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                                                                     EXHIBIT 2.1

                          AGREEMENT AND PLAN OF MERGER

                          DATED AS OF AUGUST 11, 2000,

                                     AMONG

                 PREMIER CONSTRUCTION PRODUCTS STATUTORY TRUST,

                PREMIER CONSTRUCTION PRODUCTS ACQUISITION CORP.

                                      AND

                          REPUBLIC GROUP INCORPORATED
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                          AGREEMENT AND PLAN OF MERGER

   This AGREEMENT AND PLAN OF MERGER, dated as of August 11, 2000, is among
PREMIER CONSTRUCTION PRODUCTS STATUTORY TRUST, a statutory trust ("the Trust"),
PREMIER CONSTRUCTION PRODUCTS ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of the Trust ("Acquisition Sub"), and REPUBLIC GROUP
INCORPORATED, a Delaware corporation (the "Company").

                                   RECITALS:

   WHEREAS, the beneficiary of the Trust and the Boards of Directors of
Acquisition Sub and the Company have approved the merger (the "Merger") of
Acquisition Sub with and into the Company upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding share of
common stock, par value $1.00 per share (other than shares owned by the Company
and other than Dissenting Shares (as defined in Section 2.1(d)) and the
associated Right (as defined herein) ("Company Common Stock"; shares of Company
Common Stock being hereinafter collectively referred to as the "Shares") will
be converted into the right to receive in cash $19.00 per Share, without
interest; and

   WHEREAS, the beneficiary of the Trust and the respective Boards of Directors
of Acquisition Sub and the Company have each approved and adopted this Agreement
and the Merger upon the terms and subject to the conditions set forth herein;
and

   WHEREAS, the Trust and Acquisition Sub have agreed to cause the Letter of
Credit (as defined below) to be issued on the date hereof as set forth in
Section 7.2(b) and have delivered same to the Company; and

   WHEREAS, the Company's Board of Directors has unanimously determined that
the consideration to be paid for each Share in the Merger is fair to the
holders of such Shares and recommends that the holders of such Shares approve
and adopt this Agreement, the Merger and the other transactions contemplated
hereby; and

   WHEREAS, as an inducement to the willingness of each of the Trust and
Acquisition Sub to enter into this Agreement, each of the Company's executive
officers and directors (collectively, the "Officers and Directors") have
entered into an agreement with the Trust and Acquisition Sub (individually, a
"Stockholder Agreement" and collectively, the "Stockholders Agreements")
pursuant to which each such person (and any entity controlled by such person)
has agreed, among other things, (i) to vote their Shares for approval and
adoption of this Agreement and the transactions contemplated hereby at the
Company Stockholder Meeting (as defined below), (ii) to grant a proxy to
certain designated persons to so vote their Shares and (iii) to certain
restrictions on the transfer of their Shares; and

   WHEREAS, the Trust, Acquisition Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;

   NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:

                                   ARTICLE 1

                                   The Merger

Section 1.1 The Merger.

   Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the Delaware General Corporation Law (the "DGCL"), at
the Effective Time (as defined in Section 1.3)

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Acquisition Sub shall be merged with and into the Company and the separate
corporate existence of Acquisition Sub shall cease. The Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall possess
all the rights, powers, privileges and franchises, and be subject to all of the
obligations, liabilities, restrictions and disabilities, of the Company and
Acquisition Sub in accordance with the DGCL.

Section 1.2 Closing.

   Subject to the provisions of this Agreement, the closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article 6, at
the offices of Andrews & Kurth L.L.P., 4200 Chase Tower, Houston, Texas 77002,
unless another time, date or place is agreed to in writing by the parties
hereto.

Section 1.3 Effective Time.

   Subject to the provisions of this Agreement, on the Closing Date, the
Company and Acquisition Sub shall file a certificate of merger (the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the
DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such
subsequent time as the Trust and the Company shall agree and as is specified in
the Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").

Section 1.4 Effects of the Merger.

   The Merger shall have the effects specified in Section 259 of the DGCL.

Section 1.5 Certificate of Incorporation and By-laws.

    (a) The certificate of incorporation of Acquisition Sub, as in effect
        immediately prior to the Effective Time, shall be the certificate
        of incorporation of the Surviving Corporation until thereafter
        changed or amended as provided therein or by applicable law, except
        that (i) the name of the Surviving Corporation shall continue to be
        Republic Group Incorporated and (ii) the terms of Article TENTH of
        the Company's Second Restated Certificate of Incorporation shall be
        included in the certificate of incorporation of the Surviving
        Corporation (and shall supersede and replace in its entirety any
        provision in the certificate of incorporation of Acquisition Sub
        with respect to indemnification of directors or officers or former
        directors or officers).

    (b) The by-laws of Acquisition Sub as in effect immediately prior to
        the Effective Time shall be the by-laws of the Surviving
        Corporation until thereafter changed or amended as provided therein
        or by applicable law, except that at the Effective Time Article VI
        of the Company's by-laws shall replace the provision(s), if any, on
        indemnification included in the by-laws of Acquisition Sub.

Section 1.6 Directors.

   From and after the Effective Time, the directors of Acquisition Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be. Each
of the members of the Board of Directors of the Company shall tender his
resignation to be effective immediately at the Effective Time.

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Section 1.7 Officers.

   From and after the Effective Time, the officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.

                                   ARTICLE 2

                          Effect of the Merger on the
                 Capital Stock of the Constituent Corporations

Section 2.1 Effect on Capital Stock.

   As of the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock:

    (a) Capital Stock of Acquisition Sub. Each issued and outstanding share
        of capital stock of Acquisition Sub shall be converted into and
        become one fully paid and non-assessable share of Common Stock of
        the Surviving Corporation with the same rights, powers and
        privileges as the share so converted and shall constitute the only
        outstanding shares of capital stock of the Surviving Corporation.

    (b) Cancellation of Treasury Stock. Each share of Company Common Stock
        owned by the Company or any subsidiary of the Company shall
        automatically be canceled and retired and shall cease to exist, and
        no consideration shall be delivered in exchange therefor.

    (c) Conversion of Company Common Stock. Except as otherwise provided
        herein, each share of Company Common Stock outstanding immediately
        prior to the Effective Time (other than shares to be cancelled in
        accordance with Section 2.1(b) and other than Dissenting Shares)
        shall be cancelled and automatically converted into the right to
        receive $19.00 in cash, without interest, from the Trust or, in
        accordance with Section 2.1(f), the Surviving Corporation.

    (d) Shares of Dissenting Stockholders. Notwithstanding anything in this
        Agreement to the contrary but only to the extent required by the
        DGCL, shares of Company Common Stock that are issued and
        outstanding immediately prior to the Effective Time and held by a
        person (a "Dissenting Stockholder") who shall not have voted to
        approve and adopt this Agreement or consented thereto in writing
        and who shall have complied with all of the provisions of the DGCL
        to dissent from the Merger and to demand appraisal for such shares
        in accordance with Section 262 of the DGCL ("Dissenting Shares")
        shall not be converted as described in Section 2.1(c), unless such
        holder fails to perfect or withdraws or otherwise loses his right
        to appraisal, but shall instead become the right to receive such
        consideration as may be determined to be due such Dissenting
        Stockholder pursuant to the DGCL. If, after the Effective Time,
        such Dissenting Stockholder fails to perfect or withdraws or
        otherwise loses his right to appraisal, then such Dissenting
        Stockholder's shares of Company Common Stock shall no longer be
        considered Dissenting Shares for the purposes of this Agreement and
        shall thereupon be deemed to have been converted into and to have
        become exchangeable for, at the Effective Time, the right to
        receive for each such share the amount in cash, without interest,
        that a holder of a share (a "Nondissenting Share") of Company
        Common Stock who had not demanded appraisal would have received
        with respect to such Nondissenting Share. The Company shall give
        Acquisition Sub (i) prompt notice of any demands for appraisal of
        shares of Company Common Stock received by the Company and (ii) the
        opportunity to participate in and direct all negotiations and
        proceedings with respect to any such demands. The Company shall
        not, without the prior written consent of Acquisition Sub, make any
        payment with respect to, or settle, offer to settle or otherwise
        negotiate, any such demands, or agree or commit to do any of the
        foregoing.

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    (e) Cancellation of Company Common Stock. As of the Effective Time, all
        shares of Company Common Stock outstanding immediately prior to the
        Effective Time shall no longer be outstanding and shall
        automatically be canceled and shall cease to exist, and each holder
        of a certificate that immediately prior to the Effective Time
        represented any such shares of Company Common Stock (a
        "Certificate") shall cease to have any rights with respect thereto,
        except the right to receive the amount per Share specified in
        Section 2.1(c) upon surrender of such Certificate in accordance
        with Section 2.2, without interest, or, in the case of Dissenting
        Stockholders, if any, the rights, if any, accorded under Section
        262 of the DGCL.

Section 2.2 Exchange of Certificates.

    (a) Prior to the mailing of the Proxy Statement (as defined in Section
        3.1(d)), the Trust shall enter into an agreement with a bank or
        trust company mutually acceptable to the Company and the Trust, to
        act as Paying Agent (the "Paying Agent") for the payment of the
        amount per share specified in Section 2.1(c).

      (b) Stock Options.

      (i) At or immediately prior to the Effective Time, each employee or
          director stock option to purchase Company Common Shares
          outstanding under any stock option or compensation plan or
          arrangement of the Company shall be cancelled, and the Company
          or the Surviving Corporation shall pay each holder of any such
          option at or promptly after the Effective Time for each such
          option an amount in cash determined by multiplying (A) the
          excess, if any, of $19.00 over the applicable exercise price of
          such option by (B) the number of shares of Company Common Stock
          such holder could have purchased (assuming full vesting and
          exercisability of all options) had such holder exercised such
          option in full immediately prior to the Effective Time.

      (ii) Prior to the Effective Time, the Company shall (A) use its best
           efforts to obtain any consents from holders of options to
           purchase Company Common Stock granted under the Company's stock
           option or compensation plans or arrangements and (B) make any
           amendments to the terms of such stock option or compensation
           plans or arrangements that, in the case of either clauses (A)
           or (B), are necessary to give effect to the transactions
           contemplated by part (b)(i) of this Section. Notwithstanding
           any other provision of this Section, payment may be withheld in
           respect of any employee stock option until such necessary
           consents are obtained. Except as provided in part (b)(i) of
           this Section 2.2, the Company shall not make any payment in
           respect of or in connection with the cancellation of any stock
           option.

    (c) Deposit with the Paying Agent. Promptly after the Effective Time,
        the Trust shall deposit with the Paying Agent, for the benefit of
        the holders of shares of Company Common Stock, for payment through
        the Paying Agent, cash in such amounts and at times necessary for
        the prompt payment of the per Share amount specified in Section
        2.1(c) (such cash being hereinafter referred to as the "Exchange
        Fund") pursuant to Section 2.1 in exchange for outstanding shares
        of Company Common Stock upon surrender of Certificates therefor.

    (d) Exchange Procedures. As soon as reasonably practical after the
        Effective Time, the Paying Agent shall mail to each holder of
        record of a Certificate or Certificates, (i) a letter of
        transmittal (which shall specify that delivery shall be effected,
        and risk of loss and title to such Certificates shall pass, only
        upon delivery of such Certificates to the Paying Agent, and which
        letter shall be in such form and have such other provisions as the
        Trust and the Company may reasonably specify) and (ii) instructions
        for use in effecting the surrender of such Certificates in exchange
        for the amount per Share specified in Section 2.1(c). Upon
        surrender of such a Certificate for cancellation to the Paying
        Agent or to such other agent or agents as may be appointed by the

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       Trust, together with such letter of transmittal, duly executed, and
       such other documents as may reasonably be required by the Paying
       Agent, the holder of such Certificate shall be entitled to receive in
       exchange therefor cash which such holder has the right to receive
       pursuant to this Article 2, and the Certificate so surrendered shall
       forthwith be cancelled. Upon a transfer of ownership of Company
       Common Stock that is not registered in the transfer records of the
       Company, cash may be paid to a person other than the person in whose
       name the Certificate so surrendered is registered, if such
       Certificate shall be properly endorsed or otherwise be in proper form
       for transfer and the person requesting such cash to be paid shall (i)
       have paid any transfer or other Taxes (as defined in Section 3.1(m))
       required by reason of the payment of cash to a person other than the
       registered holder of such Certificate or (ii) establish to the
       satisfaction of the Trust that such Tax has been paid or is not
       applicable. Until surrendered as contemplated by this Section 2.2(d),
       each Certificate shall be deemed at any time after the Effective Time
       to represent only the right to receive upon such surrender the amount
       per Share specified in Section 2.1(c) which the holder thereof has
       the right to receive in respect of such Certificate pursuant to the
       other provisions of this Article 2. No interest will be paid or will
       accrue on any cash payable to holders of Certificates pursuant to the
       provisions of this Article 2. The Trust shall pay the charges and
       expenses of the Paying Agent and of such other agent or agents as it
       may appoint.

    (e) No Further Ownership Rights in Company Common Stock. All cash paid
        shall be deemed to have been paid and issued in full satisfaction of
        all rights pertaining to the shares of Company Common Stock
        theretofore represented by such Certificates, subject, however, to
        the Surviving Corporation's obligation to pay any dividends or make
        any other distributions with a record date prior to the Effective
        Time that may have been declared or made by the Company on such
        shares of Company Common Stock in accordance with the terms of this
        Agreement or prior to the date of this Agreement and which remain
        unpaid at the Effective Time, and as of the Effective Time, the
        stock transfer books of the Company shall be closed, and there shall
        be no further registration of transfers of the shares of Company
        Common Stock. If, after the Effective Time, Certificates are
        presented to the Surviving Corporation or the Paying Agent for any
        reason, then they shall be canceled and exchanged as provided in
        this Article 2, except as otherwise provided by law.

    (f) Termination of Exchange Fund. Any portion of the Exchange Fund that
        remains undistributed to the holders of the Certificates for nine
        months after the Effective Time shall be delivered to the Surviving
        Corporation, upon demand, and any holders of the Certificates who
        have not theretofore complied with this Article 2 shall thereafter
        look only to the Surviving Corporation for payment of the cash
        amount per Share due pursuant to this Article 2. Any amounts
        remaining unclaimed by holders of Company Common Stock three years
        after the Effective Time (or such earlier date immediately prior to
        such time when the amounts would otherwise escheat to or become
        property of any governmental authority) shall become, to the extent
        permitted by applicable law, the property of the Surviving
        Corporation free and clear of any claims or interest of any person
        previously entitled thereto. Any cash amounts made available to the
        Paying Agent pursuant to Section 2.2(c) (or otherwise constituting a
        part of the Exchange Fund) to pay for shares of Company Common Stock
        constituting Dissenting Shares for which appraisal rights have been
        perfected shall be returned to the Surviving Corporation upon
        demand.

    (g) No Liability. Notwithstanding any other provision of this Agreement,
        none of the Trust, the Company or the Paying Agent shall be liable
        to any person in respect of any amount paid to a public official
        pursuant to any applicable abandoned property, escheat or similar
        law.

    (h) Investment of Exchange Fund. The Paying Agent shall invest any cash
        included in the Exchange Fund, as directed by the Trust, on a daily
        basis. Any interest and other income resulting from such investments
        shall be paid to the Trust.

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    (i) Lost Certificates. If any Certificate shall have been lost, stolen
        or destroyed, then upon the making of an affidavit of that fact by
        the person claiming such Certificate to be lost, stolen or
        destroyed and, if required by the Surviving Corporation, the
        posting by such person of a bond in such reasonable amount as the
        Surviving Corporation may direct as indemnity against any claim
        that may be made against the Surviving Corporation with respect to
        such Certificate, the Paying Agent will pay in exchange for such
        lost, stolen or destroyed Certificate the amount per share to be
        paid pursuant to Section 2.1(c) in respect of the shares of Company
        Common Stock represented by such Certificate, as contemplated by
        this Agreement.

    (j) Withholding Rights. Each of the Trust, the Surviving Corporation
        and the Paying Agent shall be entitled to deduct and withhold from
        the consideration otherwise payable pursuant to this Agreement to a
        holder of shares of Company Common Stock such amounts as the Trust,
        the Surviving Corporation or the Paying Agent is required to deduct
        and withhold with respect to such consideration under the Internal
        Revenue Code of 1986, as amended (the "Code"), or any provision of
        Federal, state, local or foreign tax law. To the extent that
        amounts are so withheld and paid over to the appropriate taxing
        authority by the Trust, the Surviving Corporation or the Paying
        Agent, such withheld amounts shall be treated for all purposes of
        this Agreement as having been paid to the holder of the shares of
        Company Common Stock in respect of which such deduction and
        withholding was made by the Trust, the Surviving Corporation or the
        Paying Agent, as the case may be.

                                   ARTICLE 3

                         Representations and Warranties

Section 3.1 Representations and Warranties of the Company.

   Except as set forth with respect to an identified representation and
warranty on the Disclosure Schedule delivered by the Company to the Trust at
the execution of this Agreement (the "Company Disclosure Schedule"), the
Company represents and warrants to the Trust and Acquisition Sub as follows:

    (a) Organization, Standing and Corporate Power. The Company is a
        corporation duly organized, validly existing and in good standing
        under the laws of the State of Delaware and has the requisite
        corporate power and authority to carry on its business as now being
        conducted. The Company is duly qualified or licensed to do business
        and is in good standing in each jurisdiction in which the nature of
        its business or the ownership or leasing of its properties makes
        such qualification or licensing necessary, other than in such
        jurisdictions where the failure to be so qualified or licensed or
        to be in good standing individually or in the aggregate would not
        reasonably be expected to have a material adverse effect (as
        defined in Section 9.3) on the Company. The Company has heretofore
        made available to the Trust true and correct copies of the
        certificate of incorporation and by-laws of the Company, as
        currently in effect.

    (b) Subsidiaries. The Company Disclosure Schedule sets forth a true and
        complete list of each subsidiary of the Company and its respective
        jurisdiction of incorporation. Each such subsidiary is a
        corporation duly organized, validly existing and in good standing
        under the laws of the jurisdiction in which it is incorporated and
        has the requisite corporate power and authority to carry on its
        business as now being conducted. Each such subsidiary is duly
        qualified or licensed to do business and is in good standing in
        each jurisdiction in which the nature of its business or the
        ownership or leasing of its properties makes such qualification or
        licensing necessary, other than in such jurisdictions where the
        failure to be so qualified or licensed or to be in good standing
        individually or in the aggregate would not reasonably be expected
        to have a material adverse effect on the Company. All the
        outstanding shares of capital stock of each such subsidiary have
        been validly issued and are fully paid and non-assessable and are
        owned directly or indirectly by the Company, free and clear of all
        pledges, claims, mortgages, liens, charges,

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       encumbrances, adverse claims and security interests of any kind or
       nature whatsoever (collectively, "Liens"). Except for the capital
       stock of its subsidiaries, the Company does not own, directly or
       indirectly, any capital stock or other ownership interest in any
       corporation, limited liability company, partnership, joint venture
       or other entity.

    (c) Capital Structure. The authorized capital stock of the Company
        consists of 35,000,000 shares of Company Common Stock, par value
        $1.00 per share, and 487,410 shares of Preferred Stock, without par
        value. At the close of business on August 9, 2000, (i) 11,846,837
        shares of Company Common Stock were issued and outstanding, (ii) no
        shares of Company Common Stock were held by the Company in its
        treasury, (iii) 1,811,307 shares of Company Common Stock were
        reserved for issuance pursuant to the Company's 1989 Long-Term
        Incentive Plan (as amended effective August 16, 1996), the
        Company's Non-Employee Director Stock Option Plan, the Company's
        Employee Stock Purchase Plan and the Company's Dividend
        Reinvestment Plan (collectively, the "Company Stock Plans"), (iv)
        employee and director stock options to purchase an aggregate of
        600,843 shares of Company Common Stock ("Outstanding Stock
        Options") were outstanding, (v) rights (the "Rights") to purchase
        shares of Company Common Stock (and in certain instances to receive
        fractional shares of Preferred Stock of the Company in lieu of
        shares of Company Common Stock) issuable pursuant to the Amended
        and Restated Rights Agreement dated September 19, 1996 (as amended
        from time to time, the "Rights Agreement") between the Company and
        UMB Bank, N.A., as rights agent, were outstanding and (vi) 47,250
        shares of Series C Junior Participating Preferred Stock,
        constituting a series of Preferred Stock, have been designated and
        authorized for issuance pursuant to the Rights Agreement, but no
        shares of Preferred Stock were outstanding. Except as set forth
        above, and for changes since the close of business on August 9,
        2000 resulting from the exercise or vesting of employee and
        director stock options outstanding on such date, (i) no shares of
        capital stock or other voting securities, of or ownership interests
        in the Company were issued, reserved for issuance or outstanding,
        (ii) there were no securities of the Company convertible into or
        exchangeable for shares of capital stock or voting securities and
        (iii) there were no outstanding stock appreciation rights, stock
        options or rights to receive shares of Company Common Stock on a
        deferred basis granted under the Company Stock Plans or otherwise.
        All outstanding shares of capital stock of the Company are, and all
        shares issuable upon exercise of outstanding employee or director
        stock options will be, when issued, duly authorized, validly
        issued, fully paid and non-assessable and not subject to preemptive
        rights. There are no notes, bonds, debentures or other indebtedness
        of the Company having the right to vote (or convertible into, or
        exchangeable for, securities having the right to vote) on any
        matters on which stockholders of the Company may vote. Except as
        set forth above and except for the Company's Dividend Reinstatement
        Plan and Employee Stock Purchase Plan, as to which purchases of
        Shares shall have been suspended pursuant to Section 4.1(d) hereof,
        there are no outstanding securities, options, warrants, calls,
        rights, commitments, agreements, arrangements or undertakings to
        which the Company or any of its subsidiaries was a party or by
        which any of them was bound obligating the Company or any of its
        subsidiaries to issue, deliver or sell, or cause to be issued,
        delivered or sold, additional shares of capital stock or other
        voting securities of the Company or of any of its subsidiaries or
        obligating the Company or any of its subsidiaries to issue, grant,
        extend or enter into any such security, option, warrant, call,
        right, commitment, agreement, arrangement or undertaking. There are
        no outstanding contractual obligations of the Company or any of its
        subsidiaries to repurchase, redeem or otherwise acquire any shares
        of capital stock of the Company or any of its subsidiaries. There
        are no outstanding contractual obligations of the Company to vote
        or to dispose of any shares of the capital stock of any of its
        subsidiaries.

    (d) Authority; Noncontravention. The Company has all requisite
        corporate power and authority to enter into this Agreement and,
        subject to the Company Stockholder Approval (as defined in
        Section 3.1(n)), to consummate the transactions contemplated by
        this Agreement. The execution, delivery and performance of this
        Agreement by the Company and the consummation by the

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       Company of the transactions contemplated by this Agreement have been
       duly authorized by all necessary corporate action on the part of the
       Company, subject, in the case of the approval and adoption of this
       Agreement, to the Company Stockholder Approval. This Agreement has
       been duly executed and delivered by the Company and constitutes the
       legal, valid and binding obligation of the Company, enforceable
       against the Company in accordance with its terms. The execution,
       delivery and performance of this Agreement and the Stockholders
       Agreements do not, and the consummation of the transactions
       contemplated by this Agreement and compliance with the provisions of
       this Agreement and the Stockholders Agreements will not, conflict
       with, or result in any violation of, breach of or default (with or
       without notice or lapse of time, or both) under, or give rise to a
       right of termination, cancellation or acceleration of any obligation
       or to loss of a material benefit under, or result in the creation or
       imposition of any Lien upon any of the properties or assets of the
       Company or any of its subsidiaries under, (i) the certificate of
       incorporation or by-laws of the Company or the comparable
       organizational documents of any of its subsidiaries, (ii) any loan or
       credit agreement, note, bond, mortgage, indenture, lease or other
       agreement, instrument, permit, concession, franchise or license
       applicable to the Company or any of its subsidiaries or their
       respective properties or assets or (iii) subject to the governmental
       filings and other matters referred to in the following sentence, any
       judgment, order, decree, statute, law, ordinance, rule or regulation
       applicable to the Company or any of its subsidiaries or their
       respective properties or assets, other than, in the case of clauses
       (ii) and (iii), any such conflicts, violations, defaults, rights,
       losses or Liens that individually or in the aggregate would not have
       a material adverse effect on the Company. No consent, approval, order
       or authorization of, or registration, declaration or filing with, any
       Federal, state or local government or any court, administrative or
       regulatory agency or commission or other governmental authority or
       agency, domestic or foreign (a "Governmental Entity"), is required by
       or with respect to the Company or any of its subsidiaries in
       connection with the execution, delivery and performance of the
       Stockholders Agreements by the Officers and Directors or of this
       Agreement by the Company or the consummation by the Company of the
       transactions contemplated by this Agreement, except for (1) the
       filing of a premerger notification and report form by the Company
       under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
       amended (the "HSR Act"); (2) the filing with the Securities and
       Exchange Commission (the "SEC") of (A) a proxy statement relating to
       the Company Stockholders Meeting (such proxy statement (as provided
       for in Section 5.1(a)), as amended or supplemented from time to time,
       being the "Proxy Statement"), and (B) such reports under Section
       13(a), 13(d) or 15(d) of the Securities Exchange Act of 1934, as
       amended (the "Exchange Act"), as may be required in connection with
       the Stockholders Agreements and this Agreement and the transactions
       contemplated by this Agreement; (3) the filing of the Certificate of
       Merger with the Delaware Secretary of State and appropriate documents
       with the relevant authorities of other states in which the Company is
       qualified to do business; (4) such filings as are listed on Schedule
       3.1(d) of the Company Disclosure Schedule; and (5) such consents,
       approvals, orders, authorizations, registrations, declarations and
       filings the failure to make or obtain which would not reasonably be
       expected to have a material adverse effect on the Company.

    (e) SEC Documents. The Company has filed all required reports,
        schedules, forms, statements and other documents with the SEC since
        July 1, 1997 (the "SEC Documents"). As of their respective dates,
        the SEC Documents complied or will comply in all material respects
        with the requirements of the Securities Act of 1933, as amended (the
        "Securities Act"), or the Exchange Act, as the case may be, and the
        rules and regulations of the SEC promulgated thereunder applicable
        to such SEC Documents, and, as of their respective dates, none of
        the SEC Documents 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. Except to
        the extent that information contained in any SEC Document has been
        revised or superseded by a later Filed

                                       9
<PAGE>

       SEC Document, none of the SEC Documents contains, and no SEC
       Documents filed after the date of this Agreement and prior to the
       Effective Time will contain, any untrue statement of a material fact
       or omits 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
       financial statements of the Company included in the SEC Documents
       (including, in each case, any notes thereto) comply or will comply as
       to form in all material respects with applicable accounting
       requirements of the SEC with respect thereto, have been prepared or
       will be prepared in accordance with generally accepted accounting
       principles as in effect at the time of application thereof ("GAAP")
       (except, in the case of unaudited statements, as permitted by Form
       10-Q of the SEC and other SEC rules and regulations) applied on a
       consistent basis during the periods involved (except as may be
       indicated in the notes thereto) and fairly present in all material
       respects, or will fairly present in all material respects, the
       consolidated financial position of the Company and its subsidiaries
       as of the dates thereof and the consolidated results of their
       operations and cash flows for the periods then ended (subject, in the
       case of unaudited statements, to normal year-end audit adjustments).

    (f) Other Financial Statements. The consolidated financial statements as
        of and for the year ended June 30, 2000 furnished by the Company to
        the Trust and Acquisition Sub, which consist of a balance sheet as
        of such date (the "Company Balance Sheet") and a statement of
        operations and a statement of cash flows for the year then ended
        (including the notes thereto), and the report of Arthur Andersen LLP
        with respect thereto, was prepared in accordance with GAAP applied
        on a consistent basis during the periods involved and fairly
        presents in all material respects the consolidated financial
        position of the Company and its subsidiaries as of the dates thereof
        and the consolidated results of their operations and cash flows for
        the period then ended.

    (g) No Undisclosed Material Liabilities. At the date of this Agreement,
        there are no liabilities or obligations of the Company or any of its
        subsidiaries of any kind whatsoever, whether accrued, contingent,
        absolute, determined, determinable or otherwise, other than (i)
        liabilities or obligations disclosed in or reserved against in the
        Company Balance Sheet, (ii) liabilities and obligations of a type
        not required to be disclosed in or reserved against in the Company
        Balance Sheet that are (A) referred to in the Company's Annual
        Report on Form 10-K for the year ended June 30, 1999 or any SEC
        Documents filed thereafter (including obligations under agreements,
        plans and other documents filed therewith or incorporated by
        reference therein) or (B) contained in the Disclosure Schedule, and
        (iii) liabilities or obligations incurred in the ordinary course of
        business consistent with past practice that would not reasonably be
        expected to have, individually or in the aggregate, a material
        adverse effect on the Company.

    (h) Information Supplied. None of the information included or
        incorporated by reference in any documents filed or to be filed with
        the Commission or any other Governmental Entity in connection with
        the transactions contemplated hereby, including in the Proxy
        Statement will, the respective times such documents are filed or are
        first published, sent or given to stockholders, and also, in the
        case of the Proxy Statement, at the date such document is first
        mailed to the Company's stockholders or at the time of the Company
        Stockholders Meeting or at the Effective Time, 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
        are made, not misleading, and the Proxy Statement and any such
        information statement will comply at all relevant times in all
        material respects with the requirements of the Exchange Act and the
        rules and regulations thereunder, except that no representation or
        warranty is made by the Company with respect to statements made or
        incorporated by reference therein based on information supplied to
        the Company by the Trust or Acquisition Sub in writing specifically
        for inclusion or incorporation by reference in the Proxy Statement.

                                      10
<PAGE>

    (i) Absence of Certain Changes or Events. Except as disclosed in the
        Company Disclosure Schedule and the SEC Documents filed and
        publicly available after the date of the Company Balance Sheet,
        since the date of the Company Balance Sheet, the Company has
        conducted its business only in the ordinary course, consistent with
        past practice and there has not been (i) any event, occurrence,
        development or state of circumstances or facts that has had or is
        reasonably likely to have a material adverse effect on the Company,
        except for any such event, occurrence, development or state of
        facts or circumstances attributable to conditions affecting the
        paperboard or wallboard industries or the U.S. economy as a whole,
        (ii) any declaration, setting aside or payment of any dividend or
        other distribution (whether in cash, stock or property) with
        respect to any of the Company's capital stock, (iii) any granting
        by the Company or any of its subsidiaries to any director, officer
        or other employee of the Company or any of its subsidiaries of (x)
        any options or rights to acquire equity securities of the Company,
        (y) any increase in compensation, bonuses or other benefits, except
        the vesting of benefits and for normal awards, increases and other
        payments in the ordinary course of business consistent with past
        practice or as was required under employment agreements and Company
        Plans in effect as of the date of the most recent audited financial
        statements included in the Filed SEC Documents or (z) severance or
        termination pay or increase thereof, (iv) any incurrence,
        assumption or guarantee by the Company or any of its subsidiaries
        of any indebtedness for borrowed money other than in the ordinary
        course of business and in amounts and on terms consistent with past
        practice (it being agreed that the aggregate indebtedness for
        borrowed money of the Company and its subsidiaries at any time will
        be no more than $215 million), (v) any creation or other incurrence
        by the Company or any of its subsidiaries of any Lien on any
        material asset other than in the ordinary course of business
        consistent with past practice, (vi) any damage, destruction or
        other casualty loss (whether or not covered by insurance) affecting
        the business or the assets of the Company or any of its
        subsidiaries that has had or would reasonably be expected to have a
        material adverse effect on the Company, (vii) any material labor
        dispute involving the employees of the Company or any of its
        subsidiaries, (viii) any transaction or commitment made, or any
        contract or arrangement entered into, by the Company or any of its
        subsidiaries (including the acquisition or disposition of any
        assets) other than in the ordinary course of business consistent
        with past practice except for the disposition of certain assets of
        the Company as set forth on the Company Disclosure Schedule, or
        (ix) any amendment of any term of any outstanding security of the
        Company or any of its subsidiaries.

    (j) Litigation. There is no suit, action, investigation or proceeding
        pending or, to the knowledge of the Company, threatened against or
        affecting the Company or any of its subsidiaries or any of their
        respective properties before any court or arbitrator or before any
        foreign or domestic Governmental Entity that individually or in the
        aggregate would reasonably be expected to have a material adverse
        effect on the Company, nor is there any judgment, order or decree
        of any Governmental Entity outstanding against the Company or any
        of its subsidiaries having, or which would reasonably be expected
        to have, such a material adverse effect on the Company.

    (k) Absence of Changes in Benefit Plans. Except as disclosed in the
        Company Disclosure Schedule, since the date of the Company Balance
        Sheet there has not been any adoption or amendment in any material
        respect (except as required by applicable law), or any agreement to
        adopt or amend in any material respect, by the Company or any of
        its subsidiaries of any collective bargaining agreement or
        employment contract or any bonus, pension, profit sharing, deferred
        compensation, incentive compensation, stock ownership, stock
        purchase, stock option, phantom stock, retirement, vacation,
        severance, disability, death benefit, hospitalization, medical or
        other plan, arrangement or understanding (whether or not legally
        binding) providing benefits to any current or former director,
        officer or employee of the Company or any of its subsidiaries (the
        "Company Plans"). Without limiting the foregoing, except as
        disclosed in the Company Disclosure Schedule, since the date of the
        Company Balance Sheet, there has not been any change in any
        actuarial or other assumption used to calculate funding obligations
        with respect to

                                      11
<PAGE>

       any Pension Plan (as defined in Section 3.1(l)) of the Company, or
       in the manner in which contributions to any Pension Plan of the
       Company are made or the basis on which such contributions are
       determined. Except as disclosed in the Company Disclosure Schedule,
       there exist no employment, consulting, severance, termination or
       indemnification agreements, arrangements or understandings between
       the Company or any of its subsidiaries and any current or former
       director, officer or employee of the Company or any of its
       subsidiaries.

    (l) ERISA Compliance.

      (i) The Company Disclosure Schedule contains a list of each
          "employee pension benefit plan" (as defined in Section 3(2) of
          the Employee Retirement Income Security Act of 1974, as amended
          ("ERISA")) (sometimes referred to herein as a "Pension Plan"),
          each "employee welfare benefit plan" (as defined in Section 3(1)
          of ERISA) (sometimes referred to herein as a "Welfare Plan"),
          each employment contract, stock option, stock purchase, deferred
          compensation plan or arrangement and each other employee fringe
          benefit plan or arrangement maintained, contributed to or
          required to be maintained or contributed to by the Company, any
          of its subsidiaries or any other person or entity that, together
          with the Company, is or was treated as a single employer under
          Section 414(b), (c), (m) or (o) of the Code (each, a "Commonly
          Controlled Entity") for the benefit of any current or former
          directors, officers, employees or independent contractors of the
          Company or any of its subsidiaries (collectively, "Company
          Benefit Plans"). The Company has delivered or made available to
          the Trust true, complete and correct copies of (w) each Company
          Benefit Plan, (x) the two most recent annual reports on Form
          5500 filed with the Internal Revenue Service with respect to
          each Company Benefit Plan (if any such report was required), (y)
          the most recent summary plan description for each Company
          Benefit Plan for which such summary plan description is
          required, and (z) each currently effective trust agreement,
          insurance or group annuity contract and each other funding or
          financing arrangement relating to any Company Benefit Plan.

      (ii) Except as disclosed on the Company Disclosure Schedule, (1)
           each Company Benefit Plan has been administered in accordance
           with its terms and the Company, its subsidiaries and all the
           Company Benefit Plans are in compliance with the applicable
           provisions of ERISA, the Code and all other applicable laws and
           the terms of all applicable collective bargaining agreements,
           except for any failure to so administer or any non-compliance
           that has not and, if continued, would not, individually or in
           the aggregate, have a material adverse effect on the Company,
           (2) there are no pending or, to the Company's knowledge,
           threatened, (A) investigations by any Governmental Entity, (B)
           termination proceedings or other claims (except routine claims
           for benefits payable under the Company Benefit Plans), (C)
           suits or (D) proceedings against or involving any Company
           Benefit Plan or asserting any rights or claims to benefits
           under any Company Benefit Plan, and (3) all reports, returns
           and similar documents with respect to the Company Benefit Plans
           required to be filed with any governmental agency or
           distributed to any Company Benefit Plan Participant have been
           duly, timely, and accurately filed or distributed.

      (iii) Except as described on Schedule 3.1(l) of the Company
            Disclosure Schedule, (1) all contributions to, and payments
            from, the Company Benefit Plans that may have been required to
            be made in accordance with the terms of the Company Benefit
            Plans, any applicable collective bargaining agreement and,
            when applicable, Section 302 of ERISA or Section 412 of the
            Code, have been timely made, except for any such untimely
            payment that has not and, if continued, would not,
            individually or in the aggregate, have a material adverse
            effect on the Company, (2) there has been no application for
            waiver or waiver of the minimum funding standards imposed by
            Section 412 of the Code with respect to any Pension Plan of
            the Company, (3) no Pension Plan of the Company has or had at
            any time during the current plan year an "accumulated funding
            deficiency" within the meaning of

                                      12
<PAGE>

         Section 412(a) of the Code and (4) there is no liability under
         Title IV of ERISA with respect to any Company Benefit Plan
         (except for insurance premiums payable to the Pension Benefit
         Guaranty Corporation which are not yet due) that has not been
         satisfied as of the date hereof.

      (iv) Each Pension Plan of the Company that is intended to be a tax-
           qualified plan has been the subject of a determination letter
           from the Internal Revenue Service to the effect that such
           Pension Plan and related trust is qualified and exempt from
           U.S. Federal income Taxes under Sections 401(a) and 501(a),
           respectively, of the Code; no such determination letter has
           been revoked; and, to the knowledge of the Company, no such
           revocation has been threatened. No such Pension Plan has been
           amended since the effective date of its most recent
           determination letter in any respect that would adversely affect
           its qualification, materially increase its costs or require
           security under Section 307 of ERISA. Furthermore, each Pension
           Plan of the Company that is intended to be tax qualified has
           been timely and properly amended since each respective Pension
           Plan's effective date to comport with any changes in the Code,
           ERISA, or other applicable federal or state law which might
           otherwise effect such Pension Plan's tax qualified status. The
           Company has delivered or made available to the Trust a copy of
           the most recent determination letter received with respect to
           each Pension Plan of the Company.

      (v) Each Welfare Plan of the Company may be amended or terminated
          without material liability to the Surviving Corporation at any
          time after the Effective Time.

      (vi) Except as disclosed in Schedule 3.1(l) of the Company
           Disclosure Schedule, no director, independent contractor or
           employee of the Company will be entitled to any additional
           benefits or any acceleration of the time of payment or vesting
           of any benefits under any Company Benefit Plan as a result of
           the transactions contemplated by this Agreement.

      (vii) Schedule 3.1(l) of the Company Disclosure Schedule contains a
            list of all Company Benefit Plans which provide for
            accelerated vesting or payment of any benefits as a result of
            a change in control.

    (m) Taxes.

      (i) Each of the Company and its subsidiaries has filed all Federal
          and all material state and local Tax returns and reports
          required to be filed by it or requests for extensions to file
          such returns or reports have been timely filed, granted and have
          not expired. All Federal and all material state and local Tax
          returns and reports filed by the Company and each of its
          subsidiaries are complete and accurate in all material respects.
          The Company and each of its subsidiaries has paid (or the
          Company has paid on its behalf) all Taxes shown as due on such
          returns and reports and all material Taxes otherwise due, and
          the Company Balance Sheet adequately provides for Taxes payable
          by the Company and its subsidiaries for taxable periods and
          portions thereof accrued through the date of such financial
          statements.

      (ii) No deficiencies for any Taxes have been proposed, asserted or
           assessed against the Company or any of its subsidiaries that
           are not adequately provided for on the financial statements,
           and no requests for waivers of the time to assess any such
           Taxes have been granted or are pending. There is no audit,
           examination, deficiency or refund litigation pending with
           respect to Taxes and during the past three years no taxing
           authority has given written notice of the intent to commence
           any such examination, audit deficiency or refund litigation.
           None of the assets or properties of the Company or any of its
           subsidiaries is subject to any material Tax lien, other than
           any such liens for Taxes which are not due and payable, which
           may thereafter be paid without penalty or the validity of which
           are being contested in good faith by appropriate proceedings
           and for which adequate provisions are being maintained in
           accordance with generally accepted accounting principles
           ("Permitted Tax Liens").

                                      13
<PAGE>

      (iii) Schedule 3.1(m) of the Company Disclosure Schedule lists all
            federal, state, local, and foreign income Tax returns for
            which an extension to file has filed and for which the related
            Tax return has not been filed.

      (iv) None of the payments or benefits which may be triggered under
           any Company Benefit Plan or other agreement or arrangement by
           the Merger or the other transactions contemplated hereby
           (either alone or in combination with a second event following
           the Merger such as termination of employment) will not be
           deductible under Code (S)280G.

      (v) As used in this Agreement, "Taxes" shall include all Federal,
          state and local income, franchise, use, property, sales, excise
          and other taxes, tariffs or governmental charges of any nature
          whatsoever, domestic or foreign, including any interest,
          penalties or additions with respect thereto.

    (n) Inapplicability of DGCL Section 203 and Article THIRTEENTH of the
        Company Charter; Voting Requirements. The Company's Board of
        Directors (including, without limitation the requisite approval of
        "Continuing Directors" to the extent necessary under Article
        THIRTEENTH of the Company's Second Restated Certificate of
        Incorporation) has taken all actions necessary and appropriate to
        render the limitations on business combinations contained in
        Section 203 of the DGCL and the 66 2/3% voting provisions in
        Article THIRTEENTH of the Company's Second Restated Certificate of
        Incorporation inapplicable to this Agreement, the Stockholders
        Agreements and the consummation of the Merger and the other
        transactions contemplated hereby and thereby. The affirmative vote
        of the holders of a majority of the outstanding shares of the
        Company Common Stock (the "Company Stockholder Approval") is the
        only vote of the holders of any class or series of the Company's
        capital stock necessary to approve and adopt this Agreement, the
        Merger and the other transactions contemplated by this Agreement,
        and the Stockholders Agreements.

    (o) Rights Agreement. The Rights Agreement has been amended as of the
        date hereof (the "Rights Amendment") to the extent necessary (i) to
        render the Rights Agreement inapplicable to this Agreement, the
        Stockholders Agreements, the Merger, and the other transactions
        contemplated by this Agreement and the Stockholders Agreements (ii)
        to ensure that (y) neither the Trust nor any of its subsidiaries
        (including Acquisition Sub) is an Acquiring Person (as defined in
        the Rights Agreement) pursuant to the Rights Agreement and (z) a
        Stock Acquisition Date or Distribution Date (in each case as
        defined in the Rights Agreement) does not occur solely by reason of
        the execution of this Agreement or the Stockholders Agreements or
        the consummation of the Merger or the other transactions
        contemplated by this Agreement and the Stockholders Agreements and
        (iii) to terminate the Rights Agreement effective as of the
        Effective Time.

    (p) Brokers. No broker, investment banker, financial advisor or other
        person, other than J.P. Morgan & Co., Incorporated (copies of whose
        engagement agreement have been provided to the Trust), is entitled
        to any broker's, finder's, financial advisor's or other similar fee
        or commission in connection with the transactions contemplated by
        this Agreement based upon arrangements made by or on behalf of the
        Company.

    (q) Opinion of Financial Advisor; Board Findings and
        Recommendation. The Company has received the opinion of J.P. Morgan
        & Co. Incorporated, dated as of the date of this Agreement, to the
        effect that, as of such date, the cash amount per Share specified
        in Section 2.1(c) to be paid in accordance with Article 2 is fair
        to the holders of the Company's Common Stock from a financial point
        of view. A copy of such opinion has heretofore been delivered to
        the Trust. The Company has been authorized by J.P. Morgan & Co.
        Incorporated to permit the inclusion of such opinion in its
        entirety in the Proxy Statement, so long as such inclusion is in
        form and substance reasonably satisfactory to J.P. Morgan & Co.
        Incorporated and its counsel. The Company's Board of Directors (i)
        has unanimously approved and adopted the Stockholders Agreements,
        this Agreement and the transactions contemplated hereby, including
        the Merger, and thereby, (ii) has

                                      14
<PAGE>

       unanimously determined that this Agreement and the transactions
       contemplated hereby, including the Merger, are advisable, fair to and
       in the best interests of the stockholders of the Company and (iii)
       unanimously recommends (subject to Section 4.2(b)) that the
       stockholders of the Company approve and adopt this Agreement and the
       transactions contemplated hereby, including the Merger.

    (r) Compliance with Applicable Laws. Each of the Company and its
        subsidiaries holds all Federal, state and local governmental
        approvals, authorizations, certificates, permits, filings,
        franchises, licenses, notices and rights, domestic or foreign
        ("Permits") necessary for it to own, lease or operate its properties
        and assets and to carry on its business as now conducted, and all
        such Permits are valid and in full force and effect, except where
        the failure to have, or the suppression or cancellation of, or the
        failure of any such Permits to be valid and in full force and effect
        individually or in the aggregate would not have a material adverse
        effect on the Company. The Company and each of its subsidiaries are
        in compliance with all applicable judgments, orders, decrees,
        statutes, laws, ordinances, rules and regulations of any
        Governmental Entity, except for possible noncompliance which
        individually or in the aggregate would not have a material adverse
        effect on the Company. As of the date hereof, no investigation or
        review by any Governmental Entity with respect to the Company or any
        of its subsidiaries is pending, or to the Company's knowledge
        threatened, other than those which individually or in the aggregate
        would not have a material adverse effect on the Company.

    (s) No Default. Neither the Company nor any of its subsidiaries is in
        breach, default or violation (and no event has occurred, which, with
        notice or the lapse of time or both, would constitute a breach,
        default or violation) of any term, condition or provision of (i) the
        certificate of incorporation or by-laws of the Company or the
        comparable organizational documents of any of its subsidiaries, (ii)
        any loan or credit agreement, note, bond, mortgage, indenture, lease
        or other agreement, instrument, permit, concession, franchise or
        license applicable to the Company or any of its subsidiaries or
        their respective properties or assets, or (iii) any judgment, order,
        decree, statute, law, ordinance, rule or regulation applicable to
        the Company or any of its subsidiaries or their respective
        properties or assets, except in the case of clauses (ii) and (iii)
        for breaches, defaults or violations which individually or in the
        aggregate would not have a material adverse effect on the Company.

    (t) Environmental Laws and Regulations. Except as described in Schedule
        3.1(t) of the Company Disclosure Schedule, the Company and each of
        its subsidiaries are in compliance with all applicable Federal,
        state and local laws and regulations (including common law) relating
        to pollution or protection of human health or the environment
        (including ambient air, surface water, ground water, land surface or
        subsurface strata) (collectively, "Environmental Laws"), which,
        except for any such non-compliance as has not and, if continued,
        would not, individually or in the aggregate, have a material adverse
        effect on the Company. For purposes of the immediately preceding
        sentence, compliance with Environmental Laws includes, but is not
        limited to, the possession by the Company and each of its
        subsidiaries of all permits and other governmental authorizations
        required under applicable Environmental Laws. The Company is in
        material compliance with the terms and conditions thereof. Except as
        described in Schedule 3.1(t) of the Company Disclosure Schedule,
        neither the Company nor any of its subsidiaries has received written
        notice of, or is the subject of any facts, circumstances or
        conditions that could reasonably be expected to result in, any
        actions, causes of action, claims, investigations, demands or
        notices by any person alleging liability under or non-compliance
        with any Environmental Law ("Environmental Claims") that has had or,
        if continued, would have, individually or in the aggregate, a
        material adverse effect on the Company.

    (u) Contracts; Indebtedness. (a) Except as disclosed in Schedule 3.1(u)
        of the Company Disclosure Schedule, there are no contracts,
        agreements that are material to the business, properties, assets,
        financial condition or results of operations of the Company and its
        subsidiaries

                                     15
<PAGE>

       taken as a whole. All of such disclosed contracts are valid and
       legally binding obligations of the Company or its subsidiaries, as
       the case may be, and, to the knowledge of the Company, of each of the
       other parties thereto, and are enforceable in accordance with the
       terms thereof. No such contract contains any provision which
       prohibits or restricts, or provides that the other party thereto may
       terminate such contract in the event or by reason of, the Merger or
       the other transactions contemplated by this Agreement, or contains
       any other provision that would be altered or otherwise become
       applicable by reason of such transaction. The Company has provided
       true and correct copies of all such contracts to the Trust. Schedule
       3.1(u) of the Company Disclosure Schedule sets forth (i) a list of
       each agreement, instruments and other obligation pursuant to which
       any indebtedness of the Company or any of its subsidiaries in a
       principal amount in excess of $1,000,000 is outstanding or may be
       incurred other than any that may be entered into after the date of
       this Agreement in compliance with Sections 4.1(a) and (ii) the
       respective principal amounts outstanding thereunder as of June 30,
       2000.

    (v) Intellectual Property. The Company and its subsidiaries (i) own, or
        are validly licensed or otherwise have the right to use, all
        patents, patent rights, trademarks, trade names, service marks,
        copyrights, know how and other proprietary intellectual property
        rights and computer programs (collectively, "Intellectual Property
        Rights") that are material to the conduct of the business of the
        Company and its subsidiaries taken as a whole, and (ii) has taken
        such steps to preserve such Intellectual Property Rights as the
        Company has determined to be appropriate. Schedule 3.1(v) of the
        Company Disclosure Schedule sets forth a description of all
        Intellectual Property Rights that are material to the conduct of the
        business of the Company and its subsidiaries taken as a whole, and,
        to the Company's knowledge, all such Intellectual Property Rights
        are valid and enforceable. No claims are pending or, to the
        knowledge of the Company, threatened that the Company or any of its
        subsidiaries is infringing or otherwise adversely affecting the
        intellectual property rights of any person, and the Company is not
        aware of any basis for any such claims. To the knowledge of the
        Company, no person is infringing the rights of the Company or any of
        its subsidiaries with respect to any Intellectual Property Right.
        None of the Company's Intellectual Property Rights are licensed to
        any third party. Except as disclosed in the Company Disclosure
        Schedule, no material Intellectual Property Right is subject to any
        outstanding judgment, injunction, order, decree, or agreement
        restricting the use thereof by the Company or any of its
        subsidiaries or restricting the licensing thereof by the Company or
        any of its subsidiaries.

    (w) Labor Matters. Except as disclosed in Section 3.1(w) of the Company
        Disclosure Schedule, neither the Company nor any of its subsidiaries
        is party to any collective bargaining agreement, memorandum of
        understanding, settlement or other labor agreement with any union or
        labor organization and no union or labor organization has been
        recognized by the Company or any of its subsidiaries as an exclusive
        bargaining representative for employees of the Company or any of its
        subsidiaries. Except as disclosed in Section 3.1(w) of the Company
        Disclosure Schedule, to the Company's knowledge, there is no current
        union representation question involving employees of the Company or
        any of its subsidiaries, nor does the Company have knowledge of any
        significant activity or proceeding of any labor organization (or
        representative thereof) or employee group to organize any such
        employees. Except as disclosed in Section 3.1(w) of the Company
        Disclosure Schedule, neither the Company nor any of its subsidiaries
        has made any commitment that would require the application of the
        terms of any collective bargaining agreements entered into by the
        Company or any of its subsidiaries to the Trust, to any joint
        venture of the Trust, or to any subsidiary of the Trust.

           Except as disclosed in Section 3.1(w) of the Company Disclosure
      Schedule there is no material labor dispute, strike, picketing or
      work stoppage, or any lockout, involving employees of the Company or
      any of its subsidiaries pending or, to the Company's knowledge,
      threatened against or involving the Company or any of its
      subsidiaries.

                                     16
<PAGE>

      Except as disclosed in Section 3.1(w) of the Company Disclosure
      Schedule, (i) there is no grievance, arbitration, unfair labor
      practice, investigation, employment discrimination or other labor or
      employment related charge, complaint or claim against the Company or
      any of its subsidiaries pending before any court, arbitrator,
      mediator or governmental agency or tribunal, or, to the Company's
      knowledge, threatened, and (ii) there has been no adjudication by
      any court, arbitrator, mediator or governmental agency or tribunal
      that, in the case of either (i) or (ii), has or that would
      reasonably be expected to have a material adverse effect on the
      Company or otherwise limit or affect the business operations of the
      Company.

        To the knowledge of the Company, none of the Company, any of its
      subsidiaries or any of their respective representatives or employees
      has committed any unfair labor practice in connection with the
      operation of the respective businesses of the Company or any of its
      subsidiaries that has not been resolved, and there is no charge or
      complaint against the Company or any of its subsidiaries.

           As of the date of this Agreement, (i) the Company is in
      compliance with all applicable laws relating to the employment of
      labor, including those related to wages, hours, collective
      bargaining worker classification and the payment and withholding of
      taxes and other sums as required by the appropriate governmental
      authority and has withheld and paid to the appropriate governmental
      authority or is holding for payment not yet due to such governmental
      authority all amounts required to be withheld from employees of the
      Company and is not liable for any arrears of wages, taxes, penalties
      or other sums for failure to comply with any of the foregoing; (ii)
      the Company has paid in full to all employees, or adequately accrued
      for in accordance with GAAP, consistently applied, all wages,
      salaries, commissions, bonuses, benefits and other compensation due
      to or on behalf of such employees; (iii) there is no claim with
      respect to payment of wages, salary or overtime pay that has been
      asserted or is now pending or threatened before any governmental
      authority with respect to any persons currently or formerly employed
      by the Company; (iv) the Company is not a party to, or otherwise
      bound by, any consent decree with, or citation by, any governmental
      authority relating to employees or employment practices; and (v)
      there is no charge of discrimination in employment or employment
      practices, for any reason, including, without limitation, age,
      gender, race, religion or other legally protected category, which
      has been asserted or is now pending or threatened before the United
      States Equal Employment Opportunity Commission, or any other
      governmental authority in any jurisdiction in which the Company has
      employees except in the case of clauses (i), (iii) and (v) above,
      where the same would not, individually or in the aggregate, have a
      material adverse effect on the Company.

    (x) Assets Other than Real Property Interests. The Company or a
        subsidiary of the Company has good and valid title to all material
        assets owned by them, in each case free and clear of all pledges,
        claims, charges, mortgages, liens, security interests or
        encumbrances of any kind except (i) mechanics', carriers',
        workmen's, repairmen's or other like liens arising or incurred in
        the ordinary course of business, liens arising under original
        purchase price conditional sales contracts and equipment leases
        with third parties entered into in the ordinary course of business
        if the underlying obligations are not overdue for a period of more
        than 90 days, and liens for Taxes which are not yet due and
        payable, (ii) mortgages, liens, security interests and encumbrances
        which secure debt that is reflected as a liability on the Balance
        Sheet and the existence of which is indicated in the notes thereto
        and (iii) other imperfections of title or encumbrances, if any,
        which do not, individually or in the aggregate, materially impair
        the continued use and operation or the marketability of the assets
        to which they relate in the business of the Company and its
        subsidiaries as presently conducted (the mortgages, liens, security
        interests, encumbrances and imperfections of title described in
        clauses (i), (ii) and (iii) above are hereinafter referred to
        collectively as "Permitted Liens").

           All the material tangible personal property of the Company and
      its subsidiaries has been maintained in all material respects in
      accordance with the past practice of the Company and its

                                      17
<PAGE>

      subsidiaries and generally accepted industry practice. Each item of
      material tangible personal property of the Company and its
      subsidiaries is in all material respects in good working order and
      is adequate and sufficient for the Company's intended purposes,
      ordinary wear and tear excepted.

           This Section 3.1(x) does not relate to real property or
      interests in real property, such items being the subject of Section
      3.1(y).

    (y) Title to Real Property. Schedule 3.1(y) sets forth a complete list
        of all real property owned in fee by the Company and its
        subsidiaries other than any real property disposed of after the
        date of this Agreement in compliance with Section 4.1(a)
        (individually, an "Owned Property"). Schedule 3.1(y) sets forth a
        complete list of all real property and interests in real property
        leased by the Company and its subsidiaries (other than any real
        property disposed of after the date of this Agreement in compliance
        with Section 4.1(a) (individually, a "Leased Property") and
        identifies any material leases relating thereto. The Company or a
        subsidiary has (i) good and marketable fee title to all Owned
        Property insurable at regular rates and (ii) good and valid title
        to the leasehold estates in all Leased Property (an Owned Property
        or Leased Property being sometimes referred to herein,
        individually, as a "Company Property" and, collectively, as
        "Company Properties"), in each case free and clear of all
        mortgages, liens, security interests, encumbrances, leases,
        assignments, subleases, easements, covenants, rights-of-way and
        other similar restrictions of any nature whatsoever, except (A)
        leases, subleases and similar agreements set forth in Schedule
        3.1(y), (B) Permitted Liens, (C) easements, covenants, rights-of-
        way and other similar restrictions of record, (D) any conditions
        that would be shown by a current, accurate survey or physical
        inspection of any Company Property made prior to Closing and (E)
        (I) zoning, building and other similar restrictions, (II)
        mortgages, liens, security interests, encumbrances, easements,
        covenants, rights-of-way and other similar restrictions that have
        been placed by any developer, landlord or other third party on
        property over which the Company or any subsidiary thereof has
        easement rights or on any Leased Property and subordination or
        similar agreements relating thereto, and (III) unrecorded
        easements, covenants, rights-of-way and other similar restrictions,
        none of which items set forth in clauses (C), (D) and (E),
        individually or in the aggregate, materially impair the value or
        the continued use and operation of the property to which they
        relate in the business of the Company and its subsidiaries as
        presently conducted. No local zoning or similar land use or
        government regulations materially impairs the current use by the
        Company and its subsidiaries of the plants, offices and other
        facilities located on Company Property.

    (z) Insurance. The Company and its subsidiaries maintain policies of
        directors' and officers' liability insurance, fire and casualty,
        liability and other forms of insurance (including self-insurance)
        in such amounts, with such deductibles and against such risks and
        losses as are reasonable for the operation of the business and
        ownership of assets of the Company and its subsidiaries. The
        insurance policies owned and maintained by the Company and its
        subsidiaries are listed in Schedule 3.1(z). All such policies are
        in full force and effect, all premiums due and payable thereon have
        been paid (other than retroactive or retrospective premium
        adjustments that are not yet, but may be, required to be paid with
        respect to any period ending prior to the Closing Date under
        comprehensive general liability and workmen's compensation
        insurance policies), and no notice of cancellation or termination
        has been received with respect to any such policy which has not
        been replaced on substantially similar terms prior to the date of
        such cancellation. To the knowledge of the Company, the activities
        and operations of the Company and its subsidiaries have been
        conducted in a manner so as to conform in all material respects to
        all applicable provisions of such insurance policies. The coverages
        provided by such policies of insurance with respect to events
        occurring prior to the Effective Time will not be affected in any
        manner by, and will not terminate or lapse by reason of, any of the
        Merger or any other transaction contemplated by this Agreement.

    (aa) Transactions with Affiliates. Except as set forth in Sections
         3.1(k), 3.1(l), 3.1(u) and 3.1(aa) of the Company Disclosure
         Schedule, there is no material agreement, contract or other
         arrangement between the Company or any subsidiary, on the one
         hand, and any officer, director or affiliate

                                      18
<PAGE>

       (other than the Company or a subsidiary), on the other hand. Officer,
       director or affiliate of the Company or any subsidiary (other than
       the Company or any subsidiary) has any material interest in any
       property (real or personal, tangible or intangible) or contract used
       in or pertaining to the business of the Company or a subsidiary. No
       affiliate of the Company or any subsidiary (other than the Company or
       any subsidiary) has any direct or indirect ownership interest in any
       person in which the Company or a subsidiary has any direct or
       indirect ownership interest or with which the Company or a subsidiary
       competes or has a business relationship.

    (bb) State Takeover Statutes. Except for Section 203 of the DGCL (which,
         as described in Section 3.1(n), the Board of Directors of the
         Company has taken all actions to render the limitations on business
         combinations therein inapplicable to this Agreement, the
         Stockholders Agreements and the consummation of the Merger and the
         other transactions contemplated hereby and thereby), no other state
         takeover statute or similar statute or regulation applies or
         purports to apply to this Agreement, the Stockholders Agreements,
         the Merger or the other transactions contemplated hereby or
         thereby.

Section 3.2 Representations and Warranties of the Trust.

   Except as set forth with respect to an identified representation and
warranty on the Disclosure Schedule delivered by the Trust to the Company upon
the execution of this Agreement (the "Trust Disclosure Schedule"), the Trust
represents and warrants to the Company as follows:

    (a) Organization, Standing and Corporate Power. The Trust is a statutory
        trust duly formed and validly existing under the laws of Connecticut
        and has the requisite power and authority to carry on its business
        as now being conducted. Acquisition Sub is a corporation duly
        organized, validly existing and in good standing under the laws of
        Delaware and has the requisite corporate power and authority to
        carry on its business as now being conducted. Each of the Trust and
        Acquisition Sub is duly qualified or licensed to do business and is
        in good standing (with respect to jurisdictions which recognize such
        concept) in each jurisdiction in which the nature of its business or
        the ownership or leasing of its properties makes such qualification
        or licensing necessary, other than in such jurisdictions where the
        failure to be so qualified or licensed or to be in good standing
        individually or in the aggregate would not have a material adverse
        effect on the Trust.

    (b) Authority; Noncontravention. Each of the Trust and Acquisition Sub
        has all requisite trust or corporate power and authority to enter
        into this Agreement and to consummate the transactions contemplated
        by this Agreement. The execution, delivery and performance of this
        Agreement by the Trust and Acquisition Sub and the consummation by
        the Trust and Acquisition Sub of the transactions contemplated by
        this Agreement have been duly authorized by all necessary trust or
        corporate action (as the case may be) on the part of such person.
        This Agreement has been duly executed and delivered by each of the
        Trust and Acquisition Sub and constitutes the legal, valid and
        binding obligation of such persons, enforceable against each such
        person in accordance with its terms. The execution, delivery and
        performance of this Agreement and the Stockholders Agreements do
        not, and the consummation of the transactions contemplated by this
        Agreement and compliance with the provisions of this Agreement and
        the Stockholders Agreements by the Trust and Acquisition Sub will
        not, conflict with, or result in any violation of, breach of, or
        default (with or without notice or lapse of time, or both) under, or
        give rise to a right of termination, cancellation or acceleration of
        any obligation or to loss of a material benefit under (i) trust
        agreement of the Trust or the certificate of incorporation or by-
        laws of Acquisition Sub, (ii) any loan or credit agreement, note,
        bond, mortgage, indenture, lease or other agreement, instrument,
        permit, concession, franchise or license applicable to the Trust or
        Acquisition Sub or their respective properties or assets or (iii)
        subject to the governmental filings and other matters referred to in
        the following sentence, any judgment, order, decree, statute, law,
        ordinance, rule or regulation applicable to the Trust or Acquisition
        Sub or their respective properties or assets,

                                     19
<PAGE>

       other than, in the case of clauses (ii) and (iii), any such
       conflicts, violations, defaults, rights, losses or Liens that
       individually or in the aggregate would not have a material adverse
       effect on the Trust. No consent, approval, order or authorization
       of, or registration, declaration or filing with, any Governmental
       Entity is required by or with respect to the Trust or Acquisition
       Sub in connection with the execution, delivery and performance of
       this Agreement or the Stockholders Agreements by the Trust or
       Acquisition Sub or the consummation by the Trust and Acquisition Sub
       of the transactions contemplated by this Agreement or the
       Stockholders Agreements, except for (1) the filing of a premerger
       notification and report form by the Trust or Acquisition Sub under
       the HSR Act, to the extent required thereby; (2) the filing of the
       Certificate of Merger with the Delaware Secretary of State and
       appropriate documents with the relevant authorities of other states
       in which the Trust is qualified to do business; and (3) such
       consents, approvals, orders, authorizations, registrations,
       declarations and filings the failure to make or obtain which would
       not reasonably be expected to have a material adverse effect on the
       Trust.

    (c) Information Supplied. None of the information supplied or to be
        supplied by the Trust or Acquisition Sub in writing specifically
        for inclusion or incorporation by reference in any documents filed
        or to be filed with the SEC or any other governmental entity in
        connection with the transactions contemplated hereby, including the
        Proxy Statement will, at the respective times such document is
        filed, and also, in the case of the Proxy Statement, at the date
        the Proxy Statement is first mailed to the Company's stockholders
        or at the time of the meeting of the Company's stockholders held to
        vote upon the approval and adoption of this Agreement, 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 are made, not misleading (or necessary to correct any
        statement in any earlier communication).

    (d) Brokers. No broker, investment banker, financial advisor or other
        person, other than Salomon Smith Barney, the fees and expenses of
        which will be paid by the Trust, is entitled to any broker's,
        finder's, financial advisor's or other similar fee or commission in
        connection with the transactions contemplated by this Agreement
        based upon arrangements made by or on behalf of the Trust.

    (e) Financing Commitment. The Trust has received an executed letter,
        dated as of August 8, 2000 (the "Lender Letter"), from Cooperative
        Centrale Raiffeisen--Boeremleembank B.A., "Rabobank--Nederland",
        New York (the "Lender"), a true and correct copy of which has been
        furnished to the Company, indicating that the Lender, subject to
        obtaining internal credit approval, is confident that it can
        provide the funds necessary to fund in full the payment of the
        merger consideration payable by the Trust in accordance with
        Article 2. The Trust agrees that within 30 days after the execution
        of this Agreement it will furnish to the Company an executed
        commitment (the "Commitment") from the Lender or from another
        financial institution(s) reasonably acceptable to the Company in a
        form customary for a financial buyer under similar circumstances
        with respect to the funds required by the Trust to consummate the
        transactions contemplated hereby, subject to customary conditions
        precedent for such a commitment, including, without limitation, the
        negotiation and execution of definitive documentation for such
        funding and final Lender approvals. Concurrently with the execution
        of this Agreement, the Trust has caused the Lender to issue an
        irrevocable direct draw letter of credit in the form attached
        hereto as Annex I (the "Letter of Credit"), pursuant to which the
        Company shall have the right, on the terms and subject to the
        conditions set forth therein, to draw in full to receive payment of
        $12,000,000 in accordance with Section 7.2(b).

    (f) No Prior Activities of the Trust and Acquisition Sub. Each of the
        Trust and Acquisition Sub was formed solely for the purpose of
        engaging in the transactions contemplated hereby, and has engaged
        in no other business activities and has conducted its operations
        only as contemplated hereby.

                                      20
<PAGE>

                                   ARTICLE 4

                   Covenants Relating to Conduct of Business

Section 4.1 Conduct of Business.

    (a) Conduct of Business by the Company. Except as set forth in Section
        4.1 of the Company Disclosure Schedule, and except with the written
        consent of the Trust, during the period from the date of this
        Agreement to the Effective Time, the Company shall, and shall cause
        its subsidiaries to, carry on their respective businesses in the
        usual, and ordinary course consistent with past practice and in
        compliance in material respects with all applicable laws and
        regulations and use reasonable best efforts to preserve intact
        their current business organizations, keep available the services
        of their current officers and employees and preserve their
        relationships with those persons having business dealings with
        them. Except as set forth in Section 4.1 of the Company Disclosure
        Schedule, without limiting the generality of the foregoing, during
        the period from the date of this Agreement to the Effective Time,
        the Company shall not, and shall not permit any of its subsidiaries
        to, without the written consent of the Trust:

      (i) (x) declare, set aside or pay any dividends on, or make any
          other distributions in respect of, any of its capital stock,
          other than dividends and distributions by a direct or indirect
          wholly owned subsidiary of the Company to its parent, (y) split,
          combine or reclassify any of its capital stock or issue or
          authorize the issuance of any other securities in respect of, in
          lieu of or in substitution for shares of its capital stock or
          (z) purchase, redeem or otherwise acquire any shares of capital
          stock of the Company or any of its subsidiaries or any other
          securities thereof or any rights, warrants or options to acquire
          any such shares or other securities (except for the redemption
          of the Rights (as defined in the Rights Agreement) as and in the
          manner provided for in the Rights Agreement);

      (ii) issue, deliver, sell, pledge or otherwise encumber any shares
           of its capital stock, any other voting securities or any
           securities convertible into, or any rights, warrants or options
           to acquire, any such shares, voting securities or convertible
           securities (other than the issuance of Company Common Stock
           upon the exercise of stock options outstanding on the date of
           this Agreement and in accordance with their present terms or in
           accordance with the present terms of the Stock Plans);

      (iii) amend its certificate of incorporation, by-laws, articles of
            incorporation, or other comparable organizational documents,
            as applicable;

      (iv) merge or consolidate with any other person or acquire any
           interest in material assets of any other person other than
           pursuant to existing contract or commitments which have been
           disclosed to the Trust on the Company Disclosure Schedule;

      (v) sell, lease, license, mortgage or otherwise encumber or subject
          to, or permit the creation or other incurrence of, any material
          Lien or otherwise dispose of any material properties or assets;

      (vi) (x) incur indebtedness for borrowed money, assume or guarantee
           any such indebtedness of another person, issue or sell any debt
           securities or warrants or other rights to acquire any debt
           securities of the Company or any of its subsidiaries, guarantee
           any debt securities of another person, enter into any "keep
           well" or other agreement to maintain any financial statement
           condition of another person or enter into any arrangement
           having the economic effect of any of the foregoing, except for
           working capital borrowings or general corporate purpose
           borrowings under the Bank Credit Agreement, in either case
           incurred in the ordinary course of business in an aggregate
           amount not in excess of $115 million less outstanding
           borrowings under the Bank Credit Agreement, or (y) make any
           loans, advances or capital contributions to, or investments in,
           any other person, other than to the Company

                                      21
<PAGE>

         or any direct or indirect subsidiary of the Company or to
         officers and employees of the Company or any of its subsidiaries
         for travel, business or relocation expenses in the ordinary
         course of business and for computer loans to employees in the
         ordinary course of business pursuant to existing programs;

      (vii) make or agree to make any new capital expenditure or capital
            expenditures other than capital expenditures which (a) are the
            subject of contractually committed purchase orders as of the
            date hereof with the Company or any of its subsidiaries, or
            (b) individually are not in excess of $250,000 and in the
            aggregate are not in excess of $3,000,000, provided that at
            any time aggregate capital expenditures exceed $1,000,000 the
            Company shall give written notice to the Trust at least 14
            days in advance prior to the commitment for any capital
            expenditures that individually will exceed $100,000, or (c)
            constitute reasonable expenditures not to exceed $80,000 made
            by the Company or any of its subsidiaries in connection with
            any emergency or other force majeure events affecting the
            Company or any of its subsidiaries;

      (viii) make any Tax election or settle or compromise any material
             Tax liability or take any action with respect to the
             computation of Taxes or the preparation of Tax returns or
             reports that is inconsistent with past practice;

      (ix) pay, discharge, settle or satisfy material claims, liabilities
           or obligations (absolute, accrued, asserted or unasserted,
           contingent or otherwise), other than the payment, discharge,
           settlement or satisfaction, in the ordinary course of business
           consistent with past practice or in accordance with their
           terms, of liabilities (x) reflected or reserved against in, or
           contemplated by, the most recent consolidated financial
           statements (or the notes thereto) of the Company included in
           the Filed SEC Documents or (y) incurred since the date of such
           financial statements in the ordinary course of business
           consistent with past practice;

      (x) (x) enter into or adopt any new Company Benefit Plan or amend
          (other than as required by applicable law) any Company Benefit
          Plan in any material respect, (y) increase the compensation or
          bonus opportunity of any officer or employee of the Company or
          its subsidiaries, except for increases in the ordinary course of
          business consistent with past practice and except for benefits
          required to be paid under Company Benefit Plans as in effect on
          the date of this Agreement, or (z) grant additional equity-based
          compensation to any officer or employee of the Company or its
          subsidiaries;

      (xi) enter into any contracts or agreements in the ordinary course
           of business requiring the payment, or receipt of payment, of
           consideration in excess of $300,000, or modify, amend or
           terminate any existing material contract that is material to
           the business of the Company and its subsidiaries, taken as a
           whole, other than (a) modifications, amendments or terminations
           in the ordinary course of business consistent with past
           practice, (b) contracts, agreements or purchase orders for
           capital expenditures permitted under this Section 4.1(a), and
           (c) contracts, agreements or purchase orders entered into in
           the ordinary course of business with customers and suppliers
           for the sale of the Company's or any of its subsidiary's
           products or the purchase of raw materials, supplies, fuel,
           utilities and other goods or services, used or consumed in the
           ordinary course of business.

      (xii) settle any material action, suit, investigation or proceeding
            other than any action, suit, investigation or proceeding which
            involves only the payment of damages in an immaterial amount
            and does not involve injunctive or other equitable relief;

      (xiii) fail to maintain with financially responsible insurers
             insurance in such amounts and against such risks and losses
             as are customary for companies engaged in their respective
             businesses;

      (xiv) fail to maintain in full force and effect all material Permits
            that are required in connection with the conduct of the
            businesses of the Company and its subsidiaries or sell,
            transfer, license or otherwise dispose of any rights or
            interests under such Permits;

                                      22
<PAGE>

      (xv) make any change to its accounting methods, tax accounting or
           accounting principles or practices, except as may be required
           by GAAP; or

      (xvi) authorize, or commit or agree to take, any of the foregoing
            actions.

    (b) Other Actions. The Company and the Trust shall not, and shall not
        permit any of their respective subsidiaries to, take any action
        that would, or that could reasonably be expected to, result in (i)
        any of the representations and warranties of such party set forth
        in this Agreement that are qualified as to materiality becoming
        untrue, (ii) any of such representations and warranties that are
        not so qualified becoming untrue in any material respect or (iii)
        any of the conditions to the Merger set forth in Article 6 not
        being satisfied.

    (c) Advice of Changes. The Company and the Trust shall promptly advise
        the other party orally and in writing of (i) any representation or
        warranty made by it contained in this Agreement becoming untrue or
        inaccurate (ii) the failure by it to comply with or satisfy any
        covenant, condition or agreement to be complied with or satisfied
        by it under this Agreement or (iii) any change or event having, or
        which could reasonably be expected to have, a material adverse
        effect on such party or on the truth of their respective
        representations and warranties or the ability of the conditions set
        forth in Article 6 to be satisfied; provided, however, that no such
        notification shall affect the representations, warranties,
        covenants, Disclosure Schedules or agreements of the parties or the
        conditions to the obligations of the parties under this Agreement.

    (d) DRIP; ESPP. On the date of this Agreement, the Company shall cause
        purchases of Company Common Stock under the Dividend Reinvestment
        Plan and its Employee Stock Purchase Plan to be suspended or
        terminated and to continue such suspension or termination while
        this Agreement is in effect. In connection with any such suspension
        or termination, the Company may return any unspent contributed
        funds to the contributing participants in such plans.

Section 4.2 No Solicitation.

    (a) From the date hereof until the Effective Time, the Company shall
        not, nor shall it permit any of its subsidiaries to, nor shall it
        authorize or permit any of its directors, officers or employees or
        any investment banker, financial advisor, attorney, accountant or
        other representative retained by it or any of its subsidiaries (the
        "Representatives") to, directly or indirectly through another
        person, (i) solicit or initiate (including by way of furnishing
        information), or take any other action designed and intended to
        facilitate or encourage, any inquiries or the making of any
        proposal that constitutes any Takeover Proposal (as defined below),
        (ii) participate or engage in any discussions or negotiations
        regarding any Takeover Proposal, or (iii) disclose any nonpublic
        information relating to the Company or any of its subsidiaries to
        any person; provided, however, that if, at any time prior to the
        approval and adoption of this Agreement by the holders of
        outstanding shares of Company Common Stock, the Board of Directors
        of the Company determines in good faith, (i) after consultation
        with outside counsel, that it is necessary to do so in order to
        comply with its fiduciary duties to the Company's stockholders
        under applicable law and (ii) after consultation with the Company's
        financial advisors, that such Takeover Proposal, if consummated,
        would be a Superior Proposal (as defined below), then the Company
        may, in response to a bona fide written Takeover Proposal that was
        not solicited by it, and subject to compliance with Section 4.2(c),
        (x) furnish information with respect to the Company and its
        subsidiaries to any person submitting such Takeover Proposal (which
        person may also be a person who participated in discussions with
        the Company prior to the execution of this Agreement and with whom
        the Company ceased discussions in accordance with Section 4.2(e)),
        provided such information is furnished pursuant to an existing
        confidentiality agreement or a confidentiality agreement with terms
        no less favorable to the Company than those contained in the
        Confidentiality Agreement, dated as of August 3, 2000, between the
        Company and Integrated Capital Associates, Inc., (including,
        without limitation, the standstill provisions thereof) and (y)

                                      23
<PAGE>

       participate in negotiations regarding such Takeover Proposal. For
       purposes of this Agreement, "Takeover Proposal" means any inquiry,
       proposal or offer from any person relating to any direct or indirect
       acquisition or purchase of 15% or more of the assets of the Company
       and its subsidiaries or 15% or more of any class of equity securities
       of the Company or any of its subsidiaries, any tender offer or
       exchange offer that if consummated would result in any person
       beneficially owning 15% or more of any class of equity securities of
       the Company or any of its subsidiaries, or any merger, consolidation,
       business combination, recapitalization, liquidation, dissolution or
       similar transaction involving the Company or any of its subsidiaries,
       in all cases other than the transactions contemplated by this
       Agreement.

    (b) Except as expressly permitted by this Section 4.2, neither the Board
        of Directors of the Company nor any committee thereof shall (i)
        withdraw or modify, or propose publicly to withdraw or modify, in a
        manner adverse to the Trust, the approval or recommendation by such
        Board of Directors or such committee of this Agreement, the
        Stockholders Agreements, the Merger and the other transactions
        contemplated hereby or thereby, (ii) approve or recommend, or
        propose publicly to approve or recommend, any Takeover Proposal or
        (iii) cause the Company to enter into any letter of intent,
        agreement in principle, acquisition agreement or other similar
        agreement or fee arrangement or other agreement (each, an
        "Acquisition Agreement") related to any Takeover Proposal.
        Notwithstanding the foregoing, if prior to the approval and adoption
        of this Agreement by the holders of Company Common Stock, the Board
        of Directors of the Company receives an unsolicited Takeover
        Proposal which the Board of Directors determines in good faith (i)
        after consultation with the Company's financial advisors,
        constitutes a Superior Proposal, and (ii) after consultation with
        outside counsel, that it is necessary to do so in order to comply
        with its fiduciary duties to the Company's stockholders under
        applicable law, the Board of Directors of the Company may (x)
        withdraw or modify its approval or recommendation of this Agreement,
        the Stockholders Agreements, the Merger or the transactions
        contemplated hereby or thereby, (y) approve or recommend such
        Superior Proposal or (z) terminate this Agreement and concurrently
        with or after such termination, if it so chooses, cause the Company
        to enter into any Acquisition Agreement with respect to any Superior
        Proposal subject to payment of the Termination Fee prior to or
        concurrently with the termination hereof, but only (i) if the
        Company has complied with Section 4.2(a), (ii) if such action is
        taken at a time that is after the third business day following the
        Trust's receipt of written notice from the Company advising the
        Trust that the Board of Directors of the Company has received a
        Superior Proposal, specifying the material terms and conditions of
        such Superior Proposal and identifying the person making such
        Superior Proposal and (iii) the Trust does not make prior to the
        lapse of such time period a definitive, binding offer which provides
        equal or greater value to the stockholders of the Company as the
        Superior Proposal. For purposes of this Agreement, a "Superior
        Proposal" means any bona fide written Takeover Proposal made by a
        third party on terms that the Board of Directors of the Company
        determines in its good faith judgment, after consultation with its
        financial advisors and after taking into account all the terms and
        conditions of such proposal, provides greater value to the Company's
        stockholders than the Merger and for which financing, to the extent
        required, is then committed or which the Board of Directors of the
        Company has reasonably determined can be obtained by such third
        party.

    (c) In addition to the obligations of the Company set forth in
        paragraphs (a) and (b) of this Section 4.2, the Company shall
        immediately (within 24 hours) advise the Trust of any Takeover
        Proposal or Superior Proposal, the material terms and conditions
        known to the Company of such Takeover Proposal or Superior Proposal,
        a copy of any offer or other written communications and the identity
        of the person making such request, Takeover Proposal or Superior
        Proposal. The Company shall keep the Trust fully informed of the
        status and details of any such request or proposal and the status of
        any discussions and negotiations in relation thereto.

                                     24
<PAGE>

    (d) Nothing contained in this Section 4.2 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 disclosure to the Company's stockholders if, in the
        good faith judgment of the Board of Directors of the Company, after
        consultation with outside counsel, failure so to disclose would be
        a breach of its fiduciary duties to the Company's stockholders
        under applicable law; provided, however, that neither the Company
        nor its Board of Directors nor any committee thereof shall, except
        as permitted by Section 4.2(b), withdraw or modify, or propose
        publicly to withdraw or modify, its position with respect to this
        Agreement, the Merger or approve or recommend, or propose publicly
        to approve or recommend, a Takeover Proposal.

    (e) Without the prior consent of the Trust, the Company shall not (i)
        except to the extent contemplated by this Agreement, amend or
        modify the Rights Agreement or redeem or terminate the Rights
        Agreement or (ii) modify or release any person from any
        confidentiality or standstill agreement to which the Company is a
        party if such action would have the purpose or effect of permitting
        or facilitating the submission of a Takeover Proposal by such
        person. Immediately upon the execution of this Agreement, the
        Company shall, and the Company shall cause its subsidiaries and
        Representatives to, cease and cause to be terminated all
        activities, discussions and negotiations, if any, with any person
        conducted prior to the date hereof with respect to, or seeking to
        obtain, any Takeover Proposal.

                                   ARTICLE 5

                             Additional Agreements

   Section 5.1 Preparation of the Proxy Statement; Company Stockholders
Meeting. The Company, acting through its Board of Directors, shall, in
accordance with applicable law, its Second Amended and Restated Certificate of
Incorporation and its Bylaws:

    (a) As promptly as practicable following the date of this Agreement,
        the Company shall prepare and file with the SEC the Proxy
        Statement, use its reasonable best efforts to have the Proxy
        Statement cleared by the SEC and thereafter mailed to the Company's
        stockholders at the earliest practical date. The Trust and its
        counsel shall be given the reasonable opportunity to review and
        comment upon the Proxy Statement (and any supplements thereto)
        prior to the time they are filed with the SEC. The Company shall
        provide the Trust and its counsel with a copy of any written
        comments or telephonic notification of any verbal comments that are
        received by the Company from the SEC or its staff with respect to
        the Proxy Statement and shall further provide the Trust and its
        counsel with a copy of any written response and telephonic
        notifications of any verbal responses by the Company. If at any
        time prior to the Closing Date any fact, event or development is
        discovered by the Company which is required under applicable law to
        be set forth in a supplement to the Proxy Statement, the Company
        shall prepare and file with the SEC any such supplement or
        amendment and shall disseminate the same to its stockholders in the
        manner required by applicable law.

    (b) As promptly as practicable following the date of this Agreement,
        subject to Section 4.2, the Company will, as soon as practicable
        following the date of this Agreement, duly call, give notice of,
        convene and hold a meeting of its stockholders (the "Company
        Stockholders Meeting") for the purpose of obtaining the Company
        Stockholder Approval. Subject to Section 4.2(b), the Company will,
        through its Board of Directors, recommend to its stockholders the
        approval and adoption of this Agreement, the Merger and the
        consummation of the other transactions contemplated hereby and
        shall use its reasonable best efforts to obtain such approval by
        its stockholders.

    (c) The Trust shall vote, or cause to be voted, all of the Shares then
        owned by it, Acquisition Sub or any of its other subsidiaries in
        favor of the approval and adoption of this Agreement, the Merger
        and the transactions contemplated hereby.

                                      25
<PAGE>

Section 5.2 Access to Information; Confidentiality.

   From the date of this Agreement until the Closing Date, the Company shall,
and shall cause each of its respective subsidiaries (i) to afford to the Trust
and to its officers, employees, financial advisors, attorneys, accountants and
other representatives and to any other person that the Trust or the Acquisition
Sub has advised the Company is or may be interested in purchasing from the
Surviving Corporation after the Merger any of the assets, facilities or
operations of the Company, or any of its subsidiaries, reasonable access during
normal business hours during the period prior to the Effective Time to all
their respective properties, books, contracts, commitments, personnel and
records, (ii) instruct its counsel, financial advisors, auditors and other
authorized representatives of the Company and its subsidiaries to cooperate
with the Trust in its investigation of the Company and its subsidiaries, and
(iii) to furnish promptly to the Trust (a) a copy of each report, schedule,
form, statement and other document filed by it during such period pursuant to
the requirements of U.S. Federal or state securities laws and (b) other
information concerning its business, properties and personnel as such other
party may reasonably request. The Trust will hold, and will cause its officers,
employees, financial advisors, attorneys, accountants and other representatives
and affiliates to hold, any nonpublic information in accordance with the terms
of that certain Confidentiality Agreement dated August 3, 2000 by and between
Integrated Capital Associates, Inc. and the Company (the "Confidentiality
Agreement").

Section 5.3 Reasonable Best Efforts.

   Subject to Section 4.2(b), upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practical, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, such as those referred to in Sections
4.1(d)(1)-(4) and 4.2(b)(1)-(3)) and the taking of all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
waivers, consents or approvals from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.

   Without limiting the generality of the foregoing, each of the Company and
the Trust shall, to the extent required under the HSR Act, promptly file or
cause to be filed with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division")
notification and report forms pursuant to the HSR Act relating to the merger
and the other transactions contemplated in this Agreement. The Company and the
Trust shall promptly respond to any request for additional information or
documenting material by the FTC or Antitrust Division and shall cooperate with
each other to effect the expiration of any waiting periods applicable thereto
as promptly as practicable. The Company and the Trust shall each consult with
the other and use their reasonable best efforts to coordinate any
communications or filings with the FTC and the Antitrust Division.

   In connection with and without limiting the foregoing, the Company and its
Board of Directors shall (i) take all reasonable action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to this Agreement, the Stockholders Agreements, the Merger or any of
the other transactions contemplated hereby or thereby and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to this
Agreement, the Stockholders Agreements, the Merger or any other transaction
contemplated hereby or thereby, take all action necessary to ensure that the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreements may be consummated as promptly as

                                      26
<PAGE>

practical on the terms contemplated herein and therein and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement and the Stockholders Agreements.

   In addition, the Trust undertakes and agrees to use its reasonable best
efforts and to take all reasonable actions necessary to obtain the Commitment
within the 30-day period specified in Section 3.2(e), to finalize the
definitive documentation as promptly as practicable thereafter for the funding
in full of the merger consideration that will become payable at the Effective
Time and to cause the conditions to funding thereunder to be satisfied.

Section 5.4 Employee Matters

    (a) The Trust agrees that the Company shall honor in accordance with
        their respective terms and, on and after the Effective Time, the
        Trust shall cause the Surviving Corporation to honor all Company
        Benefit Plans and all other written employment, severance,
        termination and retirement agreements to which the Company is a
        party as of the Effective Time, and which are set forth on the
        Company Disclosure Schedule. Subject to the preceding sentence, the
        Trust agrees to cause the Surviving Corporation, after consummation
        of the Merger, to pay all amounts provided under such Company
        Benefit Plans and agreements in accordance with their respective
        terms and to honor, and to cause the Surviving Corporation to
        honor, all rights and privileges to or with respect to any such
        Company Benefit Plans or agreements that are vested at the
        Effective Time or vested as a result of the Merger.

    (b) The Trust agrees that, for a period of no less than one year after
        the Effective Time, it shall, and shall cause the Surviving
        Corporation to, provide employee pension and welfare plans (other
        than stock options, restricted stock units and other equity-based
        or phantom equity-based awards) for the benefit of employees and
        former employees of the Company, that, in the aggregate, are not
        materially less favorable than the Pension Plans and Welfare Plans
        in effect immediately prior to the Effective Time. To the extent
        any benefit plan of the Trust (or any plan of the Surviving
        Corporation) shall be made applicable to any employee or former
        employee of the Company, the Trust shall, or shall cause the
        Surviving Corporation to, grant to employees and former employees
        of the Company credit for service with the Company prior to the
        Effective Time for the purposes of determining eligibility to
        participate and the employee's nonforfeitable interest in benefits
        thereunder. In addition, to the extent any benefit plan of the
        Trust (or any plan of the Surviving Corporation) that constitutes a
        "Welfare Plan," as defined in Section 4.1(l) hereof, shall be made
        applicable to any employee or former employee of the Company, the
        Trust shall, or shall cause the Surviving Corporation to, (i) waive
        all preexisting condition exclusions and waiting periods otherwise
        applicable to employees and former employees of the Company, except
        to the extent any such limitations or waiting periods in effect
        under comparable Welfare Plans have not been satisfied as of the
        date such plan is made so applicable and (ii) credit each employee
        and former employee of the Company for any co-payments and
        deductibles paid by such employee or former employee under
        comparable Welfare Plans during the current year. Nothing in this
        Agreement shall be interpreted as limiting the power of the
        Surviving Corporation to amend or terminate any Company Benefit
        Plan or any other employee benefit plan, program, agreement or
        policy or as requiring the Surviving Corporation or the Trust to
        continue (other than as required by its terms) any written
        employment contract.

Section 5.5 Rights Agreement.

   The Board of Directors of the Company shall take all further action (in
addition to that referred to in Section 3.1(o)) necessary (including redeeming
the Rights immediately prior to the Effective Time or amending the Rights
Agreement) in order to render the Rights inapplicable to the execution of this
Agreement and the Stockholders Agreements and the consummation of the Merger
and the other transactions contemplated hereby and thereby.

                                      27
<PAGE>

Section 5.6 Continuance of Existing Indemnification Rights.

    (a) For six years after the Effective Time, and during the pendency
        thereafter of any Claim (as defined below) asserted or made within
        such six year period, the Surviving Corporation shall indemnify,
        defend and hold harmless any person who is now, or has been at any
        time prior to the date hereof, or who becomes prior to the
        Effective Time, a director or officer (an "Indemnified Person") of
        the Company or any of its subsidiaries against all losses, claims,
        damages, liabilities, costs and expenses (including attorneys' fees
        and expenses), judgments, fines, losses and amounts paid in
        settlement in connection with any actual or threatened action,
        suit, claim, proceeding or investigation (each a "Claim") to the
        extent that any such Claim directly or indirectly is based on, or
        arises out of the fact that: such Indemnified Person is or was a
        director or officer of the Company or any of its subsidiaries,
        including any claim based in whole or in part on this Agreement or
        any of the transactions contemplated hereby, in each case, to the
        extent that any such Claim pertains to any matter or fact arising,
        existing or occurring prior to or at the Effective Time, regardless
        of whether such Claim is asserted or claimed prior to, at or after
        the Effective Time, to the fullest extent permitted under the DGCL,
        the Company's Second Restated Certificate of Incorporation and by-
        laws and any indemnification agreement to which the Company and an
        Indemnified Party are parties, including provisions relating to
        advancement of expenses incurred in the defense of any such Claim;
        provided, however, that the Surviving Corporation shall not be
        required to indemnify any Indemnified Person in connection with any
        proceeding (or portion thereof) involving any Claim initiated by
        such Indemnified Person unless the initiation of such proceeding
        (or portion thereof) was authorized by the Board of Directors of
        the Surviving Corporation or unless such proceeding is brought by
        an Indemnified Person to enforce rights under this Section 5.6 and
        provided, further, that the Surviving Corporation shall not be
        liable for any settlement effected without its prior written
        consent (which consent shall not be unreasonably withheld). Any
        Indemnified Party wishing to claim indemnification under this
        Section 5.6 upon learning of any such Claim shall notify the
        Company (or after the Effective Time, the Surviving Corporation),
        but the failure to so notify shall not relieve a party from any
        liability that it may have under this Section 5.6, except to the
        extent that such failure prejudices such party. The Indemnified
        Parties as a group may retain only one law firm to represent them
        with respect to each such matter unless there is, under applicable
        standards of professional conduct, a conflict or a potential
        conflict on any significant issue between the positions of any two
        or more Indemnified Parties. Without limiting the generality of the
        foregoing, if any Indemnified Person becomes involved in any Claim,
        after the Effective Time, then the Surviving Corporation shall
        periodically advance to such Indemnified Person its legal and other
        expenses (including the cost of any investigation and preparation
        incurred in connection therewith), subject to such Indemnified
        Person providing an undertaking to reimburse all amounts so
        advanced in the case of a final nonappealable determination by a
        court of competent jurisdiction that such Indemnified Person is not
        entitled to be indemnified therefor.

    (b) The Trust and the Company agree that all rights to indemnification,
        to defense, and being held harmless (including rights to
        advancement of expenses), existing in favor of any Indemnified
        Person, as provided in the Company's Second Restated Certificate of
        Incorporation or by-laws and any indemnification agreement in
        effect at the date hereof, shall survive the Merger and shall
        continue in full force and effect, without any amendment thereto
        that would be adverse to any Indemnified Person unless, as to any
        such Indemnified Person, such Indemnified person consents thereto.
        The obligations of the Surviving Corporation pursuant to Section
        5.6(a) and this Section 5.6(B) shall be assigned in accordance with
        Section 8.10.

    (c) The Surviving Corporation shall maintain the Company's existing
        directors' and officers' liability insurance policy (the "D&O
        Insurance") for a period of not less than six years after the
        Effective Time; provided, however, that (i) upon the sale by the
        Surviving Corporation of all or substantially all of its assets to
        an unaffiliated person, which person provides a substitute policy

                                      28
<PAGE>

       of similar coverage and amounts containing terms no less advantageous
       to such former directors or officers than the D&O Insurance and
       agrees to maintain such coverage for a period of not less than six
       years after the Effective Time, the Surviving Corporation's
       obligation hereunder shall cease, (ii) the Company or such
       unaffiliated person, as the case may be, may substitute therefor
       policies of similar coverage and amounts containing terms no less
       advantageous to such former directors or officers and (iii) if the
       existing D&O Insurance expires or is canceled during such period,
       then the Surviving Corporation or such unaffiliated person, as the
       case may be, shall use its reasonable best efforts to obtain a
       directors' and officers' liability insurance policy substantially
       similar to the D&O Insurance; provided, further, that if the
       aggregate annual premiums for such insurance pursuant to this Section
       5.6(c) at any time during such period shall exceed 100% of the per
       annum rate of premium paid by the Company and its subsidiaries as of
       the date hereof for such insurance, the Surviving Corporation shall
       provide only such coverage as shall then be available for such
       amount.

Section 5.7 Fees and Expenses.

    (a) Except as set forth in this Section 5.7, all fees and expenses
        incurred in connection with the Merger, this Agreement and the other
        transactions contemplated by this Agreement shall be paid by the
        party incurring such fees or expenses, whether or not the Merger is
        consummated.

    (b) If this Agreement is terminated by (i) either the Trust or the
        Company pursuant to Section 7.1(b)(i) or Section 7.1(b)(ii) and
        prior to the termination hereof a Takeover Proposal has been made by
        any person or any person publicly announces its intent to make a
        Takeover Proposal, unless, in the case of a termination by the
        Company, the failure to consummate the Merger is the result of a
        material breach of this Agreement by the Trust or Acquisition Sub or
        a material failure by the Trust or Acquisition Sub to fulfill any
        obligation under this Agreement, (ii) the Trust pursuant to Section
        7.1(b)(iv), 7.1(d), 7.1(e) or 7.1(h), or (iii) the Company pursuant
        to Section 7.1(c), then the Company shall promptly pay the Trust a
        fee equal to $10,000,000 (the "Termination Fee"), which Termination
        Fee shall be payable by wire transfer of same day funds not later
        than the date of termination of this Agreement.

Section 5.8 Public Announcements.

   The Trust and the Company will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, stock exchange
requirements or court process. If either the Company or the Trust determines
that a public announcement is required by applicable law, stock exchange
requirement or court process, prior to making such announcement, it will
consult and coordinate with the other party regarding the substance thereof.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement shall be in the form
heretofore agreed upon by the parties.

Section 5.9 Stockholder Litigation.

   The Company shall give the Trust the opportunity to participate in the
defense or settlement of any stockholder litigation against the Company and
its directors relating to the transactions contemplated by this Agreement;
provided, however, that no such settlement shall be agreed to without the
Trust's consent, which consent shall not be unreasonably withheld.

Section 5.10 Bank Credit Agreement and Indenture.

   The Surviving Corporation shall honor, on and after the Effective Time, the
obligations of the Company under the Bank Credit Agreement and the Indenture.
The Trust acknowledges that (a) under the Bank Credit

                                     29
<PAGE>

Agreement the change in beneficial ownership of the Company resulting from the
Merger will constitute an Event of Default (as defined in the Bank Credit
Agreement) and (b) for purposes of the Indenture, the Merger will constitute a
Change of Control (as such term is defined in Section 3.17 of the Indenture).
The Surviving Corporation shall, after consummation of the Merger, pay, as and
when due, all amounts provided for under the Bank Credit Agreement and the
Senior Subordinated Note Indenture in accordance with their respective terms
(including by making a Change of Control Offer (as defined in Section 3.17 of
the Indenture) under the Indenture, to the extent such offer is required by the
Indenture).

Section 5.11 Amendment of Disclosure Schedules.

   Each party agrees that, with respect to the representations and warranties
of such party contained in this Agreement, such party shall have the continuing
obligation until the Effective Time to supplement or amend promptly the
Schedules to such party's Disclosure Schedule with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in such
party's Disclosure Schedule. For all purposes of this Agreement, including for
purposes of determining whether the conditions set forth in Article 6 have been
fulfilled, the Schedules to a party's Disclosure Schedule shall be deemed to
include only that information contained therein on the date of this Agreement
and shall be deemed to exclude all information contained in any supplement or
amendment thereto, but if the Effective Time shall occur, then all matters
disclosed pursuant to any such supplement or amendment at or prior to the
Effective Time shall be waived and no party shall be entitled to make a claim
thereon pursuant to the terms of this Agreement.

                                   ARTICLE 6

                              Conditions Precedent

Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.

   The respective obligation of each party to effect the Merger is subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:

    (a) Stockholder Approvals. The Company Stockholder Approval shall have
        been obtained to the extent required by the DGCL, the Company's
        Second Restated Certificate of Incorporation and the Company's by-
        laws.

    (b) HSR Act. The waiting period (and any extension thereof) applicable
        to the Merger under the HSR Act shall have been terminated or shall
        have expired.

    (c) No Injunctions or Restraints. No judgment, decree, statute, law,
        ordinance, rule, regulation, temporary restraining order,
        preliminary or permanent injunction or other order enacted,
        entered, promulgated, enforced or issued by any court of competent
        jurisdiction or other Governmental Entity or other legal restraint
        or prohibition (collectively, "Restraints") preventing the
        consummation of the Merger shall be in effect; provided, however,
        that each of the parties shall have used all reasonable best
        efforts to prevent the enactment, promulgation, entry, issuance or
        enforcement of any such Restraints and to appeal as promptly as
        possible any such Restraints that may be entered or issued.

Section 6.2 Conditions to Obligations of the Trust and Acquisition Sub.

   The obligations of the Trust and Acquisition Sub to effect the Merger are
further subject to satisfaction or waiver (by the Trust) on or prior to the
Closing Date of the following conditions:

    (a) Representations and Warranties. The representations and warranties
        of the Company set forth in this Agreement shall be true and
        correct (without regard to any materiality qualifications or
        references to material adverse effect contained in any specific
        representation or warranty) as of

                                      30
<PAGE>

       the date of this Agreement and as of the Closing Date as though made
       on and as of the Closing Date, except to the extent such
       representations and warranties expressly relate to an earlier date
       (in which case as of such date); provided, however, that this
       paragraph (a) shall be deemed satisfied so long as the failure of all
       such representations and warranties to be true and correct would,
       collectively, not result in a material adverse effect on the Company,
       and the Trust shall have received a certificate signed on behalf of
       the Company by its chief executive officer and chief financial
       officer to such effect.

    (b) Performance of Obligations of the Company. The Company shall have
        performed in all material respects all obligations required to be
        performed by it under this Agreement at or prior to the Closing
        Date, and the Trust shall have received a certificate signed on
        behalf of the Company by its chief executive officer and chief
        financial officer to such effect.

    (c) No Litigation. There shall not be pending or threatened by any
        Governmental Entity any suit, action or proceeding (i) challenging
        the acquisition by the Trust or Acquisition Sub of any shares of
        capital stock of the Company or the Surviving Corporation, seeking
        to restrain or prohibit the consummation of the Merger or any of the
        other transactions contemplated by this Agreement, (ii) seeking to
        prohibit or limit the ownership or operation by the Trust or any of
        its subsidiaries of any material portion of the business or assets
        of the Company, or any of its subsidiaries, or to compel the Trust
        or any of its subsidiaries to dispose of or hold separate any
        material portion of the business or assets of the Company or any of
        its subsidiaries, as a result of the Merger or any of the other
        transactions contemplated by this Agreement, (iii) seeking to impose
        limitations on the ability of the Trust to acquire or hold, or
        exercise full rights of ownership of, any shares of capital stock of
        the Company or the Surviving Corporation, or (iv) seeking to
        prohibit the Trust or any of its subsidiaries from effectively
        controlling in any material respect the business or operations of
        the Company or its subsidiaries. In addition there shall not be any
        judgment, order, decrees, statute, law, ordinance, rule or
        regulation, enacted, entered, promulgated or enforced that is
        reasonably likely to result, directly or indirectly, in any of the
        consequences referred to in clauses (ii) through (iv) of the
        immediately preceding sentence.

    (d) Commercial Production at Lawton Mill. On or before October 1, 2000,
        the Company or its subsidiary Republic Paperboard Company ("RPC")
        shall have delivered to James Hardie Gypsum, Inc. ("Hardie"), the
        "Commencement Notice" (as such term is defined in Section 3(b) of
        the Paperboard Supply Agreement dated as of May 14, 1998, among RPC,
        the Company and Hardie (the "Hardie Contract")).

Section 6.3 Conditions to Obligation of the Company.

   The obligation of the Company to effect the Merger is further subject to
satisfaction or waiver (by the Company) on or prior to the Closing Date of the
following conditions:

    (a) Representations and Warranties. The representations and warranties
        of the Trust set forth in this Agreement shall be true and correct
        (without regard to any materiality qualifications or references to
        material adverse effect contained in any specific representation or
        warranty) as of the Closing Date as though made on and as of the
        Closing Date, except to the extent such representations and
        warranties expressly relate to an earlier date (in which case as of
        such date); provided, however, that this paragraph (a) shall be
        deemed satisfied so long as the failure of all such representations
        and warranties to be true and correct would, collectively, not
        result in a material adverse effect on the Trust, and the Company
        shall have received a certificate signed on behalf of the Trust by
        its trustee to such effect.

    (b) Performance of Obligations of the Trust. The Trust shall have
        performed in all material respects all obligations required to be
        performed by it under this Agreement at or prior to the Closing
        Date, and the Company shall have received a certificate signed on
        behalf of the Trust by its trustee to such effect.


                                     31
<PAGE>

                                   ARTICLE 7

                       Termination, Amendment and Waiver

Section 7.1 Termination.

   This Agreement may be terminated at any time prior to the Effective Time,
whether before or after the Company Stockholder Approval:

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

    (b) by either the Trust or the Company if:

      (i) the Merger shall not have been consummated on or before January
          31, 2001, unless the failure to consummate the Merger is the
          result of a material breach of this Agreement or a material
          failure to fulfill any obligation under the Agreement by the
          party seeking to terminate this Agreement; provided, however,
          that the passage of such period shall be tolled for any part
          thereof (but not exceeding 20 calendar days in the aggregate)
          during which any party shall be subject to a nonfinal order,
          decree, ruling, injunction or action restraining, enjoining or
          otherwise prohibiting the consummation of the Merger or the
          calling or holding of the Company Stockholder Meeting;

      (ii) the Company Stockholder Meeting has been duly convened but the
           Company Stockholder Approval shall not have been obtained at
           such Company Stockholder Meeting (or any adjournment thereof);

      (iii) any Governmental Entity shall have issued an order, decree,
            ruling or injunction or taken any other action permanently
            enjoining, restraining or otherwise prohibiting the Merger and
            such order, decree, ruling, injunction or other action shall
            have become final and nonappealable;

      (iv) the other party breaches any covenant or other agreement
           contained in this Agreement that (A) would give rise to the
           failure of such party to satisfy any condition set forth in
           Section 6.2(a) or (b) or Section 6.3(a) or (b), as applicable,
           and (B) cannot be or has not been cured within 45 days after
           the giving of written notice to the breaching party of such
           breach (a "Material Breach") (provided that the terminating
           party is not then in breach in any material respect of any
           obligation, covenant or other agreement contained in this
           Agreement or in Material Breach of any representation or
           warranty contained in this Agreement); or

    (c) by the Company in accordance with Section 4.2(b), provided that it
        has complied with all provisions thereof and that it complies with
        the requirements, if then applicable, of Section 5.7; or

    (d) by the Trust if (i) the Board of Directors of the Company or any
        committee thereof shall have failed to recommend, withdrawn, or
        modified in a manner adverse to the Trust, its approval or
        recommendation of this Agreement, the Merger and the other
        transactions contemplated hereby or approved or recommended any
        Superior Proposal, (ii) the Board of Directors of the Company or
        any committee thereof shall have resolved to take any of the
        foregoing actions or (iii) failed to affirm its recommendation of
        this Agreement, the Merger or the other transactions contemplated
        hereby within three Business Days of a request to do so by the
        Trust; or

    (e) by the Trust, if the Company shall have entered into, or publicly
        announced its intention to enter into, a definitive agreement or an
        agreement in principle with respect to a Takeover Proposal or a
        Superior Proposal; or

    (f) by the Company if (i) the Trust fails to deliver a copy of the
        Commitment to the Company during the 30-day period specified in
        Section 3.2(e) (provided that as of the time of such termination
        pursuant to this clause (f)(i) such failure is continuing); or (ii)
        as of the date of the

                                      32
<PAGE>

       Company Stockholder Meeting, (A) the Trust has not finalized the
       definitive loan agreements pursuant to which the Trust will obtain
       the funds for the payment in full of the merger consideration in
       accordance with Article 2 (and such loan documents are not finalized
       as of the time of such termination pursuant to this clause (f)(ii)),
       and (B) the Company is not then in breach of any of its obligations,
       covenants or agreements hereunder, which breach has had or, if
       continued, is likely to have a material adverse effect on the
       Company; or (iii) not later than 48 hours after the Company's
       stockholders have approved and adopted this Agreement, the Merger and
       the consummation of the other transactions contemplated hereby at the
       Company Stockholder Meeting, all conditions (other than consummation
       of the Closing) to the Trust obtaining the funds necessary to pay in
       full the merger consideration in accordance with Article 2 have not
       been satisfied, provided that as of the time of such termination (A)
       such conditions to obtaining the funds remain unsatisfied, (B) all of
       the conditions to Closing set forth in Sections 6.1 and 6.2 have been
       satisfied (and the officers of the Company specified in Section
       6.2(a) and (b) are prepared to deliver the certificates required
       thereby) and (C) the Company is not then in breach of any of its
       obligations, covenants or agreements hereunder, which breach has had
       or, if continued, is likely to have a material adverse effect on the
       Company; or

    (g) by the Company if the Trust fails to close after the second business
        day after (1) all of the conditions set forth in Sections 6.1 and
        6.2 have been satisfied (and the officers of the Company specified
        in Sections 6.2(a) and (b) are prepared to deliver the certificates
        required thereby), (2) the Company is not then in breach in any
        material respect of any of its obligations, covenants or agreements
        hereunder and (3) the Company gives 2 business days' prior written
        notice of its satisfaction of all obligations under Sections 6.1 and
        6.2 and the waiver by the Company of any obligations of the Trust
        not satisfied under Section 6.3; or

    (h) by the Trust if the Company fails to close after the second business
        day after (1) all of the conditions set forth in Sections 6.1 and
        6.3 have been satisfied (and the officers of the Trust specified in
        Sections 6.3(a) and (b) are prepared to deliver the certificates
        required thereby), (2) the Trust is not then in breach in any
        material respect of any of its obligations, covenants or agreements
        hereunder and (3) the Trust gives 2 business days' prior written
        notice of its satisfaction of all obligations under Sections 6.1 and
        6.3 and the waiver by the Trust of any obligations of the Company
        not satisfied under Section 6.2; or

    (i) by the Trust at any time after October 1, 2000 if the "Commencement
        Notice" (as such term is defined in Section 3(b) of Hardie Contract)
        was not given in accordance with the Hardie Contract on or before
        October 1, 2000.

Section 7.2 Effect of Termination.

    (a) Upon termination of this Agreement by either the Company or the
        Trust as provided in Section 7.1, this Agreement shall forthwith
        become void and have no effect, without any liability or obligation
        on the part of the Trust, Acquisition Sub or the Company, other than
        the provisions of Section 3.1(p), Section 3.2(d), the last sentence
        of Section 5.2, Section 5.7, this Section 7.2 and Article 8.

    (b) The Trust and Acquisition Sub agree that if this Agreement is
        terminated by the Company in accordance with the terms of Section
        7.1(b)(iv), Section 7.1(f) or Section 7.1(g), the Trust shall be
        obligated to pay to the Company $12,000,000 as liquidated damages,
        which payment (i) shall be funded by the Company drawing such amount
        under the Letter of Credit, (ii) shall constitute the exclusive
        remedy available to the Company at law or in equity in respect of
        any such termination by the Company or any breach of this Agreement
        by the Trust or Acquisition Sub, and (iii) shall constitute payment
        for all claims, damages, out-of-pocket expenses and fees arising out
        of or incurred by the Company in connection with this transaction.
        The Letter of Credit furnished to the Company by the Trust
        concurrently with the execution of this Agreement shall constitute
        the source for funding the $12,000,000 payment required from the
        Trust pursuant to this Section 7.2(b).

                                     33
<PAGE>

Section 7.3 Amendment.

   This Agreement may be amended by the parties at any time before or after the
Company Stockholder Approval; provided, however, that after any such approval,
there shall not be made any amendment which by law requires further approval by
the stockholders of the Company without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.

Section 7.4 Extension; Waiver.

   At any time prior to the Effective Time, a party may (a) extend the time for
the performance of any of the obligations or other acts of the other parties,
(b) waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 7.3, waive compliance
by the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a 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. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.

                                   ARTICLE 8

                               General Provisions

Section 8.1 Nonsurvival of Representations and Warranties.

   None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the parties
that by its terms contemplates performance after the Effective Time.

Section 8.2 Notices.

   All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed), sent by overnight courier
(providing proof of delivery) or mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

     (a) if to the Trust or Acquisition Sub, to

         Premier Construction Products Statutory Trust
         c/o First Union National Bank, as trustee
         10 State House Square
         Hartford, CT 06103
         Fax: (860) 247-1356
         Attention: W. Jeffrey Kramer

         with a copy to:

         Premier Construction Products Acquisition Corp.
         220 Jackson Street
         San Francisco, California 94111
         Fax: (415) 986-5511
         Attention: General Counsel

         and
         Andrews & Kurth L.L.P.
         4200 Chase Tower
         Houston, Texas 77002
         Fax: (713) 220-4285
         Attention: G. Michael O'Leary

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<PAGE>

         if to the Company, to

         Republic Group Incorporated
         811 East 30th Avenue
         Hutchinson, Kansas 67502
         Fax: (316) 727-2727
         Attention: Doyle R. Ramsey

         with a copy to:

         Locke Liddell & Sapp LLP
         2200 Ross Avenue, Suite 2200
         Dallas, Texas 75201
         Fax: (214) 740-8800
         Attention: Bryan E. Bishop

Except as provided below, all such notices, requests and other communications
shall be deemed received on the date of receipt by the recipient thereof if
actually received prior to 5 p.m. in the place of receipt and such day is a
business day in the place or receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt. Any notice given exclusively
by registered or certified mail as provided above shall be deemed received on
the fifth business day.

Section 8.3 Definitions.

   For purposes of this Agreement:

    (a) "affiliate" of any person means another person that directly or
        indirectly, through one or more intermediaries, controls, is
        controlled by, or is under common control with, such first person;

    (b) "Bank Credit Agreement" means that certain Credit Agreement dated
        as of July 15, 1998 among the Company, the banks party thereto, and
        Bank of America, N.A., as Administrative Agent, as amended;

    (c) "Filed SEC Documents" means SEC Documents filed by the Company
        pursuant to the Securities Exchange Act of 1934, as amended;

    (d) "Indenture" means that certain Indenture dated as of July 15, 1998
        between the Company and UMB Bank, N.A., as Trustee;

    (e) "material adverse effect" means, when used in connection with a
        party to this Agreement, any change, effect, event or occurrence
        that (i) is or would reasonably be expected to be materially
        adverse to the assets, business, condition (financial or otherwise)
        or results of operations of such party and its subsidiaries taken
        as a whole; (ii) impairs, or would reasonably be expected to
        impair, the ability of such party to perform its obligations under
        this Agreement in any material respect or (iii) prevents or
        materially delays, or would reasonably be expected to prevent or
        materially delay the consummation of any of the transactions
        contemplated by this Agreement.

    (f) "person" means an individual, corporation, limited liability
        company, partnership, joint venture, association, trust,
        unincorporated organization or other entity;

    (g) "subsidiary" of any person means another person, an amount of the
        voting securities, other voting ownership or voting partnership
        interests of which is sufficient to elect at least a majority of
        its Board of Directors or other governing body (or, if there are no
        such voting interests, 50% or more of the equity interests, the
        holders of which are generally entitled to vote for the election of
        the board of directors or other governing body) is owned directly
        or indirectly by such first person;

                                      35
<PAGE>

    (h) "significant subsidiary" of any person means any subsidiary of such
        person that constitutes a significant subsidiary within the meaning
        of Rule 1-02 of Regulation S-X promulgated by the SEC;

    (i) "Takeover Proposal" has the meaning assigned thereto in Section
        4.2(a);

    (j) "Superior Proposal" has the meaning assigned thereto in Section
        4.2(b); and

    (k) "Taxes" has the meaning assigned thereto in Section 3.1(m)(iii).

Section 8.4 Interpretation.

   When a reference is made in this Agreement to an Article, Section, Exhibit
or Schedule, such reference shall be to an Article or Section of, or an Exhibit
or Schedule to, this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. All terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
herein. All monetary sums herein are in United States of America dollars. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.

Section 8.5 Counterparts.

   This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
(including by facsimile transmission) to the other parties.

Section 8.6 Entire Agreement; No Third-Party Beneficiaries.

   This Agreement (including the documents and instruments referred to herein),
the Stockholders Agreements and the Confidentiality Agreement (a) constitute
the entire agreement, and supersede all prior written or oral and all
contemporaneous oral agreements and understandings, among the parties with
respect to the subject matter of this Agreement and (b) except for the
provisions of Article 2 and Section 5.6, are not intended to confer upon any
person other than the parties any rights or remedies.

Section 8.7 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 8.8 Jurisdiction.

   Any suit, action or proceeding seeking to enforce any provision of, or based
on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in any federal court located
in the State of Delaware or any Delaware state court, and each of the parties
hereby consents to

                                      36
<PAGE>

the exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now
or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 8.2 shall be deemed effective service of process on such
party.

Section 8.9 Waiver of Jury Trial.

   EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 8.10 Assignment.

   Neither this Agreement nor any of the rights, interests or obligations under
this Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by a party without the prior written consent of each other party,
except that either the Trust or Acquisition Sub may transfer or assign, in
whole or from time to time in part, to one or more of its affiliates, the right
to enter into the transactions contemplated by this Agreement, but no such
transfer or assignment will relieve the Trust or Acquisition Sub of its
obligations hereunder. Notwithstanding the foregoing, the parties hereto agree
that (i) the Surviving Corporation shall, and the Trust shall cause the
Surviving Corporation to, assign the obligations of the Trust or the Surviving
Corporation, as the case may be, under Sections 5.4 and 5.6 to any person who
acquires all or substantially all of the assets of the Surviving Corporation,
and the Surviving Corporation shall cause, and the Trust shall cause the
Surviving Corporation to cause, such person to assume the obligations of the
Surviving Corporation, and any such assignment and assumption shall relieve the
Trust and Surviving Corporation of their obligations under Sections 5.4 and
5.6, or (ii) if the Surviving Corporation sells or otherwise disposes of
substantially all of its assets in a manner or manners such that no person
acquires all or substantially all of such assets, then the Surviving
Corporation shall, and the Trust shall cause the Surviving Corporation to, make
such provisions for the obligations of the Trust and the Surviving Corporation
under Sections 5.4 and 5.6 as the Surviving Corporation and a majority of the
persons presently serving as the Chief Executive Officer, Chief Financial
Officer and Vice President-Finance (or, if any such person is unavailable due
to illness or death, a majority of the specified persons then available)
determine to be appropriate, and upon making such provisions the Trust and the
Surviving shall be relieved of their obligations under Sections 5.4 and 5.6.
Any assignment in violation of the first sentence of this Section 8.10 shall be
void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.

Section 8.11 Disclosure Schedules.

   Matters reflected on the Company Disclosure Schedule and the Trust
Disclosure Schedule are not necessarily limited to matters required by this
Agreement to be reflected therein and the inclusion of such matters shall not
be deemed an admission that such matters were required to be reflected on the
Company Disclosure Schedule or the Trust Disclosure Schedule, as the case may
be. Such additional matters are set forth for informational purposes only and
do not necessarily include other matters of a similar nature.

Section 8.12 Severability.

   If any provision of this Agreement or the application thereof to any person
or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as
to which it has been held

                                      37
<PAGE>

invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby. Upon any such determination,
the parties shall negotiate in good faith in an effort to agree upon a mutually
acceptable, suitable and equitable substitute provision to effect the original
intent of the parties.

Section 8.13 Payments Constitute Liquidated Damages.

   The parties agree that the dollar amounts provided in Sections 5.7(b) and
7.2(b) payable upon the occurrence of the events specified therein have been
determined by negotiation and reflect their best estimate and judgement of the
monetary value of the losses and damages to be incurred in connection with, and
the time, effort, expense and cost of opportunity associated with, the
transactions contemplated in this Agreement, and the parties agree to accept
payment of such amount as liquidated damages in full and complete satisfaction
of all claims and expenses arising from the occurrence of such events
(including, but not limited to, claims for specific performance).

Section 8.14 Enforcement.

   The parties agree that irreparable damage would occur and that the parties
would not have any adequate remedy at law if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any Federal
court located in the State of Delaware or in Delaware state court, the
foregoing being in addition to any other remedy to which they are entitled at
law or in equity.

   IN WITNESS WHEREOF, the Trust, Acquisition Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.

                                          PREMIER CONSTRUCTION PRODUCTS
                                           STATUTORY TRUST

                                          By: First Union National Bank, not in
                                           its individual capacity, but soley as
                                           Trustee

                                          By:   /s/ W. Jeffrey Kramer
                                              _________________________________
                                                    W. Jeffrey Kramer
                                                     Vice President

                                          PREMIER CONSTRUCTION PRODUCTS
                                           ACQUISITION CORP.

                                          By:    /s/ Douglas H. Wolf
                                              _________________________________
                                                     Douglas H. Wolf
                                                        President

                                          REPUBLIC GROUP INCORPORATED

                                          By:     /s/ Phil Simpson
                                              _________________________________
                                          Phil Simpson Chairman, President and
                                                 Chief Executive Officer

                                      38