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                                                                 EXHIBIT 10.17


                      APPLIED ANALYTICAL INDUSTRIES, INC.

                                  COMMON STOCK

                          (PAR VALUE $.001 PER SHARE)

                                  -------------



                             UNDERWRITING AGREEMENT
                             ----------------------



                                                           September 19, 1996

Goldman, Sachs & Co.,
Cowen & Company,
Lehman Brothers Inc.,
 As representatives of the several Underwriters
  named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004

Ladies and Gentlemen:

     Applied Analytical Industries, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 2,700,000 shares (the "Firm Shares") and, at the
election of the Underwriters, up to 405,000 additional shares (the "Optional
Shares") of Common Stock, par value $.001 per share ("Stock"), of the Company
(the Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof being collectively called the "Shares").

     1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:

          (a) A registration statement on Form S-1 (File No. 333-05535) (the
     "Initial Registration Statement") in respect of the Shares, and as part
     thereof the respective forms of prospectus relating to the initial
     distribution of the Shares by the Underwriters in an underwritten public
     offering and to offers and sales of Stock by Goldman, Sachs & Co. in
     secondary transactions, has been filed with the Securities and Exchange
     Commission (the "Commission"); the Initial Registration Statement and any
     post-effective amendment thereto, each in the form heretofore delivered to
     you, and, excluding exhibits thereto, to you for each of the other
     Underwriters, have been declared effective by the Commission in such form;
     other than a registration statement, if any, increasing the size of the
     offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
     462(b) under the Securities Act of 1933, as amended (the 


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     "Act") which became effective upon filing, no other document with
     respect to the Initial Registration Statement has heretofore been filed
     with the Commission; and no stop order suspending the effectiveness of the
     Initial Registration Statement, any post-effective amendment thereto or
     the Rule 462(b) Registration Statement, if any, has been issued and no
     proceeding for that purpose has been initiated or threatened by the
     Commission (any preliminary prospectus included in the Initial
     Registration Statement or filed with the Commission pursuant to Rule
     424(a) of the rules and regulations of the Commission under the Act, is
     hereinafter called a "Preliminary Prospectus"; the various parts of the
     September 16, 1996 Initial Registration Statement and the Rule 462(b)
     Registration Statement, if any, including all exhibits thereto and
     including the information contained in the form of final prospectus filed
     with the Commission pursuant to Rule 424(b) under the Act in accordance
     with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act
     to be part of the Initial Registration Statement at the time it was
     declared effective or such part of the Rule 462(b) Registration Statement,
     if any, which became or hereafter becomes effective, each as amended at
     the time such part of the registration statement became effective, is
     hereinafter collectively called the "Registration Statement"; and such
     forms of final prospectus relating to the initial distribution of the
     Shares by the Underwriters in an underwritten public offering in the form
     first filed pursuant to Rule 424(b) under the Act and to offers and sales
     of Stock by Goldman, Sachs & Co. in secondary transactions in the most
     recent form filed pursuant to Rule 424(b) under the Act, are hereinafter
     called the "Public Offering Prospectus" and the "Secondary Transactions
     Prospectus", respectively, and collectively, the "Prospectus");

          (b) No order preventing or suspending the use of any Preliminary
     Prospectus has been issued by the Commission, and each Preliminary
     Prospectus, at the time of filing thereof, conformed in all material
     respects to the requirements of the Act and the rules and regulations of
     the Commission thereunder, and did not contain an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein, in the light of the
     circumstances under which they were made, not misleading; provided,
     however, that this representation and warranty shall not apply to any
     statements or omissions made in reliance upon and in conformity with
     information furnished in writing to the Company by an Underwriter through
     Goldman, Sachs & Co. expressly for use therein;

          (c) The Registration Statement conforms, and the Prospectus and any
     further amendments or supplements to the Registration Statement or the
     Prospectus will conform, in all material respects to the requirements of
     the Act and the rules and regulations of the Commission thereunder and do
     not and will not, as of the applicable effective date as to the
     Registration Statement and any amendment thereto, and as of the applicable
     filing date as to the Prospectus and any amendment or supplement thereto,
     contain an untrue statement of a material fact or omit to state a material
     fact required to be stated therein or necessary to make the statements
     therein not misleading; provided, however, that this representation and
     warranty shall not apply to any statements or omissions made in reliance
     upon and in conformity with information furnished in writing to the
     Company by an Underwriter through Goldman, Sachs & Co. expressly for use
     therein;

          (d) Neither the Company nor any entity 50% or more of the outstanding
     voting securities of which are owned directly or indirectly by the Company
     (each, a "subsidiary"), has sustained since the date of the latest audited
     financial statements included in the Prospectus any material loss or
     interference with its business from fire, explosion, flood or other
     calamity, 


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     whether or not covered by insurance, or from any labor dispute or court
     or governmental action, order or decree, otherwise than as set forth or
     contemplated in the Prospectus; and, since the respective dates as of
     which information is given in the Registration Statement and the
     Prospectus, there has not been any change in the capital stock or any
     increase in excess of $250,000 in the long-term debt of the Company or any
     of its subsidiaries or any material adverse change, or any development
     involving a prospective material adverse change, in or affecting the
     general affairs, management, financial position, stockholders' equity or
     results of operations of the Company and its subsidiaries, taken as a
     whole, otherwise than as set forth or contemplated in the Prospectus;

          (e) The Company and its subsidiaries have good and marketable title
     in fee simple to all real property and good and marketable title to all
     personal property owned by them, in each case free and clear of all liens,
     encumbrances and defects except such as are described in the Prospectus or
     such as do not materially affect the value of such property and do not
     interfere with the use made and proposed to be made of such property by
     the Company and its subsidiaries; and any real property and buildings held
     under lease by the Company and its subsidiaries are held by them under
     valid, subsisting and enforceable leases with such exceptions as are not
     material and do not interfere with the use made and proposed to be made of
     such property and buildings by the Company and its subsidiaries;

          (f) The Company has been duly incorporated and is validly existing as
     a corporation in good standing under the laws of the State of Delaware,
     with power and authority (corporate and other) to own its properties and
     conduct its business as described in the Prospectus, and has been duly
     qualified as a foreign corporation for the transaction of business and is
     in good standing under the laws of each other jurisdiction in which it
     owns or leases properties or conducts any business so as to require such
     qualification, or is subject to no material liability or disability by
     reason of the failure to be so qualified in any such jurisdiction or is
     subject to no material liability or disability by reason of the failure to
     be so qualified in any such jurisdiction; and each subsidiary of the
     Company has been duly incorporated and is validly existing as a
     corporation in good standing under the laws of its jurisdiction of
     incorporation;

          (g) The Company has an authorized capitalization as set forth in the
     Prospectus, and all of the issued shares of capital stock of the Company
     have been duly and validly authorized and issued, are fully paid and
     non-assessable and conform to the description of the Stock contained in
     the Prospectus; and all of the issued shares of capital stock of each
     subsidiary of the Company have been duly and validly authorized and
     issued, are fully paid and non-assessable and (except for directors'
     qualifying shares) are owned directly or indirectly by the Company, free
     and clear of all liens, encumbrances, equities or claims;

          (h) The unissued Shares to be issued and sold by the Company to the
     Underwriters hereunder have been duly and validly authorized and, when
     issued and delivered against payment therefor as provided herein, will be
     duly and validly issued and fully paid and non-assessable and will conform
     to the description of the Stock contained in the Prospectus;

          (i) The issue and sale of the Shares by the Company and the
     compliance by the Company with all of the provisions of this Agreement and
     the consummation of the transactions herein contemplated will not conflict
     with or result in a breach or violation of any of the terms or provisions
     of, or constitute a default under, any indenture, mortgage, deed of trust,
     loan agreement or other agreement or instrument to which the Company or
     any of its subsidiaries is a party or by which the Company or any of its



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     subsidiaries is bound or to which any of the property or assets of the
     Company or any of its subsidiaries is subject, nor will such action result
     in any violation of the provisions of the Certificate of Incorporation or
     By-laws of the Company or any statute or any order, rule or regulation of
     any court or governmental agency or body having jurisdiction over the
     Company or any of its subsidiaries or any of their properties; and no
     consent, approval, authorization, order, registration or qualification of
     or with any such court or governmental agency or body is required for the
     issue and sale of the Shares or the consummation by the Company of the
     transactions contemplated by this Agreement, except the registration under
     the Act of the Shares, registration of Stock under the Securities Exchange
     Act of 1934 (the "1934 Act") and such consents, approvals, authorizations,
     registrations or qualifications as may be required under state securities
     or Blue Sky laws in connection with the purchase and distribution of the
     Shares by the Underwriters;

          (j) Neither the Company nor any of its subsidiaries is in violation
     of its Certificate of Incorporation or By-laws or in default in the
     performance or observance of any material obligation, agreement, covenant
     or condition contained in any indenture, mortgage, deed of trust, loan
     agreement, lease or other agreement or instrument to which it is a party
     or by which it or any of its properties may be bound;

          (k) The statements set forth in the Prospectus under the caption
     "Description of Capital Stock", insofar as they purport to constitute a
     summary of the terms of the Stock, and under the caption "Underwriting",
     insofar as they purport to describe the provisions of the laws and
     documents referred to therein, are accurate, complete and fair;

          (l) Other than as set forth in the Prospectus, there are no legal or
     governmental proceedings (other than pending review by the U.S. Food and
     Drug Administration (the "FDA") of any abbreviated new drug application
     and related filings submitted by the Company and routine FDA audits of the
     Company, its facilities and data supporting filings made by clients of the
     Company) pending to which the Company or any of its subsidiaries is a
     party or of which any property of the Company or any of its subsidiaries
     is the subject which, if determined adversely to the Company or any of its
     subsidiaries, would individually or in the aggregate have a material
     adverse effect on the current or future consolidated financial position,
     stockholders' equity or results of operations of the Company and its
     subsidiaries; and, to the best of the Company's knowledge, no such
     proceedings are threatened or contemplated by governmental authorities or
     threatened by others;

          (m) The Company is not and, after giving effect to the offering and
     sale of the Shares, will not be an "investment company" or an entity
     "controlled" by an "investment company", as such terms are defined in the
     Investment Company Act of 1940, as amended (the "Investment Company Act");

          (n) Neither the Company nor any of its affiliates does business with
     the government of Cuba or with any person or affiliate located in Cuba
     within the meaning of Section 517.075, Florida Statutes; and

          (o) Price Waterhouse, LLP, who have certified certain financial
     statements of the Company and its subsidiaries, and McGladrey & Pullen,
     who have certified certain financial statements of the Company and its
     subsidiaries, are each independent public accountants as required by the
     Act and the rules and regulations of the Commission thereunder.


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          (p) The Company and its subsidiaries are in material compliance with
     all current applicable statutes, rules, regulations, standards, guides or
     orders administered or issued by the FDA and any agency of any foreign
     government, to the extent applicable; neither the Company nor any of its
     subsidiaries has received any communication (including, any warning
     letter) or is otherwise aware of any action, proceeding or investigation
     pending or, to the best knowledge of the Company, threatened, including,
     without limitation, any warning letter, prosecution, injunction, seizure,
     civil fine or recall, alleging that the Company is not in compliance in
     all material respects with any and all applicable laws, regulations or
     orders implemented by the FDA, or implemented by the relevant state, local
     or international agency responsible for regulating the pharmaceutical
     industry, including but not limited to, allegations related to drug
     development establishments operated by the Company or its subsidiaries and
     drug applications submitted directly by the Company or its subsidiaries,
     other than non-material correspondence received from the FDA in connection
     with the filing and review of applications; with regard to all abbreviated
     new drug applications and related filings by the Company or any of its
     subsidiaries in its own name or, to its knowledge, all abbreviated new
     drug applications and related filings by third parties in connection with
     which the Company expects to receive revenue pending before the FDA, there
     is no correspondence or other communications from the FDA questioning the
     approvability of such applications other than as would not have a material
     adverse effect on the current or future consolidated financial position,
     stockholders' equity or results of operations of the Company and its
     subsidiaries;

          (q) (A) The Company and its subsidiaries own or have valid, binding,
     enforceable licenses or other rights to use any patents, trademarks,
     trade names, service marks, service names, copyrights, and other
     proprietary intellectual property rights ("Intellectual Property")
     necessary to conduct the business of the Company and its subsidiaries in
     the manner presently conducted and, to the best knowledge of the Company,
     proposed to be conducted, in the United States and to conduct the business
     of the Company and its subsidiaries in the manner presently conducted and,
     to the best knowledge of the Company proposed to be conducted, outside the
     United States other than as would not have a material adverse effect on
     the current or future consolidated financial position, stockholders'
     equity or results of operations of the Company and its subsidiaries, in
     each case without any conflict with the rights of others; and (B) the
     information contained in the Registration Statement and Prospectus
     concerning patents issued or licensed to, or patent applications filed on
     behalf of, the Company and its subsidiaries is accurate in all material
     respects; and (C) neither the Company nor its subsidiaries has received
     any notice from any other person of infringment of or conflict with (and
     knows of no such infringement of or conflict with) asserted rights of
     others with respect to any Intellectual Property or any trade secrets,
     proprietary information, inventions, know-how, processes and procedures
     owned or used by or licensed to the Company or its subsidiaries;

          (r) The Company and its subsidiaries are insured by insurers of
     recognized financial responsibility against losses and risks and in
     amounts as are prudent and customary in the businesses in which they are
     engaged; and neither the Company nor any of its subsidiaries has any
     reason to believe that they will not be able to renew their existing
     insurance coverage as and when such coverage expires or to obtain similar
     coverage from similar insurers as may be necessary to continue their
     businesses at a cost that would not have a material adverse effect on the
     current or future consolidated financial position, stockholders' equity or
     results of 



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     operations of the Company and its subsidiaries except as described or 
     contemplated in the Prospectus;

          (s) The Company and its subsidiaries are in compliance with all
     applicable existing Federal, state, local, and foreign laws and
     regulations relating to protection of human health or the environment or
     imposing liability or standards of conduct concerning any Hazardous
     Material (as hereinafter defined) ("Environmental Laws"), except where
     such noncompliance with Environmental Laws would not, individually or in
     the aggregate, have a material adverse effect on the current or future
     consolidated financial position, stockholders' equity or results of
     operations of the Company and its subsidiaries.  The term "Hazardous
     Material" means (1) any "hazardous substance" as defined by the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980, as amended, (2) any "hazardous waste" as defined by the Resource
     Conservation and Recovery Act, as amended, (3) any petroleum or petroleum
     product, (4) any polychlorinated biphenyl, and (5) any pollutant or
     contaminant or hazardous, dangerous, or toxic chemical, material, waste or
     substance regulated under or within the meaning of any other Environmental
     Law; and

          (t) There are no debt securities or preferred stock of the Company
     which are rated by any "nationally recognized statistical rating
     organization", as that term is defined by the Commission for purposes of
     Rule 436(g)(2) under the Act.

     2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $14.88, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.

     The Company hereby grants to the Underwriters the right to purchase at
their election up to 405,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares.  Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.

     3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Public Offering Prospectus.


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4.      (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in
such names as Goldman, Sachs & Co. may request upon at least forty-eight
hours' prior notice to the Company, shall be delivered by or on behalf of
the Company to Goldman, Sachs & Co., for the account of such Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer, payable to the order of the Company in Federal
(same day) funds.  The Company will cause the certificates representing
the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of Goldman, Sachs & Co., 85 Broad Street,
New York, New York 10004 (the "Designated Office").  The time and date of
such delivery and payment shall be, with respect to the Firm Shares, 9:30
a.m., New York City time, on September 25, 1996 or such other time and
date as Goldman, Sachs & Co. and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York City time,
on the date specified by Goldman, Sachs & Co. in the written notice given
by Goldman, Sachs & Co. of the Underwriters' election to purchase such
Optional Shares in accordance with Section 2 hereof, or such other time
and date as Goldman, Sachs & Co. and the Company may agree upon in
writing.  Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called
the "Second Time of Delivery", and each such time and date for delivery is
herein called a "Time of Delivery".

        (b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 8(l) hereof, will be delivered at the
offices of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza,
New York, New York 10004 (the "Closing Location"), and the Shares will be
delivered at the Designated Office, all at such Time of Delivery.  A
meeting will be held at the Closing Location at 2:00 p.m., New York City
time, on the New York Business Day next preceding such Time of Delivery,
at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the
parties hereto.  For the purposes of this Section 4, "New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.

5.      The Company agrees with each of the Underwriters:

        (a) To prepare the Public Offering Prospectus in a form approved by
you and to file the Public Offering Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Act; to make no further amendment or any supplement
to the Registration Statement or the Public Offering Prospectus during the
Public Offering Period (as defined below) which shall be disapproved by
you promptly after reasonable notice thereof; to advise you, promptly
after it receives notice thereof during the Public Offering Period, of the
time when any amendment to the Registration Statement has been filed or
becomes effective during such period or any supplement to the Public
Offering Prospectus or any amended Public Offering Prospectus has been
filed during such period and to furnish you with copies thereof; to advise
you, promptly after it receives notice thereof during the Public Offering


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Period, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Public Offering Prospectus
or for additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or prospectus or suspending any such qualification during the Public
Offering Period, promptly to use its best efforts to obtain the withdrawal of
such order (the period beginning on the date hereof and continuing for as long
as the delivery of a prospectus is required in connection with the initial
offering and sale of the Shares by the Underwriters as contemplated by the
Public Offering Prospectus, or in connection with any subsequent offer or sale
of Stock by a dealer other than Goldman, Sachs & Co. during the period
specified in Rule 174 under the Act is herein called the "Public Offering
Period");

        (b) Promptly during the Public Offering Period from time to time to
take such action as you may reasonably request to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you
may request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions during such period,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service
of process in any jurisdiction;

        (c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time
during the Public Offering Period, to furnish the Underwriters with copies
of the Public Offering Prospectus in New York City in such quantities as
you may reasonably request, and, if the delivery of a prospectus is
required at any time prior to the expiration of nine months after the time
of issue of the Public Offering Prospectus in connection with any offering
or sale of the Shares by the Underwriters and if at such time any event
shall have occurred as a result of which the Public Offering Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made when such Public Offering Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such
period to amend or supplement the Public Offering Prospectus in order to
comply with the Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in securities
as many copies as you may reasonably request of an amended Public Offering
Prospectus or a supplement to the Public Offering Prospectus which will
correct such statement or omission or effect such compliance, and in case
any Underwriter is required to deliver a prospectus in connection with any
offering or sale of any of the Shares by the Underwriters at any time nine
months or more after the time of issue of the Public Offering Prospectus,
upon your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Public Offering Prospectus complying with Section
10(a)(3) of the Act;

        (d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its 



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subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations thereunder (including, at the option
of the Company, Rule 158);

        (e) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, (i) not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are convertible into
or exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement), without
your prior written consent and (ii) during such 180-day period, not to
accelerate the vesting of any shares of Common Stock awarded under the 1995
Restricted Stock Award Plan and not to deliver certificates representing any
shares of Common Stock under the 1995 Restricted Stock Award Plan;

        (f) To furnish to its stockholders as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and statements
of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;

        (g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver
to you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any inter-dealer
quotation system or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company as you may from
time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);

        (h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";

        (i) To use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National Market
System ("NASDAQ");

        (j) To file with the Commission such reports on Form SR as may be
required by Rule 463 under the Act; and

        (k) If the Company elects to rely upon Rule 462(b), to file a Rule
462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and
at the time of filing to either pay to the Commission the filing fee for the
462(b) Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.


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6.      The Company agrees with Goldman, Sachs & Co.:

        (a) To prepare the Secondary Transactions Prospectus in a form approved
by Goldman, Sachs & Co. and to file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Act; to make no further amendment or any supplement to the Registration
Statement or the Secondary Transactions Prospectus during the Secondary
Transactions Period (as defined below) which shall be disapproved by Goldman,
Sachs & Co. promptly after reasonable notice thereof (it being understood that,
when Form S-2 or S-3 under the Act is available to the Company, the Company may
amend the Registration Statement so as to be on such form, or may file a new
registration statement on such form (in which case any reference herein to the
Registration Statement or the Prospectus shall include such new registration
and the prospectus contained therein in the form first filed pursuant to Rule
424(b) under the Act, respectively), and thereafter any information required to
be included in the Registration Statement or the Secondary Transactions
Prospectus may be incorporated therein by reference as permitted by such form);
to advise Goldman, Sachs & Co., promptly after the Company receives notice
thereof, of the time when the Registration Statement, or any amendment thereto,
has been filed or becomes effective during the Secondary Transactions Period,
or any supplement to the Secondary Transactions Prospectus or any amended
Secondary Transactions Prospectus has been filed during such period, and to
furnish Goldman, Sachs & Co. with copies thereof; to advise Goldman, Sachs &
Co., promptly after the Company receives notice thereof during the Secondary
Transactions Period, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus or suspending any such qualification during the Secondary
Transactions Period, to use promptly its reasonable efforts to obtain the
withdrawal of such order (the period beginning on the date hereof and
continuing for as long as may be required under applicable law, in the
reasonable judgment of Goldman, Sachs & Co. after consultation with the
Company, in order to offer and sell Stock as contemplated by the Secondary
Transactions Prospectus, is herein called the "Secondary Transactions Period");

        (b) Promptly from time to time to take such action as Goldman, Sachs & 
Co. may reasonably request to qualify the Shares for offering and sale during
the Secondary Transactions Period under the securities laws of such
jurisdictions as Goldman, Sachs & Co. may request and to comply with such laws
so as to permit the continuance of sales and dealings therein in such
jurisdictions during such period, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;

        (c) Prior to 10:00 a.m., New York City time, on the New York Business 
Day next succeeding the date of this Agreement and from time to time during the
Secondary Transactions Period, to furnish Goldman, Sachs & Co. with copies of
the Secondary 


                                       10




<PAGE>   11




         Transactions Prospectus in such quantities as Goldman, Sachs &
         Co. may reasonably request, and, if at any time during such period any
         event shall have occurred as a result of which the Secondary
         Transactions Prospectus as then amended or supplemented would include
         an untrue statement of a material fact or omit to state any material
         fact necessary in order to make the statements therein, in the light
         of the circumstances under which they were made when such Prospectus
         is to be delivered during such period, not misleading, or, if for any
         other reason it shall be necessary during such period to amend or
         supplement the Secondary Transactions Prospectus or to amend the
         Registration Statement in order to comply with the Act or to file
         under the 1934 Act any document incorporated by reference in such
         Prospectus in order to comply with the Act or the 1934 Act, to notify
         Goldman, Sachs & Co. and upon its request to file such document and to
         prepare and furnish without charge to Goldman, Sachs & Co. as many
         copies as it may from time to time during such period reasonably
         request of an amended Secondary Transactions Prospectus or a
         supplement to the Secondary Transactions Prospectus which will correct
         such statement or omission or effect such compliance;

                (d) During the Secondary Transactions Period, to furnish to
         Goldman, Sachs & Co. copies of all reports or other communications
         (financial or other) furnished to stockholders generally, and to
         deliver to Goldman, Sachs & Co. (i) as soon as they are available,
         copies of any reports and financial statements furnished to or filed
         with the Commission or any inter-dealer quotation system or any
         national securities exchange on which any class of securities of the
         Company is listed; and (ii) such additional information concerning the
         business and financial condition of the Company as Goldman, Sachs &
         Co. may from time to time reasonably request (such financial
         statements to be on a consolidated basis to the extent the accounts of
         the Company and its subsidiaries are consolidated in reports furnished
         to its stockholders generally or to the Commission); and

                (e) To use its reasonable efforts to furnish or cause to be
         furnished to Goldman, Sachs & Co. upon its request at reasonable
         intervals, when the Registration Statement or the Secondary
         Transactions Prospectus shall be amended or supplemented during the
         Secondary Transactions Period, written opinions of counsel for the
         Company, a letter from the independent accountants who have certified
         the financial statements included in the Registration Statement as
         then amended and certificates of officers of the Company, in each case
         in form and substance reasonably satisfactory to you, all to the
         effect specified in subsections (c), (d), (e), (f), (g) and (l),
         respectively, of Section 8 hereof (as modified to relate to the
         Registration Statement and the Secondary Transactions Prospectus as
         then amended or supplemented).

         Notwithstanding the foregoing provisions, if at any time the Company
determines in the exercise of its reasonable judgment that it is in possession
of material, non-public information that it would not be required to disclose
publicly in the absence of a registration of Stock under the Act, the Company
may, upon notice to Goldman, Sachs & Co., cease to comply with any of its
obligations under this Section 6, but only for a period or periods that the
Company reasonably determines are necessary in order to avoid such premature
disclosure and in any event not to exceed 90 days in the aggregate during any
period of 12 consecutive calendar months.  Upon receipt of any such notice,
Goldman, Sachs & Co. shall cease using the Secondary Transactions Prospectus or
any amendment or supplement thereto until it receives notice from the Company
that it may resume using such document.

                                       11



<PAGE>   12





        7. The Company covenants and agrees with the several Underwriters that 
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum and
closing documents (including any compilations thereof) for the sale of the
Shares by the Underwriters pursuant to the Public Offering Prospectus and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
5(b) hereof, including the fees and disbursements of counsel for the
Underwriters, and counsel for Goldman, Sachs & Co. during the Secondary
Transactions Period, in connection with such qualification and in connection
with the Blue Sky survey; (iv) all fees and expenses in connection with listing
the Shares on the NASDAQ; (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Shares by the Underwriters pursuant to the Public
Offering Prospectus; (vi) the cost of preparing stock certificates; (vii) the
cost and charges of any transfer agent or registrar; (viii) all reasonable
fees, disbursements and expenses incurred pursuant to Section 6(e) hereof; and
(ix) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
and Sections 9 and 12 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.

        8. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:

          (a) The Prospectus shall have been filed with the Commission pursuant
     to Rule 424(b) within the applicable time period prescribed for such
     filing by the rules and regulations under the Act and in accordance with
     Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b),
     the Rule 462(b) Registration Statement shall have become effective by
     10:00 P.M., Washington, D.C. time, on the date of this Agreement; no stop
     order suspending the effectiveness of the Registration Statement or any
     part thereof shall have been issued and no proceeding for that purpose
     shall have been initiated or threatened by the Commission; and all
     requests for additional information on the part of the Commission shall
     have been complied with to your reasonable satisfaction;

          (b) Fried, Frank, Harris, Shriver & Jacobson, counsel for the
     Underwriters, shall have furnished to you such opinion or opinions (a
     draft of such opinion is attached as Annex II(a) hereto) dated such Time
     of Delivery, with respect to the incorporation of the Company, the
     validity of the Shares being delivered at such Time of Delivery, the
     Registration Statement, the Prospectus and such other related matters as
     you may reasonably request, and such counsel


                                       12



<PAGE>   13




     shall have received such papers and information as they may reasonably 
     request to enable them to pass upon such matters;

          (c) Robinson, Bradshaw & Hinson, P.A., counsel for the Company, shall
     have furnished to you their written opinion (a draft of such opinion is
     attached as Annex II(b) hereto), dated such Time of Delivery, in form and
     substance satisfactory to you, to the effect that:

                  (i) The Company has been duly incorporated and is validly
             existing as a corporation in good standing under the laws of the
             State of Delaware, with power and authority (corporate and other)
             to own its properties and conduct its business as described in the
             Prospectus;

                  (ii) The Company has an authorized capitalization as set
             forth in the Prospectus, and all of the issued shares of capital
             stock of the Company have been duly and validly authorized and
             issued and are fully paid and non-assessable, and all of the
             Shares have been duly and validly authorized and, when issued and
             delivered against payment therefor as provided in this Agreement,
             will be duly and validly issued and fully paid and non-assessable;
             and the Shares conform to the description of the Stock contained
             in the Prospectus;

                  (iii) The Company has been duly qualified as a foreign
             corporation for the transaction of business and is in good
             standing under the laws of each jurisdiction in which it owns or
             leases properties or conducts any business so as to require such
             qualification or is subject to no material liability or disability
             by reason of failure to be so qualified in any such jurisdiction
             (such counsel being entitled to rely in respect of the opinion in
             this clause upon opinions of local counsel and in respect of
             matters of fact upon certificates of officers of the Company,
             provided that such counsel shall state that they believe that both
             you and they are justified in relying upon such opinions and
             certificates);

                  (iv) Each subsidiary of the Company is listed on Annex A to
             such opinion (such counsel being entitled to rely in respect of
             the opinion in the foregoing clause upon certificates of officers
             of the Company or its subsidiaries provided that such counsel
             shall state that they believe that both you and they are justified
             in relying upon such certificates) and each United States
             subsidiary has been duly incorporated and is validly existing as a
             corporation in good standing under the laws of its jurisdiction of
             incorporation; and all of the issued shares of capital stock of
             each such subsidiary have been duly and validly authorized and
             issued, are fully paid and non-assessable, and (except for
             directors' qualifying shares) are owned directly or indirectly by
             the Company, free and clear of all liens, encumbrances, equities
             or claims (such counsel being entitled to rely in respect of the
             opinion in this clause upon opinions of local counsel and in
             respect to matters of fact upon certificates of officers of the
             Company or its subsidiaries, provided that such counsel shall
             state that they believe that both you and they are justified in
             relying upon such opinions and certificates);

                  (v) To the best of such counsel's knowledge and other than as
             set forth in the Prospectus, there are no legal or governmental
             proceedings pending to which the Company or any of its subsidiaries
             is a party or of which any property of the Company or any of its
             subsidiaries is the subject which, if determined 


                                     13

<PAGE>   14




             adversely to the Company or any of its subsidiaries, would 
             individually or in the aggregate have a material adverse effect 
             on the current or future consolidated financial position, 
             stockholders' equity or results of operations of the Company and 
             its subsidiaries; and, to the best of such counsel's knowledge, 
             no such proceedings are threatened or contemplated by governmental
             authorities or threatened by others;

                  (vi) This Agreement has been duly authorized, executed and
             delivered by the Company;

                  (vii) The issue and sale of the Shares being delivered at
             such Time of Delivery by the Company and the compliance by the
             Company with all of the provisions of this Agreement and
             the consummation of the transactions herein contemplated will not
             (1) conflict with or result in a breach or violation of any of the
             terms or provisions of, or constitute a default under, any
             indenture, mortgage, deed of trust, loan agreement, lease,
             judgment or other agreement or instrument listed on Annex B to
             such opinion or of the provisions of the Certificate of
             Incorporation or By-laws of the Company or (2) violate any federal
             law of the United States, any law of the State of North Carolina
             or the Delaware General Corporation Law applicable to the Company
             or any order known to such counsel of any court or governmental
             agency or body having jurisdiction over the Company or any of its
             subsidiaries or any of their properties; provided, however, that,
             for the purpose of this clause (2), such counsel need not express
             an opinion with respect to state securities laws and federal
             securities laws, to the extent such federal securities laws are
             covered in the opinion in subsection (xi) hereof;

                  (viii) No consent, approval, authorization, order,
             registration or qualification of or with any such court or
             governmental agency or body is required for the issue and sale of
             the Shares or the consummation by the Company of the transactions
             contemplated by this Agreement, except the registration under the
             Act of the Shares, registration of the Stock under the 1934 Act
             and such consents, approvals, authorizations, registrations or
             qualifications as may be required under state securities or Blue
             Sky laws in connection with the purchase and distribution of the
             Shares by the Underwriters;

                  (ix) The statements set forth in the Prospectus under the
             caption "Description of Capital Stock", insofar as they purport to
             constitute a summary of the terms of the Stock, and under the 
             caption "Underwriting", insofar as they purport to describe the 
             provisions of the laws and documents referred to therein, are 
             accurate, complete and fair;

                  (x) The Company is not an "investment company" or an entity
             "controlled" by an "investment company", as such terms are defined
             in the Investment Company Act; and

                  (xi) The Registration Statement, as of its effective date,
             and the Prospectus and any further amendments and supplements
             thereto made by the Company prior to such Time of Delivery, as of
             the date thereof, (other than the financial statements and related
             schedules or other financial information therein, as to which such
             counsel need express no opinion) appear on their face to be
             appropriately 

                                       14

<PAGE>   15



             responsive in all material respects to the requirements of the
             Act and the rules and regulations thereunder; although they do
             not assume any responsibility for the accuracy, completeness or
             fairness of the statements contained in the Registration
             Statement or the Prospectus, except for those referred to in the
             opinion in subsection (ix) of this section 8(c), nothing has come
             to their attention that has caused them to believe that, as of
             its effective date, the Registration Statement or any further
             amendment thereto made by the Company prior to such Time of
             Delivery (other than the financial statements and related
             schedules or other financial information therein, as to which such
             counsel need express no opinion) contained an untrue statement of
             a material fact or omitted to state a material fact required to be
             stated therein or necessary to make the statements therein not
             misleading or that, as of its date, the Prospectus or any further
             amendment or supplement thereto made by the Company prior to such
             Time of Delivery (other than the financial statements and related
             schedules or other financial information therein, as to which such
             counsel need express no opinion) contained an untrue statement of
             a material fact or omitted to state a material fact necessary to
             make the statements therein, in the light of the circumstances
             under which they were made, not misleading or that, as of such
             Time of Delivery, either the Registration Statement or the
             Prospectus or any further amendment or supplement thereto made by
             the Company prior to such Time of Delivery (other than the
             financial statements and related schedules or other financial
             information therein, as to which such counsel need express no
             opinion) contains an untrue statement of a material fact or omits
             to state a material fact necessary to make the statements therein,
             in the light of the circumstances under which they were made, not
             misleading; and they do not know of any amendment the
             Registration Statement required to be filed or of any contracts
             or other documents of a character required to be filed as an
             exhibit to the Registration Statement or required to be described
             in the Registration Statement or the Prospectus which are not
             filed or described as required;

          (d) R. Forrest Waldon, Vice President and General Counsel of the
     Company, shall have furnished to you his written opinion (a draft of such
     opinion is attached as Annex II(c) hereto), dated such Time of Delivery,
     in form and substance satisfactory to you, to the effect that:

                  (i) The issue and sale of the Shares being delivered at such
             Time of Delivery by the Company and the compliance by the Company
             with all of the provisions of this Agreement and the consummation
             of the transactions herein contemplated will not conflict with or
             result in a breach or violation of any of the terms or provisions
             of, or constitute a default under, any indenture, mortgage, deed
             of trust, loan agreement, lease, judgment or other agreement or
             instrument known to such counsel to which the Company or any of
             its subsidiaries is a party or by which the Company or any of its
             subsidiaries is bound or to which any of the property or assets of
             the Company or any of its subsidiaries is subject, nor will such
             action result in any violation of the provisions of the
             Certificate of Incorporation or By-laws of the Company or any
             statute or any order, rule or regulation known to such counsel of
             any court or governmental agency or body having jurisdiction over
             the Company or any of its subsidiaries or any of their properties;

                                     15
<PAGE>   16


                  (ii) The Company and its subsidiaries have good and
             marketable title in fee simple to all real property owned by them,
             in each case free and clear of all liens, encumbrances and defects
             except such as are described in the Prospectus or such as do not
             materially affect the value of such property and do not interfere
             with the use made and proposed to be made of such property by the
             Company and its subsidiaries; and any real property and buildings
             held under lease by the Company and its subsidiaries are held by
             them under valid, subsisting and enforceable leases with such
             exceptions as are not material and do not interfere with the use
             made and proposed to be made of such property and buildings by the
             Company and its subsidiaries (in giving the opinion in this
             clause, such counsel may state that he is relying upon a general
             review of the titles of the Company and its subsidiaries, upon
             opinions of local counsel and abstracts, reports and policies of
             title companies rendered or issued at or subsequent to the time of
             acquisition of such property by the Company or its subsidiaries,
             upon opinions of counsel to the lessors of such property and, in
             respect to matters of fact, upon certificates of officers of the
             Company or its subsidiaries, provided that such counsel shall
             state that he believes that both you and he are justified in
             relying upon such opinions, abstracts, reports, policies and
             certificates);

                  (iii) Neither the Company nor any of its subsidiaries is in
             violation of its Certificate of Incorporation or, to his knowledge
             after due inquiry, By-laws or in default in the performance or
             observance of any obligation, agreement, covenant or condition
             contained in any indenture, mortgage, deed of trust, loan
             agreement, lease, judgment or other agreement or instrument to
             which it is a party or by which it or any of its properties may be
             bound, except where such a default would not, individually or in
             the aggregate, have a material adverse effect on the current or
             future consolidated financial position, business prospects,
             stockholders' equity or results of operations of the Company and
             its subsidiaries; and

                  (iv) Although he does not assume any responsibility for the
             accuracy, completeness or fairness of the statements contained in
             the Registration Statement or the Prospectus, nothing has come to
             his attention that has caused him to believe that, as of its
             effective date, the Registration Statement or any further
             amendment thereto made by the Company prior to such Time of
             Delivery (other than the financial statements and related
             schedules or other financial information therein, as to which
             such counsel need express no opinion) contained an untrue
             statement of a material fact or omitted to state a material fact
             required to be stated therein or necessary to make the statements
             therein not misleading or that, as of its date, the Prospectus or
             any further amendment or supplement thereto made by the Company
             prior to such Time of Delivery (other than the financial
             statements and related schedules or other financial information
             therein, as to which such counsel need express no opinion)
             contained an untrue statement of a material fact or omitted to
             state a material fact necessary to make the statements therein, in
             the light of the circumstances under which they were made, not     
             misleading or that, as of such Time of Delivery, either the
             Registration Statement or the Prospectus or any further amendment
             or supplement thereto made by the Company prior to such Time of
             Delivery (other than the financial statements and related
             schedules or other financial information therein, as to which 


                                     16
<PAGE>   17


             such counsel need express no opinion) contains an untrue
             statement of a material fact or omits to state a material fact
             necessary to make the statements therein, in the light of the
             circumstances under which they were made, not misleading; and he
             does not know of any amendment to the Registration Statement
             required to be filed or of any contracts or other documents of a
             character required to be filed as an exhibit to the Registration
             Statement or required to be described in the Registration
             Statement or the Prospectus which are not filed or described as
             required;

          (e) On the date of the Public Offering Prospectus at a time prior to
     the execution of this Agreement, at 9:30 a.m., New York City time, on the
     effective date of any post-effective amendment to the Registration
     Statement filed subsequent to the date of this Agreement and during the
     Public Offering Period and also at each Time of Delivery, Price
     Waterhouse, LLP shall have furnished to you a letter or letters, dated the
     respective dates of delivery thereof, in form and substance satisfactory
     to you, to the effect set forth in Annex I hereto (the executed copy of
     the letter delivered prior to the execution of this Agreement is attached
     as Annex I(a) hereto and a draft of the form of letter to be delivered on
     the effective date of any post-effective amendment to the Registration
     Statement and as of each Time of Delivery is attached as Annex I(b)
     hereto);

          (f) On the date of the Public Offering Prospectus at a time prior to
     the execution of this Agreement, at 9:30 a.m., New York City time, on the
     effective date of any post-effective amendment to the Registration
     Statement filed subsequent to the date of this Agreement and during the
     Public Offering Period and also at each Time of Delivery, McGladrey &
     Pullen, LLP shall have furnished to you a letter or letters, dated the
     respective dates of delivery thereof, in form and substance satisfactory
     to you, to the effect set forth in Annex I(c) hereto;

          (g) (i) Neither the Company nor any of its subsidiaries shall have
     sustained since the date of the latest audited financial statements
     included in the Prospectus any loss or interference with its business from
     fire, explosion, flood or other calamity, whether or not covered by
     insurance, or from any labor dispute or court or governmental action,
     order or decree, otherwise than as set forth or contemplated in the
     Prospectus, and (ii) since the respective dates as of which information is
     given in the Prospectus there shall not have been any change in the
     capital stock or any increase in excess of $250,000 in the long-term debt
     of the Company or any of its subsidiaries or any change, or any
     development involving a prospective change, in or affecting the general
     affairs, management, financial position, stockholders' equity or results
     of operations of the Company and its subsidiaries, otherwise than as set
     forth or contemplated in the Prospectus, the effect of which, in any such
     case described in Clause (i) or (ii), is in the judgment of the
     Representatives so material and adverse as to make it impracticable or
     inadvisable to proceed with the public offering or the delivery of the
     Shares being delivered at such Time of Delivery on the terms and in the
     manner contemplated in the Prospectus;

          (h) On or after the date hereof there shall not have occurred any of
     the following: (i) a suspension or material limitation in trading in
     securities generally on the New York Stock Exchange or on NASDAQ; (ii) a
     suspension or material limitation in trading in the Company's securities   
     on NASDAQ; (iii) a general moratorium on commercial banking activities
     declared by either Federal or New York State authorities; or (iv) the
     outbreak or escalation of hostilities involving the United States or the
     declaration by the United States of a national emergency or

                                     17
<PAGE>   18
 

     war, if the effect of any such event specified in this Clause (iv)
     in the judgment of the Representatives makes it impracticable or
     inadvisable to proceed with the public offering or the delivery of the
     Shares being delivered at such Time of Delivery on the terms and in the
     manner contemplated in the Prospectus;

          (i) The Shares to be sold at such Time of Delivery shall have been
     duly approved for quotation on NASDAQ;

          (j) The Company has obtained and delivered to the Underwriters
     executed copies of an agreement from each of the Stockholders named in
     Schedule II hereto, substantially to the effect set forth in Section 5(e)
     hereof in form and substance satisfactory to you;

          (k) The Company shall have complied with the provisions of Section
     5(c) hereof with respect to the furnishing of prospectuses on the New York
     Business Day next succeeding the date of this Agreement; and

          (l) The Company shall have furnished or caused to be furnished to you
     at such Time of Delivery certificates of officers of the Company
     satisfactory to you as to the accuracy of the representations and
     warranties of the Company herein at and as of such Time of Delivery, as to
     the performance by the Company of all of its obligations hereunder to be
     performed at or prior to such Time of Delivery, as to the matters set
     forth in subsections (a) and (g) of this Section and as to such other
     matters as you may reasonably request.

          9. (a) The Company will indemnify and hold harmless each Underwriter
     against any losses, claims, damages or liabilities, joint or several, to
     which such Underwriter may become subject, under the Act or otherwise,
     insofar as such losses, claims, damages or liabilities (or actions in
     respect thereof) arise out of or are based upon an untrue statement or
     alleged untrue statement of a material fact contained in any Preliminary
     Prospectus, the Registration Statement or the Prospectus, or any amendment
     or supplement thereto, or arise out of or are based upon the omission or
     alleged omission to state therein a material fact required to be stated
     therein or necessary to make the statements therein not misleading, and
     will reimburse each Underwriter for any legal or other expenses reasonably
     incurred by such Underwriter in connection with investigating or defending
     any such action or claim as such expenses are incurred; provided, however,
     that the Company shall not be liable in any such case to the extent that
     any such loss, claim, damage or liability arises out of or is based upon
     an untrue statement or alleged untrue statement or omission or alleged
     omission made in any Preliminary Prospectus, the Registration Statement or
     the Prospectus or any such amendment or supplement in reliance upon and in
     conformity with written information furnished to the Company by any
     Underwriter through Goldman, Sachs & Co. expressly for use therein.

          (b) Each Underwriter will indemnify and hold harmless the Company
     against any losses, claims, damages or liabilities to which the Company
     may become subject, under the Act or otherwise, insofar as such losses,
     claims, damages or liabilities (or actions in respect thereof) arise out
     of or are based upon an untrue statement or alleged untrue statement of a
     material fact contained in any Preliminary Prospectus, the Registration
     Statement or the Prospectus, or any amendment or supplement thereto, or
     arise out of or are based upon the omission or alleged omission to state
     therein a material fact required to be stated therein or necessary to make
     the statements therein not misleading, in each case to the extent, but
     only to the extent,

                                     18
<PAGE>   19
 

     that such untrue statement or alleged untrue statement or omission or
     alleged omission was made in any Preliminary Prospectus, the Registration
     Statement or the Prospectus or any such amendment or supplement in
     reliance upon and in conformity with written information furnished to the
     Company by such Underwriter through Goldman, Sachs & Co. expressly for use
     therein; and will reimburse the Company for any legal or other expenses
     reasonably incurred by the Company in connection with investigating or
     defending any such action or claim as such expenses are incurred.
     
          (c) Promptly after receipt by an indemnified party under subsection
     (a) or (b) above of notice of the commencement of any action, such
     indemnified party shall, if a claim in respect thereof is to be made
     against the indemnifying party under such subsection, notify the
     indemnifying party in writing of the commencement thereof; but the
     omission so to notify the indemnifying party shall not relieve it from any
     liability which it may have to any indemnified party otherwise than under
     such subsection.  In case any such action shall be brought against any
     indemnified party and it shall notify the indemnifying party of the
     commencement thereof, the indemnifying party shall be entitled to
     participate therein and, to the extent that it shall wish, jointly with
     any other indemnifying party similarly notified, to assume the defense
     thereof, with counsel satisfactory to such indemnified party (who shall
     not, except with the consent of the indemnified party, be counsel to the
     indemnifying party), and, after notice from the indemnifying party to such
     indemnified party of its election so to assume the defense thereof, the
     indemnifying party shall not be liable to such indemnified party under
     such subsection for any legal expenses of other counsel or any other
     expenses, in each case subsequently incurred by such indemnified party, in
     connection with the defense thereof other than reasonable costs of
     investigation.  No indemnifying party shall, in connection with any one
     action or claim, or separate but substantially similar actions or claims
     arising out of the same general allegations, be liable for the fees and
     expenses of more than one separate firm of attorneys at any time for all
     indemnified parties, except to the extent that local counsel, in addition
     to regular counsel, is required in order to defend effectively against
     such action or claim.  No indemnifying party shall, without the written
     consent of the indemnified party, effect the settlement or compromise of,
     or consent to the entry of any judgment with respect to, any pending or
     threatened action or claim in respect of which indemnification or
     contribution may be sought hereunder (whether or not the indemnified party
     is an actual or potential party to such action or claim) unless such
     settlement, compromise or judgment (i) includes an unconditional release
     of the indemnified party from all liability arising out of such action or
     claim and (ii) does not include a statement as to or an admission of
     fault, culpability or a failure to act, by or on behalf of any indemnified
     party.

          (d) If the indemnification provided for in this Section 9 is
     unavailable to or insufficient to hold harmless an indemnified party under
     subsection (a) or (b) above in respect of any losses, claims, damages or
     liabilities (or actions in respect thereof) referred to therein, then each
     indemnifying party shall contribute to the amount paid or payable by such
     indemnified party as a result of such losses, claims, damages or
     liabilities (or actions in respect thereof) in such proportion as is
     appropriate to reflect the relative benefits received by the Company on
     the one hand and the Underwriters on the other from the offering of the
     Shares.  If, however, the allocation provided by the immediately preceding
     sentence is not permitted by applicable law or if the indemnified party
     failed to give the notice required under subsection (c) above, then each
     indemnifying party shall contribute to such amount paid or payable by such
     indemnified


                                     19
<PAGE>   20
 

     party in such proportion as is appropriate to reflect not only such
     relative benefits but also the relative fault of the Company on the one
     hand and the Underwriters on the other in connection with the statements
     or omissions which resulted in such losses, claims, damages or liabilities
     (or actions in respect thereof), as well as any other relevant equitable
     considerations.  The relative benefits received by the Company on the one
     hand and the Underwriters on the other shall be deemed to be in the same
     proportion as the total net proceeds from the sale of the Shares (before
     deducting expenses) received by the Company in the underwritten public
     offering bear to the total underwriting discounts and commissions received
     by the Underwriters with respect to the Shares purchased in the
     underwritten public offering, in each case as set forth in the table on
     the cover page of the Public Offering Prospectus.  The relative fault
     shall be determined by reference to, among other things, whether the
     untrue or alleged untrue statement of a material fact or the omission or
     alleged omission to state a material fact relates to information supplied
     by the Company on the one hand or the Underwriters on the other and the
     parties' relative intent, knowledge, access to information and opportunity
     to correct or prevent such statement or omission.  The Company and the
     Underwriters agree that it would not be just and equitable if
     contributions pursuant to this subsection (d) were determined by pro rata
     allocation (even if the Underwriters were treated as one entity for such   
     purpose) or by any other method of allocation which  does not take account
     of the equitable considerations referred to above in this subsection (d). 
     The amount paid or payable by an indemnified party as a result of the
     losses, claims, damages or liabilities (or actions in respect thereof)
     referred to above in this subsection (d) shall be deemed to include any
     legal or other expenses reasonably incurred by such indemnified party in
     connection with investigating or defending any such action or claim. 
     Notwithstanding the provisions of this subsection (d), no Underwriter
     shall be required to contribute any amount in excess of the amount by
     which the total price at which the Shares underwritten by it and
     distributed to the public were offered to the public exceeds the amount of
     any damages which such Underwriter has otherwise been required to pay by
     reason of such untrue or alleged untrue statement or omission or alleged
     omission.  No person guilty of fraudulent misrepresentation (within the
     meaning of Section 11(f) of the Act) shall be entitled to contribution
     from any person who was not guilty of such fraudulent misrepresentation.
     The Underwriters' obligations in this subsection (d) to contribute are
     several in proportion to their respective underwriting obligations and not
     joint.

          (e) The obligations of the Company under this Section 9 shall be in
     addition to any liability which the Company may otherwise have and shall
     extend, upon the same terms and conditions, to each person, if any, who
     controls any Underwriter within the meaning of the Act; and the
     obligations of the Underwriters under this Section 9 shall be in addition
     to any liability which the respective Underwriters may otherwise have and
     shall extend, upon the same terms and conditions, to each officer and
     director of the Company and to each person, if any, who controls the
     Company within the meaning of the Act.

          10. (a)  If any Underwriter shall default in its obligation to
     purchase the Shares which it has agreed to purchase hereunder at a Time of
     Delivery, you may in your discretion arrange for you or another party or
     other parties to purchase such Shares on the terms contained herein.  If
     within thirty-six hours after such default by any Underwriter you do not
     arrange for the purchase of such Shares, then the Company shall be
     entitled to a further period of thirty-six hours within which to procure
     another party or other parties satisfactory to you to


                                     20
<PAGE>   21
 

     purchase such Shares on such terms.  In the event that, within the
     respective prescribed periods, you notify the Company that you have so
     arranged for the purchase of such Shares, or the Company notifies you that
     it has so arranged for the purchase of such Shares, you or the Company
     shall have the right to postpone such Time of Delivery for a period of not
     more than seven days, in order to effect whatever changes may thereby be
     made necessary in the Registration Statement or the Prospectus, or in any
     other documents or arrangements, and the Company agrees to file promptly
     any amendments to the Registration Statement or the Prospectus which in
     your opinion may thereby be made necessary. The term "Underwriter" as used
     in this Agreement shall include any person substituted under this Section
     with like effect as if such person had originally been a party to this
     Agreement with respect to such Shares.

          (b) If, after giving effect to any arrangements for the purchase of
     the Shares of a defaulting Underwriter or Underwriters by you and the
     Company as provided in subsection (a) above, the aggregate number of such
     Shares which remains unpurchased does not exceed one-eleventh of the
     aggregate number of all the Shares to be purchased at such Time of
     Delivery, then the Company shall have the right to require each
     non-defaulting Underwriter to purchase the number of shares which such
     Underwriter agreed to purchase hereunder at such Time of Delivery and, in
     addition, to require each non-defaulting Underwriter to purchase its pro
     rata share (based on the number of Shares which such Underwriter agreed to
     purchase hereunder) of the Shares of such defaulting Underwriter or
     Underwriters for which such arrangements have not been made; but nothing
     herein shall relieve a defaulting Underwriter from liability for its
     default.

          (c) If, after giving effect to any arrangements for the purchase of   
     the Shares of a defaulting Underwriter or Underwriters by you and the
     Company as provided in subsection (a) above, the aggregate number of such
     Shares which remains unpurchased exceeds one-eleventh of the aggregate
     number of all the Shares to be purchased at such Time of Delivery, or if
     the Company shall not exercise the right described in subsection (b) above
     to require non-defaulting Underwriters to purchase Shares of       a
     defaulting Underwriter or Underwriters, then this Agreement (or, with
     respect to the Second Time of Delivery, the obligations of the
     Underwriters to purchase and of the Company to sell the Optional Shares)
     shall thereupon terminate, without liability on the part of any
     non-defaulting Underwriter or the Company, except for the expenses to be
     borne by the Company and the Underwriters as provided in Section 7 hereof
     and the indemnity and contribution agreements in Section 9 hereof; but
     nothing herein shall relieve a defaulting Underwriter from liability for
     its default.

     11. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Shares.

     Anything herein to the contrary notwithstanding, the indemnity agreement
of the Company in subsection (a) of Section 9 hereof, the representations and
warranties in subsections (b) and (c) of Section 1 hereof and any
representation or warranty as to the accuracy of the Registration Statement or
the Prospectus contained in any certificate furnished by the Company pursuant
to Section 8


                                     21
<PAGE>   22
 

hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by the Company of expenses incurred or paid in
the successful defense of any action, suit or proceeding) arising under the
Act, shall not extend to the extent of any interest therein of a controlling
person or partner of an Underwriter who is a director, officer or controlling
person of the Company when the Registration Statement has become effective,
except in each case to the extent that an interest of such character shall have
been determined by a court of appropriate jurisdiction as not against public
policy as expressed in the Act.  Unless in the opinion of counsel for the
Company the matter has been settled by controlling precedent, the Company will,
if a claim for such indemnification is asserted, submit to a court of
appropriate jurisdiction the question of whether such interest is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

     12. If this Agreement shall be terminated pursuant to Section 10 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 7 and 9 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company
shall then be under no further liability to any Underwriter except as provided
in Sections 7 and 9 hereof.

     13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.

     All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the representatives in care of Goldman,
Sachs & Co., 85 Broad Street, New York, New York  10004, Attention:
Registration Department; and if to the Company shall be delivered or sent by
mail to the address of the Company set forth in the Registration Statement,
Attention: Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 9(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request.  Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.

     14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 9
and 11 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or    
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.

     15. Time shall be of the essence of this Agreement.  As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C.  is open for business.

     16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.


                                     22
<PAGE>   23
 

     17. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

     If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Underwriters and the
Company.  It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.


                                        Very truly yours,

                                        Applied Analytical Industries, Inc.

                                        By:  /s/ Frederick D. Sancilio
                                             ---------------------------------
                                             Name:  Frederick D. Sancilio
                                             Title: President and Chief
                                                    Executive Officer

Accepted as of the date hereof:

Goldman, Sachs & Co.
Cowen & Company
Lehman Brothers Inc.


     /s/  Goldman, Sachs & Co.
---------------------------------------
         (Goldman, Sachs & Co.)

  On behalf of each of the Underwriters



                                       23


<PAGE>   24
 
                                                         
                                                         
                                   SCHEDULE I


<TABLE>
<CAPTION>
                                                        NUMBER OF OPTIONAL
                                                           SHARES TO BE
                                       TOTAL NUMBER OF     PURCHASED IF
                                         FIRM SHARES      MAXIMUM OPTION
         UNDERWRITER                   TO BE PURCHASED      EXERCISED
         -----------                   ---------------  ------------------
<S>                                       <C>                 <C>
Goldman, Sachs & Co.                        650,000            97,500
Cowen & Company                             650,000            97,500
Lehman Brothers Inc.                        650,000            97,500
Adams, Harkness & Hill, Inc.                 70,000            10,500
William Blair & Company                      70,000            10,500
Alex. Brown & Sons Incorporated             110,000            16,500
Dean Witter Reynolds Inc.                   110,000            16,500
Furman Selz LLC                              70,000            10,500
Hambrecht & Quist LLC                       110,000            16,500
Morgan Keegan & Company, Inc.                70,000            10,500
The Robinson-Humphrey Company, Inc.          70,000            10,500
Scott & Stringfellow, Inc.                   70,000            10,500
                                          ---------           -------
       Total........................      2,700,000           405,000
                                          =========           =======
</TABLE>




                                       24


<PAGE>   25
 


                                                                         ANNEX I

     Pursuant to Section 8(e) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:

          (i) They are independent certified public accountants with respect to
     the Company and its subsidiaries within the meaning of the Act and the
     applicable published rules and regulations thereunder;

          (ii) In their opinion, the financial statements and any supplementary
     financial information and schedules (and, if applicable, financial
     forecasts and/or pro forma financial information) examined by them and
     included in the Prospectus or the Registration Statement comply as to form
     in all material respects with the applicable accounting requirements of
     the Act and the related published rules and regulations thereunder; and,
     if applicable, they have made a review in accordance with standards
     established by the American Institute of Certified Public Accountants of
     the unaudited consolidated interim financial statements, selected
     financial data, pro forma financial information, financial forecasts
     and/or condensed financial statements derived from audited financial
     statements of the Company for the periods specified in such letter, as
     indicated in their reports thereon, copies of which have been separately
     furnished to the representatives of the Underwriters (the
     "Representatives");

          (iii) They have made a review in accordance with standards
     established by the American Institute of Certified Public Accountants of
     the unaudited condensed consolidated statements of income, consolidated
     balance sheets and consolidated statements of cash flows included in the
     Prospectus as indicated in their reports thereon copies of which have been
     separately furnished to the Representatives and on the basis of specified
     procedures including inquiries of officials of the Company who have
     responsibility for financial and accounting matters regarding whether the
     unaudited condensed consolidated financial statements referred to in
     paragraph (vi)(A)(i) below comply as to form in all material respects with
     the applicable accounting requirements of the Act and the related
     published rules and regulations, nothing came to their attention that
     cause them to believe that the unaudited condensed consolidated financial
     statements do not comply as to form in all material respects with the
     applicable accounting requirements of the Act and the related published
     rules and regulations;

          (iv) The unaudited selected financial information with respect to the
     consolidated results of operations and financial position of the Company
     for the five most recent fiscal years included in the Prospectus agrees
     with the corresponding amounts (after restatements where applicable) in
     the audited consolidated financial statements for such five fiscal years
     which were included or incorporated by reference in the Company's Annual
     Reports on Form 10-K for such fiscal years;

          (v) They have compared the information in the Prospectus under
     selected captions with the disclosure requirements of Regulation S-K and
     on the basis of limited procedures specified in such letter nothing came
     to their attention as a result of the foregoing procedures that caused
     them to believe that this information does not conform in all material
     respects with the disclosure requirements of Items 301, 302, 402 and
     503(d), respectively, of Regulation S-K;

          (vi) On the basis of limited procedures, not constituting an
     examination in accordance with generally accepted auditing standards,
     consisting of a reading of the unaudited financial


                                     F-1
<PAGE>   26
 

     statements and other information referred to below, a reading of the
     latest available interim financial statements of the Company and its
     subsidiaries, inspection of the minute books of the Company and its
     subsidiaries since the date of the latest audited financial statements
     included in the Prospectus, inquiries of officials of the Company and its
     subsidiaries responsible for financial and accounting matters and such
     other inquiries and procedures as may be specified in such letter, nothing
     came to their attention that caused them to believe that:

                  (A) (i) the unaudited consolidated statements of income,
             consolidated balance sheets and consolidated statements of cash
             flows included in the Prospectus do not comply as to
             form in all material respects with the applicable accounting
             requirements of the Act and the related published rules and
             regulations, or (ii) any material modifications should be made to
             the unaudited condensed consolidated statements of income,
             consolidated balance sheets and consolidated statements of cash
             flows included in the Prospectus for them to be in conformity with
             generally accepted accounting principles;

                  (B) any other unaudited income statement data and balance
             sheet items included in the Prospectus do not agree with the
             corresponding items in the unaudited consolidated financial
             statements from which such data and items were derived, and any
             such unaudited data and items were not determined on a basis
             substantially consistent with the basis for the corresponding
             amounts in the audited consolidated financial statements included
             in the Prospectus;

                  (C) the unaudited financial statements which were not
             included in the Prospectus but from which were derived any
             unaudited condensed financial statements referred to in Clause (A)
             and any unaudited income statement data and balance sheet items
             included in the Prospectus and referred to in Clause (B) were not
             determined on a basis substantially consistent with the basis for
             the audited consolidated financial statements included in the
             Prospectus;

                  (D) any unaudited pro forma consolidated condensed financial
             statements included in the Prospectus do not comply as to form in
             all material respects with the applicable accounting requirements
             of the Act and the published rules and regulations thereunder or
             the pro forma adjustments have not been properly applied to the
             historical amounts in the compilation of those statements;

                  (E) as of a specified date not more than five days prior to
             the date of such letter, there have been any changes in the
             consolidated capital stock (other than issuances of capital stock
             upon exercise of options and stock appreciation rights, upon
             earn-outs of performance shares and upon conversions of
             convertible securities, in each case which were outstanding on the
             date of the latest financial statements included in the
             Prospectus) or any increase in the consolidated long-term debt of
             the Company and its subsidiaries, or any decreases in consolidated
             net current assets or stockholders' equity or other items
             specified by the Representatives, or any increases in any items
             specified by the Representatives, in each case as compared with
             amounts shown in the latest balance sheet included in the
             Prospectus, except in each case for changes, increases or
             decreases which the


                                     F-2
<PAGE>   27
 

            Prospectus discloses have occurred or may occur or which are
            described in such letter; and

                  (F) for the period from the date of the latest financial
             statements included in the Prospectus to the specified date
             referred to in Clause (E) there were any decreases in consolidated
             net revenues or operating profit or the total or per share amounts
             of consolidated net income or other items specified by the
             Representatives, or any increases in any items specified by the
             Representatives, in each case as compared with the comparable
             period of the preceding year and with any other period of
             corresponding length specified by the Representatives, except in
             each case for decreases or increases which the Prospectus
             discloses have occurred or may occur or which are described in
             such letter; and

     (vii) In addition to the examination referred to in their report(s)
     included in the Prospectus and the limited procedures, inspection of
     minute books, inquiries and other procedures referred to in paragraphs
     (iii) and (vi) above, they have carried out certain specified procedures,
     not constituting an examination in accordance with generally accepted
     auditing standards, with respect to certain amounts, percentages and
     financial information specified by the Representatives, which are derived
     from the general accounting records of the Company and its subsidiaries,
     which appear in the Prospectus, or in Part II of, or in exhibits and
     schedules to, the Registration Statement specified by the Representatives, 
     and have compared certain of such amounts, percentages and financial
     information with the accounting records of the Company and its
     subsidiaries and have found them to be in agreement.




                                      F-3