(1) MEGGITT ACQUISITION LIMITED (2) MEGGITT PLC and (3) STANDARD AERO HOLDINGS, INC. SEPARATION AGREEMENT RELATING TO THE DESIGN AND MANUFACTURING DIVISION AND THE ENGINE REPAIR AND OVERHAUL DIVISION OF THE DUNLOP STANDARD AEROSPACE GROUP LATHAM & WATKINS 99 Bishopsgate London EC2M 3XF United Kingdo

Termination Severance Agreement

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D&|M Group | Dunlop Standard Aerospace Group Limited | ERO Group | MEGGITT ACQUISITION LIMITED | MEGGITT PLC | STANDARD AERO HOLDINGS, INC

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Title: (1) MEGGITT ACQUISITION LIMITED (2) MEGGITT PLC and (3) STANDARD AERO HOLDINGS, INC. SEPARATION AGREEMENT RELATING TO THE DESIGN AND MANUFACTURING DIVISION AND THE ENGINE REPAIR AND OVERHAUL DIVISION OF THE DUNLOP STANDARD AEROSPACE GROUP LATHAM & WATKINS 99 Bishopsgate London EC2M 3XF United Kingdo
Governing Law: Delaware Date: 4/28/2005
Law Firm: Latham Watkins

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EXHIBIT 2.3

1 July 2004

(1) MEGGITT ACQUISITION LIMITED

(2) MEGGITT PLC

and

(3) STANDARD AERO HOLDINGS, INC.

SEPARATION AGREEMENT RELATING TO
THE DESIGN AND MANUFACTURING DIVISION AND
THE ENGINE REPAIR AND OVERHAUL DIVISION OF THE
DUNLOP STANDARD AEROSPACE GROUP

LATHAM & WATKINS

99 Bishopsgate
London EC2M 3XF
United Kingdom

TABLE OF CONTENTS


	Page
1. DEFINITIONS AND INTERPRETATION		3
2. CONDITIONS		14
3. COMPLETION		15
4. WRONG POCKET LOSSES AND NO POCKET LOSSES		17
5. TRANSFER OF WRONG POCKET ASSETS		19
6. CONTRACTS		20
7. GUARANTEES AND INDEBTEDNESS		23
8. INSURANCE		24
9. APPOINTMENT OF EXPERT		24
10. SHARED EMPLOYEES AND SHARED SERVICES		25
11. NON-SOLICITATION		26
12. TAXES		27
13. RIGHTS IN TRANSFERRED NAMES AND MARKS		30
14. REAL ESTATE		31
15. TRANSFERRING EMPLOYEES		32
16. PENSIONS		33
17. CONSULTATION REGARDING REGULATORY AUTHORIZATIONS		33
18. DSAG PURCHASE AGREEMENT		34
19. CLAIMS, RIGHTS AND OBLIGATIONS PURSUANT TO THE ERO PURCHASE AGREEMENT		35
20. OBLIGATIONS OF AN INDEMNIFIED PERSON		36
21. GUIDING PRINCIPLES & CATEGORISATION OF NEGATIVE OR POSITIVE		36
22. ESCROW		37
23. CONDUCT OF CLAIMS		39
24. DEALINGS BETWEEN GROUPS		39
25. CONFIDENTIALITY		39
26. ANNOUNCEMENTS		41
27. TERMINATION		41
28. ENTIRE AGREEMENT		43
29. VARIATION		43
30. ASSIGNMENT		44
31. COSTS		44


	Page
32. INVALIDITY		44
33. COUNTERPARTS		44
34. WAIVER		45
35. SURVIVAL		45
36. FURTHER ASSURANCE		45
37. NOTICES		45
38. GENERAL		47
39. CONFLICT WITH OTHER AGREEMENTS		47
40. GOVERNING LAW AND JURISDICTION		47
41. ADDRESS FOR SERVICE		47
SCHEDULE 1a – ERO TRANSFERRED MARKS
SCHEDULE 1b – D&M TRANSFERRED MARKS
SCHEDULE 2 - PROCEDURES FOR RESOLVING PURCHASE PRICE ADJUSTMENT IN DSAG PURCHASE AGREEMENT AND ERO PURCHASE AGREEMENT
SCHEDULE 3 - INTRA GROUP DEBT
SCHEDULE 4 - 2ND ESCROW AGENT
SCHEDULE 5 -GUIDING PRINCIPLES

TABLE OF CONTENTS

Page

THIS AGREEMENT is made on 1^st July 2004

BETWEEN

(1)	MEGGITT ACQUISITION LIMITED a company incorporated and registered in England and Wales with company number 02005787 whose registered office is at Farrs House, Cowgrove, Wimborne, Dorset, BH21 4EL (the “DSAG Purchaser”);

(2)	MEGGITT PLC a company incorporated and registered in England and Wales with company number 4329890 whose registered office is at Farrs House, Cowgrove, Wimborne, Dorset, BH21 4EL (“Meggitt”); and

(3)	STANDARD AERO HOLDINGS, INC. a corporation organised under the laws of the State of Delaware (the “ERO Purchaser”).

WHEREAS:

(A)	The DSAG Purchaser has agreed to acquire the entire issued share capital of Dunlop Standard Aerospace Group Limited, a company incorporated and registered in England and Wales with company number 3573726 whose registered office is at Holbrook Lane, Coventry CV6 4AA (“DSAG”) pursuant to a sale and purchase agreement entered into between the Managers (as defined therein), the Investors (as defined therein), the DSAG Purchaser, Meggitt and the ERO Purchaser, dated on or about the date hereof (the “DSAG Purchase Agreement”). Meggitt has guaranteed the performance of the obligations of the DSAG Purchaser under the DSAG Purchase Agreement.

(B)	The ERO Purchaser has contemporaneously with the signing of the DSAG Purchase Agreement agreed to acquire the entire issued and outstanding capital stock or share capital, as applicable, of each of Dunlop Standard Aerospace (US) Inc., Standard Aero Limited, Standard Aero (Asia) Pte Ltd., Standard Aero (Australia) Pty Limited and Dunlop Standard Aerospace (Nederland) B.V. pursuant to a sale and purchase agreement entered into between DSAG, the ERO Vendors and the ERO Purchaser, dated on or about the date hereof (the “ERO Purchase Agreement”).

(C)	This Agreement sets out the terms on which relations between the DSAG Purchaser and the ERO Purchaser will be governed with effect from Completion.

IT IS AGREED as follows:

1.	DEFINITIONS AND INTERPRETATION

1.1	In this Agreement, the following terms shall have the following meanings:

“1st Escrow Account” shall have the meaning given to the definition “Escrow Account” in the DSAG Purchase Agreement;

	“1st Escrow Agent” shall have the meaning to the definition “Escrow Agent” in the DSAG Purchase Agreement;

	“2nd Escrow Account” means a separately designated interest-bearing account in the name of the 2nd Escrow Agent;

	“2nd Escrow Agent” means such person as the DSAG Purchaser and the ERO Purchaser may agree in writing save that, in the event such parties cannot agree, such major bank with a AA credit rating or more as may be chosen by the DSAG Purchaser, and appointed pursuant to the Escrow Agreement;

	“A380 Issue” means whether or not the Dunlop Carbon Solution (as defined in the DSAG Purchase Agreement) is achieved in accordance with Schedule 12 of the DSAG Purchase Agreement;

	“Act” means the Companies Act 1985;

	“Actual D&M Debt” means D&M Debt as derived from the D&M Purchase Price Adjustment Statement, finally Determined;

	“Actual ERO Debt” means ERO Debt as derived from the ERO Purchase Price Adjustment Statement, finally Determined;

	“Actual Net D&M Assets” means Actual Net Assets (as defined in the DSAG Purchase Agreement) insofar as they are assets or liabilities of the Group Companies other than the ERO Companies, finally Determined;

	“Actual Net D&M Debt” means Net D&M Debt as at the close of business on the Adjustment Date (provided that the items in paragraphs (e) and (g) in the definition of D&M Debt and the items referred to in paragraph (a) (to the extent specified in Part VII of Schedule 5 of the DSAG Purchase Agreement) in the definition of D&M Specific Adjustments will be determined as of the Completion Date), finally Determined;

	“Actual Net ERO Assets” has the meaning given in Schedule 2 of the ERO Purchase Agreement, finally Determined;

	“Actual Net ERO Debt” has the meaning given in Schedule 2 of the ERO Purchase Agreement, finally Determined;

	“Actual Net Assets” has the meaning given in Schedule 5 of the DSAG Purchase Agreement, finally Determined;

	“Adjustment Date” has the meaning given in the DSAG Purchase Agreement;

	“Agreed Rate” means 3 per cent above the base rate from time to time of National Westminster Bank plc;

	“Announcement” means the release by or on behalf of Meggitt of a press announcement announcing (i) the proposed transaction contemplated by the DSAG Purchase Agreement and (ii) a rights issue by Meggitt to an information dissemination

	provider approved by the Financial Services Authority whose name is set out in schedule 12 of the Listing Rules and the release of such announcement by such information dissemination provider;

	“Assets” means assets (including Intellectual Property) and properties but shall not include the benefit or burden of any contracts of whatever nature;

	“Balancing Payment” means the aggregate net payment (if any) required to be made by Clause 3.7 and Schedule 3 with interest at the Agreed Rate from the Completion Date to the date on which such amount is paid;

	“Bonds” means the 11.875% High Yield Notes issued by Dunlop Standard Aerospace Holdings plc due 2009 ;

	“Business Day” means a day (excluding Saturdays and Sundays) on which banks generally are open in both London and New York for the transaction of normal banking business;

	“Completion” has the meaning ascribed to it in the DSAG Purchase Agreement;

	“Completion Date” has the meaning ascribed to it in the DSAG Purchase Agreement;

	“D&M Assigned Employees” means those employees engaged wholly or mainly in the D&M Business but employed by an ERO Company;

	“D&M Business” means in respect of the DSAG Group: (1) the design and manufacture of wheels, brakes and braking systems for military, civil, regional and business aircraft including helicopters and an associated aftermarket business; (2) the design and manufacture of polymers and composites products for aerospace applications business; (3) the business of designing and manufacturing for de-icing equipment for aircraft including helicopters; (4) a fluids dynamics business including the design and manufacture of valves, heat exchangers, fuel cells and oil separators; and (5) certain industrial and transportation applications of technologies developed by and as such industrial and transportation applications are carried on at the date of this Agreement by the D&M Companies;

	“D&M Cash” means the cash and cash equivalents of each Group Company (other than ERO Companies) determined in accordance with GAAP as reflected in the cash book of each Group Company (other than the ERO Companies) (but so that, for the avoidance of doubt, the amount of all issued but uncleared cheques shall be excluded from D&M Cash and the amount of all deposited but uncleared cheques and similar items shall be included in D&M Cash);

	“D&M Companies” means DSAG and its subsidiaries immediately prior to Completion other than the ERO Companies and including, for the avoidance of doubt, the Reorganisation Companies;

	“D&M Contract” means any contract which relates to the D&M Business (including Intellectual Property Licences), but excluding the D&M Guarantees, the ERO Guarantees, employment contracts, the lease agreement(s) relating to the DSAG

	facilities in Singapore and Forest Row, Georgia, USA and agreements relating to D&M Debt;

	“D&M Debt” means the following items on a combined basis for all Group Companies other than ERO Companies:

	(a)	the principal amount outstanding of borrowings and indebtedness for borrowed money or in the nature of borrowings (excluding all Intra Group Debt); plus

	(b)	the principal amounts under any finance leases or capitalised leases and the outstanding principal amount of debt purchase contracts, factoring or similar agreements whether or not interest bearing; plus

	(c)	the principal amount of off balance sheet financial obligations in respect of letters of credit, acceptances, or similar obligations in the nature of indebtedness, but not including performance bonds or guarantees or similar instruments; plus

	(d)	the amount of customer deposits, unearned revenue or advance payments received, for which the associated supplies of goods or services have not been made at or prior to the Adjustment Date net of related work in progress, accounts receivable, raw materials or finished goods reflected within the Actual Net D&M Assets; plus

	(e)	net breakage costs for the unwinding of any foreign exchange and interest rate hedges, calculated on the basis that such breakage or unwinding occurred on the Completion Date (other than the D&M Hedge, as defined in the DSAG Purchase Agreement) and if such breakage on a net basis will result in the receipt by the Group Companies (other than the ERO Companies) of a positive sum such amount shall be deducted from Net D&M Debt; plus

	(f)	obligations as of the Adjustment Date in respect of the deferred purchase price of property or services (other than payables incurred in the ordinary course of business); plus

	(g)	the aggregate amount of any break fees, prepayment penalties or premiums, fees or other costs and expenses which may be incurred by the Group Companies (other than any ERO Companies) to terminate or repay any of the items in (a) above which are outstanding as at the Completion Date and any accrued interest in respect of the above (including all interest to accrue on the Bonds through the date of redemption of the Bonds); plus

	(h)	any guarantee of any Group Company (other than any ERO Company) of the obligations of another person or entity (other than another Group Company) with respect to any of the foregoing as of the Adjustment Date; plus

	(i)	the amount of the D&M Specific Adjustments, but excluding those capitalised leases listed in Part VI of Schedule 5 of the DSAG Purchase Agreement ;

	“D&M Guarantees” means those guarantees and indemnities provided by D&M Companies in respect of or otherwise relating to any obligations or liabilities of the ERO Business;

	“D&M Managers” has the meaning ascribed to it in the DSAG Purchase Agreement;

	“D&M Purchase Price Adjustment Amount” or “D&M PPA” means the sum of (x) the Estimated Net D&M Debt minus the Actual Net D&M Debt and (y) the Actual Net D&M Assets minus the Estimated Net D&M Assets;

	“D&M Purchase Price Adjustment Statement” means the statement in the format set out in Part II of Schedule 5 of the DSAG Purchase Agreement delivered by the Company as provided in paragraph 4 of Schedule 5 of the DSAG Purchase Agreement setting forth for the D&M Companies (i) the amount of Estimated Net D&M Assets; (ii) the amount of Estimated Net D&M Debt; (iii) the amount of each of Actual Net D&M Assets and Actual Net D&M Debt; and (iv) the calculation of the D&M PPA and the amount of the D&M PPA and confirmation to whom the D&M PPA is payable where applicable under Schedule 2 of this Agreement;

	“D&M Reference Balance Sheet” means the balance sheet as set out in Part IV of Schedule 5 to the DSAG Purchase Agreement containing the pro forma statement of Net D&M Assets; and a pro forma projected statement of the Net D&M Assets as of 31 July 2004;

	“D&M Specific Adjustments” means the aggregate of:

	(a)	the Tax liability or obligation in respect of or relating to any foreign exchange gain realized in connection with repayment or termination of any D&M Debt on the Completion Date or redemption or defeasance of the Bonds on the Completion Date which is calculated as set out in Part VII of Schedule 5 to the DSAG Purchase Agreement;

	(b)	as of the Completion Date, any and all costs or expenses incurred by the Group Companies (other than the ERO Companies) in connection with the transactions contemplated by (i) the DSAG Purchase Agreement or this Agreement or (ii) the Durango or Power 2 transactions that, in each case, are unpaid as of the Adjustment Date (including all Taxes and other costs payable by a Group Company (other than ERO Companies) thereon) but excluding the withholding or withholding tax referred to in clause 4 of the ERO Purchase Agreement, any form of Tax, if any, howsoever arising in connection with the implementation of the DSAG Purchase Agreement or this Agreement and the costs of obtaining the Third Party Consents relating to the D&M Business). For the avoidance of doubt, any and all costs or expenses incurred by any Group Company which is not an ERO Group Company between the Adjustment Date and the Completion Date in respect of work carried out by persons engaged by or on behalf of the DSAG Purchaser shall be for the account of the DSAG Purchaser and shall not be for the account of the DSAG Vendors;

	(c)	the amount of £8.6 million in lieu of any provision for any deficit in the Group’s U.K. defined benefit pension scheme;

	(d)	the aggregate amount of loyalty bonuses or incentive payments due to Sale Business Employees and not paid at or before the Adjustment Date (including amounts which are conditional if Completion occurs) payable by the Group Companies (other than ERO Companies) together with all Tax and other costs payable by any such Group Company thereon; and

	(e)	adding back the sums receivable by any D&M Group Company on the exercise of Options pursuant to sub-clause 2.2(a) of the DSAG Purchase Agreement, less any sum to be paid by any D&M Group Company for the cash cancellation of Options pursuant to sub-clause 2.2(b) of the DSAG Purchase Agreement to the extent that such sums are not included with D&M Cash;

	“Determination” means in respect of the DSAG Purchase Price Adjustment Amount or the ERO Purchase Price Adjustment Amount or the D&M Purchase Price Adjustment Amount or the A380 Issue the final determination or agreement of the same either (i) if a Dispute Notice is not delivered before the expiry of the relevant Review Period, the date following the last day within such relevant Review Period; or (ii) if a Dispute Notice is delivered before the expiry of such relevant Review Period, the date of resolution of all matters set out in the Dispute Notice by mutual agreement of the relevant parties in accordance with the relevant agreement (as appropriate), or, failing any such agreement and the Accountant or Expert (as appropriate) being retained in relation thereto, the date on which the report of the Accountant or Expert has been received by the relevant parties in dispute and “Determined” shall be construed accordingly;

	“DSAG” has the meaning given in Recital A;

	“DSAG Group” means DSAG and its subsidiaries from time to time prior to Completion;

	“DSAG Purchase Price Adjustment Amount” or “DSAG PPA” means the Purchase Price Adjustment Amount as defined in the DSAG Purchase Agreement (i.e. ignoring any DSAG Escrow limit).

	“DSAG Purchase Price Adjustment Statement” has the meaning given in paragraph 2 of Schedule 2;

	“DSAG Vendors” has the same meaning as “Vendors” in the DSAG Purchase Agreement

	“ERO Assigned Employees” means those employees engaged wholly or mainly in the ERO Business but employed by a D&M Company;

	“ERO Business” means, in respect of the DSAG Group, the business of (i) providing comprehensive repair and overhaul services on a wide range of gas turbine engines as used on regional, military and business jet aircraft, helicopters, ships, and (ii) certain industrial applications and related engineering services as such industrial applications

	and related engineering services are carried on at the date of this Agreement by the ERO Companies;

	“ERO Companies” means Dunlop Standard Aerospace (US) Inc., Standard Aero Limited, Standard Aero (Asia) Pte Limited, Standard Aero (Australia) Pty Limited and Dunlop Standard Aerospace (Nederland) B.V. and their subsidiaries immediately prior to Completion and excluding, for the avoidance of doubt, the Reorganisation Companies;

	“ERO Contract” means any contract which relates to the ERO Business (including Intellectual Property Licences) but excluding the D&M Guarantees, the ERO Guarantees, employment contracts, the lease agreements relating to the DSAG facilities in Singapore and Forest Row, Georgia, USA and agreements relating to ERO Debt;

	“ERO Counsels’ Account” means such account(s) as such be notified to the DSAG Purchaser prior to Completion;

	“ERO Debt” has the meaning given in Schedule 2 of the ERO Purchase Agreement;

	“ERO Guarantees” means those guarantees and indemnities provided by ERO Companies in respect of or otherwise relating to any obligations or liabilities of the D&M Business;

	“ERO Managers” has the meaning ascribed to it in the DSAG Purchase Agreement;

	“ERO Purchase Price Adjustment Amount” or “ERO PPA” means the ERO Purchase Price Adjustment Amount as defined in the ERO Purchase Agreement;

	“ERO Purchase Price Adjustment Statement” means the statement in the format set out in Part II of Schedule 5 of the DSAG Purchase Agreement delivered by the Company as provided in paragraph 4 of Schedule 5 of the DSAG Purchase Agreement setting forth for the ERO Companies (i) the amount of Estimated Net ERO Assets; (ii) the amount of Estimated Net ERO Debt; (iii) the amount of each of Actual Net ERO Assets and Actual Net ERO Debt; and (iv) the calculation of the ERO PPA and the amount of the ERO PPA and confirmation to whom the ERO PPA is payable where applicable under Schedule 2 of this Agreement;

	“ERO Payable” means the aggregate of all amounts owed by any ERO Company to any Group Company (other than an ERO Company) (other than any Intra Group Trading Amount);

	“ERO Receivable” means the aggregate of all amounts owed by any Group Company (other than an ERO Company) to any ERO Company (other than any Intra Group Trading Amount);

	“ERO Vendors” has the same meaning as “Vendors” in the ERO Purchase Agreement but for the purpose of Clause 19 only, shall include DSAG;

	“Escrow Account” has the same meaning as in the DSAG Purchase Agreement

	“Escrow Agreement” means an agreement to be entered into between the DSAG Purchaser, the ERO Purchaser and the 2nd Escrow Agent on terms incorporating, inter alia, the terms set out in Schedule 4 and otherwise in such form as may reasonably be agreed between the DSAG Purchaser and the ERO Purchaser after the date of this Agreement;

	“Estimated Balancing Payment” shall have the meaning given to it in the ERO Purchase Agreement;

	“Estimated ERO Payable” shall mean the estimate of the ERO Payable set out within the estimated Intra Group Debt provided to the DSAG Purchaser and the ERO Purchaser pursuant to the terms of the ERO Purchase Agreement;

	“Estimated ERO Receivable” shall mean the estimate of the ERO Receivable set out within the estimated Intra Group Debt provided to the DSAG Purchaser and the ERO Purchaser pursuant to the terms of the ERO Purchase Agreement;

	“Estimated Net D&M Assets” means £115,952,000;

	“Estimated Net D&M Debt” shall mean the estimate of Net D&M Debt as notified to, inter alia, the DSAG Purchaser pursuant to Clause 3(b) of Schedule 5 of the DSAG Purchase Agreement;

	“Estimated Net ERO Assets” means £153,256,000;

	“Estimated Net ERO Debt” shall have the meaning given to it in the ERO Purchase Agreement;

	“Excluded Losses” means (i) with respect to each party, any Losses arising out of or relating to any (A) Actual D&M Debt in the case of the DSAG Purchaser or Actual ERO Debt in the case of the ERO Purchaser or (B) the obligations of any party under this Agreement, the DSAG Purchase Agreement or the ERO Purchase Agreement, (ii) with respect to the ERO Purchaser or any ERO Company, any Losses arising out of or relating to any liability (other than Actual ERO Debt) to the extent reflected or taken into account in determining the Purchase Price Adjustment pursuant to the ERO Purchase Agreement and (iii) with respect to Meggitt, the DSAG Purchaser or any D&M Company, any Losses arising out of or relating to any liability (other than Actual D&M Debt) to the extent reflected or taken into account in determining the Purchase Price Adjustment pursuant to the DSAG Purchase Agreement but not reflected or taken into account in determining the Purchase Price Adjustment pursuant to the ERO Purchase Agreement and (iv) Taxes, except as otherwise provided in Clause 12 hereof;

	“Expert” means a person appointed pursuant to Clause 9 of this Agreement;

	“Group” means, in relation to any company, the company and each of its subsidiaries;

	“Guiding Principles” means the principles applied in connection with any payments from the 2^nd Escrow Account and any additional payments made in accordance with Clause 21 and in each case in accordance with Schedule 5;

	“Indemnified Person” means the person (whether or not a party to this Agreement but if not a party, who is a member of the DSAG Purchaser’s Group or a member of the ERO Purchaser’s Group) who has received an indemnity payment pursuant to this Agreement or who has the right to receive any indemnity payment pursuant to this Agreement;

	“Indemnifying Person” means the person (whether or not a party to this Agreement but if not a party, who is a member of the DSAG Purchaser’s Group or a member of the ERO Purchaser’s Group) who has made an indemnity payment pursuant to this Agreement or who has an obligation to make any indemnity payment pursuant to this Agreement;

	“Initial ERO Consideration” shall have the meaning given to “Initial Consideration” set out within the ERO Purchase Agreement;

	“Intellectual Property” means (a) patents, trade marks, designs, trade, business and company names, copyrights (including, but not limited to, neighbouring rights and rights in software), database rights, designs and inventions and other intellectual property rights and (b) all rights of a similar nature having equivalent or similar effect to the foregoing, in each case wherever subsisting in the world and whether registered or unregistered and including pending applications for registration of any of the foregoing;

	“Intellectual Property Licences” means licences of Intellectual Property granted to or by an ERO Company or a D&M Company (as the case may be) (but excluding any shrink-wrap or click-wrap software which is readily available in the marketplace);

	“Intra Group Debt” means the aggregate of the ERO Payables minus the ERO Receivables (other than any Intra Group Trading Amount) as set out on the Intra Group Debt Statement;

	“Intra Group Debt Statement” means the statement of the Intra Group Debt to be agreed or determined pursuant to Clause 3 and Schedule 3;

	“Intra Group Trading Amount” means each amount owed for goods and services supplied by or to the ERO Business for goods or services in the ordinary course of business of the supplier and charged to or by the D&M Business (but excluding, for the avoidance of doubt, Intra Group Debt) at Completion;

	“Lien” means a mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre emption, third party right or interest, other encumbrance or security interest of any kind, or another type of preferential arrangement (including, without limitation, a title transfer or retention arrangement) having similar effect;

	“Losses” means actions, proceedings, losses, damages, liabilities, claims, costs and expenses including fines, penalties, clean-up costs, legal and other professional fees, other than any Excluded Losses;

	“Net D&M Assets” means the combined total assets of the Group Companies other than the ERO Companies (other than D&M Cash, deferred license costs other than licence costs paid after the date hereof for Tenders (as defined in the DSAG Purchase

	Agreement) accepted after the date hereof, deferred development costs and goodwill) less the combined total liabilities of such Group Companies other than the ERO Companies (other than D&M Debt, deferred income/grant related to the SASAI PBA contract or costs associated with obtaining the Third Party Consents in relation to the D&M Business), in each case, determined in accordance with Schedule 5 of the DSAG Purchase Agreement; provided, however, that, notwithstanding the foregoing, no Tax benefit, Tax asset or Tax deduction or withholding relating to or arising out of the transactions contemplated by this Agreement or the DSAG Purchase Agreement (including, without limitation, any Tax benefit or deduction) arising out of the payment or incurrence of any transaction expenses, the exercise, vesting, acceleration, termination or cancellation of any share or stock options in connection with such transactions, payment of any transaction or loyalty bonuses, payment or retirement of any D&M Debt or payment of any prepayment penalty or premium will be recognised in the calculation of the Net D&M Assets for the purpose of this Agreement either as a reduction in total liabilities (such as income taxes payable) or an increase in total assets (such as income taxes receivable);

	“Net D&M Debt” means the aggregate of the D&M Debt minus the D&M Cash (other than Trapped Cash as defined in the DSAG Purchase Agreement within a Group Company which is not an ERO Company), which may be a positive or negative figure;

	“Pension Losses” means any Losses arising in respect of any Pension Plan, including, without limitation, in relation to contributions or debt due to or under-funding of any Pension Plan;

	“Pension Plan” means any pension, retirement benefit or welfare plan or scheme;

	“Policies” shall have the meaning ascribed to it in Schedule 7 of the DSAG Purchase Agreement;

	“Purchase Price Adjustment Statement” shall have the meaning ascribed to it in Schedule 5 of the DSAG Purchase Agreement;

	“Purchaser’s Counsel’s Account” shall have the meaning as set out within the DSAG Purchase Agreement;

	“Reference Balance Sheets” has the meaning in paragraph 1(b) of Schedule 2;

	“Regulations” means the E.C. Acquired Rights Directive 2001/23 (“ARD”), as amended, the Transfer of Undertakings (Protection of Employment) Regulations 1981, as amended, and any other national legislation of a member state of the European Union that implements the ARD;

	“Relevant Interest” means such interest which has accrued on the amount of the DSAG PPA within the 1^st Escrow Account up to and including the date of payment of such amount from the 1^st Escrow Account.

	“Relevant Transfer” means a relevant transfer in terms of the Regulations;

	“Reorganisation Companies” means Dunlop Aerospace North America Inc., Stewart Warner South Wind Corporation and their subsidiaries;

	“Taxation” or “Tax” means all forms of taxation and all forms of statutory, governmental, state, federal, provincial, local government or municipal charges, deficiencies, duties, imposts, contributions, levies, withholdings or liabilities, including income, gross receipts, franchise, alternative or add-on minimum, estimated, sales, use, escheat, transfer, registration, value added, excise, utility, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, national insurance, unemployment, disability, payroll, license, occupation, employee or other withholding, or other tax, of any kind whatsoever and wherever imposed, including, without limitation, any interest, deficiencies, penalties or additions to tax or additional amounts in respect of the foregoing;

	“Tax Asset” means any investment tax credit, foreign tax credit, unclaimed capital allowance, charitable deduction or any other item of deduction, loss, credit or tax attribute which could reduce Taxes;

	“Trustee” shall mean the Trustee of the Bonds; and

1.2	In this Agreement, unless the context otherwise requires:

	(a)	references to “persons” or “undertakings” shall include individuals, firms, companies or other bodies corporate (wherever incorporated), unincorporated associations, partnerships state or agency of a state, any joint venture or any works council or employee representative body (whether or not having separate legal personality) and other unincorporated bodies (in each case, wherever resident and for whatever purpose);

	(b)	words defined in the singular have the corresponding meaning in the plural and vice versa;

	(c)	references to Clauses, sub-clauses, Schedules and paragraphs are to the Clauses, sub-clauses of and Schedules to this Agreement and to the paragraphs in such Schedules respectively unless the context otherwise requires;

	(d)	any reference to a statutory provision or an “enactment” is a reference to such statutory provision or “enactment” as from time to time amended before the date of this Agreement, consolidated or re-enacted (with or without modification) and includes all instruments or orders made under such statutory provision or enactment (as so amended, consolidated, re-enacted or modified);

	(e)	any reference to a document “in the agreed form” is to the form of the relevant document agreed between the parties and for the purpose of identification initialled by each of them or on their behalf of their representatives (in each case with such amendments as may be agreed in writing by or on behalf of the parties);

	(f)	references to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any other legal

		concept shall, in respect of any jurisdiction other than England, be deemed to include the legal concept which most nearly approximates in that jurisdiction to the English legal term and references to any English statute shall be construed so as to include equivalent or analogous laws of any other jurisdiction;

	(g)	references to a “party” are to each of the DSAG Purchaser and the ERO Purchaser (but, for the avoidance of doubt, not to Meggitt) and any person who becomes a party to this Agreement pursuant to Clause 3 hereof and each of their successors and permitted assigns, as the context may require, and the term “parties” shall be construed accordingly;

	(h)	liability under, pursuant to or arising out of (or any analogous expression) any agreement, contract, Agreement or other instrument includes a reference to contingent liability under, pursuant to or arising out of (or any analogous expression) that agreement, contract, Agreement or other instrument;

	(i)	references to a party being liable to another party, or to liability, includes, but is not limited to any liability in equity, contract or tort (including negligence) or under the Misrepresentation Act 1967;

	(j)	a “subsidiary undertaking” or “parent undertaking” is to be construed in accordance with Section 258 of the Act and to a “subsidiary” or “holding company” is to be construed in accordance with Section 736 of the Act; and

	(k)	reference to times of the day are to London time.

1.3	The Schedules form part of this Agreement and shall have the same effect as if expressly set out in the body of this Agreement. Accordingly, any reference to “this Agreement” shall include the Schedules.

1.4	Capitalised terms not otherwise defined herein shall have the meanings given to them in the DSAG Purchase Agreement.

1.5	The headings herein are inserted for convenience of reference only and shall in no way be construed to define, limit, describe, explain, modify, amplify, or add to the interpretation, construction or meaning of any provision of, or scope or intent of, this Agreement nor in any way affect this Agreement.

2.	CONDITIONS

2.1	This Agreement shall be wholly conditional upon the Announcement being made. In the event that the Announcement is not made by 1pm (London time) on 6 July 2004, this Agreement shall terminate automatically and no party to this Agreement shall have any rights against any other party to this Agreement. The obligations in Clauses 3 to 16, 18, 20, 21, 22, 24 and 26 of this Agreement shall also be conditional upon Completion of the DSAG Purchase Agreement and the ERO Purchase Agreement.

2.2	If the obligations in Clauses 3 to 16, 18, 20, 21, 22, 24 and 26 of this Agreement have not become unconditional by the End Date (as defined in the DSAG Purchase Agreement), this Agreement shall automatically terminate and neither party shall have

	any claim of any nature whatsoever against the other under this Agreement (save in respect of any rights and liabilities of the parties which have accrued prior to termination as a result of breach of this Agreement prior to termination).

2.3	On and following Completion, the provisions of Schedule 2 shall apply.

3.	COMPLETION

3.1	On and following the Completion Date, the DSAG Purchaser shall, upon taking the actions specified in the next following sentence, cause the D&M Companies to become parties to this Agreement and to guarantee the obligations of the DSAG Purchaser under this agreement by executing and delivering to the ERO Purchaser and the ERO Companies a joinder agreement in a form reasonably acceptable to the ERO Purchaser. The DSAG Purchaser shall to the extent possible, cause such of the D&M Companies as are incorporated in England and Wales to take the actions specified in Sections 155-158 of the Act to permit the giving of any “financial assistance” (as defined in Section 152(1) of the Act) necessary to become parties to this Agreement as contemplated by this Clause 3.1.

3.2	On and following the Completion Date, if the D&M Companies have become parties to this Agreement, the ERO Purchaser shall cause the ERO Companies to become parties to this Agreement and to guarantee the obligations of the ERO Purchaser under this Agreement by executing and delivering to the DSAG Purchaser and the D&M Companies a joinder agreement in a form reasonably acceptable to the DSAG Purchaser.

3.3	If at any time after the Completion Date, the ERO Purchaser or any of the ERO Companies shall transfer over half of the business or assets which are held by it and which relate to the ERO Business (i) to (an)other member(s) of its Group or to a holding company (as defined in Clause 1.2(j) as if Clause 1.2(f) did not apply) of the ERO Purchaser or to any other member(s) of that holding company’s Group or (ii) to any person owned or controlled by T.C. Group LLC, doing business as The Carlyle Group otherwise than on terms that the transferor reasonably believes to be on arm’s-length terms, then it shall be a condition of such transfer that the ERO Purchaser shall cause the transferee(s) thereof to become parties to this Agreement and the transferees shall guarantee the obligations of the ERO Purchaser under this Agreement by executing and delivering to the DSAG Purchaser and the D&M Companies a joinder agreement in a form reasonably acceptable to the DSAG Purchaser.

3.4	If at any time after the Completion Date, the D&M Purchaser or any of the D&M Companies shall transfer over half of the business or assets which are held by it and which relate to the D&M Business to (an)other member(s) of its Group (including for this purpose any subsidiary of Meggitt Plc), then it shall be a condition of such transfer that the Meggitt transferee(s) thereof shall become parties to this Agreement and the transferees shall guarantee the obligations of the DSAG Purchaser under this Agreement by executing and delivering to the ERO Purchaser and the ERO Companies a joinder agreement in a form reasonably acceptable to the ERO Purchaser.

3.5	In Clauses 3.3 and 3.4 “transfer” shall include one or more related transfers. Each party agrees not to enter into any transaction or series of transactions whose primary purpose is designed to circumvent or avoid the provisions of Clauses 3.3 or 3.4 as the case may be.

3.6	The provisions of Schedule 3 shall apply in respect of the preparation of the Intra-Group Debt Statement and the agreement or determination of the Balancing Payment.

3.7	Subject to Clause 3.8:

	(a)	if the ERO Payable shown by the Intra Group Debt Statement is more than the Estimated ERO Payable, the ERO Purchaser shall pay to the DSAG Purchaser an amount equal to such excess and the DSAG Purchaser shall repay to the ERO Purchaser an amount equal to such excess;

	(b)	if the Estimated ERO Payable exceeds the ERO Payable shown by the Intra Group Debt Statement, the DSAG Purchaser shall repay to the ERO Purchaser an amount equal to such excess, and the ERO Purchaser shall pay to the DSAG Purchaser an amount equal to such excess;

	(c)	if the amount of the ERO Receivable shown by the Intra Group Debt Statement is greater than the Estimated ERO Receivable, the DSAG Purchaser shall pay to the ERO Purchaser an amount equal to such excess, and the ERO Purchaser shall pay to the DSAG Purchaser an amount equal to such excess;

	(d)	if the amount of the Estimated ERO Receivable is more than the ERO Receivable shown by the Intra Group Debt Statement, the ERO Purchaser shall pay to the DSAG Purchaser an amount equal to such excess, and the DSAG Purchaser shall repay to the ERO Purchaser an amount equal to such excess.

3.8	Within five Business Days starting on the day after agreement or determination of the Intra Group Debt Statement, the Balancing Payment shall be made and shall increase or decrease the Initial ERO Consideration, as the case may be. For the avoidance of doubt no monies shall be paid or payable by the ERO Purchaser or the DSAG Purchaser or any member of their respective Groups post the Completion Date in respect of the Intra Group Debt other than the Balancing Payment.

3.9	The DSAG Purchaser (on behalf of itself and each Purchaser’s Group Company) and the ERO Purchaser (on behalf of each relevant ERO Company) acknowledge and undertake to each other that, after payment of the Balancing Payment, (1) the DSAG Purchaser to the exclusion of the ERO Purchaser and any ERO Company shall be responsible for paying each member of the DSAG Purchaser’s Group the relevant amount of any ERO Payable due to it and (2) the ERO Purchaser to the exclusion of the DSAG Purchaser and any DSAG Purchaser’s Group Company shall be responsible for paying each ERO Company the relevant amount of any ERO Receivable due to it.

3.10	All payments referred to in this Agreement shall be made by transfer of funds for same day value to:

	(a)	the ERO Counsel’s Account if a payment is due to the ERO Purchaser; or, as the case may be

	(b)	the Purchaser Counsel’s Account if a payment is due to the DSAG Purchaser; or in either case

	(c)	such other account as is notified in writing to the other party in accordance with the provisions of this Agreement,

	provided always that such payments will be made without any set off, restriction or condition and without any deduction or withholding (save only as required by law) unless otherwise specified in this Agreement and that any party making such payment shall not be concerned to see the application of any such payment.

3.11	The parties agree that the Intra Group Trading Amount will be settled on the earlier of:

	(a)	the date 30 days after the supply of the relevant goods and services; or

	(b)	the date on which the Intra Group Trading Amount would be settled according to past custom in the ordinary course of business of the supplier.

3.12	Any Balancing Payment payable by the ERO Purchaser shall be paid only (but immediately) after the DSAG Purchaser shall have paid the ERO Purchaser an amount equal to such Balancing Payment as a reduction of the Consideration payable under the ERO Purchase Agreement. Any Balancing Payment payable by the DSAG Purchaser shall be paid only (but immediately) after the ERO Purchaser shall have paid the DSAG Purchaser an amount equal to such Balancing Payment as an increase in the Consideration payable under the ERO Purchase Agreement.

4.	WRONG POCKET LOSSES AND NO POCKET LOSSES

4.1	To the extent such Losses are not otherwise compensated pursuant to the arrangements specifically set out elsewhere in this Agreement, the ERO Purchaser shall, and shall procure that each ERO Company shall, indemnify and keep indemnified Meggitt, the DSAG Purchaser and each of the D&M Companies (the “D&M Indemnified Parties”) from and against and in respect of:

	(a)	one hundred percent (100%) of any Losses suffered or incurred by Meggitt, the DSAG Purchaser, or any of the D&M Companies to the extent attributable exclusively to or arising exclusively out of or exclusively in connection with the operation of the ERO Business before or after Completion;

	(b)	any Losses suffered or incurred by Meggitt, the DSAG Purchaser or any of the D&M Companies relating to or arising out of or in connection with the operation of both the ERO Business and the D&M Business before Completion, to the extent attributable exclusively to the operation of the ERO Business PROVIDED THAT in the event that the parties cannot agree (and the Expert cannot determine) the extent to which any of such Losses are attributable exclusively to the operation of the ERO Business, then 50 percent

		(50%) of such unattributed Losses shall be deemed to be attributable to the operation of the ERO Business;

	(c)	fifty percent (50%) of any Losses suffered or incurred by Meggitt, the DSAG Purchaser or any of the D&M Companies which are:

	(i)	Losses of DSAG, Dunlop Standard Aerospace Holdings plc, Dunlop Standard Aerospace (UK) Limited, Dunlop Standard Aerospace Overseas Limited, Dunlop Standard Aerospace Overseas Investments Limited, Dunlop Holdings Limited or Dunlop Limited; or

	(ii)	Losses attributable to or arising out of, or in connection with, the operations of any discontinued or divested business of any member of the DSAG Group;

		in each case relating to the period prior to Completion, other than, in each case, Losses described in or falling to be indemnified pursuant to sub-clauses (a), (b), (d) and/or (e) of this Clause 4.1 or sub-clauses (a), (b), (d) and/or (e) of Clause 4.2;

	(d)	any Pension Losses suffered or incurred by Meggitt, the D&M Purchaser or any of the D&M Companies relating to or arising directly or indirectly out of or in connection with Pensions Plans of any ERO Company excluding any Pension Plan to which Meggitt, the D&M Purchaser or any of the D&M Companies continue to contribute to after Completion in respect of their employees (except in respect of any transitional period);

	(e)	fifty percent (50%) of all Losses suffered or incurred by Meggitt, the DSAG Purchaser or any of the D&M Companies relating to or arising directly or indirectly out of or in connection with a failure by any of the ERO Companies to comply with their obligations which arise prior to Completion under the Regulations in respect of their employees.

4.2

To the extent such Losses are not otherwise compensated pursuant to the arrangements specifically set out elsewhere in this Agreement, Meggitt shall, and shall procure that the DSAG Purchaser and each D&M Company shall indemnify and keep indemnified, the ERO Purchaser and each of the ERO Companies (the “ERO Indemnified Parties”) from and against and in respect of:

	(a)	one hundred percent (100%) of any Losses suffered or incurred by the ERO Purchaser or any of the ERO Companies to the extent attributable exclusively to or arising exclusively out of or exclusively in connection with the operation of the D&M Business before or after Completion;

	(b)	any Losses suffered or incurred by the ERO Purchaser or any of the ERO Companies relating to or arising out of or in connection with the operation of both the D&M Business and the ERO Business before Completion, to the extent attributable exclusively to the operation of the D&M Business PROVIDED THAT in the event that the parties cannot agree (and the Expert cannot determine) the extent to which any of such Losses are attributable exclusively to the operation of the D&M Business, then 50 percent (50%) of

		such unattributed Losses shall be deemed to be attributable to the operation of the D&M Business;

	(c)	fifty percent (50%) of any Losses suffered or incurred by the ERO Purchaser or any of the ERO Companies which are:

	(i)	Losses of Dunlop Standard Aerospace (U.S.) Legal, Inc; or

	(ii)	Losses attributable to, arising out of, or in connection with, the operations of any discontinued or divested business of any member of the DSAG Group;

		in each case relating to the period prior to Completion, other than, in each case, Losses falling to be indemnified pursuant to sub-clauses (a), (b), (d) and/or (e) of this Clause 4.2 or sub-clauses (a), (b), (d) and/or (e) of Clause 4.1;

	(d)	any Pension Losses suffered or incurred by the ERO Purchaser or any of the ERO Companies relating to or arising directly or indirectly out of or in connection with Pensions Plans of any D&M Company excluding any Pension Plan to which the ERO Purchaser or any of the ERO Companies continue to contribute to after Completion in respect of their employees (except in respect of any transitional period);

	(e)	fifty percent (50%) of all Losses suffered or incurred by the ERO Purchaser or any of the ERO Companies relating to or arising directly or indirectly out of or in connection with a failure by any of the D&M Companies to comply with their obligations which arise prior to Completion under the Regulations in respect of their employees.

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