AGREEMENT AND PLAN OF MERGER

                          dated as of August 11, 2000

                                  by and among

                                Zale Corporation

                             Jewelry Expansion Corp.

                                       and

                              Piercing Pagoda, Inc.






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                                TABLE OF CONTENTS
                                                           Page

ARTICLE I THE OFFER.........................................23
1.01 The Offer..............................................23
1.02  Company Actions.......................................25
1.03  Board of Directors and Committees; Section 14(f)......26
ARTICLE II THE MERGER.......................................27
2.01  The Merger............................................27
2.02  Effective Time........................................27
2.03  Effects of the Merger.................................27
2.04  Certificate of Incorporation and By-Laws..............27
2.05  Directors.............................................27
2.06  Officers..............................................28
2.07  Conversion of Shares..................................28
2.08  Employee Stock Options................................28
2.09  Conversion of Purchaser Common Stock..................28
2.10  Stockholders' Meeting.................................28
2.11  Merger Without Meeting of Stockholders................29
2.12  Closing...............................................29
ARTICLE III DISSENTING SHARES; EXCHANGE OF SHARES...........30
3.01  Dissenting Shares.....................................30
3.02  Exchange of Shares....................................30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....31
4.01  Organization..........................................31
4.02  Capitalization; Subsidiaries..........................31
4.03  Authority Relative to this Agreement..................32
4.04  Absence of Certain Changes............................33
4.05  No Undisclosed Liabilities............................33
4.06  Reports...............................................33
4.07  Offer Documents; Proxy Statements; Other Information..34
4.08  Consents and Approvals; No Violation..................34
4.09  Litigation, etc.......................................35
4.10  Title to Properties; Encumbrances.....................35
4.11  Benefit Plans.........................................36
4.12  Compliance With Agreements; Law.......................38
4.13  Patents, Trademarks, Trade Names, etc.................38
4.14  Taxes.................................................39
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER   43
5.01  Organization and Good Standing........................43
5.02  Authority Relative to this Agreement..................43
5.03  Consents and Approvals; No Violation..................44
5.04  Offer Documents; Proxy Statement......................44
5.05  Financing.............................................45
ARTICLE VI COVENANTS........................................45
6.01  Conduct of Business of the Company....................45
6.02  No Solicitation, etc..................................46
6.03  Access to Information.................................49
6.04 Reasonable Best Efforts................................49
6.05  Public Announcements..................................50
6.06  Indemnification; Insurance............................50
6.07  Employment Contracts, Benefits, etc...................51
6.08  Purchase of Shares....................................52



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6.09  Notification of Certain Matters.......................52
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER........53
7.01  Conditions to Each Party's Obligation to Effect the Merger   53
ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER................53
8.01  Termination...........................................53
8.02  Effect of Termination.................................56
8.03  Amendment.............................................57
8.04  Extension; Waiver.....................................57
ARTICLE IX MISCELLANEOUS....................................57
9.01  Survival of Representations and Warranties............57
9.02  Brokerage Fees and Commissions........................58
9.03  Entire Agreement; Assignment..........................58
9.04  Validity..............................................58
9.05  Notices...............................................58
9.06  Governing Law.........................................59
9.07  Descriptive Headings..................................59
9.08  Counterparts..........................................60
9.09  Expenses..............................................60
9.10  Third Party Beneficiaries.............................60
9.11  Certain Definitions...................................60
9.12  Consent to Jurisdiction...............................61
9.13  Construction; Interpretation..........................61
Conditions of the Offer.....................................63
Agreement and Plan of Merger................................66





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                          AGREEMENT AND PLAN OF MERGER

        AGREEMENT AND PLAN OF MERGER,  dated as of August 11, 2000, by and among
Piercing Pagoda, Inc., a Delaware corporation (the "Company"), Zale Corporation,
a Delaware  corporation  ("Parent"),  and Jewelry  Expansion  Corp.,  a Delaware
corporation and a wholly owned subsidiary of Parent ("Purchaser").

                             W I T N E S S E T H :

        WHEREAS,  the Boards of Directors of Parent,  Purchaser  and the Company
deem it advisable and in the best  interests of the respective  stockholders  of
such  corporations  to  effect  the  merger of the  Purchaser  with and into the
Company (the  "Merger")  upon the terms and subject to the  conditions set forth
herein; and

        WHEREAS, the respective Boards of Directors of Parent, Purchaser and the
Company  have  approved  the  acquisition  of the  Company  by  Parent  and,  in
furtherance of such  acquisition,  Parent  proposes to cause Purchaser to make a
cash tender offer for all of the issued and outstanding  shares of common stock,
par value $.01 per share (the  "Common  Stock"),  of the  Company,  on the terms
specified  herein and the Board of  Directors  of the Company has  approved  the
tender  offer and  recommended  that it be accepted by the  stockholders  of the
Company.

        WHEREAS,  certain  stockholders  of the  Company  have  indicated  their
intention  to execute  and  deliver a Tender and Voting  Agreement,  in the form
attached  hereto as Exhibit A (the "Tender and Voting  Agreement"),  pursuant to
which, subject to the terms and conditions contained therein,  such stockholders
shall  tender all Shares  owned by them into the Offer and vote their  shares of
Common Stock in favor of the transactions contemplated by this Agreement.

        NOW,  THEREFORE,  in  consideration  of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter contained, the
receipt and  sufficiency of which are hereby  acknowledged,  and intending to be
bound hereby the parties hereto agree as follows:

                               ARTICLE ITHE OFFER

      SECTION 1.01 The Offer.

             (a) Provided that this Agreement  shall not have been terminated in
        accordance  with  Article  VIII hereof and so long as none of the events
        set  forth in Annex A  hereto  shall  have  occurred  or be  continuing,
        Purchaser  shall,  and Parent shall cause  Purchaser  to, as promptly as
        practicable  commence  (within the meaning of the  applicable  rules and
        regulations  of the  Securities  and  Exchange  Commission  (the  "SEC")
        promulgated  under the Securities  Exchange Act of 1934, as amended (the
        "Exchange Act")) an offer to purchase for cash (the "Offer") any and all
        of the issued and outstanding shares of Common Stock (the "Shares") at a
        price of $21.50 per Share, net to


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        the  seller  in  cash.  For  purposes  of  this   Agreement,   the  term
        "Transaction  Consideration"  shall mean $21.50 per Share in cash or any
        higher price as shall be paid in respect of the Shares in the Offer. The
        obligations of Purchaser to commence the Offer and to accept for payment
        and to pay for  any  Shares  tendered  shall  be  subject  to  only  the
        conditions set forth in Annex A hereto (any or all of which may, subject
        to the provisions  hereof, be waived by Parent or Purchaser,  subject to
        applicable  law). The initial  expiration date of the Offer shall be the
        20th  business day following the  commencement  of the Offer  determined
        using Rule 14d-2  under the  Exchange  Act,  unless  this  Agreement  is
        terminated  in  accordance  with Article  VIII,  in which case the Offer
        (whether or not previously extended in accordance with the terms hereof)
        shall  expire on such date of  termination.  Without  the prior  written
        consent of the Company, Purchaser shall not (i) decrease the Transaction
        Consideration, (ii) decrease the number of Shares to be purchased in the
        Offer, (iii) change the form of consideration payable in the Offer, (iv)
        add to or change the  conditions  to the Offer set forth in Annex A, (v)
        waive the  Minimum  Condition  (as  defined in Annex A) or (vi) make any
        other  change in the  terms or  conditions  of the  Offer in any  manner
        materially  adverse  to  the  holders  of  Shares.  Notwithstanding  the
        foregoing, Purchaser may, without the consent of the Company, (i) extend
        the Offer in  increments  of not more than ten business days each, if at
        the then scheduled expiration date of the Offer any of the conditions to
        Purchaser's obligation to purchase Shares are not satisfied,  until such
        time as such  conditions are satisfied or waived,  (ii) extend the Offer
        for any  period  required  by any rule,  regulation,  interpretation  or
        position  of the SEC or the staff  thereof  applicable  to the Offer and
        (iii) make available a subsequent offering period (within the meaning of
        Rule 14d-11  under the  Exchange  Act).  Without  limiting  the right of
        Purchaser to extend the Offer,  provided that this  Agreement  shall not
        have been  terminated  in  accordance  with Article VIII hereof,  if the
        conditions  set forth in Annex A are not  satisfied  or,  to the  extent
        permitted  hereby,  waived by  Purchaser  as of the date the Offer would
        otherwise have expired,  then, except to the extent that such conditions
        are  incapable  of  being  satisfied,  at the  request  of  the  Company
        Purchaser  will  extend the Offer from time to time until the earlier of
        the  consummation  of the Offer or the Final Date (as defined in Section
        9.11).  Purchaser  shall,  subject  to the terms and  conditions  of the
        Offer,  accept for payment  Shares  validly  tendered and not  withdrawn
        promptly after  expiration of the Offer in compliance with Rule 14e-1(c)
        promulgated under the Exchange Act.

             (b) On the date the Offer is commenced,  Parent and Purchaser shall
        file with the SEC a Tender  Offer  Statement on Schedule TO with respect
        to the Offer,  which shall  contain an offer to  purchase  and a related
        letter of transmittal  and summary  advertisement  (such Schedule TO and
        the documents included therein pursuant to which the Offer will be made,
        together  with  any  amendments  or  supplements   thereto,  the  "Offer
        Documents").  The Company and its counsel shall be given an  opportunity
        to review the Offer  Documents  prior to their being filed with the SEC.
        Each of Parent,  Purchaser  and the Company shall  promptly  correct any
        information  provided by it for use in the Offer Documents if and to the
        extent that such information shall have become


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        false or  misleading  in any  material  respect,  and each of Parent and
        Purchaser  shall take all steps  necessary  to amend or  supplement  the
        Offer  Documents  and to cause  the Offer  Documents  as so  amended  or
        supplemented  to be  filed  with the SEC and to be  disseminated  to the
        Company's  stockholders,  in each case as and to the extent  required by
        applicable  federal  securities laws. Parent and Purchaser shall provide
        the Company and its counsel in writing  with any  comments  Parent,  the
        Purchaser  or their  counsel may receive  from the SEC or its staff with
        respect  to the  Offer  Documents  promptly  after the  receipt  of such
        comments.

        SECTION  1.02  Company  Actions.  Subject  to the  right of the Board of
Directors  of the  Company to take  action  permitted  by Section  6.02(b),  the
Company  hereby  consents  to the  Offer  and  represents  that (a) its Board of
Directors  (at a meeting  duly  called  and held) has duly  adopted  resolutions
unanimously  (i) declaring  that each of the Offer and the Merger is in the best
interests of the Company and its  stockholders  and is advisable and fair to the
stockholders  of the  Company,  (ii)  approving  the  Offer and the  Merger  and
approving  this  Agreement  and the  Tender  and  Voting  Agreement,  and  (iii)
recommending  acceptance of the Offer and approval and adoption of the Agreement
by the  stockholders  of the Company and (b) ING  Barings has  delivered  to the
Company's  Board of  Directors  its opinion  that the cash  consideration  to be
received by the holders of the Common  Stock in the Offer and the Merger is fair
to such stockholders from a financial point of view. The Company hereby consents
to the inclusion in the Offer Documents of the  recommendation  of the Company's
Board of Directors  described above in this Section 1.02, and shall not withdraw
or modify such  recommendation,  except in accordance with Section 6.02(b).  The
Company  shall  provide for  inclusion in the Offer  Documents  any  information
reasonably  requested  by Parent or  Purchaser,  and to the extent  requested by
Parent or Purchaser, the Company shall cooperate in the preparation of the Offer
Documents.  As soon as  practicable  on or prior to the  later of (x) as soon as
practicable  after the date the Offer  Documents  are filed  with the SEC or (y)
seven  business  days after the date of this  Agreement,  the Company shall file
with the SEC a  Solicitation/Recommendation  Statement  on  Schedule  14D-9 with
respect  to  the  Offer,   including  an   appropriate   information   statement
("Information  Statement") under Rule 14f-1 (such Schedule 14D-9 and Information
Statement,  as amended from time to time,  the "Schedule  14D-9") and shall mail
the Schedule  14D-9 to the holders of Shares.  The Schedule  14D-9 shall contain
the  recommendation   described  above,  unless  such  recommendation  has  been
withdrawn or modified in accordance with Section 6.02(b). Parent and its counsel
shall be given a reasonable  opportunity  to review the Schedule  14D-9 prior to
its being filed with the SEC.  Each of Parent,  Purchaser  and the Company shall
promptly correct any information provided by it for use in the Schedule 14D-9 if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company shall take all steps necessary to amend or
supplement  the Schedule  14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented  to be filed with the SEC and to be  disseminated  to the Company's
stockholders,  in each case as and to the extent required by applicable  federal
securities  laws.  The Company shall  provide  Parent and its counsel in writing
with any  comments  the Company or its  counsel may receive  from the SEC or its
staff with  respect to the  Schedule  14D-9  promptly  after the receipt of such
comments.  In connection with the Offer,  provided that this Agreement shall not
have been terminated in accordance  with Article VIII hereof,  the Company will,
or will cause its transfer agent to, promptly furnish Purchaser with


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mailing labels, security position listings and any available listing or computer
file  containing  the names and addresses of the record holders of the Shares as
of the most recent  practicable  date,  and shall  furnish  Purchaser  with such
additional information (including,  but not limited to, updated lists of holders
of the  Shares  and  their  addresses,  mailing  labels  and  lists of  security
positions) and  assistance as Purchaser or its agents may reasonably  request in
communicating  the Offer to the  stockholders  of the  Company.  Subject  to the
requirements  of law, and except for such steps as are necessary to  disseminate
the  Offer  Documents,  Parent  and  Purchaser  shall  hold  in  confidence  the
information  contained  in any of such  labels  and  lists  and  the  additional
information  referred to in the preceding  sentence,  will use such  information
only in connection  with the Offer and, if this  Agreement is  terminated,  will
upon request deliver to the Company all copies of such  information  then in its
possession.

        SECTION 1.03 Board of Directors and Committees; Section 14(f).

             (a) Subject to the  requirements of applicable  law,  promptly upon
        the purchase by Purchaser of Shares  pursuant to the Offer and from time
        to time thereafter,  Purchaser shall be entitled to designate up to such
        number of directors,  rounded up to the next whole number,  on the Board
        of  Directors  of the  Company  (the  "Board")  as will  give  Purchaser
        representation  on the  Board  equal to the  product  of the  number  of
        directors on the Board, after giving effect to such representation,  and
        the  percentage  that such  number of Shares so  purchased  bears to the
        total number of issued and outstanding Shares, and the Company shall use
        its reasonable best efforts to, upon request by Purchaser,  promptly, at
        the Company's election,  either increase the size of the Board or secure
        the  resignation  of such number of  directors as is necessary to enable
        Purchaser's  designees  to be  elected  to the  Board  and  shall  cause
        Purchaser's  designees to be so elected.  At such times the Company will
        use its  reasonable  best  efforts to cause  individuals  designated  by
        Purchaser to  constitute  the same  percentage as is on the Board of (i)
        each  committee  of the Board  (other  than any  committee  of the Board
        established  to take action  under this  Agreement),  (ii) each board of
        directors of each subsidiary of the Company  designated by Purchaser and
        (iii) each committee of each such board.  Notwithstanding the foregoing,
        the Company shall use its reasonable  best efforts to ensure that all of
        the  members  of the  Board  and its  committees  and  such  boards  and
        committees of the Company's subsidiaries,  as of the date hereof who are
        not employees of the Company and who are not otherwise  affiliated  with
        Purchaser  shall  remain  members  of the  Board  and  such  boards  and
        committees until the Effective Time (as defined in Section 2.02).

             (b) The  Company's  obligations  to appoint  designees to the Board
        shall be  subject to Section  14(f) of the  Exchange  Act and Rule 14f-1
        promulgated  thereunder.  The Company  shall  promptly  take all actions
        required  pursuant  to Section  14(f) and Rule 14f-1 in order to fulfill
        its  obligations  under  this  Section  1.03,  including  mailing to its
        stockholders  an  Information   Statement   containing  the  information
        required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
        Parent or Purchaser  will supply to the Company in writing and be solely
        responsible  for any information so supplied with respect to any of them
        and their nominees,


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        officers,  directors and  affiliates  required by Section 14(f) and Rule
        14f-1 to be included in the Information Statement.

             (c) Following the election or appointment of Purchaser's  designees
        pursuant  to this  Section  1.03 and prior to the  Effective  Time,  any
        amendment of this Agreement or the Restated Certificate of Incorporation
        or By-Laws of the Company,  any extension by the Company of the time for
        the  performance  of any of the  obligations  or other acts of Parent or
        Purchaser  or  waiver of any of the  Company's  rights  hereunder,  will
        require the  concurrence  of a majority of the  directors of the Company
        then in office who are neither designated by Purchaser, employees of the
        Company  or  any of  its  subsidiaries  nor  otherwise  affiliated  with
        Purchaser.

        SECTION  1.04  Company  Board  Approval  Under  Section  203 the General
Corporation  Law of the State of Delaware (the "DGCL").  On or prior to the date
hereof,  the Company's Board of Directors shall have approved this Agreement and
taken all other  necessary  actions  under  Section 203 of the DGCL to cause the
transactions  contemplated hereby, not to be governed by such Section 203 of the
DGCL or be subject thereto.

                              ARTICLE IITHE MERGER

        SECTION  2.01 The Merger.  Upon the terms and subject to the  conditions
hereof, and in accordance with the DGCL, Purchaser shall be merged with and into
the Company as soon as  practicable  following the  satisfaction  or waiver,  if
permissible,  of the conditions  set forth in Article VII hereof.  Following the
Merger the Company shall continue as the surviving  corporation  (the "Surviving
Corporation") and the separate corporate existence of Purchaser shall cease.

        SECTION 2.02  Effective  Time. The Merger shall be  consummated,  as and
when  provided in Section 2.12 hereof,  by filing with the Secretary of State of
the State of Delaware a certificate  of merger or a certificate of ownership and
merger in such form as is required  by, and  executed in  accordance  with,  the
relevant  provisions  of the DGCL (the time of such filing being the  "Effective
Time").

        SECTION  2.03  Effects of the Merger.  The Merger shall have the effects
set forth in Section 259 of the DGCL and from and after the Effective  Time, the
Surviving  Corporation  shall  possess  all the rights,  privileges,  powers and
franchises and be subject to all of the restrictions,  disabilities, liabilities
and duties of the Company and Purchaser.  As of the Effective  Time, the Company
shall be a wholly owned subsidiary of Parent.

        SECTION 2.04  Certificate  of  Incorporation  and By-Laws.  The Restated
Certificate  of  Incorporation  and the  By-Laws  of the  Company  shall  be the
Certificate  of  Incorporation  and By-Laws of the Surviving  Corporation  until
thereafter changed or amended as provided therein or by law.

        SECTION 2.05 Directors.  The directors of Purchaser immediately prior to
the  Effective  Time shall  constitute  the Board of Directors of the  Surviving
Corporation until their respective successors are duly elected and qualified.



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        SECTION 2.06 Officers.  The officers of the Company immediately prior to
the  Effective  Time shall be the officers of the  Surviving  Corporation  until
their respective successors are duly elected and qualified.

        SECTION 2.07  Conversion  of Shares.  Each Share issued and  outstanding
immediately  prior to the Effective Time (other than Shares held by Parent,  the
Company or any  subsidiary of Parent or of the Company,  which shall be canceled
and retired and cease to exist, and Dissenting Shares (as hereinafter  defined))
shall,  by virtue of the Merger and without any action on the part of the holder
thereof,   shall  be  converted  into  the  right  to  receive  the  Transaction
Consideration in respect of such Shares in cash,  payable to the holder thereof,
without interest  thereon,  upon surrender of the certificate  representing such
Share.  The  Company  acknowledges  and agrees that  payment of the  Transaction
Consideration  to the  stockholders  of the Company in respect of the  foregoing
conversion  of Shares in the Merger shall be subject to  applicable  withholding
taxes, if any.

        SECTION 2.08 Employee Stock Options.  Immediately prior to the Effective
Time, all outstanding options to purchase Shares granted by the Company (whether
or not then  presently  exercisable)  (the  "Options")  will be canceled  and in
consideration  of such  cancellation  each  holder  thereof  will be entitled to
receive a payment in cash (subject to any applicable  withholding taxes), at the
Effective  Time,  equal to the product of (i) the total number of Shares subject
to the Option (including Options not currently exercisable) and (ii) the excess,
if any,  of the  Transaction  Consideration  over the  exercise  price per Share
subject to such Option.  If and to the extent required by the terms of the plans
governing  such  Options  or  pursuant  to  the  terms  of  any  Option  granted
thereunder, each of Parent and the Company shall use its reasonable best efforts
to obtain the consent of each  holder of  outstanding  Options to the  foregoing
treatment of such Options.

        SECTION 2.09 Conversion of Purchaser Common Stock.  Each share of common
stock, par value $.01 per share, of Purchaser issued and outstanding immediately
prior to the  Effective  Time  shall,  by virtue of the Merger and  without  any
action on the part of the holder thereof, be converted into and exchangeable for
one share of common stock of the Surviving Corporation.

        SECTION 2.10  Stockholders'  Meeting.  If required by applicable law, in
order to consummate the Merger, the Company, acting through its Board, shall:

             (a) duly call,  give notice of, convene and hold a special  meeting
        (the  "Special  Meeting")  of its  stockholders  as soon as  practicable
        following  the  expiration  or  termination  of the Offer at which  this
        Agreement  shall be  submitted  to the  Company's  stockholders  for the
        purpose of acting on this Agreement;

             (b) use its  reasonable  efforts to prepare and file a  preliminary
        Proxy  Statement with the SEC, and after  consultation  with Parent,  to
        respond promptly to comments of the SEC, if any, in connection therewith
        and to furnish all  information  regarding  the Company  required in the
        definitive Proxy Statement and to cause the Proxy Statement to be mailed
        to its


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        stockholders at the earliest practicable time following the expiration
        or termination of the Offer;

             (c) Subject to the Board's  fiduciary  duties under applicable law,
        the Board shall  recommend that the  stockholders of the Company vote in
        favor of approval and adoption of this Agreement at the Special Meeting,
        and  shall  cause  such  recommendation  to be  included  in  the  Proxy
        Statement;

             (d) use its reasonable  efforts  deemed  necessary and advisable to
        secure  the  vote  of  stockholders  required  by  applicable  law,  the
        Company's  Restated  Certificate  of  Incorporation  and  the  Company's
        By-Laws for adoption of this  Agreement by the  Company's  stockholders.
        Parent  agrees that, at the Special  Meeting,  it shall cause all of the
        Shares then owned by Parent,  Purchaser  or any other direct or indirect
        subsidiary of Parent to be voted for adoption of this Agreement.

        SECTION 2.11 Merger Without Meeting of Stockholders. Notwithstanding the
foregoing,  in the  event  that  Purchaser,  or any  other  direct  or  indirect
subsidiary  of  Parent,  shall  acquire  at least  ninety  percent  (90%) of the
outstanding  Shares,  the  parties  hereto  agree,  at the  request of Parent or
Purchaser,  to take all necessary and appropriate  action to cause the Merger to
become  effective,  as soon as  practicable  after the  expiration of the Offer,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.

        SECTION  2.12  Closing.  Upon the terms and  subject  to the  conditions
hereof,  as soon as practicable  after  consummation  of the Offer and after the
vote of the  stockholders  of the  Company  in  favor  of the  approval  of this
Agreement has been  obtained,  if  applicable,  the Company shall execute in the
manner  required by the DGCL and deliver to the  Secretary of State of the State
of Delaware a duly  executed and verified  certificate  of merger as required by
the DGCL (or  Purchaser  shall  execute in the manner  required  by the DGCL and
deliver to the  Secretary of State of the State of Delaware a duly  executed and
verified  certificate  of ownership  and merger) and the parties shall take such
other  and  further  actions  as may be  required  by law  to  make  the  Merger
effective. Prior to the filings referred to in this Section 2.12, a closing (the
"Closing")   will  be  held  at  the   offices  of  Wolf,   Block,   Schorr  and
Solis-Cohen,LLP, 250 Park Avenue, New York, NY 10177 (or such other place as the
parties may agree) for the purpose of confirming all of the foregoing.




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               ARTICLE IIIDISSENTING SHARES; EXCHANGE OF SHARES

        SECTION  3.01  Dissenting  Shares.   Notwithstanding  anything  in  this
Agreement to the contrary,  Shares which are issued and outstanding  immediately
prior to the Effective Time and which are held by stockholders who object to the
Merger and comply with all of the relevant provisions of Section 262 of the DGCL
(the "Dissenting Shares") shall not be converted into or be exchangeable for the
right to receive the  consideration  provided in Section 2.07 of this  Agreement
but shall instead be entitled to receive  payment of the appraised value of such
Shares in accordance  with the relevant  provisions of such Section 262,  unless
and until such  holders  shall have failed to perfect or shall have  effectively
withdrawn or lost their rights to appraisal  and payment  under the DGCL. If any
such holder shall have so failed to perfect or shall have effectively  withdrawn
or lost such right,  such holder's Shares shall thereupon be deemed to have been
converted into and to have become  exchangeable  for, at the Effective Time, the
right to receive the consideration provided in Section 2.07.

        SECTION 3.02 Exchange of Shares.

             (a) Prior to the Effective  Time,  Parent shall designate a bank or
        trust  company or similar  entity  reasonably  acceptable to the Company
        which is authorized to exercise  corporate  trust or stock powers to act
        as Exchange Agent in the Merger (the "Exchange Agent"). At the Effective
        Time, Parent will provide the Exchange Agent funds necessary to make the
        cash payments contemplated by Section 2.07.

             (b)  Promptly  after the  Effective  Time,  Parent  shall cause the
        Exchange Agent to mail to each record holder,  as of the Effective Time,
        of an outstanding certificate or certificates which immediately prior to
        the Effective Time represented  outstanding Shares (the "Certificates"),
        one or more forms of a letter of  transmittal  (which shall specify that
        delivery  shall  be  effected,  and  risk  of  loss  and  title  to  the
        Certificates  shall pass, only upon proper delivery of the  Certificates
        to the  Exchange  Agent)  and  instructions  for  use in  effecting  the
        surrender of the Certificate or payment therefor.  Upon surrender to the
        Exchange  Agent  of  a   Certificate,   together  with  such  letter  of
        transmittal  duly  executed,  the  holder of such  Certificate  shall be
        entitled to receive in  exchange  therefor,  and Parent  shall cause the
        Exchange  Agent  to  promptly  so pay,  cash in an  amount  equal to the
        product  of  the  number  of  Shares  represented  by  such  Certificate
        multiplied by the amount of the Transaction  Consideration  with respect
        to Shares, and such Certificate shall then be canceled. No interest will
        be paid or  accrued  on the  cash  payable  upon  the  surrender  of any
        Certificate.  If payment is to be made to a person other than the person
        in whose name the Certificate  surrendered is registered,  it shall be a
        condition  of  payment  that the  Certificate  so  surrendered  shall be
        properly  endorsed or otherwise in proper form for transfer and that the
        person  requesting  such  payment  shall  pay  transfer  or other  taxes
        required by reason of the payment to a person other than the  registered
        holder of the Certificate  surrendered or establish to the  satisfaction
        of the  Surviving  Corporation  that  such tax has  been  paid or is not
        applicable. Until surrendered in accordance


<PAGE>


        with the provisions of this Section 3.02, each  Certificate  (other than
        Certificates  representing  Shares held by Parent or any  subsidiary  of
        Parent or of the Company and Dissenting  Shares) shall represent for all
        purposes  the right to receive  the  Transaction  Consideration  in cash
        multiplied  by the  number  of  Shares  evidenced  by such  Certificate,
        without any  interest  thereon.  Any funds  remaining  with the Exchange
        Agent one year  following the Effective Time shall be returned to Parent
        after  which  time  former  stockholders  of  the  Company,  subject  to
        applicable  law,  shall look only to Parent for  payment of amounts  due
        hereunder, without interest thereon.

             (c) After the  Effective  Time there shall be no  transfers  on the
        stock  transfer  books of the Surviving  Corporation of the Shares which
        were outstanding  immediately prior to the Effective Time. If, after the
        Effective Time, Certificates are presented to the Surviving Corporation,
        they shall be canceled and  exchanged for cash as provided in Article II
        and this Article III.

            ARTICLE IVREPRESENTATIONS AND WARRANTIES OF THE COMPANY

        Except as set forth in the  disclosure  schedule  delivered to Parent by
the Company prior to the execution of this Agreement, with specific reference to
the section of this Agreement to which the information stated in such disclosure
relates (the  "Disclosure  Schedule")  (provided that any section  thereof shall
each be deemed to include  all  disclosures  set forth in other  sections of the
Disclosure  Schedule as and to the extent the context of such disclosures  makes
it readily  apparent,  if read in the context of such other  section,  that such
disclosures  are applicable to such other section),  the Company  represents and
warrants to Parent and Purchaser as follows:

        SECTION 4.01 Organization. Each of the Company and its subsidiaries is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its  organization,  and each
such  entity has all  requisite  corporate  power and  corporate  authority  (or
limited  liability  company  power  and  authority,  as the case may be) to own,
operate and lease its  respective  properties  and to carry on its businesses as
they are being conducted on the date of this Agreement.  The Company and each of
its subsidiaries is duly qualified and in good standing in each  jurisdiction in
which the nature of the property  owned,  leased or operated by it or the nature
of the business  conducted  by it requires  such  qualification  except for such
failures to be so qualified or in good  standing  which will not have a Material
Adverse Effect (as defined in Section 9.11 hereof).  All such  jurisdictions are
identified on Schedule 4.01 of the Disclosure  Schedule.  The Company has, prior
to the date of this  Agreement,  made  available to Parent  complete and correct
copies of the Company's Restated  Certificate of Incorporation and the Company's
By-Laws  and the  comparable  governing  documents  of  each of its  Significant
Subsidiaries  (as defined in Section 4.02),  in each case as amended and in full
force and effect as of the date of this Agreement.

        SECTION 4.02 Capitalization;  Subsidiaries. The authorized capital stock
of the Company  consists of 15,000,000  Shares and 3,000,000 shares of preferred
stock,  par value  $0.01 per share  ("Preferred  Stock").  As of the date hereof
there  were (a)  8,941,239  Shares  issued  and  outstanding,  (b) no  shares of
Preferred Stock issued and outstanding


<PAGE>


and no series of Preferred Stock has been  established,  (c) 254,150 Shares were
held in the  Company's  treasury,  (d) no shares of capital stock of the Company
were held by the Company's  subsidiaries,  and (e) 934,423  Shares were reserved
for future  issuance as of the date hereof  pursuant to Options  then  currently
outstanding (including the currently non-exercisable portions thereof).  Section
4.02 of the  Disclosure  Schedule sets forth a complete and accurate list of (i)
the  number of  outstanding  Options,  (ii) the  number  of Shares  which can be
acquired upon the exercise of all outstanding Options,  respectively,  and (iii)
the exercise price of each  outstanding  Option.  Except as set forth in Section
4.02 of the Disclosure  Schedule,  since March 31, 2000, the Company (i) has not
issued any Shares other than upon the  exercise of Options,  (ii) has granted no
Options to purchase  shares of Common Stock under the Company  Benefit Plans (as
defined in Section 4.11) to the Executive Officers (as defined in Section 9.11),
(iii) has not  granted  any  stock  option,  stock  incentive,  stock  purchase,
restricted stock, stock appreciation right, phantom stock or other similar award
to  any  of  the  Executive  Officers  and  (iv)  has  not  split,  combined  or
reclassified any of its shares of capital stock.  Except as set forth in Section
4.02 of the Disclosure  Schedule,  there are no outstanding  options,  warrants,
calls,  subscriptions  or  other  rights  or  other  agreements  or  commitments
obligating the Company or any of its subsidiaries to issue, transfer or sell any
shares of capital stock of the Company or any of its  subsidiaries.  The Company
has no outstanding bonds,  debentures,  notes or other obligations entitling the
holders  thereof  to vote (or  which are  convertible  into or  exercisable  for
securities  having the right to vote) with the  holders of Shares on any matter.
There are no outstanding  obligations of the Company or any of its  subsidiaries
to  repurchase,  redeem or otherwise  acquire any shares of capital stock of the
Company.  All issued and outstanding  Shares are validly issued,  fully paid and
nonassessable  and are not  subject  to,  and were not issued in  violation  of,
preemptive   rights.   There  are  no  voting  trusts  or  other  agreements  or
understandings to which the Company is a party with respect to the voting of the
capital stock of the Company or any of its subsidiaries.

        The only  "Significant  Subsidiaries"  (as such term is  defined in Rule
1-02 of Regulation S-X of the SEC  ("Significant  Subsidiaries")  of the Company
are those named in the Company Filings (as defined in Section 4.06).  All of the
outstanding  shares of capital  stock of the Company's  subsidiaries  are owned,
directly  or  indirectly,  by the Company  free and clear of all liens,  claims,
options,  charges,  security  interests or other legal and equitable  rights and
encumbrances of whatsoever  nature. All issued and outstanding shares of capital
stock  of  the  Company's  subsidiaries  are  validly  issued,  fully  paid  and
nonassessable  and are not  subject  to,  and were not issued in  violation  of,
preemptive rights.

        SECTION 4.03 Authority Relative to this Agreement.  The Company has full
corporate power and authority to execute and deliver this Agreement,  to perform
its  obligations  hereunder  and,  subject,  in the case of the  Merger,  to the
adoption of this Agreement by the stockholders of the Company,  if required,  to
consummate the transactions  contemplated  hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board and no other corporate proceedings
on the part of the Company are  necessary  to  authorize  this  Agreement  or to
consummate  the  transactions  so  contemplated  (other than, in the case of the
Merger,  the adoption of this Agreement by the holders of Shares  representing a
majority of the votes which may be cast by holders


<PAGE>


of Shares).  This Agreement has been duly and validly  executed and delivered by
the Company and, assuming this Agreement has been duly authorized,  executed and
delivered by each of Parent and Purchaser,  this  Agreement  constitutes a valid
and  binding  agreement  of the  Company,  enforceable  against  the  Company in
accordance  with its  terms,  except  that (i)  enforcement  may be  subject  to
applicable bankruptcy, insolvency,  reorganization,  moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally and (ii)
the remedy of specific  performance  and injunctive and other forms of equitable
relief may be subject to equitable  defenses and to the  discretion of the court
before which any proceeding therefor may be brought.

        SECTION  4.04  Absence of Certain  Changes.  Since March 31,  2000,  (a)
neither the  Company  nor any of its  subsidiaries  has  suffered  any change or
changes in the financial condition or business, results of operations, or assets
which has  resulted or would be likely to result in a Material  Adverse  Effect,
(b) the Company and its  subsidiaries  have conducted their business only in the
ordinary course of business and in a manner  consistent with past practice,  and
(c) neither the Company nor any of its  subsidiaries  has taken any action that,
if taken  after the date of this  Agreement,  would  constitute  a breach of the
covenants set forth in Section 6.01.

           SECTION 4.05 No Undisclosed Liabilities. Except to the extent accrued
or reserved  in the  Company's  financial  statements  (including  the notes and
schedules  thereto) included in the Company Filings and publicly available prior
to the  date of this  Agreement  and as set  forth in the  Disclosure  Schedule,
neither  the  Company  nor  any of  its  subsidiaries  has  any  liabilities  or
obligations of any nature, whether accrued,  contingent,  absolute or otherwise,
except for those arising in the ordinary course of business consistent with past
practice and that would not,  individually  or in the  aggregate,  reasonably be
expected to have a Material Adverse Effect on the Company.

        SECTION 4.06 Reports.  The Company has filed all required forms, reports
and documents (including all prospectuses and all registration  statements) with
the SEC required to be filed by it with respect to all periods  commencing on or
after January 1, 1997 pursuant to the federal  securities laws and the SEC rules
and regulations thereunder,  all of which have complied in all material respects
with all applicable  requirements of the Securities Act of 1933 (the "Securities
Act") and the Exchange Act, and the rules and regulations promulgated thereunder
(the "Company Filings"). None of such Company Filings,  (excluding the financial
statements included therein,  which are dealt with in the following  paragraph),
nor any amendment or supplement  thereto, at the time filed contained any untrue
statement of a material  fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.

        The consolidated balance sheets and the related consolidated  statements
of income,  retained earnings and changes in financial  position  (including the
related  notes and  schedules  thereto) of the  Company  included in the Company
Filings  and the  balance  sheet  of the  Company  as of June  30,  2000 and the
statement(s)  of income and cash flows of the Company for the three months ended
June  30,  2000   previously   provided  to  Parent  (the  "June  30   Financial
Statements"), present fairly in all material respects the consolidated financial
position  of the  Company  as of their  respective  dates,  and the  results  of
consolidated operations and consolidated cash flows for the periods presented


<PAGE>


therein, all in conformity with generally accepted accounting principles applied
on a consistent basis,  except (i) as otherwise noted therein,  (ii) in the case
of quarterly  financial  statements  for the quarter  ended June 30,  2000,  for
non-material  year-end audit  adjustments and (iii) in the case of the quarterly
financial  statements  to the extent  they may not include  footnotes  or may be
condensed or summary financial statements.

        SECTION  4.07 Offer  Documents;  Proxy  Statements;  Other  Information.
Neither the Schedule  14D-9 nor any of the  information  relating to the Company
and its  subsidiaries  supplied  in  writing  by the  Company  specifically  for
inclusion  in the Offer  Documents,  including  any  amendments  or  supplements
thereto will at the respective times the Schedule 14D-9,  Offer Documents or any
amendments  or  supplements  thereto are filed with the SEC,  contain any untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Schedule 14D-9
will comply in all  material  respects  with the  Exchange Act and the rules and
regulations  promulgated  thereunder.  If a Proxy  Statement is required for the
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material  respects  with the  Exchange Act and the rules and  regulations
promulgated  thereunder  and, at the time any such Proxy  Statement is mailed to
stockholders  of the Company and at the time of any meeting of  stockholders  of
the Company,  such Proxy  Statement  will not contain any untrue  statement of a
material fact or omit to state any material  fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances,  under  which  they were made,  not  misleading,  except  that no
representation  is made by the Company with respect to  information  supplied in
writing by Parent or Purchaser specifically for inclusion in the Proxy Statement
and no representation is made by the Company with respect to any Proxy Statement
or other document filed with the SEC or mailed to stockholders of the Company at
any time after the Board  Transition  Date (as  defined in  Section  6.01).  The
letter to stockholders, notice of meeting, proxy statement and form of proxy, or
the information statement, as the case may be, to be distributed to stockholders
in connection  with the Merger,  or any schedules  required to be filed with the
SEC in connection  therewith are  collectively  referred to herein as the "Proxy
Statement".

        SECTION 4.08 Consents and Approvals; No Violation. Neither the execution
and  delivery  of this  Agreement  by the Company  nor the  consummation  of the
transactions  contemplated hereby will (i) conflict with or result in any breach
of any provision of the  respective  Restated  Certificate of  Incorporation  or
By-Laws  (or other  similar  governing  documents)  of the Company or any of its
subsidiaries, (ii) require any consent, approval, authorization or permit of, or
filing with or  notification  to, any  governmental  or regulatory  authority or
body, except (A) in connection with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"),  (B) pursuant to the Securities Act and
the Exchange Act or the rules and  requirements  of The Nasdaq  National  Market
System,  (C) the filing of a certificate of merger (or  certificate of ownership
and merger) pursuant to the DGCL, (D) filings under state securities, "Blue-Sky"
or  takeover  laws or in  connection  with  maintaining  the good  standing  and
qualification of the Surviving  Corporation  following the Effective Time or (E)
where the failure to obtain such consent, approval,  authorization or permit, or
to make such  filing or  notification,  would not in the  aggregate  when  taken
together with all such other  failures  have a Material  Adverse  Effect;  (iii)
result in a default (or give rise to any right of


<PAGE>


termination, unilateral modification or amendment, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license, agreement
or  other  instrument  or  obligation  to  which  the  Company  or  any  of  its
subsidiaries is a party or by which the Company,  any of its subsidiaries or any
of their respective assets may be bound,  except for such defaults (or rights of
termination, unilateral modification or amendment, cancellation or acceleration)
as to which  requisite  waivers or consents have been obtained prior to the date
Shares are first  accepted for payment under the Offer or which in the aggregate
would not have a Material  Adverse  Effect;  or (iv)  violate  any order,  writ,
injunction,  decree, judgment, ordinance, statute, rule or regulation applicable
to the Company, any of its subsidiaries or any of their respective properties or
businesses,  except for violations (other than of orders, writs,  injunctions or
decrees  issued  against  the Company or any of its  subsidiaries  or naming the
Company or any of its  subsidiaries as a party) which would not in the aggregate
have a Material Adverse Effect.

        SECTION 4.09 Litigation,  etc.  Section 4.09 of the Disclosure  Schedule
sets forth all claims,  actions or  proceedings  pending or, to the knowledge of
the Company,  threatened against the Company or any of its subsidiaries or their
respective  properties  or  businesses  before any  Governmental  Authority  (as
defined in Section  9.11  hereof)  with  respect to which there is a  reasonable
likelihood  of an adverse  determination  which  would  have a Material  Adverse
Effect. To the Company's knowledge, Section 4.09 of the Disclosure Schedule sets
forth all  pending  actions or  proceedings  to which the  Company or any of its
subsidiaries is a party. Neither the Company nor any of its subsidiaries nor any
of their  respective  properties  or  businesses  is subject to any  outstanding
order,  writ,  judgment,  stipulation,  award,  injunction  or decree or, to the
knowledge  of the Company,  any  investigation  or inquiry by, any  Governmental
Authority  issued against the Company or any of its  subsidiaries  or naming the
Company or any of its subsidiaries as a party which has or would have a Material
Adverse Effect.

        SECTION 4.10 Title to Properties;  Encumbrances. The Company and each of
its subsidiaries  has good title to all properties,  interests in properties and
assets (real and personal)  reflected in the  consolidated  balance sheet of the
Company at March 31, 2000 (except properties, interests in properties and assets
sold or otherwise disposed of in the ordinary course of business since March 31,
2000) free and clear of all mortgages,  liens, pledges,  charges or encumbrances
of any kind or character, except liens for current taxes not yet due and payable
and except for such mortgages,  liens,  pledges,  charges or encumbrances  which
would not in the aggregate have a Material  Adverse  Effect.  All leases of real
property leased for the use or benefit of the Company or any of its subsidiaries
to which the Company or any of its  subsidiaries is a party,  and all amendments
and  modifications  thereto,  are in full force and effect,  and there exists no
default under any such lease by the Company or any of its subsidiaries,  nor any
event which,  with notice or lapse of time or both,  would  constitute a default
thereunder by the Company or any subsidiary  except as would not have a Material
Adverse   Effect.   The  execution  and  delivery  of  this  Agreement  and  the
consummation of the transactions contemplated by this Agreement will not cause a
default  under any such  leases,  except for the need for those  consents as set
forth in Section 4.10 of the Disclosure Schedule or as would not have a Material
Adverse Effect.




<PAGE>


SECTION 4.11 Benefit Plans; Labor Relations. The Company has provided in Section
4.11 of the  Disclosure  Schedule a complete and accurate list as of the date of
this Agreement of all Company Benefit Plans (as defined herein).

             (a) With  respect  to each  employee  benefit  plan (as  defined in
Section 3(3) of the Employee  Retirement Income Security Act of 1974, as amended
("ERISA")),  and any material  bonus,  pension,  profit  sharing,  compensation,
deferred compensation,  incentive compensation, stock ownership, stock purchase,
stock option, restricted stock, phantom stock, retirement, vacation, employment,
severance, termination, disability, death benefit, hospitalization or insurance,
plan, agreement,  trust, fund, policy or arrangement (all of the foregoing being
herein called the "Company Benefit Plans"),  maintained or contributed to by the
Company or any of its  subsidiaries,  the  Company  has made  available,  to the
extent  applicable,  to Parent a true and  correct  copy of (i) the most  recent
annual report (Form 5500) filed with the Internal Revenue Service, including all
schedules  and  attachments,  (ii) such  Company  Benefit  Plan,  including  all
amendments,  (iii) each trust  agreement  and group  annuity  contract,  if any,
relating to such Company  Benefit Plan,  (iv) all service  provider  agreements,
insurance  contracts or agreements with investment managers in so far as each of
the foregoing  relates to Company  Benefit Plans,  (v) the current  summary plan
description  of each  Company  Benefit  Plan  subject to ERISA,  and any similar
descriptions of any other Company Benefit Plan, and (vi) if applicable, the most
recent  favorable  determination  letter from the Internal  Revenue Service with
respect to such Company Benefit Plan.

             (b) With respect to the Company Benefit Plans,  individually and in
the aggregate, no event has occurred, and to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any of its subsidiaries  would be subject to any liability that is reasonably
likely to have a Material  Adverse Effect  (except  liability for benefit claims
and funding obligations  payable in the ordinary course),  under ERISA, the Code
(as defined in Section 4.14(e)) or any other applicable law.

             (c)  Each of the  Company  Benefit  Plans  has  been  operated  and
 administered in accordance with its terms and all applicable  federal and state
 laws and regulations, including, but not limited to, ERISA and the Code, except
 for such failures to so operate and administer  which,  individually  or in the
 aggregate, would not be likely to have a Material Adverse Effect.

             (d) Each Company Benefit Plan intended to satisfy the  requirements
of  a  "qualified   plan"  under  Code  ss.  401(a)  has  received  a  favorable
determination  letter from the Internal  Revenue Service and the Company and its
subsidiaries  are not aware of any facts or  circumstances  that could adversely
affect the qualified status of such Company Benefit Plan.

             (e) With respect to each Company  Benefit Plan,  all  contributions
(including   all   employer   contributions   and  employee   salary   reduction
contributions) which are due have been made within the time period prescribed by
ERISA and all  contributions  for any period  prior to the  earlier of the Board
Transition  Date or the  Effective  Time which are not yet due have been paid or
accrued in accordance  with the past custom and practices of the Company and its
subsidiaries. All premiums or other payments for all


<PAGE>


             periods ending prior to the earlier of the Board Transition Date or
the  Effective  Time have been made with  respect to each  Company  Benefit Plan
which is an "employee welfare plan" as defined in ERISA.

             (f) The  requirements  of Part 6 of  Subtitle B of Title I of ERISA
and Code ss. 4980B  ("COBRA")  have been  satisfied with respect to each Company
Benefit Plan subject to COBRA.  Neither the Company nor any of its  subsidiaries
maintains,  nor is any of them obligated to provide  benefits  under,  any life,
medical or health plan which  provides  benefits to retired or other  terminated
employees other than in accordance with COBRA.

             (g) Neither the Company nor any of its subsidiaries has at any time
contributed  or had an obligation to contribute to any "multiple  employer plan"
or  "multiemployer  plan" as defined in ERISA and the Code.  No Company  Benefit
Plan is subject to Title IV of ERISA.

             (h)  No  employer  securities,  employer  real  property  or  other
employer property is included in the assets of any Company Benefit Plan.

             (i)  Section  4.11(i)  of the  Disclosure  Schedule  sets forth all
 agreements  of the  Company  and its  subsidiaries  that would be affected by a
 change of control of the Company or any of its subsidiaries, including, without
 limitation,  any agreement with any Executive  Officer or other key employee of
 the Company or any of its subsidiaries the benefits of which are contingent, or
 the terms of which are materially altered, upon the occurrence of a transaction
 involving the Company or any of its subsidiaries of the nature  contemplated by
 this Agreement,  or any Company Benefit Plan, any of the benefits of which will
 be increased, or the vesting of benefits will be accelerated, by the occurrence
 of a transaction involving the Company or any of its subsidiaries of the nature
 contemplated  by this  Agreement  or the value of any benefits of which will be
 calculated  on  the  basis  of any of the  transactions  contemplated  by  this
 Agreement.

(j) Except as  disclosed  in Section  4.11(j) of the  Disclosure  Schedule or as
provided for in this  Agreement,  since March 31, 2000,  neither the Company nor
any of its subsidiaries has become a party to any oral or written (i) consulting
agreement,  (ii) union or collective  bargaining  agreement,  or (iii) agreement
with respect to any employee of the Company  providing any term of employment or
compensation  guarantee,  or (iv) has  approved or adopted  any Company  Benefit
Plan.

             (k) There is no (i) unfair labor  practice,  labor  dispute  (other
than routine individual  grievances) or labor arbitration proceeding pending or,
to the  knowledge of the Company,  threatened  against the Company or any of its
subsidiaries relating to their businesses, (ii) to the knowledge of the Company,
activity or  proceeding by a labor union or  representative  thereof to organize
any  employees  of the Company or any of its  subsidiaries,  or (iii)  lockouts,
strikes,  slowdowns, work stoppages or, to the knowledge of the Company, threats
thereof by or with respect to such  employees,  except for such  matters  which,
individually or in the aggregate, would not have or be likely to have a Material
Adverse  Effect.  The  Company is in  compliance  with all  applicable  laws and
regulations regarding employment, employment practices, terms and conditions of


<PAGE>


employment and wages,  except for such noncompliance  which,  individually or in
the  aggregate,  would not  reasonably  be expected  to have a Material  Adverse
Effect.

        SECTION 4.12 Compliance With  Agreements;  Law.  Neither the Company nor
any of its subsidiaries is in conflict with, or in default,  breach or violation
of (i) any term,  provision  or condition  of (A) its  Restated  Certificate  of
Incorporation  or  By-Laws  (or  similar  charter  documents)  or (B) any  note,
license, agreement or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company,  any of its subsidiaries
or any of  their  respective  assets  may be  bound  ("agreement"),  or (ii) any
judgment, order, writ, injunction,  decree, stipulation,  award, law, ordinance,
rule or regulation of any Governmental Authority (including, but not limited to,
any  law,  ordinance,  rule or  regulation  relating  to the  protection  of the
environment),  except for such conflicts, defaults violations or breaches in the
case of  clauses  (i)(B) and (ii)  which in the  aggregate  do not and would not
reasonably be expected to have a Material  Adverse  Effect.  To the knowledge of
the  Company,  no other party to any such  agreement  is, or,  based on existing
facts  and  circumstances,  with the  passage  of time will be,  in  default  or
violation  of  any  such  agreement  except  for  possible  violations  of  such
agreements which will not have a Material Adverse Effect. The Company and all of
its  subsidiaries  are  in  possession  of  all  licenses,   permits  and  other
governmental authorizations necessary to conduct all businesses conducted by the
Company and its  subsidiaries  except  where the failure to hold such  licenses,
permits and other governmental  authorizations would not in the aggregate have a
Material Adverse Effect. As of the date hereof, no suspension or cancellation of
any of such licenses,  permits, or governmental authorizations is pending or, to
the  knowledge  of the  Company,  threatened,  except  where the  suspension  or
cancellation of, would not, individually or in the aggregate,  be likely to have
a Material Adverse Effect.

        SECTION 4.13 Patents,  Trademarks,  Trade Names, etc. The Company or one
of its  subsidiaries  owns,  or is licensed or  otherwise  entitled to use,  all
patents,  trademarks,  trade names, service marks, copyrights,  applications for
any of the foregoing, together with all other technology,  know-how, tangible or
intangible proprietary  information or material and formulae in the countries to
which  such  apply,  that  are  used  in the  business  of the  Company  and its
subsidiaries as currently conducted (the "Company  Intellectual  Property").  No
claims with respect to the Company Intellectual  Property have been asserted or,
to the knowledge of the Company,  threatened by any person, nor does the Company
or any of its  subsidiaries  know of any valid grounds for any bona fide claims,
(i) to the effect  that the sale or use of any product or process as now used or
offered by the  Company or any  subsidiary  infringes  on any  copyright,  trade
secret,  patent or other intellectual property right of any person, (ii) against
the use by the Company or any of its  subsidiaries  of any Company  Intellectual
Property for the  operation of the business of the Company and its  subsidiaries
as  currently  conducted  or  presently  contemplated  or (iii)  challenging  or
questioning  the validity or  effectiveness  of any of the Company  Intellectual
Property.  Neither the Company nor any of its subsidiaries is, or as a result of
the execution,  delivery or performance of the Company's  obligations  hereunder
will be, in  violation  of, or lose any  rights  pursuant  to,  any  license  or
agreement in connection with Company Intellectual Property.  Except as set forth
in  Section  4.13 of the  Disclosure  Schedule,  no owned  Company  Intellectual
Property is subject to any outstanding order, judgment,  decree,  stipulation or
agreement  restricting  in any  material  manner  the  licensing  thereof by the
Company or any of its subsidiaries. Except as set forth in


<PAGE>


Section  4.13 of the  Disclosure  Schedule,  neither  the Company nor any of its
subsidiaries  has entered  into any  agreement  to  indemnify  any other  person
against any charge of infringement based upon such person's manufacture, sale or
use of any product,  service or process  incorporating any Company  Intellectual
Property.

        SECTION 4.14  Taxes.

(a)   Each of the Company and its subsidiaries has filed all Tax Returns that
        it was required to file.  All such Tax Returns were correct and
        complete in all material respects.  All material Taxes owed by any of
        the Company and its subsidiaries (whether or not shown on any Tax
        Return) have been paid.  None of the Company and its subsidiaries
        currently is the beneficiary of any extension of time within which to
        file any Tax Return.  No claim has ever been made by an authority in a
        jurisdiction where any of the Company and its subsidiaries does not
        file Tax Returns that it is or may be subject to taxation by that
        jurisdiction.  There are no security interests on any of the assets of
        any of the Company and its subsidiaries that arose in connection with
        any failure (or alleged failure) to pay any Tax.

(b)     Each of the Company and its  subsidiaries  has withheld and paid, in all
        material respects,  all Taxes required to have been withheld and paid in
        connection  with  amounts  paid or  owing to any  employee,  independent
        contractor, creditor, stockholder, or other third party.

(c)   No director or officer (or employee responsible for Tax matters) of any
        of the Company and its subsidiaries expects any authority to assess
        any additional Taxes for any period for which Tax Returns have been
        filed.  There is no dispute or claim concerning any Tax Liability of
        any of the Company and its subsidiaries either (A) claimed or raised
        by any authority in writing or (B) as to which any of the directors
        and officers (and employees responsible for Tax matters) of the
        Company and its subsidiaries has knowledge based upon personal contact
        with any agent of such authority.  Section 4.14(c) of the Disclosure
        Schedule lists all jurisdictions in which the Company and its
        subsidiaries filed Tax Returns relating to federal, state, local, and
        foreign income tax for taxable periods ended on or after March 31,
        1998, and indicates those Tax Returns that have been audited, and
        indicates those Tax Returns that currently are the subject of audit.
        The Company has made available to the Purchaser correct and complete
        copies of all federal, state, local and foreign income Tax Returns,
        examination reports, and statements of deficiencies assessed against
        or agreed to by any of the Company and its subsidiaries since December
        31, 1997.

(d)     None of the  Company  and its  subsidiaries  has waived  any  statute of
        limitations  in respect of Taxes or agreed to any extension of time with
        respect to a Tax assessment or deficiency,  which waiver or agreement is
        currently in effect.

(e)   None of the Company and its subsidiaries has filed a consent under
        Section 341(f) of the Internal Revenue Code of 1986 (the "Code")
        concerning collapsible corporations.  None of the Company and its
        subsidiaries has made


<PAGE>


             any payments,  is obligated to make any payments,  or is a party to
        any agreement that under certain circumstances could obligate it to make
        any payments that will not be deductible under Section 280G of the Code.
        None of the Company and its  subsidiaries has been a "United States real
        property holding  corporation"  (as defined in Section  897(c)(2) of the
        Code) during the applicable period specified in Section 897(c)(1)(A)(ii)
        of the Code. Each of the Company and its  subsidiaries  has disclosed on
        its federal  income Tax Returns all  positions  taken therein that could
        give rise to a substantial  understatement  of federal income Tax within
        the meaning of Section 6662 of the Code  including  disclosure of listed
        transactions  under  Temporary  Regulation  ss.  1.6601-4T.  None of the
        Company and its subsidiaries is a party to any Tax allocation or sharing
        agreement.  None of the  Company  and its  subsidiaries  (A) has  been a
        member of an  "affiliated  group" (as defined in Section  1504(a) of the
        Code, or any similar  group defined under a similar  provision of state,
        local or foreign law) filing a  consolidated  federal  income Tax Return
        (other than a group the common  parent of which was the  Company) or (B)
        has any  liability  for the Taxes of any person  (other  than any of the
        Company and its subsidiaries) under Treasury Regulation  ss.1.1502-6 (or
        any similar provision of state,  local, or foreign law), as a transferee
        or successor, by contract, or otherwise.

             (f)  Section  4.14(f)  of the  Disclosure  Schedule  sets forth the
        following  information  with  respect  to  each of the  Company  and its
        subsidiaries  (or, in the case of clause (B) below, with respect to each
        of the subsidiaries) as of the most recent practicable date: (A) summary
        deferred tax analysis for the year ended March 31, 2000; (B) the amount,
        for federal income tax purposes,  of any net operating loss, net capital
        loss, unused  investment or other credit,  unused foreign tax, or excess
        charitable contribution allocable to the Company or subsidiary;  and (C)
        the amount of any  deferred  gain or loss  allocable  to the  Company or
        subsidiary  arising out of any "deferred  intercompany  transaction" (as
        defined in Treasury Regulation ss.1.1502-13).

             (g) The unpaid  Taxes of the Company and its  subsidiaries  (A) did
         not, as of the most recent  fiscal  month end,  exceed in any  material
         respect  the  reserve for Tax  liability  (rather  than any reserve for
         deferred Taxes established to reflect timing  differences  between book
         and Tax income) set forth on the face of the most recent  balance sheet
         (rather  than  in any  notes  thereto)  and  (B) do not  exceed  in any
         material  respect  that  reserve as  adjusted  for the  passage of time
         through the earlier of the Board  Transition Date or the Effective Time
         in accordance  with the past custom and practice of the Company and its
         subsidiaries in filing their Tax Returns.

             (h) For  purposes of this  Agreement,  (i) "Tax" means any federal,
        state,  local, or foreign  income,  gross  receipts,  license,  payroll,
        employment,  excise,  severance,  stamp, occupation,  premium,  windfall
        profits,  environmental (including taxes under Section 59A of the Code),
        customs duties, capital stock, franchise, profits,  withholding,  social
        security (or similar), unemployment, disability, real property, personal
        property, sales, use, transfer,  registration,  value added, alternative
        or add-on minimum,


<PAGE>


        estimated, or other tax of any kind whatsoever,  including any interest,
        penalty,  or addition  thereto,  whether  disputed or not, and (ii) "Tax
        Return" shall mean any report, return, document,  declaration, claim for
        refund,  information  return, or other information or filing relating to
        Taxes,  including any schedule or attachment thereto,  and including any
        amendment thereof.

      SECTION 4.15 Insurance  Policies.  The Company and all of its subsidiaries
have obtained and maintained in full force and effect the insurance policies set
forth and summarized on Section 4.15 of the Disclosure Schedule.

      SECTION 4.16 Required Vote of Company Stockholders.  Unless the Merger may
be consummated in accordance  with Section 253 of the DGCL, the only vote of the
stockholders  of the Company  required  for adoption of this  Agreement  and the
transactions  contemplated  hereby,  is the affirmative vote of the holders of a
majority of the outstanding Shares.

      SECTION 4.17 Material  Contracts.  (a) The Disclosure  Schedule contains a
list of the following  types of contracts and agreements to which the Company or
any of its subsidiaries is a party (such contracts,  agreements and arrangements
as are required to be set forth in the  Disclosure  Schedule being the "Material
Contracts"):

           (i) each  contract  and  agreement  which (A) is  likely  to  involve
      consideration of more than $25,000, in the aggregate,  during the calendar
      year ending December 31, 2000, (B) is likely to involve  consideration  of
      more than  $50,000,  in the  aggregate,  over the  remaining  term of such
      contract,  and which, in either case, cannot be canceled by the Company or
      any of its  subsidiaries  without  penalty or further  payment and without
      more than 90 days' notice;

           (ii)  all  material  broker,  distributor,   dealer,   manufacturer's
      representative,  franchise,  agency,  sales  promotion,  market  research,
      marketing,  consulting and  advertising  contracts and agreements to which
      the Company or, to the knowledge of the Company,  any of its  subsidiaries
      is a party;

           (iii)all management  contracts  (excluding  contracts for employment)
      and contracts with other  consultants,  including any contracts  involving
      the  payment  of  royalties  or other  amounts  calculated  based upon the
      revenues or income of the Company or any of its  subsidiaries or income or
      revenues  related to any product of the Company or any of its subsidiaries
      to which the Company or any of its subsidiaries is a party;

           (iv) all contracts and agreements evidencing indebtedness for
      borrowed money;

           (v)  all material contracts and agreements with any Governmental
      Authority to which the Company or to the knowledge of the Company, any
      of its subsidiaries is a party;




<PAGE>


           (vi) all contracts and  agreements  that limit,  or purport to limit,
      the  ability of the Company or any of its  subsidiaries  to compete in any
      line of business or with any person or entity or in any geographic area or
      during any period of time;

           (vii)all material contracts or arrangements that result in any person
      or  entity  holding  a power of  attorney  from  the  Company  or,  to the
      knowledge  of the  Company,  any of its  subsidiaries  that relates to the
      Company, any of its subsidiaries or their respective businesses; and

           (viii) all other contracts and agreements, whether or not made in the
      ordinary  course of  business,  the absence of which would have a Material
      Adverse Effect.

      (b) Except as would not be  reasonably  likely to have a Material  Adverse
Effect, (i) each Material Contract is a legal, valid and binding agreement,  and
the Company is not in default of any of the Material Contracts;  and none of the
Material  Contracts has been canceled by the other party;  (ii) to the Company's
knowledge,  no other party is in breach or violation of, or default  under,  any
Material Contract;  (iii) the Company and its subsidiaries are not in receipt of
any claim of default under any such agreement; and (iv) neither the execution of
this Agreement nor the  consummation  of any  transactions  contemplated  hereby
shall  constitute  default,  give  rise to  cancellation  rights,  or  otherwise
adversely  affect any of the Company's rights under any Material  Contract.  The
Company has  furnished or made  available to Parent true and complete  copies of
all Material Contracts, including any amendments thereto.

      SECTION 4.18 No  Interference.  Since March 31, 2000, none of the officers
or directors of the Company or any of its  subsidiaries  have  contacted (i) any
vendor or supplier of the Company or its subsidiaries,  or any other entity with
whom  the  Company  or  any  of  its  subsidiaries  has  a  material  commercial
relationship concerning the transfer of such person's existing relationship with
the Company to another  business  entity which would compete with the Company or
the  Surviving   Corporation  or  (ii)  any  employee  of  the  Company  or  its
subsidiaries  concerning the termination of such employee's  employment with the
Company and their  employment  with another  business entity which would compete
with the Company or the Surviving Corporation.

      SECTION 4.19 Opinion of Financial  Adviser.  The Board of Directors of the
Company has received a written  opinion of ING Barings to the effect that, as of
the date of this Agreement,  the proposed  consideration to be received,  in the
Offer and the Merger, taken together,  by the holders of Shares in the Offer and
the Merger is fair to such holders of Shares from a financial point of view (the
"Opinion").  The Company hereby  represents  that it has been  authorized by ING
Barings to permit the inclusion of the Opinion and references  thereto,  subject
to customary prior review and consent by ING Barings, in the Offering Documents.

      SECTION  4.20  State  Takeover  Statutes.  The Board of  Directors  of the
Company has taken all  necessary  action so that the  restrictions  contained in
Section 203 of the DGCL  applicable to a "business  combination"  (as defined in
Section 203) will not apply to the  execution,  delivery or  performance of this
Agreement, the Tender and Voting


<PAGE>


      Agreement,  or to the Offer, the Merger or the  transactions  contemplated
hereby and thereby.

      SECTION  4.21  Environmental.  Except as  described in Section 4.21 of the
Disclosure  Schedule,  (a) the  Company  is in  compliance  with all  applicable
Environmental  Laws (as defined in Section  9.11) except where the failure to be
in  compliance  would not be  reasonably  expected  to have a  Material  Adverse
Effect,  (b) to the knowledge of the Company,  none of the properties  currently
owned,  leased or operated by the Company are  contaminated  with any  Hazardous
Substance  (as defined in Section 9.11 hereof)  that require  remediation  under
applicable  Environmental  Laws,  (c) the Company has not  received  any written
notice that it is liable for any  contamination  by Hazardous  Substances at any
site containing Hazardous Substances generated,  transported, stored, treated or
disposed of by the Company, (d) there is not pending or, to the knowledge of the
Company, threatened any investigation, claim or lien with respect to the Company
or any of its subsidiaries  under any  Environmental  Law, (e) the Company is in
compliance with all permits,  licenses and other  authorizations  required under
any  Environmental  Law  ("Environmental  Permits") and, to the knowledge of the
Company,  all  past  non-compliance  with  Environmental  Laws or  Environmental
Permits has been  resolved  without any pending,  ongoing or future  obligation,
costs or liability, except in the case of any of the above, where the failure to
be in compliance  would not  reasonably  be expected to have a Material  Adverse
Effect;  and (f) neither the execution of this Agreement nor the consummation of
the transactions contemplated hereby will require any investigation, remediation
or other action with respect to Hazardous Substances,  or any prior notice to or
prior  consent  of  any  Governmental  Authority,  pursuant  to  any  applicable
Environmental Law or Environmental  Permit where the failure to give such notice
or obtain such consent  would  reasonably  be likely to have a Material  Adverse
Effect.

        ARTICLE VREPRESENTATIONS AND WARRANTIESOF PARENT AND PURCHASER

        Parent and Purchaser represent and warrant to the Company as follows:

        SECTION  5.01  Organization  and  Good  Standing.  Each  of  Parent  and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation.

        SECTION 5.02 Authority  Relative to this  Agreement.  Each of Parent and
Purchaser  has full  corporate  power and  authority to execute and deliver this
Agreement,   to  perform  its  obligations   hereunder  and  to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
and the consummation of the transactions  contemplated hereby have been duly and
validly  authorized by Parent and Purchaser,  and Parent as the sole stockholder
of  Purchaser,  and no other  corporate  proceedings  on the part of  Parent  or
Purchaser are necessary to authorize this Agreement, or commence the Offer or to
consummate  the  transactions  contemplated  by this  Agreement  (including  the
Offer).  This Agreement has been duly and validly executed and delivered by each
of Parent and Purchaser and,  assuming this Agreement has been duly  authorized,
executed and delivered by the Company, this Agreement constitutes a


<PAGE>


valid and binding agreement of each of Parent and Purchaser, enforceable against
each of Parent and  Purchaser  in  accordance  with its terms,  except  that (i)
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium  or  other  similar  laws,  now or  hereafter  in  effect,  affecting
creditors'  rights  generally  and (ii) the remedy of specific  performance  and
injunctive  and other  forms of  equitable  relief may be  subject to  equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

        SECTION 5.03 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by Parent and Purchaser nor the  consummation  of
the  transactions  contemplated  hereby will (i) conflict  with or result in any
breach of any  provision  or the  respective  Certificate  of  Incorporation  or
By-Laws  (or  other  similar  governing  documents)  of  Parent  or  any  of its
subsidiaries, (ii) require any consent, approval, authorization or permit of, or
filing with or  notification  to, any  governmental  or regulatory  authority or
body,  except (x) those set forth in clauses  (A)  through  (E) of Section  4.08
hereof or (y) where failure to obtain such consent,  approval,  authorization or
permit, or to make such filing or notification,  would not in the aggregate when
taken  together with all such other  failures have a material  adverse effect on
the financial condition, assets, liabilities,  business or results of operations
of Parent and its  subsidiaries  taken as a whole or adversely  affect or impair
the  ability of Parent or  Purchaser  to perform  their  respective  obligations
hereunder;  (iii) result in a default (or give rise to any right of termination,
unilateral modification or amendment, cancellation or acceleration) under any of
the terms,  conditions or provisions  of any note,  license,  agreement or other
instrument  or obligation  to which the Parent or any of its  subsidiaries  is a
party,   except  for  such  defaults  (or  rights  of  termination,   unilateral
modification or amendment,  cancellation or acceleration) which in the aggregate
would not have a material  adverse  effect on the financial  condition,  assets,
liabilities,  business or results of operations  of Parent and its  subsidiaries
taken as a whole or  adversely  affect  or  impair  the  ability  of  Parent  or
Purchaser to perform their respective obligations hereunder; or (iv) violate any
order,  writ,  injunction,   decree,  judgment,   ordinance,  statute,  rule  or
regulation  applicable  to  Parent,  any of  its  subsidiaries  or any of  their
respective  properties  or  businesses,  except for  violations  (other  than of
orders,  writs,  injunctions or decrees) which would not have a material adverse
effect on the financial condition,  assets, liabilities,  business or results of
operations of Parent and its  subsidiaries  taken as a whole or adversely affect
or impair  the  ability  of Parent or  Purchaser  to  perform  their  respective
obligations hereunder.

        SECTION 5.04 Offer Documents;  Proxy Statement.  The Offer Documents and
any amendments or supplements thereto, and the Offer will comply in all material
respects with the Exchange Act. None of the  information  contained in the Offer
Documents,  including  any  amendments  or  supplements  thereto,  will  at  the
respective  times the Offer Documents or any amendments or supplements  thereto,
are filed with the SEC contain any untrue  statement of a material  fact or omit
to state any material fact  required to be stated  therein or necessary in order
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading,  except that no representation is made by Parent with
respect to information supplied by the Company specifically for inclusion in the
Offer Documents.  None of the information  supplied by Parent and its affiliates
specifically  for inclusion in the Proxy  Statement  will, at the time the Proxy
Statement is mailed,  or, at the time of the Special Meeting or at the Effective
Time,  contain  any untrue  statement  of a  material  fact or omit to state any
material fact


<PAGE>


required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.

        SECTION 5.05 Financing.  Parent has the funds, either from its available
cash  and  cash  equivalents  or  from  borrowings  under  its  existing  credit
facilities,   necessary  to  consummate   the  Offer  and  the  Merger  and  the
transactions contemplated thereby.


                               ARTICLE VICOVENANTS

           SECTION  6.01   Conduct  of  Business  of  the  Company.   Except  as
contemplated  by  this  Agreement,  during  the  period  from  the  date of this
Agreement  to such time at which  directors  of the Company  affiliated  with or
designated by Parent or Purchaser shall constitute a majority of the Board (such
time, the "Board Transition  Date"),  the Company and its subsidiaries will each
conduct its operations according to its ordinary course of business, in a manner
consistent with past practice. Without limiting the generality of the foregoing,
and except as otherwise contemplated by this Agreement,  neither the Company nor
any of its subsidiaries  will,  prior to the Board Transition Date,  without the
prior  written  consent of Parent (i) issue,  sell or pledge,  or  authorize  or
propose the issuance,  sale or pledge of (A) additional  shares of capital stock
of any class of the  Company  (other  than  shares of Common  Stock  that may be
issued pursuant to the Company's Employee Stock Purchase Plan in connection with
amounts withheld on or before August 4, 2000) or its subsidiaries, or securities
convertible into or exchangeable for any such shares, or any options,  warrants,
calls,  subscriptions  or other  rights  to  acquire  any such  shares  or other
convertible  or  exchangeable  securities,  other than such  issuance  of Shares
pursuant to the exercise of Options  outstanding on the date hereof,  or (B) any
other  securities  in  respect  of, in lieu of or in  substitution  for,  Shares
outstanding on the date hereof, (ii) purchase,  repurchase,  redeem or otherwise
acquire, or propose to purchase,  repurchase,  redeem or otherwise acquire,  any
outstanding shares of capital stock of the Company,  (iii) declare, set aside or
pay any dividend or distribution on any Shares,  or redeem or otherwise  acquire
any shares of capital stock of the Company, (iv) propose or adopt any amendments
to its Restated Certificate of Incorporation or By-Laws (v) issue, sell, pledge,
dispose  of,  grant,   encumber,  or  authorize  the  issuance,   sale,  pledge,
disposition,  grant or encumbrance of any material  assets of the Company or any
subsidiary, except in the ordinary course of business and in a manner consistent
with past  practice;  (vi)  reclassify,  combine,  split,  subdivide  any of its
capital  stock;  (vii)  acquire  (including,   without  limitation,  by  merger,
consolidation,  or  acquisition  of  stock  or  assets  or  any  other  business
combination) any corporation,  partnership,  other business  organization or any
division  thereof  or  any  material  amount  of  assets,   other  than  pending
acquisitions or minority  investments,  in each case publicly announced prior to
the date hereof,  or, with respect to the acquisition of assets, in the ordinary
course of business consistent with past practice,  (viii) incur any indebtedness
for borrowed money or issue any debt securities or assume, guarantee or endorse,
or otherwise become  responsible for, the obligations of any person, or make any
loans or  advances,  except in the  ordinary  course of business and in a manner
consistent  with past practice;  (ix)  authorize,  or make any  commitment  with
respect to (A) any capital  expenditures  in excess of $250,000 in the aggregate
per month, (B) any single capital expenditure which is in excess of $50,000 or


<PAGE>


      (C) any single capital  project that is reasonably  likely to cost $75,000
or more in the aggregate for the Company and the subsidiaries  taken as a whole,
(D) make or direct to be made any capital  investments or equity  investments in
any entity, other than investments in any wholly owned subsidiary,  or (E) enter
into or amend any contract, agreement, commitment or arrangement with respect to
any matter set forth in this Section  6.01(ix);  (x)  increase the  compensation
payable or to become payable or the benefits provided to its directors, officers
or  employees,  except for  increases  in the  ordinary  course of business  and
consistent  with past  practice in salaries or wages of employees of the Company
or any subsidiary who are not directors or Executive Officers of the Company, or
grant any  severance  or  termination  pay to, or enter into any  employment  or
severance agreement with, any director, officer or other employee of the Company
or of any subsidiary,  or establish,  adopt,  enter into or amend any collective
bargaining,  plan or  agreement  or Company  Benefit Plan for the benefit of any
director,  officer or employee;  (xi) take any action, other than actions in the
ordinary  course of business and consistent with past practice or as required by
law,  with  respect to  accounting  policies or  procedures;  (xii) make any tax
election or settle or compromise  any United  States  federal,  state,  local or
other non-United  States income tax liability,  except in the ordinary course of
business and in a manner consistent with past practice; (xiii) pay, discharge or
satisfy any claim,  liability  or  obligation  (absolute,  accrued,  asserted or
unasserted,  contingent  or  otherwise),  other than the  payment,  discharge or
satisfaction, in the ordinary course of business and in a manner consistent with
past  practice,  of liabilities  reflected or reserved  against in the Company's
balance sheet for the year ended March 31, 2000 or subsequently  incurred in the
ordinary  course of business and  consistent  with past  practice;  (xiv) amend,
modify or consent to the termination of any Material Contract of the Company, or
amend,  waive,  modify or consent to the  termination  of the  Company's  or any
subsidiary's  rights  thereunder,  other than in the ordinary course of business
and  consistent  with  past  practice;  (xv)  commence  or settle  any  material
litigation,  suit, claim, action, proceeding or investigation;  (xvi) (A) grant,
confer or award any option, warrant,  securities convertible into or exercisable
for securities having the right to vote or any call, subscription or other right
or  agreement  to acquire any shares of its capital  stock or take any action to
cause to be  exercisable  any otherwise  unexercisable  option under any Company
Benefit  Plan (except as  otherwise  specifically  required by the terms of such
unexercisable  options  or as  otherwise  set  forth  in  this  Agreement),  (B)
accelerate or waive any or all of the goals,  restrictions or conditions imposed
under,  or (C) issue,  sell,  grant or award any shares of capital  stock or any
right to acquire  shares of capital  stock under any Company  Benefit Plan other
than pursuant to the exercise of outstanding options; or (xvii) agree in writing
or otherwise to take any of the foregoing actions.

        SECTION 6.02 No Solicitation, etc.

             (a)  From the  date of this  Agreement  until  the  earlier  of the
        Effective Time or the  termination of this Agreement (and payment by the
        Company of amounts,  if any, due and payable prior to the termination of
        this Agreement in connection with such  termination  pursuant to Section
        8.01(e)(iii)),  the  Company and its  subsidiaries  shall not (and shall
        direct  all  of  their  respective   officers,   directors,   agents  or
        affiliates,   including  without   limitation  any  investment   banker,
        attorney,  or accountant retained by the Company or its subsidiaries not
        to) directly or indirectly (i) solicit, engage in


<PAGE>


discussions  or  negotiate  with  any  person   (whether  such   discussions  or
        negotiations  are  initiated  by the Company or  otherwise)  or take any
        other  action  intended  or designed  to  facilitate  the efforts of any
        person  (other  than  Parent)   including   initiating,   soliciting  or
        encouraging  any  inquiries  or  the  making  or  implementation  of any
        proposal or offer  relating to the possible  acquisition  of the Company
        (including,   without   limitation,   any   proposal  or  offer  to  the
        stockholders  of the Company  and whether by way of merger,  purchase of
        capital stock,  purchase of assets or otherwise) or any material portion
        of its  capital  stock or  assets  (with  any such  efforts  by any such
        person,  including a firm  proposal to make such an  acquisition,  to be
        referred  to  as  an  "Alternative   Acquisition"),   (ii)  provide  any
        information  with  respect  to  the  Company  or  afford  access  to the
        properties,  books or records of the Company to any  person,  other than
        Parent,  relating to a possible  Alternative  Acquisition by any person,
        other than Parent,  or otherwise  facilitate or assist the making of any
        proposal or offer relating to an Alternate Acquisition, (iii) enter into
        an  agreement  with any  person,  other than  Parent,  contemplating  or
        providing  for a  possible  Alternative  Acquisition,  or  (iv)  make or
        authorize any statement,  recommendation  or  solicitation in support of
        any  possible  Alternative  Acquisition  by any  person,  other  than by
        Parent.  Notwithstanding  the  foregoing,  prior to the  acceptance  for
        payment of Shares  pursuant to the Offer the Company  may, to the extent
        required by the  fiduciary  obligations  of the Board,  as determined in
        good faith by a majority  of the  disinterested  members  thereof  after
        consultation  with outside  counsel,  in response to an unsolicited bona
        fide  written  proposal  for an  Alternative  Acquisition  ("Alternative
        Acquisition  Proposal")  that  was  made  by a  person  whom  the  Board
        determines, in good faith after consultation with outside counsel and an
        independent  financial advisor, to be reasonably capable of consummating
        a Superior  Company Proposal (as defined in Section  6.02(e)),  that did
        not  result  from  a  breach  of  this  Section  6.02(a),   (x)  furnish
        information  with  respect to the Company to the person or group  making
        such Alternative  Acquisition Proposal and its representatives  pursuant
        to a confidentiality agreement no less restrictive than the terms of the
        Mutual  Nondisclosure  Agreement and (y)  participate in discussions and
        negotiations with such person or group and its representatives regarding
        such Alternative Acquisition Proposal;  provided, that, at least one (1)
        business  day prior to taking the  actions  contemplated  in (x) and (y)
        above  (except that the Company  shall have the right during such period
        to negotiate a confidentiality agreement with the person or group making
        such Alternative Acquisition Proposal and its representatives that is no
        less favorable to the Company than the Mutual Nondisclosure  Agreement),
        the Company  shall  provide  Parent with written  notice of its right to
        take such action and the identity of the person making such  Alternative
        Acquisition  Proposal.  Subject  to the  foregoing  provisions  of  this
        Section  6.02,  the  Company  shall,  and  shall  cause  its  directors,
        officers,  employees,  agents and  representatives to, cease immediately
        and cause to be terminated all  discussions and  negotiations  regarding
        any proposal that constitutes, or may reasonably be expected to lead to,
        an Alternative Acquisition Proposal.

             (b)  Neither the Board nor any committee thereof shall (i)
        withdraw or modify, or propose to withdraw or modify, in a manner
        adverse to Parent or


<PAGE>


        Purchaser,  the  approval  or  recommendation  by the  Board or any such
        committee of this Agreement,  the Offer or the Merger,  (ii) approve any
        letter of intent,  agreement  in  principle,  acquisition  agreement  or
        similar agreement  relating to any Alternative  Acquisition  Proposal or
        (iii)  approve or  recommend,  or propose to approve or  recommend,  any
        Alternative  Acquisition  Proposal.  Notwithstanding the foregoing,  if,
        prior to the acceptance for payment of Shares pursuant to the Offer, the
        Board  receives  a  Superior  Company  Proposal  and a  majority  of the
        disinterested  directors of the Company  determine in good faith,  after
        consultation with outside counsel, that it is required to do so in order
        to comply with their fiduciary  obligations,  the Board may withdraw its
        approval or  recommendation  of the Offer, the Merger and this Agreement
        and, in connection therewith, approve or recommend such Superior Company
        Proposal.

             (c) The Company shall advise Parent orally and in writing  promptly
        (in no event  more  than 24 hours  after  the  receipt  thereof)  of any
        Alternative  Acquisition Proposal or any inquiry with respect to or that
        would  be  reasonably  likely  to  lead to any  Alternative  Acquisition
        Proposal,   the  identity  of  the  person  or  group  making  any  such
        Alternative  Acquisition  Proposal or inquiry and the material  terms of
        any such Alternative  Acquisition Proposal or inquiry. The Company shall
        (i) keep Parent fully  informed of the status,  including  any change to
        the details, of any such Alternative Acquisition Proposal or inquiry and
        (ii) provide to Parent  promptly after receipt or delivery  thereof with
        copies of all material correspondence and other written material sent or
        provided to the  Company  from any third  party in  connection  with any
        Alternative  Acquisition  Proposal or sent or provided by the Company to
        any third party in connection with any Alternative Acquisition Proposal.

             (d) Nothing  contained  in this  Section  6.02 shall  prohibit  the
        Company  from  taking  and  disclosing  to its  stockholders  a position
        contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
        making any required disclosure to the Company's  stockholders if, in the
        good  faith  judgment  of the Board,  after  consultation  with  outside
        counsel,   failure  so  to  disclose  could  be  inconsistent  with  its
        obligations under applicable Law.

             (e) For purposes of this  Agreement,  "Superior  Company  Proposal"
        means any bona  fide,  written  proposal  not  solicited,  initiated  or
        encouraged  in  violation  of this Section 6.02 made by a third party to
        acquire all or substantially  all the equity securities or assets of the
        Company,   pursuant  to  a  tender  or  exchange  offer,  a  merger,   a
        consolidation,  a liquidation or dissolution,  a  recapitalization  or a
        sale  of all or  substantially  all its  assets,  (i) on  terms  which a
        majority of the disinterested directors of the Company determines, after
        consultation  with its  outside  counsel  and an  independent  financial
        advisor,  in its good faith judgment to represent superior value, from a
        financial point of view for the holders of Shares than the Offer and the
        Merger,  taking into account at the time of such  determination  all the
        terms and conditions of such proposal and this Agreement  (including any
        proposal by Parent to amend the terms of this  Agreement,  the Offer and
        the Merger) and


<PAGE>


        (ii) that is reasonably  likely to be  consummated  without undue delay,
        taking into account all financial,  regulatory,  legal and other aspects
        of such proposal.

        SECTION 6.03 Access to Information.

             (a) Upon reasonable  prior notice to the Company,  the Company will
        give Parent and its authorized  representatives reasonable access during
        normal  business  hours to the  plants,  offices,  warehouses  and other
        facilities and to the books and records of it and its subsidiaries, will
        permit Parent to make such reasonable inspections during normal business
        hours as it may reasonably request and will cause its officers and those
        of its  subsidiaries to furnish Parent with such financial and operating
        data and other  information  with respect to the business and properties
        of the  Company  and its  subsidiaries  as Parent  may from time to time
        reasonably  request;  provided,   however,  that  all  such  access  and
        inspections  shall be  coordinated  by  Parent  with a  designee  of the
        Company  and  shall be  conducted  in such  manner  so as not to  unduly
        interfere with the normal  business  operations of the Company or any of
        its   subsidiaries.   The  Company   shall  use  best  efforts  to  make
        representatives of its independent accountants available for discussions
        with Parent's  authorized  representatives as they may from time to time
        reasonably request.

             (b) All  information  received  by Parent  and its  representatives
        pursuant   to  this   Section   6.03  will  be  subject  to  the  Mutual
        Non-Disclosure  Agreement  dated as of March 28, 2000 between Parent and
        the Company.

             (c) No investigation pursuant to this Section 6.03 (c) shall affect
        any  representation or warranty in this Agreement of any party hereto or
        any condition to the  obligations of the parties hereto or any condition
        to the Offer.

        SECTION  6.04  Reasonable  Best  Efforts.   Subject  to  the  terms  and
conditions herein provided, each of the parties hereto agrees to promptly effect
all necessary  filings under the HSR Act and use its reasonable  best efforts to
secure all government  clearances  (including by taking all reasonable  steps to
avoid or set aside any preliminary or permanent injunction or other order of any
federal  or  state  court  of  competent   jurisdiction  or  other  governmental
authority).  Each of the parties  hereto  further  agrees to use its  reasonable
efforts to take,  or cause to be taken,  all  action,  and to do, or cause to be
done, all other things necessary,  proper or advisable under applicable laws and
regulations to consummate and make effective the  transactions  contemplated  by
this Agreement. In particular,  Parent and the Company will use their respective
reasonable  efforts to obtain  all other  consents,  authorizations,  orders and
approvals  required in connection with, and waivers of any violations,  breaches
and defaults that may be caused by, the  consummation of the Merger or the other
transactions   contemplated   by   this   Agreement,    other   than   consents,
authorizations,  orders, approvals and waivers the failure to obtain which would
not (A) be material to the consummation of the Merger or the other  transactions
contemplated by this Agreement or (B) have a Material Adverse Effect. In case at
any time after the Effective  Time any further  action is necessary or desirable
to carry out the purposes of this  Agreement,  the proper officers and directors
of each party to this Agreement shall take all such necessary action, including,
without  limitation,  providing for the sale or other disposition or the holding
separate (through the


<PAGE>


establishment  of a trust or otherwise)  of  particular  assets or categories of
assets, or businesses, of the Company or any of its subsidiaries.

        SECTION 6.05 Public  Announcements.  Parent and the Company will consult
with each other before issuing any press release or otherwise  making any public
statements  with respect to the Offer or the Merger and shall not issue any such
press release or make any such public statement without the prior consent of the
other party, except as may be required by law or by obligations  pursuant to any
listing  agreement  with  any  national  securities  exchanges  or the  National
Association of Securities Dealers, Inc., in which case Parent or Company, as the
case may be, will use its  reasonable  efforts to provide the other party with a
reasonable  time to  comment  on such  release  or  statement  in advance of its
issuance.

        SECTION 6.06 Indemnification; Insurance.

             (a)  Notwithstanding  anything  to the  contrary  in Section  2.04,
        Parent and Purchaser agree that all rights to  indemnification  existing
        in favor, and all limitations on the personal liability of, each present
        and former director, officer, employee or agent of the Company or any of
        its subsidiaries or a director,  officer,  employee, agent or trustee of
        any  employee  benefit  plan for  employees of the Company or any of its
        subsidiaries,  and each  person  who is or was then  serving in any such
        capacity (or any person who is or was then serving any other corporation
        or  entity  in  any  such  capacity  at  the  request  of  the  Company)
        (individually, an "Indemnified Party" and collectively, the "Indemnified
        Parties")  provided  for  in  the  Company's  Restated   Certificate  of
        Incorporation  or  By-Laws or similar  organizational  documents  of any
        Company  subsidiary  as in  effect  on the date of this  Agreement  with
        respect to matters  occurring  prior to the Effective Time shall survive
        the Merger and shall  continue  in full force and effect for a period of
        not less than six (6) years from the Effective Time; provided,  however,
        that  all  rights  to  indemnification  in  respect  of  any  claim  for
        indemnification for losses, damages or liabilities of any kind or nature
        incurred  which is asserted or made  within such period  shall  continue
        until the final disposition of such claim; provided,  further,  however,
        that the Surviving  Corporation  shall not be liable for any  settlement
        effected pursuant to such indemnification provisions without its written
        consent (which consent shall not be  unreasonably  withheld or delayed);
        and provided  further,  that,  in the event that any claim or claims for
        indemnification  are asserted or made within such six-year  period,  all
        rights to  indemnification  in respect of any such claim or claims shall
        continue  until  the  disposition  of  any  and  all  such  claims.  The
        Indemnified  Parties as a group may retain only one law firm (plus local
        counsel,  if  applicable)  to represent  them with respect to any single
        action at the expense of the indemnifying  person unless there is, under
        applicable standards of professional conduct, a material conflict on any
        significant  issue between the positions of any two or more  Indemnified
        Parties,  in which case each Indemnified Party with respect to whom such
        a conflict exists (or group of such  Indemnified  Parties who among them
        have no such  conflict)  may  retain one  separate  law firm . Any legal
        counsel  referred  to in the  preceding  sentence  shall  be  reasonably
        satisfactory to the indemnifying  person,  and the  indemnifying  person
        shall pay the reasonable


<PAGE>


        fees and  expenses  of such  legal  counsel  promptly  after  statements
        therefor are received.

             (b) For a period of six (6) years after the Effective Time,  Parent
        and the  Surviving  Corporation  shall cause to be maintained in effect,
        the current directors' and officers'  liability  insurance covering each
        Indemnified Party who is currently  covered by the Company's  directors'
        and officers'  liability  insurance  with respect to claims arising from
        facts or events which occurred at or prior to the Effective Time, or may
        substitute such other  insurance as the Surviving  Corporation or Parent
        may substitute  therefor which  insurance  shall not be materially  less
        favorable than such insurance maintained in effect by the Company on the
        date hereof in terms of coverage and amounts;  provided however, that in
        no event shall the Surviving  Corporation be required to expend pursuant
        to this  Section  6.06(b)  more than an amount per year equal to 150% of
        current annual  premiums paid by the Company for such  insurance  (which
        premiums the Company represents and warrants to be $103,000 per annum in
        the aggregate).

             (c) This Section 6.06 shall survive the closing of the transactions
        contemplated  hereby, is intended to benefit the Company,  the Surviving
        Corporation and each of the  Indemnified  Parties (each of whom shall be
        entitled to enforce this Section  6.06 against  Parent or the  Surviving
        Corporation,  as the case may be) and shall be binding on all successors
        and assigns of Parent and the Surviving Corporation.

             (d) In the  event  the  Surviving  Corporation  or Parent or any of
        their respective  successors or assigns (i) consolidates  with or merges
        into any  other  person  and shall not be the  continuing  or  surviving
        corporation or entity of such consolidation or merger, or (ii) transfers
        all or  substantially  all of its  properties  and assets to any person,
        then, and in each such case,  proper provision shall be made so that the
        successors  and assigns of Parent or the Surviving  Corporation,  as the
        case may be, assume the obligations set forth in this Section 6.06.

        SECTION 6.07 Employment Contracts, Benefits, etc.

             (a) Parent agrees that following the Board  Transition Date it will
        cause the Company or the Surviving  Corporation,  as the case may be, to
        comply  with the  applicable  terms and  provisions  of the  employment,
        retirement,   termination,   severance   and  similar   agreements   and
        arrangements  with  officers or other  employees  of the Company and its
        subsidiaries  which are in effect on the Board  Transition Date, if any.
        The Company will not enter into any such agreement after the date hereof
        without Parent's prior written consent.

             (b) Parent agrees that  following  the  Effective  Time it will, or
        will cause the Surviving  Corporation and its  subsidiaries to, continue
        to maintain  the  employee  benefit  plans  (including  bonus plans) for
        employees and former employees of the Company and its subsidiaries which
        are in effect on the


<PAGE>


        Board  Transition  Date, or other plans that, in the aggregate,  provide
        benefits that are substantially the same as or no less favorable to such
        employees  than the  benefits  currently  in effect with respect to such
        employees,  or,  in the  alternative,  the  benefit  plans in place  for
        similarly  situated  employees  of  Parent;  provided  that,  subject to
        applicable law the Company's  employees  shall receive full credit under
        such plans for years of service to the  Company and shall not be subject
        to any  waiting  periods  under  such  plans.  Parent  agrees  that  the
        Company's   employees   may  be  fully   vested   under  the   Company's
        401(k)/Profit  Sharing  Plan by the  Effective  Time.  Parent  agrees to
        provide retention and severance  consistent with Parent's severance plan
        and  retention  policies  and  additional  benefits in  accordance  with
        Schedule 6.07.

        SECTION 6.08 Purchase of Shares.  Except pursuant to the Offer,  neither
Parent nor  Purchaser  nor any  subsidiary  or affiliate of Parent shall acquire
beneficial  ownership  (within the meaning of Rule 13d-3 under the Exchange Act)
of any Shares without the prior written consent of the Company.

        SECTION 6.09 Notification of Certain Matters.

             (a) The Company shall give prompt notice to Parent,  and Parent and
        Purchaser shall give prompt notice to the Company, of (i) the occurrence
        or  nonoccurrence  of any event the occurrence or nonoccurrence of which
        would be likely to cause any  representation  or warranty  contained  in
        this Agreement to be untrue or inaccurate in any material  respect at or
        prior to the Effective Time, (ii) any failure of the Company,  Parent or
        Purchaser, as the case may be, to comply with or satisfy in all material
        respects any  covenant,  condition  or agreement to be complied  with or
        satisfied by it hereunder,  (iii) any notice or other communication from
        any  third  party  alleging  that the  consent  of such  third  party is
        required  in  connection  with  the  transactions  contemplated  by this
        Agreement,  or (iv) any  Material  Adverse  Effect or  material  adverse
        effect on the  financial  condition,  assets,  liabilities,  business or
        results of operations of Parent and its subsidiaries taken as a whole.

             (b) The Company  shall confer on a regular and frequent  basis with
        Parent with respect to the Company's and its subsidiaries'  business and
        operations and other matters relevant to the Merger,  and Parent and the
        Company shall promptly advise the other,  orally and in writing,  of any
        change  or  event,   including,   without  limitation,   any  complaint,
        investigation or hearing by any Governmental Authority (or communication
        indicating the same may be contemplated) or the institution or threat of
        litigation,  having,  or which  would  reasonably  be expected to have a
        Material  Adverse  Effect or a material  adverse effect on the financial
        condition,  assets,  liabilities,  business or results of  operations of
        Parent and its subsidiaries taken as a whole.




<PAGE>


              ARTICLE VIICONDITIONS TO CONSUMMATION OF THE MERGER

        SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver,  where  permissible,  prior to the Effective Time of the
following conditions:

             (a) This Agreement shall have been adopted by the affirmative  vote
        of  the  stockholders  of the  Company  at the  Special  Meeting  by the
        requisite  vote in  accordance  with  applicable  law,  if such  vote is
        required by applicable law;

             (b)  All   regulatory   approvals   required  to   consummate   the
        transactions  contemplated  hereby  shall have been  obtained  and shall
        remain in full  force and effect and all  statutory  waiting  periods in
        respect thereof shall have expired;

             (c) No  statute,  rule or  regulation  shall  have been  enacted or
        promulgated  by  any   governmental   authority   which   prohibits  the
        consummation of the Merger; and

             (d)  There  shall  be no  order or  injunction  of a United  States
        Federal or state court of competent  jurisdiction  in effect  precluding
        consummation of the Merger.

             (e) Purchaser shall have purchased  Shares validly tendered and not
        withdrawn pursuant to the Offer.

                  ARTICLE VIIITERMINATION; AMENDMENTS; WAIVER

        SECTION 8.01  Termination.  This  Agreement  may be  terminated  and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective Time:

             (a)  by mutual written consent of Parent and the Company;

             (b) by  Parent  if an  occurrence  or  circumstance  (except  where
        Parent's  or  Purchaser's  failure  to fulfill  any of their  respective
        obligations  under this  Agreement  is the cause of or  resulted in such
        occurrence  or  circumstance  or except  where there has been a material
        breach of any material  representation or warranty on the part of Parent
        or Purchaser  which has not been cured) has rendered the  conditions set
        forth in Annex A hereto incapable of being satisfied,  and (i) Purchaser
        shall have failed to commence the Offer after the date of this Agreement
        or (ii) the Offer  shall  have been  terminated  or shall  have  expired
        without Purchaser having purchased any Shares pursuant to the Offer;



<PAGE>


        (c)  by  either  Parent  or  the  Company  if  any  court  of  competent
        jurisdiction or other  Governmental  Authority  within the United States
        shall have issued an order,  decree or ruling or taken any other  action
        permanently  restraining,  enjoining or otherwise prohibiting the Merger
        and such order,  decree,  ruling or other action shall have become final
        and nonappealable;

             (d) by  Parent  prior to the  purchase  of Shares  pursuant  to the
        Offer,  if (i)  Purchaser  shall  discover  that any  representation  or
        warranty  made by the  Company in this  Agreement  is untrue at the time
        such   representation   or  warranty  was  made  or  (except  for  those
        representations  and warranties  made as of a particular date which need
        only be true and  correct as of such date) shall not be true and correct
        as of the date of consummation of the Offer, except where the failure to
        be so true  and  correct  would  not  have a  Material  Adverse  Effect,
        provided  that if any such  failure to be so true and correct is capable
        of being cured prior to the Final Date as defined in Section 9.11,  then
        Parent  and  Purchaser  may not  terminate  this  Agreement  under  this
        paragraph (d) until the Final Date,  (ii) there shall have been a breach
        of any  covenant  or  agreement  on the part of the  Company  under this
        Agreement  resulting  in a Material  Adverse  Effect  which shall not be
        capable  of being  cured  prior to the  Final  Date,  (iii) the Board of
        Directors or any committee  thereof (x) fails to recommend  approval and
        adoption of this  Agreement  and the Merger by the  stockholders  of the
        Company or withdraws or amends or modifies in a manner adverse to Parent
        and  Purchaser  its  recommendation  or  approval  in  respect  of  this
        Agreement,  the Offer or the Merger or (y) makes any recommendation with
        respect to an Alternative  Acquisition  other than a  recommendation  to
        reject such Alternative  Acquisition or shall have resolved to do any of
        the foregoing or (iv) there shall not have been validly tendered and not
        withdrawn  prior to the  expiration  of the Offer at least a majority of
        the Shares,  on a fully  diluted  basis,  and on or prior to such date a
        person shall have made a written Alternative Acquisition Proposal to the
        Company and not withdrawn such proposal;




<PAGE>


        (e)  by  the  Company,  if (i)  the  Company  shall  discover  that  any
        representation or warranty made by Parent or Purchaser in this Agreement
        is  untrue  at the time  such  representation  or  warranty  was made or
        (except for those representations and warranties made as of a particular
        date which need only be true and  correct as of such date)  shall not be
        true and  correct as of the date of  consummation  of the Offer,  except
        where  the  failure  to be so true  and  correct  would  not  materially
        adversely affect (or materially  delay) the consummation of the Offer or
        the Merger,  provided that if any such failure to be so true and correct
        is capable of being cured prior to the Final Date,  then the Company may
        not terminate  this  Agreement  under this paragraph (e) until the Final
        Date and unless at such time the matter has not been cured or (ii) there
        shall have been a material  breach of any  covenant or agreement in this
        Agreement on the part of Parent or Purchaser which materially  adversely
        affects  (or  materially  delays) the  consummation  of the Offer or the
        Merger  which  shall not be  capable of being  cured  prior to the Final
        Date,  or (iii) such  termination  is  necessary to allow the Company to
        enter  into an  agreement  with  respect to an  Alternative  Acquisition
        Proposal  in  compliance  with  Section   6.02(b)   (provided  that  the
        termination described in this clause (iii) shall not be effective unless
        and  until  the  Company  shall  have paid to Parent in full the fee and
        expense reimbursement described in Section 8.02(b)); or

             (f) by the Company if there  shall not have been a material  breach
        of any  representation,  warranty,  covenant or agreement on the part of
        the Company which has not been cured and (i) Purchaser shall have failed
        to  commence  the Offer  within the time  required  by  Section  1.01(a)
        hereof,  (ii) the Offer shall have been terminated or shall have expired
        without the Purchaser  having purchased any Shares pursuant to the Offer
        or (iii)  Purchaser  shall have failed to pay for Shares pursuant to the
        Offer prior to the Final Date.

      SECTION 8.02 Effect of Termination.

           (a) In the event of the termination and abandonment of this Agreement
      pursuant to Section 8.01 hereof,  this Agreement  shall  forthwith  become
      void, without liability on the part of any party hereto except as provided
      in this Section 8.02 and Sections  6.03(b) and 9.09 and the last  sentence
      of Section  1.02,  and except that nothing  herein shall relieve any party
      from  liability  for any  breach of this  Agreement.  Notwithstanding  the
      foregoing,  neither Parent or Purchaser, on the one hand, nor the Company,
      on the other hand,  shall have any rights with  respect to the recovery of
      expenses,  except as provided for in Sections  8.02(b)(i) and 8.02(b)(ii),
      respectively.

           (b)(i) If Parent or Purchaser  shall have  terminated  this Agreement
      pursuant  to  Section  8.01(d)(i)  or  8.01(d)(ii),  8.01(d)(iii),  or the
      Company  shall  have  terminated   this  Agreement   pursuant  to  Section
      8.01(e)(iii),  then the Company shall  promptly  reimburse  Parent for all
      documented out-of-pocket expenses of Parent and its subsidiaries, up to an
      amount  of  $1,000,000,  incurred  in  connection  with  the  transactions
      contemplated hereby.



<PAGE>


      (ii) If the  Company  shall have  terminated  this  Agreement  pursuant to
      Section 8.01(e)(i),  8.01(e)(ii) or 8.01(f)(i), then Parent shall promptly
      reimburse the Company for all documented out-of-pocket expenses of Company
      and  its  subsidiaries,  up  to  an  amount  of  $1,000,000,  incurred  in
      connection with the transactions contemplated hereby.

           (iii)If  Parent or Purchaser  shall have  terminated  this  Agreement
      pursuant to Section 8.01(d)(iii) or the Company shall have terminated this
      Agreement  pursuant  to  Section  8.01(e)(iii),  then in any such case the
      Company  shall,  (i) in the  event of any such  termination  by  Parent or
      Purchaser within one business day after the date of such  termination,  or
      (ii) in the event of any such  termination  by the Company,  prior to such
      termination and as a condition to the  effectiveness of such  termination,
      pay Parent a termination  fee of $5,000,000.  In no event will the amounts
      received  by Parent  pursuant  to this  Section  8.02(b)(iii)  and Section
      8.02(b)(i) exceed, in the aggregate, $6,000,000.

           (iv)  Notwithstanding  any other provision  hereof, no fee or expense
      reimbursement  shall be paid pursuant to this Section 8.02(b) to any party
      who shall be in material breach of its obligations hereunder. For purposes
      of this clause (iv), Parent and Purchaser shall be deemed a single party.

      SECTION 8.03  Amendment.  This Agreement may be amended by action taken by
or on  behalf  of  the  Boards  of  Directors  of  the  Company  (excluding  any
representative  of Parent or any subsidiary of Parent),  Parent and Purchaser at
any time before or after adoption of this Agreement by the  stockholders  of the
Company but, after any such approval, no amendment shall be made which decreases
the Transaction  Consideration or otherwise adversely affects such stockholders.
This  Agreement may not be amended  except by an instrument in writing signed on
behalf of all the parties.

      SECTION 8.04  Extension;  Waiver.  Subject to Section 1.01 hereof,  at any
time prior to the Effective Time, the parties  hereto,  by action taken by or on
behalf of the  respective  Boards of  Directors  of the Company  (excluding  any
representative of Parent or any subsidiary of Parent), Parent and Purchaser, may
(i) extend the time for the  performance of any of the obligations or other acts
of any  other  applicable  party  hereto,  (ii)  waive any  inaccuracies  in the
representations and warranties contained herein by any other applicable party or
in any document,  certificate or writing delivered  pursuant hereto by any other
applicable  party or (iii) waive  compliance  with any of the  agreements of any
other  applicable  party  or with any  conditions  to its own  obligations.  Any
agreement  on the part of any other  applicable  party to any such  extension or
waiver shall be valid only if set forth in an  instrument  in writing  signed on
behalf of such party.

                             ARTICLE IXMISCELLANEOUS

      SECTION   9.01   Survival   of   Representations   and   Warranties.   The
representations  and warranties  made in this Agreement shall not survive beyond
the Effective  Time. This Section 9.01 shall not limit any covenant or agreement
of the parties hereto,  which by its terms  contemplates  performance  after the
Effective Time.



<PAGE>


SECTION 9.02 Brokerage Fees and Commissions. Except for ING Barings, the Company
hereby  represents  and warrants to Parent with  respect to the Company,  Parent
hereby  represents  and  warrants  to the  Company  with  respect  to Parent and
Purchaser,  that no person is  entitled  to receive  from the Company or Parent,
respectively,  or  any of  their  respective  subsidiaries  or  affiliates,  any
investment banking,  brokerage or finder's fee or fees for financial  consulting
or advisory  services in  connection  with this  Agreement  or the  transactions
contemplated hereby.

      SECTION 9.03 Entire Agreement;  Assignment. This Agreement (a) constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and  understandings,  both written and
oral (other than the agreement referred to in Section 6.03(b) hereof), among the
parties or any of them with respect to the subject matter  hereof,  (b) shall be
binding upon the parties hereto and their  successors and permitted  assigns and
(c) shall not be assigned by operation of law or otherwise, provided that Parent
or Purchaser  may assign its  respective  rights and  obligations  to any wholly
owned,  direct or indirect,  subsidiary of Parent,  but no such assignment shall
relieve Parent of its  obligations  hereunder.  It is understood and agreed that
either Parent,  Purchaser or any other direct wholly owned  subsidiary of Parent
may commence the Offer or purchase Shares thereunder (in which event, references
herein  to  (and  similar  to)  Purchaser  purchasing  Shares  shall  be  deemed
appropriately modified).

      SECTION 9.04 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or  enforceability  of any other
provisions  of this  Agreement,  each of which  shall  remain in full  force and
effect.

      SECTION 9.05 Notices.  All notices,  requests,  claims,  demands and other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given when  delivered  in person or by next-day  courier,  or by  facsimile
transmission with confirmation of receipt to the respective parties as follows:

           If to Parent or Purchaser:

           Zale Corporation
           961 West Walnut Hill Lane
           Irving, TX 75038-1003
           Attention:  Alan Shor
           Facsimile No.: (972) 580-5336




<PAGE>


           with a copy to:

           Zale Corporation
           901 West Walnut Hill Lane
           Irving, TX 75038-1003
           Attention:  Susan Lanigan
           Facsimile No.:  (972) 580-5336

           and a copy to:

           Troutman Sanders LLP
           600 Peachtree Street, NE
           Suite 5200
           Atlanta, GA 30308-2216
           Attention:  W. Brinkley Dickerson, Jr.
           Facsimile No.: (404) 885-3900

           If to the Company:

           Piercing Pagoda, Inc.
           3910 Adler Place
           Lehigh Valley, PA 18002-5007
           Attention: President
           Facsimile No.: (610) 694-9077

           with a copy to:

           Wolf, Block, Schorr and Solis-Cohen LLP
           1650 Arch Street, 22nd Floor
           Philadelphia, PA 19103
           Attention:  Jason M. Shargel
           Facsimile No.:  (215) 977-2334

or to such  other  address  as the  person  to whom  notice  is  given  may have
previously  furnished  to the others in  writing  in the manner set forth  above
(provided  that  notice of any change of address  shall be  effective  only upon
receipt thereof). Any such notice shall be effective upon receipt, if personally
delivered  or sent by  facsimile  transmission,  or one day after  delivery to a
courier for next-day  delivery.  Nothing in this Section 9.05 shall be deemed to
constitute  consent  to the  manner  and  address  for  service  of  process  in
connection with any legal proceeding  (including litigation arising out of or in
connection with this Agreement),  which service shall be effected as required by
applicable law.

      SECTION  9.06  Governing  Law.  This  Agreement  shall be  governed by and
construed in  accordance  with the laws of the State of Delaware,  regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

      SECTION 9.07  Descriptive  Headings.  The descriptive  headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning of interpretation of this Agreement.



<PAGE>



      SECTION 9.08  Counterparts.  This Agreement may be executed in two or more
counterparts,  each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

      SECTION 9.09 Expenses.  Subject to Section 8.02(b), all costs and expenses
incurred in connection  with the  transactions  contemplated  by this  Agreement
shall be paid by the party incurring such expenses.

      SECTION 9.10 Third Party Beneficiaries. Except for Sections 2.08, 6.06 and
6.07 which are intended to confer third party beneficiary  rights on the persons
referred to therein, this Agreement is not intended to, and does not, create any
rights or benefits of any person other than the parties hereto.

      SECTION 9.11 Certain Definitions.

           (a) "Governmental  Authority" means any United States federal, state,
      county  or local  or  other  governmental,  regulatory  or  administrative
      authority, agency, instrumentality or commission or any court, tribunal or
      judicial or arbitral body.

           (b)  "subsidiary"  shall mean, when used with reference to an entity,
      any  corporation  or other entity,  a majority of the  outstanding  voting
      securities of which are owned directly or indirectly by such entity.

           (c) "Material  Adverse  Effect" shall mean any adverse  change in the
      financial  condition,   assets,   liabilities,   business  or  results  of
      operations  of the Company and its  subsidiaries  which is material to the
      Company  and its  subsidiaries  taken  as a whole  or the  ability  of the
      Company to perform its  obligations  under this Agreement or to consummate
      the transactions  contemplated  hereby,  excluding any changes relating to
      general economic or conditions affecting at any time the Company or any of
      its  subsidiaries  or the  industry  or  industries  in which  any of them
      operate.  Notwithstanding  the foregoing,  the Company may, at its option,
      include in the Disclosure  Schedules items which would not have a Material
      Adverse  Effect  within the  meaning of the  previous  sentence,  and such
      inclusion shall not be deemed to be an  acknowledgment by the Company that
      such  items  would have a Material  Adverse  Effect or further  define the
      meaning of such term for purposes of this Agreement.

           (d) "person" shall include individuals,  corporations,  partnerships,
      limited liability companies, trusts, other entities and groups.

           (e)  "knowledge  of the Company"  shall be deemed to include only the
      actual knowledge after  reasonable  inquiry of the directors and Executive
      Officers of the Company.

           (f) "Executive  Officer" shall mean these individuals listed in Annex
      B to this Agreement.



<PAGE>



           (g)  "Final Date" shall mean December 31, 2000.

           (h) "Environmental Law" shall mean any United States federal,  state,
      local or  non-United  States laws  relating to (i) releases or  threatened
      releases  of  Hazardous   Substances  or  material  containing   Hazardous
      Substances,  (ii) the manufacture,  handling,  transport,  use, treatment,
      storage or  disposal  of  Hazardous  Substances  or  materials  containing
      Hazardous Substances, or (iii) pollution or protection of the environment,
      health or natural resources.

           (i) "Hazardous Substances" shall mean (i) those substances defined in
      or regulated as  hazardous or toxic  substances,  material or wastes under
      the following United States federal statutes and their state counterparts,
      as each may be amended from time to time, and all regulations  thereunder:
      the Hazardous Materials  Transportation Act, the Resource Conservation and
      Recovery Act, the Comprehensive  Environmental Response,  Compensation and
      Liability  Act,  the Clean Water Act,  the Safe  Drinking  Water Act,  the
      Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act
      and the Clean Air Act, (ii)  petroleum and petroleum  products,  including
      crude oil and any fractions thereof, (iii) natural gas, synthetic gas, and
      any mixtures thereof, (iv) polychlorinated biphenyls,  asbestos and radon,
      (v) any  other  contaminant,  and (vi) any  substance,  material  or waste
      regulated  as a  hazardous  or toxic  substance,  material or waste by any
      Governmental Authority pursuant to any Environmental Law.

      SECTION 9.12 Consent to  Jurisdiction.  Each of Parent,  Purchaser and the
Company irrevocably  submits to the exclusive  jurisdiction of (a) the courts of
the State of Delaware, and (b) the United States District Court for the District
of Delaware for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction  contemplated hereby.  Parent and Purchaser
irrevocably designate,  appoint and empower Troutman Sanders LLP (Attention:  W.
Brinkley  Dickerson,  Jr., Esquire) Bank of America Plaza, 600 Peachtree Street,
N.E. - Suite 5200,  Atlanta,  Georgia 30308, and the Company hereby  irrevocably
designates,  appoints and  empowers  Wolf,  Block,  Schorr and  Solis-Cohen  LLP
(Attention:   Jason  M.  Shargel,   Esquire)  1650  Arch  Street,   22nd  Floor,
Philadelphia,  PA  19103,  in  each  case  as its  true  and  lawful  agent  and
attorney-in-fact  in its  name,  place and stead to  receive  and  accept on its
behalf service of process in any action, suit or proceeding in Pennsylvania with
respect to any matters as to which it has submitted to jurisdiction as set forth
in the immediately preceding sentence.

      SECTION 9.13 Construction;  Interpretation.  The parties hereby agree that
any rule of law or any legal decision that would require  interpretation  of any
claimed  ambiguities in this Agreement  against the party that drafted it has no
application and is expressly waived.




<PAGE>


      IN WITNESS  WHEREOF,  each of the parties has caused this  Agreement to be
executed under seal on its behalf by its officers thereunto duly authorized, all
as of the day and year first above written.

                          ZALE CORPORATION


                          By:  /s/ Beryl Raff
                                Name: Beryl Raff
                              Title: President/CEO


                          JEWELRY EXPANSION CORP.


                              By: /s/ Alan P. Shor
                               Name: Alan P. Shor
                                Title: President


                          PIERCING PAGODA, INC.


                            By: /s/ John F. Eureyecko
                              Name:   John F. Eureyecko
                                Title: President





<PAGE>



                                     ANNEX A

                                       to

Agreement and Plan of Merger1

      Conditions of the Offer. Notwithstanding any other provisions of the Offer
or the Merger  Agreement,  Purchaser shall not be required to accept for payment
or, subject to any applicable  rules and regulations of the SEC,  including Rule
14e-1(c) under the Exchange Act (relating to a bidder's obligation to pay for or
return tendered  securities promptly after the termination or withdrawal of such
bidder's  offer) to pay for any Shares tendered  pursuant to the Offer,  and may
extend,  terminate or amend the Offer, unless (i) there are validly tendered and
not withdrawn  immediately prior to the expiration date of the Offer a number of
Shares,  which  when  added to the  Shares  then  beneficially  owned by  Parent
represent  at least a majority of the total  number of Shares  outstanding  on a
fully diluted basis (the "Minimum Condition"),  (ii) the waiting period (and any
extension  thereof)  under  the HSR Act  applicable  to the  purchase  of Shares
pursuant to the Offer shall have expired or been  terminated  and all regulatory
approvals  required  to  consummate  the Offer and the  Merger  shall  have been
obtained  and shall  remain in full  force and effect or (iii) at any time on or
after the date of the Agreement and prior to the  expiration of the Offer any of
the following conditions exists:

           (a)  there  shall be  instituted  or  pending  any  suit,  action  or
        proceeding by any Governmental  Authority which seeks to (i) restrain or
        prohibit the making or  consummation  of the Offer or the Merger or (ii)
        restrain or prohibit  the  performance  of the Merger  Agreement;  (iii)
        restrain or  prohibit  Parent's  ownership  of all or any portion of the
        business  and assets of the Company and its  subsidiaries,  or to compel
        Parent or its  affiliates  to  dispose  of or hold  separate  all or any
        portion of the  business  or assets of the  Company;  or (iv)  impose or
        confirm  any  limitation  on the ability of Parent or  Purchaser  or any
        affiliate of Parent or Purchaser to exercise  effectively full rights of
        ownership of any Shares,  including,  without  limitation,  the right to
        vote any Shares acquired by Purchaser pursuant to the Offer or otherwise
        on all matters properly presented to the Company's shareholders; or

           (b) there shall have been any statute, rule, regulation,  legislation
      or  interpretation  enacted,   promulgated,   amended,  issued  or  deemed
      applicable  to (i) Parent,  the Company or any  subsidiary or affiliate of
      Parent or the Company or (ii) any of the transactions  contemplated by the
      Agreement,  by any United States or non United States  legislative body or
      Governmental  Authority  with  appropriate  jurisdiction,  other  than the
      routine application of the waiting period provisions of the HSR Act and in
      the other countries  where a merger filing was necessary or advisable,  to
      the Offer or the Merger, that is reasonably likely to result, directly or


<PAGE>


      indirectly in any of the consequences referred to in clauses (i) through
      (iv) of paragraph (a) above;

           (c) (i) any  representation  or  warranty  made by the Company in the
      Merger Agreement that is qualified as to Material Adverse Effect is untrue
      at the time such  representation or warranty was made or shall not be true
      and correct as of the date of  consummation of the Offer (except for those
      representations  and  warranties  made as of a particular  date which need
      only be true and correct as of such date) or (ii) any  representations  or
      warranties  made by the  Company in the Merger  Agreement  that are not so
      qualified  as to Material  Adverse  Effect shall not be true or correct in
      all respects as of the date of consummation of the Offer (except for those
      representations  and  warranties  made as of a particular  date which need
      only be true and correct as of such date),  unless the failure of all such
      representations and warranties in this clause (ii) to be true and correct,
      individually or in the aggregate,  has had or would reasonably be expected
      to have a Material Adverse Effect; or

           (d) there  shall  have been a breach in any  material  respect by the
      Company (which breach has not been cured in all material  respects) of any
      of its covenants or agreements  contained in the Merger Agreement,  except
      for any such  breaches  or  failures  to  perform  that  would  not have a
      Material Adverse Effect; or

           (e)  the Merger Agreement shall have been terminated in accordance
      with its terms; or

           (f) the Company's  Board of Directors or any  committee  thereof will
      have withdrawn or modified  (including by amendment of the Schedule 14D-9)
      in a manner adverse to Parent or Purchaser its approval or  recommendation
      of the Offer, the Merger Agreement or the Merger, or will have recommended
      to the Company's stockholders any Alternative Acquisition Proposal or will
      have adopted any resolution to effect any of the foregoing  which,  in the
      sole  judgment  of  Purchaser  in any such  case,  and  regardless  of the
      circumstances  (including any action or omission by Purchaser) giving rise
      to  any  such  condition,  makes  it  inadvisable  to  proceed  with  such
      acceptance or payment; or

           (g)  any  Person  (other  than  Parent  or any  of its  subsidiaries)
      acquires beneficial  ownership (as defined in Rule 13d-3 promulgated under
      the Securities  Exchange Act of 1934),  of at least 25% of the outstanding
      voting  securities  of the  Company or is  granted  by the  Company or any
      shareholder  of the  Company  that is a party  to the  Tender  and  Voting
      Agreement  any  option or right to  acquire  at least  15% of such  voting
      securities  (as used  herein,  "Person"  shall  include  any  corporation,
      individual, partnership, limited liability company, trust, other entity or
      group (as defined in the  Exchange  Act),  other than Parent or any of its
      affiliates (as defined in the Exchange Act)); or

           (h) Since the date of this Agreement,  any change shall have occurred
      which has, or could  reasonably  be expected to have,  a Material  Adverse
      Effect; or




<PAGE>


           (i) there shall be in effect a declaration of a banking moratorium or
      any suspension of payments in respect of banks in the United States.

which,  in the reasonable  judgment of Parent or Purchaser in any such case, and
regardless  of the  circumstances  giving rise to any such  condition,  makes it
inadvisable to proceed with such acceptance for payment or payment.

      The foregoing  conditions are for the sole benefit of Purchaser and Parent
and,  subject to Section  1.01(a) of the Merger  Agreement,  may be  asserted by
Purchaser  and  Parent  regardless  of the  circumstances  giving  rise  to such
condition  or may be  waived by  Purchaser  or Parent in whole or in part at any
time and from time to time in its sole  discretion,  subject in each case to the
terms of the Merger Agreement. The failure by Purchaser or Parent at any time to
exercise  any of the  foregoing  rights shall not be deemed a waiver of any such
right,  each such right shall be deemed an ongoing  right and may be asserted at
any time and from time to time and the waiver of any such right with  respect to
particular  facts and  circumstances  shall  not be  deemed to be a waiver  with
respect to any other facts and circumstances.




<PAGE>


                                     ANNEX B

                          Agreement and Plan of Merger

                               EXECUTIVE OFFICERS


Richard H. Penske...............Chief Executive Officer
John F. EureyeckoPresident, Chief Operating Officer and Secretary
Sharon J. ZondagSenior Vice President - Store Operations
Barry R. ClauserSenior Vice President - Merchandise Operations
Gilbert P. HollanderSenior Vice President of Merchandise Purchasing
Brandon R. Lehman.............................Treasurer
Lisa E. Sankovsky..........Vice President - Real Estate
Richard J. McKeonDirector of Management Information Systems
Christopher J. Barone..............Corporate Controller