Document:

AGREEMENT AND PLAN OF REORGANIZATION

                                       OF

                            FORMTEK ACQUISITION, INC.

                    (A Corporation of the State of Delaware),

                                  FORMTEK, INC.

                    (A Corporation of the State of Delaware),

                                       AND

                          MET-COIL SYSTEMS CORPORATION

                    (A Corporation of the State of Delaware)

                              DATED March 13, 2000

                                Baker & McKenzie

                          815 Connecticut Avenue, N.W.

                             Washington, D.C. 20006

                            Telephone: (202) 452-7000

                            Facsimile: (202) 452-7074

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         THIS AGREEMENT AND PLAN OF REORGANIZATION  (the "Agreement"),  dated as
of March 13,  2000,  by and  among  Formtek  Acquisition,  Inc.,  a  corporation
organized  under the laws of the State of Delaware  ("Merger  Sub" or "Surviving
Corporation");  Formtek,  Inc., a  corporation  organized  under the laws of the
State of Delaware ("Parent");  and Met-Coil Systems  Corporation,  a corporation
organized under the laws of the State of Delaware (the  "Company").  Capitalized
terms used and not  otherwise  defined  herein shall have the meanings  assigned
thereto in Article XI.

                                   WITNESSETH:

         WHEREAS, Merger Sub is the wholly-owned Subsidiary of Parent;

         WHEREAS,  the Board of Directors of the Company,  Parent and Merger Sub
have each  approved  the  merger of the  Company  with and into  Merger Sub (the
"Merger"), pursuant to the terms and conditions of this Agreement;

         WHEREAS,  the Board of Directors of the Company has (x) determined that
the terms of the Merger are advisable  and in the best  interests of the holders
of capital stock of the Company,  (y) approved the Merger,  and (z)  recommended
the approval of the Merger and the  approval  and adoption of this  Agreement by
the stockholders of the Company;

         WHEREAS,  the Board of  Directors of Merger Sub has deemed it advisable
to merge with the Company and has recommended to its sole  stockholder,  Parent,
that it approve the Merger on the terms and conditions of this Agreement;

         WHEREAS,  Parent,  as the sole  stockholder of Merger Sub, has approved
and consented to the Merger of the Company with and into Merger Sub on the terms
and conditions of this Agreement;

         WHEREAS,  Parent  and  Merger  Sub are  unwilling  to enter  into  this
Agreement unless certain holders of Shares,  immediately following the execution
and  delivery  of  this  Agreement,   enter  into  stockholder  agreements  (the
"Stockholder  Agreements") among Parent,  Merger Sub and each of certain holders
of Shares  providing for,  among other things,  the agreement of such holders to
vote all of their  Shares in favor of the  Merger  and  granting  to Parent  and
Merger Sub an option to purchase such Shares;

         WHEREAS,  the  Board of  Directors  of the  Company  has  approved  the
transactions  contemplated  by the terms of the  Stockholder  Agreements  to the
extent  such  transactions  result  in Parent  or  Merger  Sub being  interested
stockholders for purposes of Section 203 of the DGCL; and

         WHEREAS,  Parent,  Merger Sub and the  Company  desire to make  certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger;

         NOW,  THEREFORE,  it is  agreed  as  follows  by all  of  the  parties,
acknowledging the receipt and sufficiency of the consideration  exchanged herein
and intending to be legally bound hereby:

                                    ARTICLE I

                                   THE MERGER

         1.1 Surviving  Corporation.  At the Effective  Time,  the Company shall
merge with and into Merger Sub,  with Merger Sub as the  surviving  corporation,
pursuant to the terms and conditions contained herein. The Surviving Corporation
shall  continue  to be governed  by the laws of the State of  Delaware,  but the
separate  corporate  existence  of the Company  shall cease  forthwith  upon the
Effective Time. Following the Merger, the existence of the Surviving Corporation
shall continue  unaffected  and  unimpaired by the Merger,  with all the rights,
privileges,   immunities,  and  powers,  and  subject  to  all  the  duties  and
liabilities, of a corporation organized under the laws of the State of Delaware.

         1.2 Effective  Time.  The closing of the Merger (the  "Closing")  shall
take place (i) at the  offices of Baker & McKenzie  at 815  Connecticut  Avenue,
N.W.,  Washington,  D.C., as soon as practicable,  but in any event within three
business  days after the day on which the last to be  fulfilled or waived of the
conditions set forth in Articles VII and VIII (other than those  conditions that
by  their  nature  are  to be  fulfilled  at the  Closing,  but  subject  to the
fulfillment  or  waiver  of such  conditions)  shall be  fulfilled  or waived in
accordance  with this  Agreement or (ii) at such other place and time or on such
other date as the Company and Parent may agree in writing. The date on which the
Closing takes place shall be referred to hereinafter  as the "Closing  Date," at
which time the Company and Merger Sub will file a certificate of merger with the
Delaware  Secretary of State and make all other filings and recordings  required
by Delaware law in connection with the Merger. The Merger shall become effective
at such time (the  "Effective  Time") as the certificate of merger is duly filed
with the  Delaware  Secretary  of State or at such later time as is specified in
the certificate of merger.

     1.3 Name. The name of Surviving Corporation shall be changed as of the
Effective Time to Met-Coil Systems Corporation.

     1.4 Certificate of  Incorporation.  The Certificate of Incorporation of
the Surviving  Corporation as in effect immediately prior to the Effective Time,
shall  continue in full force and effect and,  except as provided in Section 1.3
above,  shall  not be  changed  in any  manner  by the  Merger  and shall be the
Certificate  of  Incorporation  of  the  Surviving   Corporation  following  the
Effective  Time unless and until the same be amended or  repealed in  accordance
with the provisions thereof,  which power to amend or repeal is hereby expressly
reserved,  and all  rights or  powers of  whatsoever  nature  conferred  in such
Certificate  of  Incorporation  or herein  upon any  shareholder  or director or
officer of the Surviving  Corporation  or upon any other persons  whomsoever are
subject to the reserve power. Such Certificate of Incorporation shall constitute
the Certificate of Incorporation of the Surviving Corporation separate and apart
from this  Agreement  and may be  separately  certified  as the  Certificate  of
Incorporation of the Surviving Corporation.

     1.5  Bylaws.  The  Bylaws  of the  Surviving  Corporation  as in effect
immediately  prior to the  Effective  Time shall be the Bylaws of the  Surviving
Corporation  following  the  Effective  Time  unless and until the same shall be
amended or repealed in accordance with the provisions thereof.

     1.6 Directors  and  Officers.  The members of the Board of Directors of
the Surviving Corporation  immediately after the Effective Time shall be John E.
Reed,  R. Bruce  Dewey,  Donald  Hill,  James  Heitt and Raymond  Blakeman.  The
officers of the Surviving  Corporation  immediately  after the Effective Time of
the Merger shall  include John E. Reed as  Chairman,  James Heitt as  President,
Stephen M. Shea as Senior Vice  President - Finance and  Treasurer,  and Timothy
Scanlan as  Secretary.  All such  directors  and  officers  shall  serve in such
offices until their respective successors are elected and qualified,  subject to
the provisions of the Bylaws and of the DGCL.

     1.7  Additional  Acts. If at any time the Surviving  Corporation  shall
consider or be advised that any  acknowledgments  or  assurances in law or other
similar actions are necessary or desirable in order to acknowledge or confirm in
and to the Surviving  Corporation  any right,  title, or interest of the Company
held  immediately  prior to the  Effective  Time,  the  Company  and its  proper
officers,   directors  and  representatives  shall  and  will,  without  further
consideration,   on  behalf  of  the  Company,  execute  and  deliver  all  such
acknowledgments  or assurances  in law and do all things  necessary or proper to
acknowledge  or  confirm  such  right,  title,  or  interest  in  the  Surviving
Corporation  as shall be necessary to carry out the purposes of this  Agreement,
and the Surviving  Corporation and the proper officers and directors thereof are
fully  authorized  to take any and all such action in the name of the Company or
otherwise.

     1.8 Transfer of Property and Liabilities.  At and after the Effective Time:

         The Surviving Corporation shall succeed to and possess, without further
act or deed, all of the estate, rights, privileges, powers, and franchises, both
public and private,  all of the  property,  real,  personal,  and mixed,  of the
Company and Surviving Corporation;  all debts due to the Company shall be vested
in the Surviving Corporation; all claims, demands, property, rights, privileges,
powers and  franchises  and every other interest of either of the parties to the
Merger shall be as effectively the property of the Surviving Corporation as they
were of the  respective  parties  to the  Merger;  the title to any real  estate
vested by deed or  otherwise  in the  Company  shall not revert or be in any way
impaired  by  reason  of the  Merger,  but  shall  be  vested  in the  Surviving
Corporation;  all rights of creditors  and all liens upon any property of either
of the parties to the Merger shall be preserved  unimpaired,  limited in lien to
the property affected by such lien at the Effective Time of the Merger;  and all
debts,  liabilities,  and duties of the  respective  parties to the Merger shall
thenceforth  attach to the Surviving  Corporation and may be enforced against it
to the same extent as if such debts,  liabilities,  and duties had been incurred
or contracted by it.

                                   ARTICLE II

                      CONVERSION OF SHARES OF CAPITAL STOCK

     2.1 Merger Consideration. Subject to the provisions of this Article, at
the  Effective  Time, by virtue of the Merger and without any action on the part
of Parent,  Merger Sub or the Company or the shareholders thereof, each share of
capital stock of Merger Sub and the Company issued and  outstanding  immediately
prior to the Effective Time shall be converted or cancelled as follows:

         (a) Each share of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall become one fully paid and nonassessable  share
of common stock, par value $0.01 per share, of the Surviving Corporation.

         (b) Each Share that is issued and outstanding  immediately prior to the
Effective Time (other than (i) any Shares which are held by any Subsidiary or in
the  treasury of the  Company,  or which are held,  directly or  indirectly,  by
Parent or any direct or indirect  Subsidiary of Parent  (including  Merger Sub),
all of which shall be cancelled and none of which shall receive any payment with
respect  thereto  and (ii)  Shares  held by  Dissenting  Stockholders)  shall be
cancelled  and  converted  into and  represent the right to receive an amount in
cash,  without interest,  equal to Seven Dollars and Ten Cents ($7.10) per Share
(the "Merger Consideration").

     2.2 Stock Options and Warrants.

         (a) Each Option and Warrant which is  outstanding at the Effective Time
shall be  canceled by virtue of the Merger and without any action on the part of
Parent,  Merger  Sub  or  the  Company  or  the  shareholders  thereof,  without
consideration  except as provided  in this  Section  2.2(a),  and shall cease to
exist.  Each  holder of an  Option or  Warrant,  whether  or not such  Option or
Warrant is then exercisable, shall be entitled to receive, subject to applicable
withholding requirements, a cash payment (the "Cash Payment"), without interest,
at the Effective Time, equal to the product of (i) the total number of Shares as
to which such Option or Warrant could have been exercisable or convertible ("the
Option  Shares")  and (ii)  the  excess  of the  Merger  Consideration  over the
exercise  price per Share  subject  to such  Option or  Warrant.  Each such Cash
Payment  shall  be paid to each  holder  of an  outstanding  Option  or  Warrant
promptly after the Effective Time.

         (b)  The  Company   will  ensure   that  any   then-outstanding   stock
appreciation  rights or limited stock appreciation  rights shall be cancelled as
of  immediately  prior to the Effective Time without any payment  therefor.  The
Company  will ensure that the Met-Coil  Systems  Corporation  1997  Non-Employee
Directors Stock Option Plan, the Met-Coil Systems  Corporation 1999 Non-Employee
Directors Stock Purchase Plan, the Met-Coil  Systems  Corporation 1993 Employees
Stock  Option Plan and any other plan,  program or  arrangement  (other than the
Met-Coil Systems  Corporation  Retirement Plan and the Met-Coil Systems Employee
Stock  Ownership Plan) providing for the issuance or grant of any other interest
in  respect  of the  capital  stock of the  Company  or any of its  subsidiaries
(collectively  referred to as the "Stock Incentive Plans") shall terminate as of
the Effective Time.

     2.3 Exchange of Certificates.  The manner of making payment for Shares in
the Merger shall be as follows:

         (a) (i) Prior to the Effective  Time,  Parent shall designate a bank or
trust  company  located  in the United  States  reasonably  satisfactory  to the
Company to act as Paying Agent (the "Paying Agent") for the holders of Shares in
connection with the Merger and to receive the funds which holders of Shares will
be entitled to receive  pursuant to  Sections  2.1 and 2.2.  Promptly  after the
Effective  Time,  the  Paying  Agent  shall  mail to each  holder of record of a
certificate  or  certificates  which  immediately  prior to the  Effective  Time
represented  outstanding Shares (the "Company  Certificates")  (other than those
which  are held by any  Subsidiary  of the  Company  or in the  treasury  of the
Company  or which are held  directly  or  indirectly  by Parent or any direct or
indirect  Subsidiary of Parent  (including  Merger Sub)) (1) a form of letter of
transmittal  (which shall specify that delivery  shall be effected,  and risk of
loss and title to the Company Certificates shall pass, only upon proper delivery
of the Company Certificates to the Paying Agent) and (2) instructions for use in
effecting the surrender of the Company  Certificates for payment therefor.  Upon
surrender of Company Certificates for cancellation to the Paying Agent, together
with such letter of transmittal duly executed and any other required  documents,
the holder of such Company  Certificates shall be entitled to receive the Merger
Consideration  deliverable in respect thereof and the Company Certificates shall
forthwith  be  cancelled.  Until  so  surrendered,  Company  Certificates  shall
represent  solely  the right to  receive  the  Merger  Consideration  payable in
respect of the Shares represented thereby.

           (ii) If the Merger Consideration is to be paid to or issued in a name
other  than  that in which  the  Company  Certificate  surrendered  in  exchange
therefor  is  registered,  it shall be a  condition  of such  exchange  that the
Company  Certificate so surrendered  shall be properly endorsed and otherwise in
proper form for transfer and that the Person  requesting such exchange shall pay
to the  Paying  Agent any  transfer  or other  taxes  required  by reason of the
foregoing or shall establish to the reasonable  satisfaction of the Paying Agent
that such tax has been paid or is not applicable.

         (b) In the event that any Company  Certificate has been lost, stolen or
destroyed,  upon the making of an affidavit of that fact by the Person  claiming
such Company Certificate to be lost, stolen or destroyed and, if required by the
Surviving  Corporation,  the posting by such Person of a bond in such reasonable
amount as the Surviving  Corporation  may direct as indemnity  against any claim
that may be made against it with respect to such Company Certificate, the Paying
Agent  will  deliver  to  the  Person   delivering  such  affidavit  the  Merger
Consideration  payable in respect of the Shares represented by such lost, stolen
or destroyed Company Certificates.

         (c)  Concurrently  with or  immediately  prior to the  Effective  Time,
Parent  shall,  or shall cause  Merger Sub to,  deposit in trust with the Paying
Agent cash in United  States  dollars in an  aggregate  amount  equal to (i) the
product  of (x) the  number  of  Shares  outstanding  immediately  prior  to the
Effective  Time  (other  than  Shares  which are held by any  Subsidiary  of the
Company  or in the  treasury  of the  Company  or  which  are held  directly  or
indirectly by Parent or any direct or indirect  Subsidiary of Parent  (including
Merger  Sub) or a Person  known at the time of such  deposit to be a  Dissenting
Stockholder)  and (y) the Merger  Consideration  and (ii) the product of (x) the
Option Shares and (y) the excess of the Merger  Consideration  over the exercise
price per Share in respect of such Options or Warrants  (such  aggregate  amount
being hereinafter  referred to as the "Payment Fund"). The Payment Fund shall be
invested by the Paying Agent as directed by Parent in direct  obligations of the
United  States,  obligations  for which the full  faith and credit of the United
States is  pledged  to  provide  for the  payment  of  principal  and  interest,
commercial  paper rated of the highest  quality by Moody's  Investors  Services,
Inc.  or  Standard & Poor's  Ratings  Group or  certificates  of  deposit,  bank
repurchase  agreements or bankers'  acceptances  of a commercial  bank having at
least $100,000,000 in assets (collectively  "Permitted Investments") or in money
market funds which are invested in Permitted  Investments,  and any net earnings
with respect  thereto  shall be paid to Parent as and when  requested by Parent.
The Paying Agent shall, pursuant to irrevocable instructions,  make the payments
referred to in Sections 2.1 and 2.2 hereof out of the Payment Fund.  The Payment
Fund shall not be used for any other  purpose  except as otherwise  agreed to by
Parent.  Promptly  following  the date which is six months  after the  Effective
Time,  the Paying  Agent shall  return to the  Surviving  Corporation  all cash,
certificates and other instruments in its possession that constitute any portion
of the Payment  Fund (other than net earnings on the Payment Fund which shall be
paid to Parent), and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Company  Certificate  may surrender such Company  Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws)  receive in exchange  therefor the Merger  Consideration,  without
interest,  but shall have no greater rights against the Surviving Corporation or
Parent than may be accorded to general creditors of the Surviving Corporation or
Parent under applicable law.  Notwithstanding the foregoing,  neither the Paying
Agent nor any party  hereto shall be liable to a holder of Shares for any Merger
Consideration  delivered to a public official  pursuant to applicable  abandoned
property, escheat and similar laws.

     2.4 Transfer of Shares  Immediately  Prior to and After the  Effective
Time.  No transfers of Shares shall be made on the stock  transfer  books of the
Company  after  the  close  of  business  on the day  prior  to the  date of the
Effective  Time. No transfer of Shares shall be made on the stock transfer books
of the Surviving  Corporation.  Company Certificates  presented to the Surviving
Corporation after the Effective Time shall be canceled and exchanged for cash as
provided in this  Article.  At and after the  Effective  Time,  each holder of a
Company  Certificate  shall  cease to have any  rights as a  stockholder  of the
Company,  except  for, in the case of a holder of a Company  Certificate  (other
than Shares to be canceled pursuant to Section 2.1 hereof, and other than Shares
held by  Dissenting  Stockholders),  the right to  surrender  his or her Company
Certificate in exchange for payment of the Merger  Consideration or, in the case
of a  Dissenting  Stockholder,  the right to perfect his or her right to receive
payment  for his or her  Shares  pursuant  to  Delaware  law if such  holder has
validly  perfected and not withdrawn his or her right to receive payment for his
or her Shares.

        2.5  Dissenting  Shares.  Notwithstanding  anything  contained  in this
Agreement to the contrary  but only to the extent  required by the DGCL,  Shares
that are issued and outstanding  immediately prior to the Effective Time and are
held by holders of Shares who comply with all the  provisions  of the law of the
State of Delaware  concerning the right of holders of Shares to dissent from the
Merger and require  appraisal of their Shares (such  holders  being  referred to
hereinafter  as  "Dissenting  Stockholders",  and such Shares being  referred to
hereinafter  as  "Dissenting  Shares")  shall not be converted into the right to
receive  the Merger  Consideration  but shall  become the right to receive  such
consideration  as  may  be  determined  to be due  such  Dissenting  Stockholder
pursuant to the law of the State of Delaware; provided, however, that (i) if any
Dissenting Stockholder shall subsequently deliver a written withdrawal of his or
her  demand  for  appraisal   (with  the  written   approval  of  the  Surviving
Corporation,  if such  withdrawal  is not  tendered  within  60 days  after  the
Effective  Time), or (ii) if any Dissenting  Stockholder  fails to establish and
perfect his or her  entitlement  to appraisal  rights as provided by  applicable
law, or (iii) if within 120 days of the  Effective  Time neither any  Dissenting
Stockholder  nor the  Surviving  Corporation  has filed a petition  demanding  a
determination  of the value of all Shares  outstanding at the Effective Time and
held by Dissenting  Stockholders  in accordance  with  applicable law, then such
Dissenting  Stockholder  or Dissenting  Stockholders,  as the case may be, shall
forfeit the right to appraisal of such Shares and such Shares shall thereupon be
deemed to have been  converted  into the right to receive,  as of the  Effective
Time, the applicable  Merger  Consideration,  without  interest,  as provided in
Section 2.3, and such Shares shall no longer be Dissenting  Shares.  The Company
shall give Parent and Merger Sub (x) prompt  notice of any  written  demands for
appraisal,   withdrawals   of  demands  for  appraisal  and  any  other  related
instruments  received  by the  Company,  and (y) the  opportunity  to direct all
negotiations and proceedings with respect to demands for appraisal.  The Company
shall not voluntarily make any payment with respect to any demands for appraisal
and shall not, except with the prior written consent of Parent,  settle or offer
to settle any such demand.

                                   ARTICLE III

                        REPRESENTATIONS AND WARRANTIES OF

                                   THE COMPANY

         All representations and warranties  contained herein shall terminate at
the Effective Time. The Company represents and warrants to Parent and the Merger
Sub the following as of the date hereof.

     3.1  Corporate Standing.

         (a) The Company is organized,  validly  existing,  and in good standing
under  the laws of its  jurisdiction  of  incorporation.  The  Company  has full
corporate  authority to own, lease and operate its  properties  and  businesses.
Schedule  3.1 to the  Company  Disclosure  Statement  sets  forth  a list of the
jurisdictions in which the Company is qualified to conduct business as a foreign
corporation.  The Company is in good standing as a foreign corporation under the
laws of the states listed in Schedule 3.1.

         (b) The Company has made  available  to Parent and Merger Sub  complete
and correct  copies of the Company  Charter and Bylaws and the  certificates  of
incorporation,  bylaws and other similar organizational documents of each of its
Subsidiaries, in each case as amended to the date of this Agreement.

      3.2  Subsidiaries.  Schedule  3.2 to the Company  Disclosure  Statement
contains a complete and accurate list of all of the  Subsidiaries of the Company
as of the date hereof.  Each Subsidiary of the Company is a corporation or other
legal  entity duly  organized,  validly  existing  and (if  applicable)  in good
standing  under the laws of the  jurisdiction  of its  organization  and has all
requisite  corporate,  partnership  or similar  power and  authority  to own its
properties  and conduct its business  and  operations  as  currently  conducted.
Schedule  3.2 to the  Company  Disclosure  Statement  sets  forth  a list of the
jurisdictions  in which each  Subsidiary  of the Company is qualified to conduct
business as a foreign corporation. Each Subsidiary is in good standing under the
laws of the states listed under their names in Schedule 3.2.

         3.3      Authority.
                  ---------

         (a) The Company has the full  corporate  power and  authority  to enter
into,  execute,  deliver and perform this Agreement and all Exhibits to which it
is a party.  The execution,  delivery and performance of this Agreement and such
Exhibits,  and the  consummation  of all  transactions  contemplated  herein and
therein,  have been duly authorized by all necessary  corporate and other action
of the  Company  and no other  corporate  action on the part of the  Company  is
necessary to authorize the execution, delivery and performance of this Agreement
and such  Exhibits  by the  Company  and the  consummation  of the  transactions
contemplated  hereby  except  for the  approval  of the  Company's  stockholders
contemplated by Section 6.4. This Agreement has been duly executed and delivered
by a duly authorized  officer of the Company and (assuming the due execution and
delivery of this Agreement by the other parties hereto)  constitutes a valid and
binding agreement of the Company,  enforceable against it in accordance with its
terms,  subject to  bankruptcy,  insolvency and other similar laws affecting the
rights  of  creditors  generally  and  except  that  the  remedies  of  specific
performance,  injunction  and  other  forms  of  equitable  relief  may  not  be
available.  The Exhibits to which the Company is a party, when duly executed and
delivered  by the  Company  (assuming  the due  execution  and  delivery of such
Exhibits by the other parties hereto) constitute valid and binding agreements of
the Company  enforceable  against it in accordance with their terms,  subject to
bankruptcy,  insolvency and other similar laws affecting the rights of creditors
generally and except that the remedies of specific  performance,  injunction and
other forms of mandatory equitable relief may not be available.

         (b) The Board of Directors of the Company has approved the transactions
contemplated by this Agreement and the Exhibits to which the Company is a party,
including  the Merger and,  solely for purposes of Section 203 of the DGCL,  the
provisions contained in the Stockholder  Agreements which could result in Parent
or Merger Sub becoming an interested stockholder under Section 203 of the DGCL.

         (c) The  Board of  Directors  of the  Company  has  directed  that this
Agreement be submitted to the  stockholders  of the Company for their  approval.
The affirmative  approval,  by vote or written consent, of the holders of Shares
representing  a  majority  of the  outstanding  Shares  is the only  vote of the
holders  of any class or series of capital  stock of the  Company  necessary  to
approve and adopt this Agreement and approve the Merger.

         (d) Except as set forth in Schedule  3.3(d) to the  Company  Disclosure
Statement,  neither  the  execution  and  delivery  of  this  Agreement  nor the
execution and delivery of the  certificates  and documents set forth as Exhibits
hereto nor the consummation of the transactions  contemplated  hereby or thereby
will (i) conflict with or violate any provision of the Company Charter or Bylaws
of the Company or the  certificates  of  incorporation,  bylaws or other similar
organizational documents of any Subsidiary of the Company, (ii) conflict with or
violate any law, rule, regulation,  ordinance, order, writ, injunction, judgment
or decree  applicable  to the Company or any  Subsidiary of the Company or their
businesses or by which any of their assets is affected, except to the extent any
such conflict or violation would not,  individually or in the aggregate,  have a
Material  Adverse  Effect,  or (iii) conflict with or result in any breach of or
constitute  a default  (or an event  which with  notice or lapse of time or both
would become a default)  under,  or give to others any rights of  termination or
cancellation  of, or accelerate the  performance  required by or maturity of, or
result in the creation of any security interest,  lien, charge or encumbrance on
the assets of the Company or any  Subsidiary  of the Company  pursuant to any of
the terms,  conditions  or provisions of any note,  bond,  mortgage,  indenture,
permit, license,  franchise,  lease, contract, or other instrument or obligation
to which  either the Company or any  Subsidiary  of the Company is a party or by
which any of the assets of the  Company or any  Subsidiary  of the  Company  are
affected,  except to the extent any such  conflict,  breach,  default,  right of
termination  or  cancellation,  acceleration  or creation  of any such  security
interest,  lien,  charge  or  encumbrance  would  not,  individually  or in  the
aggregate, have a Material Adverse Effect.

         (e) Except as set forth in Schedule  3.3(e) to the  Company  Disclosure
Statement,  none of the Company or any Subsidiary of the Company are required to
submit any notice, declaration,  report or other filing or registration with any
governmental  or regulatory  authority or  instrumentality,  and no approvals or
non-objections  are  required  to be  obtained  or  made by the  Company  or any
Subsidiary  of the  Company  in  connection  with  the  execution,  delivery  or
performance by the Company or any Subsidiary of the Company of this Agreement or
any  Exhibit or the  consummation  of the  transactions  contemplated  hereby or
thereby,  except for approvals  that may be required under the DGCL, the HSR Act
and the Exchange Act.

         3.4      Capitalization.
                  --------------

         (a) Schedule 3.4(a) to the Company Disclosure  Statement sets forth the
aggregate  number of the authorized,  issued and  outstanding  shares of capital
stock of the Company as of the date hereof. The shares of issued and outstanding
capital stock of the Company have been duly  authorized  and validly  issued and
are fully paid and  non-assessable.  None of the  outstanding  shares of capital
stock of the Company was issued in violation of the  preemptive or other similar
rights of any  securityholder  of the  Company.  Except as disclosed in Schedule
3.4(a) of the Company Disclosure  Statement,  (i) there are no shares of capital
stock of the Company authorized, issued or outstanding and (ii) there are not as
of the date hereof,  and at the Closing Date there will not be, any  outstanding
or authorized options, warrants, rights, subscriptions, claims of any character,
agreements,  obligations,  convertible  or  exchangeable  securities,  or  other
commitments,  contingent or otherwise, relating to Shares or any other shares of
capital  stock of the  Company,  pursuant  to which the Company is or may become
obligated  to issue  Shares or any  other  shares  of its  capital  stock or any
securities  convertible  into,  exchangeable  for,  or  evidencing  the right to
subscribe  for, any shares of the capital stock of the Company.  The Company has
no authorized or outstanding bonds, debentures,  notes or other indebtedness the
holders of which have the right to vote (or convertible or exchangeable  into or
exercisable  for securities  having the right to vote) with the  stockholders of
the Company or any of its Subsidiaries on any matter ("Voting Debt").  After the
Closing Date, the Surviving Corporation will have no obligation,  as a result of
the Company's  actions,  to issue,  transfer or sell any Shares or any shares of
capital stock of the Surviving Corporation.

       (b) No class of capital stock of the Company is entitled to pre-emptive
rights.

       (c) There are no Warrants or Options held in the treasury of the Company.

       (d) Except as  disclosed in Schedule  3.4(d) to the Company  Disclosure
Statement, all of the issued and outstanding capital stock of each Subsidiary of
the  Company has been duly  authorized  and  validly  issued,  is fully paid and
non-assessable and is owned by the Company, directly or through its wholly-owned
Subsidiaries,  free and clear of any security interest,  mortgage, pledge, lien,
encumbrance, claim or equity and none of the outstanding shares of capital stock
of such Subsidiaries was issued in violation of any preemptive or similar rights
arising by  operation  of law, or under the charter or bylaws (or other  similar
organizational  documents)  of  any  Subsidiary  of the  Company  or  under  any
agreement to which the Company or any of its  Subsidiaries is a party. No shares
of capital stock of any of the  Subsidiaries are reserved for issuance and there
are no  outstanding  or authorized  options,  warrants,  rights,  subscriptions,
claims of any character,  agreements,  obligations,  convertible or exchangeable
securities,  or other  commitments,  contingent  or  otherwise,  relating to the
capital  stock  of any  Subsidiary  of  the  Company,  pursuant  to  which  such
Subsidiary  is or may become  obligated to issue any shares of capital  stock of
such  Subsidiary  or any  securities  convertible  into,  exchangeable  for,  or
evidencing the right to subscribe for, any shares of such Subsidiary.  Except as
disclosed in Schedule 3.4(d) to the Company  Disclosure  Statement and except as
required by applicable  Law, there are no restrictions of any kind which prevent
the payment of dividends by any of the  Subsidiaries  of the Company.  Except as
disclosed in Schedule 3.4(d) to the Company  Disclosure  Statement,  the Company
does not own, directly or indirectly, any capital stock or other equity interest
in any Person or have any direct or indirect equity or ownership interest in any
Person and neither the  Company  nor any of its  Subsidiaries  is subject to any
obligation or requirement to provide funds for or to make any investment (in the
form of a loan,  capital  contribution  or otherwise)  to or in any Person.  The
Company's Subsidiaries have no Voting Debt.

         3.5 Opinion of the Company's Financial Advisor.  The Board of Directors
of the Company has received (i) the opinion,  as of the date hereof,  of Lincoln
Partners  L.L.C.  to the  effect  that the Merger  Consideration  is fair to the
stockholders  of the  Company  from a  financial  point of view,  subject to the
assumptions and qualifications  contained in such opinion, and (ii) a commitment
from Lincoln  Partners  L.L.C.  to deliver such opinion in written format to the
Board of Directors of the Company as promptly as  reasonably  practicable  after
the date hereof.

         3.6  Operation  of  the  Company's   Business.   The  Company  and  its
Subsidiaries   own  and  retain  all  such  assets,   tangible  or   intangible,
contractual,   license  and  leasehold   rights   necessary  for  the  Surviving
Corporation  (i) to operate the business of the Company and its  Subsidiaries as
they  operate  them on the date  hereof,  and (ii) to  utilize  the  assets  and
contractual, license and leasehold rights in the same manner as they are used on
the date  hereof,  except to the  extent  such lack of  ownership  or failure to
retain would not reasonably be expected,  individually  or in the aggregate,  to
have a Material  Adverse Effect.  With the exception of those assets used in the
business of the Company and its  Subsidiaries  pursuant to license and leasehold
rights in favor of the Company and its  Subsidiaries,  all of the assets used in
the  business of the Company and its  Subsidiaries  are owned by the Company and
its Subsidiaries, and none are owned by any other party.

     3.7  Litigation.  Except as set forth in  Schedule  3.7 to the  Company
Disclosure Statement,  there are no actions,  proceedings,  suits,  inquiries or
investigations before or by any Governmental  Authority or any arbitrator or any
other alternative  dispute resolution forum, now pending or, to the knowledge of
the Company,  threatened  against the Company or any of its  Subsidiaries  which
would  reasonably  be  expected,  individually  or in the  aggregate,  to have a
Material Adverse Effect, and none of the Company, any of its Subsidiaries or any
of their  assets is  subject  to any  judgment,  order or decree  entered in any
lawsuit, action or proceeding.

     3.8 Employee Benefit Plans.
                  ----------------------

         (a)  Schedule  3.8(a) to the Company  Disclosure  Statement  contains a
complete and accurate list of all Company Plans, Company Multiemployer Plans and
Company  Other  Benefit  Obligations  (other than those  Company  Other  Benefit
Obligations  that  would not  reasonably  be  expected,  individually  or in the
aggregate, to have a Material Adverse Effect).

         (b) Schedule 3.8(b) to the Company Disclosure  Statement sets forth the
financial cost of all  obligations  owed under any Company Plan or Company Other
Benefit  Obligation  (other than those Company Other  Benefit  Obligations  that
would not reasonably be expected,  individually  or in the aggregate,  to have a
Material  Adverse  Effect) that is not subject to the  disclosure  and reporting
requirements of ERISA.

         (c) Schedule 3.8(c) to the Company Disclosure Statement sets forth, for
each Company  Multiemployer  Plan, as of its last valuation  date, the amount of
potential  withdrawal  liability of the Company and any ERISA  Affiliates of the
Company,  calculated  according to information made available  pursuant to ERISA
Section 4221(e).

         (d) the Company has delivered to Parent and the Merger Sub:

                  (i) all  documents  that set forth  the terms of each  Company
         Plan,  Company  Multiemployer  Plan or Company Other Benefit Obligation
         (other than those  Company  Other  Benefit  Obligations  that would not
         reasonably be expected,  individually  or in the  aggregate,  to have a
         Material  Adverse  Effect),  and of any related  trust,  including  all
         summary plan  descriptions,  summaries  and  descriptions  furnished to
         participants and beneficiaries;

               (ii) all personnel, payroll, and employment manuals and policies;

               (iii) a written  description  of any  Company  Plan or Company
         Other  Benefit  Obligation  (other  than those  Company  Other  Benefit
         Obligations  that would not reasonably be expected,  individually or in
         the aggregate, to have a Material Adverse Effect) that is not otherwise
         in writing;

               (iv) all registration statements filed with respect to any
Company Plan;

               (v) all insurance policies purchased by or to provide benefits
under any Company Plan;

               (vi) all reports  submitted  to the Company or any  Subsidiary
         within the three years  preceding  the date of this  Agreement by third
         party  administrators,   actuaries,   investment  managers,   trustees,
         consultants,  or other  independent  contractors  with  respect  to any
         Company  Plan or Company  Other  Benefit  Obligation  (other than those
         Company  Other  Benefit   Obligations  that  would  not  reasonably  be
         expected,  individually or in the aggregate, to have a Material Adverse
         Effect);

                  (vii) the Form  5500  filed in each of the most  recent  three
         plan years with respect to each Company Plan and Company  Other Benefit
         Obligation,  including  all  schedules  thereto  and  the  opinions  of
         independent accountants;

                  (viii) all notices that were given by the Company or any ERISA
         Affiliate of the Company or any Company  Plan to the IRS, the PBGC,  or
         any participant or beneficiary,  pursuant to ERISA or the Code,  within
         the three years preceding the date of this Agreement, including notices
         that are expressly mentioned elsewhere in this Section 3.8;

                  (ix) all notices that were given by the IRS, the PBGC,  or the
         Department of Labor to the Company, any ERISA Affiliate of the Company,
         or any Company Plan within the three years  preceding  the date of this
         Agreement;

                  (x)  with  respect  to  Qualified   Plans,   the  most  recent
         determination  letter for each Plan of the Company  that is a Qualified
         Plan;

                  (xi) with respect to Title IV Plans, the Form PBGC-1 filed for
         each of the three most  recent  plan years for each Plan of the Company
         that is a Title IV Plan; and

                  (xii) with respect to Company  Multiemployer  Plans,  the most
         recent  estimate of  potential  withdrawal  liability  prepared by each
         Company  Multiemployer Plan for the Company and each ERISA Affiliate of
         the Company.

         (e) Except as set forth in Schedule 3.8(e) to the Company Disclosure
Statement:

                  (i) The Company and its  Subsidiaries  have  performed  all of
         their  respective   obligations   under  all  Company  Plans,   Company
         Multiemployer  Plans and Company Other Benefit  Obligations  other than
         any  such   obligations   that  would  not   reasonably   be  expected,
         individually  or in the aggregate,  to have a Material  Adverse Effect.
         The Company and its Subsidiaries have made appropriate entries in their
         financial  records and statements for all  obligations  and liabilities
         under such Plans, Company Multiemployer Plans and Company Other Benefit
         Obligations  that  have  accrued  but are not due  other  than any such
         obligations  and  liabilities  that would not  reasonably  be expected,
         individually or in the aggregate, to have a Material Adverse Effect.

                  (ii) The Company  and its  Subsidiaries,  with  respect to all
         Company  Plans and Company  Other  Benefit  Obligations,  are, and each
         Company Plan and Company  Other  Benefit  Obligation  is, in compliance
         with  ERISA,   the  Code,  and  other  applicable  Laws  including  the
         provisions  of such Laws  expressly  mentioned in this Section 3.8, and
         with any  applicable  collective  bargaining  agreement  other than any
         noncompliance that would not reasonably be expected, individually or in
         the aggregate,  to have a Material Adverse Effect. Except to the extent
         that  any  of  the   following   would  not   reasonably  be  expected,
         individually or in the aggregate, to have a Material Adverse Effect:

                           (A) No  transaction  prohibited  by ERISA Section 406
                  and no "prohibited transaction" under Code Section 4975(c) has
                  occurred with respect to any Company Plan.

                           (B) Neither  the Company nor any of its  Subsidiaries
                  has  any  liability  to the  IRS  with  respect  to any  Plan,
                  including any liability imposed by Chapter 43 of the Code.

                           (C) Neither  the Company nor any of its  Subsidiaries
                  has any  liability to the PBGC with respect to any Plan or has
                  any liability under ERISA Section 502 or Section 4071.

                           (D) All  contributions  and payments  made or accrued
                  with respect to all Company Plans, Company Multiemployer Plans
                  and Company Other Benefit  Obligations  are  deductible  under
                  Code Section 162 or Section 404.

                  (iii)  No event  has  occurred  or,  to  Company's  knowledge,
         circumstance  exists that could result in an increase in premium  costs
         of Company Plans and Company Other Benefit Obligations that are insured
         or an increase in benefit costs of such Plans and Company Other Benefit
         Obligations  that are  self-insured  other than any such increases that
         would not reasonably be expected,  individually or in the aggregate, to
         have a Material Adverse Effect.

                  (iv)  Other than  routine  claims for  benefits  submitted  by
         participants or beneficiaries, no claim against, or legal proceeding or
         investigation  involving,  any Company  Plan or Company  Other  Benefit
         Obligation is pending or is threatened.

                  (v)  Each  Qualified  Plan  of the  Company  and  each  of its
         Subsidiaries  has  received a favorable  determination  letter from the
         Internal Revenue Service that it is qualified under Code Section 401(a)
         and that its related trust is exempt from federal income tax under Code
         Section  501(a),  and each such Plan  complies in form and in operation
         with the  requirements  of the Code and  meets  the  requirements  of a
         "qualified  plan" under Section 401(a) of the Code except to the extent
         that any noncompliance or failure to meet such  requirements  would not
         reasonably be expected,  individually  or in the  aggregate,  to have a
         Material Adverse Effect.  No event has occurred or circumstance  exists
         that will or could give rise to  disqualification or loss of tax-exempt
         status  of any  such  Plan or trust  other  than  any  such  events  or
         circumstances that would not reasonably be expected, individually or in
         the aggregate, to have a Material Adverse Effect .

                  (vi) The Company and each ERISA  Affiliate  of the Company has
         met the  minimum  funding  standard,  and has  made  all  contributions
         required under each Company Plan and Company  Multiemployer Plan, under
         ERISA  Section  302 and Code  Section  412,  and  there is no  unfunded
         liability under any Company Plan.

                  (vii) The  Company and each of its  Subsidiaries  has paid all
amounts due to the PBGC pursuant to ERISA Section 4007.

                  (viii)  Neither  the Company  nor any ERISA  Affiliate  of the
         Company has ceased operations at any facility or has withdrawn from any
         Title IV Plan in a manner that would  subject the Company to  liability
         under ERISA Sections 4062(e), 4063, or 4064.

                  (ix)  Neither  the  Company  nor any  ERISA  Affiliate  of the
         Company  has  filed a notice of  intent  to  terminate  any Plan or has
         adopted any amendment to treat a Plan as  terminated.  The PBGC has not
         instituted  proceedings  to treat any Company  Plan as  terminated.  No
         event has occurred or circumstance  exists that may constitute  grounds
         under ERISA Section 4042 for the  termination of, or the appointment of
         a trustee to administer, any Company Plan other than any such events or
         circumstances that would not reasonably be expected, individually or in
         the aggregate, to have a Material Adverse Effect.

                  (x) No amendment has been made,  or is reasonably  expected to
         be made,  to any Company  Plan that has  required or could  require the
         provision  of  security   under  ERISA  Section  307  or  Code  Section
         401(a)(29).

                  (xi) No accumulated funding deficiency, whether or not waived,
         exists  with  respect to any  Company  Plan;  no event has  occurred or
         circumstance   exists  that  may  result  in  an  accumulated   funding
         deficiency as of the last day of the current plan year of any such Plan
         other than any such events or  circumstances  that would not reasonably
         be  expected,  individually  or in the  aggregate,  to have a  Material
         Adverse Effect.

                  (xii) The  actuarial  report for each  Company  Plan that is a
         Pension Plan fairly presents the financial condition and the results of
         operations of each such Plan in accordance with GAAP.

                  (xiii) The actuarially determined present value of all accrued
         benefits  under  each  Title IV Plan of the  Company  (determined  on a
         projected  benefits basis) does not exceed, as of the Closing Date, the
         fair market value of the assets of each such Title IV Plan.

                  (xiv) No  reportable  event (as defined in ERISA  Section 4043
         and in regulations issued thereunder) has occurred.

                  (xv) Neither the Company nor any of its  Subsidiaries has ever
         established or  contributed  to, or had an obligation to contribute to,
         any  VEBA,  any   organization  or  trust  described  in  Code  Section
         501(c)(17) or Code Section  501(c)(20),  or any welfare benefit fund as
         defined in Code Section 419(e).

                  (xvi)  Neither  the  Company  nor any ERISA  Affiliate  of the
         Company has withdrawn from any Multiemployer Plan with respect to which
         there is any outstanding liability as of the date of this Agreement. No
         event has occurred or  circumstance  exists that presents a risk of the
         occurrence of any withdrawal from, or the  participation,  termination,
         reorganization,  or insolvency  of, any  Multiemployer  Plan that could
         result  in  any  liability  of  either  the  Company  or  Parent  to  a
         Multiemployer Plan other than any such events that would not reasonably
         be  expected,  individually  or in the  aggregate,  to have a  Material
         Adverse Effect.

                  (xvii) Except to the extent  required  under ERISA Section 601
         et seq.  and Code  Section  4980B,  neither  the Company nor any of its
         ERISA Affiliates provides health or welfare benefits for any retired or
         former  employee or is obligated to provide health or welfare  benefits
         to any active employee  following such  employee's  retirement or other
         termination of service.

                  (xviii)  The  Company  and each of its  Subsidiaries  have the
         right  to  modify  and  terminate  benefits  to  retirees  (other  than
         pensions) with respect to both retired and active employees.

                  (xix) The Company and each of its  Subsidiaries  have complied
         with the  provisions of ERISA Section 601 et seq. and
         Code Section 4980B and with the provisions of ERISA Section 701 et seq
         and Subtitle K of the Code.

                  (xx)  No  payment  that  is  owed  or  may  become  due to any
         director,   officer,   employee,  or  agent  of  the  Company  will  be
         non-deductible  to the  Company or any of its  Subsidiaries  under Code
         Section  280G or subject to tax under Code Section  4999;  nor will the
         Company  or  any of its  Subsidiaries  be  required  to  "gross  up" or
         otherwise  compensate  any such person because of the imposition of any
         excise tax on a payment to such person.

                  (xxi)  Each  Company  Plan  that is or is  purported  to be an
         "employee  stock  ownership  plan",  as such  term is  defined  in Code
         Section 4975(e)(7) (the "ESOP"),  complies with all of the requirements
         set forth in Code Section  4975(e)(7),  Treas. Reg. Section  54.4975-11
         and ERISA Section 407(d)(6) except to the extent that any noncompliance
         would not reasonably be expected,  individually or in the aggregate, to
         have a Material Adverse Effect. To the extent that there is or has been
         a loan or other  extension  of credit  made to the  ESOP,  that loan or
         other  extension of credit meets or has met the  requirements of Treas.
         Reg. Section 54.4975-7 and ERISA Reg. Section 2550.408b-3 except to the
         extent that any failure to meet such requirements  would not reasonably
         be  expected,  individually  or in the  aggregate,  to have a  Material
         Adverse  Effect.  The  execution,  delivery  and  performance  of  this
         Agreement  by  the  parties   hereto  and  the   consummation   of  the
         transactions  contemplated  hereby will not: (A) constitute a violation
         of,  or give  rise to any  liability  under,  Title I of  ERISA or Code
         Section 4975; (B) result in a  disqualification  of the ESOP under Code
         Section  401(a);  (C) cause the ESOP to fail to comply  with all of the
         requirements set forth in Code Section 4975(e)(7),  Treas. Reg. Section
         54.4975-11 and ERISA Section 407(d)(6); or (D) result in the imposition
         of a tax  under  Chapter  43 of the Code or Code  Section  4978A (as in
         effect prior to the Revenue Reconciliation Act of 1989).

         (f) Since May 31, 1999,  except as set forth on Schedule 3.8 (f) to the
Company  Disclosure  Statement attached hereto or as required by applicable law,
neither the  Company  nor an ERISA  Affiliate  has (i)  instituted  or agreed to
institute any new employee benefit plan or practice for any employee,  (ii) made
or agreed to make any change in any Company  Plan,  (iii) made or agreed to make
any increase in the compensation  payable or to become payable by the Company or
an ERISA Affiliate to any employee, other than regularly scheduled increases, or
(iv) except pursuant to this Agreement and except for contributions  required to
provide  benefits  pursuant  to the  provisions  of the Company  Plans,  paid or
accrued or agreed to pay or accrue any bonus,  percentage  of  compensation,  or
other like benefit to, or for the credit of, any employee.

         (g) Any contribution, insurance premium, excise tax, interest charge or
other  liability or charge  imposed or required with respect to any Company Plan
which is  attributable  to any period or any portion of any period  prior to the
Closing  shall,  to the extent  required by GAAP, be reflected as a liability on
the  Company's  balance sheet at Closing,  including,  without  limitation,  any
portion of the matching  contribution required with respect to each Company Plan
for its respective  plan year ending after the Closing which is  attributable to
elective contributions made by employees in such plan prior to the Closing.

         3.9      Taxes.  Except as set forth on Schedule 3.9 to the Company
Disclosure Statement:

         (a) The Company and its Subsidiaries  have timely filed or caused to be
timely filed all federal  income Tax Returns.  The Company and its  Subsidiaries
have timely filed all other  United  States  federal,  state  county,  local and
foreign Tax Returns  required to be filed by or with respect to them,  except to
the extent that a failure to file such Tax Returns  would not, in the  aggregate
with all other  undisclosed  items  covered by this Section 3.9, have a Material
Adverse  Effect.  Such Tax Returns have  accurately  reflected the liability for
Taxes of the  Company and its  Subsidiaries  for the  periods  covered  thereby,
except to the extent that any inaccuracies  would not, in the aggregate with all
other  undisclosed  items covered by this Section 3.9,  have a Material  Adverse
Effect.  All Taxes  shown to be  payable on such Tax  Returns  or on  subsequent
assessments  with respect thereto have been paid in full on a timely basis other
than assessments  which are being contested in good faith,  except to the extent
that any  failures to pay any such Taxes would not,  in the  aggregate  with all
other  undisclosed  items covered by this Section 3.9,  have a Material  Adverse
Effect.  The amount of the  liability  of the Company and its  Subsidiaries  for
unassessed  and/or unpaid Taxes for all periods  ending on or before the Closing
Date,  would not exceed the amount of the  current  liability  accrual for Taxes
(including  reserves for deferred Taxes) reflected on the Company's November 30,
1999 balance  sheet,  by an amount that would,  when  aggregated  with all other
undisclosed items covered by this Section 3.9, have a Material Adverse Effect.

         (b) There are no Tax assessments or adjustments that have been asserted
against  the  Company or its  Subsidiaries  for any period  that  would,  in the
aggregate with all other  undisclosed  items covered by this Section 3.9, have a
Material Adverse Effect.

         (c) There are no audits,  examinations,  actions,  suits,  proceedings,
investigations,  claims or  assessments  pending  or  threatened,  in writing or
otherwise to the  knowledge  of the  Company,  against the Company or any of its
Subsidiaries for any alleged deficiency in any Tax (a "Tax Controversy") and the
Company has not been notified in writing of any proposed Tax Controversy against
the Company or any of its  Subsidiaries  (other than a Tax Controversy set forth
in Schedule 3.9 to the Company Disclosure  Statement which is being contested in
good faith). There are no "deferred intercompany  transactions" or "intercompany
transactions"  the gain or loss on which  has not yet been  taken  into  account
under the appropriate  consolidated  return Treasury  Regulations that would, in
the aggregate with all other undisclosed items covered by this Section 3.9, have
a Material Adverse Effect. Except for the consolidated return of the Company and
its  Subsidiaries,  neither the Company  nor any of its  Subsidiaries  have been
included in any "consolidated,"  "unitary" or "combined" Tax Return with respect
to Taxes for any  taxable  period for which the statute of  limitations  has not
expired.  The Company has delivered to Parent correct and complete copies of all
United  States  federal,  state,  and foreign  income Tax Returns (to the extent
filed as of the date  hereof  or, if due but not  filed,  correct  and  complete
copies of extensions thereof),  examination reports,  statements of deficiencies
assessed against or agreed to by the Company and any of its Subsidiaries, or any
other similar correspondence from a taxing authority,  relating to taxable years
1996,  1997,  1998 and  1999.  Schedule  3.9  (c)(i) of the  Company  Disclosure
Statement  lists all of the  jurisdictions  in which the Company has filed or is
filing  returns  on sales  and use  tax.  Schedule  3.9 (c) (ii) of the  Company
Disclosure  Statement  lists all of the  jurisdictions  in which the Company has
filed or is filing returns on income tax.

         (d)  There  are no liens on the  assets  of the  Company  or any of its
Subsidiaries  for Taxes that would, in the aggregate with all other  undisclosed
items in this Section 3.9, have a Material Adverse Effect.

         (e)  (i) Neither the  Company nor any of its  Subsidiaries  has entered
              into an  agreement  or waiver or been  requested  to enter into an
              agreement or waiver extending any statute of limitations  relating
              to the payment or collection of Taxes of the Company or any of its
              Subsidiaries.

              (ii) All Taxes which the Company or any of its Subsidiaries is (or
              was) required by law to withhold or collect (other than immaterial
              amounts)  have  been duly  withheld  or  collected,  and have been
              timely paid over to the proper  authorities  to the extent due and
              payable.

              (iii) No claim  has ever been made by any  taxing  authority  in a
              jurisdiction where the Company or any of its Subsidiaries does not
              file a Tax Return that the Company or any of its  Subsidiaries  is
              or may be subject to taxation by that jurisdiction,  except to the
              extent that a failure to file such Tax  Returns  would not, in the
              aggregate with all other undisclosed items covered by this Section
              3.9, have a Material Adverse Effect.

              (iv)  There are no tax  sharing,  allocation,  indemnification  or
              similar  agreements  in  effect  as  between  the  Company  or its
              Subsidiaries or any predecessor or affiliate  thereof or any other
              party  under  which the  Company,  Parent  or Merger  Sub could be
              liable for Taxes.

              (v) Neither the  Company nor any of its  Subsidiaries  has applied
              for, been granted,  or agreed to any accounting  method change for
              which it will be  required  to take into  account  any  adjustment
              under Section 481 of the Code or any similar provision of the Code
              or the corresponding tax laws of any nation, state or locality.

              (vi) No election under Section 341(f) of the Code has been made or
              shall be made prior to the  Closing  Date to treat the  Company or
              any of its Subsidiaries as a consenting corporation, as defined in
              Section 341 of the Code.

              (vii) Neither the Company nor any of its  Subsidiaries  is a party
              to any  agreement  that would  require  the  Company or any of its
              Subsidiaries  or any  affiliate  thereof to make any payment  that
              would  constitute  an "excess  parachute  payment" for purposes of
              Sections 280G and 4999 of the Code.

              (viii)  Neither  the  Company  nor  any of its  Subsidiaries  is a
              "United  States  real  property  holding  corporation"  within the
              meaning of Section 897(c)(2) of the Code.

         (f) For  purposes  of this  Agreement,  the term "Tax" means any United
States federal,  state, county or local, or foreign or provincial income,  gross
receipts,  profits, capital gains, capital stock, occupation,  severance, stamp,
withholding,  property,  sales, use,  license,  excise,  franchise,  employment,
payroll, value added,  alternative or added minimum, ad valorem or transfer tax,
or any  other  tax,  levy,  custom,  duty  or  governmental  fee or  other  like
assessment  or charge of any kind  whatsoever,  together  with any  interest  or
penalty imposed by any Governmental  Authority,  and shall include any liability
for  such  amounts  as a  result  either  of  being  a  member  of  a  combined,
consolidated,  unitary or  affiliated  group or of a  contractual  obligation to
indemnify  any person or other  entity.  The term "Tax  Return"  means a report,
return or other information  (including any attached schedules or any amendments
to such report, return or other information) required to be supplied to or filed
with  any  Governmental   Authority  with  respect  to  any  Tax,  including  an
information return, claim for refund, amended return or declaration or estimated
Tax.

         3.10 Intellectual Property. Except as disclosed in Schedule 3.10 to the
Company  Disclosure  Statement,  the Company and its  Subsidiaries own or have a
valid and  enforceable  license  to use the rights to all  patents,  trademarks,
tradenames,  service marks and copyrights,  together with any  registrations and
applications therefor, licenses,  inventions,  know-how (including trade secrets
and  other   unpatented   and/or   unpatentable   proprietary  or   confidential
information,   systems   or   procedures)   or   other   intellectual   property
(collectively,  "Intellectual  Property")  used in and necessary to carry on the
business now operated by them;  provided,  however,  that the  enforceability of
such license may be subject to  bankruptcy,  insolvency  and other  similar laws
affecting  debtors'  rights or creditors'  rights  generally and except that the
remedies of specific performance, injunction and other forms of equitable relief
may not be  available.  Except as  disclosed  in  Schedule  3.10 to the  Company
Disclosure  Statement,  neither  the  Company  nor any of its  Subsidiaries  has
received any written notice or otherwise has knowledge of any infringement of or
conflict  with  asserted  rights  of others  with  respect  to any  Intellectual
Property or of any facts or  circumstances  which would render any  Intellectual
Property  invalid or inadequate to protect the interest of the Company or any of
its Subsidiaries  therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate,  would result in a Material  Adverse  Effect.  There are no
amounts owing or to be owed by the Company to any other  Person,  as a result of
the consummation of the Merger or otherwise, with respect to any claims relating
to any Intellectual  Property (or any intellectual  property rights of any other
Person) or any settlement thereof.

         3.11     Reports and Financial Statements.
                  --------------------------------

         (a) The Company has filed all forms, reports and documents with the SEC
required  to be  filed by it since  January  1,  1997  pursuant  to the  federal
securities laws and the SEC rules and regulations thereunder (collectively,  the
"Company SEC Reports").  None of the Company SEC Reports, as of their respective
dates,  contained  any untrue  statement of material  fact or omitted to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  Each of the  consolidated  balance  sheets  (including  the related
notes)  included in the Company SEC Reports  presents  fairly,  in all  material
respects,   the  consolidated   financial   position  of  the  Company  and  its
Subsidiaries  as  of  the  respective  dates  thereof,  and  the  other  related
statements  (including  the related  notes)  included in the Company SEC Reports
present  fairly,  in all material  respects,  the results of operations  and the
changes in  financial  position  of the  Company  and its  Subsidiaries  for the
respective  periods  or as of the  respective  dates set forth  therein,  all in
conformity with generally accepted accounting  principles  consistently  applied
during the periods involved,  except as otherwise noted therein and subject,  in
the case of the  unaudited  interim  financial  statements,  to normal  year-end
adjustments.  All of the  Company SEC  Reports,  as of their  respective  dates,
complied  as to form in all  material  respects  with  the  requirements  of the
Exchange Act or the Securities Act, as applicable,  and the applicable rules and
regulations thereunder.

         (b) Except (i) as and to the extent  disclosed  or reserved  against on
the balance sheet of the Company as of November 30, 1999 included in the Company
SEC Reports or (ii) as incurred after the date thereof in the ordinary course of
business consistent with prior practice and not prohibited by this Agreement and
not involving borrowing by the Company or its Subsidiaries, the Company does not
have any liabilities or obligations of any nature, absolute, accrued, contingent
or  otherwise  and whether due or to become due,  that,  individually  or in the
aggregate,  have or would  reasonably  be  expected  to have a Material  Adverse
Effect on the Company.

         3.12     Absence of Certain Changes or Events.  During the period since
May 31, 1999, except as disclosed in the Company SEC

Reports filed prior to the date hereof:

         (a) The business of the Company and its Subsidiaries has been conducted
only  in  the  ordinary  course,  consistent  with  past  practice,  except  for
activities related to possible strategic alternatives for the Company, including
the  execution  and  delivery  of this  Agreement  and the  consummation  of the
transactions contemplated hereby, and except as otherwise expressly permitted or
required by this Agreement;

         (b)  Neither  the  Company  nor any of its  Subsidiaries  has taken any
action or omitted to take any action,  or entered into any contract,  agreement,
commitment or arrangement to take any action or omit to take any action,  which,
if taken or omitted after the date hereof, would violate Section 6.1.; and

         (c) There has not been,  and,  to the best  knowledge  of the  Company,
nothing has occurred that would reasonably be expected to have,  individually or
in the aggregate, a Material Adverse Effect.

         3.13  Registration  Rights and Certain Other  Agreements.  Set forth in
Schedule  3.13 to the Company  Disclosure  Statement is an accurate and complete
listing,  as of the date hereof,  of (a) all  contracts,  leases,  agreements or
understandings,  whether  written or (to the knowledge of the Company)  oral, to
which the Company or any of its  Subsidiaries  is a party or is otherwise  bound
which contain any restriction or limitation on the ability of the Company or any
of its Affiliates to engage in any business  anywhere in the world,  and (b) all
contracts,  leases,  agreements or  understandings,  whether  written or (to the
knowledge  of the  Company)  oral,  giving any  Person the right to require  the
Company to register securities of any type or to participate in any registration
of securities of any type. The Company has previously provided or made available
to Parent true and complete copies of each of the foregoing agreements.

         3.14 Brokers and Finders.  Except for the fees and expenses  payable to
Lincoln  Partners L.L.C.  (whose fees and expenses will be paid by the Company),
which fees and expenses are reflected in its agreements with the Company, copies
of which have been furnished to Parent by the Company, no agent, broker,  Person
or firm  acting on behalf of the  Company  is, or will be,  entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto,  or from
any Person  controlling,  controlled by, or under common control with any of the
parties  hereto,  in connection  with this Agreement or any of the  transactions
contemplated hereby.

         3.15 Proxy  Statement.  The  definitive  proxy  statement  and  related
materials to be furnished to the holders of Common Stock in connection  with the
Merger (the "Proxy  Statement")  will comply in all material  respects  with the
Exchange Act and the rules and regulations  thereunder and any other  applicable
laws. If at any time prior to the Company Stockholders' Meeting any event occurs
which should be described in an amendment or supplement to the Proxy  Statement,
the Company will file and disseminate,  as required,  an amendment or supplement
which complies in all material  respects with the Exchange Act and the rules and
regulations  thereunder and any other  applicable laws. Prior to its filing with
the SEC, the amendment or supplement shall be delivered to Parent and Merger Sub
and their counsel. None of the information supplied by the Company for inclusion
or  incorporation  by reference in the Proxy  Statement,  will, at the date such
information is supplied and at the Closing Date, contain any untrue statement of
a material  fact or omit to state any material  fact  necessary in order to make
the statements made, in light of the circumstance under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is made
by the Company with respect to any  information  with respect to Parent,  Merger
Sub or their officers, directors or affiliates provided to the Company by Parent
or  Merger  Sub  for  inclusion  or  incorporation  by  reference  in the  Proxy
Statement.

         3.16 Title To Assets.  Except as reflected in the  Company's  financial
statements  as of November 30, 1999 or disclosed in Schedule 3.16 to the Company
Disclosure  Statement,  the  Company and each of its  Subsidiaries  has good and
marketable title to (or in the case of leases or other  contracts,  the full and
unencumbered right to exercise its rights under such leases or other agreements)
the properties and assets used by it, free and clear of all mortgages,  deeds of
trust,  liens,  security  interests,   pledges,   encumbrances,   encroachments,
easements, leases, agreements,  covenants, charges, restrictions,  option, joint
ownership or adverse claims or rights whatsoever (collectively, "Liens"), except
for Permitted  Liens,  and except for properties  and assets  disposed of in the
ordinary  course of business since November 30, 1999.  "Permitted  Liens" means:
(i) rights of  lessors  or lessee  under the terms of leases (x) which have been
disclosed to Parent in this Agreement or Schedule 3.16 to the Company Disclosure
Statement or (y) for office  equipment  entered  into in the ordinary  course of
business;  (ii) Liens for Taxes not yet due or payable;  (iii) Liens  imposed by
applicable law and incurred in the ordinary  course of business for  obligations
not yet due and payable to  laborers,  materialmen  and the like;  (iv) liens in
favor of the lender  listed on Schedule  3.16 in  connection  with the Company's
secured  credit  facilities;  (v)  zoning  and  other  restrictions,  variances,
covenants,   rights-of-way,   encumbrances,   easements   and  or  other   minor
irregularities of title, none of which, individually or in the aggregate,  would
reasonably be expected to have a material  adverse effect on the value of any of
the real property of the Company or of any  Subsidiary of the Company,  or would
impair in any  material  respect  the  ability of the  Company  or the  relevant
Subsidiary of the Company to utilize such property for its current use; and (vi)
rights  which would not,  singly or in the  aggregate,  have a Material  Adverse
Effect.

         3.17 Contracts.  Schedule 3.17 to the Company Disclosure Statement sets
forth the following oral or written  contracts and other agreements to which the
Company or any of its Subsidiaries is a party:

         (a) Any agreement (or group of related agreements,  with the same third
party or any of its Affiliates) for the lease of personal property providing for
lease payments in excess of $50,000 per annum;

         (b) Any agreement (or group of related  agreements) for the purchase or
sale of supplies,  products or other personal property, or for the furnishing or
receipt of services, the performance of which involve consideration in excess of
$50,000  per  annum,  except for  agreements  for the sale of  inventory  in the
ordinary course of business, for the purchase of raw materials, for the purchase
of machine  component  parts and for the  receipt of legal  services;  provided,
however,  that this  clause  (b)  shall not  include  any  employment  agreement
included pursuant to clause (e) below;

         (c) Any agreement concerning a partnership or joint venture;

         (d) Any agreement (or group of related agreements,  with the same third
party  or  any  of  its  Affiliates)  under  which  the  Company  or  any of its
Subsidiaries has created, incurred,  assumed, or guaranteed any indebtedness for
borrowed  money, or any  capitalized  lease  obligation the performance of which
involves  consideration  in excess of $50,000  per annum,  or under which it has
imposed a Lien  (excluding  Permitted  Liens as that term is  defined in Section
3.16 of this Agreement) on any of its material assets, tangible or intangible;

         (e) Any individual agreement with an employee of the Company or any of
its Subsidiaries;

         (f) Any other  agreement (or group of related  agreements with the same
third  party)  the  performance  of which  involves  consideration  in excess of
$25,000 per annum.

         The foregoing  are referred to hereafter as the  "Material  Contracts".
With respect to each of the Material Contracts,  except as set forth in Schedule
3.17 to the Company Disclosure Statement:  (i) they are in full force and effect
and  enforceable  against the  counterparties  in  accordance  with their terms,
except that such  enforceability  may be subject to  bankruptcy,  insolvency and
other similar laws affecting  debtors' rights or creditors' rights generally and
except that the remedies of specific performance,  injunction and other forms of
equitable  relief may not be available;  (ii) neither the Company nor any of its
Subsidiaries and to the Company's  knowledge no other party thereto is in breach
or default,  and no event has occurred  which with notice or lapse of time would
constitute  a  breach  or  default,  or  permit  termination,  modification,  or
acceleration  under the  agreement;  (iii)  neither  the  Company nor any of its
Subsidiaries  has  assigned  any of its rights or  obligations  under any of the
Material  Contracts;  (iv) neither the Company nor any of its  Subsidiaries  has
received any  outstanding  notice of  cancellation  or termination in connection
with any of them;  and (v) neither the Company nor any of its  Subsidiaries  is,
and to the  Company's  knowledge no party  thereto is, the subject of bankruptcy
proceedings,  nor has had a trustee appointed on its behalf or is insolvent. The
Company has  delivered to the Parent and Merger Sub a correct and complete  copy
of each written Material Contract (as amended to the date of this Agreement) and
a written  summary setting forth the terms and conditions of each oral agreement
constituting  a Material  Contract  referred to in Schedule  3.17 to the Company
Disclosure Statement.  With respect to agreements for the purchase or receipt of
legal services,  there are no such agreements in which the Company or any of its
Subsidiaries  are obligated to pay any type of success fee,  contingency  fee or
fee determined with reference to the size or  consummation  of the  transactions
contemplated by this Agreement.

         3.18  Compliance.  Except as set forth in Schedule  3.18 to the Company
Disclosure  Statement,  neither the Company  nor any of its  Subsidiaries  is in
conflict with, or in default or violation of any law, rule,  regulation,  order,
judgment or decree  applicable to the Company or any of its  Subsidiaries  or by
which any property or asset of the Company or any of its  Subsidiaries  is bound
or affected,  except for such  conflicts,  defaults or violations that would not
reasonably be expected to,  individually  or in the  aggregate,  have a Material
Adverse Effect.

         3.19  Insurance.  The Company and its  Subsidiaries  have  obtained and
maintained  in  full  force  and  effect  insurance  (including  director's  and
officer's insurance) with insurance companies or associations in such amounts as
disclosed in Schedule 3.19 to the Company Disclosure Statement.

         3.20 Company Preference Shares. Except as set forth in Schedule 3.20 to
the Company Disclosure Statement, the former holders of the Preferred Shares are
not entitled to receive any accrued dividends or redemption  payments which have
not been paid when due.

         3.21 Year 2000.  Except to the extent that it would not  reasonably  be
expected to,  individually or in the aggregate,  have a Material Adverse Effect,
all internal computer systems, computer software or technology that are material
to the business,  finances or operations of the Company and its  Subsidiaries or
were  sold  or  licensed  to  customers  of the  Company  and  its  Subsidiaries
(collectively,  "Material  Systems")  are (i) able to  receive,  record,  store,
process,  calculate,  manipulate  and output  dates from and after  September 9,
1999,  time  periods  that include any  Relevant  Date and  information  that is
dependent  on or relates to such dates or time  periods,  in the same manner and
with the same accuracy,  functionality,  data integrity and  performance as when
dates or time  periods  prior to September 9, 1999 are involved and (ii) able to
store and output date  information in a manner that is unambiguous as to century
(the circumstances set forth in clauses (i) and (ii),  collectively,  "Year 2000
Compliant").  The Company's  costing system for inventory  properly reflects the
actual  costs of any  inventory  with a maximum  deviation of plus or minus five
percent  (5%) of  such  actual  costs  in the  aggregate  at any  given  date of
determination.  The term  "Relevant  Date"  means each of the  following  dates:
September  9, 1999,  December  31,  1999,  January 1, 2000,  February  28, 2000,
February 29, 2000, March 1, 2000, December 31, 2000, and January 1, 2001.

         3.22  Disposition of Assets.  Other than inventory sold in the ordinary
course of  business,  no tangible  asset of the  Company  having a fair value in
excess of $20,000 per item, or $50,000 in the aggregate, and no intangible asset
which is part of the assets of the Company,  has been disposed of since November
30,  1999,  except  as set  forth on  Schedule  3.22 to the  Company  Disclosure
Statement.

         3.23     Environmental and Health and Safety Matters.
                  -------------------------------------------

(a) Set forth on Schedule 3.23(a) to the Company  Disclosure  Statement attached
hereto is a true,  accurate and complete  list of all real  property,  currently
owned, leased and/or otherwise used or occupied by the Company (the "Property").

(b) Except as set forth in Schedule 3.23(b) to the Company Disclosure Statement,
the Company, and the Property, have been at all times and are in compliance with
(and the  formerly  owned real  property  located  at  Rockford,  Illinois  (the
"Rockford Property") was, subsequent to April 12, 1988, and prior to December 7,
1993,  in  compliance  with) the Resource  Conservation  and  Recovery  Act, the
Comprehensive  Environmental  Response,  Compensation,  and  Liability  Act, the
Superfund  Amendments  and  Reauthorization  Act,  the Federal  Water  Pollution
Control Act, the Clean Water Act, the Clean Air Act, the Occupational Safety and
Health  Act,  and all  other  federal,  state and local  laws,  regulations  and
ordinances  relating to  pollution,  health and  safety,  or  protection  of the
environment,  including,  without  limitation,  those  relating to  containment,
emissions,  discharges,  releases or threatened releases of industrial, toxic or
hazardous  substances,  materials or wastes or other  pollutants,  contaminants,
petroleum products,  asbestos,  polychlorinated biphenyls ("PCBs"), or chemicals
(collectively,  "Hazardous  Substances") into the environment (including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or  otherwise  relating  to the  manufacturing,  processing,  recycling,
distribution,  use, treatment,  labeling, storage, disposal, release, abatement,
transport or handling of Hazardous Substances (the "Environmental Laws"), except
for such  failures  to  comply  which  would  not  reasonably  be  expected  to,
individually or in the aggregate, have a Material Adverse Effect.

(c) The Company has obtained and is in  compliance  (except for such failures to
comply  which  would not  reasonably  be  expected  to,  individually  or in the
aggregate,  have a Material Adverse Effect) with all permits, licenses and other
consents or  authorizations  which are required with respect to the operation of
its  business  at the  Property  under the  Environmental  Laws  ("Environmental
Permits"),  including without  limitation those that are required to (a) operate
or install any equipment or facilities and (b) generate, manufacture, formulate,
store,  treat,  handle,  transport,  discharge,  emit or  dispose  of  Hazardous
Substances  generated  by its  business,  a true  and  complete  list  of  which
Environmental  Permits is included in Schedule 3.23(c) to the Company Disclosure
Schedule.

(d) Except as listed in  Schedules  3.23(b)  and (d) to the  Company  Disclosure
Statement,  there are and have been no  Hazardous  Substances  generated,  used,
treated, stored, maintained, disposed of, or otherwise deposited in, located on,
released from,  under or on, the Property or the Rockford  Property (or released
onto, from or on any geologically or  hydrologically  adjoining  property),  the
business of the Company, or any premises at which the business of the Company is
being conducted,  or is located,  except in compliance with Environmental  Laws.
Additionally,  except as described in Schedule 3.23(d) to the Company Disclosure
Statement, there are and were no underground storage tanks maintained or located
on the Property or the Rockford  Property,  the business of the Company,  or any
premises at which the business of the Company is located.

(e)  Except  as set  forth  in  Schedules  3.23(b),  (d) and (e) of the  Company
Disclosure Statement, neither the Company nor its predecessors have any basis to
expect,  nor have they, or any other Person for whose conduct they are or may be
held  responsible   received,   any  actual  or  threatened  notice,   document,
information,  report or other  communication  (written or oral) from any Person,
Governmental Authority or person acting in the public interest, of any actual or
threatened  failure to comply  with any  Environmental  Law, or that any of them
have any potential  liability  with respect to  Environmental  Health and Safety
Liabilities.

(f) The Company has made  available  to Parent and Merger Sub true and  complete
copies  and  results  of any  reports,  correspondence,  information  or studies
possessed or  initiated  by the Company  since  January 1, 1990,  pertaining  to
Hazardous  Substances in, on, under, or adjacent to the Property or the Rockford
Property,  or concerning compliance by the Company or any other Person for whose
conduct they are or may be held responsible, with Environmental Laws.

         3.24 Related Party Transactions.  No officer or director of the Company
or  any  affiliate  thereof  has,  directly  or  indirectly,  entered  into  any
transaction with the Company,  except for any arrangements  which are either (i)
expressly  disclosed on or  incorporated  by reference in the  Company's  Annual
Report on Form 10-K or (ii)  listed on Schedule  3.24 to the Company  Disclosure
Statement.  For purposes of this Section 3.24 only, the term  "affiliate" of the
Company  shall mean and  include  any  officer or director of the Company or any
shareholder  owning or controlling more than 5% of the outstanding  Common Stock
or any person  related  to any such  officer,  director  or  shareholder  of the
Company   by   blood  or  by   marriage,   or  any   corporation,   partnership,
proprietorship,  trust or other  entity in which  such  officer or  director  or
shareholder  of the Company (or any spouse,  ancestor or descendant of the same)
has  more  than  a  5%  legal  or  beneficial  interest,   or  any  corporation,
partnership, proprietorship, trust or other entity which controls, is controlled
by or is under common control with the Company.

         3.25 Increases in Salaries and Wages.  Except in the ordinary course of
business or as listed in Schedule 3.25 to the Company Disclosure Statement,  the
Company has not, since November 30, 1999, paid any salary,  wage, bonus payments
or any other benefits to its employees at rates  exceeding the respective  rates
paid to such employees which were in effect at November 30, 1999.

         3.26 Employee  Salaries and Benefits.  The Company has provided  Parent
with  an  accurate  list  of all  salaried  employees  of the  Company  and  its
Subsidiaries,  and the  current  rate of  compensation  for each  such  employee
(including a separate  statement of bonuses and fringe benefits).  Except in the
ordinary  course  of  business  or as  listed on  Schedule  3.26 to the  Company
Disclosure Statement, there is no liability for unpaid salary or wages, bonuses,
vacation  time,  or other  employee  benefits due or accrued,  nor liability for
withheld or deducted amounts from employees' earnings,  for the period ending on
or  immediately  prior  to  the  Closing  Date,   including  without  limitation
commission payments to agents,  representatives or employees. There are no labor
disputes,   strikes,  work  stoppages  or  other  interruptions  in  service  or
performance  that  would  reasonably  be  expected  to,  individually  or in the
aggregate,  have a Material Adverse Effect, and, to the Company's knowledge, all
relationships  between  the  Company  and  each of its  Subsidiaries  and  their
employees are generally stable and satisfactory.

         3.27 Customer and Supplier Relationships;  Warranty Claims. Neither the
Company nor any of its Subsidiaries has received any written notice or otherwise
has  knowledge  that  any of the  ten  largest  customers  or  suppliers  of The
Lockformer  Company or any of the ten largest  customers  or  suppliers  of Iowa
Precision  Industries,  Inc. intends to discontinue or alter the prices or terms
of, or substantially  diminish,  its relationship with the Company or any of its
Subsidiaries.  Outstanding  warranty  claims  against  the Company or any of its
Subsidiaries by any customers with respect to products sold or services rendered
do not, in the  aggregate,  exceed two  percent  (2%) of the  Company's  and its
Subsidiaries'  aggregate  gross sales in the 12 months  prior to the date hereof
and in the 12 months prior to the date of any  subsequent  determination.  There
are no defects in any of the  product  lines  designed  or  manufactured  by the
Company  or any  of  its  Subsidiaries,  except  for  defects  which  would  not
reasonably be expected to,  individually  or in the  aggregate,  have a Material
Adverse Effect.

         3.28 Accounts Receivable and Notes Receivable.  The accounts receivable
and notes  receivable  of the  Company  and its  Subsidiaries,  other than those
listed on Schedule 3.28 to the Company Disclosure Schedule,  represent bona fide
claims which the Company or its  Subsidiaries  have against debtors for sales or
services arising on or before the Closing Date are not subject to counterclaims,
setoffs  or  deductions  of any kind  except to the extent  such  counterclaims,
setoffs or deductions  would not reasonably be expected to,  individually  or in
the aggregate, have a Material Adverse Effect, and are not subject to additional
requirements of performance by the Company or any Subsidiary of the Company. The
aggregate  amount of  customer  advance  payments  (i.e.,  payments in excess of
actual work  performed  or  materials  supplied as of the date of such  payment)
received  by the  Company or any  Subsidiary  of the  Company at or prior to the
Closing Date with respect to such accounts  receivable does not exceed $750,000.
All of the accounts  receivable and notes receivable have been created since the
date of incorporation of the Company or any Subsidiary of the Company,  pursuant
to shipments  of goods or services  conforming  to the terms of purchase  orders
executed by and received  from  unrelated  third parties in the normal course of
business.  Such  receivables have been recorded in accordance with the Company's
historical revenue recognition policy. To the Company's knowledge,  there are no
pending  insolvency,  bankruptcy  or similar  proceedings  involving  any of the
Company's   or   its   Subsidiaries'   customers,   distributors,   dealers   or
representatives.

         3.29 Bonds;  Guarantees.  Other than as listed on Schedule  3.29 to the
Company Disclosure Schedule,  there are no bonds,  guarantees,  notes, sureties,
letters of credit,  or other similar credit  agreements or debt obligations that
exist with respect to the Company or any of its  Subsidiaries,  their businesses
or any of their assets. Neither the Company nor any Subsidiary of the Company is
in default on the payment of any principal or interest on any  indebtedness  for
borrowed money, nor is the Company or any Subsidiary of the Company otherwise in
default  under any  indemnity,  fidelity or  contract  bond or letter of credit,
note, guarantee or other credit agreement or debt obligation or instrument.

                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF PARENT

         As of the date of this Agreement, Parent represents and warrants to the
Company as follows:

         4.1 Corporate Standing. Parent is a corporation duly organized, validly
existing,  and in good  standing  under the laws of its state of  incorporation.
Parent has full corporate authority to own, lease and operate its properties and
businesses. Schedule 4.1 to the Parent Disclosure Statement sets forth a list of
the  jurisdictions in which Parent is qualified to conduct business as a foreign
corporation.  Parent is in good standing as a foreign corporation under the laws
of the states listed in Schedule 4.1.

         4.2      Authority.
                  ---------

         (a)  Parent  has full  corporate  power and  authority  to enter  into,
execute,  deliver,  and perform this Agreement and all Exhibits to which it is a
party.  The  execution,  delivery and  performance  of this  Agreement  and such
Exhibits,  and the  consummation  of all  transactions  contemplated  herein and
therein,  have been duly authorized by all necessary corporate action of Parent.
This Agreement has been duly executed and delivered by a duly authorized officer
of the Parent and (assuming the due execution and delivery of this  Agreement by
the other parties hereto other than Merger Sub and Ultimate Parent)  constitutes
a  valid  and  binding  agreement  of  the  Parent,  enforceable  against  it in
accordance with its terms,  subject to bankruptcy,  insolvency and other similar
laws affecting the rights of creditors generally and except that the remedies of
specific performance,  injunction and other forms of equitable relief may not be
available.  Such Exhibits,  when duly executed and delivered by Parent (assuming
the due  execution  and delivery of such  Exhibits by the other  parties  hereto
other than Merger Sub and Ultimate Parent) shall be valid and binding agreements
of  Parent  enforceable  against  it in  accordance  with the terms  hereof  and
thereof, subject to bankruptcy,  insolvency and other similar laws affecting the
rights  of  creditors  generally  and  except  that  the  remedies  of  specific
performance,  injunction  and  other  forms  of  equitable  relief  may  not  be
available.

         (b) The Board of  Directors  of Parent has  approved  the  transactions
contemplated by this Agreement and the Exhibits to which Parent is a party.

         (c) Neither  the  execution  and  delivery  of this  Agreement  nor the
execution and delivery of the  certificates  and documents set forth as Exhibits
hereto nor the consummation of the transactions  contemplated  hereby or thereby
will (i) conflict with or violate any provision of the Articles of Incorporation
or Bylaws of Parent,  (ii) conflict with or violate any law,  rule,  regulation,
ordinance,  order, writ, injunction,  judgment or decree applicable to Parent or
its  business or by which any of its assets are  affected,  except to the extent
any such  conflict or violation  would not have a Material  Adverse  Effect,  or
(iii)  conflict  with or result in any breach of or  constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or give to others any rights of termination or cancellation of or accelerate the
performance  required  by or  maturity  of,  or result  in the  creation  of any
security interest,  lien, charge or encumbrance on the assets of Parent pursuant
to any of the terms,  conditions  or  provisions  of any note,  bond,  mortgage,
indenture,  permit, license,  franchise, lease, contract, or other instrument or
obligation  to  which  Parent  is a party  or by  which  any of its  assets  are
affected,  except to the extent any such  conflict,  breach,  default,  right of
termination  or  cancellation,  acceleration  or creation  of any such  security
interest, lien, charge, or encumbrance would not have a Material Adverse Effect.

         (d) Parent is not required to submit any notice, declaration, report or
other filing or registration  with any  governmental or regulatory  authority or
instrumentality,  and no approvals or non-objections are required to be obtained
or made by Parent in connection  with the execution,  delivery or performance by
Parent of this Agreement or any Exhibit or the  consummation of the transactions
contemplated hereby or thereby,  except for approvals that may be required under
the DGCL, the HSR Act and the Exchange Act.

         4.3 Information Supplied.  None of the information supplied by Ultimate
Parent,  Parent or Merger Sub for inclusion or incorporation by reference in the
Proxy Statement (and provided to Ultimate  Parent,  Parent and Merger for review
and comment  prior to printing of the Proxy  Statement)  will, on the date it is
first  mailed  to the  Company's  stockholders  or at the time of the  Company's
stockholders meeting, contain any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

         4.4      Adequate Financing.  Parent has adequate funds to consummate
the Merger and perform its other obligations under this
Agreement, including payment of the Merger Consideration and the Cash Payment.

                                    ARTICLE V

                  REPRESENTATIONS AND WARRANTIES OF MERGER SUB

         As of the date of this Agreement, Merger Sub represents and warrants to
the Company as follows:

         5.1 Corporate  Standing.  Merger Sub is a corporation  duly  organized,
validly  existing,  and  in  good  standing  under  the  laws  of its  state  of
incorporation. Merger Sub has full corporate authority to own, lease and operate
its  properties  and  businesses.  Schedule  5.1 to the  Merger  Sub  Disclosure
Statement  sets  forth  a list  of the  jurisdictions  in  which  Merger  Sub is
qualified to conduct  business as a foreign  corporation.  Merger Sub is in good
standing  as a  foreign  corporation  under  the laws of the  states  listed  in
Schedule 5.1.

         5.2      Authority.
                  ---------

         (a) Merger Sub has full  corporate  power and  authority to enter into,
execute,  deliver,  and perform this Agreement and all Exhibits to which it is a
party.  The  execution,  delivery and  performance  of this  Agreement  and such
Exhibits,  and the  consummation  of all  transactions  contemplated  herein and
therein,  have been duly authorized by all necessary  corporate action of Merger
Sub. This  Agreement  has been duly executed and delivered by a duly  authorized
officer of Merger Sub and  (assuming  the due  execution  and  delivery  of this
Agreement by the other  parties  hereto  other than Parent and Ultimate  Parent)
constitutes a valid and binding agreement of Merger Sub,  enforceable against it
in  accordance  with its terms,  subject  to  bankruptcy,  insolvency  and other
similar laws  affecting  the rights of creditors  generally  and except that the
remedies of specific performance, injunction and other forms of equitable relief
may not be available.  Such Exhibits, when duly executed and delivered by Merger
Sub  (assuming  the due  execution  and  delivery of such  Exhibits by the other
parties hereto other than Parent and Ultimate Parent) shall be valid and binding
agreement  of Merger Sub  enforceable  against it in  accordance  with the terms
hereof and thereof,  subject to  bankruptcy,  insolvency  and other similar laws
affecting  the rights of  creditors  generally  and except that the  remedies of
specific performance,  injunction and other forms of equitable relief may not be
available.

         (b) The Board of Directors and stockholders of Merger Sub have approved
the transactions contemplated by this Agreement and the Exhibits to which Merger
Sub is a party.

         (c) Neither  the  execution  and  delivery  of this  Agreement  nor the
execution and delivery of the  certificates  and documents set forth as Exhibits
hereto nor the consummation of the transactions  contemplated  hereby or thereby
will (i) conflict with or violate any provision of the Articles of Incorporation
or  Bylaws  of  Merger  Sub,  (ii)  conflict  with or  violate  any  law,  rule,
regulation, ordinance, order, writ, injunction, judgment or decree applicable to
Merger Sub or its business or by which any of its assets are affected, except to
the extent any such  conflict  or  violation  would not have a Material  Adverse
Effect,  or (iii)  conflict  with or result in any  breach  of or  constitute  a
default (or an event  which with notice or lapse of time or both would  become a
default)  under,  or give to others any rights of termination or cancellation of
or  accelerate  the  performance  required by or  maturity  of, or result in the
creation of any security interest,  lien, charge or encumbrance on the assets of
Merger Sub pursuant to any of the terms,  conditions  or provisions of any note,
bond, mortgage, indenture, permit, license, franchise, lease, contract, or other
instrument  or  obligation to which Merger Sub is a party or by which any of its
assets are affected,  except to the extent any such conflict,  breach,  default,
right of  termination  or  cancellation,  acceleration  or  creation of any such
security interest, lien, change or encumbrance would not have a Material Adverse
Effect.

         (d)  Merger Sub is not  required  to submit  any  notice,  declaration,
report or other  filing or  registration  with any  governmental  or  regulatory
authority or instrumentality, and no approvals or non-objections are required to
be obtained or made by Merger Sub in connection with the execution,  delivery or
performance by Merger Sub of this  Agreement or any Exhibit or the  consummation
of the transactions  contemplated  hereby or thereby,  except for approvals that
may be required under the DGCL, the HSR Act and the Exchange Act.

         5.3      No Business Activities.  Merger Sub is not a party to any
material agreements and has not conducted any activities other than in
connection with the organization of Merger Sub, the negotiation and execution of
this Agreement and the consummation of the transactions contemplated hereby.
Merger Sub has no Subsidiaries.

                                   ARTICLE VI

                       ADDITIONAL COVENANTS AND AGREEMENTS

         6.1 Conduct of Business of the Company. Except as set forth in Schedule
6.1  to the  Company  Disclosure  Statement,  as  expressly  permitted  by  this
Agreement  (including any  transaction  permitted by Schedule 6.1 to the Company
Disclosure  Statement),  as  required  by any change in  applicable  Law,  or as
otherwise  agreed by Parent in writing,  during the period from the date of this
Agreement to the Closing Date,  (i) the Company will, and will cause each of its
Subsidiaries  to,  conduct their  businesses in the ordinary  course of business
consistent  with  past  practice,  and (ii) to the  extent  consistent  with the
foregoing,  the Company will,  and will cause each of its  Subsidiaries  to, use
their  reasonable  best  efforts  to  preserve  intact  their  current  business
organizations,  keep  available  the  service  of  their  current  officers  and
employees, and preserve their relationships with customers, suppliers and others
having  business  dealings  with them (but  without  the  obligation  to pay any
additional compensation to any such officers,  employees,  customers,  suppliers
and  other  persons),  in  each  case  with  respect  to the  Company's  and its
Subsidiaries'  current  businesses.  Without  limiting  the  generality  of  the
foregoing,  from and including the date hereof to the Closing Date,  the Company
will not,  and will not permit any of its  Subsidiaries  to,  without  the prior
written consent of Parent (except to the extent set forth in Schedule 6.1 to the
Company Disclosure Statement):

         (a) Except for Shares  issued upon  exercise of Options or other rights
outstanding as of the date hereof under Stock  Incentive  Plans or Company Plans
in accordance with the terms thereof,  issue, deliver,  sell, dispose of, pledge
or otherwise encumber, or authorize or propose the issuance,  sale,  disposition
or pledge or other  encumbrance (in each instance,  whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise) of (A) any additional shares of its capital stock of any class, or
any Voting Debt or any securities or rights convertible into,  exchangeable for,
or  evidencing  the right to  subscribe  for any shares of its capital  stock or
Voting Debt or any rights,  warrants,  options, calls,  commitments or any other
agreements  of any  character  to  purchase or acquire any shares of its capital
stock or Voting Debt or any securities or rights convertible into,  exchangeable
for, or evidencing  the right to subscribe for, any shares of its capital stock,
or (B) any other  securities in respect of, in lieu of, or in substitution  for,
Shares outstanding on the date hereof;

         (b)  Redeem,  purchase  or  otherwise  acquire,  or  propose to redeem,
purchase or otherwise  acquire,  any of its outstanding  securities,  other than
pursuant to existing  agreements  requiring the Company to repurchase or acquire
any shares of its capital stock (provided that such repurchase or acquisition is
in accordance with the terms of such agreement as in effect on the date hereof);

         (c) Split,  combine,  subdivide or reclassify any shares of its capital
stock or declare,  set aside for payment or pay any dividend,  or make any other
actual,  constructive  or deemed  distribution  in  respect of any shares of its
capital stock or otherwise make any payments to  stockholders  in their capacity
as  such  (other  than  dividends  or  distributions  paid by any  Wholly  Owned
Subsidiary of the Company to the Company or another  Wholly Owned  Subsidiary of
the Company);

         (d)  (i)  grant  any  increases  in  the  compensation  of  any  of its
directors,  officers or  employees,  except for  increases  granted to employees
other than  officers in the  ordinary  course of business  consistent  with past
practice,  (ii) pay or award or agree to pay or award  any  pension,  retirement
allowance,  or other non-equity incentive awards, or other employee benefit, not
required by any of the Company Plans to any current or former director,  officer
or  employees,  whether  past or  present,  or to any other  Person,  except for
payments  or awards to current  employees  other than  officers  that are in the
ordinary course of business,  consistent with past practice,  (iii) pay or award
or agree to pay or award any stock option or equity incentive awards, (iv) enter
into any new or amend  any  existing  employment  agreement  with any  director,
officer  or  employee,  (v) enter into any new or amend any  existing  severance
agreement  with any current or former  director,  officer or  employee,  or (vi)
become  obligated  under any new Company  Plan which was not in existence on the
date  hereof,  or amend any such  Company  Plan in existence on the date hereof,
except as may be contemplated by this Agreement;

         (e)  Adopt a plan of  complete  or  partial  liquidation,  dissolution,
merger, consolidation,  restructuring,  recapitalization or other reorganization
of the Company or any Subsidiary of the Company (other than the Merger);

         (f) Make  any  acquisition,  by  means  of  stock  or  asset  purchase,
recapitalization,  merger,  consolidation  or  otherwise,  of (i) any  direct or
indirect ownership  interest in or assets comprising any business  enterprise or
operation  or (ii)  except  in the  ordinary  course  and  consistent  with past
practice, any other assets; provided that such acquisitions do not and would not
prevent or materially delay the consummation of the Merger;

         (g) (i) dispose of any interest in any material business  enterprise or
operation  of the  Company  or any of its  Subsidiaries;  (ii)  make  any  other
disposition of any other direct or indirect  ownership  interest in any material
assets  of the  Company  or any of its  Subsidiaries;  or  (iii)  except  in the
ordinary course and consistent  with past practice,  dispose of any other assets
of the Company or any of its Subsidiaries;

         (h) Adopt any amendments to the Company  Charter or its Bylaws or alter
through  merger,  liquidation,  reorganization,  restructuring  or in any  other
fashion the corporate  structure or ownership of any  Subsidiary of the Company,
except as required by this Agreement or as required by applicable laws, rules or
regulations, including any NASDAQ rule or regulation;

         (i) Incur any  indebtedness  (other than  pursuant to and not exceeding
its existing secured credit facilities listed on Schedule 6.1(i) in the ordinary
course) for borrowed money or guarantee any  indebtedness of any other Person or
make any loans,  advances or capital  contributions  to, or investments  in, any
other Person (other than to any Wholly Owned Subsidiary of the Company);

         (j) Engage in the conduct of any business other than the Company's
existing businesses;

         (k) Enter into any agreement or exercise any  discretion  providing for
acceleration of payment or performance as a result of a change of control of the
Company or its Subsidiaries, except in connection with the Merger;

         (l) enter into any contracts,  arrangements or understandings requiring
in the aggregate the purchase of equipment,  materials,  supplies or services in
excess of the Company's  budget attached hereto as Schedule 6.1(l) plus $250,000
in the aggregate;

         (m) enter into or amend, modify, terminate or waive any right under any
agreement with any Affiliates of the Company (other than its Subsidiaries);

         (n) settle or compromise any litigation or Tax Controversy with respect
to the  Company or its  Subsidiaries  or waive,  release or assign any rights or
claims with respect to any litigation or Tax  Controversy  involving the Company
or its Subsidiaries;

         (o) effect any change in any of its methods of accounting, except as
may be required by law or generally accepted accounting principles;

         (p) Take any action, including without limitation,  the adoption of any
shareholder  rights plan or  amendments  to the Company  Charter,  which  would,
directly or  indirectly,  restrict  or impair the ability of Parent to vote,  or
otherwise to exercise the rights and receive the benefits of a stockholder  with
respect to,  securities  of the Company  that may be acquired or  controlled  by
Parent or Merger Sub or permit any  stockholder  to  acquire  securities  of the
Company  on a basis not  available  to Parent in the event that  Parent  were to
acquire securities of the Company; or

         (q) Authorize, recommend or propose (other than to Parent), or announce
an intention to do any of the foregoing, or enter into any contract,  agreement,
commitment or arrangement to do any of the foregoing.

         The Company  shall also  continue  to  undertake  all usual  corporate,
stockholder,  accounting and regulatory  matters on a routine and regular basis.
The  Company  shall  notify  Parent  in  advance  in  writing  of  any  material
developments  or  activities  that would be outside  of the  ordinary  course of
business  in  manufacturing  carried  on at the  Company's  facilities  in Cedar
Rapids, Iowa and Lisle, Illinois,  including,  without limitation,  the proposed
acquisition and/or disposition of assets material to the efficient  operation of
the  business,  the pending or threatened  loss of an important  customer of the
Company,  the receipt of a pending or threatened claim that would be material to
the business or the assets of the Company and its Subsidiaries taken as a whole,
or the existence of labor unrest at the Company or any of its Subsidiaries.

         6.2      No Solicitation of Other Offers.
                  -------------------------------

         (a) The  Company  and its  Affiliates  and  each  of  their  respective
officers,  directors,  employees,   representatives,   consultants,   investment
bankers,  attorneys,  accountants and other agents shall  immediately  cease any
discussions  or  negotiations  with any other  parties  that may be ongoing with
respect  to  any  Acquisition  Proposal.  Neither  the  Company  nor  any of its
Affiliates  shall,  directly  or  indirectly,  take (and the  Company  shall not
authorize  or permit  its or its  Affiliates'  officers,  directors,  employees,
representatives,  consultants,  investment  bankers,  attorneys,  accountants or
other agents or Affiliates,  to so take) any action to (i)  encourage,  solicit,
initiate  or  facilitate  the  making of any  Acquisition  Proposal  (including,
without limitation, by taking any action that would make Section 203 of the DGCL
inapplicable  to an  Acquisition  Proposal)  or (ii)  participate  in any way in
discussions or  negotiations  with, or, furnish or disclose any  information to,
any Person  (other than Parent or Merger Sub) in  connection  with,  or take any
other action to  facilitate  any  inquiries  or the making of any proposal  that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
provided,  however, that the Company, in response to an unsolicited  Acquisition
Proposal and in compliance with its obligations under Section 6.2(b) hereof, may
participate in discussions or negotiations with or furnish information (pursuant
to a confidentiality agreement with terms not more favorable to such third party
than the terms of the Confidentiality  Agreement) to any third party which makes
an Acquisition Proposal if (i) the Board of Directors reasonably  determines (in
consultation  with  the  Company's  independent  financial  advisor)  that  such
Acquisition Proposal is likely to lead to a Superior Proposal and (ii) the Board
of Directors reasonably believes (in consultation with the Company's independent
legal counsel) that failing to take such action would constitute a breach of its
fiduciary duties. In addition, neither the Board of Directors of the Company nor
any committee  thereof  shall (A) withdraw or modify,  or propose to withdraw or
modify,  in  a  manner  adverse  to  Parent  or  Merger  Sub  the  approval  and
recommendation  of the Merger and this Agreement,  (B) approve or recommend,  or
propose to approve or recommend, any Acquisition Proposal, or (C) enter into any
agreement  with  respect  to  any   Acquisition   Proposal  or  enter  into  any
arrangement,  understanding or agreement  requiring it to abandon,  terminate or
fail to consummate  the Merger or any other  transactions  contemplated  by this
Agreement;  provided  that the  Company may  recommend  to its  stockholders  an
Acquisition Proposal and in connection therewith withdraw or modify its approval
or recommendation of the Merger and enter into an agreement with respect to such
Acquisition Proposal if (1) a third party makes a Superior Proposal, and (2) (a)
three (3) business days have elapsed  following  delivery to Parent of a written
notice of the  determination  by the Board of  Directors  of the Company to take
such action and during  such (3)  business  day period the Company has  informed
Parent of the terms and conditions of such Superior  Proposal,  and the identity
of the Person  making such Superior  Proposal,  and (b) at the end of such three
(3)  business day period the  Acquisition  Proposal  continues  to  constitute a
Superior Proposal.

         "Acquisition  Proposal"  shall mean (i) any inquiry,  proposal or offer
from any Person relating to any direct or indirect  acquisition or purchase of a
substantial amount of assets of the Company or any of its material  Subsidiaries
or of 50% or more of any class of equity securities of the Company or any of its
material  Subsidiaries,  (ii)  any  tender  offer or  exchange  offer  that,  if
consummated,  would result in any Person  beneficially owning 50% or more of any
class of equity securities of the Company or any of its  Subsidiaries,  or (iii)
any merger,  consolidation,  business combination, sale of substantially all the
assets,  recapitalization,   liquidation,  dissolution  or  similar  transaction
involving the Company or any of its Subsidiaries.

         "Superior  Proposal"  shall mean a bona fide  proposal  made by a third
party to acquire  all of the Shares  pursuant to a tender  offer,  a merger or a
sale of all of the assets of the  Company  (w) on terms  which a majority of the
members of the Board of  Directors of the Company  determines  in its good faith
reasonable  judgment (in consultation with the Company's  independent  financial
advisor)  to be more  favorable  to the Company  and its  stockholders  than the
transactions  contemplated hereby, (x) for which financing is then available (it
being  understood  that  financing  evidenced  by highly  confident  letters and
similar  letters shall be considered  "available" for purposes of this Section),
and (y) which is not subject to any financing condition.

         (b) From and after the date hereof,  in addition to the  obligations of
the Company set forth in  paragraph  (a),  on the date of receipt  thereof,  the
Company shall advise Parent of any request for information or of any Acquisition
Proposal, or any inquiry,  proposal,  discussions or negotiation with respect to
any  Acquisition  Proposal.  The Company  shall  promptly  provide to Parent any
non-public  information  concerning the Company  provided to any other Person in
connection  with any Acquisition  Proposal which was not previously  provided to
Parent.

         (c) Immediately following the execution of this Agreement,  the Company
shall  request  each  Person  which has  heretofore  executed a  confidentiality
agreement in connection with its  consideration  of acquiring the Company or any
portion thereof to return all confidential  information  heretofore furnished to
such Person by or on behalf of the Company.

         6.3 Proxy  Statement.  As promptly  as  practicable,  the Company  will
prepare and file a  preliminary  Proxy  Statement  with the SEC and will use its
reasonable  best  efforts to  respond to the  comments  of the SEC,  if any,  in
connection  therewith  and to furnish  all  information  regarding  the  Company
required in the  definitive  Proxy  Statement  (including,  without  limitation,
financial  statements and supporting  schedules and  certificates and reports of
independent public accountants).  Parent,  Merger Sub and Company will cooperate
with each other in the preparation of the Proxy Statement.  Without limiting the
generality of the  foregoing,  each of Parent and Merger Sub will furnish to the
Company the  information  relating to it required by the  Exchange Act to be set
forth in the Proxy  Statement.  As promptly as is  reasonably  practicable,  the
Company  will  cause  the  definitive  Proxy  Statement  to  be  mailed  to  the
stockholders  of the  Company  and, if  necessary,  after the  definitive  Proxy
Statement shall have been so mailed, promptly circulate amended, supplemental or
supplemented proxy material and, if required in connection therewith, re-solicit
proxies.  The Company will provide  Ultimate  Parent,  Parent and Merger Sub the
opportunity  to review and  comment  on the Proxy  Statement  (and any  amended,
supplemental or supplemented  proxy material) before it is printed and mailed to
the stockholders of the Company.  The Company's  obligations  under this Section
6.3  are  subject  to  its  right  to   withdraw  or  modify  its   approval  or
recommendation of the Merger in accordance with Section 6.2.

         6.4 Stockholder Approval. As promptly as is reasonably practicable, the
Company,  acting  through its Board of  Directors,  shall,  in  accordance  with
applicable  Law,  duly call,  give notice of,  convene and hold a meeting of the
holders of Shares  (the  "Company  Stockholders'  Meeting")  for the  purpose of
voting  upon this  Agreement  and the Merger,  and the Company  agrees that this
Agreement and the Merger shall be submitted at such  meeting.  The Company shall
use its reasonable best efforts to solicit from its  stockholders  proxies,  and
shall take all other action  necessary and advisable,  to obtain the approval of
stockholders  required by applicable  law and the Company  Charter or its Bylaws
for this  Agreement and the Merger.  The Company  agrees that it will include in
the Proxy Statement the recommendation of its Board of Directors that holders of
Shares  approve and adopt this  Agreement and approve the Merger.  The Company's
obligations  under this  Section  6.4 are  subject to its right to  withdraw  or
modify its approval or  recommendation  of the Merger in accordance with Section
6.2.

         6.5 Commercially  Reasonable Efforts. The Company and Parent shall, and
shall  use their  commercially  reasonable  efforts  to cause  their  respective
Subsidiaries,  as  applicable,  to: (i)  promptly  make all  filings and seek to
obtain all Authorizations  (including,  without limitation, all filings required
under the HSR Act) required under all applicable Laws with respect to the Merger
and the other transactions  contemplated  hereby and will reasonably consult and
cooperate  with  each  other  with  respect  thereto;  (ii) not take any  action
(including  effecting  or  agreeing  to effect or  announcing  an  intention  or
proposal to effect, any acquisition,  business  combination or other transaction
except as set forth in the Company Disclosure  Statement) which would impair the
ability  of  the  parties  to  consummate  the  Merger;   and  (iii)  use  their
commercially  reasonable efforts to promptly (x) take, or cause to be taken, all
other  actions  and (y) do,  or cause to be done,  all other  things  reasonably
necessary, proper or appropriate to satisfy the conditions set forth in Articles
VII  and  VIII  (unless  waived)  and  to  consummate  and  make  effective  the
transactions  contemplated  by this  Agreement on the terms and  conditions  set
forth herein (including seeking to remove promptly any injunction or other legal
barrier that may prevent such  consummation);  provided,  however,  that no loan
agreement  or contract for  borrowed  money shall be repaid  except as currently
required  by its terms,  in whole or in part,  and,  subject to Section  6.1, no
contract shall be amended to increase the amount payable thereunder or otherwise
to be more  burdensome  to the  Company or any of its  Subsidiaries  in order to
obtain any such consent,  approval or authorization  without first obtaining the
written  approval of Parent and Merger Sub. Each party shall promptly notify the
other party of any  communication to that party from any Governmental  Authority
in  connection  with any required  filing  with,  or approval or review by, such
Governmental  Authority in connection with the Merger and the other transactions
contemplated hereby and permit the other party to review in advance any proposed
communication  to any  Governmental  Authority in such  connection to the extent
permitted by applicable law.

         6.6 Access to Information.  Subject to currently  existing  contractual
and legal restrictions  applicable to the Company,  the Company shall (and shall
cause each of its  Subsidiaries  to)  afford to  officers,  employees,  counsel,
accountants   and  other   authorized   representatives   of   Parent   ("Parent
Representatives") reasonable access, during normal business hours throughout the
period  prior  to  the  Closing  Date,  to its  properties,  books  and  records
(including, subject to execution of customary access letters, the work papers of
independent  accountants),  such access not to  unreasonably  interfere with the
Company's  business or  operations,  and,  during such period,  shall (and shall
cause  each  of  its   Subsidiaries   to)   furnish   promptly  to  such  Parent
Representatives  all  information   concerning  its  business,   properties  and
personnel  as may  reasonably  be  requested,  including  but not limited to all
purchase order and customer order logs. In addition,  Parent Representatives may
conduct,  within the  two-week  period  prior to the  Closing  Date  expected by
Parent, a complete  investigation  of the Company's  financial and other records
and  accounts  (including  but not limited to the work  papers of the  Company's
independent accountants),  and Company will permit and cooperate fully with such
investigation.  Parent may  further  conduct,  and the  Company  will permit and
cooperate  fully with,  environmental  audits of the Company's  Cedar Rapids and
Lisle  facilities.  The  Company  shall,  at its  discretion  which shall not be
unreasonably  withheld,   introduce  Parent  Representatives  to  the  Company's
principal suppliers,  customers, dealers and employees to facilitate discussions
between  such  persons and Parent in regard to Parent's  conduct of the business
following the Closing Date.  The officers and management of the Company agree to
cooperate  with the Parent  Representatives  and  agents and to make  themselves
available  to the extent  necessary  to  complete  the  Parent  Representatives'
investigation  process and the closing of the Merger.  All information  obtained
pursuant to this Section 6.6 shall be subject to the Confidentiality  Agreement,
which shall remain in full force and effect until consummation of the Merger or,
if the Merger is not consummated,  for the period specified  therein;  provided,
however,  that neither Parent nor the Company shall be precluded from making any
disclosure  which it deems  required by law or applicable  rule or regulation of
any Governmental  Authority or  self-regulatory  organization in connection with
the  Merger.   Parent  acknowledges  the  Company's  interest  that  the  Parent
Representatives'  investigations  be as  discreet  as  possible  and not  unduly
disrupt  the  operations  of the  Company,  and Parent will work  diligently  to
complete the Parent  Representatives'  investigations in a timely manner so long
as the  Company  cooperates  in making the records and  personnel  available  to
Parent in a timely fashion.

6.7      Employee Matters.
         ----------------

         (a)  Starting  on the day  after  the  Closing  Date and  ending on the
earlier  of (i) one year  from the  Closing  Date  and  (ii) May 31,  2001  (the
"Initial Period"),  Parent will cause Surviving  Corporation to provide employee
benefit plans for eligible employees of the Company (i.e., employees who satisfy
the eligibility requirements of the Company Plans as in effect immediately prior
to the date of this  Agreement,  and who  continue to satisfy  such  eligibility
requirements through the end of the Initial Period) that are not materially less
favorable in the aggregate  than the employee  benefit plans provided to them as
set forth on Schedule 3.8(a) of the Company Disclosure  Statement on the date of
this Agreement. With respect to any employee benefit plans established by Parent
and  made  available  by  Parent  to  employees  of  the  Company  or any of its
Subsidiaries,  to  the  extent  an  employee  of  the  Company  or  any  of  its
Subsidiaries  becomes  eligible to participate  in any such plans,  Parent shall
grant to such employee  from and after the Closing Date,  credit for all service
with the Company and its  Subsidiaries  (and any other  service  credited by the
Company under similar  Company Plans) prior to the Closing Date for  eligibility
to participate and vesting purposes.  Notwithstanding the preceding sentence, no
employee  of the Company or any of its  Subsidiaries  shall  receive  credit for
service  with the Company  and its  Subsidiaries  prior to the Closing  Date for
purposes of eligibility for, or vesting of, profit sharing  contributions  under
the Mestek,  Inc.  Savings &  Retirement  Plan.  To the extent  Parent  employee
benefit plans provide medical or dental welfare  benefits and an employee of the
Company or any of its  Subsidiaries  becomes eligible to participate in any such
plans,  such plans shall waive any preexisting  conditions and actively  at-work
exclusions with respect to employees of the Company and any of its  Subsidiaries
(but only to the extent such employees were covered under corresponding  Company
Plans immediately prior to the date they became eligible for coverage under such
Parent employee  benefit plans) and shall provide that any expenses  incurred on
or before the Closing Date in the  applicable  plan year by or on behalf of such
employees shall be taken into account under such Parent  employee  benefit plans
for the purposes of satisfying applicable  deductible,  co-insurance and maximum
out-of- pocket provisions for such employees.

         (b) The Company may amend  and/or take action with respect to its Stock
Incentive  Plans prior to the Closing Date to provide that upon the Merger,  all
options,  stock appreciation rights or other awards granted under such plans and
outstanding  as of the Closing  Date shall be fully  vested,  and in the case of
stock options or stock appreciation rights, be immediately exercisable.

         (c) Katie  Michael (the  "Agent")  shall be appointed  and  constituted
agent by the Company for and on behalf of the employees of the Company,  to take
all actions necessary or appropriate for the  accomplishment  and enforcement of
Section 6.7 (a), for the time period stated  therein,  including but not limited
to (i) giving and receiving  notices and  communications,  (ii)  negotiating and
entering into agreements and settlements with the parties of this Agreement, and
(iii) filing  lawsuits to enforce  Section  6.7(a),  and enforcing and complying
with any orders of courts.  The Agent,  as far as required to perform her duties
hereunder,  shall  have  reasonable  access to  information  about the  employee
benefit  plans  provided to the  employees  of the Company,  and the  reasonable
assistance  of the parties to this  Agreement  with respect  thereto;  provided,
however,  that the Agent shall treat such  information as  confidential  and not
disclose any nonpublic  information from or about the Company,  Ultimate Parent,
any  of  their  Subsidiaries,  any  employee  of  the  Company  or  any  of  its
Subsidiaries,  any employee benefit plan of the Company,  Ultimate Parent or any
of their  Subsidiaries,  any fiduciary of such employee  benefit  plans,  or any
insurance  company under  contract with the Company,  Ultimate  Parent or any of
their  Subsidiaries,  to  anyone  (except  on a need to know  basis to his legal
counsel  and other  individuals  who agree in writing  with the Company to treat
such information as  confidential).  The Agent shall receive no compensation for
her  services,  and  shall  not be  personally  liable  to the  parties  of this
Agreement  or to any  employee  of the  Company  for  any act  done  or  omitted
hereunder as Agent while acting in good faith,  and any act performed or omitted
pursuant to the advice of counsel shall be conclusive evidence of good faith.

         6.8  Preparation  of Tax Returns and Payment of Taxes.  The Company and
its  Subsidiaries  shall prepare and timely file all Tax Returns and  amendments
thereto required to be filed by or with respect to them on or before the Closing
Date. Parent shall have a reasonable  opportunity to review all such Tax Returns
and amendments  thereto prior to filing.  The Company and its Subsidiaries shall
timely pay all Taxes shown to be payable on such Tax Returns.

         6.9      Indemnification.
                  ---------------

                  (a) From the  Effective  Time  and for a period  of six  years
after the Effective Time,  Parent and Merger Sub shall jointly and severally (i)
indemnify, defend and hold harmless the present and former officers,  directors,
employees  and  agents of the  Company  and its  Subsidiaries  and of Merger Sub
(collectively,  the  "Indemnified  Parties"),  from  and  against,  and  pay  or
reimburse  the  Indemnified  Parties  for,  all losses,  obligations,  expenses,
claims,  damages or liabilities resulting from third party claims (and involving
claims by or in the right of the Company)  and  including  interest,  penalties,
out-of-pockets  expenses and attorneys'  fees incurred in the  investigation  or
defense  of any of the  same  or in  asserting  any of  their  rights  hereunder
resulting  from or  arising  out of  actions or  omissions  of such  Indemnified
Parties  occurring  on or  prior  to  the  Effective  Time  (including,  without
limitation,  the  transactions  contemplated  by this  Agreement) to the fullest
extent  permitted or required under (A) applicable  law, (B) the  certificate of
incorporation or Bylaws of the Company or its applicable Subsidiary in effect on
the date of this Agreement,  including, without limitation,  provisions relating
to advances of  expenses  incurred in the defense of any action or suit,  or (C)
any  indemnification  agreement between the Indemnified Party and the Company or
its Subsidiaries;  and (ii) advance to any Indemnified Parties expenses incurred
in defending  any action or suit with respect to such  matters,  in each case to
the  extent  such  Indemnified   Parties  are  entitled  to  indemnification  or
advancement  of expenses  under the  Company's  or its  applicable  Subsidiary's
certificate of incorporation and Bylaws in effect on the date hereof and subject
to the terms of such certificate of incorporation and Bylaws; provided, however,
that in the event any claim or claims are asserted or made within such  six-year
period,  all rights to  indemnification  in  respect  of each such  claim  shall
continue until final disposition of such claim.

                  (b) Any  Indemnified  Party  wishing to claim  indemnification
under  Section  6.9(a)  shall  provide  notice to  Parent  promptly  after  such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought,  and the  Indemnified  Party shall permit the Parent (at its expense) to
assume the defense of any claim or any litigation resulting therefrom; provided,
however, that (i) counsel for Parent who shall conduct the defense of such claim
or litigation shall be reasonably  satisfactory to the Indemnified Party and the
Indemnified  Party may participate in such defense at such  Indemnified  party's
expense,  and (ii) the  omission  by any  Indemnified  Party to give  notice  as
provided herein shall not relieve Parent of its indemnification obligation under
this Agreement,  except to the extent that such omission results in a failure of
actual notice to Parent,  and Parent is actually  prejudiced as a result of such
failure to give notice.  In the event that Parent does not accept the defense of
any matter as above provided, or counsel for the Indemnified Parties advises the
Indemnified  Parties in writing  that there are issues that raise  conflicts  of
interest between Parent and the Indemnified Parties, the Indemnified Parties may
retain counsel  satisfactory  to them, and Parent shall pay all reasonable  fees
and expenses of such counsel for the Indemnified  Parties promptly as statements
therefor are received;  provided,  however,  that Parent shall not be liable for
any settlement  effected  without its prior written consent (which consent shall
not be unreasonably withheld); provided, further, however, that Parent shall not
be responsible for the fees and expenses of more than one counsel for all of the
Indemnified  Parties.  In any event,  Parent and the  Indemnified  Parties shall
cooperate  in the  defense of any  action or claim.  Parent  shall  not,  in the
defense  of any such  claim  or  litigation,  except  with  the  consent  of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
that  provides  for  injunctive  or  other  nonmonetary   relief  affecting  the
Indemnified Party or that does not include as an unconditional  term thereof the
giving by the claimant or plaintiff to such Indemnified  Party of a release from
all liability with respect to such claim or litigation.

                  (c) This  Section 6.9 is  intended  for the benefit of, and to
grant third party  rights to,  persons  entitled to  indemnification  under this
Section 6.9, whether or not parties to this Agreement,  and each of such persons
shall be entitled to enforce the covenants contained in this Section 6.9.

                  (d) If  Parent or  Merger  Sub,  as the case may be, or any of
their respective  successors or assigns (i) reorganizes or consolidates  with or
merges into any other person and is not the  resulting,  continuing or surviving
corporation or entity of such  reorganization,  consolidation or merger, or (ii)
liquidates,  dissolves or transfers all or  substantially  all of its properties
and assets to any person or persons,  then, and in such case,  proper  provision
will be made so that the  successors  and assigns of Parent or Merger Sub assume
all of the obligations of Parent or Merger Sub, as the case may be, as set forth
in this Section 6.9.

         6.10  Employment  Agreements.  During the period  from the date of this
  Agreement  to the  Closing  Date,  the Company  shall use its best  efforts to
  assist  Merger Sub to obtain  employment  agreements  with James Heitt,  to be
  effective as of the Effective Time and  containing  terms which are reasonably
  satisfactory to Merger Sub.

                                   ARTICLE VII

          CONDITIONS PRECEDENT TO PARENT'S AND MERGER SUB'S OBLIGATIONS

         Parent and Merger Sub shall not be  required  to proceed on the Closing
Date with the  transactions  contemplated by this Agreement unless the following
conditions precedent shall have been fulfilled and satisfied, or shall have been
waived in writing by Parent or Merger Sub:

         7.1  Representations  and  Warranties.   Each  of  the  warranties  and
representations  of the Company contained herein shall be true and correct as of
the date of this Agreement, and shall also be true and correct as of the Closing
Date as if then originally made (other than representations and warranties which
address  matters only as of a certain date which shall be true and correct as of
such certain date ), except as affected by the transactions  contemplated hereby
and except where such failures would not,  individually or in the aggregate have
a Material Adverse Effect.

         7.2  Covenants.  The  Company  shall  have  complied  with  each of the
covenants  required of it on or prior to the  Closing  Date,  except  where such
failures would not,  individually or in the aggregate,  have a Material  Adverse
Effect.

         7.3      Board and Shareholder Approval.  This Agreement and the Merger
shall have been approved and adopted by the Board of Directors of the Company
and by the necessary vote of holders of the capital stock of the Company.

         7.4 Certificate.  The Company shall have delivered to Parent and Merger
Sub a certificate of its President and Chief Financial  Officer,  dated the date
of the Closing Date, certifying, to the best of the knowledge and belief of such
persons,  that  each  of the  warranties  and  representations  of  the  Company
contained  herein  are true and  correct  as of the  Closing  Date  (other  than
representations  and warranties  which address matters only as of a certain date
which shall be true and correct as of such  certain  date) except as affected by
the transactions  contemplated  hereby and except where such failures would not,
individually or in the aggregate,  have a Material Adverse Effect,  and that the
Company  shall have  complied  with each of the  covenants  required of it on or
prior to the Closing Date, except where such failures would not, individually or
in the aggregate, have a Material Adverse Effect.

         7.5      Legal Opinion.  The Company shall have delivered to Parent and
Merger Sub a legal opinion, in substantially the form attached hereto as Exhibit
A, from Shuttleworth & Ingersoll, P.L.C., Cedar Rapids, Iowa, counsel to the
Company.

         7.6      Material Adverse Change.  There shall have been no change
resulting in a Material Adverse Effect (or changes which in the aggregate result
in a Material Adverse Effect) since the date hereof.

         7.7 Bankruptcy.  The Company shall not be the subject of a petition for
reorganization or liquidation under the Federal  bankruptcy laws, or under state
or foreign insolvency laws, nor shall an assignment for the benefit of creditors
or any  similar  protective  proceeding  or  act or  event  of  bankruptcy  have
occurred.

         7.8      Employment Agreements.  Merger Sub shall have obtained an
employment agreement with James Heitt which has been duly executed by the
employee and by Merger Sub and is effective as of the Closing Date.

         7.9 Lawsuits.  No action, suit or proceeding shall have been instituted
before a court,  arbitration panel or Governmental Authority,  and no regulatory
enforcement  proceeding  shall be  pending  before  any  governmental  agency or
Governmental  Authority,  with  respect to the  business  or  operations  of the
Company or its Subsidiaries or any products manufactured or services rendered by
the Company or its Subsidiaries, except where such actions, suits or proceedings
would not reasonably be expected to,  individually  or in the aggregate,  have a
Material Adverse Effect.

         7.10 No  Injunctions  or Restraints.  No temporary  restraining  order,
preliminary  or permanent  injunction  or other order issued by a court or other
Governmental Authority of competent jurisdiction shall be in effect and have the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger.

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

         7.12   Dissenters' Rights.  Holders of more than 25% of the outstanding
Shares shall not have perfected or otherwise provided written notice of their
intention to perfect their dissenters' rights.

         7.13 Market  Condition.  There shall not have  occurred (i) any general
suspension of trading in or  limitation on prices for,  securities on the Nasdaq
Stock Market's National Market or Small Cap Market,  the New York Stock Exchange
or the American Stock Exchange (excluding any coordinated trading halt triggered
solely  as  a  result  of a  specified  decrease  in a  market  index),  (ii)  a
declaration of a banking  moratorium or any suspension of payments in respect of
banks in the  United  States  or any  state,  or (iii) any  material  limitation
(whether or not mandatory) by any United States or state Governmental  Authority
which would prohibit  Parent's bank or other financial  institution from lending
funds to Parent for the purpose of consummating the Merger.

                                  ARTICLE VIII

                 CONDITIONS PRECEDENT TO CLOSING BY THE COMPANY

         The Company  shall not be required to proceed at the Closing  Date with
the transactions  contemplated by this Agreement unless the following conditions
precedent shall have been fulfilled and satisfied,  or shall have been waived in
writing by the Company:

         8.1  Representations  and Warranties.  Each of the  representations and
warranties of Parent and Merger Sub  contained  herein shall be true and correct
as of the date of this Agreement and shall be true and correct as of the Closing
Date as if then originally made (other than representations and warranties which
address  matters only as of a certain date which shall be true and correct as of
such certain date ), except as affected by the transactions  contemplated hereby
and except where such failure would not, individually or in the aggregate,  have
a Material Adverse Effect.

         8.2  Covenants.  Parent and Merger Sub shall have complied with each of
the  covenants  required of them on or prior to the Closing  Date,  except where
such  failure  would  not,  individually  or in the  aggregate,  have a Material
Adverse Effect.

         8.3  Officers'  Certificate.  Parent  and  Merger  Sub shall  each have
delivered to the Company a certificate of the Chief Executive  Officer and Chief
Financial  Officer of Parent and Merger Sub, dated the date of the Closing Date,
certifying,  to the best of the knowledge and belief of such officers, that each
of the warranties and  representations of Parent and Merger Sub contained herein
are true and correct as of the Closing  Date  (other  than  representations  and
warranties  which address  matters only as of a certain date which shall be true
and correct as of such  certain  date),  except as affected by the  transactions
contemplated  hereby, and except where such failures would not,  individually or
in the  aggregate,  have a Material  Adverse  Effect and that  Parent and Merger
shall have complied  with each of the covenants  required of them on or prior to
the Closing Date,  except where such failures would not,  individually or in the
aggregate, have a Material Adverse Effect.

         8.4 Legal  Opinion.  Parent and Merger Sub shall have  delivered to the
Company,  a legal  opinion as of the Closing  Date,  in  substantially  the form
attached  hereto as  Exhibit  B, from  Baker &  McKenzie,  counsel to Parent and
Merger Sub.

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

         8.6 No  Injunctions  or  Restraints.  No temporary  restraining  order,
preliminary  or permanent  injunction  or other order issued by a court or other
Governmental Authority of competent jurisdiction shall be in effect and have the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger.

                                   ARTICLE IX

                                   TERMINATION

         9.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be  abandoned  at any time prior to the Closing  Date,  before or
after the approval by  stockholders,  by the mutual  written  consent of Parent,
Merger Sub and the Company.

         9.2 Termination by Either Parent or the Company.  This Agreement may be
terminated (upon notice from the terminating party to the other parties) and the
Merger may be abandoned by either Parent or the Company if:

         (a) The  Closing  Date shall not have  occurred  by June 15,  2000 (the
"Termination  Date");  provided that the right to terminate this Agreement under
this clause  shall not be  available  to any party whose  failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Closing  Date to occur on or before the  Termination  Date;  and provided
further  that the  Termination  Date shall be June 29,  2000 if (i) any  waiting
period (and any extension  thereof)  under the HSR Act  applicable to the Merger
shall not have  expired or been  terminated  by June 15,  2000,  or (ii) the SEC
shall have  refused to allow the Company to file a  definitive  proxy  statement
with respect to the Merger by June 1, 2000.

         (b) Any court of competent jurisdiction or Governmental Authority shall
have  issued an order,  decree or ruling or taken any other  action  permanently
restraining,  enjoining  or  otherwise  prohibiting  the  payment  of the Merger
Consideration  for the Shares or the making of any Cash Payment  pursuant to the
Merger and such order,  decree,  ruling or other  action shall have become final
and nonappealable.

         9.3      Termination by the Company.  This Agreement may be terminated
(upon notice to Parent) by the Company and the Merger may be abandoned by the
Company if:

         (a) Parent or Merger Sub  breaches  or fails to perform or comply  with
its covenants and agreements  contained  herein or breaches its  representations
and  warranties  in any material  respect and such breach cannot or has not been
cured within 15 days after the giving of written notice of such breach to Parent
and Merger Sub, other than any breach which is not  reasonably  likely to result
in a Material Adverse Effect; or

         (b) the Board of Directors of the Company,  after complying with all of
the  provisions of Section 6.2,  accepts and enters into a definitive  agreement
with respect to a Superior Proposal.

         9.4      Termination by Parent and Merger Sub.  This Agreement may be
terminated (upon notice to the Company) by Parent or Merger Sub, and the Merger
may be abandoned by Parent or Merger Sub if:

         (a) The Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of this Agreement or the Merger;

         (b) In the  event of a breach  by the  Company  of any  representation,
warranty,  covenant or agreement contained in this Agreement which cannot or has
not been  cured  prior to 15 days  after the  giving of  written  notice of such
breach to the Company  and has not been waived by Parent or Merger Sub  pursuant
to the provisions  hereof,  other than any breach which is not reasonably likely
to result in a Material Adverse Effect; or

         (c)  Any  parties  (other  than  Parent  or  the  Merger  Sub)  to  any
Stockholder Agreements whose signatories own of record or beneficially more than
ten percent (10%) of the Common Stock of the Company  issued and  outstanding on
the date of this Agreement shall have materially breached or repudiated any such
agreements.

         9.5 Effect of Termination and Abandonment.  In the event of termination
of this Agreement and  abandonment of the Merger pursuant to this Article IX, no
party hereto (or any of its  directors or officers)  shall have any liability or
further  obligation to any other party to this Agreement,  except as provided in
Section 9.6 and 10.1,  except that  nothing  herein will  relieve any party from
liability for any breach of this Agreement.

         9.6      Payment of Certain Fees upon Termination.
                  ----------------------------------------

         (a) (i) If either (A)(i) the Company  receives a bona fide  Acquisition
Proposal  at any  time  after  the  date  of this  Agreement  and  prior  to the
termination  of this  Agreement,  (ii) this  Agreement  terminates  prior to the
consummation of the Merger for any reason (other than a breach of this Agreement
by Parent or Merger  Sub),  and (iii) by the date  which is twelve  (12)  months
after the date of  termination  of this  Agreement,  either  (1) an  Acquisition
Proposal with a third party is  consummated,  or (2) the Company  enters into an
agreement  for an  Acquisition  Proposal  with a third party which is thereafter
consummated,  or (B) the Company  terminates this Agreement  pursuant to Section
9.3(b), then, in either event, the Company shall pay to Parent, by wire transfer
of immediately  available  funds,  within two days after the consummation of the
Acquisition  Proposal  or  Superior  Proposal,  as the case may be, a fee in the
amount of One Million Two Hundred Seventy-Seven Thousand Dollars ($1,277,000).

         (b) In the event of  termination  of this Agreement by Parent or Merger
Sub  pursuant  to  Section  9.4(b) or Section  9.4(c),  then the  Company  shall
reimburse Parent for its reasonable  out-of-pocket  expenses  (including but not
limited  to  expenses  referenced  in Section  10.1(i)  and  10.1(ii))  actually
incurred in connection  with this  Agreement and the  transactions  contemplated
hereby,  up to an aggregate  amount of One Million Dollars  ($1,000,000),  which
amount shall be payable by wire transfer of immediately  available  funds within
three  business days of written  demand  therefor,  accompanied  by a reasonable
detailed  statement of such expenses and  appropriate  supporting  documentation
therefor.

         (c) In the  event  of  termination  of this  Agreement  by the  Company
pursuant to Section  9.3(a),  then Parent  shall  reimburse  the Company for its
reasonable  out-of-pocket  expenses  (including  but  not  limited  to  expenses
referenced  in  Section  10.1(i))  actually  incurred  in  connection  with this
Agreement and the transactions contemplated hereby, up to an aggregate amount of
One Million Dollars ($1,000,000), which amount shall be payable by wire transfer
of  immediately  available  funds within three  business days of written  demand
therefor,  accompanied by a reasonably  detailed  statement of such expenses and
appropriate supporting documentation therefor.

                                    ARTICLE X

                            MISCELLANEOUS AND GENERAL

         10.1  Expenses.  Each party shall bear its own expenses,  including the
fees and expenses of any attorneys,  accountants,  investment bankers,  brokers,
finders or other  intermediaries  or other  Persons  engaged by it,  incurred in
connection with this Agreement and the transactions  contemplated hereby, except
(i) the expenses incurred in connection with the printing, filing and mailing to
stockholders  of  the  Proxy  Statement  and  the  solicitation  of  stockholder
approvals  shall be shared  equally by the Company  and Parent,  (ii) all filing
fees incurred,  or to be incurred,  in connection with filings under the HSR Act
and any  other  applicable  antitrust  laws  and  regulations  shall be the sole
responsibility of Parent, and (iii) as otherwise provided in Section 9.6.

         10.2   Notices,   Etc.   All  notices,   requests,   demands  or  other
communications  required by or otherwise with respect to this Agreement shall be
in  writing  and  shall be deemed  to have  been  duly  given to any party  when
delivered  personally,  when scheduled for delivery when sent by courier service
guaranteeing delivery by a specific date, when sent by telecopy and confirmed by
return  telecopy,  or upon receipt  after being mailed by  first-class  mail (or
other class of mail),  postage prepaid and return receipt requested in each case
to the applicable addresses set forth below:

                  If to the Company:

                  Met-Coil Systems Corporation
                  5486 Sixth Street, SW
                  Cedar Rapids, IA 52404
                  Attn: James D. Heitt
                  President and Chief Operating Officer

                  Facsimile:  (319) 362-0225

                  With a copy to:

                  Carroll Reasoner, Esq.
                  Shuttleworth & Ingersoll
                  115 Third Street SE, Suite 500
                  Cedar Rapids, IA  52406-2107

                  Facsimile: (319)-365-8725

                  If to Parent or Merger Sub:

                  Formtek, Inc.
                  260 North Elm Street
                  Westfield, MA 01085
                  Attn: Stephen Shea

                  Senior Vice President and Chief Financial Officer

                  Facsimile:  (413) 568-7428

                  With a copy to:

                  Baker & McKenzie
                  815 Connecticut Ave, N.W.
                  Washington, DC  20006
                  Attn: Marc R. Paul, Esq.

                  Facsimile: (202) 452-7074

or to such other address as such party shall have  designated by notice so given
to each other party.

         10.3 Amendments,  Waivers, Etc. This Agreement may be amended, changed,
supplemented,  waived or otherwise  modified  only by an  instrument  in writing
signed by the party against whom enforcement is sought; provided that, after the
adoption  of  this  Agreement  by the  stockholders  of  the  Company,  no  such
amendment,  change,  supplement  or waiver  shall be made  without  the  further
requisite approval of such stockholders if such amendment, change, supplement or
waiver by law requires the further approval by such stockholders.

         10.4 No  Assignment.  This  Agreement  shall be binding  upon and shall
inure to the benefit of and be enforceable  by the parties and their  respective
successors and assigns;  provided that, except as otherwise  expressly set forth
in this  Agreement,  neither the rights nor the  obligations of any party may be
assigned or delegated without the prior written consent of the other parties.

         10.5  Entire  Agreement.  Except as  otherwise  provided  herein,  this
Agreement (together with the Company Disclosure Statement, the Parent/Merger Sub
Disclosure Statement,  Exhibits, and the Confidentiality Agreement and the other
agreements  expressly  contemplated  hereby)  embodies the entire  agreement and
understanding  between the parties  relating  to the subject  matter  hereof and
supersedes  all prior  agreements  and  understandings  relating to such subject
matter.  There are no  representations,  warranties  or covenants by the parties
hereto  relating to such subject matter other than those  expressly set forth in
this Agreement  (including the Company Disclosure  Statement,  the Parent/Merger
Sub Disclosure  Statement,  Exhibits and the Confidentiality  Agreement) and any
writings expressly required hereby.

         10.6 Specific  Performance.  The parties acknowledge that money damages
are not an adequate  remedy for  violations of this Agreement and that any party
may, in its sole  discretion,  apply to a court of  competent  jurisdiction  for
specific  performance  or injunctive or such other relief as such court may deem
just and proper in order to enforce  this  Agreement  or prevent  any  violation
hereof and, to the extent  permitted by  applicable  Law,  each party waives any
objection to the imposition of such relief.

         10.7  Remedies  Cumulative.  All rights,  powers and remedies  provided
under this  Agreement  or  otherwise  available  in respect  hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the  simultaneous or
later exercise of any other such right, power or remedy by such party.

         10.8 No Waiver.  The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise  available in respect
hereof at law or in equity,  or to insist  upon  compliance  by any other  party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof,  shall not  constitute a waiver by such party
of its right to exercise any such or other  right,  power or remedy or to demand
such compliance.

         10.9 No Third  Party  Beneficiaries.  Except as  otherwise  provided in
Section 6.7 (with respect to the Agent only) and Section 6.9, this  Agreement is
not intended to be for the benefit of and shall not be enforceable by any Person
or entity who or which is not a party hereto.

         10.10 Public Announcements.  Parent and the Company will agree upon the
timing and  content of the initial  press  release to be issued  describing  the
transactions  contemplated  by this  Agreement,  and will  not  make any  public
announcement  thereof prior to reaching such agreement  unless required to do so
by applicable Law or regulation or NASDAQ or stock exchange requirement.  To the
extent  reasonably  requested  by any other  party,  each party will  thereafter
consult with and provide reasonable cooperation to the others in connection with
the issuance of further press releases or other public documents  describing the
transactions contemplated by this Agreement.

         10.11 Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed  and enforced in accordance  with the internal laws of
the State of Delaware, without regard to principles of conflict of laws.

         10.12 Name,  Captions,  Etc. The names  assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction  hereof.  Unless otherwise  specified,
(a) the terms "hereof",  "herein" and similar terms refer to this Agreement as a
whole and (b)  references  herein to Articles  or Sections  refer to articles or
sections of this Agreement.  Wherever  appearing  herein,  the word  "including"
shall be deemed to be followed by the words "without limitation."

         10.13  Counterparts.  This  Agreement  may be executed in any number of
counterparts,  each of which shall be deemed to be an original, but all of which
together shall  constitute one  instrument.  Each  counterpart  may consist of a
number of copies each signed by less than all, but  together  signed by all, the
parties hereto.

         10.14   Survival  of   Representations,   Warranties,   Covenants   and
Agreements.  The  respective  representations  and  warranties  of  the  Company
contained herein or in any certificates or other documents delivered prior to or
at the Closing  Date shall  terminate  at the  Effective  Time.  The  respective
representations  and warranties of the Parent and Merger Sub contained herein or
in any certificates or other documents delivered prior to or at the Closing Date
shall terminate at the Effective  Time. The respective  covenants and agreements
of the parties contained herein or in any other documents  delivered prior to or
at the Closing Date shall survive the  execution and delivery of this  Agreement
and shall only terminate in accordance with their respective terms.

         10.15  Severability.  In case any provision in this Agreement  shall be
held invalid,  illegal or unenforceable in a jurisdiction,  such provision shall
be modified  or deleted,  as to the  jurisdiction  involved,  only to the extent
necessary to render the same valid,  legal and  enforceable,  and the  validity,
legality and enforceability of the remaining  provisions hereof shall not in any
way be  affected  or  impaired  thereby  nor shall  the  validity,  legality  or
enforceability of such provision be affected thereby in any other jurisdiction.

         10.16  Disclosure   Statements.   The  parties   acknowledge  that  the
disclosures  contained in the Company Disclosure Statement and Parent/Merger Sub
Disclosure  Statement to this Agreement (i) relate to certain matters concerning
the disclosures required and transactions  contemplated by this Agreement,  (ii)
are  qualified in their  entirety by reference  to specific  provisions  of this
Agreement,  and (iii) are not intended to constitute  and shall not be construed
as  indicating  that such  matter is required  to be  disclosed,  nor shall such
disclosure be construed as an admission  that such  information is material with
respect to the Company,  Parent or Merger Sub, as the case may be, except to the
extent required by this Agreement.

         10.17    Waiver.
                  ------

         (a) Any of the parties may:

              (i) Extend in writing the time for the performance of any of the
              obligations herein contained to be performed for the benefit of
              such party;

              (ii) Waive in writing any inaccuracies in the  representations and
              warranties  made to it contained in this  Agreement or any Exhibit
              or Company  Disclosure  Statement or Parent/Merger  Sub Disclosure
              Statement or any certificate or certificates  delivered by another
              party to this Agreement;

              (iii) Waive in writing the failure in performance of any of the
              conditions herein expressed for its benefit; and

              (iv) Waive in writing compliance with any of the covenants herein
              contained for its benefit.

         (b) No such waiver or  extension  shall be valid  unless in writing and
signed by the party  granting  the waiver or  extension,  and no such  waiver or
extension  shall be  construed to excuse or mitigate  any  subsequent  breach or
violation of this Agreement not specifically covered by such waiver.

                                   ARTICLE XI

                                   DEFINITIONS

As used in this  Agreement,  the  following  terms  shall  have  the  respective
meanings set forth below:

         "Acquisition Proposal":  As defined in Section 6.2(a).

         "Affiliate":  As defined in Rule 12b-2 under the Exchange Act.

         "Agent":  As defined in Section 6.7(c).

         "Agreement":  As defined in the preamble hereto.

         "Authorization":  Any consent, approval or authorization of, expiration
or termination of any waiting period requirement  (including pursuant to the HSR
Act) by, or filing,  registration,  qualification,  declaration  or  designation
with, any Governmental Authority.

         "Bylaws":  In respect of any Person, the bylaws of such Person.

         "Cash Payment":  As defined in Section 2.2(a).

         "Certificate of Merger":  The certificate of merger with respect to the
merger of the  Company  with and into  Merger  Sub,  containing  the  provisions
required by, and executed in accordance with, Section 251 of the DGCL.

         "Closing":  As specified in Section 1.2.

         "Closing Date":  As defined in Section 1.2.

         "Code":  The Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.

         "Common Stock":  The Company's common stock, par value $0.01 per share.

         "Company":  Met-Coil Systems Corporation, a Delaware corporation.

         "Company Certificates":  As defined in Section 2.3.

         "Company Charter":  The Certificate of Incorporation of the Company, as
amended to the date hereof and as it may be further amended prior to the Closing
Date with the consent of Parent pursuant to Section 6.1.

         "Company Disclosure Statement":  The disclosure statement, dated the
date of this Agreement, delivered by the Company to Parent.

         "Company Multiemployer Plan" means all Multiemployer Plans to which the
Company or an ERISA Affiliate of the Company contributes or has contributed,  or
in which the Company or an ERISA Affiliate of the Company otherwise participates
or has participated.

         "Company Other Benefit  Obligation"  means an Other Benefit  Obligation
owed, adopted, or followed by the Company or an ERISA Affiliate of the Company.

         "Company  Plan" means all Plans,  other than  Multiemployer  Plans,  of
which the Company or an ERISA Affiliate of the Company is or was a Plan Sponsor,
or to  which  the  Company  or an  ERISA  Affiliate  of  the  Company  otherwise
contributes or has contributed, or in which the Company or an ERISA Affiliate of
the Company otherwise participates or has participated.  All references to Plans
are to Company Plans unless the context requires otherwise.

         "Company SEC Reports":  As defined in Section 3.11.

         "Company Stockholders' Meeting":  As defined in Section 6.4.

         "Confidentiality Agreement":  That certain Confidentiality Agreement
dated July 21, 1999 between the Company and Ultimate Parent.

         "Control":  With  respect  to any  Person,  the  possession,  direct or
indirect,  of the power to direct or cause the direction of the  management  and
policies of such Person, whether through the ownership of voting securities,  by
contract, or otherwise.

         "DGCL":  The Delaware General Corporation Law.

         "Dissenting Shares":  As defined in Section 2.5.

         "Dissenting Stockholder": As defined in Section 2.5.

         "Effective Time":  As defined in Section 1.2.

         "Environmental, Health, and Safety Liabilities": Any cost, damages,
attorneys' fees, expense, liability, obligation, or
other responsibility arising from or under Environmental Laws and consisting of
or relating to:
(a)      any environmental, health, or safety matters or conditions including
on-site or off-site contamination, occupational safety
and health, and regulation of Hazardous Substances;

(b) any events, facts, conditions or circumstances which may give rise to common
 law or  other  legal  liability,  or  otherwise  form the  basis of any  fines,
 penalties,  judgments, awards, settlements,  suits, notices of violation, legal
 or administrative  proceedings,  damages, losses, claims, demands and response,
 investigative, remedial, or inspection costs and expenses;

(c)  financial  responsibility  under  Environmental  Laws for cleanup  costs or
 corrective action, including any investigation,  cleanup, removal, containment,
 or other  remediation or response  actions  ("Cleanup")  required by applicable
 Environmental  Laws (whether or not such Cleanup has been required or requested
 by any Governmental Authority or any other Person) and for any natural resource
 damages; or

(d)      any other compliance, corrective, investigative, response, removal or
remedial measures required under Environmental Laws.

         The terms  "removal,"  "remedial," and "response  action,"  include the
 types of activities  covered by the United States  Comprehensive  Environmental
 Response,  Compensation,  and  Liability  Act, 42 U.S.C.  ss. 9601 et seq.,  as
 amended ("CERCLA"),  or equivalent state "Superfund" laws, and include removal,
 remedial and investigatory  activities under federal, state, or local voluntary
 site remediation programs.

         "Environmental Laws":  As defined in Section 3.23.

         "ERISA Affiliate" means, with respect to the Company,  any other person
that,  together with the Company,  would be treated as a single  employer  under
Code Section 414.

         "ERISA":  The Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in
effect from time to time.

          "Exchange Act":  The Securities Exchange Act of 1934, as amended.

         "Executive Agreements":  As defined in Section 6.7.

         "Governmental Authority": Any

(a)      nation, state, county, city, town, village, district, or other
         jurisdiction of any nature;
(b)      federal, state, local, municipal, foreign, or other government;
(c)      governmental or quasi-governmental authority of any nature (including
         any governmental agency, branch, department, official, or entity and
         any court or other tribunal);

(d)      multi-national organization or body; or

(e) body exercising,  or entitled to exercise,  any  administrative,  executive,
 judicial, legislative,  police, regulatory, or taxing authority or power of any
 nature.

         "Hazardous Substances":  As defined in Section 3.23.

         "HSR Act": The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

         "Initial Period":  As defined in Section 6.7(a).

         "Intellectual Property":  As defined in Section 3.10.

         "Knowledge of the Company",  "to the Company's  knowledge" and words of
similar import shall mean the actual knowledge of Raymond Blakeman, James Heitt,
Gary Dickerson,  Rian Sheel,  Randall Stodola,  J.R. Svehla,  John Toben or John
Welty.

         "Law": Any foreign or domestic law,  statute,  code,  ordinance,  rule,
regulation promulgated, or order, judgment, writ, stipulation, award, injunction
or decree entered by any Governmental Authority.

         "Lien":  As defined in Section 3.16.

         "Material Adverse Effect": In respect of any Person, a material adverse
effect on the business, properties, assets, liabilities,  operations, results of
operations  or  condition  (financial  or  otherwise)  of  such  Person  and its
Subsidiaries  taken as a whole,  or which would prevent the  consummation of the
transactions  contemplated  by  this  Agreement  on  the  terms  and  conditions
contained herein.

         "Material Contracts":  As defined in Section 3.17.

         "Material Systems":  As defined in Section 3.21.

         "Merger":  As defined in the recitals hereto.

         "Merger Consideration":  As defined in Section 2.1.

         "Merger Sub":  Formtek Acquisition, Inc., a Delaware corporation.

         "Merger Sub Common Stock":  Merger Sub's common stock, par value $0.01
          per share.

         "Multiemployer Plan" has the meaning given in ERISA Section 3(37)(A).

         "NASDAQ":  The Nasdaq Stock Market, National Market System.

         "Options":  Options to purchase Shares.

          "Other Benefit  Obligation"  means all obligations,  arrangements,  or
customary practices,  whether or not legally  enforceable,  to provide benefits,
other than salary, as compensation for services  rendered,  to present or former
directors,  employees,  or agents,  other than  obligations,  arrangements,  and
practices  that are Plans or  Multiemployer  Plans.  Other  Benefit  Obligations
include consulting  agreements under which the compensation paid does not depend
upon the amount of service  rendered,  sabbatical  policies,  severance  payment
policies, and fringe benefits within the meaning of Code Section 132.

         "Parent":  Formtek, Inc., a Delaware corporation.

         "Parent/Merger Sub Disclosure Statement": The disclosure statement,
          dated the date hereof, delivered by Parent and Merger Sub to the
          Company.

         "Parent Representatives":  As defined in Section 6.6.

         "Paying Agent":  As defined in Section 2.3.

         "Payment Fund":  As defined in Section 2.3.

         "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

         "Pension Plan" has the meaning given in ERISA Section 3(2)(A).

         "Permitted Investments":  As defined in Section 2.3.

         "Permitted Liens":  As defined in Section 3.16.

         "Person": Any individual or corporation,  company, partnership,  trust,
incorporated or unincorporated  association,  limited liability  company,  joint
venture or other entity of any kind.

          "Plan" has the meaning given in ERISA Section 3(3).

         "Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).

         "Preferred Shares":  The Company's Cumulative Preferred Shares, par
          value $1.00 per share.

         "Property":  As defined in Section 3.23.

         "PCBs":  As defined in Section 3.23.

         "Proxy Statement":  As defined in Section 3.15.

         "Qualified  Plan"  means any Plan that  meets or  purports  to meet the
requirements of Code Section 401(a).

         "Relevant Date":  As defined in Section 3.21.

         "SEC":  The Securities and Exchange Commission.

         "Securities Act":  The Securities Act of 1933, as amended.

         "Shares":  Shares of common stock of the Company, par value $0.01 per
          share.

         "Stockholder Agreements":  As defined in the recitals hereof.

         "Stock Incentive Plans":  As defined in Section 2.2(b).

         "Subsidiary": As to any Person, any other Person of which more than (i)
50% of the equity and (ii) 50% of the voting  interests  are owned,  directly or
indirectly,  by such  first  Person.  For  the  avoidance  of  doubt,  the  term
"Subsidiary",  when  applied to the  Company,  includes  any Person  listed as a
Subsidiary on Schedule 3.2 to the Company Disclosure Statement.

         "Superior Proposal":  As defined in Section 6.2.

         "Surviving Corporation":  Shall mean the Merger Sub in its capacity as
          the surviving corporation in the Merger pursuant to Section 1.1 of
          this Agreement.

         "Tax":  As defined in Section 3.9.

         "Tax Controversy":  As defined in Section 3.9.

         "Tax Return":  As defined in Section 3.9.

         "Termination Date":  As defined in Section 9.2.

         "Title IV Plans"  means all Pension  Plans that are subject to Title IV
         of ERISA other than Multiemployer Plans.

         "Ultimate Parent": Mestek, Inc., a Pennsylvania corporation.

         "VEBA" means a voluntary employees' beneficiary  association under Code
          Section 501(c)(9).

         "Voting Debt":  As defined in Section 3.4(a).

         "Warrants":  Warrants to purchase Shares.

         "Welfare Plan" has the meaning given in ERISA Section 3(1).

         "Wholly  Owned  Subsidiary":  As to any Person,  a  Subsidiary  of such
Person 100% of the equity and voting  interest in which  (other than  directors'
qualifying shares) is owned, directly or indirectly, by such Person.

         "Year 2000 Compliant":  As defined in Section 3.21.

<PAGE>

                  IN WITNESS  WHEREOF,  this  Agreement  has been  executed  and
delivered by the parties set forth below.

                                                     FORMTEK, INC.

                                             By: _/S/Stephen M. Shea________

                                             Name:Stephen M. Shea

                                             Title:Sr. Vice President-Finance

                                                     FORMTEK ACQUISITION, INC.

                                               By: _/S/ Stephen M.Shea__________

                                               Name:Stehpen M. Shea

                                               Title: Sr. Vice President-Finance

                          MET-COIL SYSTEMS CORPORATION

                                               By: /S/ Raymond Blakeman_________

                                               Name: Raymond Blakeman

                                               Title: Chairman

                  In order to induce  the  Company to  execute  this  Agreement,
Ultimate Parent hereby jointly and severally  unconditionally  guarantees to the
Company the full and timely performance of all of the obligations and agreements
of Parent and Merger Sub in accordance  with the terms hereof.  The Company may,
at its option,  proceed against  Ultimate Parent for the performance of any such
obligation or agreement,  or for damages for default in the performance thereof,
without first  proceeding  against  Parent or Merger Sub or against any of their
properties.  Ultimate  Parent  further  agrees  that its  guarantee  shall be an
irrevocable guarantee and shall continue in effect notwithstanding any extension
or  modification  of any  guaranteed  obligation,  any  assumption  of any  such
guaranteed  obligation by any other party, or any other act or thing which might
otherwise operate as a legal or equitable  discharge of a guarantor and Ultimate
Parent hereby waives all special  suretyship  defenses and notice  requirements.
Ultimate Parent  represents and warrants to the Company that (i) Ultimate Parent
is a corporation duly organized, validly existing and in good standing under the
laws of its state of  incorporation;  (ii)  Ultimate  Parent has full  corporate
power and authority to enter into, execute,  deliver and perform its obligations
under this Agreement,  (iii) this Agreement has been duly executed and delivered
by a duly authorized  officer of Ultimate Parent and (assuming the due execution
and delivery of this Agreement by the other parties hereto other than Merger Sub
and Parent)  constitutes a valid and binding  agreement of the Ultimate  Parent,
enforceable  against it in  accordance  with its terms,  subject to  bankruptcy,
insolvency  and other similar laws  affecting the rights of creditors  generally
and except that the remedies of specific performance, injunction and other forms
of equitable  relief may not be  available,  and (iv) neither the  execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby  will  conflict  with  or  violate  any  provision  of  the  Articles  of
Incorporation  or Bylaws of Ultimate Parent or conflict with or violate any law,
rule,  regulation,  ordinance,  order,  writ,  injunction,  judgment  or  decree
applicable to Ultimate  Parent or its business or by which any of its assets are
affected,  except to the extent any such conflict or violation  would not have a
Material Adverse Effect.

                          MESTEK, INC.

                                               By: _/s/ Stephen M. Shea________

                                               Name:  Stephen M. Shea

                                               Title: Sr. Vice President-FinanceBILL OF SALE

KNOW ALL MEN BY THESE  PRESENTS,  that  ELIZABETH C. REED TRUST  ("Seller"),  in
consideration  of  Ninety-Nine  Thousand  Seven  Hundred  Fifty and /oo  Dollars
($99,750.00)  and  other  good  and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby acknowledged,  does hereby grant, convey, assign,
transfer and deliver to Mestek, Inc., a Pennsylvania corporation ("Buyer"), free
and  clear  of  all  liens,   encumbrances,   restrictions  and  adverse  claims
whatsoever,  all of the machinery,  equipment,  fixtures,  jigs, dies,  tooling,
patterns,  tooling  fixtures  identified  in  Schedule  1 attached  hereto  (the
"Machinery & Equipment"),  together with any rights of Seller to all warranties,
if any,  and to the  extent  assignable,  received  from the  manufacturers  and
sellers of such items.

Seller does for itself,  and its successors and assigns,  covenant and agree, at
its own expense, to warrant and defend the title to and the sale and transfer of
the Machinery & Equipment unto Buyer,  its  successors and assigns,  against all
claims whatsoever.

Seller shall, at the request of Buyer and without further consideration, execute
and deliver such other  instruments of  conveyance,  assignment and transfer and
take such other  actions  as Buyer may  reasonably  require to more  effectively
convey,  assign,  transfer to and vest in Buyer,  good and marketable  title and
possession in the Machinery & Equipment.

Buyer hereby accepts the Equipment "AS IS" and "WHERE IS" and  understands  that
there are NO WARRANTEES  EXPRESS OR IMPLIED,  INCLUDING ANY IMPLIED  WARRANTY OF
MERCHANTABILITY  OR  FITNESS  FOR A  PARTICULAR  PURPOSE  granted  or given with
respect to the Machinery & Equipment.

By acceptance hereof,  Buyer agrees to utilize,  guard and equip the Machinery &
Equipment  as  required  under  the  applicable  rules  and  regulations  of the
Occupational  Safety and Health  Administration  ("OSHA") and to comply with any
and all applicable  OSHA  standards in its sale,  use,  modification,  repair or
refurbishment of the Equipment with all appropriate disclaimers for and in favor
of the Seller, and to hold Seller harmless for any claims related thereto.

IN  WITNESS  WHEREOF,  Seller  has  executed  this  Bill of Sale this 1st day of
January, 1999.

WITNESS:                                             ELIZABETH C. REED TRUST

                                                      /S/ JOHN E. REED
---------------------------                          ---------------------------
                                                     By: John E. Reed
                                                     Its: Trustee

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