	Vice President
BENEFICIARY
/s/ Michael S. Lipscomb
Michael S. Lipscomb

EX-10.16

EXHIBIT 10.16

FOURTH AMENDMENT TO THE
ARGO-TECH CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
AND TRUST AGREEMENT

As Amended and Restated
Effective November 1, 2001

     Pursuant to Section 13.02 of the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, as amended and restated effective November 1, 2001 (the “Plan”), the Plan is hereby amended, effective September 15, 2005, as follows:

     (1) Effective September 15, 2005, the following definitions are added to Section 1 of the Plan:

1.74 “Interim Allocation Date” means September 15, 2005, and such other date, other than the last date of the Plan Year, designated by the Plan Administrator, in its sole discretion, as a date for the allocation of Employer contributions and forfeitures pursuant to Section 3.04.

1.75 “Interim Allocation Period” means the period of time beginning on the first day of the Plan Year and ending on an Interim Allocation Date.

     (2) Effective September 15, 2005, Section 3.04(A) of the Plan is amended and restated in its entirety to read as follows:

     3.04 Contribution Allocation.

(A) Method of Allocation. Subject to any restoration allocation required under Section 5.04 and to Section 8.03(B), the Plan shall allocate and credit each Employer contribution, and Participant forfeitures, if any, to the Account on the last day of the Plan Year and each Interim Allocation Date of each Participant who satisfies the conditions of Section 3.06. The Plan shall make this allocation in the same ratio that each Participant’s Compensation for the Plan Year or for the Interim Allocation Period, if applicable, bears to the total Compensation of all Participants for the Plan Year or the Interim Allocation Period. For purposes of this Section 3.04(A),

“Participant” means, in addition to a Participant who satisfies the requirements of Section 3.06 for the Plan Year, any other Participant entitled to a top heavy minimum allocation under Section 3.04(B), but such Participant’s allocation shall not exceed 3% of his Compensation for the Plan Year.

     (3) Effective September 15, 2005, Section 3.06(B) of the Plan is amended and restated in its entirety to read as follows:

(B) Employment Requirement: A Participant for a particular Plan Year shall share in the allocation of Employer contributions and Participant forfeitures, if any, for that Plan Year or for any applicable Interim Allocation Period only if he is actively employed by the Employer as an Employee (other than an Excluded Employee) on the last day of such Plan Year or on the applicable Interim Allocation Date, or his employment terminates during such Plan Year or during the Interim Allocation Period as a result of his death, or his Disability, or after he has attained age 55 with 10 or more years of Continuous Service.

EXECUTION OF FOURTH AMENDMENT

     To record the adoption of this Fourth Amendment to the Plan, Argo-Tech Corporation has executed this Amendment this 22nd day of September, 2005.

ARGO-TECH CORPORATION

By: /s/ Frances S. St. Clair

Title: Vice President

By: /s/ Paul R. Keen

Title: Vice President

-2-

CONSENT OF THE
ARGO-TECH CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
PLAN ADMINISTRATIVE COMMITTEE

Pursuant to the requirements of Section 13.02 of the Argo-Tech Corporation Employee Stock Ownership Plan (the “Plan”), the undersigned members of the Plan Administrative Committee hereby consent to the Fourth Amendment to the Amended and Restated Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement:

Signature:	/s/ Frances S. St. Clair
Print Name:	Frances S. St. Clair
Date: October 25, 2005
Signature:	/s/ James M. Cunningham
Print Name:	James M. Cunningham
Date: October 26, 2005
Signature:	/s/ Paul R. Keen
Print Name:	Paul R. Keen
Date: October 25, 2005
Signature:	/s/ Paul A. Sklad
Print Name:	Paul A. Sklad
Date: October 25, 2005
Signature:	/s/ Michelle L. McCormick
Print Name:	Michelle L. McCormick
Date: October 26, 2005

-3-

EX-10.17

EXHIBIT 10.17

FIFTH AMENDMENT TO THE
ARGO-TECH CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
AND TRUST AGREEMENT

As Amended and Restated
Effective November 1, 2001

     Pursuant to Section 13.02 of the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, as amended and restated effective November 1, 2001 (the “Plan”), the Plan is hereby amended as follows:

     (1) Effective on the Merger Effective Date (as defined below), Section 1 of the Plan shall be amended by adding the following definitions:

1.71 “Argo Tracker Payment” means the payment of additional consideration, if any, payable to AT Holdings Corporation stockholders pursuant to Section 2.12 of the Merger Agreement.

1.72 “Employer Securities Ownership Percentage” means each Participant’s percentage ownership of the Employer Securities held by the Trust on the Merger Effective Date as set forth on Appendix A hereto.

1.73 “Escrow Account” means the account established pursuant to the escrow agreement provided for in the Merger Agreement to hold a portion of the merger consideration as provided for in the Merger Agreement.

1.76 “Merger Agreement” means the Agreement and Plan of Merger dated as of September 13, 2005, by and among AT Holdings Corporation, Argo-Tech Corporation, the Trustee, V.G.A.T. Investors, LC, and Vaughn Merger Sub, Inc.

1.77 “Merger Effective Date” means the effective date of the merger provided for in the Merger Agreement.

     (2) Effective on the Merger Effective Date, a new Section 6.03(c), which reads as follows, is added to the Plan:

6.03(c) Special Allocations.

Amounts may be allocated to Participant General Investment Account as the result of the payment of additional consideration to stockholders pursuant to the Merger Agreement.

(1) Escrow Account. In the event any amounts are paid to the Trust from the Escrow Account, such amounts shall immediately, be allocated to Participants’ General Investment Accounts in accordance with the Employer Securities Ownership Percentage. Such allocation shall be made to a Participant’s Account even if the Participant is not an Employee of the Company on the date of such allocation.

(2) Argo Tracker. In the event any amount is paid to the Trust as an Argo Tracker Payment, such amount shall immediately, be allocated to Participant(s) General Investment Accounts, in accordance with the Employer Securities Ownership Percentage. Such allocation shall be made to a Participant’s Account even if the Participant is not an Employee of the Company on the date of such allocation.

     (3) Effective on the Merger Effective Date, the second and third sentences of Section 7.02 of the Plan shall be deleted from the Plan.

     (4) Effective on the Merger Effective Date, the first sentence of the second paragraph of Section 7.03 of the Plan shall be deleted from the Plan.

     (5) Effective on the Merger Effective Date, Article VII of the Plan is amended by adding the following Section 7.11 thereto:

“7.11. Distribution of Special Allocations”
Any amounts allocated to a Participant’s Account pursuant to Section 6.03(c) shall be distributed to the Participants as soon as practical after allocation. Such distribution shall be in the form of a lump sum cash payment.

     (6) Effective on the Merger Effective Date, the first paragraph of Section 8.03(A) is amended and restated in its entirety to read as follows:

(A) Trustee Powers. Subject to the investment policy provided to the Trustee by the Plan Administrative Committee, the Trustee has full discretion and authority with regard to the investment of the Trust Fund.

-2-

     (7) Effective on the Merger Effective Date, Section 8.03 of the Plan is amended by addition thereto of a new 8.03(A)(r) which reads as follows:

“To take any and all action the Trustee determines as necessary or appropriate to protect or enforce the Trust’s rights under the Merger Agreement and the Escrow Agreement.”

     (8) Effective on the Merger Effective Date, the Plan shall no longer be an “employee stock ownership plan” within the meaning of Section 4975(e)(7) of the Code and the second “Whereas” clause of the introductory page of the Plan shall be deleted.

     (9) Effective immediately prior to the Merger Effective Date, Article XIII of the Plan shall be amended by adding a Section 13.07 to the Plan which reads as follows:

13.07 Terminated Plan. The Plan is terminated and all Accrued Benefits shall be fully vested and nonforfeitable.

     (10) Effective on the Merger Effective Date, Article XIII of the Plan shall be amended by adding a Section 13.08 to the Plan which reads as follows:

     13.08 Employee Stock Ownership Plan Provisions. Effective on the Merger Effective Date, the Plan shall constitute a profit sharing plan, any Plan provisions resulting from, or relating to, the Plan’s former status as an “employee stock ownership plan” within the meaning of Section 4975(e)(7) of the Code shall be deleted from the Plan, and no distributions of Employer Securities or any other “qualifying employer security” (within the meaning of Section 4975(e)(8) of the Code) shall be provided.

EXECUTION OF FIFTH AMENDMENT

     To record the adoption of this Fifth Amendment to the Plan, Argo-Tech Corporation has executed this Amendment this 25 day of October, 2005.

ARGO-TECH CORPORATION

By: /s/ Paul R. Keen

Title: Vice President

By: /s/ Frances S. St. Clair

Title: Vice President

-3-

CONSENT OF THE
ARGO-TECH CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
PLAN ADMINISTRATIVE COMMITTEE

Pursuant to the requirements of Section 13.02 of the Argo-Tech Corporation Employee Stock Ownership Plan (the “Plan”), the undersigned members of the Plan Administrative Committee hereby consent to the Fifth Amendment to the Amended and Restated Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement:

Signature:	/s/ Frances S. St. Clair
Print Name:	Frances S. St. Clair
Date: October 25, 2005
Signature:	/s/ James M. Cunningham
Print Name:	James M. Cunningham
Date: October 25, 2005
Signature:	/s/ Paul R. Keen
Print Name:	Paul R. Keen
Date: October 25, 2005
Signature:	/s/ Paul A. Sklad
Print Name:	Paul A. Sklad
Date: October 25, 2005
Signature:	/s/ Michelle L. McCormick
Print Name:	Michelle L. McCormick
Date: October 26, 2005

-4-

EX-10.20

EXHIBIT 10.20

SECOND AMENDMENT TO THE
ARGO-TECH CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
EXCESS BENEFITS PLAN

As Amended and Restated
Effective November 1, 2001

     WHEREAS, Argo-Tech Corporation has established the Argo-Tech Corporation Employee Stock Ownership Plan Excess Benefit Plan (the “Plan”), effective as of May 17, 1994; and

     WHEREAS, Argo-Tech Corporation, with the consent of each Participant (as such term is defined in the Plan), deems it desirable to amend and terminate the Plan in accordance with Section 5.01 of the Plan.

     NOW, THEREFORE, effective as set forth below, the Plan is here amended.

     (1) Section 2.01 is amended by adding the following definitions:

(h) “Merger Agreement” means the Agreement and Plan of Merger dated as of September 13, 2005, by and among A. T. Holdings’ Corporation, Argo-Tech Corporation, the GreatBanc Trust Company as Trustee of the Argo-Tech Corporation Employee Stock Ownership Plan, V.G.A.T. Investors, LLC, and Vaughn Merger Sub, Inc., wholly-owned subsidiary of V.G.A.T. Investors, LLC.

(i) “Merger Effective Date” means the effective date of the merger provided for in the Merger Agreement.

(j) “Per Share Common Consideration” shall have the meaning set forth in the Merger Agreement.

     (2) Section 3.04 is amended and restated in its entirety to read as follows:

“SECTION 3.04. Payment of Excess Benefit Account. Upon the occurrence of the Merger Effective Date, the Excess Benefit Account of each Participant shall be valued based upon the Per Share Common Consideration and such value shall be distributed,

as soon as practical, to each Participant in a single cash lump sum distribution, subject to any applicable income tax withholding.”

     (3) The Plan is amended by adding the following new Section 5.08 to the Plan:

5.08 Termination. Effective on the Merger Effective Date, the Plan is terminated and all Excess Benefit Accounts are nonforfeitable.

     This Second Amendment shall be effective as of the Merger Effective Date, but only with respect to Participants who agree to the term hereof and to be bound hereby in such manner as is prescribed by the Company.

     IN WITNESS WHEREOF, the Company, pursuant to a resolution of its Board of Directors, has executed this Second Amendment.

ARGO-TECH CORPORATION

By: /s/ Michael S. Lipscomb

Title: President

By: /s/ Paul R. Keen

Title: Chief Financial Officer

-2-

EX-10.30

EXHIBIT 10.30

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

September 13, 2005

Among

ARGO-TECH CORPORATION,
as Borrower,

AT HOLDINGS CORPORATION,

The LENDERS Party Hereto

and

NATIONAL CITY BANK,
as Administrative Agent and Issuing Bank

NATIONAL CITY BANK and J.P. MORGAN SECURITIES INC.,
as Joint Lead Arrangers and Joint Bookrunners

JPMORGAN CHASE BANK, N.A.,
as Issuing Bank and Syndication Agent

GENERAL ELECTRIC CAPITAL CORPORATION
and
FIRSTMERIT BANK, N.A.
as Co-Documentation Agents

TABLE OF CONTENTS

	Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms		2
SECTION 1.02. Classification of Loans and Borrowings		26
SECTION 1.03. Terms Generally		27
SECTION 1.04. Accounting Terms; GAAP		27
ARTICLE II
The Credits
SECTION 2.01. Commitments; Outstanding Loans		27
SECTION 2.02. Loans and Borrowings		28
SECTION 2.03. Requests for Borrowings		28
SECTION 2.04. Letters of Credit		29
SECTION 2.05. Funding of Borrowings		33
SECTION 2.06. Interest Elections		34
SECTION 2.07. Termination and Reduction of Commitments		35
SECTION 2.08. Repayment of Loans; Evidence of Debt		36
SECTION 2.10. Prepayment of Loans		37
SECTION 2.11. Fees		38
SECTION 2.12. Interest		39
SECTION 2.13. Alternate Rate of Interest		40
SECTION 2.14. Increased Costs		40
SECTION 2.15. Break Funding Payments		42
SECTION 2.16. Taxes		42
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Setoffs		43
SECTION 2.18. Mitigation Obligations; Replacement of Lenders		45
SECTION 2.19. All Advances to Constitute One Indebtedness; Same Indebtedness; Other References		45
SECTION 2.20. Optional Increases in Revolving Commitments; Added Term Loans		46
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers		48
SECTION 3.02. Authorization; Enforceability		48
SECTION 3.03. Governmental Approvals; No Conflicts		48
SECTION 3.04. Financial Condition; No Material Adverse Change		48
SECTION 3.05. Properties		49
SECTION 3.06. Litigation and Environmental Matters		49
SECTION 3.07. Compliance with Laws and Agreements		50
SECTION 3.08. Investment and Holding Company Status		50
SECTION 3.09. Taxes		50
SECTION 3.10. ERISA		50

2

	Page
SECTION 3.11. Disclosure		50
SECTION 3.12. Subsidiaries		51
SECTION 3.13. Insurance		51
SECTION 3.14. Labor Matters		51
SECTION 3.15. Solvency		51
SECTION 3.16. Security Documents		52
SECTION 3.17. Federal Reserve Regulations		52
SECTION 3.18. TRW Agreement		52
SECTION 3.21. Purchase Documents		53
ARTICLE IV
Conditions
SECTION 4.01. Opening Covenants		53
SECTION 4.02. Prior to Initial Credit Event		53
SECTION 4.03. Each Credit Event		56
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information		56
SECTION 5.02. Notices of Material Events		58
SECTION 5.03. Information Regarding Collateral		58
SECTION 5.04. Existence; Conduct of Business		59
SECTION 5.05. Payment of Obligations		59
SECTION 5.06. Maintenance of Properties		59
SECTION 5.07. Insurance		59
SECTION 5.08. Casualty and Condemnation		60
SECTION 5.09. Books and Records; Inspection and Audit Rights		61
SECTION 5.10. Compliance with Laws and Agreements		61
SECTION 5.11. Use of Proceeds and Letters of Credit		61
SECTION 5.12. Additional Subsidiaries		62
SECTION 5.13. Further Assurances		62
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness; Certain Equity Securities		63
SECTION 6.02. Liens		64
SECTION 6.03. Fundamental Changes		65
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions		66
SECTION 6.05. Asset Sales		67
SECTION 6.06. Sale and Lease-Back Transactions		68
SECTION 6.07. Hedging Agreements		68
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness		69
SECTION 6.09. Transactions with Affiliates		70
SECTION 6.10. Restrictive Agreements		71
SECTION 6.11. Amendment of Material Documents		71
SECTION 6.13. Leverage Ratios		72
SECTION 6.15. Fixed Charge Coverage Ratio		72
SECTION 6.16. Certain Actions under June 2004 Note Documents		72
ARTICLE VII

3

	Page
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices		77
SECTION 9.02. Waivers; Amendments		78
SECTION 9.03. Expenses; Indemnity; Damage Waiver		80
SECTION 9.04. Successors and Assigns		81
SECTION 9.05. Survival		84
SECTION 9.06. Counterparts; Integration; Effectiveness		84
SECTION 9.07. Severability		85
SECTION 9.08. Right of Setoff		85
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process		85
SECTION 9.10. WAIVER OF JURY TRIAL		86
SECTION 9.11. Headings		86
SECTION 9.12. Confidentiality		86
SECTION 9.13. Joint Lead Arrangers, et al		87
SECTION 9.14. Interest Rate Limitation		87
SECTION 9.15. Existing Credit Agreement; Effectiveness of Amendment and Restatement		87

4

SCHEDULES:

Schedule 1.01(a) — Purchase Documents
Schedule 1.01(b) — Fiscal Quarter Ends
Schedule 1.01(c) — Existing Liens
Schedule 1.01(d) — Existing Investments
Schedule 1.01(e) — Immaterial Subsidiaries
Schedule 2.01(a) — Commitments
Schedule 2.01(b) — Existing Term Loans
Schedule 2.01(c) — Fourth Restatement Term Loans
Schedule 2.04 — Existing Letters of Credit
Schedule 3.05 — Real Property
Schedule 3.06 — Disclosed Matters
Schedule 3.12 — Subsidiaries
Schedule 3.13 — Insurance
Schedule 3.14 — Labor Matters
Schedule 6.10 — Existing Restrictions

EXHIBIT:

Exhibit A — Form of Assignment and Acceptance
Exhibit B — Form of Subordination Agreement
Exhibit C — Form of Management Fee Subordination

5

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

          This Fourth Amended and Restated Credit Agreement is made and entered into as of September 13, 2005, by and among:

(i)	ARGO-TECH CORPORATION, a Delaware corporation (the “Borrower”);
(ii)	AT HOLDINGS CORPORATION, a Delaware corporation (“Holdings”);
(iii)	THE FINANCIAL INSTITUTIONS as signatory lender parties hereto and their successors and assigns (collectively, the “Lenders”, with each individually being a “Lender”);
(iv)	NATIONAL CITY BANK, as successor to JPMorgan Chase Bank, N.A., as Administrative Agent and Issuing Bank;
(v)	JPMORGAN CHASE BANK, N.A., as Issuing Bank in respect of certain of the Letters of Credit (defined below);
(vi)	GENERAL ELECTRIC CAPITAL CORPORATION, as Co-Documentation Agent; and
(vii)	FIRSTMERIT BANK, N.A., as Co-Documentation Agent.

Recitals:

          A. The parties to this Agreement are the parties to that certain Third Amended and Restated Credit Agreement dated as of June 23, 2004, as amended by a First Amendment thereto dated January 19, 2005 (collectively, the “Existing Credit Agreement”), as in effect immediately prior to the Fourth Restatement Effective Date (as defined herein).

          B. Pursuant and subject to the Existing Credit Agreement, the Lenders agreed to advance to the Borrower revolving credit loans in an aggregate principal amount not to exceed $30,000,000 (collectively, the “Existing Revolving Loans”), consolidated term loans in the original aggregate principal amount of $15,000,000 (collectively, the “Existing Term Loans”); and the Issuing Banks agreed to issue letters of credit (collectively, the “Existing Letters of Credit”).

          C. On the close of business September 12, 2005, the aggregate unpaid principal balance of the Existing Revolving Loans was $0; the aggregate unpaid principal balance of the Existing Term Loans was $14,250,000.00; and the aggregate undrawn face amount of the Existing Letters of Credit was $8,482,573.78.

          D. The Borrower and Holdings have informed the Agent and the Lenders that pursuant to the Agreement and Plan of Merger by and among AT Holdings Corporation, Argo-Tech Corporation, GreatBanc Trust Company, as Trustee, V.G.A.T. Investors, LLC, and Vaughn Merger Sub, Inc. dated as of September 13, 2005 and the other related documents listed on Schedule 1.01(a) hereto (collectively, the “Purchase Documents”) a Change in Control (as

defined in the Existing Credit Agreement) is to occur on the last day of the Borrower’s current fiscal year.

          E. The Borrower and Holdings have requested the Lenders to amend and restate in their entirety the terms and conditions of the Existing Credit Agreement to, among other modifications, (i) consent to and reflect the consummation of the transactions contemplated by the Purchase Documents, (ii) increase the maximum aggregate principal amount of revolving credit available to $40,000,000 at any time outstanding, and (iii) advance additional term loans to the Borrower in the aggregate principal amount of $5,000,000.

          F. Subject to the satisfaction of the terms and conditions set forth in this Agreement, the parties hereto agree that the Existing Credit Agreement shall be amended and restated as provided herein.

Agreements:

          NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual agreements hereinafter set forth, the Borrower, Holdings, the Lenders, the Issuing Bank and the Administrative Agent hereby agree that the Existing Credit Agreement is hereby amended and restated in its entirety to provide as follows:

ARTICLE I

Definitions

          SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

          “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

          “Account Debtor” has the meaning assigned to such term in the Security Agreement.

          “Accounts” has the meaning assigned to such term in the Security Agreement.

          “Acquired Business” means any Person, property, business or asset acquired (or, as applicable, proposed to be acquired) by the Borrower or a Subsidiary pursuant to a Permitted Acquisition.

          “Added Term Loan” has the meaning assigned to such term in Section 2.20.

          “Added Term Loan Amendment” has the meaning assigned to such term in Section 2.20.

2

          “Added Term Loan Lender” means a Lender with an outstanding Added Term Loan.

          “Added Term Loan Maturity Date” means, with respect to each Added Term Loan, such date of final maturity of such Added Term Loan as shall be provided in the Added Term Loan Amendment applicable thereto; provided that in no event shall an Added Term Loan Maturity Date be earlier than the Revolving Maturity Date, the Existing Term Loan Maturity Date, and the Fourth Restatement Term Loan Maturity Date and, if they are different, the earliest thereof.

          “Adjusted EBITDA” means, for any period, the Consolidated EBITDA for such period, adjusted (a) to include the Consolidated EBITDA of any Acquired Business acquired during such period (and, solely for purposes of determining whether a proposed acquisition is a Permitted Acquisition pursuant to clause (iv) of the definition of the term “Permitted Acquisition”, (i) any Acquired Business that, at the time of calculation of Adjusted EBITDA for such purpose, has been acquired subsequent to the end of such period and prior to such time of calculation as well as (ii) the business proposed to be acquired) pursuant to a Permitted Acquisition and not subsequently sold, transferred or otherwise disposed of during such period (or, solely for purposes of determining whether a proposed acquisition is a Permitted Acquisition, subsequent to the end of such period and prior to such time), based on the Consolidated EBITDA of such Acquired Business for such period (including the portion thereof attributable to such period prior to the date of acquisition of such Acquired Business), (b) to give pro forma effect to Permitted S-X Adjustments in respect of an Acquired Business, (c) to exclude the Consolidated EBITDA of any Sold Business sold, transferred or otherwise disposed of during such period (and, solely for purposes of determining whether a proposed acquisition is a Permitted Acquisition pursuant to clause (iv) of the definition of the term “Permitted Acquisition”, any Sold Business that, at the time of calculation of Adjusted EBITDA for such purpose, has been sold, transferred or otherwise disposed of subsequent to the end of such period and prior to such time of calculation), based on the Consolidated EBITDA of such Sold Business for such period (including the portion thereof attributable to such period prior to the date of sale, transfer or disposition of such Sold Business) and (d) to reflect other adjustments reasonably satisfactory to the Administrative Agent.

          “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the nearest sixth decimal point) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

          “Administrative Agent” means National City Bank, in its capacity as successor administrative agent for the Lenders hereunder.

          “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

          “Affiliate” means, with respect to a specified Person, another Person that (a) directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is

3

under common Control with the Person specified or (b) owns, directly or indirectly, 10% or more of the voting securities of the Person specified.

          “Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds Effective Rate in effect on such day plus ¹/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

          “Applicable Percentage” means, with respect to any Revolving Lender, the percentage of the total Revolving Commitments represented by such Lender’s Revolving Commitment. If the Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Revolving Commitments most recently in effect, giving effect to any assignments.

          “Applicable Rate” means, for any day with respect to any ABR Loan or Eurodollar Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread” “Eurodollar Spread” or “Commitment Fee Rate”, as the case may be, based upon the Leverage Ratio as of the most recent determination date; provided that until the delivery to the Administrative Agent, pursuant to Section 5.01(b), of Borrower’s consolidated financial statements for Borrower’s first full fiscal quarter commencing after the Fourth Restatement Effective Date, the “Applicable Rate” shall be the applicable rate per annum set forth below in Category 2:

	ABR		Eurodollar		Commitment Fee
Leverage Ratio:	Spread		Spread		Rate
Category 1		1.25		2.75		0.50
Greater than or equal to 6.00 to 1.00
Category 2		1.00		2.50		0.50
Greater than or equal to 5.00 to 1.00 but less than 6.00 to 1.00
Category 3		0.75		2.25		0.375
Less than 5.00 to 1.00

          For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of the end of each fiscal quarter of Borrower’s fiscal year based upon Borrower’s consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a change in the Leverage Ratio shall be effective during the

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period commencing on and including the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change; provided that the Leverage Ratio shall be deemed to be in Category 1 (A) at any time that an Event of Default has occurred and is continuing or (B) if the Borrower fails to deliver the consolidated financial statements required to be delivered by it pursuant to Section 5.01(a) or (b), during the period from the date that is five (5) Business Days after the date on which delivery thereof is required by Section 5.01(a) or (b) until such consolidated financial statements are delivered.

          “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

          “Board” means the Board of Governors of the Federal Reserve System of the United States of America.

          “Borrower” means Argo-Tech Corporation, a Delaware corporation.

          “Borrowing” means Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

          “Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.

          “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in either or both of Cleveland, Ohio and New York City, New York are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

          “California Property” means that parcel of land and buildings and improvements situated thereon known as 617 West 17^th Street, Costa Mesa, California.

          “Capital Expenditures” means, for any period, (a) the additions to property, plant and equipment and other capital expenditures of the Borrower and its consolidated Subsidiaries that are (or would be) set forth in a consolidated statement of cash flows of the Borrower for such period prepared in accordance with GAAP and (b) the deemed principal portion of Capital Lease Obligations incurred by the Borrower and its consolidated Subsidiaries during such period.

          “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

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          “Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person other than Holdings of any shares of capital stock of the Borrower; (b) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), other than Permitted Owners of shares representing more than 20% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Holdings; (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of Holdings by Persons who were neither (i) nominated by AT Holdings LLC or the chief executive officer of the Borrower nor (ii) appointed by directors so nominated; or (d) the failure of the Permitted Owners to have Control of Holdings at any time prior to an initial public offering of Holdings’ capital stock.

          “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

          “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Consolidated Term Loans (or, as applicable, within Consolidated Term Loans, Existing Term Loans, Fourth Restatement Term Loans or Added Term Loans).

          “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          “Collateral” means any and all “Collateral”, as defined in any applicable Security Document, and any and all Mortgaged Property.

          “Collateral Agent” means the “Collateral Agent”, as defined in the Security Agreement.

          “Common Stock” means shares of Common Stock, par value $.001 per shares, of Holdings.

          “Company Notes” means promissory notes issued to holders of Holdings equity in connection with the redemption of equity pursuant to the Stockholders’ Agreement

          “Consolidated EBITDA” means, for any period, Consolidated Net Income for such period (adjusted to exclude any non-cash items attributable to purchase accounting for any acquisition transactions) plus (i) proceeds of business interruption insurance, but only to the extent not included in Consolidated Net Income and, plus, (ii) without duplication and to the extent deducted from revenues in determining Consolidated Net Income, the sum of (a) the aggregate amount of Consolidated Interest Expense for such period, (b) the aggregate amount of letter of credit fees accrued during such period, (c) the aggregate amount of income tax (or franchise tax or equivalent tax otherwise named) expense for such period, (d) all amounts

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attributable to depreciation and amortization (including good will impairment charges) for such period, (e) all extraordinary or non-cash charges during such period and all non-cash charges associated with ESOP compensation and stock options and stock appreciation rights issued to management, (f) debt extinguishment expense and write-off of deferred financing costs, (g) expenses paid for which the Borrower or a Subsidiary has been reimbursed by a third-party (other than an Affiliate of Holdings), such as an insurance company or TRW, but only to the extent that such third-party reimbursement was not included as income in determining Consolidated Net Income for such period, (h) customary and reasonable fees and other expenses in connection with the Effective Date Transactions, (i) customary and reasonable fees and other expenses in connection with proposed or consummated Permitted Acquisitions and the issuance of equity or debt securities permitted under the terms of this Agreement, provided that such fees and expenses in connection with proposed Permitted Acquisitions and proposed permitted issuances of equity or debt securities that are not consummated shall not exceed $1,000,000 in the aggregate for any four consecutive fiscal quarter period, and (j) Permitted Management Fees, and minus, (I) without duplication and to the extent added to revenues in determining Consolidated Net Income for such period, all extraordinary gains during such period, all as determined on a consolidated basis with respect to the Borrower and its Subsidiaries, except as expressly provided herein in accordance with GAAP and (II) to the extent paid in cash during such period, any charge previously excluded from the computation of Consolidated Net Income for a prior period pursuant to clause (e), above. For purposes of determining the Consolidated EBITDA of an Acquired Business or Sold Business as provided in the definition of Adjusted EBITDA, references in this definition, and in the definitions of Consolidated Interest Expense and Consolidated Net Income, to the Borrower and its Subsidiaries shall be deemed to refer to such Acquired Business or Sold Business, as applicable.

          “Consolidated Interest Expense” means, for any period, the interest expense, both expended and capitalized (including the interest component in respect of Capital Lease Obligations, but excluding any amortization of deferred financing costs and prepayment fees), accrued or paid by the Borrower and its Subsidiaries during such period, determined on a consolidated basis in accordance with GAAP.

          “Consolidated Net Income” means, for any period, net income or loss of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, provided that there shall be excluded (a) the income of any Person in which any other Person (other than the Borrower or any of the Subsidiaries or any director holding qualifying shares in compliance with applicable law) has a joint interest, except income shall be included to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Subsidiaries by such Person during such period and (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or any of its Subsidiaries or the date that Person’s assets are acquired by the Borrower or any of its Subsidiaries.

          “Consolidated Term Borrowing” means a Borrowing comprised of or in respect of any of the Consolidated Term Loans.

          “Consolidated Term Loans” means, collectively, the Existing Term Loans, the Fourth Restatement Term Loans and the Added Term Loans.

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          “Consolidated Term Loan Lender” means an Existing Term Loan Lender, a Fourth Restatement Term Loan Lender or an Added Term Loan Lender.

          “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

          “Current Redeemable Equity” means any preferred stock or other preferred equity interests that, in either case, and except in the event of a Change in Control, is subject to mandatory redemption at the option of the holder at any time prior to the date that is ninety (90) days after the Revolving Maturity Date, the Existing Term Loan Maturity Date, the Fourth Restatement Term Loan Maturity Date or the Added Term Loan Maturity Date (if they are different, whichever is latest).

          “Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, pursuant to Article VII become an Event of Default.

          “Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.

          “dollars” or “$” refers to lawful money of the United States of America.

          “Effective Date Transactions” means, collectively, the Restatement Transactions and the merger and acquisition transactions to be effected pursuant to the Purchase Documents.

          “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, handling, treatment, storage, disposal, release or threatened release of any Hazardous Material or to health and safety matters.

          “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of Holdings, the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

          “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the

8

Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

          “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

          “ESOP” means the employee stock ownership plan created pursuant to the terms of the ESOP Plan and Trust Document.

          “ESOP Plan and Trust Document” means the Argo-Tech Corporation Employee Stock Ownership Plan and Trust Agreement, dated May 17, 1994, between the Borrower and GreatBanc Trust Company in its capacity as trustee of the ESOP.

          “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

          “Event of Default” has the meaning assigned to such term in Article VII.

          “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.16(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive

9

additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a).

          “Existing Credit Agreement”, “Existing Revolving Loans”, and “Existing Term Loans” have the respective meanings given such terms in the Recitals hereto.

          “Existing Letters of Credit” has the meaning given such term in the Recitals hereto and shall include any Existing Letter of Credit after giving effect to any extension of the expiration date thereof effective after the Fourth Restatement Effective Date.

          “Existing Term Loan Lender” means a Lender with an outstanding Existing Term Loan.

          “Existing Term Loan Maturity Date” means June 23, 2009.

          “Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

          “Financial Officer” means the chief financial officer or treasurer of the Borrower.

          “Fixed Charge Capital Expenditures” means, for any period, Capital Expenditures for such period, other than any Capital Expenditure (or portion thereof) that (i) is made with (a) the proceeds of capital contributed to the Borrower or one of its consolidated Subsidiaries not more than five (5) Business Days prior to such Capital Expenditure, (b) the proceeds of the sale of assets replaced by such Capital Expenditure, but only to the extent that such proceeds were not included as income in determining Consolidated Net Income for such period, (c) the proceeds of any third-party reimbursement in respect of the capital asset in question, such as insurance proceeds or lessor rebate, but only to the extent that such third-party reimbursement was not included as income in determining Consolidated Net Income for such period, or (d) the proceeds of Capital Lease Obligations or other Indebtedness, other than Revolving Loans, or (ii) is part or all of a Permitted Acquisition.

          “Fixed Charge Coverage Ratio” means, for any period, the ratio of (a) remainder of (i) Adjusted EBITDA, minus (ii) Fixed Charge Capital Expenditures, and minus (iii) the aggregate amount of income tax expense paid in cash net of refunds received to (b) the sum of (i) Consolidated Interest Expense (other than the portion thereof, if any, consisting of annual agency fees or fees and expenses paid in connection with the Effective Date Transactions) paid in cash (net of interest income), plus (ii) scheduled payments of any and all of the Consolidated Term Loans after the Fourth Restatement Effective Date (and after giving effect to any prepayments affecting such scheduled payments), in each case for such period, plus (iii) Restricted Payments by the Borrower to the extent not otherwise deducted or expensed in computing Consolidated

10

Net Income, other than Restricted Payments pursuant to Sections 6.08(a)(iii) and 6.08(a)(iv)(F), and (iv) plus Permitted Management Fees paid in cash.

          “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

          “Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

          “Fourth Restatement Effective Date” means the date as of which the amendment and restatement of the Existing Credit Agreement pursuant to this Agreement is effective.

          “Fourth Restatement Term Loan” has the meaning assigned to such term in the Section 2.01(c).

          “Fourth Restatement Term Loan Lender” means, as of the effectiveness of this Agreement, each of the Lenders party hereto upon such effectiveness and, thereafter, a Lender with an outstanding Fourth Restatement Term Loan.

          “Fourth Restatement Term Loan Maturity Date” means June 23, 2009.

          “GAAP” means accounting principles generally accepted in the United States of America, consistently applied.

          “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

          “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.

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          “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

          “Hedging Agreement” means any interest rate hedging agreement entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment; foreign currency exchange agreement; commodity price protection agreement; or other interest or currency exchange rate or commodity price hedging arrangement.

          “Holdco 2005 Notes” means the Senior Discount Notes issued by Holdings in connection with the Purchase Documents that (i) do not require the current payment of accrued interest prior to the date that is 90 days after the Revolving Maturity Date, the Existing Term Loan Maturity Date or the Fourth Restatement Term Loan Maturity Date (if they are different, whichever is latest), (ii) do not require the payment of principal prior to the date that is 365 days after the Revolving Maturity Date, the Existing Term Loan Maturity Date or the Fourth Restatement Term Loan Maturity Date (if they are different, whichever is latest), and (iii) otherwise contain terms with respect to the obligations of and restrictions on the issuer that are consistent with those prevailing in the high-yield debt market at the time of issuance and are of the nature contained in the June 2004 Notes Documents.

          “Holdings” means AT Holdings Corporation, a Delaware corporation.

          “Holdings Included Indebtedness” has the meaning assigned to such term in clause (ii) of the definition of Total Debt.

          “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges (as distinct from so-called late charges or late fees) are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable and accrued expenses incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all reimbursement obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

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          “Indemnified Taxes” means Taxes other than Excluded Taxes.

          “Indemnity, Subrogation and Contribution Agreement” means the Amended and Restated Indemnity, Subrogation and Contribution Agreement, of even date with the Existing Credit Agreement, as amended, supplemented or otherwise modified from time to time, among the Borrower, Holdings, the Subsidiary Loan Parties and the Administrative Agent.

          “Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing, Existing Term Borrowing, Fourth Restatement Term Borrowing or Added Term Borrowing in accordance with Section 2.06.

          “Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each fiscal quarter of the Borrower, as such fiscal quarter-ends are identified on Schedule 1.01(b) hereto, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.

          “Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that

          (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and

          (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.

          For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

          “Inventory” has the meaning assigned to such term in the Security Agreement.

          “Issuing Bank” means National City Bank, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.04(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by an Affiliate of the Issuing Bank, by another Lender or by an Affiliate of another Lender, in which case the term “Issuing Bank” shall include any such Lender (which, on the Fourth Restatement Effective Date is JPMorgan Chase Bank, N.A.) or Affiliate with respect to Letters of Credit issued by such Lender or Affiliate.

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          “June 2004 Notes” means, collectively, the “9¹/4% Senior Notes, Series A, due 2011” and the “9¹/4% Senior Notes, Series B, due 2011” issued on the Third Restatement Effective Date (as defined in the Existing Credit Agreement) in the aggregate face principal amount of $250,000,000 (without giving effect to any purchase accounting adjustments) and any substantially identical notes issued in replacement therefore pursuant to the June 2004 Note Documents, as from time to time amended, waived, supplemented or modified in accordance with Section 6.11, and which term shall include additional issuances of notes by the Borrower after the Fourth Restatement Effective Date under and pursuant to the June 2004 Notes Documents and pursuant to Section 6.11. Except where the context otherwise requires, the term “June 2004 Notes” shall be deemed to include any and all promissory notes evidencing Put Refinancing Indebtedness.

          “June 2004 Notes Documents” means the indenture under which the June 2004 Notes are issued and all other instruments, agreements and documents evidencing, guaranteeing or providing for the terms and conditions of the June 2004 Notes, as from time to time amended, waived, supplemented or modified in accordance with Section 6.11. Except where the context otherwise requires, the term “June 2004 Notes Documents” shall be deemed to include any and all indentures, instruments, agreements and documents evidencing, guaranteeing or providing for the terms and conditions of the Put Refinancing Indebtedness.

          “LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

          “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

          “Lenders” means the Persons listed on Schedule 2.01(a) and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance.

          “Letter of Credit” means any Existing Letter of Credit and any letter of credit issued pursuant to this Agreement.

          “Leverage Ratio” means, on any date, the ratio of (a) Total Debt as of such date to (b) Adjusted EBITDA for the period of four consecutive fiscal quarters of the Borrower, as the case may be, (i) ending on such date (if such date is the last day of a fiscal quarter) or (ii) most recently ended prior to such date (if such date is not the last day of a fiscal quarter), all determined on a consolidated basis, except as expressly provided in this Agreement, in accordance with GAAP.

          “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the

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Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., Cleveland, Ohio time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall instead be the average (rounded up to the nearest sixth decimal point) of the rates at which U.S. dollar deposits of in the approximate amount of such Eurodollar Borrowing are offered to National City Bank (or other Lender selected as a reference bank by the Administrative Agent and the Required Lenders) in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for contracts which would be entered into at the commencement of such Interest Period.

          “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. The term “Lien” shall not be construed to include (i) a lessor’s (or sublessor’s) or licensors (or sub-licensor’s) interest under and pursuant to an operating (or so called ‘true’) lease or license under which Holdings, the Borrower or a Subsidiary is lessee (or sublessee) or (ii) a lessee’s (or sublessee’s) or licensee’s (or sub-licensee’s) interest under and pursuant to an operating (or so called ‘true’) lease or license permitted by this Agreement and under which Holdings, the Borrower or a Subsidiary is lessor (or sublessor) or licensor (or sub-licensor).

          “Loan Documents” means this Agreement, the promissory notes, if any, executed and delivered pursuant to Section 2.08(e), the Parent Guarantee Agreement, the Subsidiary Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement, the Security Documents and any intercreditor or subordination agreement in respect of Indebtedness of a Loan Party (including, without limitation, subordination provisions contained in documents evidencing or governing Subordinated Indebtedness).

          “Loan Parties” means Holdings, the Borrower and the Subsidiary Loan Parties.

          “Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

          “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of Holdings, the Borrower and the Subsidiaries taken as a whole, (b) the ability of one or more Loan Parties to perform any of their obligations under the Loan Documents that, taken as a whole, are material or (c) the rights of or benefits available to the Lenders under one or more Loan Documents that, taken as a whole, are material.

          “Material Indebtedness” means (i) Indebtedness under the June 2004 Notes, (ii) other Indebtedness (other than the Loans and Letters of Credit) in an aggregate principal amount

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exceeding $5,000,000, or (iii) obligations in respect of one or more Hedging Agreements in an aggregate principal amount exceeding $5,000,000, of any one or more of Holdings, the Borrower and its Subsidiaries. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of Holdings, the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Holdings, the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

          “Moody’s” means Moody’s Investors Service, Inc.

          “Mortgage” means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be satisfactory in form and substance to the Collateral Agent.

          “Mortgaged Property” means the California Property, the Ohio Property and each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13.

          “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

          “Net Proceeds” means, with respect to any event (a) the cash proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by Holdings, the Borrower and the Subsidiaries to third parties in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or other insured damage or condemnation or similar proceeding), the amount of all payments required to be made by Holdings, the Borrower and the Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by Holdings, the Borrower and the Subsidiaries, and the amount of any reserves established by Holdings, the Borrower and the Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of the Borrower).

          “Obligations” has the meaning assigned to such term in the Security Agreement.

          “Ohio Property” means that parcel of land and buildings and improvements situated thereon known as 23555 Euclid Avenue, Euclid, Ohio.

          “Other Taxes” means any and all current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

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          “Parent Guarantee Agreement” means the Amended and Restated Parent Guarantee Agreement of even date with the Existing Credit Agreement, as amended, supplemented or otherwise modified from time to time, made by Holdings in favor of the Administrative Agent for the benefit of the Secured Parties.

          “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

          “Perfection Certificate” means a certificate in the form of Annex 1 to the Security Agreement or any other form approved by the Collateral Agent.

          “Permitted Acquisition” means any acquisition by the Borrower or a Subsidiary Loan Party of all or substantially all the assets of, or all the shares of capital stock of or other equity interests in, a Person or division or line of business of a Person if, immediately after giving effect thereto, (i) both of the Restricted Transaction Conditions shall have been satisfied immediately prior and after giving effect to such acquisition, (ii) all transactions related thereto are consummated in accordance with applicable laws, (iii) all the capital stock of any Subsidiary formed for the purpose of or resulting from such acquisition are owned directly by the Borrower or a Subsidiary Loan Party and all actions required to be taken, if any, with respect to such acquired or newly formed Subsidiary under Sections 5.12 and 5.13 have been taken, (iv) the Borrower and its Subsidiaries are in compliance, on a pro forma basis after giving effect to such acquisition (and taking into account all appropriate assets, liabilities and items of income and expense of any acquired entity or acquired assets for any applicable period prior to the acquisition thereof) with the covenants contained in Sections 6.12 and 6.13 recomputed as at the last day of the most recently ended fiscal quarter of the Borrower as of which the Borrower is then obligated to have delivered a balance sheet and related statements of operations pursuant to Section 5.01(a) or (b), as applicable, as if such acquisition had occurred on the first day of each relevant period for testing such compliance, (v) in the case of an acquisition of assets, such assets are to be used, and in the case of an acquisition of capital stock or other equity interests, the Person so acquired is engaged in, the same or a related line of business as the Borrower and the Subsidiaries and other business activities incidental thereto, (vi) the Borrower has delivered to the Administrative Agent an officers’ certificate to the effect set forth in clauses (i) and (iv) above, and clause (vii) below, together with all relevant financial information for the Person or assets to be acquired, and (vii) none of Holdings, the Borrower nor any Subsidiary, including any acquired or newly formed Subsidiary, shall be liable for any Indebtedness other than as permitted by Section 6.01.

          “Permitted Encumbrances” means:

     (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.04 or, as of any date of determination, not then required to be paid pursuant to Section 5.04;

     (b) contractual or statutory liens in favor of lessors of real property and carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 90 days or are being contested in compliance with Section 5.04;

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     (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

     (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

     (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII;

     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

     (g) rights of the government of the United States of America or any agency or instrumentality thereof in inventory or equipment, arising out of any contract between the Borrower or any Subsidiary and such government, agency or instrumentality or pursuant to any contract entered into with, or received from, any higher-tier subcontractor or prime contractor of such government, agency or instrumentality, whether by operation of law or the terms of such contract, or by virtue of the receipt by the Borrower or its predecessor or such Subsidiary of progress or advance payments or reimbursement of costs in connection therewith;

     (h) Liens arising in the ordinary course of business under Article 2 and Section 4-210 of the Uniform Commercial Code, as adopted in the State of Ohio;

     (i) Liens on property of a Foreign Subsidiary so long as the aggregate principal amount of all Indebtedness secured by such Liens does not exceed $2,500,000 as to all Foreign Subsidiaries taken together;

     (j) Liens attaching to earnest money deposits (or equivalent deposits otherwise named) made in connection with proposed Permitted Acquisitions;

     (k) the interest of a proposed purchaser under an agreement to sell or otherwise dispose of property permitted under the terms of this Agreement;

     (l) (i) set-off rights or (ii) Liens arising in connection with repurchase agreements that are Permitted Investments;

     (m) the interest of a purchaser of uncollectible or past due Accounts in the ordinary course of business;

     (n) Liens arising pursuant to law in favor of a Governmental Authority in connection with the importation of goods in the ordinary course of business;

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     (o) Liens existing on the Fourth Restatement Effective Date and set forth on Schedule 1.01(c) hereto;

     (p) Liens securing insurance premium Indebtedness permitted under Section 6.01(a)(xiii); and

     (q) in addition to the Liens and interests described in clauses (a) through (p), inclusive, above, other Liens securing Indebtedness and other obligations, so long as the aggregate principal amount of all such Indebtedness and other obligations, as to the Borrower and its Subsidiaries taken together does not at any time exceed $5,000,000.

provided that, except as expressly provided in clauses (i), (o), (p) and (q), above, the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

          “Permitted Investments” means:

     (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

     (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least A-1 or the equivalent thereof from S&P or P-1 or the equivalent thereof from Moody’s;

     (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, (i) any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000, (ii) any domestic office of any commercial bank organized under the laws of a foreign jurisdiction that has a rating of at least AA by S&P or Aa by Moody’s and (iii) any Lender;

     (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;

     (e) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (a), (b) and (c), above;

     (f) investments in money market funds access to which is provided as part of “sweep” accounts maintained with a Lender;

     (g) investments in industrial development revenue bonds or floating-rate taxable bonds which (i) “re-set” interest rates no less frequently than quarterly, (ii) are entitled to the benefit of a remarketing arrangement with an established broker dealer, and (iii) are supported by a direct pay letter of credit covering principal and accrued interest which is

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issued by a bank having, on such date, a short-term commercial paper rating of at least A-1 or the equivalent thereof from S&P or P-1 or the equivalent thereof from Moody’s;

     (h) investments in pooled funds or investment accounts consisting of investments of the nature described in the foregoing clause (g);

     (i) receivables owing to the Borrower or any Subsidiary created or acquired in the ordinary course of business or payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary terms as the Borrower or such Subsidiary deems reasonable under the circumstances;

     (j) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

     (k) the investment by Holdings in the Tracker Sub described on Schedule 1.01(d) hereto and additional contributions to the capital thereof (the proceeds of which were received from the Borrower), so long as the aggregate amount of such contributions made on or after the Fourth Restatement Effective Date does not exceed $3,000,000;

     (l) investments existing on the Fourth Restatement Effective Date and set forth on Schedule 1.01(d) hereto;

     (m) investments by Foreign Subsidiaries of the type described in clauses (a) through (h), inclusive, above, that are issued by a foreign Governmental Authority, foreign bank, or other issuer, so long as the credit quality ratings of such investments is equivalent to that required pursuant to said clauses (a) through (h); and

     (n) investments made with the proceeds of capital contributed to, as the case may be, Holdings, the Borrower and one of its consolidated Subsidiaries not more than five (5) Business Days prior to such investment.

          “Permitted Management Agreement” means the management agreement executed in conjunction with the Effective Date Transactions and in force on the Fourth Restatement Effective Date.

          “Permitted Management Fees” means management or similar compensation payable by either or both of Holdings and the Borrower pursuant to the Permitted Management Agreement.

          “Permitted Owners” means (a) Mr. Masashi Yamada and members of his immediate family, (b) corporations and other entities that are Controlled by one or more of the persons referred to in clause (a), (c) V.G.A.T. Investors, LLC, Vaughn Merger Sub, Inc. and their respective Affiliates, and (d) trusts for the sole benefit of one or more of the Persons referred to in clause (a) or (c).

          “Permitted S-X Adjustments” means adjustments to Consolidated Net Income for identified cost savings in respect of an Acquired Business that (i) would be permitted in a pro

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forma financial statement prepared in compliance with Regulation S-X. of the Securities and Exchange Commission and (ii) are verified by the Administrative Agent or an independent third party reasonably acceptable to the Administrative Agent.

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

          “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

          “Pledge Agreement” means the Amended and Restated Pledge Agreement of even date with the Existing Credit Agreement, as amended, supplemented or otherwise modified from time to time, among the Borrower, Holdings, the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties.

          “Prepayment Event” means:

     (a) any sale, transfer or other disposition or series of related sales, transfers or other dispositions (including pursuant to a sale and leaseback transaction) of any property or asset (including capital stock) of Holdings, the Borrower or any Subsidiary, other than (i) dispositions described in clauses (a), (b) and (f) of Section 6.05, (ii) the sale of the cryogenics business, (iii) the sale of non-core assets acquired in connection with a Permitted Acquisition, and (iv) other dispositions resulting in aggregate Net Proceeds not exceeding $3,000,000; or

     (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of Holdings, the Borrower or any Subsidiary, or

     (c) the issuance by Holdings, the Borrower or any Subsidiary of any equity securities, or the receipt by Holdings, the Borrower or any Subsidiary of any capital contribution, other than (i) any such issuance to a Permitted Owner or any Person with pre-emptive rights with respect to such equity securities or a holder who acquired stock as purchase consideration paid by a Loan Party in a Permitted Acquisition, (ii) any such issuance to a Person who is not a Permitted Owner or a Person with pre-emptive rights with respect to such equity securities or a holder who acquired stock as purchase consideration paid by a Loan Party in a Permitted Acquisition, so long as, after giving effect to such issuance and all other such issuances under this clause (ii) occurring after the Fourth Restatement Effective Date, Persons acting together as a group who are not Permitted Owners or Persons with pre-emptive rights with respect to such equity securities or holders who acquired stock as purchase consideration paid by a Loan Party in a Permitted Acquisition do not, directly or indirectly, Control an aggregate of more than twenty percent (20%) of voting stock of any Loan Party, (iii) in connection with a Permitted Acquisition, a Permitted Investment or a Restricted Payment permitted

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pursuant to Section 6.08, (iv) issuances of stock as purchase consideration paid by a Loan Party in a Permitted Acquisition, and (iv) any such issuance of equity securities to, or receipt of any such capital contribution from, Holdings, the Borrower or a Subsidiary; provided that, unless a Default has occurred and is continuing, an event of the type described in this clause (c) shall not constitute a Prepayment Event if all of the principal of and interest on the Consolidated Term Loans shall have been paid in full; or

     (d) the incurrence by Holdings, the Borrower or any Subsidiary of any Indebtedness, other than Indebtedness permitted under Section 6.01;

provided that, at the option of the Borrower, so long as the Net Proceeds of any event described in clause (a) or (b), above, are deposited upon receipt with the Collateral Agent pursuant to a security and control agreement reasonably satisfactory to the Collateral Agent, the Collateral Agent will, at any time and from time to time during the 360 day period (or any longer period provided for in Section 5.08(c) with respect to events referred to in such Section) after such event (so long as no Default then exists), disburse such Net Proceeds to the Borrower or a Subsidiary to make one or more Permitted Acquisitions (in the case of clause (a) above), or to repair, restore or replace such property or asset (in the case of clause (b) above, provided that such disbursement shall be on terms reasonably satisfactory to the Collateral Agent) and in each such case, only the portion of such Net Proceeds, if any, continuing to be held by the Collateral Agent at the end of such 360 day period (or such longer period described above) shall be deemed to be Net Proceeds of a Prepayment Event.

          “Prime Rate” means the rate of interest per annum publicly announced from time to time by National City Bank as its prime rate (or equivalent rate otherwise named) in effect at its principal office in Cleveland, Ohio; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

          “Purchase Documents” has the meaning given such term in the Recitals hereto.

          “Put Refinancing Indebtedness” means Indebtedness incurred by the Borrower and its Subsidiaries that are guarantors of the June 2004 Notes solely for the purpose of redeeming, and not greater in principal amount than the amount necessary to redeem, June 2004 Notes presented for mandatory redemption by reason of the “Change of Control” (as defined in the June 2004 Notes Documents) that is to occur on the Fourth Restatement Effective Date that is on terms in all material respects the same as those governing the June 2004 Notes and that does not breach any covenant in the June 2004 Notes Documents or otherwise cause the occurrence of a “Default” or “Event of Default” (as those two terms are defined therein).

          “Quarterly Payment Date” means the last day of each fiscal quarter of the Borrower during the term of this Agreement, as such fiscal quarter-ends are identified on Schedule 1.01(b) hereto.

          “Register” has the meaning set forth in Section 9.04.

          “Regulation U” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

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          “Regulation X” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

          “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

          “Required Lenders” means, at any time, Lenders having Revolving Exposures, Consolidated Term Loans and unused Revolving Commitments representing more than 50% of the sum of the total Revolving Exposures, outstanding Consolidated Term Loans and unused Revolving Commitments at such time.

          “Restatement Transactions” means the execution and delivery of this Agreement by each Person party hereto, the satisfaction of the conditions to the effectiveness hereof, and the consummation of the transactions contemplated hereby, including the amendments to the Existing Credit Agreement effected by the restatement thereof.

          “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of Holdings, the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of Holdings, the Borrower or any Subsidiary or any option, warrant or other right to acquire any such shares of capital stock of Holdings, the Borrower or any Subsidiary.

          “Restricted Transaction Conditions” means, as of any date, both of the following shall be true: (i) that as of such date and after giving effect to the Restricted Payment, Permitted Acquisition, prepayment or other transaction in respect of which the Restricted Transaction Conditions are being referenced, there exists no Default, and (ii) that, after giving effect to the Restricted Payment, Permitted Acquisition, prepayment or other transaction in respect of which the Restricted Transaction Conditions are being referenced, the Borrower shall have delivered to the Administrative Agent a certificate that the aggregate of the Borrower’s consolidated cash-on-hand, plus the Revolving Availability is greater than $10,000,000.

          “Revolving Availability” means, as of any date of determination, an amount equal to the aggregate amount of the Lenders’ Revolving Commitments on such date, minus (ii) the aggregate amount of the Lenders’ Revolving Exposures on such date.

          “Revolving Availability Period” means the period from and including the Fourth Restatement Effective Date to but excluding the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments.

          “Revolving Borrowing” means a Borrowing comprised of or in respect of Revolving Loans.

          “Revolving Commitment” means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such

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Lender’s Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.07, (b) increased pursuant to Section 2.20, and (c) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial aggregate amount of the Lenders’ Revolving Commitments as of the Fourth Restatement Effective Date is $40,000,000.

          “Revolving Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure at such time.

          “Revolving Lender” means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure.

          “Revolving Loan” means a Loan made pursuant to Section 2.01(a).

          “Revolving Maturity Date” means June 23, 2009.

          “S&P” means Standard & Poor’s.

          “Secured Parties” shall have the meaning assigned to such term in the Security Agreement.

          “Secured Leverage Ratio” means, on any date, the ratio of (a) that portion of Total Debt as of such date that is secured by a Lien on any property or interest therein of the Borrower or any of its Subsidiaries to (b) Adjusted EBITDA for the period of four consecutive fiscal quarters of the Borrower, as the case may be, (i) ending on such date (if such date is the last day of a fiscal quarter) or (ii) most recently ended prior to such date (if such date is not the last day of a fiscal quarter), all determined on a consolidated basis, except as expressly provided in this Agreement, in accordance with GAAP.

          “Security Agreement” means the Amended and Restated Security Agreement of even date with the Existing Credit Agreement, as amended, supplemented or otherwise modified from time to time, among the Borrower, the Subsidiary Loan Parties and the Collateral Agent for the benefit of the Secured Parties.

          “Security Documents” means the Security Agreement, the Pledge Agreement, the Mortgages and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the Obligations.

          “Sold Business” means any Person, property, business or assets comprising a division or business line sold, transferred or otherwise disposed of by the Borrower or any Subsidiary thereof to a Person who is not an Affiliate, other than in the ordinary course of business.

          “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the

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Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentage shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in such reserve percentage.

          “Stockholders’ Agreement” means the stockholders’ agreement executed in conjunction with the Effective Date Transactions and in force on the Fourth Restatement Effective Date in form reasonably satisfactory to the Agent.

          “Subordinated Indebtedness” shall mean any Indebtedness that (i) does not require any principal payment prior to December 15, 2009 and (ii) has been subordinated to the Obligations in right and time of payment upon terms set forth on Exhibit B hereto; provided that, notwithstanding the foregoing, Subordinated Indebtedness incurred as part of the purchase consideration in a Permitted Acquisition may provide for principal payment prior to December 15, 2009 so long as the aggregate unpaid principal balance of all such Subordinated Indebtedness of the Borrower and its Subsidiaries incurred in connection with Permitted Acquisitions that provides for principal payment prior to December 15, 2009 does not at any time exceed an amount equal to 10% of Adjusted EBITDA for the preceding four consecutive quarterly periods most recently ended.

          “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, Controlled or held.

          “Subsidiary” means any subsidiary of Holdings or the Borrower, as the context requires.

          “Subsidiary Guarantee Agreement” means the Amended and Restated Subsidiary Guarantee Agreement of even date with the Existing Credit Agreement, as amended, supplemented or otherwise modified from time to time, made by the Subsidiary Loan Parties in favor of the Administrative Agent for the benefit of the Secured Parties. Subsidiary Loan Parties as of the Fourth Restatement Effective Date are set forth on Schedule 3.12.

          “Subsidiary Loan Party” means any Subsidiary of the Borrower other than (a) any Foreign Subsidiary, and (b) immaterial Subsidiaries set forth on Schedule 1.01(e) so long as such immaterial Subsidiaries have no operating assets or earnings other than operating assets and earnings as of the Fourth Restatement Effective Date.

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          “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

          “Total Debt” means, the aggregate of, but without duplication, and calculated without giving effect to purchase accounting adjustments, (i) with respect to the Borrower and its Subsidiaries on a consolidated basis at any time, all Indebtedness of the Borrower and its Subsidiaries that at such time would be required to be reflected as a liability for borrowed money on a consolidated balance sheet of the Borrower and its consolidated Subsidiaries prepared in accordance with GAAP and (ii) with respect to Holdings and its Subsidiaries (other than the Borrower and its Subsidiaries) on a consolidated basis at any time, all Indebtedness of Holdings and its Subsidiaries (other than the Borrower and its Subsidiaries) (A) that at such time would be required to be reflected as a liability for borrowed money on a consolidated balance sheet of Holdings and its Subsidiaries (other than the Borrower and its Subsidiaries) prepared in accordance with GAAP and (B) that requires that interest accrued on such Indebtedness to be paid in cash at any time before the earlier of (x) the date that is 365 days after such time and (y) the date that is 90 days after the Revolving Maturity Date, the Existing Term Loan Maturity Date, the Fourth Restatement Term Loan Maturity Date or the Added Term Loan Maturity Date (if they are different, whichever is latest) (“Holdings Included Indebtedness”).

          “Tracker Sub” means Argo Tracker Corporation, a Delaware corporation.

          “TRW” means TRW Inc. and its successors and permitted assigns under the TRW Agreement, including, without limitation, any division or subsidiary of Northrop Grumman Corporation.

          “TRW Agreement” means that certain Agreement of Purchase and Sale between Agnem Holdings, Inc. and TRW, dated as of August 5, 1986, as amended by (a) that certain letter agreement dated September 5, 1986, (b) that certain Agreement dated as of September 16, 1986, (c) that certain Agreement dated as of September 26, 1986, (d) that certain Agreement dated as of October 1, 1986, (e) that certain letter agreement dated as of October 10, 1986, (f) that certain letter agreement dated October 15, 1986, and (g) that certain Amendment No. 6 to Purchase Agreement dated as of October 20, 1986; such term shall also include any other amendments or modifications thereof entered into in accordance with Section 6.11.

          “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

          “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

          SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or

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by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

          SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

          SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

ARTICLE II

The Credits

          SECTION 2.01. Commitments; Outstanding Loans. (a) Upon the effectiveness of this Agreement, the terms and conditions governing Existing Revolving Loans will be amended and restated in their entirety to provide for a revolving credit facility under which, subject to the terms and conditions set forth in this Agreement, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment. The amount of each Revolving Lender’s Revolving Commitment as of the Fourth Restatement Effective Date is set forth on Schedule 2.01(a) and thereafter, the amount of each Revolving Lender’s Revolving Commitment is set forth in the Assignment and Acceptance or Commitment Acceptance pursuant to which

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such Lender shall have assumed its Revolving Commitment or increase thereto. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

          (b) The principal balance of the Existing Term Loan of each Existing Term Loan Lender, as of the Fourth Restatement Effective Date, is set forth on Schedule 2.01(b).

          (c) Upon the effectiveness of this Agreement, each Fourth Restatement Term Loan Lender shall advance to the Borrower an additional term loan in the amount set forth opposite the name of such Fourth Restatement Term Loan Lender on Schedule 2.01(c) (each a “Fourth Restatement Term Loan” and, collectively, the “Fourth Restatement Term Loans”).

          SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of the same Type made by the Revolving Lenders ratably in accordance with their respective Applicable Percentage. The failure of any Revolving Lender to make any Revolving Loan required to be made by it shall not relieve any other Revolving Lender of its obligations hereunder; provided that the Revolving Commitments are several and no Revolving Lender shall be responsible for any other Revolving Lender’s failure to make Revolving Loans as required.

          (b) Subject to Section 2.13, each Revolving Borrowing and Class of Consolidated Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

          (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $2,500,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Revolving Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(e). Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of eight (8) Eurodollar Borrowings outstanding.

          (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date, Existing Term Loan Maturity Date, Fourth Restatement Term Loan Maturity Date or Added Term Loan Maturity Date, as applicable.

          SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing or Class of Consolidated Term Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Cleveland, Ohio time, three Business Days before the date of the proposed Borrowing, or (b) in

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the case of an ABR Borrowing, not later than 11:00 a.m., Cleveland, Ohio time, one Business Day before the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(e) may be given not later than 10:00 a.m., Cleveland, Ohio time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

     (i) whether the requested Borrowing is to be a Revolving Borrowing or Existing Term Borrowing, Fourth Restatement Term Borrowing or Added Term Borrowing;

     (ii) the aggregate amount of such Borrowing;

     (iii) the date of such Borrowing, which shall be a Business Day;

     (iv) subject to the second sentence of Section 2.02(b), whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

     (v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

     (vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

          SECTION 2.04. Letters of Credit. (a) General. The Existing Letters of Credit are identified on Schedule 2.04 hereto. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing

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Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $30,000,000, and (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments.

          (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Maturity Date.

          (d) Participations. By the issuance of a Letter of Credit, including without limitation the previous issuance of an Existing Letter of Credit, (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

          (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, Cleveland, Ohio time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., Cleveland, Ohio time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, Cleveland, Ohio time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., Cleveland, Ohio time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives

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such notice, if such notice is not received prior to such time on the day of receipt; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with an ABR Revolving Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

          (f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or

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willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

          (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

          (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

          (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

          (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the

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Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.

          SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, Cleveland, Ohio time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in Cleveland, Ohio and designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.04(e) shall be remitted by the Administrative Agent to the Issuing Bank.

          (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective

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Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

          SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing and Consolidated Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

          (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

          (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (f) of this Section:

     (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

     (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

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          (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

          (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

          (f) A Borrowing of any Class may not be converted to or continued as a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period therefor would commence before and end after a date on which any principal of the Loans of such Class is scheduled to be repaid and (ii) the sum of the aggregate principal amount of outstanding Eurodollar Borrowings of such Class with Interest Periods ending on or prior to such scheduled repayment date plus the aggregate principal amount of outstanding ABR Borrowings of such Class would be less than the aggregate principal amount of Loans of such Class required to be repaid on such scheduled repayment date.

          SECTION 2.07. Termination and Reduction of Commitments. (a) Unless previously terminated, the Revolving Commitments shall terminate on the Revolving Maturity Date.

          (b) The Borrower may at any time terminate, or from time to time reduce, the Revolving Commitments; provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $100,000 and not less than $1,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the sum of the Revolving Exposures would exceed the total Revolving Commitments.

          (c) In the event that, on the date on which any prepayment would be required pursuant to Section 2.10(c), no Consolidated Term Borrowings remain outstanding or the amount of the prepayment required by Section 2.10(c), exceeds the aggregate principal amount of Consolidated Term Borrowings then outstanding, the Borrower shall reduce the Revolving Commitments, ratably according to the Applicable Percentages, by an amount equal to the excess of the required prepayment over the principal amount, if any, of Consolidated Term Borrowings actually prepaid.

          (d) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Commitments under paragraph (b) of this Section, or any required reduction of the Revolving Commitments under paragraph (c) of this Section, at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the

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Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Revolving Commitments shall be permanent. Each reduction of the Revolving Commitments shall be made ratably among the Lenders in accordance with their respective Applicable Percentage.

          SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date and (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Consolidated Term Loan of such Lender as provided in Section 2.09. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing.

          (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

          (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

          (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

          (e) Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

          SECTION 2.09. Amortization of Consolidated Term Loans. (a) Subject to adjustment pursuant to paragraph (b) of this Section 2.09 and Section 2.10(c), (i) the Borrower shall repay Existing Term Borrowings from and after the Fourth Restatement Effective Date in

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(A) twelve (12) consecutive quarter-annual installments, each in the aggregate principal amount of One Hundred Eighty-seven Thousand Five Hundred Dollars ($187,500), on each Quarterly Payment Date, commencing with October 28, 2005, (B) three (3) consecutive quarter-annual installments, each in the aggregate principal amount of Three Million Dollars ($3,000,000), on each Quarterly Payment Date, commencing with October 24, 2008 and (C) one installment, on the Existing Term Loan Maturity Date, in the aggregate principal amount of all Existing Term Borrowings then remaining unpaid and (ii) the Borrower shall repay Fourth Restatement Term Borrowings from and after the Fourth Restatement Effective Date in one installment, on the Fourth Restatement Term Loan Maturity Date, in the aggregate principal amount of all Fourth Restatement Term Borrowings then remaining unpaid.

          (b) Any prepayment of a Consolidated Term Borrowing on or after the Fourth Restatement Effective Date shall be applied to reduce the subsequent scheduled repayments of the Consolidated Term Borrowings to be made pursuant to this Section in the order provided for in the last sentence of Section 2.10(c), below.

          (c) Prior to any repayment of any Consolidated Term Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be repaid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 11:00 a.m., Cleveland, Ohio time, three Business Days before the scheduled date of such repayment; provided that each repayment of Consolidated Term Borrowings shall be applied to repay any outstanding ABR Consolidated Term Borrowings before any Eurodollar Consolidated Term Borrowings of such Class. Repayments of Consolidated Term Borrowings shall be accompanied by accrued interest on the amount repaid.

          SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of paragraphs (e) and (f) this Section; provided that each prepayment of Consolidated Term Borrowings shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $1,000,000.

          (b) On any date that the total Revolving Exposures exceed the Total Revolving Commitments, in the event and on each such occasion, the Borrower shall prepay Revolving Borrowings in an aggregate amount equal to such excess.

          (c) In the event and on each occasion that any Net Proceeds are received by or on behalf of Holdings, the Borrower or any Subsidiary in respect of any Prepayment Event, the Borrower shall, immediately after such Net Proceeds are received apply an aggregate amount equal to such Net Proceeds (i) first, to the prepayment in full of all outstanding Consolidated Term Borrowings and (ii) second, to the reduction of the Revolving Commitments. Prepayments of the Consolidated Term Borrowings shall be applied (A) first, to principal installments of the Existing Term Loans due on the four (4) Quarterly Payment Dates next following such receipt of Net Proceeds in the order of maturity of such installments, (B) second, to all of the remaining principal installments of the Existing Term Loans, ratably according to the respective amounts of such remaining installments, (C) third, to the principal of the Fourth Restatement Term Loans, and (D) fourth, to the principal installments of the Added Term Loans, in such order as shall

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have be specified in the Added Term Loan Amendment applicable thereto or, in the absence of such specification, in their inverse order of maturity.

          (d) In the event of any partial reduction of the Revolving Commitments, then (i) at or prior to the date of such reduction, the Administrative Agent shall notify the Borrower and the Lenders of the Revolving Exposure after giving effect thereto and (ii) if such Revolving Exposure would exceed the Revolving Commitments after giving effect to such reduction, then the Borrower shall, on the date of such reduction, repay or prepay Revolving Borrowings in an amount sufficient to eliminate such excess.

          (e) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section; provided that each prepayment of Borrowings of any Class shall be applied to prepay ABR Borrowings of such Class before any other Borrowings of such Class.

          (f) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Cleveland, Ohio time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., Cleveland, Ohio time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if a notice of optional prepayment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.07, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.07. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12.

          SECTION 2.11. Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily unused amount of the Revolving Commitment of such Lender during the period from and including the Fourth Restatement Effective Date to but excluding the date on which such Revolving Commitment terminates. Accrued commitment fees shall be payable in arrears on each Interest Payment Date and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the Fourth Restatement Effective Date. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender.

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          (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as interest on Eurodollar Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Fourth Restatement Effective Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at one-fourth of one percent (0.25%) per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Fourth Restatement Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees (other than fronting fees, which shall be payable as specified above) with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees shall be payable in arrears on each Interest Payment Date, commencing on the first such date to occur after the Fourth Restatement Effective Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

          (c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

          (d) The Borrower shall pay to the Administrative Agent on the Fourth Restatement Effective Date for distribution to each Lender a closing fee for such Lender in the amount specified in the commitment allocation letter between such Lender and either or both of the Joint Lead Arrangers.

          (e) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances.

          SECTION 2.12. Interest. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.

          (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

          (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at

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stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (A) in the case of overdue principal of any Loan, two percent (2%) plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (B) in the case of any other amount, two percent (2%) plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.

          (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

          (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

          SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

     (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

     (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

          SECTION 2.14. Increased Costs. (a) If any Change in Law shall:

     (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by,

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any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or

     (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

          (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

          (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

          (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

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          SECTION 2.15. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including, without limitation, as a result of the requirements of Section 2.10 or of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Consolidated Term Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(f) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

          SECTION 2.16. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

          (c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by

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the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. If the Administrative Agent, any Lender or the Issuing Bank (as the case may be) receives a refund of any Indemnified Taxes or Other Taxes for which the Borrower has made a payment hereunder, it shall promptly notify the Borrower thereof and shall promptly upon receipt repay such refund to the Borrower, without interest and net of any expenses incurred; provided that the Borrower, upon the request of the Administrative Agent, such Lender or the Issuing Bank (as the case may be), agrees to return the amount of such refund (plus any penalties, interest or other charges required to be paid) to the Administrative Agent, such Lender or the Issuing Bank (as the case may be) in the event the Administrative Agent, such Lender or the Issuing Bank (as the case may be) is required to repay such refund to the relevant Governmental Authority.

          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

          (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.

          SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Setoffs. (a) The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, Cleveland, Ohio time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 1900 East Ninth Street, Cleveland, Ohio, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars.

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          (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

          (c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans, Consolidated Term Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Consolidated Term Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Consolidated Term Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Consolidated Term Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

          (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

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          (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(d) or (e), 2.05(b), 2.17(d) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

          SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

          (b) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

          SECTION 2.19. Same Indebtedness; Other References.

               (a) This Agreement and the other Loan Documents shall not be deemed to provide for or effect a novation or repayment and re-advance of any portion of the Existing Revolving Loans, the Existing Tranche A Term Loans or the Existing Delayed Draw Acquisition Loans now outstanding, it being the intention of the Borrower and the Lenders hereby that the Indebtedness owing under this Agreement be and hereby is the same Indebtedness as that owing under the Existing Credit Agreement immediately prior to the effectiveness hereof. Without

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limiting the generality of the foregoing, to the extent, if any, not paid prior to the effectiveness of this Agreement, all accrued interest and fees owing under and pursuant to the Existing Credit Agreement shall be due and payable in full on the date on which they would have been due and payable pursuant the Existing Credit Agreement.

               (b) Upon the effectiveness of this Agreement as provided in Sections 2.01 and 4.02 hereof, the Existing Credit Agreement shall be deemed to have been amended and restated in its entirety and superseded by this Agreement, and any references in any other Loan Document to the Existing Credit Agreement shall be deemed to refer to this Agreement.

     SECTION 2.20. Optional Increase in Revolving Commitments; Added Term Loans. At any time prior to the date that is thirty days prior to, as applicable, the Revolving Maturity Date or the latest of any Added Term Loan Maturity Date, if no Default shall have occurred and be continuing (or would result after giving effect thereto), the Borrower, may, if it so elects, (i) increase the aggregate amount of the Revolving Commitments (each such increase to be in an aggregate amount an integral multiple of $1,000,000 and not less than $5,000,000), (ii) obtain additional term loan advances (each such term loan to be in an initial principal amount that is an integral multiple of $1,000,000) that will become part of the Consolidated Term Loans and Obligations hereunder (each an “Added Term Loan”) or (iii) a combination of both, (I) by designating one or more financial institutions not theretofore a Lender to become a Lender (such designation to be effective only with the prior written consent of the Administrative Agent and, in the case of an increase in the Revolving Commitments, the Issuing Bank, which consents will not be unreasonably withheld or delayed), (II) by agreeing with one or more existing Lenders that, as applicable, such existing Lenders’ respective Revolving Commitments shall be increased or such existing Lenders will advance Added Term Loans, or (III) some combination of both. In the case of an increase in the aggregate amount of the Revolving Commitments, upon execution and delivery by the Borrower and each such Lender or other financial institution of an instrument (a “Commitment Acceptance”) in form reasonably satisfactory to the Administrative Agent, such existing Lender shall have a Commitment as therein set forth, or such other financial institution shall become a Lender with a Revolving Commitment as therein set forth, and all the rights and obligations of a Lender with such a Revolving Commitment hereunder; and in the case of Added Term Loans, the Borrowers, the Agents and each such Lender providing an Added Term Loan or other financial institution providing an Added Term Loan shall execute and deliver such amendments to this Agreement (each an “Added Term Loan Amendment”) and the other Loan Documents and such additional Loan Documents, in form reasonably satisfactory to, as the case may be, the Administrative Agent or the Collateral Agent, as may be necessary or appropriate to reflect the rate or rates of interest applicable thereto and terms of payment thereof and the addition of such Added Term Loans as Loans and Obligations hereunder; provided, in each instance:

     (a) that the Borrower shall provide prompt notice of such increase or Added Term Loans to the Administrative Agent, which shall promptly notify the Lenders thereof;

     (b) that the Borrower shall have delivered to the Administrative Agent a copy of the Commitment Acceptance and each commitment in respect of Added Term Loans;

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     (c) that, before and after giving effect to, as the case may be, such increase or such Added Term Loans, the representations and warranties of the Borrower and Holdings contained in Article III of this Agreement shall be true and correct in all material respects; and

     (d) that the Administrative Agent shall have received such evidence (including an opinion of Borrower’s counsel) as it may reasonably request to confirm (i) the Borrower’s due authorization of the transactions contemplated by this Section 2.20 and the validity and enforceability of the obligations of the Borrower resulting therefrom and (ii) that such increase will not violate or result in a default under June 2004 Note Documents or any other Material Indebtedness.

     On the date of any such increase, the Borrower shall be deemed to have represented to the Administrative Agent and the Lenders that the conditions set forth in clauses (a) through (d) above have been satisfied.

     Upon any increase in the aggregate amount of the Revolving Commitments pursuant to this Section 2.20:

     (x) within five Business Days, in the case of any ABR Revolving Borrowings then outstanding, and at the end of the then current Interest Period with respect thereto, in the case of any Eurodollar Revolving Borrowings then outstanding, the Borrower shall pay such Borrowing in its entirety and, to the extent the Borrower elects to do so and subject to the conditions specified in Article IV, the Borrower shall reborrow Revolving Loans from the Revolving Lenders in proportion to their respective Revolving Commitments after giving effect to such increase, until such time as all outstanding Revolving Loans are held by the Lenders in such proportion; and

     (y) each existing Lender whose Revolving Commitment has not increased pursuant to this Section 2.20 (each, a “Non-increasing Revolving Lender”) shall be deemed, without further action by any party hereto, to have sold to each Lender whose Revolving Commitment has been assumed or increased under this Section 2.20 (each, an “Increased Revolving Commitment Lender”), and each Increased Revolving Commitment Lender shall be deemed, without further action by any party hereto, to have purchased from each Non-Increasing Revolving Lender, a participation (on the terms specified in Section 2.04(d)) in each Letter of Credit in which such Non-Increasing Revolving Lender has acquired a participation in an amount equal to such Increased Revolving Commitment Lender’s Applicable Percentage thereof, until such time as the LC Exposure is borne by the Revolving Lenders in proportion to their respective Revolving Commitments after giving effect to such increase.

ARTICLE III

Representations and Warranties

     Each of Holdings and the Borrower represents and warrants to the Lenders that:

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          SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

          SECTION 3.02. Authorization; Enforceability. The Restatement Transactions and the other Effective Date Transactions to be entered into by each Loan Party are within such Loan Party’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement has been duly executed and delivered by each of Holdings and the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of Holdings, the Borrower or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

          SECTION 3.03. Governmental Approvals; No Conflicts. The Restatement Transactions and the other Effective Date Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of Holdings, the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under the Purchase Documents, the June 2004 Note Documents or any other indenture, agreement or other instrument binding upon Holdings, the Borrower or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by Holdings, the Borrower or any of its Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of Holdings, the Borrower or any of its Subsidiaries, except Liens created under the Loan Documents.

          SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended October 29, 2004, reported on by Deloitte & Touche LLP, independent registered public accounting firm, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended July 29, 2005, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.

          (b) The Borrower shall furnish to the Lenders within five (5) Business Days after the date of this Agreement its pro forma consolidated balance sheet as of the Fourth Restatement Effective Date, prepared giving effect to the Effective date Transactions as if the Effective Date Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) has been

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prepared in good faith based on the same assumptions used to prepare the pro forma financial statements included in the information package distributed to the Lenders in September 2005 (which assumptions are believed by the Borrower to be reasonable), (ii) is based on the best information available to the Borrower after due inquiry, (iii) accurately reflects all adjustments necessary to give effect to the Effective Date Transactions and (iv) presents fairly, in all material respects, the pro forma financial position of the Borrower and its consolidated Subsidiaries as of the date of such proforma consolidated balance sheet as if the Effective Date Transactions had occurred on such date.

          (c) Except as disclosed in the financial statements referred to above or the notes thereto and except for the Disclosed Matters, after giving effect to the Restatement Transactions and the other Effective Date Transactions, none of Holdings, the Borrower or its Subsidiaries has, as of the Fourth Restatement Effective Date, any material contingent liabilities, other than material contingent liabilities arising in the ordinary course of business, unusual long-term commitments or unrealized losses that would be required by GAAP to be disclosed in such financial statements.

          (d) Since October 29, 2004, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of Holdings, the Borrower and its Subsidiaries, taken as a whole.

          SECTION 3.05. Properties. (a) Each of Holdings, the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

          (b) Each of Holdings, the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by Holdings, the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

          (c) Schedule 3.05 sets forth the address of each real property that is owned or leased by the Borrower or any of its Subsidiaries as of the Fourth Restatement Effective Date after giving effect to the Restatement Transactions. As of the Fourth Restatement Effective Date, after giving effect to the Restatement Transactions, neither Holdings, the Borrower nor any of its Subsidiaries owns any real property other than the real property set forth in Schedule 3.05.

          SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of Holdings or the Borrower, threatened against or affecting Holdings, the Borrower, any of its Subsidiaries or the ESOP (i) as to which there is a reasonable possibility of an adverse determination and that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any of the Loan Documents or the Effective Date Transactions and that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

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          (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither Holdings, the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

          (c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

          SECTION 3.07. Compliance with Laws and Agreements. Each of Holdings, the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

          SECTION 3.08. Investment and Holding Company Status. Neither Holdings, the Borrower nor any of its Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

          SECTION 3.09. Taxes. Each of Holdings, the Borrower and its Subsidiaries has timely filed or caused to be filed all income, franchise and other material Tax returns and reports required to have been filed and has paid or caused to be paid all material Taxes required to have been paid by it, except Taxes that are being contested in good faith by appropriate proceedings and for which Holdings, the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves.

          SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of all the assets of such Plan by an amount that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. Each Plan is in compliance in all material respects with the requirements under ERISA and the Code.

          SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which Holdings, the Borrower or any of its Subsidiaries is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender with respect to any Loan Party in

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connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; provided that, with respect to projected financial information, and general market data Holdings and the Borrower represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

          SECTION 3.12. Subsidiaries. Holdings does not have any Subsidiaries other than the Tracker Sub, the Borrower and the Borrower’s Subsidiaries, and such other Persons that become Subsidiaries after the Fourth Restatement Effective Date in compliance with Section 6.04(l). Schedule 3.12 sets forth the name and jurisdiction of organization of, and the ownership interest of the Borrower in, each Subsidiary of the Borrower and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of the Fourth Restatement Effective Date.

          SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all insurance maintained by or on behalf of the Borrower and its Subsidiaries as of the Fourth Restatement Effective Date. As of the Fourth Restatement Effective Date, all premiums in respect of such insurance have been paid.

          SECTION 3.14. Labor Matters. As of the Fourth Restatement Effective Date, except as described on Schedule 3.14, there are no strikes, lockouts or slowdowns against Holdings, the Borrower or any Subsidiary pending or, to the knowledge of Holdings or the Borrower, threatened. The hours worked by and payments made to employees of Holdings, the Borrower and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters, except where such violations, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. All material payments due from Holdings, the Borrower or any Subsidiary, or for which any material claim may be made against Holdings, the Borrower or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of Holdings, the Borrower or such Subsidiary. The consummation of the Effective Date Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which Holdings, the Borrower or any Subsidiary is bound.

          SECTION 3.15. Solvency. Immediately after the consummation of the Restatement Transactions to occur on the Fourth Restatement Effective Date and immediately following the making of each Loan made on the Fourth Restatement Effective Date and after giving effect to the application of the proceeds of such Loans (and taking into consideration the rights and obligations of the Loan Parties under the Indemnity, Subrogation and Contribution Agreement), (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party will not have unreasonably small capital

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with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Fourth Restatement Effective Date.

     SECTION 3.16. Security Documents. (a) The Pledge Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Pledge Agreement) and, when the Collateral is delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of each pledgor thereunder in such Collateral to the extent such Lien can be perfected by possession, in each case prior and superior in right to any other Person.

     (b) The Security Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and, by virtue of the financing statements filed with the Secretary of State of the jurisdiction of organization of each respective Loan Party pursuant to the Existing Credit Agreement, the Security Agreement constitutes a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property, as defined in the Security Agreement) to the extent such Lien can be perfected by the filing of such financing statements, which Collateral is subject to no other Lien, except, to the extent applicable, Liens permitted under Section 6.02.

     (c) By virtue of the filing of the Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, the Security Agreement constitutes a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Intellectual Property (as defined in the Security Agreement) in which a security interest may be perfected by filing, recording or registering a security agreement, financing statement or analogous document in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in each case prior and superior in right to any other Person other than Liens expressly permitted by Section 6.02 (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks, trademark applications and copyrights acquired by the Loan Parties after the date hereof).

          SECTION 3.17. Federal Reserve Regulations. (a) Neither Holdings, the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

     (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation U or X.

          SECTION 3.18. TRW Agreement. The provisions of the TRW Agreement pursuant to which TRW is obligated to perform any “Environmental Remediation” and/or indemnify, defend and hold harmless the Borrower, with respect to “Excluded Environmental Obligations”, TRW’s share of “Shared Environmental Obligations”, or otherwise with respect to “Environmental Activities”, are in full force and effect in accordance with the terms of the TRW

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Agreement and no party has waived any material rights thereunder. Terms contained in quotation marks in this Section 3.18 shall have the respective meanings ascribed to such terms in the TRW Agreement.

          SECTION 3.19. Purchase Documents. The Borrower has delivered to the Agent and the Lenders true and complete copies of each of the Purchase Documents, which constitute all of the material agreements and understandings relating to the transactions contemplated thereby.

ARTICLE IV

Conditions

          SECTION 4.01. Opening Covenants. Prior to or concurrently with the execution and delivery of this Agreement and its effectiveness, the Borrower and Holdings shall furnish to Administrative Agent originals or copies for delivery to each Lender of the following:

          (a) Loan Party Certificates. A certificate executed by an authorized officer of each Loan Party and a secretary or assistant secretary of such Loan Party certifying (i) the resolutions of the Board of Directors of such Loan Party authorizing the execution, performance and delivery of each Loan Document to which such Loan Party is a party, (ii) the names and signatures of the officers of such Loan Party executing or attesting to such Loan Documents, and (iii) the absence of any Default;

          (b) Good Standing Certificates. Certificates of good standing for each Loan Party, certified by the office of the Secretary of State or other similar official of the state of incorporation or formation of such Loan Party, and certificates of qualification to transact business as a foreign corporation or other entity in every other State where such Loan Party’s failure so to qualify could have a Material Adverse Effect; and

          (c) Formation Documents. (i) A copy of the certificate or articles of incorporation of each Loan Party, including any amendments or restatements thereof, certified as of a recent date by the Secretary of State or other governmental official of the jurisdiction of its formation, and (ii) a copy of the by-laws or equivalent governing documents of such Loan Party, certified as true, correct and in full force and effect by the Secretary or an Assistant Secretary of such Loan Party.

          SECTION 4.02 Prior to Initial Credit Event. Prior to or concurrently with the effectiveness of this Agreement to amend and restate the Existing Credit Agreement in its entirety and the occurrence of the initial Borrowing or Letter of Credit issuance hereunder (provided that if such effectiveness fails to occur on or before December 15, 2005 this Agreement shall terminate), the Borrower shall furnish to Administrative Agent originals or copies for delivery to each Lender and the Letter of Credit Issuer of the following:

          (a) Notes. The Borrower shall have executed and delivered to the Administrative Agent such promissory notes, if any, as may have been requested by any Lender pursuant to Section 2.08(e) in the principal amount of, as applicable, such Lender’s Revolving Commitment and such Lender’s Existing Term Loan and Fourth Restatement Term Loan.

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          (b) June 2004 Notes Consent. The Borrower shall have delivered to the Administrative Agent evidence that the Borrower has sought to obtain consents from holders of the June 2004 Notes regarding (i) the Change of Control (as defined in the June 2004 Notes Documents) effected by the Purchase Documents, and (ii) distributions by the Borrower or Holdings or both in an amount reasonably necessary to consummate the Effective Date Transactions and no other amendment thereto (other than amendments that are approved in writing by the Administrative Agent in its reasonable discretion), and that holders of June 2004 Notes having an aggregate principal balance of at least $230,000,000 have consented to such Change of Control (or, if evidence of such consents of holders of June 2004 Notes having an aggregate principal balance of less than $230,000,000 is so delivered, at the Borrower’s option, the Borrower shall have delivered to the Administrative Agent a written commitment for Put Refinancing Indebtedness or additional equity in an amount at least equal to the difference between $230,000,000 and aggregate principal balance of June 2004 Notes as to which the Borrower has obtained such consents, and such commitment shall be in full force and effect and subject only to conditions precedent deemed by the Administrative Agent to be attainable by the Borrower).

          (c) Purchase Documents Closing. Holdings shall have delivered to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent that the transactions contemplated by the Purchase Documents have been consummated in all material respects in accordance with the respective terms and conditions thereof.

          (d) Subordinated Indebtedness. The Borrower and the manager or managers under the Permitted Management Agreement shall have delivered to the Administrative Agent a subordination agreement with respect to Permitted Management Fees in the form of Exhibit C hereto.

          (e) Disbursement Instructions. The Borrower shall have delivered to the Administrative Agent a Borrowing Request and instructions from the Borrower directing the Administrative Agent to disburse the proceeds of the Effective Date Term Advance.

          (f) Guarantees. Holdings shall have executed and delivered to the Administrative Agent a confirmation of the Parent Guarantee Agreement, and each of the Subsidiary Loan Parties shall have executed and delivered to the Administrative Agent a confirmation of its Subsidiary Guarantee Agreement, all in form and substance satisfactory to the Administrative Agent.

          (g) Security Agreements. Each of the Subsidiary Loan Parties shall have executed and delivered to the Administrative Agent a confirmation of the Security Agreement, in form and substance satisfactory to the Administrative Agent.

          (h) Pledge Agreement. Holdings shall have executed and delivered to the Administrative Agent a confirmation of the Pledge Agreement, in form and substance satisfactory to the Administrative Agent.

          (i) Indemnity, Subrogation and Contribution Agreement. The Loan Parties shall have executed and delivered to the Administrative Agent a confirmation of the Indemnity,

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Subrogation and Contribution Agreement, in form and substance satisfactory to the Administrative Agent

          (j) Closing Fees. The Borrower shall have paid or caused to be paid all fees required to be paid by it on or prior to such date pursuant to 2.11 hereof, the structuring and arrangement fee to each of the Joint Lead Arrangers as heretofore agreed to in letters between them and the Borrower, and all reasonable fees and expenses of the Administrative Agents and of special counsel to the Administrative Agents in connection with the preparation, execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby.

          (k) Mortgages. The appropriate Loan Parties shall have executed and delivered to the Collateral Agent amendments to Mortgages encumbering the California Property and the Ohio Property; at the expense of the Borrower, such Mortgage amendments shall have been filed for record in the appropriate public records; and, at the expense of the Borrower, there shall have been issued to the Collateral Agent endorsements to the loan policies of title insurance in respect of the Mortgages in form and substance satisfactory to the Collateral Agent.

          (l) Legal Opinion. The Borrower shall have caused the delivery to the Administrative Agent a favorable opinion of Jones Day, counsel for the Loan Parties, all in form and substance reasonably acceptable to the Administrative Agent.

          (m) Lien Searches; Filings. The Borrower shall have delivered, or cause to be delivered, to the Administrative Agent results of searches, in form and scope and as of such dates, as are satisfactory to the Administrative Agent, of Uniform Commercial Code and all other liens which may have been filed against each Loan Party and its property; and such additional filings to perfect the Liens of the Security Documents, if any, shall have been made at the expense of the Borrower as the Collateral Agent may request.

          (n) Evidence of Insurance. The Administrative Agent shall have received certificates of insurance and other evidence, satisfactory to it, of compliance with the insurance requirements of this Agreement and the Security Documents.

          (o) Absence of Litigation. The Administrative Agent shall have received evidence satisfactory to it that there shall is not any action, suits or proceedings pending or threatened with respect to any Loan Party (i) that have, or could reasonably be expected to have, a Material Adverse Effect, or (ii) that question the validity or enforceability of any of the Loan Documents, or of any action to be taken by the Borrower or any of the other Loan Parties pursuant to any of the Loan Documents.

          (p) Bringdown Certificate. On the Fourth Restatement Effective Date, and after giving effect to the Effective Date Transactions, (i) all of the representations and warranties of the Borrower and Holdings set forth in Article III of this Agreement shall be true and correct in all material respects, (ii) no Default shall have occurred and be continuing, and (iii) the Chief Financial Officers (or other executive officers) of the Borrower and Holdings shall have executed and delivered a certificate on such date to that effect.

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          (q) Other Matters. The Borrower shall have executed and delivered to the Administrative Agent such other documents, certificates and other matters, and shall have taken such other actions, as the Administrative Agent may reasonably request of the Borrower and any of the Subsidiary Guarantors.

          SECTION 4.03. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

     (a) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable.

     (b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by Holdings and the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V

Affirmative Covenants

          Until the Revolving Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed and each other Obligation shall have been performed and satisfied in full, each of Holdings and the Borrower covenants and agrees with the Lenders that:

          SECTION 5.01. Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent and each Lender:

     (a) within 120 days after the end of each fiscal year of the Borrower, at the option of the Borrower, the audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows of either the Borrower or of Holdings as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte & Touche LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of, as the case may be, the Borrower or Holdings, and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently (except as noted therein) applied, provided that, if the Borrower chooses to furnish such financial information with

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respect to Holdings, such financial information shall include the consolidating financial information with respect to the Borrower;

     (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, at the option of the Borrower, the consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows of either the Borrower or of Holdings as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of the Borrower’s Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently (except as noted therein) applied, subject to normal year-end audit adjustments and the absence of footnotes, provided that, if the Borrower chooses to furnish such financial information with respect to Holdings, such financial information shall include the consolidating financial information with respect to the Borrower;

     (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.12 and 6.13 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the Borrower’s audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

     (d) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines);

     (e) within 60 days after the commencement of each fiscal year of the Borrower, a detailed consolidated budget for such fiscal year (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for such fiscal year) and, promptly when available, any significant revisions of such budget;

     (f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by Holdings, the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by Holdings to its shareholders generally, as the case may be; and

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     (g) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of Holdings, the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request.

          Delivery to the Administrative Agent and each Lender (directly or through the Administrative Agent) of a copy of the Borrower’s Form 10-K or 10-Q, as the case may be, filed with the Securities and Exchange Commission will satisfy the requirements set forth in clause (a) and (b) above, as the case may be, provided that the contents thereof satisfy such requirements.

          SECTION 5.02. Notices of Material Events. Holdings and the Borrower will furnish to the Administrative Agent and each Lender (directly or through the Administrative Agent) prompt written notice of the following:

     (a) the occurrence of any Default;

     (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting Holdings, the Borrower or any Affiliate thereof that could reasonably be expected to result in either (i) liability in excess of $3,000,000 or (ii) a Material Adverse Effect;

     (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of Holdings, the Borrower and its Subsidiaries in an aggregate amount exceeding $2,000,000; and

     (d) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

          SECTION 5.03. Information Regarding Collateral. (a) The Borrower will furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party’s name, (ii) in the jurisdiction of incorporation or organization of any Loan Party, (iii) in the location of the chief executive office of any Loan Party, (iii) in any Loan Party’s identity or type of organization or corporate structure or (iv) in any Loan Party’s Organizational Identification Number. Each Loan Party agrees to promptly provide the Administrative Agent with certified organizational documents reflecting any of the changes described in the first sentence of this paragraph. The Borrower agrees not to effect or permit any change referred to in the first sentence of this paragraph unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. The Borrower also agrees promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed.

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          (b) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer of the Borrower and the chief legal officer of the Borrower setting forth the information required pursuant to Section 2 of the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Fourth Restatement Effective Date or the date of the most recent certificate delivered pursuant to this Section. Each certificate delivered pursuant to this Section 5.03(b) shall identify in the format of Schedule II, III, IV or V, as applicable, of the Security Agreement all Intellectual Property (as defined in the Security Agreement) of any Loan Party in existence on the date thereof and not then listed on such Schedules as previously so identified to the Collateral Agent.

          SECTION 5.04. Existence; Conduct of Business. Each of Holdings and the Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and tradenames material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

          SECTION 5.05. Payment of Obligations. Each of Holdings and the Borrower will, and will cause each of its Subsidiaries to, pay its obligations (other than Indebtedness, the failure in payment of which is governed by Article VII), including material Tax liabilities, before the same shall become delinquent or in default, except where (i) (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) Holdings, the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect or (ii) as to obligations other than material Tax liabilities, the failure of payment of which cannot reasonably expected to result in a Material Adverse Effect.

          SECTION 5.06. Maintenance of Properties. Each of Holdings and the Borrower will, and will cause each of its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

          SECTION 5.07. Insurance. (a) Each of Holdings and the Borrower will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurance companies:

     (i) fire and extended coverage insurance, on a replacement cost basis, with respect to all personal property and improvements to real property, in such amounts as are customarily maintained by companies in the same or similar business operating in the same or similar locations;

     (ii) commercial general liability insurance against claims for bodily injury, death or property damage occurring upon, about or in connection with the use of any properties owned, occupied or controlled by it, providing coverage on an occurrence basis with a

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combined single limit of not less than $1,000,000 (plus $35,000,000 of additional coverage under umbrella and similar policies) and including the broad form CGL endorsement;

     (iii) business interruption insurance, insuring against loss of gross earnings for a period of not less than 12 months arising from any risks or occurrences required to be covered by insurance pursuant to clause (i) above; and

     (iv) such other insurance of the type and in the amount described in Schedule 3.13 or as may be required by law.

Deductibles or self-insured retention shall not exceed $500,000 for fire and extended coverage policies, $0 for commercial general liability policies or $500,000 for business interruption policies.

          (b) Fire and extended coverage policies (and any policies required to be maintained pursuant to paragraph (c) below) maintained with respect to any Collateral shall be endorsed or otherwise amended to include (i) a non-contributing mortgage clause (regarding improvements to real property) and lenders’ loss payable clause (regarding personal property), in each case in favor of the Administrative Agent and providing for losses thereunder to be payable to the Administrative Agent or its designee, (ii) a provision to the effect that neither the Borrower, the Administrative Agent nor any other party shall be a coinsurer and (iii) such other provisions as the Administrative Agent may reasonably require from time to time to protect the interests of the Lenders. Commercial general liability policies shall be endorsed to name the Administrative Agent as an additional insured. Business interruption policies shall name the Administrative Agent as loss payee. Each such policy referred to in this paragraph also shall provide that it shall not be canceled, modified or not renewed (i) by reason of nonpayment of premium except upon not less than 10 days’ prior written notice thereof by the insurer to the Administrative Agent (giving the Administrative Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than 30 days’ prior written notice thereof by the insurer to the Administrative Agent. The Borrower shall deliver to the Administrative Agent, prior to the cancellation, modification or nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent) together with evidence satisfactory to the Administrative Agent of payment of the premium therefor.

          (c) If at any time the area in which any Mortgaged Property is located is designated (i) a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), the Borrower shall obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time, or (ii) a “Zone 1” area, the Borrower shall obtain earthquake insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require.

          SECTION 5.08. Casualty and Condemnation. (a) The Borrower will furnish to the Administrative Agent and the Lenders prompt written notice of any casualty or other insured

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damage to any portion of any material Collateral or the commencement of any action or proceeding for the taking of any material Collateral or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding.

          (b) If any event described in paragraph (a) of this Section results in Net Proceeds (whether in the form of insurance proceeds, condemnation award or otherwise), the Administrative Agent is authorized to collect such Net Proceeds and, if received by Holdings, the Borrower or any Subsidiary, such Net Proceeds shall be paid over to the Administrative Agent; provided that (i) if the aggregate Net Proceeds in respect of such event (other than proceeds of business income insurance) are less than $3,000,000, such Net Proceeds shall be paid over to the Borrower unless a Default has occurred and is continuing, and (ii) all proceeds of business income insurance shall be paid over to the Borrower unless a Default has occurred and is continuing. All such Net Proceeds retained by or paid over to the Administrative Agent shall be held by the Administrative Agent and released from time to time to pay the costs of repairing, restoring or replacing the affected property in accordance with the terms of the applicable Security Document, subject to the provisions of the applicable Security Document regarding application of such Net Proceeds during a Default.

          (c) If any Net Proceeds retained by or paid over to the Administrative Agent as provided above continue to be held by the Administrative Agent on the date that is two years after the occurrence of the event resulting in such Net Proceeds, then such Net Proceeds shall be applied to prepay Consolidated Term Borrowings as provided in Section 2.10(c).

          SECTION 5.09. Books and Records; Inspection and Audit Rights. Each of Holdings and the Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Each of Holdings and the Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its Collateral and properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

          SECTION 5.10. Compliance with Laws and Agreements. Each of Holdings and the Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect and with all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

          SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of the Revolving Loans have been and will be used, and the proceeds of the Effective Date Term Advance will be used, solely (a) for working capital purposes and (b) for other general corporate purposes permitted by this Agreement, including, without limitation, Permitted Acquisitions. No part of the proceeds of any Loan has been or will be used, whether directly or indirectly, for any

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purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X. Letters of Credit will be issued only for general corporate purposes.

          SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary is formed or acquired after the Fourth Restatement Effective Date, the Borrower will notify the Administrative Agent and the Lenders thereof and (a) if such Subsidiary is a Subsidiary Loan Party, the Borrower will cause such Subsidiary to become a party to the Subsidiary Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and each applicable Security Document in the manner provided therein within three Business Days after such Subsidiary is formed or acquired and promptly take such actions to create and perfect Liens on such Subsidiary’s assets to secure the Obligations as the Administrative Agent or the Required Lenders shall reasonably request and (b) if any shares of capital stock or Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party, the Borrower will cause such shares and promissory notes evidencing such Indebtedness to be pledged pursuant to the Pledge Agreement within three Business Days after such Subsidiary is formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary, shares of common stock of such Subsidiary to be pledged pursuant to the Pledge Agreement may be limited to 65% of the outstanding shares of common stock of such Subsidiary).

          SECTION 5.13. Further Assurances. (a) Each of Holdings and the Borrower will, and will cause each Subsidiary Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), which may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. Holdings and the Borrower also agree to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.

          The Collateral Agent shall release such lien as it may hold in the stock or assets of the Tracker Sub upon request of the Borrower or Holdings.

          (b) If any material assets (including any real property or improvements thereto or any interest therein) are acquired by the Borrower or any Subsidiary Loan Party after the Fourth Restatement Effective Date (other than assets constituting Collateral under the Security Agreement that become subject to the Lien of the Security Agreement upon acquisition thereof), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Administrative Agent or the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the Loan Parties.

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ARTICLE VI

Negative Covenants

          Until the Revolving Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed and each other Obligation shall have been performed and satisfied in full, each of Holdings and the Borrower covenants and agrees with the Lenders that:

          SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

     (i) Indebtedness created under the Loan Documents;

     (ii) in the case of the Borrower, Indebtedness under the June 2004 Notes;

     (iii) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; provided that Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or any Subsidiary Loan Party shall be subject to Section 6.04;

     (iv) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided that (A) the Indebtedness so guaranteed is permitted by this Section, (B) Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be subject to Section 6.04 and (C) the June 2004 Notes shall not be Guaranteed by any Subsidiary that is not a guarantor under the Subsidiary Guarantee Agreement;

     (v) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof; provided that (A) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (B) the aggregate principal amount of Indebtedness permitted by this clause (v) shall not exceed $3,000,000 at any time outstanding;

     (vi) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that (A) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary and (B) the aggregate principal amount of Indebtedness permitted by this clause (vi) shall not exceed an amount equal to 10% of Adjusted EBITDA for the

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preceding four consecutive quarterly periods most recently ended, measured at the time such Person becomes a Subsidiary;

     (vii) Indebtedness of a Foreign Subsidiary, so long as the aggregate unpaid principal balance of all Indebtedness of all of the Foreign Subsidiaries does not at any time exceed $10,000,000; and

     (viii) Subordinated Indebtedness of the Borrower and the Subsidiary Loan Parties;

     (ix) Indebtedness secured by Liens that are permitted under Section 6.02;

     (x) Indebtedness in respect of overdraft services in the ordinary course of business that is not more than ten (10) days past due;

     (xi) Indebtedness in respect of earn-out agreements, non-compete agreements, deferred compensation agreements and similar agreements, so long as the aggregate unpaid balance of all such Indebtedness does not at any time exceed an amount equal to 5% of Adjusted EBITDA for the preceding four consecutive quarterly periods most recently ended, measured at the time any such agreement is entered into;

     (xii) Indebtedness in respect of reasonable and customary purchase price adjustment provisions in connection with Permitted Acquisitions and dispositions permitted under this Agreement

     (xiii) Indebtedness incurred to finance some or all of the premiums of insurance obtained by the Loan Parties in the ordinary course of business; and

     (xiv) other unsecured Indebtedness in an aggregate principal amount at any time outstanding not exceeding an amount equal to (A) $10,000,000, minus (B) the aggregate principal amount of Indebtedness and other obligations outstanding at such time pursuant to clause (q) of the definition of Permitted Encumbrances.

          (b) Holdings will not create, incur, assume or permit to exist any Indebtedness that is secured by a Lien except Indebtedness created under the Loan Documents.

          (c) Neither Holdings nor the Borrower will, nor will they permit any Subsidiary to, issue any Current Redeemable Equity.

          SECTION 6.02. Liens. (a) The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable, other than sales of delinquent accounts receivable for collection purposes in the ordinary course of business) or rights in respect of any thereof, except:

     (i) Liens created under the Loan Documents;

     (ii) Permitted Encumbrances;

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     (iii) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (A) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (B) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary and (C) such Lien shall secure only those obligations that it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

     (iv) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (A) such security interests secure Indebtedness permitted by clause (v) of Section 6.01(a), (B) such security interests and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (C) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (D) such security interests shall not apply to any other property or assets of the Borrower or any Subsidiary; and

     (v) Liens in the form of options on the Common Stock held by the Borrower and Holdings issued to directors and employees of Holdings, the Borrower and the Subsidiaries.

          (b) Holdings will not create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect thereof, except Liens created under the Loan Documents and Permitted Encumbrances.

          SECTION 6.03. Fundamental Changes. (a) Except for the Effective Date Transactions and the effects of Permitted Acquisitions, neither Holdings nor the Borrower will, nor will they permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary Loan Party in a transaction in which the surviving entity is a Subsidiary Loan Party, (iii) any Subsidiary that is not a Loan Party may merge into any Subsidiary that is not a Loan Party and (iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders; provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 6.04.

          (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the

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Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.

               SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. Neither Holdings nor the Borrower will, nor will they permit any of the Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) or make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any equity investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:

     (a) the Borrower (and, in the case of clause (i) below, Holdings) will be permitted to (i) repurchase stock (and options to acquire stock) from current or former directors and employees of Holdings, the Borrower and the Subsidiaries (and their respective estates, descendants, legatees, spouses, former spouses and trusts for the benefit of any of such Persons) in an aggregate amount not to exceed (x) $4,000,000 in the fiscal year ending October 27, 2006 and (y) $2,000,000 in any fiscal year thereafter (but net of cancelled Indebtedness of the Borrower or Holdings, the proceeds of life insurance received by the Borrower or Holdings, the proceeds of contributions to the capital of the Borrower or Holdings made not more than five (5) Business Days prior to such repurchase, and amounts in respect of rolled-over purchases in respect of such director or employee); provided, however, that any amount that is permitted and not used in any particular fiscal year to repurchase stock shall be carried over to the subsequent fiscal year and shall be available to be used to repurchase stock in such fiscal year; and provided further, however, that the aggregate amount used to repurchase stock pursuant to this clause (a)(i) shall not exceed $5,000,000 in any consecutive 365 day period, and (ii) make Permitted Acquisitions; provided that both of the Restricted Transaction Conditions shall have been satisfied immediately prior and after giving effect thereto;

     (b) Permitted Investments;

     (c) credit arrangements in favor of Account Debtors in the ordinary course of business and consistent with practice prior to the Fourth Restatement Effective Date;

     (d) investments by the Borrower in the capital stock of the Subsidiaries; provided that (i) any such shares of capital stock shall be pledged pursuant to the Pledge Agreement (subject to the limitations applicable to common stock of a Foreign Subsidiary referred to in Section 5.12) and (ii) the aggregate amount of investments in, and loans and advances to, and Guarantees of Indebtedness of, Subsidiaries that are not Loan Parties shall not exceed $5,000,000 in the aggregate at any time outstanding;

     (e) loans or advances made by the Borrower to any Subsidiary and made by any Subsidiary to the Borrower or any other Subsidiary; provided that (i) any such loans and advances made by a Loan Party shall be evidenced by a promissory note pledged pursuant to the Pledge Agreement and (ii) the amount of all such loans and advances by

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Loan Parties to Subsidiaries that are not Loan Parties shall be subject to the limitation set forth in clause (d)(ii) above;

     (f) Guarantees constituting Indebtedness permitted by Section 6.01; provided that the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan Parties Guaranteed by any Loan Party shall be subject to the limitation set forth in clause (d)(ii) above;

     (g) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

     (h) Indebtedness of current or former employees and directors in respect of equity interests in Loan Parties purchased by such Persons and other loans to directors and employees of the Borrower and the Subsidiaries in their capacity as such, in an aggregate principal amount not to exceed $3,500,000 at any time outstanding;

     (i) Hedging Agreements permitted under Section 6.07;

     (j) loans by the Borrower to Holdings to the extent Holdings is permitted to incur such Indebtedness pursuant to Section 6.01(b);

     (k) guarantees by Holdings of Indebtedness incurred by another Person with respect to the development of certain tracking technology transferred to Holdings by the Borrower on or before the Fourth Restatement Effective Date, so long as the aggregate principal amount of all such Indebtedness does not at any time exceed an amount equal to $4,000,000, minus the amount of all expenditures made by Holdings permitted by Section 6.08(a)(iv)(D), below;

     (l) investment by Holdings in the capital stock of its Subsidiaries, and the purchase of operating assets by such Subsidiaries that are not Loan Parties, so long as all such stock (other than stock of the Tracker Sub) is subject to the Lien of the Pledge Agreement;

     (m) subject to the requirements of Section 6.05, investments received from asset sales; and

     (n) other investments, so long as the aggregate acquisition cost of all such investments of all Loan Parties does not exceed $10,000,000 at any time.

               SECTION 6.05. Asset Sales. The Borrower will not, and will not permit any of its Subsidiaries to, sell, transfer, lease (as lessor) or otherwise dispose of any asset, including any capital stock, nor will the Borrower permit any of its Subsidiaries to issue any additional shares of its capital stock or other ownership interest in such Subsidiary, except:

     (a) sales of inventory, used or surplus equipment and Permitted Investments in the ordinary course of business;

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     (b) sales, transfers, and dispositions to the Borrower or a Subsidiary; provided that any such sales, transfers or dispositions involving a Subsidiary that is not a Loan Party shall be made in compliance with Section 6.09;

     (c) sales, transfers and dispositions of assets that are not permitted by any other clause of this Section; provided that the aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance upon this clause (c) shall not exceed $10,000,000 in the aggregate during the term of this Agreement;

     (d) sales of the Ohio Property and leases of portions of the Ohio Property consistent with practice prior to the Fourth Restatement Effective Date;

     (e) pursuant to stock options issued to directors and employees of Holdings, the Borrower and the Subsidiaries, sales of Common Stock purchased and held by the Borrower;

     (f) the transfer of the capital stock of the Tracker Sub at any time following the Fourth Restatement Effective Date; and

     (g) sales, transfers and dispositions of assets related to the cryogenics business; and

     (h) sales, transfers and dispositions of non-core assets acquired in connection with a Permitted Acquisitions;

provided that all sales, transfers and other dispositions permitted by clauses (c) and (d) above (but not including leases of portions of the Ohio property), shall be made for fair value and for cash consideration comprising at least 75% of the full consideration received therefrom.

               SECTION 6.06. Sale and Lease-Back Transactions. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred, except for the Ohio Property.

               SECTION 6.07. Hedging Agreements. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any Hedging Agreement, other than (i) Hedging Agreements (a) that are entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct of its business or the management of its liabilities, and (b) if the Hedging Agreements described in clause (a) hereof are interest rate protection agreements or other interest hedging arrangements, that hedge a floating interest rate to a stipulated fixed interest rate and (ii) other Hedging Agreements that are interest rate protection agreements or other interest hedging arrangements, so long as the aggregate notional amount of all such other interest rate Hedging Agreements to which the Borrower or any Subsidiary is a party that do not comply with the requirements of clause (i) hereof do not at any time exceed $100,000,000.

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               SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. (a) Neither Holdings nor the Borrower will, nor will they permit any Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:

     (i) Holdings may declare and pay dividends with respect to its capital stock payable solely in additional shares of its common stock or Current Redeemable Equity;

     (ii) Subsidiaries of the Borrower may declare and pay dividends ratably with respect to their capital stock;

     (iii) Holdings and the Borrower may make the Restricted Payments (A) contemplated by and permitted under Section 6.04(a)(i), so long as, in each instance, immediately prior to, and after giving effect to, such Restricted Payment, no Default shall exist, and (B) Holdings may make Restricted Payments consisting of Company Notes pursuant to the Stockholders’ Agreement;

     (iv) the Borrower may pay to Holdings, at such times and in such amounts as shall be necessary, after giving effect to the application by Holdings of any other cash resources available to it (including Permitted Investments), to permit Holdings to

(A) pay taxes imposed upon it and liabilities incidental to its existence (including, without limitation, the premiums of directors’ and officers’ errors and omissions insurance and indemnities owing to officers and directors and expenses in connection with public filings) when due,

(B) pay directors’ fees to its directors and actual operating expenses when due, provided that dividends paid to Holdings for the purpose of paying directors’ fees and actual operating expenses shall not exceed $1,000,000 in any fiscal year,

(C) pay Permitted Management Fees that do not exceed in any fiscal year $1,000,000, plus indemnities and usual and customary out-of-pocket expenses provided for under the Permitted Management Agreement,

(D) pay customary and reasonable fees and expenses in connection with the Effective Date Transactions and other issuances of equity or Indebtedness in each case permitted by this Agreement and with Permitted Acquisitions,

(E) make Restricted Payments to be made by Holdings that are permitted by clause (iii) above,

(F) make investments in the Tracker Sub described in clause (k) of the definition of Permitted Investments, and

(G) if at the time thereof and after giving effect thereto no Default has occurred and is continuing, make payments on Holdings Included Indebtedness,

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provided that any dividends permitted to be paid to Holdings shall not be paid more than five (5) Business Days prior to the date that Holdings will apply the proceeds of such dividends to the purposes for which such dividends are permitted,

(v) the transfer of the stock of the Tracker Sub described in Section 6.05(f);

(vi) Restricted Payments that are part of the Effective Date Transactions;

(vii) Restricted Payments made with the proceeds of contributions to the capital of the applicable Loan Party not more than five (5) Business Days prior to such Restricted Payments, so long as no Default then exists or would exist after giving effect thereto; and

               (b) Neither Holdings nor the Borrower will, nor will they permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Indebtedness, except:

     (i) payment of Indebtedness created under the Loan Documents;

     (ii) payment of regularly scheduled interest and principal payments as and when due in respect of any Indebtedness;

     (iii) refinancings of Indebtedness to the extent permitted by Section 6.01; and

     (iv) prepayment or any other repurchase, redemption or repayment of the June 2004 Notes to the extent permitted by Section 6.14, below; and

     (v) purchase (prior to maturity) or prepayment of Indebtedness (other than Subordinated Indebtedness and Indebtedness under the June 2004 Notes) so long as immediately prior thereto, and after giving effect thereto, no Default exists or would exist, unless such purchase or prepayment is made with the proceeds of contribution to the capital of, as the case may be, Holdings or the Borrower not more than five (5) Business Days prior to such purchase or prepayment, in which case such purchase or prepayment can be so made.

               SECTION 6.09. Transactions with Affiliates. Neither Holdings nor the Borrower will, nor will they permit any Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business that do not involve Holdings (except as expressly permitted pursuant to Section 6.08) and are at prices and on terms and conditions not, in any material respect, less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among Holdings, the Borrower and the Subsidiary Loan Parties not involving any other Affiliate, (c) any Restricted Payment permitted by Section 6.08, (d) director and employee loans permitted by Section 6.04, (e) transactions

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between the Borrower, Holdings or a Subsidiary and an Affiliate that is an employee of the Borrower or such Subsidiary that (i) are in the nature of employment agreements or otherwise related to such employee’s employment or compensation and (ii) are at prices and on terms and conditions not materially less favorable to the Borrower, Holdings or such Subsidiary than are customarily obtained by other similarly situated employees from their employers, (f) transactions under the Stockholders’ Agreement permitted by this Agreement, (g) performance of the Permitted Management Agreement, and (h) transactions relating to the Tracker Sub permitted by this Agreement.

               SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower will, nor will they permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of Holdings, the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document, (ii) the foregoing shall not apply to restrictions and conditions existing on the Fourth Restatement Effective Date identified on Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to restrictions and conditions imposed by the Holdco 2005 Notes, (iv) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (v) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (vi) clause (a) of the foregoing shall not apply to customary provisions in leases and other agreements restricting the assignment thereof.

               SECTION 6.11. Amendment of Material Documents. Except pursuant to the Effective Date Transactions, neither Holdings nor the Borrower will, nor will they permit any Subsidiary to (a) amend, modify or waive any of its rights under its certificate of incorporation, by-laws or other organizational documents; provided that the organizational documents of the Loan Parties may be amended so long as such amendment could not reasonably be expected to have a Material Adverse Effect, (b) amend, supplement or modify any of the terms or provisions contained in the TRW Agreement, the Permitted Management Agreement or the Holdco 2005 Notes (or any other document governing or providing for the terms and conditions of the Indebtedness evidenced thereby) unless such amendment, supplementation or modification could not reasonably be expected to have a Material Adverse Effect, or (c) amend, modify or supplement any terms or provisions contained in the June 2004 Note Documents, other than (i) such amendments and consents as shall be contained in the documents delivered by the Borrower pursuant to Section 4.02(b), (ii) a supplement to add a guarantor thereunder, so long as such Person is a guarantor under the Subsidiary Guarantee Agreement, (iii) in connection with additional issuances of Notes pursuant to the June 2004 Notes Documents in all material respects on the same terms as the June 2004 Notes and the June 2004 Notes Documents provide on the Fourth Restatement Effective Date, after giving effect to the amendments and consents as shall

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be contained in the documents delivered by the Borrower pursuant to Section 4.02(b), as from time to time modified pursuant to this Section 6.11, (iv) in connection with permitted repayments or repurchases of the June 2004 Notes, and (v) any amendment or consent the effect of which does not impose any new material obligation on, and is not in any material respect more restrictive on, any Loan Party than the terms of the June 2004 Notes and the June 2004 Notes Documents on the Fourth Restatement Effective Date, after giving effect to the amendments and consents as shall be contained in the documents delivered by the Borrower pursuant to Section 4.02(b). With respect to any amendment, supplementation or modification pursuant to clauses (a), (b) or (c), above, the Borrower shall have delivered to the Administrative Agent and its counsel a copy of such proposed amendment, supplementation or modification at least five (5) Business Days prior to the proposed effective date thereof.

               SECTION 6.12. Leverage Ratios. (a) The Borrower will not permit the Leverage Ratio as of the last day of any fiscal quarter ending during any of the periods (or, as applicable, ending on the date) set forth below to be in excess of the ratio set forth opposite such period:

Fiscal Quarter Ending	Maximum Ratio
October 28, 2005		7.50 to 1
All of fiscal year 2006		6.75 to 1
All of fiscal year 2007		6.25 to 1
All of fiscal year 2008 and thereafter		5.50 to 1.

               (b) The Borrower will not permit the Secured Leverage Ratio as of the last day of any fiscal quarter ending on or after October 28, 2005 to be in excess of 2.50 to 1.

               SECTION 6.13 Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed Charge Coverage Ratio for any period of four (4) consecutive fiscal quarters of the Borrower ending on or after October 28, 2005 to be less than 1.10 to 1.

               SECTION 6.14. Certain Actions under June 2004 Note Documents. The Borrower will not (i) make any voluntary prepayment or optional prepayment of any of the June 2004 Notes or make any other repurchase, redemption or repayment of the June 2004 Notes prior to the stated maturity date thereof, as they provide on the Fourth Restatement Effective Date, or (ii) purchase or otherwise acquire any June 2004 Note, unless (x) in either case of clause (i) or clause (ii) both of the Restricted Transaction Conditions shall have been satisfied immediately prior and after giving effect thereto, or (y) made with contributions to the capital of the Borrower not more than five (5) Business Days prior thereto.

ARTICLE VII

Events of Default

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     If any of the following events (“Events of Default”) shall occur:

     (a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

     (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three Business Days;

     (c) any representation or warranty made or deemed made by or on behalf of Holdings, the Borrower or any Subsidiary in or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made;

     (d) Holdings or the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.04 (with respect to the existence of Holdings or the Borrower) or 5.11 or in Article VI;

     (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender);

     (f) Holdings, the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any notice, passage of time or both required or permitted by any note or other agreement evidencing or governing such Material Indebtedness);

     (g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after giving effect to such giving of notice, passage of time or both as may be required under the agreements evidencing or governing such Material Indebtedness) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

     (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of Holdings, the

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Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings, the Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

     (i) Holdings, the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings, the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

     (j) Holdings or the Borrower shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

     (k) one or more judgments for the payment of money in an aggregate amount in excess of $5,000,000 shall be rendered against Holdings, the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any material assets of Holdings, the Borrower or any Subsidiary to enforce any such judgment;

     (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $5,000,000 for all periods;

     (m) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents or (ii) as a result of the Administrative Agent’s failure to maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Pledge Agreement; or

     (n) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event,

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the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Revolving Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Revolving Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII

The Administrative Agent

               Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent (which term for purposes of this Article shall be deemed to refer to the Administrative Agent and the Collateral Agent) as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.

               The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Holdings, the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

               The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Holdings, the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity, and (d) the Administrative Agent shall have no liability for its failure to deliver to a Lender any

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report, information or other writing that a Loan Party is obligated to deliver to such Lender. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall not be deemed to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by Holdings, the Subsidiaries, the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

               The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

               The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

               Subject to the appointment and acceptance of a successor the Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent that shall be a bank with an office in either or both of Cleveland, Ohio and New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the

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retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

               Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder.

ARTICLE IX

Miscellaneous

               SECTION 9.01. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

     (a) if to Holdings or the Borrower, to it at Argo-Tech Corporation, 23555 Euclid Avenue, Cleveland, Ohio 44117-1795, Attention of Frances St Clair (Telecopy No. (216) 692-6331);

     (b) if to the Administrative Agent or the Collateral Agent, to National City Agent Services, 629 Euclid Avenue, 2nd Floor, Locator 01-3028, Cleveland, Ohio, Attention of Scott Lankford (Telecopy No.(216) 222-0103), with a copy to National City Bank, 1900 East Ninth Street, Locator 01-2083, Cleveland, Ohio 44114, Attention of Christian S. Brown (Telecopy No. (216) 222-9396);

     (c) if to the Issuing Bank, to it at, as applicable,

(i)	National City Bank, International Division #7532, P.O. Box 5101, 23000 Millcreek Boulevard, Cleveland, Ohio 44122, Attention of Patricia Bounds (Telecopy No. (216) 488-7550), National City Bank, 1900 East Ninth Street, Locator 01-2083, Cleveland, Ohio 44114, Attention of Christian S. Brown (Telecopy No. (216) 222-9396), or
(ii)	JPMorgan Chase Bank, N.A., Standby Letter of Credit Department, Global Trade Services, 10420 Highland Manor Dr., Tampa, Florida 33610, Attention: Gina Thomas (Telecopy No. (813) 432-5161), with a

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copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017, Attention of Stephen Simon (Telecopy No.(212) 270-5100);

     (d) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

               SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

               (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Holdings, the Borrower and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent or the Collateral Agent, as applicable, and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Revolving Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Revolving Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent

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thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) release Holdings or any Subsidiary Loan Party from its Guarantee under the Parent Guarantee Agreement or the Subsidiary Guarantee Agreement, as applicable (except as expressly provided in the Parent Guarantee Agreement or the Subsidiary Guarantee Agreement, as applicable), or limit its liability in respect of such Guarantee, without the written consent of each Lender, (vii) except in strict accordance with the express provisions thereof, release all or any substantial part of the Collateral from the Liens of the Security Documents, without the written consent of each Lender, or (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Revolving Commitments of each affected Class (in addition to any consents required under the foregoing provisions of this Section); provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent or the Issuing Bank without the prior written consent of the Administrative Agent, the Collateral Agent or the Issuing Bank, as the case may be, and (B) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Consolidated Term Loan Lenders), the Consolidated Term Loan Lenders (but not the Revolving Lenders) may be effected by an agreement or agreements in writing entered into by Holdings, the Borrower and requisite percentage in interest of the affected Class of Lenders.

               (c) The Borrower shall be permitted to replace any Lender that fails to consent to any amendment, waiver or consent to any Loan Document requested by the Borrower, and supported by the Required Lenders, with a replacement financial institution; provided that (i) no later than sixty (60) days after the date on which the consent of the Required Lenders was obtained with respect to such amendment, waiver or consent, the Borrower shall notify the Lender of the Borrower’s intention to replace such Lender, (ii) such replacement does not conflict with any applicable requirement of law, (iii) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (iv) the Borrower shall be liable to such replaced Lender under Section 2.15 if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (v) the replacement financial institution, if not already a Lender, shall be approved the Administrative Agent and, if such replaced Lender is a Revolving Lender, approved by the Letter of Credit Issuer (which approvals shall not be withheld or delayed unreasonably), (vi) the replaced Lender and the replacement financial institution shall be obligated to effect such replacement in accordance with the provisions of Section 9.04 (provided that the Administrative Agent agrees to waive the processing and recordation fee referred to therein in respect of a replacement pursuant to this Section 9.02(c)), (vii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.14 or 2.16, as the case may be, (viii) any such replacement shall not be deemed to be a waiver of any rights that (A) the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender or (B) the replaced Lender shall have against the Borrower, the Administrative Agent or any other Lender, (ix) the provisions of Section 9.05 (and the Sections referenced therein) shall continue to benefit the replaced Lender, and (x) the replacement financial institution has agreed to the respective amendment, waiver or consent in connection with such replacement.

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               Nothing in this Section 9.02(c) shall be construed to create or imply a basis to restrict, delay or otherwise impair the exercise of any right or remedy of any of the Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank at any time upon and during the continuance of any Default.

               SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and their Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and the Collateral Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

               (b) The Borrower shall indemnify the Administrative Agent, the Collateral Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Effective Date Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any Mortgaged Property or any other property currently or formerly owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses resulted from the gross negligence or willful misconduct of such Indemnitee.

               (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Collateral Agent or the Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the

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Collateral Agent or the Issuing Bank, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent or the Issuing Bank in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the total Revolving Exposures, outstanding Consolidated Term Loans and unused Revolving Commitments at the time.

               (d) To the extent permitted by applicable law, neither Holdings nor the Borrower shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Effective Date Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

               (e) All amounts due under this Section shall be payable promptly after written demand therefor.

               SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

               (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

     (A) the Borrower; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default under paragraph (a), (b), (h) or (i) of Article VII has occurred and is continuing, any other assignee; and

     (B) the Administrative Agent and the Issuing Bank; provided that no consent of the Administrative Agent or the Issuing Bank shall be required for an assignment of any

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Revolving Commitment to an assignee that is a Lender with a Revolving Commitment immediately prior to giving effect to such assignment.

     (ii) Assignments shall be subject to the following additional conditions:

     (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment or Loans of any Class, the amount of the Revolving Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $3,000,000, unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

     (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of its Revolving Commitment or one Class of Loans;

     (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500;

     (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and

     (E) in the case of an assignment to a CLO (as defined below), the assigning Lender shall retain the sole right to approve any amendment, modification or waiver of any provision of this Agreement, provided that the Assignment and Acceptance between such Lender and such CLO may provide that such Lender will not, without the consent of such CLO, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such CLO.

               For purposes of this Section 9.04(b), the terms “Approved Fund” and “CLO” have the following meanings:

“Approved Fund” means (a) a CLO and (b) with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extension of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“CLO” means any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender.

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               (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

               (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Revolving Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and Holdings, the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

               (v) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

               (e) Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Revolving Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Holdings, the Borrower, the Administrative Agent, the Collateral Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant,

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agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17(c) as though it were a Lender.

               (f) A Participant shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as though it were a Lender.

               (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

               SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Revolving Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Revolving Commitments or the termination of this Agreement or any provision hereof.

               SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Document and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Subject to compliance with

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the provisions of Sections 4.01 and 4.02, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

               SECTION 9.07. Severability. Any provision of this Agreement held to be invalid, illegal, ineffective or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality, ineffectiveness or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity, illegality, ineffectiveness or unenforceability of a particular provision in a particular jurisdiction shall not make such provision invalid, illegal, ineffective or unenforceable in any other jurisdiction.

               SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the Obligations held by such Lender then due, irrespective of whether or not such Lender shall have made any demand under this Agreement. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have.

               SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of Ohio.

               (b) Each of Holdings and the Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Court of Common Pleas of the State of Ohio sitting in Cuyahoga County, Ohio and of the United States District Court of the Northern District of Ohio, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Ohio State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against Holdings, the Borrower or its properties in the courts of any jurisdiction.

               (c) Each of Holdings and the Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now

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or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

               (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

               SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

               SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

               SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than Holdings or the Borrower. For the purposes of this Section, “Information” means all information received from Holdings or the Borrower relating to Holdings or the Borrower or its business, other than any

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such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Holdings or the Borrower; provided that, in the case of information received from Holdings or the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

               SECTION 9.13. Joint Lead Arrangers, et al. None of the Joint Lead Arrangers, Joint Bookrunners, Syndication Agent or Documentation Agent shall have any duties or obligations, in such capacities, under this Agreement.

               SECTION 9.14. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

               SECTION 9.15. Existing Credit Agreement; Effectiveness of Amendment and Restatement. Until this Agreement becomes effective in accordance with the terms of this Agreement, the Existing Credit Agreement shall remain in full force and effect and shall not be affected hereby. After the Fourth Restatement Effective Date, all obligations of the Borrower under the Existing Credit Agreement shall become obligations of the Borrower hereunder, guaranteed by the Parent Guarantee Agreement and the Subsidiary Guarantee Agreements and secured by the Security Documents, and the provisions of the Existing Credit Agreement shall be superseded by the provisions hereof.

[No additional provisions are on this page; the pages next following are the signature pages.]

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

AT HOLDINGS CORPORATION
	by		/s/ Michael S. Lipscomb
		Name:	Michael S. Lipscomb
		Title:	Chairman, President and
			Chief Executive Officer

ARGO-TECH CORPORATION
	by		/s/ Frances S. St.Clair
		Name:	Frances S. St.Clair
		Title:	Executive Vice President and
			Chief Financial Officer

NATIONAL CITY BANK, as Administrative Agent, as Issuing Bank and as a Lender,
	by		/s/ Christian S. Brown
		Name:	Christian S. Brown
		Title:	Vice President

JPMORGAN CHASE BANK, N.A., as Syndication Agent, Issuing Bank and as a Lender
	by		/s/ Matthew H. Massie
		Name:	Matthew H. Massie
		Title:	Managing Director

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GENERAL ELECTRIC CAPITAL CORPORATION, as Co-Documentation Agent and as a Lender
	by		/s/ Kelly Stotler
		Name:	Kelly Stotler
		Title:	Duly Authorized Signatory

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FIRSTMERIT BANK, N.A., as Co- Documentation Agent and as a Lender
	by		/s/ Kim Gottfried
		Name:	Kim Gottfried
		Title:	Senior Vice President

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EX-10.42

EXHIBIT 10.42

PROFESSIONAL SERVICES AGREEMENT

     This PROFESSIONAL SERVICES AGREEMENT (this “Agreement”) is made as of October 28, 2005 between                      (the “Service Provider”) and AT Holdings Corporation, a Delaware corporation (the “Company”).

     WHEREAS, the Service Provider, by and through its officers, employees, directors, agents, representatives and affiliates, has expertise in the areas of corporate management, finance, investment, acquisitions and other matters relating to the business of the Company and its subsidiaries;

     WHEREAS, the Service Provider has rendered certain services in connection with securing, structuring and negotiating the equity and debt financing for the transactions contemplated by that certain Agreement and Plan of Merger, dated as of September 13, 2005 (the “Merger Agreement”), by and among V.G.A.T. Investors, LLC, a Delaware limited liability company (“V.G.A.T.”), Vaughn Merger Sub, Inc. a Delaware corporation, Greatbanc Trust Company, as trustee for the Argo-Tech Corporation Employee Stock Ownership Plan, the Company and Argo-Tech Corporation, a Delaware corporation (“Argo-Tech”); and

     WHEREAS, the Company desires to avail itself, for the term of this Agreement, of the expertise of the Service Provider in the aforesaid areas, in which it acknowledges the expertise of the Service Provider;

     NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions herein set forth, the parties hereto agree as follows:

     1. Appointment. The Company hereby appoints the Service Provider to render the advisory and consulting services described in Section 2 commencing on the Closing Date (as defined in Section 3(b)).

     2. Services. The Service Provider hereby agrees that, commencing on the Closing Date, it shall render to the Company and its subsidiaries, by and through such of Service Provider’s officers, employees, directors, agents, representatives and affiliates as such Service Provider, in its sole discretion, shall designate from time to time, advisory and consulting services in relation to the affairs of the Company and its subsidiaries in connection with strategic financial planning and other services not referred to in the next sentence, including, without limitation, advisory and consulting services in relation to the selection, supervision and retention of independent auditors, the selection, retention and supervision of outside legal counsel, and the selection, retention and supervision of investment bankers or other financial advisors or consultants. It is expressly agreed that the services to be performed hereunder shall not include (a) investment banking or other financial advisory services rendered by the Service Provider or its affiliates to the Company or any of its subsidiaries after the Closing Date in connection with acquisitions, divestitures, refinancings, restructurings and similar transactions by the Company or any of its subsidiaries or (b) full-time or part-time employment by the Company or any of its subsidiaries of any officer, employee, director or partner of the Service Provider or its affiliates for which, in each case, such Service Provider or affiliate shall be entitled to receive additional compensation.

     3. Fees.

          (a) In consideration of the services contemplated by Section 2, subject to the provisions of Section 6, the Company hereby agrees to pay to the Service Provider a per annum advisory fee (the “Advisory Fee”) equal to $375,000 commencing at the Closing Date. For the period from the Closing Date through December 31, 2005, the Advisory Fee shall be pro rated based on the number of days in such period and shall be payable in full on the Closing Date. For all periods beginning after December 31, 2005, the Advisory Fee shall be payable semi-annually in advance on January 1 and July 1 of each calendar year. The Advisory Fee shall be fully earned when accrued or paid, as the case may be.

          (b) At the time of the closing (the “Closing Date”) of the transactions contemplated by the Merger Agreement, the Company hereby also agrees to (i) pay to the Service Provider a transaction fee (the “Transaction Fee”) equal to $2,687,500, which Transaction Fee shall be payable for services rendered in connection with securing, structuring and negotiating the equity and debt financing for the transactions contemplated by the Merger Agreement and (ii) reimburse the Service Provider for all Out-of-Pocket Expenses (as defined below) incurred by it on and prior to the Closing Date in connection with the services described in the foregoing clause.

          (c) The Service Provider shall be entitled to be paid (i) a fee by the Company for any investment banking services provided by it in connection with a Company Sale (as defined in that certain Securityholders Agreement, dated as of the date hereof, by and among V.G.A.T., the Company and certain of the securityholders of V.G.A.T and the Company from time to time party thereto, as the same may be amended, modified or restated from time to time (the “Securityholders Agreement”)) in an amount equal to 0.50% of the sum of the consideration received by the Company in connection with such Company Sale plus the principal amount of the Company’s indebtedness assumed by the purchaser in connection with such Company Sale and (ii) customary and reasonable fees for any other transaction relating to (A) any acquisition, divestiture or other transaction by V.G.A.T, the Company, Argo-Tech or any of its subsidiaries, (B) any initial Public Offering by an Issuer (each as defined in the Securityholders Agreement), or (C) any debt or equity financing by or involving V.G.A.T, the Company, Argo-Tech or any of their respective subsidiaries.

     4. Reimbursements. In addition to the Advisory Fee and the Transaction Fee, the Company hereby agrees to pay directly or reimburse the Service Provider, at the direction of the Service Provider, for its and its officers’, employees’, directors’, agents’, representatives’ and affiliates’ Out-of-Pocket Expenses (as defined below) incurred after the Closing Date in connection with the services described in Section 2. For the purposes of this Agreement, the term “Out-of-Pocket Expenses” shall mean the amounts paid by or on behalf of the Service Provider in connection with the services contemplated hereby, including, but not limited to, (a) fees and disbursements of any independent professionals and organizations, including, without limitation, independent auditors and outside legal counsel, investment bankers or other financial advisors or consultants, (b) costs of any outside services or independent contractors, such as financial printers, couriers, business publications or similar services, (c) transportation, per diem, telephone calls, word processing expenses or any similar expense, and (d) bank ticking or other similar fees in connection with any proposed financing for the Company and/or any of its subsidiaries. All reimbursements for Out-of-Pocket Expenses contemplated hereby shall be

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made by wire transfer of immediately available funds to an account designated by the Service Provider promptly upon, or as soon as practicable after, presentation by the Service Provider of the statement in connection therewith.

     5. Liability. Neither the Service Provider nor any of its affiliates, partners, members, officers, directors, employees, agents, representatives and securityholders (collectively, the “Service Provider Group”) shall be liable to the Company or its subsidiaries or affiliates for any loss, liability, damage or expense (collectively, a “Loss”) arising out of or in connection with the performance of services contemplated by this Agreement, unless and then only to the extent that such Loss is determined by a court in a final order from which no appeal can be taken, to have resulted solely from the gross negligence or willful misconduct on the part of such member of the Service Provider Group. The Service Provider makes no representations or warranties, express or implied, in respect of the services to be provided by the Service Provider Group. Except as the Service Provider otherwise may agree in writing on or after the Closing Date: (a) each member of the Service Provider Group shall have the right to, and shall have no duty (contractual or otherwise) not to, directly or indirectly: (i) engage in any Permitted Business (as defined in V.G.A.T.’s Amended and Restated Limited Liability Company Agreement, as in effect from time to time, the “LLC Agreement”) or similar business activities or lines of business as the Company or its subsidiaries or affiliates, (ii) do business with any client, customer, supplier, lender or investor of, to or in the Company or its subsidiaries or affiliates with respect to a Permitted Business and (iii) develop a strategic relationship with a Permitted Businesses; (b) no member of the Service Provider Group shall be liable to the Company or its subsidiaries or affiliates for breach of any duty (contractual or otherwise) by reason of any such activities or of such person’s participation therein; and (c) in the event that any member of the Service Provider Group acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both (A) the Company or any of its subsidiaries or affiliates, on the one hand, and (B) such member of the Service Provider Group, on the other hand, or any other person, other than to the extent such corporate opportunity involves a Permitted Business, no member of the Service Provider Group shall have any duty (contractual or otherwise) to communicate or present such corporate opportunity to the Company or its subsidiaries and, notwithstanding any provision of this Agreement to the contrary, shall not be liable to the Company, its subsidiaries or any of their affiliates for breach of any duty (contractual or otherwise) by reasons of the fact that any member of the Service Provider Group directly or indirectly pursues or acquires such opportunity for itself, directs such opportunity to another person, or does not present such opportunity to the Company, its subsidiaries or any of their affiliates. In no event will any of the parties hereto be liable to any other party hereto for any punitive, exemplary, indirect, special, incidental or consequential damages, including lost profits or savings, whether or not such damages are foreseeable, or in respect of any liabilities relating to any third party claims (whether based in contract, tort or otherwise) other than for the Claims relating to the services which may be provided by the Service Provider hereunder. Nothing in this Section 5 shall limit the confidentiality obligations set forth in Section 9.4 of the LLC Agreement, or any fiduciary obligations of the members of the management committee or similar body of V.G.A.T. or its subsidiaries.

     6. Term. This Agreement shall be effective as of the Closing Date and shall terminate (i) at such time after the Closing Date as                     , together with its affiliates (the “                     Investors”), in the aggregate, hold directly or indirectly, less than thirty-percent (30%) of the units of V.G.A.T. acquired by the                      Investors pursuant to

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the Unit Purchase Agreement dated as of the date hereof, by and among V.G.A.T. and certain of its equity holders or (ii) upon the consummation by any Issuer (as defined in the Securityholders Agreement) of an initial Public Offering (as defined in the Securityholders Agreement). This sentence, the provisions of Sections 4, 5 and 7 through 14 inclusive and the obligation of the Company to pay the Advisory Fees accrued during the term of this Agreement pursuant to Section 2 shall survive the termination of this Agreement.

     7. Indemnification. The Company hereby agrees to defend, indemnify and hold harmless each member of the Service Provider Group (each an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities of whatever kind or nature, joint or several, absolute, contingent or consequential, to which such Indemnified Party may become subject under any applicable federal or state law, or any claim made by any third party, or otherwise, to the extent they relate to or arise out of the services contemplated by this Agreement or the engagement of the Service Provider pursuant to, and the performance by the Service Provider of the services contemplated by, this Agreement (each a “Claim”). The Company hereby agrees to reimburse any Indemnified Party for all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim for which the Indemnified Party would be entitled to indemnification under the terms of the previous sentence, or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party hereto. The Company will not be liable under the foregoing indemnification provision to the extent that any Claim, cost or expense is determined by a court, in a final judgment from which no further appeal may be taken, to have resulted primarily from the gross negligence or willful misconduct of the Service Provider claiming such indemnification.

     8. Notices. All notices hereunder shall be in writing and shall be delivered personally or mailed by United States mail, postage prepaid, addressed to the parties as follows:

To the Company:
AT Holdings Corporation
23555 Euclid Avenue
Cleveland, OH 44117
Facsimile: (216) 579-0212
Attention: Michael Lipscomb and Paul R. Keen Esq.
with copies (which shall not constitute notice to the Company) to:
V.G.A.T. Investors, LLC
c/o Vestar Capital Partners
245 Park Avenue, 41st Floor
New York, NY 10167
Facsimile:	(212) 808-4922
Attention:	John R. Woodard and
	General Counsel
and

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V.G.A.T. Investors, LLC
c/o Greenbriar Equity Group LLC
555 Theodore Fremd Avenue
Rye, New York 10580
Facsimile:	(914) 925-9699
Attention:	Reginald L. Jones
	John Daileader
and
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, NY 10022
Facsimile:	(212) 446-6460
Attention:	Michael Movsovich, Esq.
	Christopher Neumann, Esq.
To Service Provider:
Facsimile:
Attention:
with a copy (which shall not constitute notice to the Service Provider) to:
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, NY 10022
Facsimile:	(212) 446-6460
Attention:	Michael Movsovich, Esq.
	Christopher Neumann, Esq

     9. Assignment. No party hereto may assign any obligations hereunder to any other party without the prior written consent of the other parties (which consent shall not be unreasonably withheld); provided that the Service Provider may, without the consent of the Company, assign its rights under this Agreement to any of its affiliates.

     10. No Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.

     11. Successors and Assigns. All covenants and agreements contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective heirs,

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executors, administrators, successors, legal representatives and permitted assigns, whether so expressed or not.

     12. Counterparts. This Agreement may be executed simultaneously in two or more separate counterparts, any one of which need not contain the signatures of more than one party, but each of which shall be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.

     13. Entire Agreement; Modification; Governing Law. The terms and conditions hereof constitute the entire agreement between the parties hereto with respect to the subject matter of this Agreement and supersede all previous communications, either oral or written, representations or warranties of any kind whatsoever, except as expressly set forth herein. No modifications of this Agreement nor waiver of the terms or conditions thereof shall be binding upon either party unless approved in writing by an authorized representative of such party. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed therein, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Any dispute relating hereto shall be heard in the state or federal courts of New York, New York, in the borough of Manhattan, and the parties agree to jurisdiction and venue therein.

     14. Arbitration.

          (a) Any disputes with regard to this Agreement that is not resolved by mutual agreement, other than as provided in Section 14(b), shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without limitation, legal fees and fees of any experts) and out-of-pocket expenses.

          (b) The parties hereby agree and stipulate that in the event of any breach or violation or violation of this Agreement by any other party hereto, either threatened or actual, the non-breaching parties’ rights shall include, in addition to any and all other rights available to any such non-breaching party at law or in equity, the right to seek and obtain any and all injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to prohibit, bar, and restrain any and all such breaches or violations by any other party hereto. Each of the parties hereto further agrees that no bond need be filed in connection with any request by any other party hereto for a temporary restraining order or for temporary or preliminary injunctive relief.

     15. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO

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TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.

[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]

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SIGNATURE PAGE TO PROFESSIONAL SERVICES AGREEMENT

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers or agents as set forth below.

AT HOLDINGS CORPORATION
By:
	Name:
	Title:
[VESTAR CAPITAL PARTNERS/GREENBRIAR EQUITY GROUP LLC]
By:
	Name:
	Title:

EX-10.47

EXHIBIT 10.47

INCENTIVE UNIT GRANT AGREEMENT

     This INCENTIVE UNIT GRANT AGREEMENT (this “Agreement”) is made as of October 28, 2005, by and between V.G.A.T. Investors, LLC, a Delaware limited liability company (the “Company”), and                      (the “Executive”).

     WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 13, 2005, by and among the Company, Vaughn Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of the Company (“Merger Sub”), AT Holdings Corporation, a Delaware corporation, (“AT Holdings”), Argo-Tech Corporation, a Delaware corporation (“Argo Tech”), and GreatBanc Trust Company as Trustee for the Argo-Tech Corporation Employee Stock Ownership Plan (the “ESOP Trustee”), on the date hereof Merger Sub will merge (the “Merger”) with and into AT Holdings with AT Holdings surviving as a wholly owned Subsidiary of the Company;

     WHEREAS, pursuant to a Unit Purchase Agreement (the “Unit Purchase Agreement”), dated as of the date hereof, by and among Vestar Capital Partners IV, L.P., a Delaware limited partnership (“Vestar IV”), Vestar/V.G.A.T. Investors, LLC, a Delaware limited liability company (“Vestar/V.G.A.T.” and, together with Vestar IV, “Vestar”), Greenbriar Equity Fund, L.P. a Delaware limited partnership (“GEF”), Greenbriar Co-Investment Partners, L.P. a Delaware limited partnership (“GCP”), Greenbriar Co-Investment-AT, LLC, a Delaware limited partnership (“GC” and, together with GEF and GCP, “Greenbriar”), GS Mezzanine Partners III Onshore Fund, L.P., a Delaware limited partnership (“GS Onshore”), GS Mezzanine Partners III Offshore Fund, L.P., an exempted limited partnership organized under the laws of the Cayman Islands (“GS Offshore” and together with GS Onshore, “GS Mezzanine”), and the Management Investors (as defined therein), Vestar, Greenbriar, GS Mezzanine and the Management Investors have purchased membership interests in the Company;

     WHEREAS, following the Merger the Executive will render services to or for the benefit of the Company and its Subsidiaries; and

     WHEREAS, on the terms and subject to the conditions contained herein, the Company desires to grant to the Executive such Class B Units and Class C Units (as defined herein) of the Company as are set forth on Schedule I attached hereto.

     NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

1. Definitions.

     1.1. Activity Date. The term “Activity Date” shall mean the first date on which Executive engages in Competitive Activity.

     1.2. Affiliate. The term “Affiliate” shall have the meaning set forth in the LLC Agreement.

     1.3. Agreement. The term “Agreement” shall have the meaning set forth in the preface.

     1.4. AT Holdings. The term “AT Holdings” shall have the meaning set forth in the preface.

     1.5. Argo Tech. The term “Argo Tech” shall have the meaning set forth in the preface.

     1.6. Board. The term “Board” shall mean the Management Committee (as defined in the LLC Agreement) of the Company.

     1.7. Cash Deferral Conditions. The term “Cash Deferral Conditions” shall have the meaning set forth in Section 6.1.

     1.8. Cause. The term “Cause” shall mean:

          (a) Executive is indicted or charged with, or pleads guilty or nolo contendere to, (A) a felony or (B) a crime involving moral turpitude that is either materially detrimental to the Company or that brings the Company into public disgrace or disrepute;

          (b) in carrying out his duties to the Company, the Executive engages in conduct that constitutes gross neglect or willful misconduct;

          (c) Executive engages in willful misconduct resulting in or intended to result in direct personal gain to Executive at the Company’s expense or that brings the Company into public disgrace or disrepute, or the Executive has made, or is aware of, any material and knowing misrepresentation to the Company or any of its Subsidiaries in any Transaction Document (as defined in the Merger Agreement);

          (d) the Executive breaches any material provision of this Agreement, any employment agreement with the Company or any Subsidiary, if any, or breaches in any material respect any Company policy governing employee conduct in the workplace, including, without limitation, policies relating to the use of illicit drugs, alcohol abuse and sexual harassment, and such breach has not been cured prior to 30 days following notice from the Company;

          (e) the Executive’s repeated refusal to perform duties or responsibilities as reasonably directed by the Board in writing; or

          (f) the Executive’s material breach of a fiduciary obligation to the Company or a material breach of any confidentiality or non-competition obligations.

     1.9. Class A Units. The term “Class A Units” shall have the meaning set forth in the LLC Agreement and shall include any securities of the Company or any other Person that may be received in respect thereof.

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     1.10. Class B Units. The term “Class B Units” shall have the meaning set forth in the LLC Agreement and shall include any securities of the Company or any other Person that may be received in respect thereof.

     1.11. Class C Units. The term “Class C Units” shall have the meaning set forth in the LLC Agreement and shall include any securities of the Company or any other Person that may be received in respect thereof.

     1.12. Code. The term “Code” means the United States Internal Revenue Code of 1986, as amended.

     1.13. Company. The term “Company” shall have the meaning set forth in the preface.

     1.14. Company Sale. The term “Company Sale” shall mean the dissolution of the Company in accordance with this Agreement or the consummation of a transaction, whether in a single transaction or in a series of related transactions that are consummated contemporaneously (or consummated pursuant to contemporaneous agreements), with any other Person or group of related Persons (other than Vestar or Greenbriar) on an arm’s-length basis, pursuant to which such Person or group of related Persons (i) acquire (whether by merger, stock purchase, recapitalization, reorganization, redemption, issuance of capital stock or otherwise) more than 50 percent of (A) the Company’s Units or (B) the total number of shares of AT Holdings Corporation’s or Argo-Tech Corporation’s common stock outstanding (in each case assuming that all equity securities convertible into or exercisable for the Company’s Units or for shares of common stock of AT Holdings or Argo-Tech, as the case may be, have been so converted or exercised), or (ii) acquire assets constituting all or substantially all of the assets of the Company’s Subsidiaries on a consolidated basis; provided that in no event shall a Company Sale be deemed to include any transaction effected for the purpose of (x) changing, directly or indirectly, the form of organization or the organizational structure of the Company or any of its Subsidiaries or (y) contributing equity securities to entities controlled by the Company.

     1.15. Competitive Activity. Executive shall be deemed to have engaged in “Competitive Activity” if: while employed by the Company or any of its Subsidiaries, and during the period from the date of termination of Executive’s employment by the Company or any of its Subsidiaries for any reason until the first anniversary of the date of such termination, Executive, directly or indirectly, either for himself or for any other individual, corporation, partnership, joint venture or other entity:

     (a) participates in any business (including, without limitation, any division, group or franchise of a larger organization) anywhere in the Non Competition Area (defined below) which engages or which proposes to engage in the promotion, development, sale, distribution or production of any (i) aircraft engine fuel pumps, (ii) commercial and military airframe fuel system products and services, (iii) aerial refueling pumps, (iv) ground fueling components, (v) fuel management systems, (vi) cryogenic pumps, or (vii) any products or product lines that compete with any of the foregoing or other products or product lines of the Company or any Subsidiary (a “Competitive Business”) (A) at any time during the Executive’s employment with the Company, if the determination of whether or not Executive has engaged in “Competitive

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Activity” is being made during his employment with the Company or (B) at the time of Executive’s termination of employment by the Company; or

     (b) (i) induces or attempts to induce any employee of the Company or any of its Subsidiaries to leave the employ of the Company or such Subsidiary, or in any way interferes with the relationship between the Company or any Subsidiary and any employee thereof, including inducing or attempting to induce any union, employee or group of employees to interfere with the business or operations of the Company or its Subsidiaries, (ii) hires any person who was an employee of the Company or any Subsidiary unless at least twelve months has elapsed since the termination of such employee’s employment by the Company or any Subsidiary, as the case may be, or (iii) induces or attempts to induce any customer, supplier, distributor, franchisee, licensee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interferes with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and the Company or any Subsidiary.

     For purposes of this Agreement, the term “participate in” shall include, without limitation, having any direct or indirect interest in any corporation, partnership, joint venture or other entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any individual, corporation, partnership, joint venture or other business entity (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise). For the purposes of this Agreement, “Non Competition Area” means anywhere in the world. Notwithstanding the above, Executive shall not be prohibited from (i) owning up to 3% of the outstanding stock of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation; or (ii) becoming employed by any entity or organization that has a division, group, Subsidiary or franchise that engages in any Competitive Business (a “Competing Employer”); provided, that (A) Executive’s employment with such Competing Employer does not require Executive to provide any services on behalf of, or otherwise interact with, such division, group, Subsidiary or franchise that engages in any Competing Business, (B) Executive causes the Competing Employer to screen Executive from the Competing Employer’s activities involving a Competing Business and (C) the disclosure by Executive of any confidential or proprietary information concerning the Company or any of its Subsidiaries to a Competing Employer or any of its affiliates shall be deemed to be a Competing Activity.

     1.16. Credit Agreement. The term “Credit Agreement” shall mean AT Holdings’ principal credit facility, which shall initially be that certain Fourth Amended and Restated Credit Agreement, dated September 13, 2005 by and among Argo Tech, AT Holdings, the Lenders (as defined therein) and National City Bank, as Administrative Agent, any successor principal credit facility in replacement thereof and any ancillary and related documents thereto.

     1.17. ESOP Trustee. The term “ESOP Trustee” shall have the meaning set forth in the preface.

     1.18. Executive. The term “Executive” shall have the meaning set forth in the preface.

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     1.19. Executive Group. The term “Executive Group” shall have the meaning set forth in Section 5.1(a).

     1.20. Fair Market Value. The term “Fair Market Value” means, with respect to any asset or securities, the fair market value for such assets or securities as between a willing buyer and a willing seller in an arm’s length transaction occurring on the date of valuation, taking into account all relevant factors determinative of value, as is determined in good faith by the Board, and subject to the approval of the Majority Unitholders (as such term is defined in the LLC Agreement). The Board shall communicate its determination of Fair Market Value to Executive and, unless Executive objects to such determination within fifteen days of receipt of such determination, Fair Market Value shall be the value so notified by the Board. If Executive disagrees with such determination of Fair Market Value, then it shall notify the Company and Executive and a representative identified by the Board shall negotiate regarding the determination for a period of up to fifteen days. If Executive and the Board are unable to reach agreement within 30 days after the Board has notified Executive of its determination of Fair market Value, then an Expert (as defined in the LLC Agreement) shall be selected jointly by Executive and the Board or, if such selection cannot be made within 15 days, by an Expert selected by the American Arbitration Association in accordance with its commercial arbitration rules for arbitrators. The Expert shall determine Fair Market Value in accordance with the terms and provisions of this definition. The Board and Executive each shall deliver to the Expert promptly, and in any event within five days, after the selection of the Expert, a written statement setting forth its respective determination of Fair Market value and shall provide reasonable supporting documentation for such determination. The Expert shall deliver to the Board and Executive, as promptly as practicable and in any event within 30 days after its selection, a written report setting forth the determination of Fair Market Value as determined in accordance with the terms of this definition. The Expert shall select the position of either the Board or Executive as its determination of Fair Market Value and may not impose an alternative resolution. The Expert shall make its determination based on presentations and supporting material provided by the parties and, at its election, based upon its independent review. Fair Market Value as determined by the Expert shall be, absent manifest error or fraud, final, conclusive and binding upon the parties. The fees, costs and expenses of the Expert shall be borne by (x) the Company, if Fair Market Value as determined by Executive is selected by the Expert or (y) Executive, if Fair Market Value as determined by Board is selected by the Expert.

     1.21. Greenbriar. The term “Greenbriar” shall have the meaning set forth in the preface.

     1.22. GS Mezzanine. The term “GS Mezzanine” shall have the meaning set forth in the preface.

     1.23. Investors. The term “Investors” shall mean Vestar and Greenbriar.

     1.24. LLC Agreement. The term “LLC Agreement” shall mean the Amended and Restated Limited Liability Company Agreement of the Company, dated as of the date hereof, entered into by and among the Company and its members, as amended from time to time in accordance with its terms.

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     1.25. Losses. The term “Losses” shall have the meaning set forth in Section 8.5.

     1.26. Merger Agreement. The term “Merger Agreement” shall have the meaning set forth in the preface.

     1.27. Merger Sub. The term “Merger Sub” shall have the meaning set forth in the preface.

     1.28. Permitted Transferee. The term “Permitted Transferee” means any transferee of Units pursuant to clause (v) of the definition of “Exempt Transfer” in the Securityholders Agreement.

     1.29. Person. The term “Person” shall mean any individual, corporation, partnership, limited liability company, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other entity of any nature whatsoever.

     1.30. Public Offering. The term “Public Offering” shall have the meaning set forth in the Securityholders Agreement.

     1.31. Return Hurdle. The term “Return Hurdle” shall have the meaning set forth in Section 4(a)(ii).

     1.32. Rollover Amount. The term “Rollover Amount” shall have the meaning set forth in the Merger Agreement.

     1.33. Rollover Securities. The term “Rollover Securities” shall have the meaning set forth in Section 4(b).

     1.34. Securities Act. The term “Securities Act” shall mean the United States Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder, as the same may be amended from time to time.

     1.35. Securityholders Agreement. The term “Securityholders Agreement” shall mean the Securityholders Agreement, dated as of the date hereof, among the Company, Vestar, Greenbriar, GS Mezzanine and the other securityholders party thereto, as it may be amended or supplemented thereafter from time to time.

     1.36. Subsidiary. The term “Subsidiary” shall have the meaning set forth in the LLC Agreement.

     1.37. Subordinated Note. The term “Subordinated Note” shall have the meaning set forth in Section 6.1.

     1.38. Tax or Taxes. The terms “Tax” or “Taxes” shall mean (i) any United States federal, state or local, or any non-United States, net or gross income, gross receipts, net proceeds, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real

6

property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other taxes, assessments, duties, fees, levies or other governmental charges of any kind whatever, whether disputed or not, including any interest, penalty or addition thereto; or (ii) any liability for or in respect of the payment of any amount described in clause (i) of this definition as a member of a consolidated, affiliated, unitary or similar group, as a transferee or successor, by contract or otherwise.

     1.39. Unit Purchase Agreement. The term “Unit Purchase Agreement” shall have the meaning set forth in the preface.

     1.40. Units. The term “Units” shall mean the Class A Units, the Class B Units and/or the Class C Units issued by the Company to the Executive pursuant to this Agreement and/or the Unit Purchase Agreement, as applicable.

     1.41. Vestar. The term “Vestar” shall have the meaning set forth in the preface.

2. Grant of Units.

     2.1. Closing Events. Subject to the Executive executing and delivering to the Company the LLC Agreement and the Securityholders Agreement and the other terms and conditions set forth in this Agreement, the Company hereby grants to Executive, as of the date hereof, 1,705 Class B Units and 1,705 Class C Units. Upon the execution and delivery of this Agreement by the parties hereto, the Company shall modify the unit register of the Company to reflect Executive’s ownership of the number of Class B Units and Class C Units set forth above.

     2.2. Section 83(b) Election. With respect to the Class B Units and Class C Units received by Executive, within 30 days after the Closing, Executive shall make a timely election with the Internal Revenue Service under Section 83(b) of the Code and the regulations promulgated thereunder, in the form of Exhibit A attached hereto.

     2.3. Equity Agreements. Simultaneously with the execution of this Agreement, the Executive shall execute joinders, in form and substance acceptable to the Company, to each of the LLC Agreement and the Securityholders Agreement.

3. Representations and Warranties. The Executive represents and warrants to the Company that the statements contained in this Section 3.1 are correct and complete as of the date of this Agreement, with respect to himself:

     3.1. Power and Authority. The Executive has full power and authority to execute and deliver this Agreement and perform his obligations hereunder.

     3.2. Noncontravention. To the knowledge of the Executive, neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate any provision of law, statute, rule or regulation to which the Executive is subject.

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     3.3. Brokers’ Fees. The Executive has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Company or any of its affiliates could become liable or obligated.

     3.4. Units Unregistered. The Executive acknowledges and represents that Executive has been advised by the Company that:

     (a) the grant of the Units hereunder has not been registered under the Securities Act;

     (b) the Units must be held indefinitely and the Executive must continue to bear the economic risk of the investment in the Units unless the offer and sale of such Units are subsequently registered under the Securities Act and all applicable state securities laws or an exemption from such registration is available;

     (c) there is no established market for the Units and it is not anticipated that there will be any public market for the Units in the foreseeable future;

     (d) a restrictive legend in the form set forth below and the legends set forth in Section 8.2 of the Securityholders Agreement and on the cover page of the LLC Agreement shall be placed on the certificates representing the Units if any such certificates shall be issued in the future:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE OPTIONS AND OTHER PROVISIONS SET FORTH IN A UNIT GRANT AGREEMENT BETWEEN THE ISSUER AND THE EXECUTIVE DATED AS OF OCTOBER 28, 2005, AS AMENDED AND MODIFIED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE”; and

     (e) a notation shall be made in the appropriate records of the Company indicating that the Units are subject to restrictions on transfer and, if the Company should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to the Units.

4. Vesting and Forfeiture.

          (a) General. None of the Class B Units or Class C Units granted to the Executive pursuant to this Agreement are vested as of the date hereof.

     (i) Vesting of Class B Units. Subject to Sections 4(b) and 4(c) below, 20% of the Class B Units granted hereunder will vest effective as of the end of each fiscal year commencing at the end of the fiscal year ended October 31, 2006, so long as the Executive remains continuously employed by the Company or any of its Subsidiaries until the end of each such fiscal year; provided that for fiscal years following October 31, 2006, unless the Executive’s employment by the Company and its Subsidiaries is

8

terminated by the Company for Cause or voluntarily by the Executive, the Class B Units that would vest in such fiscal year will vest on a daily basis, such that if Executive’s employment by the Company terminated during such fiscal year the number of Class B Units that would vest with respect to such fiscal year would be equal to (i) the product of 0.20 multiplied by the number of Class B Units held by the Executive, multiplied by (ii) a fraction, the numerator of which is equal to the number of days that have elapsed in such fiscal year prior to the date such termination occurs, and the denominator of which is 365.

     (ii) Vesting of Class C Units. Subject to Sections 4(b) and 4(c) below, as of the end of each fiscal year commencing with the fiscal year ended October 31, 2006, 20% of the Class C Units granted hereunder will be eligible to vest as described in this Section 4(a)(ii), so long as the holder of such Class C Units remains continuously employed by the Company or any of its Subsidiaries until the end of each such fiscal year (the “Time Condition”). Class C Units for which the Time Condition has been satisfied shall vest in total to the extent that each of Vestar and Greenbriar receives a pre-tax cash on cash return (from sources including, but not limited to, cash distributions on the Class A Units by the Company, the sale of any Class A Units by the Investors, and the sale for cash of securities received in exchange for, as a distribution on, or in respect of Class A Units) on the aggregate amount of its equity invested in the Company that is at least equal to the greater of (A) an annualized internal rate of return of 25% on its aggregate equity investment in the Company and (B) 2.5 times the amount of its aggregate equity investment in the Company, in each case after giving effect to the vesting of such Class C Units (the “Return Hurdle”). To the extent that the Return Hurdle has not been met at the time that Vestar or Greenbriar are to receive the final amounts with respect to their equity investments in the Company, including upon a Company Sale, and there are amounts on deposit in the Catch-up Account (as defined in Section 4.5 of the LLC Agreement) or proceeds in respect of a Company Sale that would be payable with respect to the Class C Units if they were to vest (in each case, a “Class C Amount”), then all or a portion of the Class C Amount first will be distributed or paid to the Class A Unitholders until the Return Hurdle is met for each of Greenbriar and Vestar. To the extent that only a portion of the Class C Amount is required to be distributed or paid to the Class A Unitholders in order for the Return Hurdle to be met, then the Class C Units for which the Time Condition has been met and that have not been forfeited or repurchased prior to that time will vest and the remainder of the Class C Amount shall be distributed or paid to the Class C Unitholders in respect of such Class C Units. Any Class C Units that cannot be vested without resulting in a failure of the Return Hurdle to be achieved in connection with a Company Sale will not vest and will be forfeited.

          (b) Effect of Termination. In the case of a termination of the Executive’s employment by the Company or any of its Subsidiaries for any reason (i) all Class A Units and options to purchase Class A Units (collectively, the “Rollover Securities”), and all vested Class B Units and all Class C Units which have satisfied the Time Condition granted to the Executive pursuant to this Agreement shall be subject to the repurchase provisions in Section 5 below and (ii) all unvested Class B Units and all Class C Units that have not satisfied the Time Condition granted to the Executive pursuant to this Agreement shall be immediately and permanently forfeited, and the Executive’s rights as a holder of such unvested Units shall immediately expire.

9

          (c) Effect of Company Sale. Upon the occurrence of a Company Sale prior to the fourth anniversary of the end of the fiscal year ended October 31, 2006, provided that the Executive has been continuously employed with the Company or any of its Subsidiaries until the time such sale occurs (i) all of the Class B Units granted to the Executive pursuant to this Agreement that have not previously vested or been forfeited pursuant to Section 4(b) above shall vest and (ii) all of the Class C Units granted to the Executive pursuant to this Agreement that have not previously been forfeited pursuant to Section 4(b) above shall vest to the extent the Return Hurdle is achieved as contemplated in Section 4(a)(ii) above.

5. Certain Sales Upon Termination of Employment.

     5.1. Call Options.

          (a) If the Executive’s employment by the Company or any of its Subsidiaries terminates for any reason, the Company shall have the right and option to purchase in its sole discretion, and, to the extent the Company exercises such right, the Executive and the Executive’s Permitted Transferees (hereinafter referred to as the “Executive Group”) shall be required to sell to the Company (i) any or all of the Class B Units then held by such member of the Executive Group that have vested in accordance with Section 4, and any or all of Class C Units then held by such member of the Executive Group that have satisfied the Time Condition in accordance with Section 4 and (ii) in the event that following such termination of Executive’s employment with the Company or any of its Subsidiaries the Executive engages in Competitive Activity, any or all of the Rollover Securities then held by such member of the Executive Group, in each case at a price per Unit equal to the applicable purchase price determined pursuant to Section 5.1(c).

          (b) If the Company desires to exercise one of its options to purchase Class B Units, Class C Units or Rollover Securities pursuant to this Section 5.1, the Company shall, not later than the six month anniversary of (i) the date of termination of Executive’s employment by the Company or any of its Subsidiaries or (ii) the Activity Date (in the event that following a termination of the Executive’s employment by the Company or any of its Subsidiaries, the Executive engages in Competitive Activity), send written notice to the Executive of its intention to purchase all or a portion of such Class B Units, Class C Units and Rollover Securities, specifying the number of Class B Units, Class C Units and Rollover Securities to be purchased (the “Call Notice”). Subject to the provisions of Section 6, the closing of the purchase shall take place at the principal office of the Company on the later of the 30^th day after the giving of the Call Notice and, if applicable, the date that is 10 business days after the final determination of Fair Market Value. Subject to the provisions of Section 6, the Executive shall, and, to the extent securities held by other members of the Executive Group are being repurchased, shall cause such member(s) of the Executive Group to, deliver to the Company duly executed instruments transferring title to the applicable Class B Units, Class C Units and Rollover Securities to the Company, against payment of the appropriate purchase price by cashier’s or certified check payable to the Executive or by wire transfer of immediately available funds to an account designated by the Executive. It being understood that any Units or Rollover Securities to be repurchased hereunder shall be purchased from Executive and/or from other members of the Executive Group at the Company’s option and if the Company first elects to purchase any Units or Rollover Securities from one member of the Executive Group who fails to honor such

10

Person’s obligations hereunder, then the Company may elect to purchase Units or Rollover Securities from any one or more other members of the Executive Group so that it can repurchase the entire amount of securities it desires to repurchase.

          (c) In the event of a purchase by the Company pursuant to Section 5.1, (i) the purchase price for each Class B Unit and Class C Unit purchased by the Company shall be (x) in the case of a termination other than for Cause, the Fair Market Value of such Class B Unit and Class C Unit as of the date of termination of Executive’s employment by the Company or any of its Subsidiaries and (y) in the case of a termination for Cause or if the Executive engages in Competitive Activity following the termination of his employment, the lesser of (A) the Executive’s cost for such Unit and (B) the Fair Market Value of such Unit as of the date of termination of the Executive’s employment by the Company or any of its Subsidiaries or the Activity Date, as applicable, and (ii) the purchase price for any Rollover Security shall be the lesser of (A) the Executive’s cost for such Rollover Security and (B) the Fair Market Value of such Rollover Security as of the Activity Date.

     5.2. Obligation to Sell Several. If there is more than one member of the Executive Group, the failure of any one member thereof to perform its obligations hereunder shall not excuse or affect the obligations of any other member thereof, and the closing of the purchases from such other members by the Company shall not excuse, or constitute a waiver of its rights against, the defaulting member.

6. Certain Limitations on the Company’s Obligations to Purchase Class B Units, Class C Units and Rollover Securities.

     6.1. Payment for Class B Units, Class C Units and Rollover Securities. If at any time the Company elects to purchase any Class B Units, Class C Units or Rollover Securities pursuant to Section 5, the Company shall pay the purchase price for the Class B Units, Class C Units and Rollover Securities it purchases (i) first, by offsetting indebtedness, if any, owing from the Executive to the Company or any of its Subsidiaries or Affiliates (which indebtedness shall be applied pro rata against the proceeds receivable by each member of the Executive Group receiving consideration in such repurchase) and (ii) then by the Company’ delivery of a cashier’s or certified check or wire transfer of immediately available funds for the remainder of the purchase price, if any, against delivery of the certificates or other instruments representing the Class B Units, Class C Units and Rollover Securities so purchased, duly endorsed; provided that if such cash payment would result in a violation of any (A) law, statute, rule, regulation, policy, order, writ, injunction, decree or judgment promulgated or entered by any federal, state, local or foreign court or governmental authority applicable to the Company or any of its Subsidiaries or Affiliates or any of its or their property or (B) terms, provision or covenants of the Credit Agreement or any other agreement governing funded indebtedness of the Company or its Subsidiaries (the “Cash Deferral Conditions”), the portion of the cash payment so affected may be made by the Company’s delivery of a junior subordinated note of the Company (a “Subordinated Note”) with a principal amount equal to the balance of the purchase price for the Class B Units or Rollover Securities to be purchased pursuant to Section 5 above. The Subordinated Note will be subordinated to all other funded debt of the Company, payable on the earlier of such time as the Company is no longer restricted from paying the purchase price as

11

described in the preceding sentence and the eighth anniversary of the date such note was issued and accrue interest at a rate equal to the then current rate of the Company’s senior credit facility.

7. Miscellaneous.

     7.1. Deemed Transfer of Class B Units, Class C Units and Rollover Securities. If the Company shall deliver, at the time and place and in the amount and form provided in this Agreement, the consideration for the Class B Units, Class C Units or Rollover Securities, as applicable, to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the Person from whom such Class B Units, Class C Units or Rollover Securities are to be repurchased shall no longer have any rights as a holder of such Class B Units, Class C Units or Rollover Securities (other than the right to receive payment of such consideration in accordance with this Agreement), and such Class B Units, Class C Units or Rollover Securities shall be deemed purchased in accordance with the applicable provisions hereof and the Company shall be deemed the owner and holder of such Class B Units, Class C Units or Rollover Securities, as applicable, whether or not certificates therefor have been delivered as required by this Agreement.

     7.2. Recapitalizations, Exchanges, Etc., Affecting Class A Units, Class B Units and Class C Units. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to Class A Units, Class B Units and Class C Units, to any and all securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Class A Units, Class B Units and Class C Units, by reason of any distribution payable in Class A Units, Class B Units or Class C Units, as applicable, issuance of securities, combination, recapitalization, reclassification, merger, consolidation or otherwise.

     7.3. Executive’s Employment by Company. Nothing contained in this Agreement shall be deemed to obligate the Company or any of its Subsidiaries or Affiliates to employ the Executive or otherwise to receive services from the Executive in any capacity whatsoever (including as an employee or independent contractor) or to prohibit or restrict the Company and (or any such Subsidiary or Affiliate) from terminating the employment of, and provision of services by, the Executive at any time or for any reason whatsoever, with or without Cause.

     7.4. Indemnification by Executive. Executive agrees to indemnify and hold harmless the Company and its Subsidiaries and Affiliates against any and all Taxes arising in connection with any failure to withhold Taxes in respect of the grant, transfer or vesting of the Units acquired by the Executive hereunder or pursuant to the Unit Purchase Agreement. Each of Executive, on the one hand, and the Company and its Subsidiaries and Affiliates, on the other hand, shall notify the other (in a manner described in Section 8.11 of this Agreement) within 20 days of first receiving notice of an audit or other proceeding being conducted by the Internal Revenue Service or any state or local taxing authority relating to the Class B Units and Class C Units acquired herein by the Executive or the Class A Units acquired by Executive pursuant to the Unit Purchase Agreement, and each of the Executive, the Company and its Subsidiaries and Affiliates shall assist each other during the course of such audit or other proceeding to the extent that such assistance is reasonably requested.

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     7.5. Withholding Tax Requirements. The Company and its Subsidiaries may withhold from amounts otherwise due or payable to Executive hereunder or under the LLC Agreement or in connection with the provision of services by the Executive to the Company or any of its Subsidiaries any amount in respect of Taxes that the Company or its Subsidiaries determine in good faith that it is required to withhold, in each case in connection with (a) any payment, allocation or distribution hereunder, pursuant to the LLC Agreement or in connection with the Executive’s employment by the Company or any of its Subsidiaries, (b) the transfer of any Class A Units acquired pursuant to the Unit Purchase Agreement, or (c) the transfer or vesting of any Class B Unit or Class C Unit granted hereunder. Executive shall furnish such information as the Company or its Subsidiaries requests in good faith to make any such determination of Taxes.

     7.6. Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns; provided, however, that no Permitted Transferee shall derive any rights under this Agreement unless and until such Permitted Transferee has executed and delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement.

     7.7. Amendment; Waiver. This Agreement may be amended only by a written instrument signed by the parties hereto. No waiver by any party hereto of any of the provisions hereof shall be effective unless set forth in a writing executed by the party so waiving.

     7.8. Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE FOR CONTRACTS ENTERED INTO AND TO BE PERFORMED SOLELY WITHIN SUCH STATE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION.

     7.9. Arbitration.

          (a) Any dispute with regard to this Agreement that is not resolved by mutual agreement, other than as provided in Section 7.9(b), shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without limitation, legal fees and fees of any experts) and out-of-pocket expenses.

          (b) The parties hereby agree and stipulate that in the event of any breach or violation or violation of this Agreement by any other party hereto, either threatened or actual, the non-breaching parties’ rights shall include, in addition to any and all other rights available to any

13

such non-breaching party at law or in equity, the right to seek and obtain any and all injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to prohibit, bar, and restrain any and all such breaches or violations by any other party hereto. Each of the parties hereto further agrees that no bond need be filed in connection with any request by any other party hereto for a temporary restraining order or for temporary or preliminary injunctive relief.

     7.10. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.

     7.11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when personally delivered, telecopied (with confirmation of receipt), one day after deposit with a reputable overnight delivery service (charges prepaid) and three days after deposit in the U.S. Mail (postage prepaid and return receipt requested) to the address set forth below or such other address as the recipient party has previously delivered notice to the sending party.

(a) If to the Company:

V.G.A.T. Investors, LLC
c/o Vestar Capital Partners
245 Park Avenue
41^st Floor
New York, NY 10167
Attention: John R. Woodard and General Counsel
Facsimile: (212) 808-4922

             and

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

             with copies (which shall not constitute notice to the Company) to:

Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, NY 10022
Attention:	Michael Movsovich, Esq.
	Christopher Neumann, Esq.
Facsimile:	(212) 446-6460

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(b) If to the Executive, to the address as shown on the unit register of the Company.

     7.12. Integration. This Agreement and the documents referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to the subject matter hereof and thereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

     7.13. Counterparts. This Agreement may be executed in separate counterparts (including by means of telecopied signature pages), and by different parties on separate counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

     7.14. Rights Cumulative; Waiver. The respective rights and remedies of the Executive and the Company under this Agreement shall be cumulative and not exclusive of any rights or remedies which either would otherwise have hereunder or at law or in equity or by statute, and no failure or delay by either party in exercising any right or remedy shall impair any such right or remedy or operate as a waiver of such right or remedy, nor shall any single or partial exercise of any power or right preclude such party’s other or further exercise or the exercise of any other power or right. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.

[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]

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SIGNATURE PAGE TO UNIT GRANT AGREEMENT

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

V.G.A.T. INVESTORS, LLC
By:
	Name:
	Title:

SIGNATURE PAGE TO UNIT GRANT AGREEMENT

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

EXECUTIVE
 

EX-10.48

EXHIBIT 10.48

AMENDMENT AND WAIVER

     THIS AMENDMENT AND WAIVER, dated as of October 28, 2005 (this “Amendment and Waiver”), is made by and among                      (the “Option Holder”), AT Holdings Corporation, a Delaware corporation (the “Company”), Argo-Tech Corporation, a Delaware corporation (“Argo-Tech”), and V.G.A.T. Investors, LLC, a Delaware limited liability company (“Parent”).

W I T N E S S E T H

     WHEREAS, pursuant to that certain AT Holdings Corporation Nonqualified Stock Option Agreement, dated as of                      (the “Option Agreement”), by and among the Company, Argo-Tech and the Option Holder, the Option Holder is the holder of options to purchase an aggregate of                     shares of common stock of the Company (the “Options”);

     WHEREAS, as part of the transactions contemplated by that certain Merger Agreement (the “Merger Agreement”), dated September 13, 2005, by and among the Company, Argo-Tech, The Argo-Tech Corporation Employee Stock Ownership Plan (the “ESOP”), acting therein through GreatBanc Trust Company in its capacity as trustee of the ESOP, Parent, and Vaughn Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent, as amended, the Merger Agreement provides that the Option Holder will (i) retain 400 Options that were issued under the Option Agreement (the “Rollover Securities”), (ii) amend the Option Agreement to provide that such Rollover Securities will become options to purchase Class A Units of Parent as set forth herein and (iii) waive his right to receive any amounts that would otherwise be payable pursuant to the Merger Agreement with respect to such Rollover Securities, and as the result, such Rollover Securities will not be cancelled as otherwise contemplated by the terms of the Merger Agreement and no amounts will be paid to the Option Holder in respect thereof pursuant to the Merger Agreement;

     WHEREAS, pursuant to Section 11 of the Option Agreement, the board of directors of the Company may make adjustments in the securities covered by outstanding options to reflect the occurrence of certain transactions with respect to the stock of the Company and, pursuant to Section 13 of the Option Agreement, the Option Agreement may be amended with the consent of the Option Holder;

     WHEREAS, the parties hereto intend that this Amendment and Waiver shall not constitute a modification of the Rollover Securities for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder (the “Code”), and this Amendment and Waiver shall be construed accordingly; and

     WHEREAS, the Option Holder is willing to amend the Option Agreement and provide all such waivers with respect to such Rollover Securities as are required under the Merger Agreement in connection with the transactions contemplated thereby, upon the terms and subject to the conditions set forth below.

     NOW, THEREFORE, in consideration of the respective covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.

Waiver of Right to Receive Merger Consideration. The Option Holder hereby consents to the Company’s execution and delivery of the Merger Agreement and the consummation of the transactions contemplated thereby, including the treatment of Rollover Securities, and waives all of his rights to receive any amounts that would otherwise be payable pursuant thereto with respect to the Rollover Securities held by the Option Holder.

2.

Amendment to Option Agreement. The Option Holder hereby consents, in accordance with Section 11 and Section 13 of the Option Agreement, to the following amendments of the Option Agreement:

(a) The title and preamble of the Option Agreement are hereby deleted in their entirety and replaced with the following:

“V.G.A.T. Investors, LLC

Nonqualified Unit Option Agreement

     This AGREEMENT (the “Agreement”) is made by and between V.G.A.T. INVESTORS, LLC, a Delaware limited liability company (the “Company”), AT HOLDINGS CORPORATION, a Delaware corporation (“ATH”), ARGO-TECH CORPORATION, a Delaware corporation (“Argo-Tech”), and the individual listed on the signature page of this Agreement (the “Optionee”). Capitalized terms have the meaning set forth in Section 7 of this Agreement.”

(b)	Section 1 of the Option Agreement is hereby deleted in its entirety and replaced with the following:
	“1. Grant of Option. The Company hereby assumes, effective as of October 28, 2005, an option (the “Option”) to purchase the number of Class A Units listed on the signature page of this Agreement (the “Optioned Units”). Prior to the assumption thereof by the Company, the Option consisted of an option to acquire from ATH a number of shares of common stock of ATH (the “Optioned Shares”) equal to the number of Optioned Units now subject to the Option. The price at which each of the Optioned Units may be purchased pursuant to this Option shall be listed on the signature page of this Agreement (the “Option Price”), subject to adjustment as hereinafter provided, and shall be equal to the Option Price for an Option Share prior to the assumption of the Option by the Company. The Option is intended to be a “nonqualified stock option” and shall not be treated as an “incentive stock option” within the meaning of that term under Section 422 of the Internal Revenue Code of 1986, as amended, or any successor provision thereto.”
(c)	The words “ten (10) years from the Date of Grant” in Section 2 are hereby deleted and replaced with the words “                    .”

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(d)	Section 3(a) of the Option Agreement is hereby deleted in its entirety and replaced with the following:
	“The Option is immediately exercisable with respect to all Optioned Units. Upon exercise of the Option with respect to one or more Optioned Units, (i) the Company shall cause ATH to transfer to Argo-Tech a number of shares of common stock of ATH equal to the number of Optioned Units, (ii) the Company shall cause Argo-Tech to transfer the shares of ATH common stock to the Optionee in exchange for payment by the Optionee to Argo-Tech of the Option Price and (iii) the Optionee shall contribute shares of ATH common stock to the Company in exchange for the Optioned Units acquired upon the exercise of the Option.
(e)	The words “the Company” in the third sentence of Section 5(a) of the Option Agreement are hereby deleted and replaced with the words “an Issuer.”
(f)	Section 5(b) of the Option Agreement is hereby deleted in its entirety and replaced with the following:
	“(b) The Optionee may also tender the Option Price by (i) the actual or constructive transfer to the Company of outstanding Class A Units (or such other Company securities as the Company’s chief accounting officer, upon consultation with the Company’s independent accountants, determines the acceptance of which by the Company will not adversely affect the Company’s tax or accounting position) with a Fair Market Value on the date of exercise equal to the aggregate exercise price payable with respect to the Options so exercised (and the number of shares of ATH common stock issued under Section 3(a) shall be adjusted to reflect the net exercise), (ii) if authorized by the Board or the Compensation Committee at the time of exercise, delivery of a full recourse promissory note or notes of the Optionee payable on the earlier of the closing of an Initial Public Offering or an agreed period of time not to exceed five years and with such other terms as the Board or the Compensation Committee may determine from time to time, (iii) by authorizing the Company to withhold from issuance a number of Class A Units (and ATH and Argo-Tech to withhold a correlative number of shares of ATH common stock) issuable upon exercise of the Options which, when multiplied by the Fair Market Value of a Class A Unit on the date of exercise, is equal to the aggregate exercise price payable with respect to the Options so exercised or (iv) by any combination of the foregoing methods of payment.”
(g)	Section 5(d) of the Option Agreement is hereby deleted in its entirety.
(h)	Section 6(e) is hereby deleted in its entirety and replaced with the words “September 11, 2011.”
(i)	Section 7 of the Option Agreement is hereby deleted in its entirety and replaced with the following:

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“7.  Definitions.

“Common Stock” means the common stock of any Subsidiary of the Company or of an Issuer, and any other class or series of authorized capital stock of such Subsidiary or Issuer which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of such Subsidiary or Issuer.

“Fair Market Value” of a Class A Unit of the Company or Common Stock of an Issuer means, as of the date in question, (i) following an Initial Public Offering, the officially-quoted closing selling price of the stock (or if no selling price is quoted, the bid price) on the principal securities exchange or market on which any security in respect of the Common Stock of an Issuer is then listed for trading (including, for this purpose, the New York Stock Exchange or the Nasdaq National Market) (the “Market”) for the applicable trading day and (ii) prior to an Initial Public Offering or following an Initial Public Offering, if the Common Stock of an Issuer is not then listed or quoted in the Market, the Fair Market Value shall be the fair value of the Class A Units or Common Stock, as applicable, determined in good faith by the Board using any reasonable method; provided, however, that when securities received upon exercise of an option are immediately sold in the open market, the net sale price received may be used to determine the Fair Market Value of any shares used to pay the exercise price or applicable withholding taxes and to compute the withholding taxes.

“Issuer” means the Company, any direct or indirect Subsidiary of the Company or any successor to the Company, any of the capital stock of which the Company distributes to the holders of Units or that is received by the holders of Units in connection with a transaction contemplated by Section 4.2 of the Company’s Amended and Restated Limited Liability Company Agreement, dated as of October 28, 2005, as may be amended from time to time.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership,

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association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.”

(j)	Section 10(b) of the Option Agreement is hereby deleted in its entirety;
(k)	The words “the Plan” in the penultimate sentence of Section 11 of the Option Agreement is hereby deleted and replaced with the words “this Agreement.” The last sentence of Section 11 is hereby deleted in its entirety and replaced with the following:
	“In the event of a Company Sale (as defined in that certain Securityholders Agreement, dated as of October 28, 2005, between the Company and its members, as may be amended from time to time), the Board shall have the right to terminate the Option and provide in substitution to the Optionee payment in an amount equal to the Fair Market Value of a Class A Unit on the date of exercise less the aggregate exercise price payable with respect to the options so exercised.”
(l)	Section 13 of the Option Agreement is hereby deleted in its entirety and replaced with the following:
	This Agreement may be amended from time to time by the Compensation Committee in its discretion in any manner that it deems appropriate; provided that no such amendment shall adversely affect in a material manner any of the Optionee’s rights hereunder without the Optionee’s written consent.
(m)	Section 15 of the Option Agreement is hereby deleted in its entirety.
(n)	The words “Number of Optioned Shares:                     ” on the signature page of the Option Agreement are hereby deleted and replaced with the words “Number of Class A Units:                     .”

Except as expressly set forth in this Amendment and Waiver, all other terms of the Option Agreement shall remain in full force and effect.

3.	No Modification. Each of the parties hereto agrees that this Amendment and Waiver is not intended to be a modification for purposes of Section 409A of the Code and shall construe the terms herein accordingly.
4.	Binding Nature and Benefit. This Amendment and Waiver shall be binding upon and inure to the benefit of each party hereto and their respective successors and assigns.
5.	Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute on and the same document.

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6.	Facsimile Signature. A facsimile signature of this Agreement has the same effect as an original signature.
7.	GOVERNING LAW. THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
8.	Arbitration.

     (a) Any dispute with regard to this Agreement that is not resolved by mutual agreement, other than as provided in Section 8(b), shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without limitation, legal fees and fees of any experts) and out-of-pocket expenses.

     (b) The parties hereby agree and stipulate that in the event of any breach or violation or violation of this Agreement by any other party hereto, either threatened or actual, the non-breaching parties’ rights shall include, in addition to any and all other rights available to any such non-breaching party at law or in equity, the right to seek and obtain any and all injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to prohibit, bar, and restrain any and all such breaches or violations by any other party hereto. Each of the parties hereto further agrees that no bond need be filed in connection with any request by any other party hereto for a temporary restraining order or for temporary or preliminary injunctive relief.

9. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.

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     IN WITNESS WHEREOF, the parties hereto has caused this Amendment and Waiver to be executed and delivered as of the day and year first above written.

AT HOLDINGS CORPORATION
By:
	Name:
	Title:
ARGO-TECH CORPORATION
By:
	Name:
	Title:
V.G.A.T. INVESTORS, LLC
By:
	Name:
	Title:
[Option Holder]

EX-10.49

EXHIBIT 10.49

ARGO-TECH CORPORATION
23555 Euclid Avenue
Cleveland, OH 44117

October 28, 2005

Mr. John S. Glover
11965 Lambert Street
Tustin, CA 92782

Dear John:

Re: Severance Benefits Payable Upon a Change of Control

     Argo-Tech Corporation (the “Company”) considers the maintenance of a sound management team to be essential to protecting and enhancing the best interests of the Company and its stockholders. In this connection, the Company recognizes that the possibility of a change in control may exist from time to time, and that this possibility, and the uncertainty and questions it may raise among management and employees, may result in the departure or distraction of management and other personnel to the detriment of the Company and its stockholders. Accordingly, the Company has determined that appropriate steps should be taken to encourage the continued attention and dedication of members of the Company’s management and other key employees, including yourself, to their assigned duties without the distraction which may arise from the possibility of a change in control of the Company.

     This letter agreement (this “Agreement”) is not an employment contract nor does it alter your status as an at-will employee of the Company. Just as you remain free to leave the employ of the Company at any time, so too does the Company retain its right to terminate your employment without notice, at any time, for any reason. However, the Company believes that, both prior to and at the time a change in control is anticipated or occurring, it is necessary to have your continued attention and dedication to your assigned duties without distraction. Therefore, should you still be an employee of the Company at such time, the Company agrees that you shall receive the severance benefits hereinafter set forth in the event your employment with the Company terminates in contemplation of or subsequent to a “Change in Control” (as defined in Section 1 hereof) under the circumstances described below.

     For good and valuable consideration, the sufficiency and receipt of which is acknowledged, the Company and you agree as follows:

     1. Change in Control. No benefits shall be payable hereunder unless there shall have been a Change in Control (as defined below) of the Company and your employment with the Company or any of its subsidiaries shall have been terminated in accordance with Section 3 below. For purposes of this Agreement, a “Change in Control” means the consummation of a transaction, whether in a single transaction or in a series of related transactions that are consummated contemporaneously (or consummated pursuant to contemporaneous agreements),

with any other party or parties on an arm’s-length basis, pursuant to which such party or parties (a) acquire (whether by merger, stock purchase, recapitalization, reorganization, redemption, issuance of capital stock or otherwise) more than 50% of the voting stock of the Company or (b) acquire assets constituting all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis.

     2. Termination of Employment Following a Change in Control.

          (a) If at any time after the date hereof any of the events described in Section 1 hereof constituting a Change in Control of the Company occurs and in contemplation thereof, in connection therewith or within 6 months thereafter (i) you involuntarily cease to be an employee of the Company or any of its subsidiaries for any reason other than termination for Cause (as defined below ), Disability (as defined below) or death or (ii) you terminate your employment with the Company and its subsidiaries for Good Reason (as defined below ) then:

          (i) The Company shall pay to you in addition to other amounts that may be payable to you in connection with the termination of your employment an amount equal to the sum of your then current annual base salary and annual bonus for the preceding fiscal year, payable over the one year period following your termination in regular installments in accordance with the Company’s general payroll practices; and

          (ii) the Company shall provide you continued coverage under the Company’s group health plans until the earlier of (x) one year following the Date of Termination and (y) the date you become eligible for comparable coverage under health plans of any successor employer.

          (b) Your employment shall be deemed to be terminated for “Cause” if:

          (i) you are indicted or charged with, or plead guilty or nolo contendere to, (A) a felony or (B) a crime involving moral turpitude that is either materially detrimental to the Company or that which brings the Company into public disgrace or disrepute;

          (ii) in carrying out your duties of employment, you engage in conduct that constitutes gross neglect or willful misconduct;

          (iii) you engage in willful misconduct resulting in or intended to result in direct personal gain to you at the Company’s expense or that brings the Company into public disgrace or disrepute, or you have made, or are aware of, any material misrepresentation to V.G.A.T. Investors, LLC (“Parent”) or any of its subsidiaries in any Transaction Document (as defined in that certain Agreement and Plan of Merger, dated the date hereof, by and among Parent, the Company, AT Holdings Corporation, Greatbanc Trust Company, Vaughn Merger Sub, Inc. and Paul R. Keen, as Stockholders’ Representative);

          (iv) you breach any material provision of this Agreement (including Section 4 hereof), or you breach in any material respect any Company policy governing employee conduct in the workplace, including without limitation, policies relating to the

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use of illicit drugs, alcohol abuse and sexual harassment, and such breach has not been cured prior to 30 days following notice from the Company;

          (v) you repeatedly refuse to perform duties or responsibilities as reasonably directed by the Board or any executive to whom you report; or

          (vi) you breach of a fiduciary obligation to the Company or materially breach any confidentiality or non-competition obligations.

          (c) For purposes of this Agreement, “Good Reason” shall mean a termination of your employment by you on thirty (30) days’ written notice to the Company following the occurrence of any of the following events, which notice shall be given within 10 days following you become aware of such occurrence, without your express prior written consent, unless all grounds for termination shall have been fully cured prior to thirty (30) days after you give notice to the Company requesting cure:

          (i) any failure of the Company to continue your employment as Vice President, Finance of the Company;

          (ii) any material diminution in your then responsibilities or authorities or the assignment you of duties that are materially inconsistent with, or materially impair your ability to perform, the duties then assigned to you;

          (iii) any material breach by the Company of any of its obligations under this Agreement which has not been cured prior to 30 days following notice from you of such breach or if the Company decreases your then current salary (other than due to administrative error which is cured promptly);

          (iv) any permanent relocation to a facility that is more than 60 miles from the then current location of your employment with the Company; or

          (v) any failure of the Company to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of its business or assets within thirty (30) days after any reconstruction, amalgamation, combination, merger, consolidation, sale, liquidation, dissolution or similar transaction.

          (d) For purposes of this Agreement, “Disability” shall mean a determination by the Board of Directors of the Company (the “Board”) in its good faith judgment with input from appropriate medical personnel that you are unable to substantially perform your job responsibilities as a result of chronic illness, physical, mental or any other disability for a period of 180 days or more in any 365 consecutive day period. You shall co-operate and make yourself available for any medical examination reasonably required by the Company with respect to any determination of a Disability.

          (e) Notice of Termination. Any termination by the Company or by you shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 5(c) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement

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relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination employment under the provision so indicated and (iii) if the date of termination of your employment is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by you or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any of your or the Company’s rights hereunder, respectively, or preclude you or the Company, respectively, from asserting such fact or circumstance in enforcing your or the Company’s rights hereunder.

          (f) Release. The severance payments and such benefits to be provided by the Company pursuant to this Section 2 shall (i) be in lieu of any other payments by the Company to you and (ii) be subject to your execution (other than in the case of your death) of a release agreement in substantially the form attached hereto as Exhibit A,

     3. Nonsolicitation; Etc. You acknowledges that in the course of your employment with the Company you will become familiar with the Company’s and its subsidiaries’ trade secrets and other confidential information concerning the Company and such subsidiaries (collectively, the “Confidential Information”) and that your services will be of special, unique and extraordinary value to the Company and its subsidiaries. Therefore, you agree and acknowledge that:

          (a) Nonsolicitation. During the two-year period following your termination of employment with the Company, you shall not directly or indirectly (i) induce or attempt to induce any employee of the Company or any of its subsidiaries to leave the employ of the Company or such subsidiary, or in any way interfere with the relationship between the Company or any subsidiary and any employee thereof, including inducing or attempting to induce any union, employee or group of employees to interfere with the business or operations of the Company or its subsidiaries or (ii) hire any person who was an employee of the Company or any subsidiary unless at least twelve months has elapsed since the termination of such employee’s employment with the Company or any subsidiary, as the case may be. Furthermore, during the one-year period following the termination of your employment of the Company, you shall not directly or indirectly induce or attempt to induce any customer, supplier, distributor, franchisee, licensee or other business relation of the Company or any subsidiary to cease doing business with the Company or such subsidiary, or in any way interfere with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and the Company or any subsidiary.

          (b) Confidentiality.

          (i) The continued success of the Company and its subsidiaries and other affiliates depends upon the use and protection of a large body of confidential and proprietary information, including, without limitation, confidential and proprietary information now existing or to be developed in the future. “Confidential Information” will be defined to include all information of any sort (whether merely remembered or embodied in a tangible or intangible form or medium) that is (i) related to the Company’s or its subsidiaries’ or other affiliates’ prior, current or potential business or operations

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and (ii) not generally or publicly known. Confidential Information includes, without limitation, the information, observations and data of the Company and its subsidiaries and other affiliates including, without limitation, designs, drawings, photographs and other works and reports (including, without limitation, all Company Works); programs, software, source code, object code, diagrams, flow charts, manuals, documentation and databases; know-how, data, designs, specifications, improvements, inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice; all technology and trade secrets; information concerning development, acquisition or investment opportunities in or reasonably related to the Company’s or its subsidiaries’ or other affiliates’ business or industry of which you are aware or become aware during the term of your employment, the persons or entities that are current, former or prospective suppliers or customers of any one or more of them during your employment with the Company; development, transition and transformation plans, methodologies and methods of doing business, strategic, marketing and expansion plans, including plans regarding planned and potential sales, pricing and cost information, financial and business plans, employee, customer and supplier lists and telephone numbers, locations of sales representatives, new and existing programs and services, prices and terms, customer service, integration processes, requirements and costs of providing service, support and equipment; and all similar and related information in whatever form or medium.

          (ii) You shall not disclose or use for your own account any of such Confidential Information, except as reasonably necessary for the performance of your duties of employment with the Company, without the prior written consent of the Board, unless and to the extent that any Confidential Information (i) becomes generally known to and available for use by the public other than as a result of your breach or actions in violation of this Agreement or other improper acts or omissions to act or otherwise (ii) is required to be disclosed pursuant to any applicable law or court order, provided, however that, you must give Company prompt written notice of any such legal requirement, disclose no more information than is so required and seek confidential treatment where available, and cooperate fully with all efforts by the Company to obtain a protective order or similar confidentiality treatment for such information. Upon the termination of your employment hereunder, or at any other time the Company may request in writing, you agree to deliver to the Company all memoranda, notes, plans, records, reports, notebooks (and similar repositories of or containing Confidential Information) and other documents (and all copies, summaries and extracts thereof, in whatever form or medium) relating to the business or operations of the Company or its subsidiaries or other affiliates or that otherwise constitute Confidential Information, and at any time thereafter, if any such materials are brought to your attention or you discover them in your possession or control, you shall deliver such materials to the Company immediately upon such notice or discovery

          (c) Inventions and Patents. If you creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, whether patentable or unpatentable and whether or not reduced to practice, know-how, data, processes, methods, programs, systems, materials, documents or other work product or other intellectual property, either alone or in conjunction with third parties, at any time during your employment by or

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engagement with the Company (“Works”), to the extent that such Works were created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of such employment or engagement and/or relate to the business or operations, or actual or demonstrably anticipated research or development, of the Company or its subsidiaries or other affiliates (collectively, the “Company Works”), you shall promptly and fully disclose such Company Works to the Company. Any copyrightable work falling within the definition of Company Works shall be deemed a “work made for hire” as such term is defined in 17 U.S.C. § 101. You hereby (i) irrevocably assigns, transfers and conveys, to the extent permitted by applicable law, all right, title and interest in and to the Company Works on a worldwide basis (including, without limitation, rights under patent, copyright, trademark, trade secret, unfair competition and related laws) to the Company or such other entity as the Company shall designate, to the extent ownership of any such rights does not automatically vest in the Company under applicable law and (ii) waives any moral rights therein to the fullest extent permitted under applicable law. You agree that you will not use any Company Works for your personal benefit, the benefit of a competitor, or for the benefit of any other person or entity other than the Company. You agree to execute any further documents and take any further actions requested by the Company to assist it in validating, effectuating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of its rights hereunder.

          (d) Enforcement. The parties to this Agreement hereby agree and stipulate that (i) the restrictions contained in this Agreement are reasonable and necessary in order to protect the Company’s and its subsidiaries’ legitimate business interests and (ii) in the event of any breach or violation of this Agreement or of any provision hereof by you, the Company and its subsidiaries will have no adequate remedy at law and will suffer irreparable loss and damage thereby. The parties hereby further agree and stipulate that in the event of any such breach or violation, either threatened or actual, the Company’s and its subsidiaries’ rights shall include, in addition to any and all other rights available to the Company and its subsidiaries at law or in equity, the right to seek and obtain any and all injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to prohibit, bar, and restrain any and all such breaches or violations by you. The prevailing party to any legal action, arbitration or other proceeding commenced in connection with enforcing any provision of this Section 3, including without limitation, obtaining the injunctive relief provided by this Section 3 shall be entitled to recover all court costs, reasonable attorneys’ fees, and related expenses incurred by such party. You further agree that no bond need be filed in connection with any request by the Company and its subsidiaries for a temporary restraining order or for temporary or preliminary injunctive relief.

          (e) Additional Acknowledgments. You acknowledge that the provisions of this Section 3 are in consideration of: (i) employment with the Company, (ii) the issuance of certain limited liability company interests of V.G.A.T. Investors, LLC to you and (iii) additional good and valuable consideration as set forth in this Agreement. In addition, you acknowledge (i) that the business of the Company and its subsidiaries is international in scope and without geographical limitation and (ii) notwithstanding the state of incorporation or principal office of the Company or any of its subsidiaries, or any of their respective executives or employees (including you), it is expected that the Company will have business activities and have valuable business relationships within its industry throughout the world. You acknowledge that you have carefully read this Agreement and has given careful consideration to the restraints imposed upon you by this Agreement, and are in full accord as to their necessity for the reasonable and proper

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protection of confidential and proprietary information of the Company and its subsidiaries now existing or to be developed in the future. You expressly acknowledge and agree that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

     4. Successors.

          (a) This Agreement is personal to you and without the prior written consent of the Company shall not be assignable by you otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the your legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

     5. Miscellaneous.

          (a) This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of New York applicable to contracts entered into and to be performed solely within such State without regard to choice of law considerations. The parties hereto hereby waive, to the fullest extent by applicable law, any right to trial by jury with respect to any action or proceeding arising out of or relating to this Agreement.

          (b) Any disputes with regard to this Agreement that is not resolved by mutual agreement, other than as provided in Section 3(d) hereof, shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without limitation, legal fees and fees of any experts) and out-of-pocket expenses.

          (c) All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally recognized overnight courier, or sent via facsimile to the recipient with telephonic confirmation by the sending party. Such notices, demands and other communications will be sent to the address indicated below:

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If to you:
John S. Glover
11965 Lambert Street
Tustin, CA 92782
If to the Company:
V.G.A.T. Investors LLC
c/o Vestar Capital Partners IV, L.P.
245 Park Avenue, 41st Floor
New York, New York 10167
Telecopy: (212) 808 4922
Attention:	John Woodard
	General Counsel
and
c/o Greenbriar Equity Group LLC
555 Theodore Fremd Avenue
Rye, New York 10580
Telecopy: (914) 925-9699
Attention:	Reginald L. Jones
	John Daileader
with a copies to (which shall not constitute notice to the Company):
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, NY 10022
Telecopy: (212) 446-4900
Attention:	Michael Movsovich, Esq.
	Christopher Neumann, Esq.

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

          (d) Subject to the provisions of Section 2(a), there shall be no limitation on the ability of the Company to terminate your employment at any time with or without Cause.

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          (e) Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

          (f) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

          (g) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

          (h) Your or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right you or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

          (i) From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

* * * * * * * * *

9

     If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company this letter and the enclosed copy of this letter which will then constitute our agreement on this subject. We will return the copy of this letter to you.

Sincerely, ARGO-TECH CORPORATION
By:	/s/ Paul R. Keen
	Name:	Paul R. Keen
	Title:	Vice President

Agreed to as of October __, 2005

  /s/ John S. Glover

John S. Glover

Exhibit A

FORM OF RELEASE AGREEMENT

          In consideration of receipt of severance payments and benefits as set forth in Section 2 of the Letter Agreement, dated as of                     , 2005, by and between Argo-Tech Corporation (the “Company”) and [  ] (the “Letter Agreement”), I,                                         , hereby release and discharge the Company, and each of its employees, officers, directors, stockholders, agents, subsidiaries and other affiliates from, and waive any and all claims, demands, damages, causes of action or suits (collectively, “Claims”) of any kind or nature whatsoever that I may have had or may now have against any of them (including, without limitation, any Claims arising out of or related to my employment with the Company or the termination thereof), whether arising under contract, tort, statute or otherwise, and whether I know of the claim or not, including, without limitation, Claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay for Equal Work Act, and any other applicable federal, state or local statutes, rules, codes, or ordinances. Notwithstanding anything herein to the contrary this release does not cover (i) my rights to the severance payments and benefits provided in Section 2 of the Letter Agreement; (ii) my rights to any vested or accrued benefits or rights under the applicable terms of Company plans, programs, or arrangements; (iii) any Claim by me to enforce the rights arising under or preserved by the Letter Agreement that survive expressly survive termination of my employment; (iv) any Claim by me to enforce indemnification rights as provided in the Company’s articles of incorporation and (v) my rights in my capacity as an equity holder of V.G.A.T. Investors, LLC and/or AT Holdings Corporation unless such right is terminated by its terms due to the termination of my employment with the Company.

          I have not, and shall not hereafter, institute any lawsuit of any kind whatsoever, or file any complaint or charge, against the Company or any of its former or present employees, officers, directors, stockholders, agents, subsidiaries, or affiliates, and any of their successors or assigns, under any federal, state or local statute, rule, regulation or principle of common law growing out of events released hereunder. I shall not seek employment or reemployment with the Company. I acknowledge that I have had at least 21 days to review and consider this release agreement before accepting it. I have been advised to consult with an attorney before signing this release agreement.

          This release agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of New York applicable to contracts entered into and to be performed solely within such State without regard to choice of law considerations. The parties hereto hereby waive, to the fullest extent by applicable law, any right to trial by jury with respect to any action or proceeding arising out of or relating to this Agreement.

11

[     ]

Dated:

	Acknowledged and Agreed as of
	___, ___:
ARGO-TECH CORPORATION
By:
	Name:
	Title:

12

EX-10.50

EXHIBIT 10.50

NON SOLICITATION AND CONFIDENTIALITY AGREEMENT

          THIS NON SOLICITATION AND CONFIDENTIALITY AGREEMENT (this “Agreement”) is made as of October 28, 2005, by and between Francis St. Clair (“Employee”) and Argo-Tech Corporation, a Delaware corporation (the “Company”).

          WHEREAS, AT Holdings Corporation, a Delaware corporation, the Company, V.G.A.T. Investors, LLC, a Delaware limited liability company (“Parent”), Vaughn Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent and Greatbanc Trust Company, as Trustee for the Argo-Tech Corporation Employee Stock Ownership Plan are parties to the Agreement and Plan of Merger, dated as of September 13, 2005 (the “Merger Agreement”), as amended;

          WHEREAS, the execution and delivery of this Agreement is a condition to the closing under the Merger Agreement; and

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

     1. Nonsolicitation. For so long as Employee is employed by the Company and for a period of two years thereafter, Employee shall not directly or indirectly (i) induce or attempt to induce any employee of the Company or any of its subsidiaries to leave the employ of the Company or such subsidiary, or in any way interfere with the relationship between the Company or any subsidiary and any employee thereof, including inducing or attempting to induce any union, employee or group of employees to interfere with the business or operations of the Company or its subsidiaries, (ii) hire any person who was an employee of the Company or any subsidiary unless at least twelve months has elapsed since the termination of such employee’s employment with the Company or any subsidiary, as the case may be, or (iii) induce or attempt to induce any customer, supplier, distributor, franchisee, licensee or other business relation of the Company or any subsidiary to cease doing business with the Company or such subsidiary, or in any way interfere with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and the Company or any subsidiary.

     2. Confidential Information.

(a) Employee acknowledges that the continued success of the Company and its subsidiaries and other affiliates depends upon the use and protection of a large body of confidential and proprietary information, including, without limitation, confidential and proprietary information now existing or to be developed in the future. “Confidential Information” will be defined to include all information of any sort (whether merely remembered or embodied in a tangible or intangible form or medium) that is (i) related to the Company’s or its subsidiaries’ or other affiliates’ prior, current or potential business or operations and (ii) not generally or publicly known. Confidential Information includes, without limitation, the information, observations and data of the Company and its subsidiaries and other affiliates including, without limitation, designs, drawings, photographs and other works and reports (including, without limitation, all Company Works); programs,

software, source code, object code, diagrams, flow charts, manuals, documentation and databases; know-how, data, designs, specifications, improvements, inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice; all technology and trade secrets; information concerning development, acquisition or investment opportunities in or reasonably related to the Company’s or its subsidiaries’ or other affiliates’ business or industry of which Employee is aware or becomes aware during the term of his/her employment, the persons or entities that are current, former or prospective suppliers or customers of any one or more of them during Employee’s employment with the Company; development, transition and transformation plans, methodologies and methods of doing business, strategic, marketing and expansion plans, including plans regarding planned and potential sales, pricing and cost information, financial and business plans, employee, customer and supplier lists and telephone numbers, locations of sales representatives, new and existing programs and services, prices and terms, customer service, integration processes, requirements and costs of providing service, support and equipment; and all similar and related information in whatever form or medium.

(b)

Therefore, Employee agrees that he shall not disclose or use for his own account any of such Confidential Information, except as reasonably necessary for the performance of his duties under this Agreement, without the prior written consent of the Company’s board of directors, unless and to the extent that any Confidential Information (i) becomes generally known to and available for use by the public other than as a result of Employee’s breach or actions in violation of this Agreement or other improper acts or omissions to act or otherwise (ii) is required to be disclosed pursuant to any applicable law or court order, provided, however that, Employee must give Company prompt written notice of any such legal requirement, disclose no more information than is so required and seek confidential treatment where available, and cooperate fully with all efforts by the Company to obtain a protective order or similar confidentiality treatment for such information. Upon the termination of Employee’s employment hereunder, or at any other time the Company may request in writing, Employee agrees to deliver to the Company all memoranda, notes, plans, records, reports, notebooks (and similar repositories of or containing Confidential Information) and other documents (and all copies, summaries and extracts thereof, in whatever form or medium) relating to the business or operations of the Company or its subsidiaries or other affiliates or that otherwise constitute Confidential Information, and at any time thereafter, if any such materials are brought to Employee’s attention or Employee discovers them in his possession or control, Employee shall deliver such materials to the Company immediately upon such notice or discovery.

     3. Ownership of Intellectual Property.

(a) If Employee creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, whether patentable or unpatentable and whether or not reduced to practice, know-how, data, processes, methods, programs,

2

	systems, materials, documents or other work product or other intellectual property, either alone or in conjunction with third parties, at any time during Employee’s employment by or engagement with the Company (“Works”), to the extent that such Works were created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of such employment or engagement and/or relate to the business or operations, or actual or demonstrably anticipated research or development, of the Company or its subsidiaries or other affiliates (collectively, the “Company Works”), Employee shall promptly and fully disclose such Company Works to the Company. Any copyrightable work falling within the definition of Company Works shall be deemed a “work made for hire” as such term is defined in 17 U.S.C. § 101. Employee hereby (i) irrevocably assigns, transfers and conveys, to the extent permitted by applicable law, all right, title and interest in and to the Company Works on a worldwide basis (including, without limitation, rights under patent, copyright, trademark, trade secret, unfair competition and related laws) to the Company or such other entity as the Company shall designate, to the extent ownership of any such rights does not automatically vest in the Company under applicable law and (ii) waives any moral rights therein to the fullest extent permitted under applicable law. Employee agrees that he will not use any Company Works for his personal benefit, the benefit of a competitor, or for the benefit of any other person or entity other than the Company. Employee agrees to execute any further documents and take any further actions requested by the Company to assist it in validating, effectuating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of its rights hereunder.
(b)	Employee agrees and acknowledges that: (i) the covenants set forth in this Agreement are reasonably limited in both time and geographical scope and in all other respects, (ii) the covenants set forth in this Agreement are reasonably necessary for the protection of the Company, (iii) the covenants contained herein have been made as a material incentive to the Parent to enter into the Merger Agreement.
(c)	In the event that, notwithstanding the foregoing, any of the provisions of Sections 1 through 3 of this Agreement shall be declared by an arbitration or a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions thereof shall nevertheless continue to be valid and enforceable as though said invalid or unenforceable provisions had not been included therein. In the event that any provision of Sections 1 through 3 shall be declared by a court of competent jurisdiction to exceed the maximum restrictiveness such court deems reasonable and enforceable, the term, condition or aspect deemed reasonable and enforceable by the court shall be incorporated into the applicable section of this Agreement, shall replace the term, condition or aspect deemed by the court to be unreasonable and unenforceable, and shall remain enforceable to the fullest extent permitted by law.

3

(d) Employee recognizes and affirms that in the event of his breach of any provision of this Agreement, money damages would be inadequate and the Company would have no adequate remedy at law. Accordingly, Employee agrees that in the event of a breach or a threatened breach by Employee of any of the provisions of this Agreement, the Company, in addition and supplementary to other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).

     4. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally recognized overnight courier, or sent via facsimile to the recipient with telephonic confirmation by the sending party. Such notices, demands and other communications will be sent to the address indicated below:

To the Company:

Argo-Tech Corporation
c/o Vestar Capital Partners IV, L.P.
245 Park Avenue
New York, NY 10167
Attention: John Woodard and
                 General Counsel
Facsimile No.: (212) 808-4922

and

c/o Greenbriar Equity Group LLC
555 Theodore Fremd Avenue
Rye, NY 10580
Attention: Reginald L. Jones
                 John Daileader
Facsimile No.: (914) 925-9699

with a copy (which shall not constitute notice) to:

Kirkland & Ellis
Citigroup Center
153 East 53^rd Street
New York, NY 10022
Attention: Michael Movsovich, Esq.
Facsimile No.: (212) 446-4900

4

     To Employee:

Francis St. Clair
327 Inwood Trail
Aurora, OH 44202-8205

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.

     5. Miscellaneous.

(a)	Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
(b)	Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and their respective successors and assigns.
(c)	GOVERNING LAW. THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(d)	Arbitration.

(i)

Any dispute with regard to this Agreement that is not resolved by mutual agreement, other than as provided in Section 5(d)(ii), shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of liability. The arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without limitation, legal fees and fees of any experts) and out-of-pocket expenses.

(ii)

The parties hereby agree and stipulate that in the event of any breach or violation or violation of this Agreement by any other party hereto, either threatened or actual, the non-breaching parties’ rights shall include, in addition to any and all other rights available to any such non-breaching party at law or in equity, the right to seek and obtain any and all injunctive relief or restraining orders available to it in courts of proper jurisdiction,

5

so as to prohibit, bar, and restrain any and all such breaches or violations by any other party hereto. Each of the parties hereto further agrees that no bond need be filed in connection with any request by any other party hereto for a temporary restraining order or for temporary or preliminary injunctive relief.

(e) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company.

* * * *

6

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

ARGO-TECH CORPORATION
By:	/s/ Paul R. Keen
Name:	Paul R. Keen
Its:	Vice President
/s/ Francis St. Clair
Francis St.Clair

EX-12.1

Exhibit 12.1

ARGO-TECH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Fiscal Year Ended
	October 29,			October 30,			October 25,			October 26,			October 27,
	2005			2004			2003			2002			2001
				(Dollars in Thousands)
Historical:
Net income/(loss)	$	(11,286	)	$	(461	)	$	4,528		$	5,926		$	10,800
Income tax provision/(benefit)		(10,769	)		(3,499	)		1,579			569			2,876
Net income/(loss) before tax	$	(22,055	)	$	(3,960	)	$	6,107		$	6,495		$	13,676
Fixed charges:
Interest expense	$	25,601		$	22,705		$	21,257		$	21,434		$	24,534
Earnings as adjusted	$	3,546		$	18,745		$	27,364		$	27,929		$	38,210
Ratio of earnings to fixed charges (1)		—	x		—	x		1.3	x		1.3	x		1.6	x

(1) For purposes of computing the ratio of earnings available to cover fixed charges, earnings consist of income before taxes plus fixed charges. Fixed charges consist of interest on indebtedness including amortization of deferred financing fees and fixed loan guarantee fees. No ratio is presented for the fiscal period ended October 29, 2005 or the fiscal period ended October 30, 2004 as the earnings for those periods were $22,055,000 and $3,960,000, respectively, less than the fixed charges.

EX-24.1

EXHIBIT 24.1

ARGO-TECH CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of Argo-Tech Corporation, a Delaware corporation (the “Registrant”), does hereby make, constitute and appoint each of Michael S. Lipscomb, Paul R. Keen, John S. Glover and Paul A. Sklad as his true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign on behalf of each of the undersigned an Annual Report on Form 10-K for the fiscal year ended October 29, 2005 (the “Form 10-K”) pursuant to Section 15 of the Securities Exchange Act of 1934 and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue thereof; provided that such Form 10-K and any amendments thereto are first approved by the Audit Committee of the Board of Directors of AT Holdings Corporation.

     This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.

     Executed as of this 26^th day of January 2006.

Signature		Title
	/s/ Michael S. Lipscomb
	Michael S. Lipscomb	Chairman, President, Chief Executive Officer and Director
	/s/ John S. Glover
	John S. Glover	Vice President and Chief Financial Officer
	/s/ Paul A. Sklad
	Paul A. Sklad	Controller
	/s/ John Daileader
	John Daileader	Director
	/s/ Reginald L. Jones, III
	Reginald L. Jones, III	Director
	/s/ Jeffrey W. Long
	Jeffrey W. Long	Director
	/s/ Kathleen Moran
	Kathleen Moran	Director
	/s/ Daniel S. O'Connell
	Daniel S. O'Connell	Director
	/s/ John R. Woodard
	John R. Woodard	Director

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT

I, Michael S. Lipscomb, certify that:

1. I have reviewed this annual report on Form 10-K of Argo-Tech Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 27, 2006

By:	/s/ MICHAEL S. LIPSCOMB
	Michael S. Lipscomb Chairman, President and CEO

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT

I, John S. Glover, certify that:

1. I have reviewed this annual report on Form 10-K of Argo-Tech Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 27, 2006

By:	/s/ JOHN S. GLOVER
	John S. Glover Vice President and CFO

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the annual report of Argo-Tech Corporation (the “Company”) on Form 10-K for the year ended October 29, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: January 27, 2006

By:	/s/ MICHAEL S. LIPSCOMB
	Michael S. Lipscomb Chief Executive Officer
By:	/s/ JOHN S. GLOVER
	John S. Glover Chief Financial Officer