EXECUTION COPY







                            STOCK PURCHASE AGREEMENT



                                  By and Among

                                AIL SYSTEMS INC.

                                       and

                              UNITED CAPITAL CORP.

                                       and

                                METEX CORPORATION

                          Dated as of November 20, 1997





<PAGE>
DISCLOSURE SCHEDULE



         The Disclosure Schedule shall include the following Sections1:

3.02     Organization and Qualification of the Company
3.04     Subsidiaries
3.06     No Conflict
3.07     Government Consents and Approvals
3.08     Reference Balance Sheet
3.09     No Undisclosed Liabilities
3.10     Receivables
3.11     Acquired Assets
3.11     Sales and Purchase Order Backlog
3.13     Conduct in the Ordinary Course; Absence of Certain Changes,  Events and
         Conditions
3.14     Litigation
3.15     Certain Interests
3.16     Compliance with Laws
3.17     Environmental and Other Permits and Licenses; Related Matters
3.18     Material Contracts
3.19     Intellectual Property Rights
3.21     Employee Benefit Matters
3.22     Labor Matters
3.23     Taxes
3.24     Insurance
3.25     Accounts; Lockboxes; Safe Deposit Boxes; Powers of Attorney
5.01     Conduct of Business Prior to the Closing
5.07     Use of Intellectual Property

------------------------
  1      Notwithstanding  any other provisions of this Agreement  (including the
         Disclosure   Schedule),   information   disclosed  in  one  section  or
         subsection  of the  Disclosure  Schedule  will be deemed  disclosed for
         purposes  of  such  section  or  subsection  only,  unless  a  specific
         cross-reference to another section or subsection is made.


<PAGE>

                                TABLE OF CONTENTS

Section                                                                     Page

                                    ARTICLE I

DEFINITIONS.................................................................-1-

1.01. Certain Defined Terms.................................................-1-

                                   ARTICLE II

                                PURCHASE AND SALE

2.01.    Purchase and Sale of the Shares....................................-8-
2.02.    Purchase Price.....................................................-9-
2.03.    Closing............................................................-9-
2.04.    Closing Deliveries by the Seller...................................-9-
2.05.    Closing Deliveries by the Purchaser................................-9-

                                   ARTICLE III

          REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PARENT

3.01.    Organization, Authority and Qualification of the Seller............-9-
3.02.    Organization, Authority and Qualification of the Company..........-10-
3.03.    Capital Stock of the Company; Ownership of the Shares.............-10-
3.04.    Subsidiaries......................................................-11-
3.05.    Corporate Books and Records.......................................-11-
3.06.    No Conflict.......................................................-11-
3.07.    Governmental Consents and Approvals...............................-12-
3.08.    Financial Information, Books and Records,
         Projections and Operating Data....................................-12-
3.09.    No Undisclosed Liabilities........................................-13-
3.10.    Receivables.......................................................-13-
3.11.    Acquired Assets...................................................-13-
3.12.    Sales and Purchase Order Backlog..................................-13-
3.13.    Conduct in the Ordinary Course;
         Absence of Certain Changes, Events and Conditions.................-13-
3.14.    Litigation........................................................-16-
3.15.    Certain Interests.................................................-17-
3.16.    Compliance with Laws..............................................-17-
3.17.    Environmental Matters.............................................-18-
3.18.    Material Contracts................................................-19-
3.19.    Intellectual Property.............................................-20-
3.20.    Real Property.....................................................-20-

                                      -i-
<PAGE>

3.21.    Employee Benefit Matters..........................................-20-
3.22.    Labor Matters.....................................................-23-
3.23.    Taxes.............................................................-24-
3.24.    Insurance.........................................................-26-
3.25.    Accounts; Lockboxes; Safe Deposit Boxes; Powers of Attorney.......-27-
3.26.    Brokers...........................................................-28-

                                   ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

4.01.    Organization and Authority of the Purchaser.......................-28-
4.02.    No Conflict.......................................................-28-
4.03.    Governmental Consents and Approvals...............................-28-
4.04.    Investment Purpose................................................-29-
4.05.    Litigation........................................................-29-
4.06.    Brokers...........................................................-29-

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS

5.01.    Conduct of Business Prior to the Closing..........................-29-
5.02.    Access to Information.............................................-30-
5.03.    Confidentiality...................................................-31-
5.04.    Regulatory and Other Authorizations; Notices and Consents.........-31-
5.05.    Notice of Developments............................................-32-
5.06.    No Solicitation or Negotiation....................................-33-
5.07.    Use of Intellectual Property......................................-33-
5.08.    Non-Competition...................................................-33-
5.09.    Release of Indemnity Obligations..................................-35-
5.10.    Further Action....................................................-35-
5.11.    Transfer of Business..............................................-35-
5.12.    Unaudited Financial Statements....................................-35-

                                   ARTICLE VI

                                EMPLOYEE MATTERS

6.01.    Transferred Employees.............................................-36-
6.02.    Non-Transferred Employees.........................................-36-
6.03.    WARN Act Information..............................................-37-

                                      -ii-
<PAGE>
                                   ARTICLE VII

                                   TAX MATTERS

7.01.    Indemnity.........................................................-37-
7.02.    Returns and Payments..............................................-38-
7.03.    Refunds...........................................................-38-
7.04.    Contests..........................................................-39-
7.05.    Time of Payment...................................................-40-
7.06.    Cooperation and Exchange of Information...........................-40-
7.07.    Conveyance Taxes..................................................-41-
7.08.    Section 338(h)(10) Election.......................................-41-
7.09.    Miscellaneous.....................................................-41-

                                  ARTICLE VIII

                              CONDITIONS TO CLOSING

8.01.    Conditions to Obligations of the Seller and the Parent............-42-
8.02.    Conditions to Obligations of the Purchaser........................-43-

                                   ARTICLE IX

                                 INDEMNIFICATION

9.01.    Survival of Representations and Warranties........................-45-
9.02.    Indemnification by the Seller and the Parent......................-45-
9.03.    Limits on Indemnification.........................................-47-
9.04.    Tax Matters.......................................................-47-

                                    ARTICLE X

                             TERMINATION AND WAIVER

10.01.   Termination.......................................................-48-
10.02.   Effect of Termination.............................................-48-
10.03.   Waiver............................................................-49-

                                   ARTICLE XI

                               GENERAL PROVISIONS

11.01.   Expenses..........................................................-49-
11.02.   Notices...........................................................-49-
11.03.   Public Announcements..............................................-50-
11.04.   Headings..........................................................-51-
11.05.   Severability......................................................-51-
11.06.   Entire Agreement..................................................-51-
11.07.   Assignment........................................................-51-

                                     -iii-
<PAGE>

11.08.   No Third Party Beneficiaries......................................-51-
11.09.   Amendment.........................................................-51-
11.10.   Governing Law.....................................................-51-
11.11.   Counterparts......................................................-52-
11.12.   Specific Performance..............................................-52-

EXHIBIT 8.02(f)

         FORM OF OPINION OF THE SELLER'S AND THE PARENT'S COUNSEL..........-54-






                                      -iv-

<PAGE>
         STOCK PURCHASE  AGREEMENT,  dated as of November 20, 1997, by and among
AIL SYSTEMS  INC., a Delaware  corporation  (the  "Purchaser"),  UNITED  CAPITAL
CORP., a Delaware corporation the "Parent"),  and METEX CORPORATION,  a Delaware
corporation and wholly-owned, direct subsidiary of the Parent (the "Seller").


                              W I T N E S S E T H:

         WHEREAS,  the Seller  owns all the issued and  outstanding  shares (the
"Shares") of common stock,  $0.10 par value per share (the "Common  Stock"),  of
DORNE & MARGOLIN, INC., a Delaware corporation (the "Company"); and

         WHEREAS, the Seller wishes to sell to the Purchaser,  and the Purchaser
wishes to purchase  from the Seller,  the Shares,  upon the terms and subject to
the conditions set forth herein;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements and covenants  hereinafter set forth,  the Purchaser,  the Parent and
the Seller hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.01.  Certain Defined Terms.  As used in this  Agreement,  the
following terms shall have the following meanings:

               "Acquisition  Documents"  has the  meaning  specified  in Section
9.01.

               "Action" means any claim,  action,  suit,  arbitration,  inquiry,
proceeding or investigation by or before any Governmental Authority.

               "Affiliate"  means,  with respect to any  specified  Person,  any
other Person that directly,  or indirectly  through one or more  intermediaries,
controls,  is controlled  by, or is under common  control with,  such  specified
Person.

               "Agreement"  or  "this   Agreement"  means  this  Stock  Purchase
Agreement,  dated as of November 20, 1997,  between the Seller and the Purchaser
(including the Exhibits  hereto and the Disclosure  Schedule) and all amendments
hereto made in accordance with the provisions of Section 11.09.

               "Assets" means all the properties and assets, including,  without
limitation, the Owned Intellectual Property, the Licensed Intellectual Property,
and the Tangible Personal  Property,  used or intended to be used in the conduct
of the  Business  or  otherwise  owned,  leased  or used by the  Company  or any
Subsidiary and the benefits of all contracts,


<PAGE>

agreements and other  arrangements used or intended to be used by the Company or
any Subsidiary or in or relating to the conduct of the Business

               "Business"  means  the  business  of  designing,  developing  and
manufacturing  antennas and all other business which within three years prior to
the date hereof has been conducted by the Company and the Subsidiaries.

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

               "Closing" has the meaning specified in Section 2.03.

               "Closing Date" has the meaning specified in Section 2.03.

               "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended
through the date hereof.

               "Common Stock" has the meaning  specified in the recitals to this
Agreement.

               "Company"  has the  meaning  specified  in the  recitals  to this
Agreement.

               "Confidentiality  Agreement"  means the letter agreement dated as
of April 9, 1997 between the Seller and the Purchaser.

               "control"  (including the terms "controlled by" and "under common
control with"),  with respect to the  relationship  between or among two or more
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the  direction of the affairs or management of a
Person,  whether  through  the  ownership  of voting  securities,  as trustee or
executor,  by  contract  or  otherwise,   including,   without  limitation,  the
ownership,  directly or  indirectly,  of securities  having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.

               "Disclosure  Schedule"  means the  Disclosure  Schedule  attached
hereto, dated as of the date hereof, and forming a part of this Agreement.

               "Encumbrance" means any security interest, pledge, mortgage, lien
(including,   without   limitation,   environmental  and  tax  liens),   charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including,  without  limitation,  any restriction on the use, voting,  transfer,
receipt of income or other exercise of any attributes of ownership.

               "Environment" means surface waters,  groundwaters,  surface water
sediment, soil, subsurface strata and ambient air.

               "Environmental Claims" means any and all actions, suits, demands,
demand letters,  claims, liens, notices of non-compliance or violation,  notices
of liability or potential

                                      -2-
<PAGE>

liability,  investigations,  proceedings,  consent orders or consent  agreements
relating in any way to any Environmental  Law, any  Environmental  Permit or any
Hazardous  Material or arising  from any  alleged  injury or threat of injury to
health, safety or the Environment.

               "Environmental Law" means any Law, now or hereafter in effect and
as amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative  order,  consent decree or judgment,  relating to
pollution  or  protection  of the  Environment,  health or safety or to the use,
handling, transportation,  treatment, storage, disposal, release or discharge of
Hazardous Materials.

               "Environmental Permit" means any permit, approval, identification
number,  license or other authorization  required to operate the Business or the
Real Property under any applicable Environmental Law.

               "ERISA" has the meaning specified in Section 3.21(a).

               "Financial  Statements"  has the  meaning  specified  in  Section
3.08(a).

               "Governmental  Authority" means any United States federal,  state
or local or any foreign government,  governmental,  regulatory or administrative
authority,  agency or commission or any court, tribunal, or judicial or arbitral
body.

               "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation,  determination or award entered by or with any Governmental
Authority.

               "Hazardous Materials" means (a) petroleum and petroleum products,
by-products or breakdown products,  radioactive  materials,  asbestos-containing
materials and polychlorinated biphenyls, and (b) any other chemicals,  materials
or substances regulated as toxic or hazardous or as a pollutant,  contaminant or
waste under any applicable Environmental Law.

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

               "Indebtedness"  means,  with  respect  to  any  Person,  (a)  all
indebtedness of such Person, whether or not contingent,  for borrowed money, (b)
all  obligations  of such Person for the deferred  purchase price of property or
services,  (c) all  obligations  of  such  Person  evidenced  by  notes,  bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional  sale or other title  retention  agreement with respect to
property  acquired by such Person  (even  though the rights and  remedies of the
seller or lender  under such  agreement  in the event of default  are limited to
repossession  or sale of such  property),  (e) all obligations of such Person as
lessee under leases that have been or should be, in accordance  with U.S.  GAAP,
recorded as capital leases,  (f) all  obligations,  contingent or otherwise,  of
such Person under acceptance,  letter of credit or similar  facilities,  (g) all
obligations of such Person to purchase,  redeem,  retire,  decrease or otherwise
acquire for value any capital  stock of such Person or any  warrants,  rights or
options  to  acquire  such

                                      -3-
<PAGE>
capital stock, valued, in the case of redeemable preferred stock, at the greater
of its voluntary or involuntary  liquidation  preference plus accrued and unpaid
dividends, (h) all Indebtedness of others referred to in clauses (a) through (f)
above  guaranteed  directly or  indirectly  in any manner by such Person,  or in
effect guaranteed directly or indirectly by such Person through an agreement (i)
to pay or  purchase  such  Indebtedness  or to advance  or supply  funds for the
payment or purchase of such  Indebtedness,  (ii) to purchase,  sell or lease (as
lessee or lessor) property,  or to purchase or sell services,  primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, (iii) to supply funds to or in any
other manner invest in the debtor  (including  any agreement to pay for property
or services  irrespective  of whether such property is received or such services
are rendered) or (iv)  otherwise to assure a creditor  against loss, and (i) all
Indebtedness  referred to in clauses  (a)  through (f) above  secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured by) any  Encumbrance on property  (including,  without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.

               "Indemnified Party" has the meaning specified in Section 9.02(a).

               "Intellectual  Property"  means (a)  inventions,  whether  or not
patentable,  whether or not reduced to practice, and whether or not yet made the
subject  of  a  pending  patent  application  or  applications,  (b)  ideas  and
conceptions  of  potentially  patentable  subject  matter,  including,   without
limitation,  any patent  disclosures,  whether or not  reduced to  practice  and
whether  or not  yet  made  the  subject  of a  pending  patent  application  or
applications,  (c)  national  (including  the United  States) and  multinational
statutory  invention  registrations,  patents,  patent  registrations and patent
applications    (including    all    reissues,     divisions,     continuations,
continuations-in-part,  extensions  and  reexaminations)  and all rights therein
provided by  international  treaties or conventions and all  improvements to the
inventions  disclosed  in each such  registration,  patent or  application,  (d)
trademarks,  service marks, trade dress, logos, trade names and corporate names,
whether or not registered,  including all common law rights,  and  registrations
and applications for registration  thereof,  including,  but not limited to, all
marks registered in the United States Patent and Trademark Office, the Trademark
Offices of the States and  Territories of the United States of America,  and the
Trademark Offices of other nations  throughout the world, and all rights therein
provided by international treaties or conventions, (e) copyrights (registered or
otherwise) and registrations and applications for registration  thereof, and all
rights therein  provided by  international  treaties or  conventions,  (f) moral
rights (including,  without limitation,  rights of paternity and integrity), and
waivers of such rights by others,  (g)  computer  software,  including,  without
limitation, source code, operating systems and specifications, data, data bases,
files,   documentation   and  other   materials   related   thereto,   data  and
documentation,  (h) trade  secrets  and  confidential,  technical  and  business
information   (including  ideas,   formulas,   compositions,   inventions,   and
conceptions of inventions  whether patentable or unpatentable and whether or not
reduced to practice),  (i) whether or not  confidential,  technology  (including
know-how and show-how),  manufacturing and production  processes and techniques,
research and development information, drawings, specifications,  designs, plans,
proposals,   technical  data,  copyrightable  works,  financial,  marketing  and
business data,

                                      -4-
<PAGE>
pricing and cost  information,  business  and  marketing  plans and customer and
supplier lists and information,  (j) copies and tangible  embodiments of all the
foregoing,  in whatever  form or medium,  (k) all rights to obtain and rights to
apply for patents, and to register trademarks and copyrights, and (1) all rights
to sue or recover and retain damages and costs and  attorneys'  fees for present
and past infringement of any of the foregoing.

               "Inventories" means all inventory,  merchandise,  finished goods,
and raw materials,  packaging,  supplies and other personal  property related to
the Business maintained,  held or stored by or for the Company or any Subsidiary
on the date of this  Agreement or the Closing Date and any prepaid  deposits for
any of the same.

               "IRS" means the Internal Revenue Service of the United States.

               "Leased  Real  Property"  means the real  property  leased by the
Company or any Subsidiary, as tenant, together with, to the extent leased by the
Company or any  Subsidiary,  all buildings and other  structures,  facilities or
improvements  currently or hereafter  located  thereon,  all fixtures,  systems,
equipment  and items of  personal  property  of the  Company  or any  Subsidiary
attached  or  appurtenant  thereto,  and all  easements,  licenses,  rights  and
appurtenances relating to the foregoing.

               "Law" means any federal,  state,  local or foreign statute,  law,
ordinance, regulation, rule, code, order, other requirement or rule of law.

               "Liabilities"   means  any  and  all   debts,   liabilities   and
obligations,  whether  accrued  or fixed,  absolute  or  contingent,  matured or
unmatured or determined or determinable,  including,  without limitation,  those
arising under any Law (including,  without  limitation,  any Environmental Law),
Action or  Governmental  Order and those arising under any contract,  agreement,
arrangement, commitment or undertaking.

               "Licensed  Intellectual Property" means all Intellectual Property
licensed or sublicensed to the Company or any Subsidiary from a third party.

               "Loss" has the meaning specified in Section 9.02.

               "Material Adverse Effect" means any  circumstance,  change in, or
effect on the Business,  the Company or any Subsidiary that,  individually or in
the  aggregate  with any other  circumstances,  changes  in, or effects  on, the
Business, the Company or any Subsidiary: (a) is, or could be, materially adverse
to the business,  operations,  assets or  Liabilities,  employee  relationships,
customer or supplier  relationships,  prospects,  results of  operations  or the
condition (financial or otherwise) of the Company or any Subsidiary or (b) could
materially and adversely affect the ability of the Purchaser, the Company or any
Subsidiary  to  operate  or conduct  the  Business  in the manner in which it is
currently operated or conducted by the Seller, the Company and the Subsidiaries.

               "Material   Contracts"  has  the  meaning  specified  in  Section
3.18(a).

                                      -5-
<PAGE>
               "Multiemployer   Plan"  has  the  meaning  specified  in  Section
3.21(b).

               "Multiple  Employer  Plan" has the meaning  specified  in Section
3.21(b).

               "Non-Transferred  Employees"  means  all  the  employees  of  the
Company and the  Subsidiaries as of the date of this Agreement  (including those
employees on vacation, leave of absence, sick leave, layoff (whether or not such
employees  return to active  employment  with the Seller or any  Affiliate),  or
disability (work-related or otherwise)) other than the Transferred Employees.

               "Owned Intellectual  Property" means all Intellectual Property in
and to which the Company or any Subsidiary holds, or has a right to hold, right,
title and interest.

               "Owned  Real  Property"  means  the  real  property  owned by the
Company or any  Subsidiary,  together with all  buildings and other  structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems,  equipment  and  items  of  personal  property  of the  Company  or any
Subsidiary attached or appurtenant thereto and all easements,  licenses,  rights
and appurtenances relating to the foregoing.

               "Parent" has the meaning specified in the recitals hereto.

               "Permitted  Encumbrances" means such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced:  (a) liens for taxes,  assessments and  governmental  charges or
levies  not yet due and  payable  accrued  on the  Reference  Balance  Sheet  or
incurred  since the date thereof in the ordinary  course of business  consistent
with past  practice;  (b)  Encumbrances  imposed by law, such as  materialmen's,
mechanics',  carriers',  workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business securing obligations that (i) are not
overdue  for a period  of more than 30 days and (ii) are not in excess of $5,000
in the case of a single  property or $50,000 in the  aggregate at any time;  (c)
pledges or deposits to secure  obligations  under workers'  compensation laws or
similar legislation or to secure public or statutory obligations;  and (d) minor
survey   exceptions,   reciprocal   easement   agreements  and  other  customary
encumbrances  on title to real property that (i) were not incurred in connection
with any  Indebtedness,  (ii) do not  render  title to the  property  encumbered
thereby  unmarketable  and  (iii)  do  not,  individually  or in the  aggregate,
materially  adversely  affect the value or use of such  property for its current
and anticipated purposes.

               "Person" means any individual,  partnership,  firm,  corporation,
association,  trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.

               "Plans" has the meaning specified in Section 3.21(a).

               "Purchase Price" has the meaning specified in Section 2.02.

                                      -6-
<PAGE>
               "Purchase  Price Bank Account" means a bank account in the United
States to be  designated  by the Seller in a written  notice to the Purchaser at
least five Business Days before the Closing.

               "Purchaser"  has the meaning  specified  in the  recitals to this
Agreement.

               "Real Property" means the Leased Real Property and the Owned Real
Property.

               "Receivables"  means any and all accounts  receivable,  notes and
other amounts  receivable by the Company or any  Subsidiary  from third parties,
including,  without  limitation,  customers,  arising  from the  conduct  of the
Business or otherwise  before the Closing  Date,  whether or not in the ordinary
course, together with all unpaid financing charges accrued thereon.

               "Reference Balance Sheet" means the consolidated balance sheet of
the  Company,  dated as of  September  30, 1997, a copy of which is set forth in
Section 3.08(a) of the Disclosure Schedule.

               "Reference Balance Sheet Date" means September 30, 1997.

               "Regulations" means the Treasury Regulations (including Temporary
Regulations)  promulgated  by the United  States  Department  of  Treasury  with
respect to the Code or other federal tax statutes.

               "Release"  means  disposing,  discharging,  injecting,  spilling,
leaking, leaching, dumping, emitting,  escaping,  emptying, seeping, placing and
the like into or upon any land or water or air or  otherwise  entering  into the
Environment.

               "Remedial   Action"   means   any   investigation,    assessment,
monitoring,  treatment, excavation, removal, remediation or cleanup of Hazardous
Materials in the Environment.

               "Restricted Period" has the meaning specified in Section 5.10.

               "Returns" has the meaning specified in Section 7.02.

               "Seller"  has  the  meaning  specified  in the  recitals  to this
Agreement.

               "Seller's  Knowledge"  means the actual knowledge of the officers
of the Seller or the Parent.

               "Subsidiaries"  means  any  and all  corporations,  partnerships,
joint  ventures,  associations  and other  entities  controlled  by the  Company
directly or indirectly through one or more intermediaries.

                                       -7
<PAGE>
               "Tangible Personal Property" means each item or distinct group of
machinery,   equipment,  tools,  supplies,  furniture,   fixtures,   personalty,
vehicles,  rolling  stock  and  other  tangible  personal  property  used in the
Business or owned or leased by the Company or any Subsidiary.

               "Tax" or "Taxes" means any and all taxes, fees,  levies,  duties,
tariffs,  imposts,  and other  charges  of any kind  (together  with any and all
interest,  penalties,  additions  to tax and  additional  amounts  imposed  with
respect  thereto)  imposed by any  Governmental  Authority or taxing  authority,
including,  without  limitation:  taxes or other  charges on or with  respect to
income, franchise,  alternative minimum,  estimated,  windfall or other profits,
gross receipts,  real property,  personal  property sales,  use,  capital stock,
payroll,  employment,  social  security,  workers'  compensation,   unemployment
compensation,  or net  worth;  taxes or other  charges  in the nature of excise,
withholding,  ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation  fees; and customs duties,  tariffs,  and similar
charges.

               "Third  Party  Claims"  has  the  meaning  specified  in  Section
9.02(b).

               "Transferred Employees" means all "touch" or production employees
of the Company and the  Subsidiaries  and other employees of the Company and the
Subsidiaries  deemed by Purchaser  necessary to the  continued  operation of the
Business and others, all as set forth in a writing to be delivered to the Seller
at least 5 days  prior to  Closing.  The  Transferred  Employees  shall,  in the
aggregate,  number  not  less  than  two-thirds  of the  sum of the  numbers  of
Transferred Employees and Non-Transferred  Employees employed by the Company and
the  Subsidiaries,  whether in the aggregate or at any single site of employment
to which 50 or more employees are assigned, as of the Closing Date.

               "U.S.  GAAP" means United States  generally  accepted  accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.

               "Vendors" means any and all vendors who are unaffiliated with the
Seller or the Company and who supply raw  materials,  components,  spare  parts,
supplies, goods, merchandise or services to the Company or any Subsidiary.

               "WARN Act"  means the Worker  Adjustment  and  Retraining  Act of
1988, as amended, and the rules and regulations promulgated thereunder.


                                   ARTICLE II

                                PURCHASE AND SALE

         SECTION  2.01.  Purchase  and Sale of the  Shares.  Upon the  terms and
subject to the conditions of this  Agreement,  at the Closing,  the Seller shall
sell to the Purchaser,  and the Purchaser  shall  purchase from the Seller,  the
Shares.

                                      -8-
<PAGE>
         SECTION 2.02.  Purchase  Price.  The aggregate  purchase  price for the
Shares shall be $16,000,000 (the "Purchase Price"), all of which will be paid by
the Purchaser to the Seller in immediately available funds at the Closing.

                  SECTION  2.03.  Closing.  Upon the  terms and  subject  to the
conditions of this Agreement,  the sale and purchase of the Shares  contemplated
by this  Agreement  shall take place at a closing (the  "Closing") to be held at
the offices of Reid & Priest LLP, 40 W. 57th Street, New York, New York 10019 at
10:00 A.M. New York time on the fifth  Business Day following the later to occur
of (A) expiration or termination of all applicable waiting periods under the HSR
Act and (B) satisfaction or waiver of all other conditions to the obligations of
the parties set forth in Article  VIII,  or at such other place or at such other
time or on such other date as the  Seller,  the  Parent  and the  Purchaser  may
mutually  agree upon in writing (the day on which the Closing  takes place being
the "Closing Date").

         SECTION 2.04.  Closing  Deliveries by the Seller.  At the Closing,  the
Seller shall deliver or cause to be delivered to the Purchaser:

               (a) stock  certificates  evidencing  the Shares duly  endorsed in
blank,  or  accompanied  by  stock  powers  duly  executed  in  blank,  in  form
satisfactory  to the Purchaser and with all required  stock  transfer tax stamps
affixed;

               (b) a receipt for the Purchase Price; and

               (c) the opinions, certificates and other documents required to be
delivered pursuant to Section 8.02.

         SECTION 2.05. Closing Deliveries by the Purchaser.  (a) At the Closing,
the Purchaser shall deliver to the Seller:

               (i) the Purchase Price by wire transfer in immediately  available
funds to the Purchase Price Bank Account; and

               (ii)  the  certificates  and  other  documents   required  to  be
delivered pursuant to Section 8.01.


                                   ARTICLE III

           REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PARENT

         As an  inducement to the  Purchaser to enter into this  Agreement,  the
Seller and the Parent each hereby jointly and severally  represents and warrants
to the Purchaser as follows:

         SECTION 3.01.  Organization,  Authority and Qualification of the Seller
and the  Parent.  Each  of the  Seller  and the  Parent  is a  corporation  duly
organized,  validly existing

                                      -9-
<PAGE>

and in good  standing  under  the  laws of the  State  of  Delaware  and has all
necessary  power and  authority to enter into this  Agreement,  to carry out its
obligations hereunder and to consummate the transactions contemplated hereby. No
failure on the part of the Seller or the Parent to be duly licensed or qualified
to do  business,  and be in good  standing in all  jurisdictions  in which it is
required to be so licensed, qualified and in good standing will adversely affect
(i) the ability of the Seller or the Parent to carry out its obligations  under,
and to consummate the transactions  contemplated by, this Agreement and (ii) the
ability of the  Company  and the  Subsidiaries  to  conduct  the  Business.  The
execution  and  delivery of this  Agreement  by the Seller and the  Parent,  the
performance  by the Seller and the Parent of its  obligations  hereunder and the
consummation  by the  Seller  and the  Parent of the  transactions  contemplated
hereby  have been duly  authorized  by all  requisite  action on the part of the
Seller and the Parent.  This  Agreement  has been duly executed and delivered by
the Seller and the  Parent,  and  (assuming  due  authorization,  execution  and
delivery by the  Purchaser)  this  Agreement  constitutes  the legal,  valid and
binding obligation of the Seller and the Parent  enforceable  against the Seller
in accordance with its terms.

         SECTION 3.02. Organization, Authority and Qualification of the Company.
The  Company is a  corporation  duly  organized,  validly  existing  and in good
standing under the laws of the State of Delaware and has all necessary power and
authority to own, operate or lease the properties and assets now owned, operated
or leased  by it and to carry on the  Business  as it has been and is  currently
conducted.  The Company is duly  licensed or  qualified to do business and is in
good standing in each jurisdiction in which to Seller's knowledge the properties
owned or leased by it or the operation of its business  makes such  licensing or
qualification necessary or desirable except to the extent that the failure to be
so licensed or qualified  would not adversely  affect the ability of the Company
to conduct the Business and all such jurisdictions are set forth in Section 3.02
of the  Disclosure  Schedule.  To the Seller's  knowledge all corporate  actions
taken by the Company  have been duly  authorized,  and the Company has not taken
any action that in any respect  conflicts  with,  constitutes a default under or
results in a violation of any provision of its Certificate of  Incorporation  or
By-laws. True and correct copies of the Certificate of Incorporation and By-laws
of the Company, each as in effect on the date hereof, have been delivered by the
Seller to the Purchaser.

         SECTION 3.03. Capital Stock of the Company; Ownership of the Shares.

               (a) The  authorized  capital  stock of the  Company  consists  of
10,000  shares of Common  Stock.  As of the date hereof,  1,000 shares of Common
Stock are issued and  outstanding,  all of which are validly issued,  fully paid
and nonassessable. None of the issued and outstanding shares of Common Stock was
issued in violation of any preemptive  rights.  There are no options,  warrants,
convertible securities or other rights, agreements,  arrangements or commitments
of any character  relating to the capital stock of the Company or obligating the
Seller or the  Company to issue or sell any  shares of capital  stock of, or any
other interest in, the Company. There are no outstanding contractual obligations
of the Company to repurchase,  redeem or otherwise  acquire any shares of Common
Stock or to  provide  funds to, or make any  investment  (in the form of a loan,
capital  contribution or otherwise) in, any other Person.  The Shares constitute
all the issued and  outstanding  capital  stock of the  Company and are owned of
record and beneficially solely by the Seller free and clear of all Encumbrances.
Upon  consummation  of the  transactions  contemplated  by  this  Agreement  and
registration  of the Shares in the name of the Purchaser in the stock records of
the Company,  the  Purchaser,  assuming it shall have  purchased  the Shares for
value in good faith and without  notice of any adverse  claim,  will own all the
issued  and  outstanding  capital

                                      -10-
<PAGE>

stock of the Company  free and clear of all  Encumbrances  (except  those if any
which  may be  imposed  as a result  of  Purchaser's  ownership  thereof).  Upon
consummation of the transactions contemplated by this Agreement, the Shares will
be  fully  paid and  nonassessable.  There  are no  voting  trusts,  stockholder
agreements, proxies or other agreements or understandings in effect with respect
to the voting or transfer of any of the Shares.

               (b) The stock register of the Company accurately records: (i) the
name and address of each Person  owning  shares of capital  stock of the Company
and (ii) the certificate number of each certificate evidencing shares of capital
stock  issued  by the  Company,  the  number of  shares  evidenced  by each such
certificate, the date of issuance thereof and, in the case of cancellation,  the
date of cancellation.

         SECTION 3.04. Subsidiaries.

               (a) Section 3.04(a) of the Disclosure  Schedule sets forth a true
and complete list of all  Subsidiaries,  listing for each  Subsidiary  its name,
type of entity,  the jurisdiction and date of its incorporation or organization.
None of the  Subsidiaries  is active or has any material  assets or liabilities.
The  Company  is not  subject  to any  claims  or  liability  as a result of its
ownership of the Subsidiaries.

               (b) Other than the Subsidiaries, there are no other corporations,
partnerships,  joint  ventures,  associations  or other  entities  in which  the
Company owns, of record or beneficially,  any direct or indirect equity or other
interest or any right  (contingent or otherwise) to acquire the same. Other than
the  Subsidiaries,  the  Company  is not a  member  of (nor  is any  part of the
Business  conducted  through)  any  partnership.  Except as set forth in Section
3.04(b) of the  Disclosure  Schedule,  the Company is not a  participant  in any
joint venture or similar arrangement.

         SECTION  3.05.  Corporate  Books and  Records.  The minute books of the
Company  contain  accurate  records of all meetings and  accurately  reflect all
other actions taken by the stockholders,  Boards of Directors and all committees
of the Boards of  Directors  of the Company and the  Subsidiaries.  Complete and
accurate  copies  of all such  minute  books and of the  stock  register  of the
Company have been provided by the Seller to the Purchaser.

         SECTION  3.06.  No Conflict.  Assuming  that all  consents,  approvals,
authorizations  and other  actions  described in Section 3.07 have been obtained
and all  filings  and  notifications  listed in Section  3.07 of the  Disclosure
Schedule  have been  made,  the  execution,  delivery  and  performance  of this
Agreement by the Seller and the Parent, respectively,  does not and will not (a)
violate,  conflict  with or result in the breach of any provision of the charter
or by-laws (or similar  organizational  documents) of the Seller and

                                      -11-
<PAGE>
the Parent,  the Company or any  Subsidiary,  (b)  conflict  with or violate (or
cause an event  which could have a Material  Adverse  Effect as a result of) any
Law or  Governmental  Order  applicable  to the  Seller and the  Parent,  or the
Company,  any  Subsidiary  or any of  their  respective  assets,  properties  or
businesses,  including,  without limitation,  the Business, or (c) except as set
forth in Section 3.06(c) of the Disclosure  Schedule,  conflict with,  result in
any breach of, constitute a default (or event which with the giving of notice or
lapse of time,  or both,  would  become a default)  under,  require  any consent
under,  or give to others any rights of  termination,  amendment,  acceleration,
suspension,  revocation  or  cancellation  of, or result in the  creation of any
Encumbrance  on any of the Shares or on any of the assets or  properties  of the
Seller, the Company or any Subsidiary  pursuant to, any note, bond,  mortgage or
indenture,  contract,  agreement, lease, sublease, license, permit, franchise or
other  instrument or arrangement to which the Seller or the Parent,  the Company
or any Subsidiary is a party or by which any of the Shares or any of such assets
or  properties  is bound or  affected,  except for such  conflicts,  breaches or
defaults  described in Section 3.06(c) as would not (with respect to the Company
or any Subsidiary only) have a Material Adverse Effect.

         SECTION  3.07.  Governmental  Consents and  Approvals.  The  execution,
delivery and  performance  of this Agreement by the Seller and the Parent do not
and will not require any  consent,  approval,  authorization  or other order of,
action by, filing with or notification to any Governmental Authority, except (a)
as  described  in  Section  3.07  of  the  Disclosure  Schedule,   and  (b)  the
notification requirements of the HSR Act.

         SECTION 3.08. Financial Information, Books and Records, Projections and
Operating Data.

               (a) True and complete  copies of (i) the  unaudited  consolidated
balance  sheet of the  Company  as of  December  31,  1996 and the  consolidated
statements  of income of the Company for the years ended  December  31, 1996 and
1995,  (collectively referred to herein as the "Financial  Statements") and (ii)
the  unaudited  consolidated  balance  sheet of the Company as of September  30,
1997, and the related consolidated statement of income for the nine months ended
September 30, 1997  (collectively  referred to herein as the "Interim  Financial
Statements")  have been delivered by the Seller to the Purchaser.  The Financial
Statements, the Interim Financial Statements and the Reference Balance Sheet (i)
were  prepared  in  accordance  with the books of  account  and other  financial
records of the Company, (ii) present fairly the consolidated financial condition
and results of  operations of the Company and the  Subsidiaries  as of the dates
thereof  or for the  periods  covered  thereby,  (iii)  have  been  prepared  in
accordance with U.S. GAAP applied on a basis  consistent with the past practices
of the  Seller,  the Parent and the Company  and (iv)  include  all  adjustments
(consisting  only of normal  recurring  accruals)  that are necessary for a fair
presentation  of the  consolidated  financial  condition  of the Company and the
Subsidiaries  and  the  results  of  the  operations  of  the  Company  and  the
Subsidiaries  as of the  dates  thereof  or for  the  periods  covered  thereby;
provided,   however,   that  the  Financial  Statements  and  Interim  Financial
Statements  and the  Reference  Balance Sheet do not contain notes and schedules
and the Interim Financial  Statements are subject to normal year-end adjustments
consistent with past practice.

                                      -12-
<PAGE>
               (b) The books of  account  and  other  financial  records  of the
Company and the Subsidiaries: (i) fairly reflect all items of income and expense
and all assets and  Liabilities  required to be reflected  therein in accordance
with U.S.  GAAP  applied on a basis  consistent  with the past  practices of the
Company and the  Subsidiaries,  respectively,  (ii) are in all material respects
complete and correct, and do not contain or reflect any material inaccuracies or
discrepancies  and (iii) have been  maintained in accordance  with good business
and accounting practices.

               (c) No  representations  are being made or are to be implied with
respect to any financial projections regarding the Company.

         SECTION 3.09. No Undisclosed  Liabilities.  There are no Liabilities of
the Company or any Subsidiary in excess of $100,000 in the aggregate  which,  in
accordance  with U.S. GAAP would be required to be disclosed on a balance sheet,
other than  Liabilities  (i)  reflected  or  reserved  against on the  Reference
Balance Sheet,  or (ii) disclosed in Section 3.09 of the Disclosure  Schedule or
incurred  since the  Reference  Balance  Sheet  Date in the  ordinary  course of
business consistent with past practice.  Reserves are reflected on the Reference
Balance Sheet against all  Liabilities  of the Company and the  Subsidiaries  in
amounts that have been established on a basis consistent with the past practices
of the Company and the Subsidiaries and in accordance with U.S. GAAP.

         SECTION 3.10. Receivables. Section 3.10 of the Disclosure Schedule sets
forth an aged list of the Receivables of the Company and the  Subsidiaries as of
a current  date.  Except to the extent,  if any,  reserved for on the  Reference
Balance Sheet,  all Receivables  reflected on the Reference  Balance Sheet arose
from,  and the  Receivables  existing on the Closing Date will have arisen from,
the sale of Inventory or services to Persons not affiliated with the Seller, the
Company or any Subsidiary and in the ordinary course of the Business  consistent
with past practice and to Seller's knowledge,  except as reserved against on the
Reference Balance Sheet, constitute or will constitute, as the case may be, only
valid,  undisputed  claims of the Company or a  Subsidiary  not subject to valid
claims of set-off or other  defenses  or  counterclaims  other than  normal cash
discounts  accrued in the ordinary  course of the Business  consistent with past
practice.  Neither  the  Seller  nor the  Parent  is  aware of  reasons  why the
Receivables  reflected on the  Reference  Balance Sheet or arising from the date
thereof  until the  Closing  (subject  to the  reserve  for bad  debts,  if any,
reflected  on the  Reference  Balance  Sheet)  are not or will  not be good  and
collectible,  without resort to litigation or extraordinary collection activity,
except as set forth on Section 3.10 of the Disclosure Schedule.

         SECTION 3.11.  Acquired Assets.  Except as disclosed in Section 3.11 of
the  Disclosure  Schedule,  each  asset  of the  Company  and  the  Subsidiaries
(including,  without  limitation,  the benefit of any licenses,  leases or other
agreements or arrangements)  acquired since the Reference Balance Sheet Date has
been acquired for  consideration  not less than or  substantially  more than the
fair market value of such asset at the date of such acquisition.

                                      -13-
<PAGE>
         SECTION 3.12. Sales and Purchase Order Backlog.  Section 3.12(a) of the
Disclosure  Schedule  lists all sales  orders  which have been  accepted  by the
Company or any Subsidiary, and which were open as of October 1, 1997.

         SECTION  3.13.  Conduct  in the  Ordinary  Course;  Absence  of Certain
Changes,  Events and Conditions.  Since the Reference Balance Sheet Date, except
as disclosed in Section 3.13 of the Disclosure Schedule,  to Seller's knowledge,
the  business of the  Company and the  Subsidiaries  has been  conducted  in the
ordinary  course and consistent  with past practice.  As  amplification  and not
limitation  of the  foregoing,  except  as  disclosed  in  Section  3.13  of the
Disclosure Schedule, since the Reference Balance Sheet Date, neither the Company
nor any Subsidiary has:

               (i) permitted or allowed any of the assets or properties (whether
tangible or  intangible) of the Company or any Subsidiary to be subjected to any
Encumbrance, other than Permitted Encumbrances;

               (ii) except in the ordinary  course of business  consistent  with
past practice,  discharged or otherwise  obtained the release of any Encumbrance
or paid or otherwise  discharged any Liability,  other than current  liabilities
reflected on the Reference Balance Sheet and current liabilities incurred in the
ordinary  course of business  consistent  with past practice since the Reference
Balance Sheet Date;

               (iii)  made  any  loan  to,  guaranteed  any  Indebtedness  of or
otherwise incurred any Indebtedness on behalf of any Person;

               (iv) failed to pay any creditor any material  amount owed to such
creditor when due;

               (v) redeemed any of the capital  stock or declared,  made or paid
any dividends or distributions  (whether in cash,  securities or other property)
to the holders of capital  stock of the Company or any  Subsidiary or otherwise,
other than (A) dividends,  distributions and redemptions declared,  made or paid
by any  Subsidiary  solely to the  Company or (B)  dividends  and  distributions
through the  cancellation of not more than  $18,500,000 of indebtedness  owed by
such holders to the Company;

               (vi)  made any  material  changes  in the  customary  methods  of
operations  of the Company or any  Subsidiary,  including,  without  limitation,
practices  and  policies  relating to  manufacturing,  purchasing,  Inventories,
marketing, selling and pricing;

               (vii) merged with,  entered into a consolidation with or acquired
an interest of 1% or more in any Person or acquired a substantial portion of the
assets or business of any Person or any division or line of business thereof, or
otherwise  acquired  any material  assets  other than in the ordinary  course of
business consistent with past practice;

               (viii) made any capital expenditure or commitment for any capital
expenditure in excess of $50,000 individually or $100,000 in the aggregate;

                                      -14-
<PAGE>
               (ix)  issued  any sales  orders or  otherwise  agreed to make any
purchases  involving  exchanges in value in excess of $500,000  individually  or
$6,000,000 in the aggregate;

               (x) sold, transferred,  leased, subleased,  licensed or otherwise
disposed  of any  properties  or assets,  real,  personal  or mixed  (including,
without limitation,  leasehold interests and intangible assets),  other than the
sale of  Inventories  in the ordinary  course of business  consistent  with past
practice;

               (xi)  issued or sold any  capital  stock,  notes,  bonds or other
securities,  or any option,  warrant or other right to acquire,  exchange for or
convert  into the  same,  of, or any  other  interest  in,  the  Company  or any
Subsidiary;

               (xii)  entered into or modified  any  agreement,  arrangement  or
transaction with any of its directors,  officers,  employees or shareholders (or
with any relative, beneficiary, spouse or Affiliate of such Person);

               (xiii) (A) except in the ordinary  course of business  consistent
with past  practice  granted any increase,  or announced  any  increase,  in the
wages, salaries,  compensation,  bonuses, incentives,  pension or other benefits
payable by the Company or any  Subsidiary  to any of its  employees,  including,
without  limitation,  any  increase  or  change  pursuant  to  any  Plan  or (B)
established or increased or promised to increase any benefits under any Plan, in
either case except as required by Law or any collective bargaining agreement, or
involving ordinary  increases  consistent with the past practices of the Company
or such Subsidiary;

               (xiv)  written  down or  written  up (or  failed to write down or
write up in accordance  with U.S. GAAP  consistent with past practice) the value
of any  Inventories  or receivables or revalued any assets of the Company or any
Subsidiary  other than in the ordinary  course of business  consistent with past
practice and in accordance with U.S. GAAP;

               (xv) amended,  terminated,  cancelled or compromised any material
claims  of the  Company  or  any  Subsidiary  or  waived  any  other  rights  of
substantial value to the Company or any Subsidiary;

               (xvi) made any change in any method of  accounting  or accounting
practice  or policy  used by the  Company  or any  Subsidiary,  other  than such
changes  required by U.S.  GAAP or disclosed  in Section 3.13 of the  Disclosure
Schedule;

               (xvii) failed  substantially to maintain the Assets in accordance
with past practice and in reasonable operating condition and repair;

               (xviii) allowed any material Permit or Environmental  Permit that
was issued or relates to the Company or any  Subsidiary or otherwise  relates to
any  Asset to  lapse or  terminate  or  failed  to  renew  any  such  Permit  or
Environmental  Permit or any insurance  policy that is scheduled to terminate or
expire prior to the Closing Date;

                                      -15-
<PAGE>
               (xix) incurred any  Indebtedness  (exclusive of the Company's and
any  Subsidiary's  guaranty of  Indebtedness  in  connection  with the revolving
credit facility identified in Section 3.06(c) of the Disclosure Schedule,  which
guaranty will be released and  terminated  prior to Closing  without cost to the
Company or any Subsidiary), in excess of $50,000 individually or $150,000 in the
aggregate;

               (xx)  amended,  modified or consented to the  termination  of any
Material Contract or the Company's or any Subsidiary's rights thereunder;

               (xxi) amended or restated the Certificate of Incorporation or the
By-laws (or other organizational documents) of the Company or any Subsidiary;

               (xxii) terminated, discontinued, closed or disposed of any plant,
facility or other  business  operation,  or laid off any  employees  (other than
layoffs of less than 50 employees in any six-month period in the ordinary course
of business  consistent with past practice) or implemented any early retirement,
separation or program  providing  early  retirement  window  benefits within the
meaning of Section  1.401(a)-4  of the  Regulations  or announced or planned any
such action or program for the future;

               (xxiii) made any charitable contribution;

               (xxiv) disclosed any secret or confidential Intellectual Property
(except by way of issuance of a patent)  which is material or permitted to lapse
or go abandoned any Intellectual Property which is material (or any registration
or grant thereof or any application  relating thereto) to which, or under which,
the Company or any Subsidiary has any right, title, interest or license;

               (xxv)  made  any  express  or  deemed   election  or  settled  or
compromised any material liability,  with respect to Taxes of the Company or any
Subsidiary;

               (xxvi)  suffered any casualty  loss or damage with respect to any
of the  Assets  which in the  aggregate  have a  replacement  cost of more  than
$50,000 whether or not such loss or damage shall have been covered by insurance;

               (xxvii)  suffered  any Material  Adverse  Effect or any change or
event that with  notice or the passage of time or both is  reasonably  likely to
result in a Material Adverse Effect; or

               (xxviii) agreed, whether in writing or otherwise,  to take any of
the actions  specified  in this Section 3.13 or granted any options to purchase,
rights of first  refusal,  rights of first offer or any other similar  rights or
commitments  with respect to any of the actions  specified in this Section 3.13,
except as expressly contemplated by this Agreement.

         SECTION  3.14.  Litigation.  Except as set forth in Section 3.14 of the
Disclosure Schedule (which, with respect to each Action disclosed therein,  sets
forth: the parties, nature of the proceeding,  date and method commenced, amount
of damages or other relief sought and, if  applicable,  paid or granted),  there
are no Actions by or against the Company or any

                                      -16-
<PAGE>
Subsidiary (or by or against the Seller, the Parent or any Affiliate thereof and
relating to the Business,  the Company or any  Subsidiary),  or affecting any of
the Assets,  pending  before any  Governmental  Authority  (or, to the  Seller's
knowledge,  threatened to be brought by or before any  Governmental  Authority).
None of the matters disclosed in Section 3.14 of the Disclosure  Schedule has or
has had a Material  Adverse  Effect or could  affect the  legality,  validity or
enforceability  of  this  Agreement  or the  consummation  of  the  transactions
contemplated  hereby.  Except as set  forth in  Section  3.14 of the  Disclosure
Schedule,  none of the Company,  the  Subsidiaries nor any of the Assets nor the
Seller or the Parent is subject to any Governmental  Order (nor, to the Seller's
knowledge,  are there any such  Governmental  Orders threatened to be imposed by
any Governmental Authority) which has or has had a Material Adverse Effect.

         SECTION 3.15. Certain Interests.

               (a)  Except as  disclosed  in Section  3.15(a) of the  Disclosure
Schedule,  no officer or director of the Seller,  the Parent, the Company or any
Subsidiary  and no relative or spouse (or  relative of such  spouse) who resides
with, or is a dependent of, any such officer or director:

                    (i) has any direct or  indirect  financial  interest  in any
         competitor,  supplier or  customer  of the  Company or any  Subsidiary,
         provided,  however,  that the ownership of securities  representing  no
         more  than  one  percent  of  the  outstanding   voting  power  of  any
         competitor,  supplier or customer, and which are listed on any national
         securities exchange or traded actively in the national over-the-counter
         market, shall not be deemed to be a "financial interest" so long as the
         Person owning such  securities has no other  connection or relationship
         with such competitor, supplier or customer;

                    (ii) owns,  directly or indirectly,  in whole or in part, or
         has any other interest in any tangible or intangible property which the
         Company  or any  Subsidiary  uses  or has  used in the  conduct  of the
         Business or otherwise; or

                    (iii) has outstanding any Indebtedness to the Company or any
         Subsidiary.

               (b)  Except as  disclosed  in Section  3.15(b) of the  Disclosure
Schedule,  no officer  or  director  of the  Company  or any  Subsidiary  and no
relative or spouse (or  relative  of such  spouse)  who  resides  with,  or is a
dependent of, any such officer or director has outstanding  any  Indebtedness to
the Seller.

               (c)  Except as  disclosed  in Section  3.15(c) of the  Disclosure
Schedule,  neither the Company nor any Subsidiary has any Liability or any other
obligation of any nature  whatsoever to any officer,  director or shareholder of
the  Seller,  the  Company or any  Subsidiary  or to any  relative or spouse (or
relative  of such  spouse)  who resides  with,  or is a  dependent  of, any such
officer, director or shareholder.

                                      -17-
<PAGE>
         SECTION 3.16. Compliance with Laws.

               (a)  Except as set forth in  Section  3.16(a)  of the  Disclosure
Schedule,  the Company and the Subsidiaries  have each conducted and continue to
conduct  the  Business  in  accordance  with all Laws  and  Governmental  Orders
applicable  to the  Company  or any  Subsidiary  or  any  of the  Assets  or the
Business, and neither the Company nor any Subsidiary is in violation of any such
Law (except for such  violations as  individually  or in the aggregate would not
exceed $100,000 to correct or as a fine or penalty) or Governmental  Order. None
of the  Seller,  the  Parent,  the  Company,  any  Subsidiary  nor any  officer,
director,  employee,  agent or  representative  of the Seller,  the Parent,  the
Company or any  Subsidiary  has  furthered or supported  any foreign  boycott in
violation of the Anti-Boycott laws and regulations  promulgated  pursuant to the
Export  Administration  Act of 1979 (50 U.S.C.A.  Appx ss. 2407, and regulations
promulgated thereunder).

               (b) To  Seller's  knowledge,  Section  3.16(b) of the  Disclosure
Schedule sets forth a brief  description of each  Governmental  Order applicable
exclusively  to the  Company  or any  Subsidiary  or  any of the  Assets  or the
Business,  and no such  Governmental  Order  has or has had a  Material  Adverse
Effect.

         SECTION 3.17. Environmental Matters.

               (a)  Except as  disclosed  in Section  3.17(a) of the  Disclosure
Schedule:

                    (i) The Company and the Subsidiaries are in compliance with,
          and for the past three years have been in  compliance  in all material
          respects with, all applicable Environmental Laws and all Environmental
          Permits.   All  past   non-compliance   with   Environmental  Laws  or
          Environmental Permits has been resolved without any pending,  on-going
          or future obligation,  cost or liability,  and there is no requirement
          proposed for adoption or implementation under any Environmental Law or
          Environmental  Permit that is reasonably expected to be adverse to the
          Company or any Subsidiary.

                    (ii) There are no underground  or aboveground  storage tanks
          or any surface  impoundments,  septic tanks, pits, sumps or lagoons in
          which  Hazardous  Materials are being or have been treated,  stored or
          disposed  on any of the  Real  Property  or on any  property  formerly
          owned, leased or occupied by the Company or any Subsidiary.

                    (iii) The  Company  and the  Subsidiaries  have not,  and no
          other  Person has,  Released  Hazardous  Materials  on any of the Real
          Property or on any property formerly owned,  leased or occupied by the
          Company or the Subsidiaries.

                    (iv) The Company and the  Subsidiaries  are not  conducting,
          and have not undertaken or completed,  any Remedial Action relating to
          any Release or threatened Release at the Real Property or at any other
          site,  location or operation,  either  voluntarily  or pursuant to the
          order  of  any  Governmental  Authority  or  the  requirements  of any
          Environmental Law or Environmental Permit.

                                      -18-
<PAGE>
                    (v) There is no asbestos or asbestos-containing  material on
          any of the Real Property.

                    (vi) None of the Real Property  adjoins any property that is
          listed or proposed for listing on the National  Priorities  List under
          the federal Comprehensive  Environmental Response,  Compensation,  and
          Liability Act.

                    (vii)  There  are  no   Environmental   Claims   pending  or
          threatened against the Company, the Subsidiaries,  the Business or the
          Real Property,  and there are no circumstances  that can reasonably be
          expected to form the basis of any such Environmental Claim,  including
          without  limitation  with  respect to any off-site  disposal  location
          currently or formerly used by the Company or any  Subsidiary or any of
          their predecessors or with respect to any previously owned or operated
          facilities.

               (b)  Except as  disclosed  in Section  3.17(b) of the  Disclosure
Schedule,  neither the execution of this Agreement nor the  consummation  of the
transactions  contemplated in this Agreement will require any Remedial Action or
notice to or consent of Governmental  Authorities or any third party pursuant to
any applicable Environmental Law or Environmental Permit.

         SECTION 3.18. Material Contracts.

               (a) To  Seller's  knowledge,  Section  3.18(a) of the  Disclosure
Schedule  lists  each of the  following  contracts  and  agreements  (including,
without  limitation,  oral and  informal  arrangements)  of the  Company and the
Subsidiaries  (such  contracts and  agreements,  and all agreements  relating to
Intellectual  Property set forth in Section 3.19(a) of the Disclosure  Schedule,
being "Material Contracts"):

                    (i) all management  contracts and contracts with independent
          contractors  or  consultants  requiring a payment of more than $25,000
          (or similar  arrangements  to which the Company or any Subsidiary is a
          party and which are not cancelable  without penalty or further payment
          and without more than 30 days' notice;

                    (ii) all contracts and agreements  relating to  Indebtedness
          of the Company or any Subsidiary;

                    (iii) all contracts and agreements  that limit or purport to
          limit the ability of the Company or any  Subsidiary  to compete in any
          line of  business  or with any  Person  or in any  geographic  area or
          during any period of time;

                    (iv) all  contracts  and  agreements  between  or among  the
          Company  or any  Subsidiary  and the  Seller or any  Affiliate  of the
          Seller;

                    (v) all  contracts  and  agreements  providing  for benefits
          under any Plan; and

                                      -19-
<PAGE>
                    (vi) all employment  contracts and agreements with employees
          of the Company or any Subsidiary providing for the payment of at least
          $75,000 in annual  compensation,  copies of which have previously been
          provided to the Purchaser.

               For  purposes of this  Section  3.18 and Section  3.20,  the term
"lease" shall include any and all leases,  subleases,  sale/leaseback agreements
or similar arrangements.

               (b) To Seller's knowledge, except as disclosed in Section 3.18(b)
of the Disclosure Schedule,  each Material Contract: (i) is valid and binding on
the  respective  parties  thereto  and is in full force and effect and (ii) upon
consummation of the transactions  contemplated by this Agreement,  except to the
extent that any consents set forth in Section  3.07 of the  Disclosure  Schedule
are not obtained,  shall  continue in full force and effect  without  penalty or
other adverse  consequence.  To Seller's knowledge,  neither the Company nor any
Subsidiary is in breach of, or default under, any Material Contract.

               (c) To Seller's knowledge, except as disclosed in Section 3.18(c)
of the Disclosure Schedule, no other party to any Material Contract is in breach
thereof or default thereunder.

               (d)  Except as  disclosed  in Section  3.18(d) of the  Disclosure
Schedule,  there is no  contract,  agreement or other  arrangement  granting any
Person any preferential right to purchase,  other than in the ordinary course of
business  consistent with past practice,  any of the properties or assets of the
Company or any Subsidiary.

         SECTION 3.19. Intellectual Property.

               (a)  To  Seller's  knowledge,  except  as  disclosed  in  Section
3.19(a)(iii)  of the  Disclosure  Schedule,  the  rights of the  Company  or any
Subsidiary,  as the  case may be,  in or to such  Intellectual  Property  do not
conflict  with or  infringe on the rights of any other  Person,  and none of the
Seller,  the Parent,  the Company nor any  Subsidiary  has received any claim or
written notice from any Person, to such effect.

               (b)  Except as  disclosed  in Section  3.19(b) of the  Disclosure
Schedule: (i) all the Owned Intellectual Property is owned by either the Company
or a Subsidiary,  as the case may be, free and clear of any Encumbrance and (ii)
no  Actions  have  been  made or  asserted  or are  pending  (nor,  to  Seller's
knowledge,  has any such  Action  been  threatened)  against  the Company or any
Subsidiary  either (A) based upon or  challenging or seeking to deny or restrict
the  use by the  Company  or any  Subsidiary  of any of the  Owned  Intellectual
Property or (B) alleging that any services provided, or products manufactured or
sold by the Company or any Subsidiary are being  provided,  manufactured or sold
in violation of any patents or trademarks, or any other rights of any Person. To
Seller's  knowledge,  no Person is using any  patents,  copyrights,  trademarks,
service  marks,  trade  names,  trade  secrets  or  similar  property  that  are
confusingly similar to the Owned Intellectual Property or that infringe upon the
Owned Intellectual  Property or upon the rights of the Company or any Subsidiary
therein.  Except as disclosed in Section 3.19(b) of the Disclosure Schedule,  to
Seller's  knowledge,  none  of the  Seller,  the  Parent,  the  Company  nor any
Subsidiary  has

                                      -20-
<PAGE>
granted any license or other right to any other Person with respect to the Owned
Intellectual Property.

         SECTION 3.20.  Real  Property.  As of the date of this  Agreement,  the
Company  owns the real  property  located  at 2950  Veterans  Memorial  Highway,
Bohemia,  NY 11716,  and neither the Company nor any  Subsidiary  owns or leases
(other than a testing  antenna on the rooftop of the  Radisson  Hotel) any other
Real Property.

         SECTION 3.21. Employee Benefit Matters.

               (a)  Plans  and  Material  Documents.   Section  3.21(a)  of  the
Disclosure  Schedule lists (i) all employee benefit plans (as defined in Section
3(3)  of the  Employee  Retirement  Income  Security  Act of  1974,  as  amended
("ERISA"))  and all bonus,  stock  option,  stock  purchase,  restricted  stock,
incentive,   deferred   compensation,   retiree   medical  or  life   insurance,
supplemental   retirement,   severance  or  other  benefit  plans,  programs  or
arrangements, and all employment,  termination,  severance or other contracts or
agreements,  whether  legally  enforceable  or not,  to which the Company or any
Subsidiary is a party,  with respect to which the Company or any  Subsidiary has
any  obligation  or which are  maintained,  contributed  to or  sponsored by the
Company or any  Subsidiary  for the benefit of any  current or former  employee,
officer or  director of the  Company or any  Subsidiary  (except for such of the
above-described  plans,  programs,  contracts and  arrangements  as do not have,
individually or in aggregate,  termination costs or underfunding  liabilities in
excess of $100,000),  (ii) each  employee  benefit plan for which the Company or
any Subsidiary  could incur  liability  under Section 4069 of ERISA in the event
such plan has been or were to be terminated,  (iii) any plan in respect of which
the Company or any Subsidiary  could incur  liability  under Section  4212(c) of
ERISA and (iv) any contracts,  arrangements or understandings between the Seller
or any of its Affiliates  and any employee of the Company or of any  Subsidiary,
including,  without  limitation,  any contracts,  arrangements or understandings
relating to the sale of the Company  (collectively,  the  "Plans").  Neither the
Company nor any  Subsidiary  has any pension  plan (except for a 401(k) plan) or
post-retirement  healthcare  plan.  Each Plan is in  writing  and the Seller has
furnished  the  Purchaser  with a complete and accurate  copy of each Plan and a
complete and accurate copy of each material document prepared in connection with
each such Plan including,  without limitation, (i) a copy of each trust or other
funding arrangement,  (ii) each summary plan description and summary of material
modifications,  (iii) the most recently filed Internal  Revenue  Service ("IRS")
Form 5500,  (iv) the most recently  received IRS  determination  letter for each
such Plan,  and (v) the most recently  prepared  actuarial  report and financial
statement  in  connection  with each such Plan.  Except as  disclosed on Section
3.21(a) of the Disclosure  Schedule,  there are no other employee benefit plans,
programs,  arrangements  or agreements,  whether formal or informal,  whether in
writing or not, to which the Company or any Subsidiary is a party,  with respect
to  which  the  Company  or any  Subsidiary  has any  obligation  or  which  are
maintained, contributed to or sponsored by the Company or any Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any  Subsidiary.  Neither  the  Company  nor any  Subsidiary  has any express or
implied  commitment,  whether legally  enforceable or not, (i) to create,  incur
liability  with respect to or cause to exist any other  employee  benefit  plan,
program or arrangement,  (ii) to

                                      -21-
<PAGE>
enter into any contract or agreement to provide  compensation or benefits to any
individual  or (iii) to modify,  change or terminate  any Plan,  other than with
respect to a modification, change or termination required by ERISA or the Code.

               (b)  Absence  of Certain  Types of Plans.  None of the Plans is a
multiemployer  plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a  "Multiemployer  Plan") or a single employer pension plan (within the meaning
of Section  4001(a)(15) of ERISA) for which the Company or any Subsidiary  could
incur  liability  under  Section  4063 or 4064 of  ERISA (a  "Multiple  Employer
Plan").  None of the Plans  provides for the payment of  separation,  severance,
termination or  similar-type  benefits to any Person or obligates the Company or
any  Subsidiary  to  pay  separation,  severance,  termination  or  similar-type
benefits solely as a result of any transaction contemplated by this Agreement or
as a result of a "change  in  control",  within  the  meaning of such term under
Section 280G of the Code.  None of the Plans  provides  for or promises  retiree
medical,  disability  or  life  insurance  benefits  to any  current  or  former
employee,  officer or  director of the  Company or any  Subsidiary.  Each of the
Plans  is  subject  only  to  the  laws  of the  United  States  or a  political
subdivision thereof.

               (c) Compliance  with  Applicable Law. Each Plan is now and always
has been operated in all respects in  accordance  with the  requirements  of all
applicable  Law,  including,  without  limitation,  ERISA and the Code,  and all
persons  who   participate   in  the  operation  of  such  Plans  and  all  Plan
"fiduciaries"  (within the meaning of Section  3(21) of ERISA) have always acted
in accordance  with the provisions of all  applicable  Law,  including,  without
limitation,  ERISA and the Code.  The Company and each  Subsidiary has performed
all  obligations  required to be performed by it under, is not in any respect in
default  under or in  violation  of,  and has no  knowledge  of any  default  or
violation by any party to, any Plan. No legal  action,  suit or claim is pending
or  threatened  with  respect to any Plan (other than claims for benefits in the
ordinary  course)  and no fact or event  exists that could give rise to any such
action, suit or claim.

               (d)  Qualification of Certain Plans.  Each Plan which is intended
to be qualified  under Section  401(a) of the Code or Section 401(k) of the Code
has  received  a  favorable  determination  letter  from  the IRS  that it is so
qualified  and each  trust  established  in  connection  with any Plan  which is
intended to be exempt from federal  income  taxation under Section 501(a) of the
Code has received a determination  letter from the IRS that it is so exempt, and
no fact or event has occurred since the date of such  determination  letter from
the IRS to adversely  affect the qualified status of any such Plan or the exempt
status of any such trust. Each trust maintained or contributed to by the Company
or any  Subsidiary  which is intended to be qualified as a voluntary  employees'
beneficiary  association  and which is intended to be exempt from federal income
taxation  under  Section   501(c)(9)  of  the  Code  has  received  a  favorable
determination  letter from the IRS that it is so qualified and so exempt, and no
fact or event has occurred  since the date of such  determination  by the IRS to
adversely affect such qualified or exempt status.

               (e) Absence of Certain Liabilities and Events.  There has been no
prohibited  transaction  (within  the meaning of Section 406 of ERISA or Section
4975 of the

                                      -22-
<PAGE>
Code) with  respect to any Plan.  Neither  the Company  nor any  Subsidiary  has
incurred any liability for any penalty or tax arising under Section 4971,  4972,
4980, 4980B or 6652 of the Code or any liability under Section 502 of ERISA, and
no fact or event exists which could give rise to any such liability. Neither the
Company nor any Subsidiary has incurred any liability  under,  arising out of or
by  operation  of Title IV of ERISA  (other than  liability  for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course), including,
without  limitation,  any liability in connection  with (i) the  termination  or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal  from any  Multiemployer  Plan or Multiple  Employer Plan, and no
fact or event exists which could give rise to any such liability. No complete or
partial termination has occurred within the five years preceding the date hereof
with respect to any Plan.  No  reportable  event  (within the meaning of Section
4043 of ERISA) has  occurred or is  expected  to occur with  respect to any Plan
subject  to Title IV of ERISA.  No Plan had an  accumulated  funding  deficiency
(within the meaning of Section 302 of ERISA or Section 412 of the Code), whether
or not waived, as of the most recently ended plan year of such Plan. None of the
assets of the Company or any Subsidiary is the subject of any lien arising under
Section 302(f) of ERISA or Section  412(n) of the Code;  neither the Company nor
any Subsidiary has been required to post any security under Section 307 of ERISA
or Section  401(a)(29) of the Code; and no fact or event exists which could give
rise to any such lien or requirement to post any such security.

               (f) Plan Contributions and Funding.  All contributions,  premiums
or payments  required  to be made with  respect to any Plan have been made on or
before  their due dates.  All such  contributions  have been fully  deducted for
income tax purposes and no such  deduction has been  challenged or disallowed by
any  government  entity and no fact or event exists which could give rise to any
such challenge or disallowance. As of the Closing Date, no Plan which is subject
to Title IV of ERISA  will have an  "unfunded  benefit  liability"  (within  the
meaning of Section 4001(a)(18) of ERISA).

               (g)  Certain  Employee-Benefits  Assets.  Each of the  guaranteed
investment contracts and other funding contracts with any insurance company that
are held by any of the Plans and any annuity  contracts  purchased by (i) any of
the Plans or (ii) any  pension  benefit  plans (as  defined in  Section  3(2) of
ERISA) that provided  benefits to any current or former employees of the Company
or any Subsidiary  was issued by an insurance  company which carried the highest
rating from each of Duff & Phelps Credit Rating Co., Standard & Poor's Insurance
Rating Services, A.M. Best Company and Moody's Investors Service, as of the date
such contract was issued, the date hereof and the Closing Date.

               (h)  Americans  With   Disability   Act.  The  Company  and  each
Subsidiary are in compliance in all material  respects with the  requirements of
the Americans With Disabilities Act.

               (i)  WARN  Act.  Subject  to  performance  by  Purchaser  of  its
obligations  as set forth in Section  6.01 and  elsewhere,  the  Company and the
Subsidiaries  are in compliance with the  requirements of the WARN Act, and have
no liabilities  pursuant to the WARN Act based on events  occurring prior to the
Closing.

                                      -23-
<PAGE>
               (j) Employee Numbers. As of the date of this Agreement, the Total
number of people employed by the Company and the Subsidiaries  (inclusive of all
employees (i) on leave, disability, vacation or out sick or (ii) terminated with
the expectation of rehire) is  approximately  180 full-time,  5 part-time and 15
temporary  employees,  all of whom are  employed at the  location  specified  in
Section 3.20.

         SECTION 3.22. Labor Matters. Except as set forth in Section 3.22 of the
Disclosure  Schedule,  (a) neither the Company nor any  Subsidiary is a party to
any collective  bargaining agreement or other labor union contract applicable to
persons  employed by the Company or any  Subsidiary  and currently  there are no
organizational  campaigns,  petitions or other  unionization  activities seeking
recognition  of a collective  bargaining  unit which could affect the Company or
any  Subsidiary;  (b) there are no  controversies,  strikes,  slowdowns  or work
stoppages pending or, to the Seller's knowledge,  threatened between the Company
or any Subsidiary and any of their respective employees, and neither the Company
nor any Subsidiary has experienced  any such  controversy,  strike,  slowdown or
work  stoppage  within the past three  years;  (c)  neither  the Company nor any
Subsidiary has breached or otherwise failed to comply with the provisions of any
collective bargaining or union contract and there are no grievances  outstanding
against the Company or any Subsidiary under any such agreement or contract which
could have a Material  Adverse  Effect;  (d) there are no unfair labor  practice
complaints  pending  against the Company or any  Subsidiary  before the National
Labor Relations Board or any other  Governmental  Authority or any current union
representation  questions  involving  employees of the Company or any Subsidiary
which  could have a Material  Adverse  Effect;  (e) to  Seller's  knowledge  the
Company  and each  Subsidiary  is  currently  in  material  compliance  with all
applicable Laws relating to the employment of labor,  including those related to
wages, hours, collective bargaining 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 or any  Subsidiary and is not liable for
any arrears of wages, taxes,  penalties or other sums for failure to comply with
any of the  foregoing;  (f) the Company and each  Subsidiary has paid in full to
all their respective employees or adequately accrued for in accordance with U.S.
GAAP all wages, salaries, commissions,  bonuses, benefits and other compensation
due to or on behalf of such  employees;  (g) there is no claim  with  respect to
payment of wages,  salary or overtime pay that has been  asserted or to Seller's
knowledge is now pending or threatened  before any  Governmental  Authority with
respect to any  Persons  currently  or  formerly  employed by the Company or any
Subsidiary;  (h)  neither  the  Company  nor any  Subsidiary  is a party  to, or
otherwise  bound by, any consent  decree with, or citation by, any  Governmental
Authority relating to employees or employment practices;  (i) there is no charge
or proceeding with respect to a violation of any  occupational  safety or health
standards that has been asserted or is now pending or threatened with respect to
the Company or any Subsidiary;  and j) 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 to Seller's  knowledge 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  or  any
Subsidiary has employed or currently employs any Person.

                                      -24-
<PAGE>
         SECTION 3.23. Taxes.

               (a) (i) All returns  and reports in respect of Taxes  required to
be filed  with  respect  to the  Company  and  each  Subsidiary  (including  the
consolidated  federal  income  tax return of the Seller and any state Tax return
that includes the Company or any Subsidiary on a consolidated or combined basis)
have been timely filed;  (ii) all Taxes required to be shown on such returns and
reports or  otherwise  due have been  timely  paid;  (iii) all such  returns and
reports  are true,  correct  and  complete  in all  material  respects;  (iv) no
adjustment  relating to such returns has been proposed formally or informally by
any Tax authority  (insofar as either relates to the activities or income of the
Company or any  Subsidiary  or could  result in  liability of the Company or any
Subsidiary  on the basis of joint  and/or  several  liability)  and, to the best
knowledge of the Seller,  the Company and the Subsidiaries  (after due inquiry),
no basis  exists for any such  adjustment;  (v) there are no pending  or, to the
best  knowledge  of the  Seller,  the Company  and the  Subsidiaries  (after due
inquiry),  threatened actions or proceedings for the assessment or collection of
Taxes against the Company or any Subsidiary or (insofar as either relates to the
activities  or  income  of the  Company  or any  Subsidiary  or could  result in
liability of the Company or any  Subsidiary on the basis of joint and/or several
liability) any corporation  that was included in the filing of a return with the
Seller on a consolidated or combined basis; (vi) no consent under Section 341(f)
of the Code has been filed with respect to the Company or any Subsidiary;  (vii)
there are no Tax liens on any assets of the  Company or any  Subsidiary;  (viii)
neither the Seller nor any  Subsidiary  or Affiliate of the Seller is a party to
any agreement or arrangement that would result,  separately or in the aggregate,
in the payment of any "excess parachute  payments" within the meaning of Section
280G of the Code; (ix) no acceleration of the vesting  schedule for any property
that is unvested within the meaning of the  regulations  under Section 83 of the
Code  will  occur in  connection  with  the  transactions  contemplated  by this
Agreement; (x) for the last five years, the Company and each Subsidiary has been
and  continues  to be a member of the  affiliated  group  (within the meaning of
Section 1504(a)(1) of the Code) for which the Seller files a consolidated return
as the common  parent,  and has not been  includible  in any other  consolidated
return for any  taxable  period for which the  statute  of  limitations  has not
expired;  and (xi) neither the Company nor any Subsidiary has been at any time a
member  of any  partnership  or joint  venture  or the  holder  of a  beneficial
interest  in any trust for any period for which the statute of  limitations  for
any Tax has not expired;  and (xii) neither the Company nor any  Subsidiary  has
been a United States real  property  holding  corporation  within the meaning of
Section  897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii)  of the  Code;  and  (xiii)  no claim  has ever been made by an
authority in a jurisdiction  where any of the Company and its Subsidiaries  does
not  file  Tax  Returns  that  it is or may  be  subject  to  taxation  by  that
jurisdiction;  and  (xiv)  none  of the  Company  and its  Subsidiaries  has any
liability  for  the  Taxes  of  any  Person  other  than  the  Company  and  its
Subsidiaries  (A) under Reg.  ss.1.1502-6  (or any similar  provision  of state,
local,  or foreign law), (B) as a transferee or successor,  (C) by contract,  or
(D) otherwise.

               (b) Except as disclosed  with  reasonable  specificity in Section
3.23 of the  Disclosure  Schedule:  (i)  there  are no  outstanding  waivers  or
agreements  extending the statute of limitations  for any period with respect to
any Tax to which  the  Seller,  any  affiliate  of the  Seller,  Company  or any
Subsidiary  may be subject;  (ii) neither the Company nor any

                                      -25-
<PAGE>
Subsidiary  (A) has or is projected to have an amount  includible  in its income
for the  current  taxable  year under  Section  951 of the Code,  (B) has been a
passive  foreign  investment  company  within the meaning of Section 1296 of the
Code, (C) has an unrecaptured overall foreign loss within the meaning of Section
904(f)  of  the  Code  or  (D)  has   participated  in  or  cooperated  with  an
international  boycott  within the  meaning of  Section  999 of the Code;  (iii)
neither the  Company  nor any  Subsidiary  has any (A) income  reportable  for a
period ending after the Closing Date but attributable to a transaction (e.g., an
installment  sale) or a change in accounting  method  occurring in or made for a
period  ending on or prior to the  Closing  Date  which  resulted  in a deferred
reporting  of income from such  transaction  or from such  change in  accounting
method (other than a deferred intercompany transaction), or (B) deferred gain or
loss arising out of any  deferred  intercompany  transaction;  (iv) there are no
requests for information  currently  outstanding  that could affect the Taxes of
the Company or any Subsidiary;  (v) there are no proposed  reassessments  of any
property  owned by the Company or any  Subsidiary or other  proposals that could
increase the amount of any Tax to which the Company or any  Subsidiary  would be
subject;  (vi) neither the Company nor any  Subsidiary  is  obligated  under any
agreement with respect to industrial  development bonds or similar  obligations,
with  respect to which the  excludability  from  gross  income of the holder for
federal income tax purposes could be affected by the  transactions  contemplated
hereunder;  and (vii) no power of attorney  that is  currently in force has been
granted  with  respect to any  matter  relating  to Taxes that could  affect the
Company or a Subsidiary.

               (c) (i) Section 3.23 of the Disclosure Schedule lists all income,
franchise and similar Tax Returns (federal, state, local and foreign) filed with
respect to each of the Company and the Subsidiaries for taxable periods ended on
or after December 31, 1995, indicates for which jurisdictions  Returns have been
filed on the  basis of a  unitary  group,  indicates  the  most  recent  income,
franchise  or similar  Tax Return for each  relevant  jurisdiction  for which an
audit has been completed or the statute of limitations  has lapsed and indicates
all Tax Returns  that  currently  are the subject of audit;  (ii) the Seller has
delivered to the Purchaser  correct and complete  copies of all federal,  state,
local and  foreign  income,  franchise  and  similar  tax  Returns,  examination
reports,  and statements of  deficiencies  assessed  against or agreed to by the
Company  or any  Subsidiary  since  December  31,  1995;  (iii) the  Seller  has
delivered  to the  Purchaser  a true and  complete  copy of any  tax-sharing  or
allocation agreement or arrangement  involving the Company or any Subsidiary and
a true and complete  description of any such unwritten or informal  agreement or
arrangement;  (iv)  Section  3.23 of the  Disclosure  Schedule  sets  forth  the
following  information  with respect to each of the Company and the Subsidiaries
as of the most recent practicable date: (A) the tax basis of the Company and the
Subsidiaries in the Assets reflected on the Reference Balance Sheet, (B) the tax
basis of the  stockholder(s)  of each  Subsidiary in its stock (or the amount of
any excess loss  account),  and (C) the amount of any net  operating  loss,  net
capital  loss,   unused  credit,   unused  foreign  tax,  or  excess  charitable
contribution allocable to each of the Company and the Subsidiaries;  and (v) the
Seller has  delivered to the  Purchaser  complete and correct  copies of all pro
forma  federal  income Tax Returns of the  Subsidiaries,  prepared in connection
with  the  Seller's  or  any  other  consolidated  federal  income  Tax  Return,
accompanied by a schedule  reconciling  the items in the pro forma Return to the
items as included in the consolidated Tax Return for all taxable years ending on
or after December 31, 1995.

                                      -26-
<PAGE>
               (d) Each of the Company and its  Subsidiaries  has  withheld  and
paid all  Taxes  required  to have been  withheld  and paid in  connection  with
amounts  paid  or  owing  to any  employee,  independent  contractor,  creditor,
stockholder, or other third party.

         SECTION 3.24. Insurance.

               (a) Section  3.24(a) of the  Disclosure  Schedule  sets forth the
following  information with respect to each insurance policy (including policies
providing property,  casualty,  liability,  workers' compensation,  and bond and
surety  arrangements)  under  which the  Company or any  Subsidiary  has been an
insured,  a named insured or otherwise the principal  beneficiary of coverage at
any time within the past three years:

                    (i) the name,  address and telephone  number of the agent or
               broker;

                    (ii) the name of the insurer and the names of the  principal
               insured and each named insured;

                    (iii) the policy number and the period of coverage;

                    (iv) the type, scope (including an indication of whether the
               coverage  was on a claims  made,  occurrence  or other basis) and
               amount  (including a description of how  deductibles,  retentions
               and aggregates are calculated and operate) of coverage; and

                    (v) the premium charged for the policy,  including,  without
               limitation,  a description of any retroactive premium adjustments
               or other loss-sharing arrangements.

               (b) With respect to each such insurance policy: (i) the policy is
legal,  valid,  binding and enforceable in accordance with its terms and, except
for policies that have expired under their terms in the ordinary  course,  is in
full force and effect;  (ii) neither the Company nor any Subsidiary is in breach
or  default  (including  any breach or default  with  respect to the  payment of
premiums or the giving of notice),  and no event has occurred which, with notice
or the  lapse of time,  would  constitute  such a breach  or  default  or permit
termination or modification,  under the policy; and (iii) no party to the policy
has  repudiated,  or given  notice  of an  intent to  repudiate,  any  provision
thereof.

               (c) At no time since  December  31,  1995 has the  Company or any
Subsidiary (i) been denied any insurance or indemnity bond coverage which it has
requested,  (ii)  made any  material  reduction  in the  scope or  amount of its
insurance coverage, or, except as set forth in Section 3.24(e) of the Disclosure
Schedule,  received notice from any of its insurance carriers that any insurance
premiums will be subject to increase in an amount materially disproportionate to
the amount of the  increases  with  respect  thereto (or with respect to similar
insurance)  in prior  years or that any  insurance  coverage  listed in  Section
3.24(a)  of the  Disclosure  Schedule  will  not  be  available  in  the  future
substantially  on the same  terms as are now in  effect  or (iii)  suffered  any
extraordinary increase in premium for renewed coverage.  Since December 1995, no
insurance  carrier  has  cancelled,  failed to

                                      -27-
<PAGE>
renew or  materially  reduced  any  insurance  coverage  for the  Company or any
Subsidiary  or given any notice or other  indication of its intention to cancel,
not renew or reduce any such coverage.

               (d)  No  insurance  policy  listed  in  Section  3.24(a)  of  the
Disclosure  Schedule  will cease to be legal,  valid,  binding,  enforceable  in
accordance  with its terms and in full  force and effect on terms  identical  to
those in effect as of the date  hereof  as a result of the  consummation  of the
transactions contemplated by this Agreement. No representation is made regarding
the  availability of continued  coverage for the Company on policies where it is
jointly covered with Seller.

         SECTION  3.25.  Accounts;  Lockboxes;  Safe  Deposit  Boxes;  Powers of
Attorney. Section 3.25 of the Disclosure Schedule is a true and complete list of
(a) the  names  of each  bank,  savings  and  loan  association,  securities  or
commodities  broker or other  financial  institution in which the Company or any
Subsidiary has an account,  including cash contribution  accounts, and the names
of all  persons  authorized  to draw  thereon or have  access  thereto,  (b) the
location  of all  lockboxes  and  safe  deposit  boxes of the  Company  and each
Subsidiary  and the names of all  Persons  authorized  to draw  thereon  or have
access  thereto  and (c) the names of all  Persons,  if any,  holding  powers of
attorney from the Seller or the Parent  relating to the Company,  any Subsidiary
or the  Business,  or from the  Company  or any  Subsidiary.  At the time of the
Closing, without the prior written consent of the Purchaser, neither the Company
nor any  Subsidiary  shall have any such  account,  lockbox or safe  deposit box
other than those listed in Section 3.25 of the  Disclosure  Schedule,  nor shall
any additional Person have been authorized,  from the date of this Agreement, to
draw  thereon  or have  access  thereto  or to hold any such  power of  attorney
relating to the Company,  any  Subsidiary or the Business or from the Company or
any Subsidiary.  Since the Reference  Balance Sheet Date, except as disclosed in
Section 3.25 of the Disclosure Schedule or to the extent permitted under Section
5.01(iv), the Seller has not commingled monies or accounts of the Company or any
Subsidiary  with other monies or accounts of the Seller or relating to its other
businesses nor has the Seller  transferred  monies or accounts of the Company or
any Subsidiary  other than to an account of the Company or such  Subsidiary.  At
the time of the  Closing,  all  monies  and  accounts  of the  Company  and each
Subsidiary  shall be held by, and be  accessible  only to,  the  Company or such
Subsidiary.

         SECTION  3.26.  Brokers.  No  broker,  finder or  investment  banker is
entitled to any  brokerage,  finder's or other fee or  commission  in connection
with the  transactions  contemplated by this Agreement  based upon  arrangements
made by or on behalf of the Seller or the Parent or, to the Seller's  knowledge,
the Company.

                                      -28-
<PAGE>
                                   ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

         As an  inducement  to the  Seller  and the  Parent  to enter  into this
Agreement,  the Purchaser  hereby  represents and warrants to the Seller and the
Parent as follows:

         SECTION  4.01.  Organization  and  Authority  of  the  Purchaser.   The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all  necessary  corporate  power
and  authority  to enter  into  this  Agreement,  to carry  out its  obligations
hereunder and to consummate the transactions  contemplated hereby. The execution
and  delivery  of  this  Agreement  by the  Purchaser,  the  performance  by the
Purchaser of its obligations  hereunder and the consummation by the Purchaser of
the transactions  contemplated hereby have been duly authorized by all requisite
action on the part of the  Purchaser.  This Agreement has been duly executed and
delivered by the  Purchaser,  and  (assuming  due  authorization,  execution and
delivery by the Seller and the Parent) this  Agreement  constitutes,  the legal,
valid and binding obligation of the Purchaser  enforceable against the Purchaser
in accordance with its terms.

         SECTION 4.02. No Conflict.  Assuming  compliance with the  notification
requirements  of the HSR  Act  and the  making  and  obtaining  of all  filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.03,  except as may result from any facts or circumstances  relating
solely to the Seller, the execution,  delivery and performance of this Agreement
by the Purchaser do not and will not (a) violate, conflict with or result in the
breach of any provision of the  Certificate of  Incorporation  or By-laws of the
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to the Purchaser or (c) conflict with, or result in any breach of,  constitute a
default  (or event  which with the  giving of notice or lapse or time,  or both,
would become a default) under,  require any consent under, or give to others any
rights of  termination,  amendment,  acceleration,  suspension,  revocation,  or
cancellation  of, or result in the  creation  of any  Encumbrance  on any of the
assets or properties of the Purchaser  pursuant to, any note, bond,  mortgage or
indenture,  contract,  agreement, lease, sublease, license, permit, franchise or
other  instrument or  arrangement  to which the Purchaser is a party or by which
any of such  assets or  properties  are bound or  affected  which  would  have a
material  adverse  effect on the  ability of the  Purchaser  to  consummate  the
transactions contemplated by this Agreement.

         SECTION  4.03.  Governmental  Consents and  Approvals.  The  execution,
delivery and  performance of this Agreement by the Purchaser do not and will not
require any  consent,  approval,  authorization  or other  order of,  action by,
filing with,  or  notification  to, any  Governmental  Authority,  except (a) as
described in a writing  given to the Seller by the Purchaser on the date of this
Agreement and (b) the notification requirements of the HSR Act.

                                      -29-
<PAGE>
         SECTION 4.04. Investment Purpose. The Purchaser is acquiring the Shares
solely  for the  purpose of  investment  and not with a view to, or for offer or
sale in connection with, any distribution thereof.

         SECTION 4.05. Litigation. Except as disclosed in a writing given to the
Seller  by the  Purchaser  on the  date of this  Agreement,  no  claim,  action,
proceeding or  investigation  is pending or, to the knowledge of the  Purchaser,
threatened,  which seeks to delay or prevent the consummation of, or which would
be reasonably likely to materially  adversely affect the Purchaser's  ability to
consummate, the transactions contemplated by this Agreement.

         SECTION  4.06.  Brokers.  No  broker,  finder or  investment  banker is
entitled to any  brokerage,  finder's or other fee or  commission  in connection
with the  transactions  contemplated by this Agreement  based upon  arrangements
made by or on behalf of the Purchaser.


                                    ARTICLE V

                              ADDITIONAL AGREEMENTS

         SECTION 5.01. Conduct of Business Prior to the Closing.

               (a) The Seller and the Parent  each  covenants  and agrees  that,
except as described  in Section  5.01(a) of the  Disclosure  Schedule and except
that prior to Closing the Company will release the Seller from any obligation to
repay  Indebtedness in an amount not to exceed $18,500,000 owed by the Seller or
its  Affiliates  to the Company  reflected  on the  Reference  Balance  Sheet or
incurred  since the date thereof in the ordinary  course of business  consistent
with past practice,  between the date thereof and the time of the Closing,  none
of the Seller,  the Parent,  the Company nor any  Subsidiary  shall  conduct its
business other than in the ordinary course and consistent with the Company's and
such Subsidiary's  prior practice,  except for the transfer of the Real Property
contemplated  in Section  8.02(n) and the  transfer of the  accounting  computer
system and software referred to in Section 5.11. Without limiting the generality
of the  foregoing,  except as  described  in Section  5.01(a) of the  Disclosure
Schedule,  the Seller and the Parent  each shall not cause the  Company and each
Subsidiary to (i) fail to continue its advertising  and promotional  activities,
and pricing and purchasing  policies,  in accordance  with past  practice;  (ii)
shorten or lengthen  the  customary  payment  cycles for any of its  payables or
receivables;  (iii) fail to (A) preserve intact their business organizations and
the business  organization of the Business,  (B) keep available to the Purchaser
the services of the  Transferred  Employees,  (C) fail to continue in full force
and effect without  material  modification  all existing  policies or binders of
insurance  currently  maintained in respect of the Company,  each Subsidiary and
the  Business  and (D)  fail to  preserve  its  current  relationships  with its
customers,  suppliers and other persons with which it has  significant  business
relationships;  (iv)  transfer any cash out of the Company or the  Subsidiaries,
except for reimbursements to the Seller of usual and customary third party costs
(including  income  taxes in the ordinary  course of  business)  expended by the
Seller on behalf of the business  consistent  with past practice,  each of which
costs shall be identified  and

                                      -30-
<PAGE>

explained to the Purchaser in writing; and (v) engage in any practice,  take any
action,  fail to take any action or enter into any transaction which could cause
any  representation  or  warranty  of the  Seller or the  Parent to be untrue or
result  in a breach of any  covenant  made by the  Seller or the  Parent in this
Agreement.

               (b)  Except as  described  in Section  5.01(b) of the  Disclosure
Schedule,  the Seller covenants and agrees that,  prior to the Closing,  without
the  prior  written  consent  of the  Purchaser,  neither  the  Company  nor any
Subsidiary  will do any of the  things  enumerated  in the  second  sentence  of
Section  3.13  (including,  without  limitation,  clauses (i)  through  (xxviii)
thereof).

               (c) For the period from the date  hereof  through the time of the
Closing,  the  Seller  and the  Parent  each  covenants  and agrees to cause the
Company  and each  Subsidiary  to  maintain  the level,  mix and  quality of the
Inventories consistent with the past practice of the Business.

         SECTION 5.02. Access to Information.

               (a) From the date  hereof  until  the  Closing,  upon  reasonable
notice,  the  Seller  and the  Parent  each  shall  cause  the  Company  and the
Subsidiaries  and  each  of  the  Company's  and  the  Subsidiaries'   officers,
directors, employees, agents,  representatives,  accountants and counsel to: (i)
afford the officers,  employees and  authorized  agents,  accountants,  counsel,
financing sources and representatives of the Purchaser complete and unrestricted
access (to the  extent  permitted  by U.S.  government  security  restrictions),
during  normal  business  hours,  to  the  offices,  properties,  plants,  other
facilities,  books and records of the Company and each  Subsidiary  and to those
officers,  directors,  employees, agents, accountants and counsel of the Company
and of each  Subsidiary  who have any  knowledge  relating to the  Company,  any
Subsidiary  or the  Business  and (ii) furnish to the  officers,  employees  and
authorized agents,  accountants,  counsel, financing sources and representatives
of the  Purchaser  such  additional  financial  and  operating  data  and  other
information  regarding the assets,  properties and goodwill of the Company,  the
Subsidiaries  and the Business (or legible copies  thereof) as the Purchaser may
from time to time request.

               (b) In order to  facilitate  the  resolution  of any claims  made
against or incurred by the Seller  prior to the  Closing,  for a period of seven
years after the Closing, the Purchaser shall (i) retain the books and records of
the Company and the  Subsidiaries  relating to periods prior to the Closing in a
manner  reasonably  consistent  with the prior  practice  of the Company and the
Subsidiaries and (ii) upon reasonable notice, afford the officers, employees and
authorized agents and representatives of the Seller reasonable access (including
the right to make, at the Seller's expense, photocopies), during normal business
hours, to such books and records.

               (c) In order to facilitate  the  resolution of any claims made by
or against or incurred by the Purchaser, the Company or any Subsidiary after the
Closing  or for any  other  reasonable  purpose,  for a period  of  seven  years
following the Closing,  the Seller and the Parent shall (i) retain the books and
records of the Seller and the Parent,  as the case may be,

                                      -31-
<PAGE>
which  relate to the  Company  and the  Subsidiaries  and their  operations  for
periods prior to the Closing and which shall not otherwise  have been  delivered
to the Purchaser, the Company or any Subsidiary and (ii) upon reasonable notice,
afford the officers,  employees and authorized agents and representatives of the
Purchaser,  the Company or any Subsidiary reasonable access (including the right
to make  photocopies,  at the  expense  of the  Purchaser,  the  Company or such
Subsidiary), during normal business hours, to such books and records.

         SECTION  5.03.  Confidentiality.  The Seller and the Parent each agrees
to, and shall cause its agents, representatives, Affiliates, employees, officers
and  directors  to:  (i) treat and hold as  confidential  (and not  disclose  or
provide  access to any Person to) all  information  relating  to trade  secrets,
processes,  patent  and  trademark  applications,  product  development,  price,
customer  and  supplier  lists,  pricing  and  marketing  plans,   policies  and
strategies,  details of client and  consultant  contracts,  operations  methods,
product  development  techniques,  business  acquisition  plans,  new  personnel
acquisition  plans and all other  confidential  information  with respect to the
Business, the Company and each Subsidiary,  (ii) in the event that the Seller or
the Parent each or any such agent, representative,  Affiliate, employee, officer
or director becomes legally compelled to disclose any such information,  provide
the  Purchaser  with  prompt  written  notice  of such  requirement  so that the
Purchaser,  the Company or any Subsidiary  may seek a protective  order or other
remedy or waive  compliance with this Section 5.03, (iii) in the event that such
protective  order or other  remedy  is not  obtained,  or the  Purchaser  waives
compliance   with  this  Section  5.03,   furnish  only  that  portion  of  such
confidential  information  which is legally required to be provided and exercise
its best  efforts  to obtain  assurances  that  confidential  treatment  will be
accorded such  information,  (iv) promptly  furnish (prior to, at, or as soon as
practicable following,  the Closing) to the Company or the Purchaser any and all
copies (in whatever form or medium) of all such confidential information then in
the  possession  of  the  Seller  or the  Parent  each  or  any  of its  agents,
representatives,  Affiliates,  employees,  officers and directors and, except as
otherwise  required by Section  5.02(c),  destroy any and all additional  copies
then in the  possession  of the Seller or the Parent  each or any of its agents,
representatives,   Affiliates,   employees,   officers  and  directors  of  such
information  and of any  analyses,  compilations,  studies  or  other  documents
prepared,  in whole or in part, on the basis thereof;  provided,  however,  that
this  sentence  shall  not  apply  to  any  information  that,  at the  time  of
disclosure,  is  available  publicly  and was not  disclosed  in  breach of this
Agreement  by the  Seller  or the  Parent  each,  its  agents,  representatives,
Affiliates,  employees,  officers or  directors;  provided  further  that,  with
respect to Intellectual Property, specific information shall not be deemed to be
within  the  foregoing  exception  merely  because  it is  embraced  in  general
disclosures  in the public  domain.  In addition,  with respect to  Intellectual
Property,  any  combination  of  features  shall not be deemed to be within  the
foregoing  exception  merely because the  individual  features are in the public
domain unless the  combination  itself and its principle of operation are in the
public  domain.  The Seller and the Parent  each  agrees and  acknowledges  that
remedies at law for any breach of its  obligations  under this  Section 5.03 are
inadequate and that in addition  thereto the Purchaser shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach.

                                      -32-

<PAGE>
         SECTION  5.04.  Regulatory  and  Other   Authorizations;   Notices  and
Consents.

               (a) The Seller and the Parent each shall use its best  efforts to
obtain (or cause the Company and the Subsidiaries to obtain) all authorizations,
consents,  orders and approvals of all  Governmental  Authorities  and officials
that may be or become  necessary  for its  execution  and  delivery  of, and the
performance  of its  obligations  pursuant to, this Agreement and will cooperate
fully with the Purchaser in promptly seeking to obtain all such  authorizations,
consents,  orders and approvals. Each party hereto agrees to make an appropriate
filing,  if necessary,  pursuant to the HSR Act with respect to the transactions
contemplated  by this  Agreement as promptly as  practicable  after,  but in any
event within ten Business  Days of, the date hereof and to supply as promptly as
practicable  to  the   appropriate   Governmental   Authorities  any  additional
information and documentary  material that may be requested  pursuant to the HSR
Act.

               (b) The  Seller  and the  Parent  each  shall or shall  cause the
Company and the  Subsidiaries to give promptly such notices to third parties and
use its or their best  efforts to obtain such third party  consents and estoppel
certificates  as the  Purchaser  may in its sole and  absolute  discretion  deem
necessary or desirable in connection with the transactions  contemplated by this
Agreement.

               (c) The Purchaser shall cooperate and use all reasonable  efforts
to assist the Seller and the Parent in giving such  notices and  obtaining  such
consents and estoppel certificates;  provided, however, that the Purchaser shall
have no obligation to give any guarantee or other consideration of any nature in
connection with any such notice,  consent or estoppel  certificate or to consent
to any change in the terms of any agreement or  arrangement  which the Purchaser
in its sole and absolute  discretion  may deem  adverse to the  interests of the
Purchaser, the Company, any Subsidiary or the Business.

               (d) Neither the Seller nor the Parent  knows of no reason why all
the consents, approvals and authorizations necessary for the consummation of the
transactions contemplated hereby will not be received.

               (e) The Seller,  the Parent and the Purchaser  agree that, in the
event any consent,  approval or authorization necessary or desirable to preserve
for the Business,  the Company or any  Subsidiary any right or benefit under any
lease, license, contract,  commitment or other agreement or arrangement to which
the Seller,  the Company or any  Subsidiary is a party is not obtained  prior to
the  Closing,  the Seller and the Parent each will,  subsequent  to the Closing,
cooperate  with the  Purchaser  and the  Company in  attempting  to obtain  such
consent,  approval or  authorization as promptly  thereafter as practicable.  If
such consent,  approval or authorization cannot be obtained,  the Seller and the
Parent  each  shall  use  its  best  efforts  to  provide  the  Company  or such
Subsidiary,  as the case may be, with the rights and  benefits  of the  affected
lease, license,  contract,  commitment or other agreement or arrangement for the
term of such lease, license, contract or other agreement or arrangement, and, if
the Seller or the Parent provides such rights and benefits,  the Company or such
Subsidiary,  as the  case may be,  shall  assume  the  obligations  and  burdens
thereunder.

                                      -33-
<PAGE>
               (f) The Seller and the Parent  shall  cause the  Company  and the
Subsidiaries  to be  released  from all  guarantees  of the  obligations  of the
Seller, the Parent and the Affiliates of either.

         SECTION 5.05. Notice of Developments.  Prior to the Closing, the Seller
shall promptly notify the Purchaser in writing of (i) all events, circumstances,
facts and  occurrences  arising  subsequent to the date of this Agreement  which
could  result in any breach of a  representation  or warranty or covenant of the
Seller  in this  Agreement  or  which  could  have  the  effect  of  making  any
representation  or warranty of the Seller in this Agreement  untrue or incorrect
in any respect and (ii) all other  material  developments  affecting the assets,
Liabilities,  business, financial condition,  operations, results of operations,
customer or supplier relations, employee relations,  projections or prospects of
the Company, any Subsidiary or the Business.

         SECTION 5.06. No Solicitation or Negotiation. The Seller and the Parent
agrees  that  between  the date of this  Agreement  and the  earlier  of (i) the
Closing and (ii) the  termination  of this  Agreement,  none of the Seller,  the
Parent,  the Company,  the Subsidiaries nor any of their respective  Affiliates,
officers,  directors,  representatives  or agents  will (a)  solicit,  initiate,
consider,  encourage or accept any other proposals or offers from any Person (i)
relating  to any  acquisition  or  purchase of all or any portion of the capital
stock  of the  Company  or any  Subsidiary  or  assets  of  the  Company  or any
Subsidiary  (other than Inventory to be sold in the ordinary  course of business
consistent with past practice), (ii) to enter into any business combination with
the  Company or any  Subsidiary  or (iii) to enter into any other  extraordinary
business  transaction  involving  or  otherwise  relating  to the Company or any
Subsidiary, or (b) participate in any discussions,  conversations,  negotiations
and  other  communications  regarding,  or  furnish  to  any  other  Person  any
information  with  respect  to, or  otherwise  cooperate  in any way,  assist or
participate  in,  facilitate  or  encourage  any  effort or attempt by any other
Person  to seek to do any of the  foregoing.  The  Seller  and the  Parent  each
immediately  shall cease and cause to be  terminated  all existing  discussions,
conversations,  negotiations and other communications with any Persons conducted
heretofore with respect to any of the foregoing.  The Seller and the Parent each
shall  notify the  Purchaser  promptly  if any such  proposal  or offer,  or any
inquiry or other  contact  with any Person  with  respect  thereto,  is made and
shall,  in any such notice to the Purchaser,  indicate in reasonable  detail the
identity of the Person making such proposal,  offer,  inquiry or contact and the
terms and conditions of such  proposal,  offer,  inquiry or other  contact.  The
Seller and the Parent  each  agrees  not to, and to cause the  Company  and each
Subsidiary not to, without the prior written  consent of the Purchaser,  release
any Person from, or waive any provision  of, any  confidentiality  or standstill
agreement to which the Seller,  the Parent,  the Company or any  Subsidiary is a
party.

         SECTION 5.07. Use of Intellectual Property.

               (a) The  Seller and the Parent  each  acknowledges  that from and
after the Closing,  the name "Dorne & Margolin" and "DM/CHU  Technology" and all
similar or related  names,  marks and logos (all of such names,  marks and logos
being the "Names")  shall be owned by the Company or a Subsidiary,  that neither
the Seller  nor any of its

                                      -34-
<PAGE>
Affiliates  shall have any rights in the Names,  and that neither the Seller nor
any of its  Affiliates  will contest the  ownership or validity of any rights of
the Purchaser, the Company or any Subsidiary in or to the Names.

               (b) From and after the  Closing,  none of the Seller,  the Parent
nor any of its Affiliates  shall use any of the Owned  Intellectual  Property or
any of the Licensed Intellectual Property.

         SECTION 5.08. Non-Competition.

               (a) For a period  of three  (3)  years  after  the  Closing  (the
"Restricted  Period"),  each of the  Seller  and the  Parent  shall not  engage,
directly or indirectly, in any business anywhere in the world that manufactures,
produces or supplies products or services of the kind manufactured,  produced or
supplied by the Business,  the Company or any  Subsidiary as of the Closing Date
or, without the prior written consent of the Purchaser,  directly or indirectly,
own an  interest  in,  manage,  operate,  join,  control,  lend  money or render
financial or other  assistance to or participate in or be connected  with, as an
officer,  employee,  partner,  stockholder,  consultant or otherwise, any Person
that competes with the Purchaser, the Business, the Company or any Subsidiary in
manufacturing,   producing  or  supplying  products  or  services  of  the  kind
manufactured,  produced  or  supplied  by  the  Business,  the  Company  or  any
Subsidiary as of the Closing; provided,  however, that, for the purposes of this
Section 5.08,  ownership of securities  having no more than three percent of the
outstanding  voting  power of any  competitor  which are listed on any  national
securities exchange or traded actively in the national  over-the-counter  market
shall not be  deemed  to be in  violation  of this  Section  5.08 so long as the
Person owning such securities has no other connection or relationship  with such
competitor.

               (b) As a separate and  independent  covenant,  the Seller and the
Parent  each  agrees with the  Purchaser  that,  for a period of three (3) years
following  the  Closing,  the Seller  and the  Parent  each will not in any way,
directly  or  indirectly,  for the  purpose of  conducting  or  engaging  in any
business  that  manufactures,  produces or supplies  products or services of the
kind  manufactured,  produced or supplied  by the  Business,  the Company or any
Subsidiary  as of the Closing,  call upon,  solicit,  advise or otherwise do, or
attempt to do,  business with any customers of the Business,  the Company or any
Subsidiary with whom the Business,  the Company, any Subsidiary or the Seller or
the Parent had any  dealings  during the period of time in which the Company was
an Affiliate of the Seller and the Parent,  or take away or interfere or attempt
to interfere with any custom, trade, business or patronage of the Business,  the
Company or any  Subsidiary,  or interfere  with or attempt to interfere with any
officers,  employees,  representatives or agents of the Business, the Company or
any  Subsidiary,  or induce or attempt to induce any of them to leave the employ
of the Company or any Subsidiary or violate the terms of their contracts, or any
employment arrangements, with the Company or any Subsidiary.

               (c) The Restricted  Period shall be extended by the length of any
period during which the Seller is in breach of the terms of this Section 5.08.

                                      -35-
<PAGE>
               (d)  The  parties  further  acknowledge  that  the  time,  scope,
geographic  area and other  provisions  of Section  5.08 have been  specifically
negotiated  by  sophisticated   commercial  parties  and  agree  that  all  such
provisions  are  reasonable   under  the   circumstances   of  the  transactions
contemplated  by this  Agreement.  In the event that  agreements in Section 5.08
shall be determined by any court of competent  jurisdiction to be  unenforceable
by reason of their  extending for too great a period of time or over too great a
geographical  area or by  reason  of their  being  too  extensive  in any  other
respect,  they shall be  interpreted  to extend only over the maximum  period of
time for which they may be enforceable and/or over the maximum geographical area
as to which they may be  enforceable  and/or to the maximum  extent in all other
respects as to which they may be enforceable, all as determined by such court in
such action.

               (e) The existence of any claim or cause of action which any party
may have  against  another  party shall not  constitute  a defense or bar to the
enforcement  of any of the  provisions of this Section  5.08,  but such claim or
cause of action may be pursued through separate court action by such party.

               (f) The Seller and the Parent  acknowledges that the covenants of
the  Seller  and the  Parent  set forth in this  Section  5.08 are an  essential
element of this  Agreement and that, but for the agreement of the Seller and the
Parent each to comply with these covenants, the Purchaser would not have entered
into this  Agreement.  The  Seller and the Parent  each  acknowledges  that this
Section 5.08  constitutes an  independent  covenant and shall not be affected by
performance or  nonperformance  of any other  provision of this Agreement by the
Purchaser.  The Seller and the Parent have  independently  consulted  with their
counsel and after such consultation  agrees that the covenants set forth in this
Section 5.08 are reasonable and proper.

         SECTION  5.09.  Release of  Indemnity  Obligations.  The Seller and the
Parent each  covenants  and agrees,  on or prior to the Closing,  to execute and
deliver to the Company,  for the benefit of the Company and each  Subsidiary,  a
general  release  and  discharge,  in form  and  substance  satisfactory  to the
Purchaser releasing and discharging the Company and each Subsidiary from any and
all  obligations  to indemnify  the Seller,  the Parent or their  Affiliates  or
otherwise  hold  any of  them  harmless  pursuant  to  any  agreement  or  other
arrangement  entered into prior to the  Closing;  provided,  however,  that such
release  shall not be deemed to affect the right of the  transferee  of the Real
Property  who is an  Affiliate  of the Seller or the  Parent,  to pursue a claim
under the Company's  insurance for any matter covered by insurance to the extent
of such coverage.

         SECTION 5.10. Further Action.  Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate  action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such  documents and other papers,  as may be required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.

                                      -36-
<PAGE>
         SECTION 5.11.  Transfer of Business.  Promptly  after the Closing,  the
Purchaser  will move (at the  Purchaser's  cost) all the Assets of the  Business
(including the test range but exclusive of the single accounting computer system
and the software related exclusively  thereto) to the Purchaser's Deer Park, New
York  facility.  The Seller will  cooperate in all respects with such  transfer.
Such move is to be completed within 60 days of the Closing and during the period
of continued  occupancy  the  Purchaser  shall be  responsible  for all costs of
occupancy.  At the  termination  of such  occupancy,  the premises  will be left
"broom clean". If such occupancy extends beyond 60 days, the Purchaser shall pay
the Seller during the continued  occupancy,  which will continue thereafter as a
month-to-month tenancy, rent on a "triple net basis" at the rate of $400,000 per
annum.

         SECTION 5.12. Unaudited Financial Statements.  The Seller will, and the
Parent  will cause the Seller to,  deliver to the  Purchaser  monthly  unaudited
financial statements of the Company and the Subsidiaries as promptly as possible
after  the  end of each  calendar  month,  which  financial  statements  will be
accompanied  by a  certificate  of each  the  Seller's  and the  Parent's  chief
financial  officers  certifying  that they: (i) were prepared in accordance with
the books of account and other  financial  records of the Company,  (ii) present
fairly the  consolidated  financial  condition  and results of operations of the
Company and the  Subsidiaries as of the dates thereof or for the periods covered
thereby,(iii) have been prepared in accordance with U.S. GAAP applied on a basis
consistent with the past practices of the Seller, the Parent and the Company and
(iv) include all adjustments (consisting only of normal recurring accruals) that
are necessary for a fair presentation of the consolidated financial condition of
the  Company  and the  Subsidiaries  and the  results of the  operations  of the
Company and the  Subsidiaries as of the dates thereof or for the periods covered
thereby.


                                   ARTICLE VI

                                EMPLOYEE MATTERS

         SECTION 6.01.  Transferred  Employees.  Commencing on the Closing Date,
the Purchaser  agrees to provide,  or to cause the Companies or the Subsidiaries
to provide,  the Transferred  Employees with terms and conditions of employment,
including, without limitation, wages and employee benefits that in the aggregate
are  reasonably  equivalent  to, and  generally no less  favorable  than,  those
provided  by the  Company  to the  Transferred  Employees  immediately  prior to
Closing.  Purchaser  agrees to maintain such terms and  conditions  for not less
than 90 days. In the event  Purchaser or the Company or any of the  Subsidiaries
separates  from  employment  any  of the  Transferred  Employees,  or any  other
employee,  at any time subsequent to the Closing such as to trigger or give rise
to an  obligation  on the  part of the  Company  or any of the  Subsidiaries  to
provide, or to have provided,  including, without limitation, at a date prior to
the  Closing,  advance  notice  under or pursuant  to the WARN Act,  such notice
obligation, and any obligation, relating thereto, including, without limitation,
back pay,  attorneys' fees,  interest,  penalties,  or fines,  shall be the sole
responsibility  of Purchaser and Purchaser shall  indemnify  Seller with respect
thereto.  Without limiting the foregoing,  prior to the Closing the Seller shall
cause the Company to satisfy the obligations of the Company under the bonus plan
to the extent  accrued for on the

                                      -37-
<PAGE>
Reference  Balance  Sheet or  accrued  after the date  thereof  per the  formula
specified  in such bonus  plan,  all in an amount not to exceed  $200,000 in the
aggregate.

         SECTION  6.02.  Non-Transferred  Employees.  Prior to the  Closing  the
Seller or the Parent will either  terminate  all  Non-Transferred  Employees  or
transfer  them to the Seller or its  Affiliates  (other  than the Company or the
Subsidiaries).  The Seller or the Parent (and not the Company or any Subsidiary)
will pay and be  responsible  for all  costs  and  expenses  (including  but not
limited to severance,  pension, and post-retirement healthcare costs) related to
or arising from the transfer or  termination of the  Non-Transferred  Employees.
The Company and not the Seller will be  responsible  for other accrued  employee
benefit expenses  related to the  Non-Transferred  Employees.  To the extent any
claims in respect of such costs and expenses are made against the Purchaser, the
Company, any Subsidiary or any of their Affiliates after Closing, the Seller and
the Parent will fully indemnify the Purchaser  against,  and promptly  reimburse
the Purchaser for any Losses  resulting  from,  such claims.  The Seller and the
Parent  jointly  and  severally  will be solely  responsible  for all  change in
control  payments,  if any,  relating to the transactions  contemplated  hereby,
whether payable to Transferred Employees or Non-Transferred  Employees, and will
fully indemnify the Purchaser against,  and promptly reimburse the Purchaser for
any Losses resulting from,  claims arising from such payments.  Purchaser agrees
to select the  Transferred  Employees in  compliance  with  applicable  laws and
regulations,  and to defend and  indemnify  the  Seller and the Parent  from and
against any claim to the extent resulting from such selection.

         SECTION 6.03. WARN Act Information.  Between the date of this Agreement
and the Closing Date,  each party to this  Agreement  will  promptly  notify the
other parties hereto of any events or changes  (including  changes in the number
of employees employed by the Company and the Subsidiaries) that reasonably could
result in WARN Act  obligations  or  liabilities  for any of the parties to this
Agreement.

                                   ARTICLE VII

                                   TAX MATTERS

         SECTION 7.01. Indemnity.

               (a)  The  Parent  agrees  to  indemnify  and  hold  harmless  the
Purchaser, the Company and each Subsidiary against the following income and real
estate  Taxes  (except to the extent  current  taxes on income in respect of the
current year,  which, to the extent unpaid on the Closing Date, shall be paid to
Seller by the  Purchaser  at an imputed rate of 34% (but only to the extent that
such taxes are accrued for on the Reference  Balance Sheet and accrued after the
date thereof in ordinary  course of business  consistent  with past practice and
the Parent, on its income tax returns to the federal  government for the current
year (which tax returns  will be  prepared on a basis  consistent  with past tax
returns of the Parent)  makes actual tax  payments in respect of the  Business),
and,  except as otherwise  provided in Section 7.04,  against any loss,  damage,
liability or expense,  including reasonable fees for attorneys and other outside
consultants,  incurred in contesting  or otherwise in  connection  with any such

                                      -38-
<PAGE>
income and real estate  Taxes:  (i) income and real estate Taxes  imposed on the
Company or any Subsidiary  with respect to taxable periods of such Person ending
on or before the Closing Date;  (ii) with respect to taxable  periods  beginning
before the  Closing  Date and ending  after the  Closing  Date,  income and real
estate  Taxes  imposed on the  Company or any  Subsidiary  which are  allocable,
pursuant to Section 7.01(b), to the portion of such period ending on the Closing
Date;  (iii)  income and real  estate  Taxes  imposed on or with  respect to any
member  of  any  affiliated  group  with  which  any  of  the  Company  and  the
Subsidiaries file or have filed a Return on a consolidated or combined basis for
a taxable  period  ending on or before the Closing  Date or which  includes  the
Closing Date;  and (iv) income and real estate Taxes imposed on the Purchaser or
the  Company  or any  Subsidiary  as a  result  of any  breach  of  warranty  or
misrepresentation  under Section 3.23. The Purchaser  shall be  responsible  for
Taxes and  associated  expenses  not  allocated  to the Seller  pursuant  to the
preceding  sentence  hereof.  It is  agreed  that  Purchaser  shall  not make an
election permitted by Section 338 of the Code.

               (b) In the  case of Taxes  that are  payable  with  respect  to a
taxable  period that begins  before the Closing  Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be:

                    (i) in the case of Taxes  that are  either (x) based upon or
          related to income or receipts,  or (y) imposed in connection  with any
          sale or other  transfer or assignment  of property  (real or personal,
          tangible  or  intangible)  (other  than  conveyances  pursuant to this
          Agreement,  which are covered under Section 7.07), deemed equal to the
          amount  which  would be payable if the taxable  period  ended with the
          Closing Date; and

                    (ii) in the case of Taxes  imposed on a periodic  basis with
          respect to the assets of the Company or any  Subsidiary,  or otherwise
          measured  by the  level of any item,  deemed to be the  amount of such
          Taxes for the entire period (or, in the case of such Taxes  determined
          on an arrears  basis,  the  amount of such  Taxes for the  immediately
          preceding  period)  multiplied by a fraction the numerator of which is
          the number of calendar  days in the period  ending on the Closing Date
          and the  denominator  of which is the number of  calendar  days in the
          entire period.

         SECTION  7.02.  Returns and Payments.  From the date of this  Agreement
through and after the Closing  Date,  the Seller or the Parent shall prepare and
file  or  otherwise  furnish  in  proper  form to the  appropriate  Governmental
Authority (or cause to be prepared and filed or so furnished) in a timely manner
all Tax returns,  reports and forms ("Returns")  relating to the Company and the
Subsidiaries that are due on or before or relate to any taxable period ending on
or before the Closing Date (and the Purchaser  shall do the same with respect to
any taxable  period ending after the Closing  Date).  Returns of the Company and
the  Subsidiaries  not yet filed for any taxable  period that begins  before the
Closing  Date  shall be  prepared  in a manner  consistent  with past  practices
employed with respect to the Company and the Subsidiaries  (except to the extent
counsel for the Seller,  the Parent or the Company  renders a legal opinion that
there is no reasonable  basis in law therefor or determines that a Return cannot
be so prepared and filed without being  subject to

                                      -39-
<PAGE>

penalties).  With respect to any Return  required to be filed by the  Purchaser,
the Parent or the Seller with respect to the Company and the Subsidiaries and as
to which an amount of Tax is allocable to the other party under Section 7.01(b),
the  filing   party  shall   provide   the  other   party  and  its   authorized
representatives  with a copy of such completed Return and a statement certifying
the amount of Tax shown on such  Return  that is  allocable  to such other party
pursuant to Section 7.01(b),  together with appropriate  supporting  information
and  schedules,  at least 20 Business Days prior to the due date  (including any
extension  thereof) for the filing of such Return,  and such other party and its
authorized  representatives  shall have the right to review and  comment on such
Return and statement prior to the filing of such Return.

         SECTION  7.03.  Refunds.  Any Tax refund  (including  any interest with
respect  thereto)  relating  to the  Company or any  Subsidiary  for any taxable
period  ending on or before the Closing Date (except for any refund  included on
the Reference Balance Sheet, which shall be the property of the Purchaser and if
paid to the Seller or the Parent,  shall be paid over promptly to the Purchaser)
shall be the  property  of the  Seller or the  Parent,  and if  received  by the
Purchaser or the Company or any  Subsidiary  shall be paid over  promptly to the
Seller or the Parent. Notwithstanding the foregoing sentence, any Tax refund (or
equivalent  benefit  to  the  Seller  through  a  reduction  in  Tax  liability)
(including  any  interest  with  respect  thereto) for a period on or before the
Closing  Date arising out of the  carryback of a loss or credit  incurred by the
Company or any  Subsidiary in a taxable year ending after the Closing Date shall
be the property of the  Purchaser  and, if received by the Seller or the Parent,
shall be paid over promptly to the Purchaser.

         SECTION 7.04. Contests.

               (a) After the Closing,  the Purchaser  shall promptly  notify the
Seller in writing of any written notice of a proposed  assessment or claim in an
audit or administrative or judicial proceeding of the Purchaser or of any of the
Company and the  Subsidiaries  which,  if determined  adversely to the taxpayer,
would be grounds for indemnification under this Article VII; provided,  however,
that a failure to give such  notice  will not affect  the  Purchaser's  right to
indemnification  under this Article VII except to the extent,  if any, that, but
for such  failure,  the Seller or the Parent could have avoided all or a portion
of the Tax liability in question.

               (b) In  the  case  of an  audit  or  administrative  or  judicial
proceeding  that  relates  to  periods  ending on or before  the  Closing  Date,
provided  that the Seller  acknowledges  in  writing  its  liability  under this
Agreement  to hold the  Purchaser,  the  Company and the  Subsidiaries  harmless
against the full amount of any adjustment  which may be made as a result of such
audit or proceeding that relates to periods ending on or before the Closing Date
(or, in the case of any taxable year that includes the Closing Date,  against an
adjustment allocable under Section 7.01(b) to the portion of such year ending on
or before the Closing Date), the Seller and the Parent each shall have the right
at its  expense  to  participate  in and  control  the  conduct of such audit or
proceeding  but only to the extent that such audit or proceeding  relates solely
to a  potential  adjustment  for  which  the  Seller  and the  Parent  each  has
acknowledged its liability; the Purchaser also may participate in any such

                                      -40-
<PAGE>
audit or proceeding and, if the Seller or the Parent does not assume the defense
of any such  audit or  proceeding,  the  Purchaser  may  defend the same in such
manner as it may deem appropriate,  including, but not limited to, settling such
audit or proceeding  after giving five days' prior written  notice to the Seller
or the Parent setting forth the terms and conditions of settlement. In the event
that  issues  relating to a  potential  adjustment  for which the Seller and the
Parent each has  acknowledged its liability are required to be dealt with in the
same proceeding as separate issues relating to a potential  adjustment for which
the  Purchaser  would be liable,  the  Purchaser  shall  have the right,  at its
expense, to control the audit or proceeding with respect to the latter issues.

               (c) With respect to issues relating to a potential adjustment for
which both the Seller  and/or the  Parent (as  evidenced  by its  acknowledgment
under this  Section  7.04) and the  Purchaser  or the Company or any  Subsidiary
could be liable, (i) each party may participate in the audit or proceeding,  and
(ii) the audit or proceeding  shall be controlled by that party which would bear
the  burden  of the  greater  portion  of the  sum of  the  adjustment  and  any
corresponding  adjustments  that may  reasonably be  anticipated  for future Tax
periods.  The principle set forth in the  immediately  preceding  sentence shall
govern  also for  purposes of  deciding  any issue that must be decided  jointly
(including, without limitation, choice of judicial forum) in situations in which
separate issues are otherwise controlled under this Article VII by the Purchaser
and the Seller and/or the Parent.

               (d) None of the  Purchaser,  the Parent or the Seller shall enter
into any  compromise  or agree to settle any claim  pursuant to any Tax audit or
proceeding  which  would  adversely  affect  the other  party for such year or a
subsequent  year without the written  consent of the other party,  which consent
may not be unreasonably withheld. The Purchaser, the Parent and the Seller agree
to cooperate, and the Purchaser agrees to cause the Company and the Subsidiaries
to cooperate,  in the defense against or compromise of any claim in any audit or
proceeding.

         SECTION 7.05.  Time of Payment.  Payment by the Seller or the Parent of
any amounts due under this  Article VII in respect of Taxes shall be made (i) at
least  three  Business  Days  before  the due date of the  applicable  estimate,
extension or Return  required to be filed by the  Purchaser on which is required
to be reported  income for a period  ending after the Closing Date for which the
Seller or the Parent is responsible  under Sections  7.01(a) and 7.01(b) without
regard to whether the Return  shows  overall net income or loss for such period,
and (ii) within three Business Days following an agreement between the Seller or
the Parent and the Purchaser that an indemnity amount is payable,  an assessment
of a Tax by a taxing  authority,  or a  "determination"  as  defined  in Section
1313(a) of the Code. If liability  under this Article VII is in respect of costs
or expenses other than Taxes, payment by the Seller or the Parent of any amounts
due under this  Article VII shall be made within  five  Business  Days after the
date when the Seller or the Parent has been notified by the  Purchaser  that the
Seller or the  Parent  has a  liability  for a  determinable  amount  under this
Article VII and is provided with calculations or other materials supporting such
liability.

         SECTION 7.06. Cooperation and Exchange of Information.  The Seller, the
Parent and the  Purchaser  will  provide  each other with such  cooperation  and
information as

                                      -41-
<PAGE>

any of them  reasonably  may request of the other in filing any Return,  amended
Return or claim for refund,  determining  a liability  for Taxes or a right to a
refund of Taxes, participating in or conducting any audit or other proceeding in
respect  of Taxes or making  representations  to or  furnishing  information  to
parties subsequently desiring to purchase any of the Company or the Subsidiaries
or any part of the Business from the Purchaser. Such cooperation and information
shall include providing copies of relevant Returns or portions thereof, together
with  accompanying  schedules,  related  work papers and  documents  relating to
rulings or other  determinations  by Tax authorities.  The Seller and the Parent
shall  make its  employees  available  on a basis  mutually  convenient  to both
parties  to  provide  explanations  of any  documents  or  information  provided
hereunder.  Each of the  Seller and the  Purchaser  shall  retain  all  Returns,
schedules  and work  papers,  records  and  other  documents  in its  possession
relating to Tax matters of the Company  and the  Subsidiaries  for each  taxable
period first ending  after the Closing  Date and for all prior  taxable  periods
until the later of (i) the  expiration  of the  statute  of  limitations  of the
taxable periods to which such Returns and other documents relate, without regard
to  extensions  except to the extent  notified  by the other party in writing of
such extensions for the respective Tax periods,  or (ii) six years following the
due date (without  extension) for such Returns.  The Seller,  the Parent and the
Purchaser  agree to give the other  party  reasonable  written  notice  prior to
transferring,  destroying or  discarding  any such books and records and, if the
other party so requests, the Purchaser and its Subsidiaries or the Seller or the
Parent,  as the case may be, shall allow the other party to take  possession  of
such books and records.  Any information  obtained under this Section 7.06 shall
be kept  confidential in accordance with Section 5.02 except as may be otherwise
necessary  in  connection  with the filing of Returns or claims for refund or in
conducting an audit or other proceeding.

         SECTION  7.07.  Conveyance  Taxes.  The Seller and the Parent  shall be
jointly and severally  liable for and shall hold the Purchaser  harmless against
any real property transfer,  sales, use, transfer,  value added, stock transfer,
and stamp taxes, any transfer, recording,  registration, and other fees, and any
similar  Taxes  which  become  payable  in  connection  with  the   transactions
contemplated by this Agreement, and shall prepare and file such applications and
documents  as shall  permit any such Tax to be assessed  and paid on or prior to
the Closing Date in accordance with any available pre-sale filing procedure. The
Purchaser,  upon  request by the Seller or the  Parent and as  required  by Law,
shall execute and deliver all instruments and  certificates  necessary to enable
the Seller or the Parent to comply with the foregoing.

         SECTION 7.08.  Section 338(h)(10)  Election.  No election shall be made
under  Section  338(h)(10)  of the Code with respect to the purchase and sale of
the Shares.

         SECTION 7.09. Miscellaneous.

               (a)  The  Seller  and  the  Parent,  on the  one  hand,  and  the
Purchaser, on the other hand, agree to treat all payments made by either of them
to or for the benefit of the other (including any payments to the Company or any
Subsidiary)  under this Article VII,  under other  indemnity  provisions of this
Agreement and for any  misrepresentations or

                                      -42-
<PAGE>

breaches of warranties or covenants as  adjustments  to the Purchase Price or as
capital  contributions for Tax purposes and that such treatment shall govern for
purposes hereof.

               (b) From and after the date of this Agreement, neither the Seller
nor the Parent shall,  without the prior written consent of the Purchaser (which
may, in its sole and absolute discretion, withhold such consent), make, or cause
or permit to be made,  any Tax  election  that would  affect the  Company or any
Subsidiary.

               (c) For  purposes of this  Article  VII,  "the  Purchaser,"  "the
Parent"  and "the  Seller",  respectively,  shall  include  each  member  of the
affiliated  group of corporations of which it is or becomes a member (other than
the Company and the Subsidiaries, except to the extent expressly referenced).

         SECTION 7.10.  Tax Sharing  Agreements.  All tax sharing  agreements or
similar agreements with respect to or involving the Company and its Subsidiaries
shall be  terminated  as of the Closing Date and,  after the Closing  Date,  the
Company and its  Subsidiaries  shall not be bound  thereby or have any liability
thereunder for any taxable year (past, current or future).


                                  ARTICLE VIII

                              CONDITIONS TO CLOSING

         SECTION 8.01.  Conditions to  Obligations of the Seller and the Parent.
The  obligations  of the Seller and the Parent to  consummate  the  transactions
contemplated by this Agreement shall be subject to the fulfillment,  at or prior
to the Closing, of each of the following conditions:

               (a)    Representations,    Warranties    and    Covenants.    The
representations  and  warranties  of the Purchaser  contained in this  Agreement
shall have been true and correct  when made and shall be true and correct in all
material  respects as of the Closing,  with the same force and effect as if made
as of the Closing Date,  other than such  representations  and warranties as are
made as of  another  date,  which  shall be true  and  correct  as of such  date
(provided,  however,  that if any portion of any  representation  or warranty is
already  qualified  by  materiality,  for purposes of  determining  whether this
Section  8.01(a)  has  been  satisfied  with  respect  to such  portion  of such
representation or warranty,  such portion of such  representation or warranty as
so qualified  must be true and correct in all  respects),  and the covenants and
agreements  contained in this  Agreement to be complied with by the Purchaser on
or before the Closing shall have been complied  with,  and the Seller shall have
received  a  certificate  from the  Purchaser  to such  effect  signed by a duly
authorized officer thereof;

               (b) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Shares  contemplated  hereby shall
have expired or shall have been terminated;

                                      -43-

<PAGE>
               (c) No  Proceeding  or  Litigation.  No  Action  shall  have been
commenced by or before any Governmental  Authority  against either the Seller or
the  Purchaser,  seeking to  restrain  or  materially  and  adversely  alter the
transactions contemplated by this Agreement which, in the reasonable, good faith
determination  of the Seller,  is likely to render it  impossible or unlawful to
consummate such  transactions;  provided,  however,  that the provisions of this
Section  8.01(c)  shall not apply if the Seller or the Parent  has  directly  or
indirectly solicited or encouraged any such Action;

               (d)  Resolutions.  The  Seller  shall  have  received  a true and
complete  copy,  certified by the  Secretary  or an  Assistant  Secretary of the
Purchaser, of the resolutions duly and validly adopted by the Board of Directors
of the Purchaser  evidencing its  authorization of the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby; and

               (e)  Incumbency  Certificate.  The Seller  shall have  received a
certificate  of  the  Secretary  or an  Assistant  Secretary  of  the  Purchaser
certifying the names and signatures of the officers of the Purchaser  authorized
to sign this Agreement and the other documents to be delivered hereunder.

         SECTION  8.02.   Conditions  to  Obligations  of  the  Purchaser.   The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the  fulfillment,  at or prior to the Closing,  of
each of the following conditions:

               (a)    Representations,    Warranties    and    Covenants.    The
representations  and  warranties of the Seller and the Parent  contained in this
Agreement  shall  have  been  true and  correct  when made and shall be true and
correct  in all  material  respects  as of the  Closing  with the same force and
effect  as if  made as of the  Closing,  other  than  such  representations  and
warranties as are made as of another date, which shall be true and correct as of
such date  (provided,  however,  that if any  portion of any  representation  or
warranty is already  qualified by materiality or dollar amount,  for purposes of
determining whether this Section 8.02(a) has been satisfied with respect to such
portion of such representation or warranty,  such portion of such representation
or  warranty  as so  qualified  must be true and  correct in all  respects  and;
provided,  further  that the  accuracy  of the  representations  and  warranties
contained in Section  3.17 will not operate as a condition to Closing),  and the
covenants and agreements  contained in this Agreement to be complied with by the
Purchaser on or before the Closing shall have been complied with in all material
respects,  and the covenants and  agreements  contained in this  Agreement to be
complied  with by the Seller on or before the Closing  shall have been  complied
with, and the Purchaser  shall have received  certificates of the Seller and the
Parent to such effect signed by a duly authorized officer thereof;

               (b) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Shares  contemplated  hereby shall
have expired or shall have been terminated;

               (c) No  Proceeding  or  Litigation.  No  Action  shall  have been
commenced or threatened by or before any Governmental  Authority  against any of
the Seller,  the Parent

                                      -44-
<PAGE>

or the  Purchaser,  seeking to restrain or materially  and  adversely  alter the
transactions   contemplated   hereby  which  in  the   reasonable,   good  faith
determination of the Purchaser, is likely to render it impossible or unlawful to
consummate the transactions contemplated by this Agreement or which could have a
Material Adverse Effect; provided,  however, that the provisions of this Section
8.02(c) shall not apply if the  Purchaser  has solicited or encouraged  any such
Action;

               (d) Resolutions of the Seller and the Parent. The Purchaser shall
have  received  a true and  complete  copy,  certified  by the  Secretary  or an
Assistant  Secretary  of each of the Seller and the Parent,  of the  resolutions
duly and validly  adopted by the Board of Directors of the Seller and the Parent
evidencing its authorization of the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby;

               (e)  Secretary's  Certificate  of the Seller and the Parent.  The
Purchaser  shall have  received a  certificate  of the Secretary or an Assistant
Secretary  of each of the  Seller  and  the  Parent  certifying  the  names  and
signatures of the officers of the Seller and the Parent  authorized to sign this
Agreement and the other documents to be delivered hereunder and also certifying,
as the case may be, the Seller's and the Parent's  Certificate of  Incorporation
and Bylaws.

               (f) Legal Opinion.  The Purchaser shall have received from Reid &
Priest LLP, a legal  opinion,  addressed to the  Purchaser and dated the Closing
Date, substantially in the form of Exhibit 8.02(f);

               (g) Consents and  Approvals.  The  Purchaser and the Seller shall
have  received,  each in  form  and  substance  reasonably  satisfactory  to the
Purchaser,   all   authorizations,   consents,   orders  and  approvals  of  all
Governmental  Authorities and officials and all third party consents (other than
such authorizations,  consents,  orders or approvals of Governmental Authorities
and third parties  which,  if not  obtained,  would not  individually  or in the
aggregate  have a Material  Adverse  Effect on the  Company),  including but not
limited to the consents identified in Schedules 3.06(c) and 3.07;

               (h) Resignations of the Company's Directors.  The Purchaser shall
have  received  the  resignations,  effective  as of the  Closing,  of  all  the
directors and officers of the Company and each Subsidiary;

               (i) Organizational Documents. The Purchaser shall have received a
copy  of  (i)  the  Certificates  of  Incorporation,   as  amended  (or  similar
organizational  documents), of the Company,  certified by the secretary of state
of the jurisdiction in which each such entity is incorporated or organized,  and
accompanied  by a certificate  of the  Secretary or Assistant  Secretary of each
such entity,  dated as of the Closing Date, stating that no amendments have been
made to such Certificate of Incorporation (or similar organizational  documents)
since such date, and (ii) the By-laws (or similar  organizational  documents) of
the Company and of each  Subsidiary,  certified  by the  Secretary  or Assistant
Secretary of each such entity;

                                      -45-
<PAGE>
               (j) Minute Books. The Purchaser shall have received a copy of the
minute books and stock register of the Company and each Subsidiary, certified by
their respective Secretaries or Assistant Secretaries as of the Closing Date;

               (k) Good Standing;  Qualification  to Do Business.  The Purchaser
shall have  received  good  standing  certificates  for the Company and for each
Subsidiary  from the secretary of state of the  jurisdiction  in which each such
entity is  incorporated  or  organized  and from the  secretary of state in each
other jurisdiction in which the Company is qualified to do business as a foreign
corporation, in each case dated as of a date not earlier than five Business Days
prior to the Closing  Date and  accompanied  by  bring-down  telegrams  or other
similar advice dated the Closing Date;

               (l) Release of Indemnity  Obligations.  The Purchaser  shall have
received  the  general  release  and  discharge  from the Seller  referred to in
Section 5.10 in form and substance satisfactory to the Purchaser in its sole and
absolute discretion;

               (m) No Material  Adverse  Effect.  No event or events  shall have
occurred,  or be  reasonably  likely to  occur,  which,  individually  or in the
aggregate, have, or could have, a Material Adverse Effect;

               (n) Real  Property.  The Seller and the Parent  shall have caused
all Real Property to be transferred out of the Company and the Subsidiaries, and
shall have executed  documents  (acceptable  to the Purchaser and its counsel in
form and substance) retaining all liability for the Real Property;

               (o)  Non-Transferred  Employees.  The Seller and the Parent shall
have caused all Non-Transferred Employees to be terminated or transferred to the
Seller,  the  Parent or their  Affiliates,  and shall  have  executed  documents
(acceptable  in form and substance to the  Purchaser and its counsel)  retaining
all liability for the Non-Transferred Employees.


                                   ARTICLE IX

                                 INDEMNIFICATION

         SECTION  9.01.   Survival  of  Representations   and  Warranties.   The
representations  and  warranties of the Parent and the Seller  contained in this
Agreement,  and all statements contained in this Agreement, the Exhibits to this
Agreement,  the Disclosure  Schedule and any certificate,  Financial  Statement,
Interim Financial  Statement or report or other document  delivered  pursuant to
this  Agreement or in  connection  with the  transactions  contemplated  by this
Agreement (collectively, the "Acquisition Documents"), shall survive the Closing
until the 15 month anniversary of the Closing Date; provided,  however, that (a)
the  representations  and  warranties  dealing with Tax matters  shall until the
expiration  of the  applicable  statute of  limitations,  and (b) insofar as any
claim is made by the Purchaser for the breach of any  representation or warranty
of the Seller or the Parent contained herein

                                      -46-
<PAGE>
relating to environmental  matters,  such  representations and warranties shall,
for purposes of such claims by the Purchaser, survive the Closing Date until the
tenth  anniversary  of the Closing Date.  Neither the period of survival nor the
liability  of  the  Parent  with  respect  to  the  Seller's  and  the  Parent's
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of the  Purchaser.  If  written  notice of a claim has been
given prior to the expiration of the applicable  representations  and warranties
by the Purchaser to the Parent, then the relevant representations and warranties
shall survive as to such claim, until such claim has been finally resolved.

         SECTION 9.02. Indemnification by the Parent.

               (a) The  Purchaser,  its  Affiliates  and  their  successors  and
assigns, and the officers, directors, employees and agents of the Purchaser, its
Affiliates and their successors and assigns (each an "Indemnified  Party") shall
be indemnified  and held harmless by the Parent (but not the Seller) for any and
all Liabilities,  losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties  (including,  without limitation,  reasonable attorneys'
and  consultants'  fees and  expenses)  actually  suffered  or  incurred by them
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from:

                    (i) the breach of any representation or warranty made by the
          Seller or the Parent contained in the Acquisition Documents; or

                    (ii) the breach of any  covenant or  agreement by the Seller
          or the Parent contained in the Acquisition Documents; or

                    (iii) [Intentionally Left Blank]

                    (iv) (A) any and all  Remedial  Actions  before or after the
          Closing  relating  to any  Release  of  Hazardous  Materials  into the
          Environment  or on or about the Real Property  prior to the Closing to
          the  extent  any  such   Remedial   Action  is   required   under  any
          Environmental Law or by any Governmental  Authority or is necessary to
          prevent  or  abate  a   significant   risk  to  human  health  or  the
          environment;  (B) any and all Environmental Claims arising at any time
          that  relate to the  Business or the  operation  of the Company or the
          Subsidiaries  prior to the Closing;  or (C) any and all noncompliances
          with  or   violations   of  any   applicable   Environmental   Law  or
          Environmental  Permit by the Company or the Subsidiaries  prior to the
          Closing; or

                    (v) any and all losses and liabilities  relating to the Real
          Property,  whether  arising  before or after the Closing  (except as a
          result  of  the  Company's   continued  occupancy  thereof  after  the
          Closing).

The  parties  will  cooperate  fully  in  seeking  insurance  recovery,  and the
indemnification,  payments  due from the Parent  will be reduced by any  amounts
actually recovered by the Purchaser under the Company's  insurance in respect of
the subject matter of such  indemnification.  The Purchaser  agrees to cause the
Company to continue in force  liability

                                      -47-
<PAGE>

insurance with coverage substantially equivalent to the coverage the Company has
historically  maintained.  The Parent  will be  subrogated  to the rights of the
Company against its insurance carriers to the extent of its indemnity payments.

To the extent that the Parent's  undertakings set forth in this Section 9.02 may
be  unenforceable,  the Parent shall  contribute  the maximum  amount that it is
permitted to contribute  under applicable law to the payment and satisfaction of
all Losses incurred by the Purchaser, the Company and the Subsidiaries.

               (b) An  Indemnified  Party  shall give the  Parent  notice of any
matter which an Indemnified Party has determined has given or could give rise to
a right of  indemnification  under  this  Agreement,  promptly  but in any event
within 20 days of such determination,  stating the amount of the Loss, if known,
and method of computation  thereof, and containing a reference to the provisions
of this Agreement in respect of which such right of  indemnification  is claimed
or arises.  The  obligations and Liabilities of the Parent under this Article IX
with respect to Losses  arising from claims of any third party which are subject
to the  indemnification  provided for in this Article IX ("Third Party  Claims")
shall be governed by and  contingent  upon the  following  additional  terms and
conditions:  if an  Indemnified  Party shall  receive  notice of any Third Party
Claim,  the  Indemnified  Party shall give the Parent notice of such Third Party
Claim  within 10 days of the receipt by the  Indemnified  Party of such  notice;
provided, however, that the failure to provide such notice shall not release the
Parent from any of its  obligations  under this  Article IX except to the extent
the Parent is  materially  prejudiced  by such failure and shall not relieve the
Parent  from  any  other  obligation  or  Liability  that  it  may  have  to any
Indemnified   Party  otherwise  than  under  this  Article  IX.  If  the  Parent
acknowledges  in writing its  obligation  to  indemnify  the  Indemnified  Party
hereunder  against any Losses that may result from such Third Party Claim,  then
the Parent  shall be  entitled  to assume and  control the defense of such Third
Party Claim at its expense and through  counsel of its choice if it gives notice
of its  intention to do so to the  Indemnified  Party within  twenty days of the
receipt  of such  notice  from the  Indemnified  Party.  In the event the Parent
exercises the right to undertake  any such defense  against any such Third Party
Claim as provided above,  the Indemnified  Party shall cooperate with the Parent
in such  defense and make  available  to the  Parent,  at the  Parent's  expense
(exclusive  of  overhead  costs or  employee  time),  all  witnesses,  pertinent
records,  materials and  information in the  Indemnified  Party's  possession or
under the Indemnified Party's control relating thereto as is reasonably required
by the Parent.  Similarly,  in the event the  Indemnified  Party is, directly or
indirectly,  conducting  the defense  against any such Third  Party  Claim,  the
Seller and the Parent shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified  Party, at the Parent's expense,  all such
witnesses,  records,  materials and  information in the Seller's or the Parent's
possession or under the Seller's or the Parent's  control relating thereto as is
reasonably  required by the Indemnified  Party. No such Third Party Claim may be
settled by the  Parent  without  the prior  written  consent of the  Indemnified
Party, which consent shall not be unreasonably withheld.

         SECTION 9.03. Limits on  Indemnification.  Notwithstanding  anything to
the contrary  contained in this Agreement,  the maximum amount of  indemnifiable
Losses which

                                      -48-
<PAGE>

may be recovered  from the Seller  arising out of or  resulting  from the causes
enumerated  in Section  9.02 shall be an amount  equal  (exclusive  of insurance
recoveries)  to $6  million  and that no claim  may be made  against  Seller  in
respect of the first  $400,000 of Losses for which  Seller  would  otherwise  be
responsible hereunder; provided, however, that indemnifiable Losses (a) relating
to the Seller's  obligations  to  employees of the Company and the  Subsidiaries
other than  Transferred  Employees or (b) arising under Sections  9.02(a)(iv) or
9.02(a)(v) will not be subject to the limitations of this Section 9.03.

         SECTION 9.04. Tax Matters.  Anything in this Article IX (except for the
specific   reference   to  Tax  matters  in  Section   9.01)  to  the   contrary
notwithstanding,  the rights and  obligations  of the  parties  with  respect to
indemnification for any and all Tax matters shall be governed by Article VII.


                                    ARTICLE X

                             TERMINATION AND WAIVER

         SECTION  10.01.  Termination.  This  Agreement may be terminated at any
time prior to the Closing:

               (a) by the  Purchaser  if,  between  the date hereof and the time
scheduled for the Closing: (i) an event or condition occurs that has resulted in
or that may be  expected  to  result  in a  Material  Adverse  Effect,  (ii) any
representation  or  warranty  of the  Seller  or the  Parent  contained  in this
Agreement  shall not have been true and correct  when made,  (iii) the Seller or
the Parent shall not have complied with any covenant or agreement to be complied
with by it and  contained  in this  Agreement  after notice of breach shall have
been given to the Seller and the Seller  shall have  failed to cure such  breach
within 10 days of such notice;  or (iv) the Seller,  the Parent,  the Company or
any Subsidiary makes a general  assignment for the benefit of creditors,  or any
proceeding shall be instituted by or against the Seller, the Parent, the Company
or any Subsidiary seeking to adjudicate any of them a bankrupt or insolvent,  or
seeking  liquidation,  winding up or  reorganization,  arrangement,  adjustment,
protection,  relief or  composition  of its  debts  under  any Law  relating  to
bankruptcy, insolvency or reorganization; or

               (b) by any of the  Seller,  the  Parent or the  Purchaser  if the
Closing shall not have occurred by January 15, 1998; provided, however, that the
right to  terminate  this  Agreement  under this Section  10.01(b)  shall not be
available  to any party  whose  failure to  fulfill  any  obligation  under this
Agreement  shall  have  been the cause of, or shall  have  contributed  to,  the
failure of the Closing to occur on or prior to such date; or

               (c) by any of the  Purchaser,  the  Parent  or the  Seller in the
event that any  Governmental  Authority  shall have  issued an order,  decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions  contemplated by this Agreement and such order, decree,  ruling
or other action shall have become final and nonappealable; or


                                      -49-
<PAGE>
               (d) by the mutual written  consent of the Seller,  the Parent and
the Purchaser.

         SECTION 10.02. Effect of Termination.

               (a) In the event of  termination of this Agreement as provided in
Section 10.01,  this Agreement shall forthwith become void and there shall be no
liability on the part of either party hereto except (a) as set forth in Sections
5.03 and 10.02(b),  and (b) that nothing  herein shall relieve either party from
liability for any breach of this Agreement. Purchaser acknowledges that the loss
associated with Purchaser's failure to consummate the transactions  contemplated
by this  Agreement,  will  result in  substantial  damages to Seller.  Purchaser
acknowledges  that,  in the event that this  Agreement  is  terminated  due to a
breach hereof by Purchaser, the actual damages incurred by Seller resulting from
such breach and other  factors would be extremely  impractical  or impossible to
determine accurately or with certainty. Accordingly, after full negotiation, all
parties being  represented by counsel and having equal  bargaining power in such
negotiations,  the  parties  hereto  agree that  Purchaser  shall pay Seller Two
Million Dollars as liquidated  damages to Seller,  and such is not a penalty and
reflects a good faith and  reasonable  attempt to estimate the actual damages of
Seller  which would  accrue due to such  breach.  In the event the  Purchaser is
obligated  to pay such  liquidated  damages  to the  Seller  as a result  of the
Purchaser's  breach of this Agreement (all parties hereto  acknowledging that no
liquidated damages will be payable to the Seller as a result of a termination of
this  Agreement  pursuant  to Section  10.01),  then  neither the Seller nor the
Parent  will have any claim,  cause of action or right of  recovery  against the
Purchaser beyond or in excess of such liquidated damages.

               (b) Notwithstanding the foregoing,  if the Closing does not occur
because of the failure to satisfy the conditions to the  Purchaser's  obligation
to effect the Closing contained in Section(s) 8.02 (a), (d), (e), (f), (h), (i),
(j),  (k), and (l), then the Seller and the Parent  jointly and severally  shall
reimburse the  Purchaser  for its out of pocket costs and  expenses,  including,
without  limitation,  fees and  disbursements  of  counsel,  financing  sources,
consultants  and  accountants,  incurred by the Purchaser in connection with the
preparation,  negotiation  and  performance of this  Agreement,  the Acquisition
Documents and the transactions  contemplated  hereby and the diligence performed
in connection therewith.

         SECTION  10.03.  Waiver.  Either party to this Agreement may (a) extend
the time for the  performance  of any of the  obligations  or other  acts of the
other party, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an  instrument  in writing  signed by the party to be bound
thereby.  Any waiver of any term or condition shall not be construed as a waiver
of any subsequent  breach or a subsequent  waiver of the same term or condition,
or a waiver of any other term or condition,  of this  Agreement.  The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.

                                      -50-
<PAGE>
                                   ARTICLE XI

                               GENERAL PROVISIONS

         SECTION  11.01.  Expenses.   Except  as  otherwise  specified  in  this
Agreement,  all costs and  expenses,  including,  without  limitation,  fees and
disbursements  of  counsel,  financial  advisors  and  accountants,  incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses,  whether or not the Closing
shall  have  occurred.  The  Seller  and the  Parent  will not pass any of their
expenses on to the Company or the Subsidiaries.

         SECTION 11.02.  Notices.  All notices,  requests,  claims,  demands and
other  communications  hereunder  shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon  receipt)  by delivery
in person, by courier service, by cable, by telecopy,  by telegram,  by telex or
by registered or certified mail (postage prepaid,  return receipt  requested) to
the respective parties at the following  addresses (or at such other address for
a party as shall be specified in a notice given in accordance  with this Section
11.02):

               (a) if to the Seller or the Parent:

                   United Capital Corp.
                   9 Park Place
                   Great Neck, New York  11021
                   Facsimile:  (516) 829-4301
                   Attention:  Mr. Anthony J. Miceli, Chief Financial Officer

                   with a copy to:
                   Reid & Priest LLP
                   40 West 57th Street
                   New York, New York  10019
                   Facsimile:  (212) 603-2001
                   Attention:  Gregory Katz, Esq.

               (b) if to the Purchaser:

                   AIL Systems Inc.
                   455 Commack Road
                   Deer Park, New York  11729
                   Facsimile:  (516) 595-4945
                   Attention:  Mr. Darrell L. Reed, Vice President
                                        and Chief Financial Officer

                                      -51-
<PAGE>
                   with a copy to:

                   Kleinberg, Kaplan, Wolff & Cohen, P.C.
                   551 Fifth Avenue
                   New York, New York  10176
                   Facsimile:  (212) 986-8866
                   Attention:  Harold I. Steinbach, Esq.

         SECTION 11.03.  Public  Announcements.  Except as required by law or by
the  requirements  of any stock  exchange on which the securities of a party (or
its parent) are listed,  no party to this  Agreement  shall make, or cause to be
made, any press release or public  announcement  in respect of this Agreement or
the  transactions  contemplated  hereby or otherwise  communicate  with any news
media  without the prior  written  consent of the other  party,  and the parties
shall  cooperate  as to the timing  and  contents  of any such press  release or
public announcement.

         SECTION 11.04.  Headings.  The descriptive  headings  contained in this
Agreement are for  convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.

         SECTION  11.05.  Severability.  If any term or other  provision of this
Agreement  is  invalid,  illegal or  incapable  of being  enforced by any Law or
public  policy,   all  other  terms  and  provisions  of  this  Agreement  shall
nevertheless  remain in full force and effect so long as the  economic  or legal
substance of the transactions  contemplated hereby is not affected in any manner
materially  adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall  negotiate  in good  faith to modify  this  Agreement  so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the  transactions  contemplated  hereby are consummated as originally
contemplated to the greatest extent possible.

         SECTION 11.06. Entire Agreement.  This Agreement constitutes the entire
agreement of the parties  hereto with respect to the subject  matter  hereof and
thereof and supersede all prior  agreements and  undertakings,  both written and
oral,  between the Seller and the Purchaser  with respect to the subject  matter
hereof and thereof.

         SECTION  11.07.  Assignment.  This  Agreement  may not be  assigned  by
operation of law or otherwise  without the express written consent of the Seller
and the  Purchaser  (which  consent  may be  granted  or  withheld  in the  sole
discretion  of the  Seller  or  the  Purchaser);  provided,  however,  that  the
Purchaser may assign this Agreement to an Affiliate of the Purchaser without the
consent of the Seller,  without in any way relieving  Purchaser of any liability
hereunder.

         SECTION 11.08. No Third Party Beneficiaries.  Except for the provisions
of Article IX relating to Indemnified  Parties,  this Agreement shall be binding
upon and inure solely to the benefit of the parties  hereto and their  permitted
assigns and nothing herein,

                                      -52-
<PAGE>
express or implied,  is intended  to or shall  confer upon any other  Person any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.

         SECTION 11.09. Amendment. This Agreement may not be amended or modified
except (a) by an  instrument  in writing  signed by, or on behalf of, the Seller
and the Purchaser or (b) by a waiver in accordance with Section 10.03.

         SECTION 11.10.  Governing Law. This Agreement  shall be governed by and
construed  and  enforced  in  accordance  with the laws of the State of New York
applicable to contracts  executed and to be performed  solely within such State.
All actions and  proceedings  arising out of or relating to this Agreement shall
be heard and  determined  in any New York state or federal  court sitting in the
County of Nassau, New York.

         SECTION 11.11.  Counterparts.  This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when  executed  shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.

         SECTION  11.12.  Specific  Performance.  The parties  hereto agree that
irreparable  damage would occur in the event any provision of this Agreement was
not performed in accordance  with the terms hereof and that the parties shall be
entitled to specific  performance of the terms hereof,  in addition to any other
remedy at law or equity.






                            [Signature page follows]

                                      -53-

<PAGE>
         IN WITNESS  WHEREOF,  the  Seller,  the Parent and the  Purchaser  have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto, duly authorized.

                                AIL SYSTEMS INC.


                                    By:/s/ Darrell L. Reed
                                       --------------------
                                         Darrell L. Reed
                                         Vice President and
                                         Chief Financial Officer


                                METEX CORPORATION


                                    By:  /s/ Anthony J. Miceli
                                         ---------------------
                                         Anthony J. Miceli
                                         Chief Financial Officer


                                UNITED CAPITAL CORP.


                                    By:  /s/ Anthony J. Miceli
                                         ---------------------
                                         Anthony J. Miceli
                                         Chief Financial Officer

                                      -54-