SECURITIES AND EXCHANGE COMMISSION



                             Washington, D.C. 20549



                                    FORM 8-K


                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                                January 28, 2000
                                 Date of Report
                        (Date of earliest event reported)

                        ADVANCED TECHNICAL PRODUCTS, INC.
             (Exact name of registrant as specified in its charter)



                           Delaware 0-01298 11-1581582
                  (State or other (Commission (I.R.S. Employer
                jurisdiction of File Number) Identification No.)
                                 incorporation)


                       200 MANSELL COURT, EAST, SUITE 505
                             ROSWELL, GEORGIA 30076
               (Address of principal executive offices)(Zip Code)


                 (770) 993-0291 (Registrant's telephone number,
                              including area code)


                                 NOT APPLICABLE
         (Former name and former address, if changed since last report)

262344






Item 5. Other Events.

                  Introduction

                  On January 28, 2000, Advanced Technical Products, Inc. (the
"Company") and two affiliates of The Veritas Capital Fund, L.P., ATP Holding
Corp. ("Veritas Holding") and ATP Acquisition Corp. ("Veritas Acquisition" and
together with the Company and Veritas Holding, the "Parties"), pursuant to the
Termination Agreement among the Parties, mutually agreed to terminate that
certain Agreement and Plan of Merger among the Parties dated September 3, 1999
(the "September Merger Agreement").  The Parties simultaneously entered into a
new January 2000 Agreement and Plan of Merger dated January 28, 2000 (the
"January 2000 Merger Agreement"), pursuant to which it is contemplated that
Veritas Holding will essentially acquire 100% of the outstanding stock of the
Company pursuant to a merger of ATP Acquisition with and into the Company.
Veritas Acquisition is a wholly owned subsidiary of Veritas Holding which is
beneficially owned by The Veritas Capital Fund, L.P.

                  The January 2000 Merger Agreement provides that the amount
paid for each share of the Company's common stock shall be $12.75, without
interest, (a reduction from $14.50, without interest, per share, as provided for
in the September Merger Agreement), gives Veritas Holding the right to terminate
the January 2000 Merger Agreement in its discretion during the Optional
Termination Period (as defined herein) and does not provide for a deposit
securing the obligations of Veritas Holding.


                  Background

                  The Parties executed the September Merger Agreement on
September 3, 1999, and the Company's stockholders approved the September Merger
Agreement on October 21, 1999.  Pursuant to its terms, the September Merger
Agreement was to have been consummated or terminated by January 31, 2000.

                  Due to certain developments which occurred at the Company
since September 3, 1999, the Parties mutually agreed to terminate the September
Merger Agreement without liability to any of the Parties in consideration of the
agreement of the Parties to enter into the January 2000 Merger Agreement.  These
developments included: (i) the decrease in the Company's revenues and earnings
due primarily to the decrease in revenues and earnings at Alcore, Inc.
("Alcore"), one of the Company's subsidiaries, in the fourth quarter of 1999;
(ii) the Company's receipt of notification that it may be deemed a potentially
responsible party for some portion of the cleanup costs associated under


applicable environmental statutes with the municipal landfill site in Babylon,
New York; (iii) the pending governmental investigation into Alcore reflected in
a United States government search warrant served to Alcore on January 7, 2000,
and the affidavit supporting the application for such search warrant (the
"Alcore Investigation"); and (iv) certain tax issues.

                  Summary of Material Transaction Terms

                  Under the January 2000 Merger Agreement, Veritas Acquisition
will be merged with and into the Company (the "Merger") with the Company
continuing as the "Surviving Corporation."  At the effective time of the
Merger (the "Effective Time"), each of the outstanding shares of the Company's
common stock (except for shares held by those dissenting stockholders who
exercise and perfect their appraisal rights) will be converted into the
right to receive a cash payment of $12.75 without interest.

                  Holders of certain options and warrants to buy the Company's
common stock will also be entitled to receive a cash payment at the Effective
Time.  Under the January 2000 Merger Agreement, the term (i) "Option" means each
unexercised option, warrant or other security that is outstanding at the
Effective Time pursuant to which the holder thereof has the right to purchase
the Company's common stock from the Company (whether or not such option is
vested or exercisable) and (ii) "In the Money Option" means each Option that by
its terms is exercisable from and after the Effective Time and has an exercise
price which is less than $12.75 per share.

                  As of the Effective Time, each vested and exercisable portion
of any In the Money Option (a"Vested In the Money Option") will be extinguished
and represent at the Effective Time the right to receive a cash amount equal to
the product of (x) the excess of (a) $12.75 over (b) the exercise price of such
Vested In the Money Option multiplied by (y) the aggregate number of shares of
the Company's common stock issuable upon the exercise of such Vested In the
Money Option as of the Effective Time (the "Vested Option Consideration").  A
holder of a Vested In the Money Option will be entitled to receive the Vested
Option Consideration from the Company upon the cancellation of such Vested In
the Money Option and the surrender and cancellation of the applicable option
agreement.




                  In addition, as of the Effective Time, each unvested and
unexercisable portion of any In the Money Option (an "Unvested In the Money
Option") shall be extinguished and represent a right to receive equity in, or an
option for the purchase of equity in, the Surviving Corporation or a holding
entity owning, directly or indirectly, 100% of the Surviving Corporation (the
"Replacement Security"), which Replacement Security shall (i) have a value
equivalent to the value of such Unvested In the Money Option as of the Effective
Time, (ii) shall vest in full or cease to be subject to forfeiture upon a change
in control of the Surviving Corporation and (iii) bear terms and conditions
which are substantially similar to the terms currently contained in such
Unvested In the Money Option or terms more favorable to the holder except
that the vesting/forfeiture provisions of such Replacement Security may be
changed to a vesting/forfeiture period of five (5) years commencing at the
Effective Time so long as the holder of such Unvested In the Money Option is
issued, in addition to the Replacement Security, additional equity or an
additional equity right pursuant to a stock or option plan implemented for
employees of the Surviving Corporation.

                  In addition, (a) each Option that is not an In the Money
Option shall terminate at the Effective Time (i) by determination of the
Company's board or any applicable committee thereof if the stock option
agreement and the stock option plan of the Company relating such Option permits
such a determination, or (ii) by the agreement of the holder of such Option on
or before the Effective Time and (b) all stock option plans of the Company shall
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any subsidiary of the Company
shall be terminated as of the Effective Time.

                  Pursuant to the terms of the January 2000 Merger Agreement and
in accordance with the terms of the Company's Restated Certificate of
Incorporation, each share of the Company's outstanding preferred stock
immediately prior to the Effective Time will be redeemed by the Company for
$1.00 per share, without interest, plus accrued but unpaid dividends.

                  Optional Termination Period

                  Under the January 2000 Merger Agreement, promptly after the
Company's receipt of its audited financial statements for the year ended
December 31, 1999 together with a restatement of its financial statements
for prior periods, if any, which are currently being prepared by KPMG LLP (the
"Audited Statements"), the Company shall deliver to Veritas Holding and Veritas



Acquisition such Audited Statements together with a certificate which will bring
the Company's representations and warranties in the January 2000 Merger
Agreement current to the date of such delivery (the "Audit Delivery Date") and
related amendments and supplements to the Disclosure Schedule of the January
2000 Merger Agreement (the "Disclosure Updates").  Veritas Holding shall then
have ten days commencing on the Audit Delivery Date (the "Optional Termination
Period") in which to terminate the January 2000 Merger Agreement in accordance
with Section 7.1(h) therein, and, unless Veritas Holding so terminates the
January 2000 Merger Agreement during the Optional Termination Period, then
Veritas Holding and Veritas Acquisition shall be deemed to have accepted and
agreed to the Audited Statements and the Disclosure Updates which shall be fully
incorporated therein and shall be deemed to be an integral part of the January
2000 Merger Agreement.  Veritas Holding shall also have the right to terminate
the January 2000 Merger Agreement if the Company fails to disclose the Audited
Statements and the Disclosure Updates on or before April 15, 2000.

                  Transaction Requirements

                  The Company's Board of Directors has approved the January 2000
Merger Agreement and the transactions contemplated thereby, including the
Merger. Consummation of the transactions, including the Merger, is subject to
certain conditions, including (i) the approval of the Company's stockholders;
(ii) the Company's obtaining certain third-party consents to the Merger; and
(iii) the absence of a material adverse change to the Company from the Audit
Delivery Date.

                  As part of the January 2000 Merger Agreement, the Parties
expressly acknowledged and agreed that the following developments since
September 3, 1999, have been disclosed and considered, and for purposes of
the January 2000 Merger Agreement shall not as of the date thereof, and will not
as of or after the Audit Delivery Date, individually or in the aggregate,
constitute a circumstance or circumstances which have caused or will be deemed
to cause, a material adverse change to the Company: (i)  notification that the
Company may be deemed a potentially responsible party for some portion of the
cleanup costs associated under applicable environmental statutes with the
municipal landfill site in Babylon, New York; (ii) the Family Medical Leave Act
claim and the Americans with Disabilities Act claim filed against the Company's
Marion Composites division; (iii)  the pending governmental investigation into
Alcore reflected in the government's search warrant served January 7, 2000, and
the affidavit supporting the application for such search warrant, copies of each
of which have been provided to Veritas Holding and Veritas Acquisition.  The



Parties further agreed that any and all consequences or effects on any aspect of
the Company or its subsidiaries which arise out of the business or operations of
Alcore, including without limitation, Alcore's financial results and any
liability or damages relating to the allegations in the pending governmental
investigation, shall specifically be excluded for any determinations made
thereunder.

                  Termination

                  The January 2000 Merger Agreement may be terminated pursuant
to certain specified events, including by Veritas Holding in its sole discretion
within 10 days of the Audit Delivery Date. Unlike the September Merger
Agreement, pursuant to the January 2000 Merger Agreement Veritas Holding will
not deposit any money in escrow as a good faith deposit securing its obligations
in connection with the Merger, but in the event the January 2000 Merger
Agreement is terminated after the Optional Termination Period due to the failure
of Veritas Holding and Veritas Acquisition to obtain financing by June 30, 2000,
then Veritas Holding shall pay the Company $3,000,000 and reimburse the Company
for its expenses incurred in connection with the Merger up to a maximum amount
of $750,000.

                  In the event that the January 2000 Merger Agreement is
terminated as a result of the Company's election to consummate an Alternative
Transaction (as defined in Section 5.8(b) of the January 2000 Merger Agreement),
then the Company is required to pay Veritas Holding $2,500,000 (the "Break-up
Fee") together with an amount equal to the expenses of Veritas Holding and
Veritas Acquisition incurred in connection with the Merger up to a maximum
amount of $750,000. The similar provision in the September Merger Agreement
provided for a Break-up Fee of $4,125,000 and an obligation to reimburse the
expenses of Veritas Holding and Veritas Acquisition without limit.  In addition,
in the event of termination for certain other reasons as specified in the
January 2000 Merger Agreement, either the Company, on the one hand, or Veritas
Holding and Veritas Acquisition, on the other hand, is obligated to reimburse
the other Party for expenses incurred by such Party in connection with the
Merger up to a maximum amount of $750,000.

                  The foregoing summary of the January 2000 Merger Agreement,
the Termination Agreement and the transactions contemplated thereby is qualified
in its entirety by reference to the January 2000 Merger Agreement and the
Termination Agreement which are attached hereto as Exhibit 2.1 and Exhibit 2.2,
respectively, and are incorporated herein by reference.


                  As of September 3, 1999, the Company had 5,286,206  shares of
its Common Stock outstanding.




Item 7.   Financial Statements and Exhibits.

(c)  Exhibits.  The following exhibits are provided in accordance with the
provisions of Item 601 of Regulation S-K and are filed herewith unless otherwise
noted.



Exhibit No.              Description

    2.1*                 January 2000 Agreement and Plan of Merger dated
                         January 28, 2000 by and among Advanced Technical
                         Products, Inc., ATP Acquisition Corp. and ATP Holding
                         Corp.




    2.2                  Termination Agreement dated January 28, 2000 by and
                         among Advanced Technical Products, Inc., ATP
                         Acquisition Corp. and ATP Holding Corp.





    99.1            Press Release dated January 31, 1999


*The schedules thereto have been omitted but copies thereof will be furnished
supplementally to the Commission upon request.



                                   SIGNATURES



                  Pursuant to the  requirements  of the  Securities  Exchange
Act of 1934,  the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.


                                      ADVANCED TECHNICAL PRODUCTS, INC.



                                      By: /s/ Garret L. Dominy
                                      Name: Garret L. Dominy
                                      Title: Executive Vice President
                                             & Chief Financial Officer


Dated:  February 15, 2000

269945





                                                                  EXHIBIT 2.1


                    JANUARY 2000 AGREEMENT AND PLAN OF MERGER

         This JANUARY 2000 AGREEMENT AND PLAN OF MERGER, dated January 28, 2000
(this "Agreement"), by and among ATP HOLDING CORP., a Delaware corporation
("Parent"), ATP ACQUISITION CORP., a Delaware corporation ("Sub"), and ADVANCED
TECHNICAL PRODUCTS, INC. a Delaware corporation (the "Company"). Capitalized
terms used herein have the meanings ascribed to them in Section 8.3.

         WHEREAS, each of Parent, Sub and the Company previously entered into
that certain Agreement and Plan of Merger dated September 3, 1999 (the
"September Merger Agreement") pursuant to which a merger of Sub with and into
the Company (the "Merger") was contemplated; and

         WHEREAS, as a result of certain events occurring at the Company since
September 3, 1999 each of Parent, Sub and the Company have mutually agreed to
terminate the September Merger Agreement pursuant to that certain Termination
Agreement of even date herewith (the "Termination Agreement") and to
simultaneously enter into this Agreement regarding the Merger with the terms and
conditions provided herein; and

         WHEREAS, the Board of Directors of each of Parent, Sub and the Company
have adopted resolutions in accordance with the Delaware General Corporation Law
(the "DGCL") approving this Agreement and the Termination Agreement, and deem it
advisable and in the best interests of their respective companies and
stockholders to consummate the Merger upon the terms and subject to the
conditions set forth herein; and

         WHEREAS, pursuant to the Merger, shares of the Company's common stock
will be converted into the right to receive the Merger Consideration (as defined
below) in the manner set forth herein, and the Company shall become a wholly
owned subsidiary of Parent.

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound, the parties agree as follows:

                                   Article I

                                                    THE MERGER

Section 1.1.      THE MERGER.  Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time (as hereinafter defined).  Upon


the Effective Time, the separate existence of Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving
Corporation").

Section 1.2.      INTENTIONALLY OMITTED.

Section 1.3.      CLOSING.  Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
at 10:00 a.m., New York City time, on the third business day following the date
on which the last to be fulfilled or waived of the conditions set forth in
Article VI shall be fulfilled or waived in accordance with this Agreement (the
"Closing Date"), at the offices of Whitman Breed Abbott & Morgan LLP, 200 Park
Avenue, New York, New York or such other date, time or place as agreed to in
writing by the Parties.

Section 1.4.      EFFECTIVE TIME.  The Company and Sub, with the consent of
Parent, will file with the Secretary of State of the State of Delaware (the
"Delaware Secretary of State") on the Closing Date (or on such other date as
Parent and the Company may agree) a certificate of merger or other appropriate
documents, executed in accordance with the relevant provisions of the DGCL, and
make all other filings or recordings required under the DGCL in connection with
the Merger. The Merger shall become effective upon the filing of the certificate
of merger with the Delaware Secretary of State, or at such later time as is
specified in the certificate of merger and is agreed to by the parties (the
"Effective Time").

Section 1.5.      EFFECTS OF THE MERGER.  The Merger shall have the effects set
forth in Section 259 of the DGCL.  Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company, which shall continue
as the Surviving Corporation, and Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Sub shall become the
debts, liabilities and duties of the Surviving Corporation.

Section 1.6.      CERTIFICATE OF INCORPORATION; BY-LAWS.

(a)      At the Effective Time, the Company's Restated Certificate of
          Incorporation (the "Restated Charter") shall be amended so as to read
          in its entirety as set forth in Exhibit 1.6(a) to this Agreement and
          as so amended shall become the certificate of incorporation of the
          Surviving Corporation until amended in accordance with applicable law.

(b)      The By-laws of Sub as in effect at the Effective Time shall be, from
          and after the Effective Time, the By-laws of the Surviving Corporation
           until thereafter changed or amended as provided therein or by
          applicable law.


Section 1.7.      DIRECTORS.  The directors of Sub at the Effective Time shall
become, from and after the Effective Time, the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.

Section 1.8.      OFFICERS.  The officers of the Sub at the Effective Time shall
become, from and after the Effective Time, the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.

                                   Article II

                     EFFECT OF THE MERGER ON THE SECURITIES
                         OF THE CONSTITUENT CORPORATIONS

Section 2.1.      EFFECT ON CAPITAL STOCK.  As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder:

(a)      COMMON STOCK OF SUB. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of Common Stock of the Surviving Company ("Surviving Company Securities"),
which Surviving Company Securities shall be validly issued, fully paid and
nonassessable upon such conversion.

(b)      CANCELLATION OF TREASURY STOCK. Each share of the Company's Common
          Stock, $0.01 par value (the "Common Stock") or Preferred Stock,
          $1.00 par value (the "Preferred Stock"), issued or outstanding
          immediately prior to the Effective Time that is owned by the Company
          or any of its wholly-owned Subsidiaries (as defined in Section 3.1(b),
          below) shall be canceled automatically and shall cease to exist, and
          no cash or other consideration shall be delivered or deliverable in
          exchange therefor.

(c)      CONVERSION OF COMPANY SHARES. Each share of Common Stock that is then
          issued and outstanding (such shares of Common Stock being hereinafter
          referred to collectively as the "Company Shares", other than shares to
          be canceled pursuant to subsection 2.1(b) above and other than
          Dissenting Shares (as hereinafter defined), which shares will not
          constitute "Company Shares" hereunder) shall be converted into and
          become the right to receive, upon surrender of the certificate
          representing such Company Shares in accordance with Section 2.3,
          $12.75 in cash, without interest thereon (the "Merger Consideration").

(d)      REDEMPTION OF PREFERRED STOCK. Each share of Preferred Stock that is
          then issued and outstanding, other than shares to be canceled pursuant
          to subsection 2.1(b) above, shall be redeemed by the Company in
          accordance with Article IV, Section (C)(1)(d) of the Company's
          Restated Charter immediately prior to the Effective Time by virtue of



          the Merger and without any action by the holders thereof. Upon
          surrender of a certificate representing Preferred Stock, $1.00 per
          share in cash, without interest thereon, plus any accrued but unpaid
          dividends thereon shall be paid to the holder thereof.

(e)      DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, shares of Common Stock issued and outstanding immediately prior to the
Effective Time held by a holder (a "Dissenting Shareholder") (if any) who has
the right to demand, and who properly demands, an appraisal of such shares in
accordance with Section 262 of the DGCL (or any successor provision)
("Dissenting Shares")shall not be converted into a right to receive the Merger
Consideration unless such Dissenting Shareholder fails to perfect or otherwise
loses such Dissenting Shareholder's right to such appraisal.  If, after the
Effective Time, such Dissenting Shareholder fails to perfect or loses any such
right to appraisal, each such share of such Dissenting Shareholder shall be
treated as a share that had been converted as of the Effective Time into the
right to receive the Merger Consideration in accordance with this Section 2.1,
without interest or dividends thereon. The Company shall give prompt notice to
Parent of any demands received by the Company for appraisal of any Company
Shares, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.

(f)      CANCELLATION AND RETIREMENT OF COMMON STOCK. As of the Effective Time,
all certificates representing shares of Common Stock issued and  outstanding
immediately prior to the Effective Time shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section 2.3,
or, in the case of Dissenting Shares, the rights, if any, accorded under
Section 262 of the DGCL.

Section 2.2.      STOCK OPTIONS.  For purposes of this Agreement, the term (i)
"Option" means each unexercised option, warrant or other security that is
outstanding at the Effective Time pursuant to which the holder thereof has the
right to purchase Common Stock from the Company (whether or not such option is
vested or exercisable) and (ii) "In the Money Option" means each Option that by
its terms is exercisable from and after the Effective Time and has an exercise
price which is less than $12.75 per share. As of the Effective Time, each vested
and exercisable portion of any In the Money Option (a "Vested In the Money
Option") shall be extinguished and represent at the Effective Time the right to
receive a cash amount (the "Vested Option Consideration") equal to the product
of (x) the excess of (a) the Merger Consideration over (b) the exercise price of
such Option (the "Cash Option Amount") multiplied by (y) the aggregate number of
shares of Common Stock issuable upon the exercise of such vested and exercisable
portion of the Option as of the Effective Time. In addition, as of the Effective



Time, each unvested and unexercisable portion of any In the Money Option (an
"Unvested In the Money Option") shall be extinguished and represent a right to
receive equity in, or an option for the purchase of equity in, the Surviving
Corporation or a holding entity owning directly or indirectly 100% of the
Surviving Corporation (the "Replacement Security"), which Replacement Security
shall (i) have a value equivalent to the value of such Unvested In the Money
Option as of the Effective Time, (ii) shall vest in full or cease to be subject
to forfeiture upon a change in control of the Surviving Corporation and (ii)
bear terms and conditions which are substantially similar to the terms currently
contained in such Unvested In the Money Option or terms more favorable to the
holder except that the vesting/forfeiture  provisions of such Replacement
Security may be changed to a vesting/forfeiture period of five (5) years
commencing at the Effective Time so long as the holder of such Unvested In the
Money Option is issued, in addition to the Replacement Security, additional
equity or an additional equity right pursuant to a stock or option plan
implemented for employees of the Surviving Corporation (the "Unvested Option
Consideration").  In addition, (a) each Option that is not an In the Money
Option shall terminate at the Effective Time (i) by determination of the
Company's board or any applicable committee thereof if the stock option
agreement and Company Stock Option Plan relating such Option permits such a
determination, or (ii) by the agreement of the holder of such Option on or
before the Effective Time and (b) the Company Stock Option Plans (as defined in
Section 3.1(c)) shall terminate as of the Effective Time and the provisions in
any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or any
Subsidiary shall be terminated as of the Effective Time.

Section 2.3.      EXCHANGE OF CERTIFICATES.

(a)      EXCHANGE AGENT. As of the Effective Time, Sub (or the Company, as the
Surviving Corporation) shall deposit with or for the account of a bank or trust
company designated prior to the Effective Time by Sub, which shall be reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of Certificates (as defined herein), or shall cause to be deposited,
with the Exchange Agent:

(i)      cash in an aggregate amount (the "Exchange Fund") equal to the sum of
(x) the product of (A) the number of Company Shares issued and outstanding at
the Effective Time multiplied by (B) the Merger Consideration plus (y) the
product of (A) the aggregate number of shares of Common Stock issuable upon
exercise in full of all of the Vested In the Money Options as of the Effective
Time multiplied by (B) the Cash Option Amount with respect to such Vested In the
Money Options, and

                (ii) certificates representing, or other certified evidence of
the issuance of, the Unvested Option.


(b)      EXCHANGE PROCEDURES. As soon as practicable following the Effective
          Time, the Surviving Corporation shall cause the Exchange Agent to mail
          or deliver to each record holder, as of the Effective Time, of an
          outstanding certificate or certificates or option grant which
          immediately prior to the Effective Time represented either Common
          Shares or In the Money Options (the "Certificates"), a letter of
          transmittal (which shall specify that delivery shall be effected, and
          risk of loss and title to the Certificates shall pass, only upon
          proper delivery of the Certificates to the Exchange Agent) and
          instructions for use in effecting the surrender of the Certificates
          for payment therefor. Upon surrender to the Exchange Agent of a
          Certificate, together with a duly executed letter of transmittal and
          any other reasonably required documents, the holder of such
          Certificate shall promptly receive in exchange therefor the amount of
          cash to which such holder is entitled pursuant to Section 2.1(c) or
          Section 2.2 (as applicable), without interest, together with the
          Unvested Option Consideration to which such holder is entitled
          pursuant to Section 2.2, if any, less any required withholding of U.S.
          federal income taxes and such Certificate shall be canceled. If, in
          the case of Certificates representing Company Shares, payment or
          delivery is to be made to a Person other than the Person in whose name
          a Certificate so surrendered is registered, it shall be a condition of
          payment that the Certificate so surrendered shall be properly endorsed
          or otherwise in proper form for transfer, that the signatures on the
          certificate or any related stock power shall be properly guaranteed
          and that the Person requesting such payment either pay any transfer or
          other taxes required by reason of the payment to a Person other than
          the registered holder of the Certificate so surrendered or establish
          to the satisfaction of the Surviving Corporation that such tax has
          been paid or is not applicable. Until surrendered in accordance with
          the provisions of this Section 2.3, each Certificate (other than
          Certificates canceled pursuant to Section 2.1(b), and Dissenting
          Shares) shall represent for all purposes only the right to receive the
          Merger Consideration or the Vested Option Consideration, in each case
          without interest, payable, or the Unvested Option Consideration
          issuable, pursuant to Section 2.1(c) or 2.2, as the case may be, in
          the form provided for by this Agreement.

(c)      TERMINATION OF EXCHANGE FUND. If Certificates are not surrendered prior
          to the date that is 180 days after the Effective Time, unclaimed
          amounts (including interest thereon) remaining in the Exchange Fund
          shall, to the extent permitted by applicable law, become the property
          of the Surviving Corporation, free and clear of all claims or interest
          of any Person previously entitled thereto. Any stockholders or
          optionholders of the Company who have not theretofore complied with
          the provisions of this Section 2.3 shall thereafter look only to the
          Surviving Corporation and only as general creditors thereof for
          payment for their claims in the form and amounts to which such
          stockholders or optionholders are entitled without any interest or
          dividends thereon (subject to applicable abandoned property, escheat
          and similar laws).  Neither Parent nor Surviving Corporation will be
          liable to any stockholder or optionholder of the Company for any
          amount paid to a public official in accordance with applicable
          abandoned property, escheat or similar laws.

(d)      NO FURTHER RIGHTS IN COMMON STOCK. After the Effective Time, there
          shall be no transfers on the stock transfer books of the Surviving
          Corporation of the shares of Common Stock that were outstanding
          immediately prior to the Effective Time.  If, after the Effective
          Time, Certificates are presented to the Surviving Corporation, they
          shall be canceled and exchanged for the Merger Consideration, Vested
          Option Consideration and/or Unvested Option Consideration, as the
          case may be, as provided for and in accordance with the provisions of
          this Section 2.3.

         (e)  INVESTMENT OF THE EXCHANGE FUND.  The Exchange Agent shall invest
the Exchange Fund as directed by Parent on a daily basis as provided herein.
Any interest and other income resulting from such investments shall promptly be
paid to Parent. The Exchange Agent shall invest the Exchange Fund, as directed
by Parent, in (i)direct obligations of the United States of America, (ii)
obligations for which the full faith and credit of the United States of America
is pledged to provide for the payment of principal and interest, (iii)
commercial paper rated the highest quality by either Moody's Investors Services,
Inc. or Standard & Poor's Corporation, or (iv) certificates of deposit, bank
repurchase agreements or bankers acceptances, of commercial banks with capital
exceeding $100 million; provided that any such investment or any such payment
of earnings shall not delay the receipt by holders of Certificates of the Merger
Consideration, Vested Option Consideration or Unvested Option Consideration, as
the case may be, or otherwise impair such holders' respective rights hereunder.
         (f)  LOST CERTIFICATES.  If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the Company
Shares or Vested Option Consideration and/or Unvested Option Consideration with
respect to In the Money Options formerly represented thereby.

         (g)      WITHHOLDING RIGHTS.  Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the Merger Consideration,
Vested Option Consideration and Unvested Option Consideration otherwise payable
pursuant to this Agreement to any holder of Company Shares or In the Money
Options such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations promulgated thereunder, or any
provision of any other law relating to taxes.  To the extent that amounts are so
withheld by the Surviving Corporation or Parent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Company Shares or In the Money Options in respect
to which such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.


                                  Article III

                         REPRESENTATIONS AND WARRANTIES

Section 3.1.      REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company
represents and warrants to Parent and Sub as follows, except as otherwise set
forth in the disclosure schedule attached hereto (the "Disclosure Schedule") and
except in all cases to the extent any of the following is affected by any
consequence relating to the pending governmental investigation into the
Company's Alcore, Inc. Subsidiary reflected in the government's search warrant
served January 7, 2000 and the affidavit supporting such search warrant and
relating to the allegations therein:

(a)      ORGANIZATION, STANDING AND CORPORATE POWER.  The Company and each
Subsidiary (as defined in Section 3.1(b)) is a corporation duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation and has the requisite corporate power and corporate authority to
own, lease and operate its properties and carry on its business as now being
conducted. The Company and each Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed would not have a Company Material Adverse Effect (as
defined below). As used in this Agreement, the term "Company Material Adverse
Affect" means any circumstance, event, change or effect that, individually or
when taken together with all other adverse circumstances, events, changes and
effects that are within the scope (excluding any qualification as to materiality
or Company Material Adverse Effect) of the representations and warranties made
by the Company in this Agreement, (A) is, or is reasonably likely to be,
materially adverse to the business or financial condition of the Company and its
Subsidiaries taken as a whole, or (B) impairs, or is reasonably likely to
impair, the consummation of the Merger or any of the other transactions
contemplated hereby.  The Company has delivered to Parent complete and correct
copies of its Restated Charter and By-laws, as amended to the date of this
Agreement.

(b)      SUBSIDIARIES.  Section 3.1(b) of the Disclosure Schedule  sets forth
the name, jurisdiction of incorporation, total capitalization and number of
shares of outstanding capital stock of each class owned, directly or indirectly,
by the Company of each corporation of which the Company owns, directly or
indirectly, a majority of the outstanding capital stock (individually, a
"Subsidiary" and, collectively, the "Subsidiaries"). All the issued and
outstanding shares of capital stock of each Subsidiary are validly issued, fully
paid and nonassessable. Other than 4 of the 3,000 shares of Alcore Brigantine
which are owned by officers of the Company and one of the Subsidiaries in
accordance with French law, all such shares owned, directly or indirectly, by
the Company are owned by the Company or a Subsidiary beneficially and of record,
free and clear of all liens, pledges, encumbrances or restrictions of any kind.



No Subsidiary has outstanding any securities convertible into or exchangeable or
exercisable for any shares of its capital stock, and there are no outstanding
options, warrants, stock appreciation rights, phantom stock, stock equivalents,
subscription or other rights, agreements or commitments which either obligate
such Subsidiary to issue, sell or transfer or repurchase or redeem any shares of
its capital stock or other securities. Except for the Subsidiaries, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect equity interest in
any business.  The Company has delivered to Parent complete and correct copies
of the Articles of Incorporation and By-laws of each Subsidiary, as amended to
the date of this Agreement.

(c)      CAPITALIZATION.  As of September 3, 1999, the authorized capital stock
of the Company consisted of 30,000,000 shares of Common Stock, par value $0.01
per share, and 2,000,000 shares of Preferred Stock, $1.00 par value per share
(1,000,000 shares of which had been designated "8% Cumulative Redeemable
Preferred Stock" and 1,000,000 shares of which remained undesignated).
At September 3, 1999, 5,286,206 shares of Common Stock and 1,000,000 shares of
Preferred Stock (all of which are 8% Cumulative Redeemable Preferred Stock) were
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and non-assessable, and 536,835 shares of Common Stock were reserved for
issuance upon the exercise of outstanding Options of which 316,335 shares were
subject to In the Money Options. Except as set forth above, as of September 3,
1999 no shares of capital stock or other equity securities of the Company were
issued, reserved for issuance or outstanding.  Section 3.1(c) of the Disclosure
Schedule sets forth each plan or agreement (collectively, the "Company Stock
Option Plans") pursuant to which any Options to acquire Common Stock have been,
or may be, granted as of September 3, 1999. Except as set forth above or in
Section 3.1(c) of the Disclosure Schedule, as of September 3, 1999 the Company
had no outstanding option, warrant, stock appreciation right, phantom stock,
stock equivalent, subscription or other right, agreement or commitment which
either obligated the Company to issue, sell or transfer, repurchase or redeem
any shares of the capital stock or other securities of the Company. As of
September 3, 1999 there were no voting trusts, proxies or other agreements or
understandings to which the Company or, to the best of Company's knowledge, any
stockholder of the Company, was a party with respect to the voting of the
capital stock of the Company.

(d)      AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION.

(i)      The Company has the requisite corporate power and authority to enter
into this Agreement and the Termination Agreement and, subject to the adoption
of this Agreement by its stockholders as set forth in subsection 6.1(a) with
respect to the consummation of the Merger, to consummate the transactions
contemplated by this Agreement and the Termination Agreement. The execution



and delivery of this Agreement and the Termination Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to the adoption of this Agreement by its stockholders as
set forth in subsection 6.1(a). Each of this Agreement and the Termination
Agreement has been duly executed and delivered by the Company and, assuming this
Agreement and the Termination Agreement constitute the valid and binding
agreement of Parent and Sub, constitutes valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms except
that the enforceability hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

(ii)  Subject to the receipt of consents or waivers  from the parties  listed in
Schedule 3.1(d) of the Disclosure  Schedule and the receipt of the approvals and
completion of the filings referenced in Section  3.1(d)(iii) below,  neither the
execution and delivery of this Agreement and the  Termination  Agreement nor the
consummation of the transactions  contemplated  hereby or thereby nor compliance
by the Company with any of the provisions hereof or thereof will (A) violate any
provision  of its  Restated  Charter  or  By-laws  or  any of its  Subsidiaries'
articles or certificates of incorporation or by-laws,  (B) result in a violation
or breach  of, or  constitute  (with or  without  due notice or lapse of time or
both) a default  under,  require  notice to or the  consent  of any third  party
under, or give rise to any right of termination, cancellation or acceleration or
any right which becomes effective upon the occurrence of a merger, consolidation
or change in  control  or  ownership  under,  any of the  terms,  conditions  or
provisions  of any  note,  bond,  mortgage,  indenture  or other  instrument  of
indebtedness  for money borrowed to which the Company or any of its Subsidiaries
was a party, or by which the Company or any of its  Subsidiaries or any of their
respective properties were bound as of September 3, 1999, except for violations,
breaches,  defaults or rights which, individually or in the aggregate, would not
or could not  reasonably  be  expected to result in a Company  Material  Adverse
Effect,  (C) result in a violation or breach of, or constitute  (with or without
due notice or lapse of time or both) a default  under,  require notice to or the
consent  of any third  party  under,  or give rise to any right of  termination,
cancellation  or  acceleration  or any right which  becomes  effective  upon the
occurrence of a merger,  consolidation  or change in control or ownership under,
any of the terms,  conditions or provisions of any license,  franchise,  permit,
lease or agreement to which the Company or any of its  Subsidiaries was a party,
or by which the Company or any of its  Subsidiaries  or any of their  respective
properties may have been bound as of September 3, 1999,  except for  violations,
breaches,  defaults or rights which, individually or in the aggregate, would not
or could not  reasonably  be  expected to result in a Company  Material  Adverse
Effect,  or (D) violate any law by which the Company or any of its  Subsidiaries
or any of their respective  properties was bound as of September 3, 1999, except
for  violations,  breaches,  defaults or rights  which,  individually  or in the
aggregate,  would not or could not reasonably be expected to result in a Company
Material Adverse Effect.

(iii) No filing or registration with, notification to, or authorization, consent
or approval  of, any  governmental  entity is required  in  connection  with the
execution and delivery of this  Agreement and the  Termination  Agreement by the
Company,  or the  consummation by the Company of the  transactions  contemplated
hereby  or  thereby,  except  (A) in  connection,  or in  compliance,  with  the
provisions of the  Securities  Exchange Act of 1934,  as amended (the  "Exchange
Act"), (B) the filing of a certificate of merger with the Delaware  Secretary of
State, (C) such filings and consents as may be required under any  environmental
law pertaining to any notification, disclosure or required approval triggered by
the Merger or the transactions  contemplated by this Agreement, (D) filing with,
and approval of, the Securities and Exchange Commission (the "SEC") with respect
to the delisting and  deregistration of the Common Stock, (E) in connection with
the applicable requirements of the Hart-Scott-Rodino  Antitrust Improvements Act
of 1976,  as amended (the "H-S-R Act") and (F) such other  consents,  approvals,
orders, authorizations,  notifications,  registrations, declarations and filings
not  obtained or made prior to the  consummation  of the Merger,  the failure of
which to be  obtained  or made  would  not,  individually  or in the  aggregate,
materially impair the Company's ability to perform its obligations  hereunder or
prevent the consummation of any of the transactions contemplated hereby.

(e) SEC REPORTS; FINANCIAL STATEMENTS. (i) Except as set forth in Section 3.1(e)
of the  Disclosure  Schedule,  as of September 3, 1999 the Company had filed all
required  forms,  reports and documents with the SEC since January 1, 1996, each
of which has complied in all material respects with all applicable  requirements
of the  Securities  Act of 1933,  as amended  (the  "Securities  Act"),  and the
Exchange Act,  each as in effect on the dates such forms,  reports and documents
were filed.  The Company has heretofore  made  available to Parent,  in the form
filed with the SEC (including any amendments thereto), (i) its Annual Reports on
Form 10-K for each of the fiscal years ended  December 31, 1996,  1997 and 1998,
(ii) all  definitive  proxy  statements  relating to the  Company's  meetings of
stockholders  (whether  annual or special)  held since  January 1, 1996  through
September 3, 1999, and (iii) all other reports or registration  statements filed
by the Company with the SEC since January 1, 1996 through September 3, 1999 (the
"SEC  Reports").  Except  as set  forth  on  Section  3.1(e)  of the  Disclosure
Schedule,  none  of  such  forms,  reports  or  documents,   including,  without
limitation,  any financial  statements or schedules  included or incorporated by
reference  therein,  contained,  when filed,  any untrue statement of a material
fact or omitted to state a material fact  required to be stated or  incorporated
by reference  therein or necessary in order to make the statements  therein,  in
light of the circumstances under which they were made, not misleading. Except as
set forth on Section 3.1(e) of the Disclosure Schedule, the financial statements
and related  schedules  and notes  thereto of the Company  contained  in the SEC
Reports (or incorporated  therein by reference) were prepared in accordance with
generally accepted accounting principles applied on a consistent basis except as
noted  therein,  and fairly  present in all material  respects the  consolidated
financial  position of the Company and its  consolidated  Subsidiaries as of the
dates  thereof  and  the  consolidated  results  of  their  operations  and,  if
applicable,  the cash flows for the periods then ended,  subject (in the case of
interim unaudited  financial  statements) to normal year-end audit  adjustments,
and such  financial  statements  complied  as of their  respective  dates in all
material  respects with  applicable  rules and regulations of the SEC. Except as
set forth on  Section  3.1(e) of the  Disclosure  Schedule,  each SEC Report was
prepared  in  accordance  with the  requirements  of the  Securities  Act or the
Exchange  Act, as  applicable.  (ii) As of September 3, 1999 neither the Company
nor any of its Subsidiaries,  nor any of their respective assets, businesses, or
operations,  was a party to, or was bound by or  affected  by, or  received  any
benefits under any contract or agreement or amendment thereto, that in each case
was required to be filed as an exhibit to an SEC Report,  that has not been,  or
timely will not be, filed as an exhibit to an SEC Report. (f) ABSENCE OF CERTAIN
CHANGES OR EVENTS. Except as may be disclosed in the SEC Reports or disclosed in
Section  3.1(f) of the  Disclosure  Schedule,  since  June 30,  1999 up  through
September 3, 1999 the Company and its  Subsidiaries  have conducted  business in
the  ordinary  course,  and there has not been (i) any  change in the  business,
assets, financial condition or results of operations of the Company or any other
event which in any such case has had or could  reasonably  be expected to have a
Company Material Adverse Effect;  (ii) any damage,  destruction or loss, whether
covered  by  insurance  or not,  having  a  material  adverse  effect  upon  the
properties or business of the Company;  (iii) any declaration,  setting aside or
payment of any dividend,  or other  distribution in respect of the capital stock
of the Company or any  redemption or other  acquisition by the Company of any of
its capital  stock;  (iv) any  issuance by the  Company,  or  commitment  of the
Company to issue, any shares of its Common Stock or securities  convertible into
or exchangeable for shares of its Common Stock or Preferred Stock other than the
issuance of Common Stock to any persons exercising Options;  (v) any increase in
the rate or terms of compensation payable or to become payable by the Company to
its directors, officers or employees, except increases occurring in the ordinary
course of business in accordance  with its customary  past  practices;  (vi) any
grant  or  increase  in the  rate or terms  of any  bonus,  insurance,  pension,
severance or other employee benefit plan, payment or arrangement made to, for or
with any directors,  officers or employees,  except  increases  occurring in the
ordinary  course of business in accordance  with its customary  past  practices;
(vii) any change by the Company in accounting  methods,  principles or practices
except as required by generally accepted accounting principles; (viii) any stock
split, reverse stock split, combination or reclassification of the Common Stock;
(ix) any change in the terms and  conditions  of the Company  Stock Option Plans
except as contemplated  hereby;  or (x) any agreement or commitment,  whether in
writing or otherwise,  to take any action  described in this subsection  3.1(f).
(g) COMPANY PROXY MATERIALS.  All of the information supplied by the Company for
inclusion in the Definitive  Proxy  Statement  referred to in Section 5.2 hereof
will not, on the date when the Definitive Proxy Statement is first mailed to the
Company's  shareholders,  and the Definitive Proxy Statement, as then amended or
supplemented,  will  not,  on the date of the  Company's  stockholders'  meeting
referred to in Section 5.1 hereof or on the Closing  Date (as defined in Section
1.3 hereof),  contain any statement which is false or misleading with respect to
any  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.  Notwithstanding  the
foregoing, the Company makes no representation or warranty regarding information
furnished by Parent or Sub for inclusion in the Definitive  Proxy  Statement (or
any amendment or supplement thereto).  (h) BOARD RECOMMENDATION.  As of the date
hereof,  the  Board  of  Directors  of the  Company  has  recommended  that  the
stockholders  of the Company  vote for  adoption of this  Agreement,  subject to
Section 5.8. (i) UNDISCLOSED LIABILITIES.  Except as set forth in Section 3.1(i)
of the Disclosure Schedule,  as of September 3, 1999 the Company had no material
liability  (whether known or unknown,  whether  asserted or unasserted,  whether
absolute or  contingent,  whether  accrued or unaccrued,  whether  liquidated or
unliquidated,  and whether due or to become due,  including  any  liability  for
taxes),  except for (i)  liabilities,  obligations  or  contingencies  that were
reflected  or reserved  against the audited  consolidated  balance  sheet of the
Company and its  Subsidiaries  dated as of December 31, 1998,  (ii)  liabilities
which have arisen after  December  31, 1998 in the ordinary  course of business,
and (iii)  liabilities  which  individually or in the aggregate would not have a
Company  Material  Adverse  Effect.  (j)  BROKERS.  Other  than  Allen & Company
Incorporated  ("Allen"),  the fees and  expenses  of which  shall be paid by the
Company,  no broker,  investment  banker,  financial  advisor or other person is
entitled to any broker's,  finder's, financial advisor's or other similar fee or
commission in connection  with the  transactions  contemplated by this Agreement
based  on  arrangements  made  by or on  behalf  of  the  Company  or any of its
Affiliates.  (k)  LITIGATION.  Except as  disclosed  by the  Company  in the SEC
Reports or in Section 3.1(k) of the Disclosure Schedule, as of September 3, 1999
there was no suit, claim, action, proceeding or investigation pending or, to the
knowledge  of  the  Company,  threatened  against  the  Company  or  any  of its
Subsidiaries or any of their respective properties or assets before any court or
governmental  entity,  nor, to the  knowledge  of the Company as of September 3,
1999,  were there any facts that are reasonably  likely to give rise to any such
suit, claim, action, proceeding or investigation. Except as disclosed in the SEC
Reports or in Section 3.1(k) of the Disclosure Schedule, as of September 3, 1999
neither the Company nor any of its  Subsidiaries  was subject to any outstanding
order, writ, injunction or decree. (l) COMPLIANCE WITH APPLICABLE LAW. Except as
disclosed by the Company in the SEC Reports, as of September 3, 1999 the Company
and its Subsidiaries held all permits, licenses,  variances,  exemptions, orders
and approvals of all governmental  entities  necessary for the lawful conduct of
their respective  businesses (the "Company Permits") and as of September 3, 1999
the  Company  and its  Subsidiaries  were in  compliance  with the  terms of the
Company Permits except for such failure or noncompliance which,  individually or
in the  aggregate,  would  not or could not  reasonably  be  expected  to have a
Company  Material  Adverse Effect.  Except as disclosed in Section 3.1(l) of the
Disclosure  Schedule,  as of September 3, 1999 the businesses of the Company and
its  Subsidiaries  were not  conducted  in  violation  of any law,  ordinance or
regulation  of any  governmental  entity,  except  for  such  violations  which,
individually or in the aggregate,  would not or could not reasonably be expected
to have a Company Material Adverse Effect. Except as disclosed in Section 3.1(l)
of the  Disclosure  Schedule,  as of September 3, 1999 no  investigation  by any
governmental  entity with respect to the Company or any of its  Subsidiaries was
pending or, to the  Company's  knowledge,  threatened  nor had any  governmental
entity  indicated an intention to conduct the same,  except for such  violations
which,  individually  or in the aggregate,  would not or could not reasonably be
expected to have a Company Material Adverse Effect.  (m) TAXES. (i) For purposes
of this  Agreement,  "Tax" or "Taxes  shall mean taxes,  fees,  levies,  duties,
tariffs,  imposts  and  governmental  impositions  or charges of any kind in the
nature of (or  similar to) taxes,  payable to any  federal,  state,  provincial,
local or foreign taxing  authority,  including,  without  limitation (A) income,
franchise,  profits,  gross receipts, ad valorem, net worth, value added, sales,
use, service,  real or personal property,  special  assessments,  capital stock,
license,   payroll,   withholding,   employment,   social   security,   workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation,  premiums, windfall profits, transfer and gains taxes and (B)
interest,  penalties,  additional  taxes and additions to tax imposed in respect
thereto;  and  "Tax  Returns"  shall  mean  returns,   reports  and  information
statements with respect to Taxes required to be filed with the Internal  Revenue
Service  (the  "IRS")  or any  other  taxing  authority,  domestic  or  foreign,
including, without limitation,  consolidated,  combined and unitary tax returns.
(ii) Except as set forth in Section  3.1(m) of the  Disclosure  Schedule,  as of
September 3, 1999 each of the Company and its  Subsidiaries had filed, or caused
to be filed,  within the time and in the manner prescribed by law, or had timely
applied for extensions of time to file, all material Tax Returns  required to be
filed by it, and all such Tax  Returns  which have been filed are  accurate  and
complete in all material respects.  Except as set forth in Section 3.1(m) of the
Disclosure  Schedule,  as of  September  3,  1999  each of the  Company  and its
Subsidiaries had paid or discharged (or there has been paid or discharged on its
behalf)  within the time and in the manner  prescribed by law all Taxes required
to be  paid,  withheld  or  deducted  or for  which  any of the  Company  or its
Subsidiaries was liable, except such Taxes as were being contested in good faith
by appropriate  proceedings  (to the extent that such  proceedings are required)
and with respect to which the Company had set up an adequate reserve for payment
of such Taxes. Except as set forth in Section 3.1(m) of the Disclosure Schedule.
as of  September  3, 1999 the  Company  had set up an  adequate  reserve  on the
Company  balance sheet for all Taxes required to be paid by the Company and each
of its Subsidiaries through September 3, 1999 and no Taxes have been incurred by
the Company or any of its  Subsidiaries  after such date which were not incurred
in the ordinary course of business. Except as set forth in Section 3.1(m) of the
Disclosure  Schedule,  as of September 3, 1999 no material  deficiencies for any
taxes were  proposed  to, or asserted or assessed  against the Company or any of
its Subsidiaries or were pending,  and no requests for waivers of time to assess
any such Taxes were  pending or were  consented  to by the Company or any of its
Subsidiaries.  Except as set forth in Section 3.1(m) of the Disclosure Schedule,
as of September 3, 1999 neither the Company nor any Subsidiary had requested any
extension  of time within which to file any Tax Return in respect of any taxable
year, which Tax Return has not since been filed.  Except as set forth in Section
3.1(m) of the  Disclosure  Schedule,  as of September 3, 1999 the federal income
Tax Returns of the Company and its Subsidiaries had not been examined by the IRS
during the past three years.  None of the Company or its Subsidiaries has been a
member of an affiliated  group of  corporations  which has filed a  consolidated
federal  income Tax  Return  (other  than the group of which the  Company is the
common  parent) or otherwise  has any  liability  for Taxes of any person (other
than the Company and its Subsidiaries)  under Treas. Reg. Section 1.1502-6,  any
similar provision of state,  local or foreign law, or by reason of its status as
a transferee, successor, indemnitor or otherwise. (n) TERMINATION, SEVERANCE AND
EMPLOYMENT  AGREEMENTS.  Section  3.1(n) of the Disclosure  Schedule  contains a
complete and accurate list of each (i)  employment or severance  agreement as of
September 3, 1999 not terminable  without liability or obligation on 30 days' or
less notice; (ii) agreement with any director,  officer or other employee of the
Company or any of its  Subsidiaries  as of September 3, 1999 (A) the benefits of
which  are  contingent,  or the terms of which are  materially  altered,  on the
occurrence of a transaction  involving the Company or any of its Subsidiaries of
the nature of any of the transactions contemplated by this Agreement or relating
to an actual  or  potential  change  in  control  of the  Company  or any of its
Subsidiaries  or (B)  providing  any term of  employment  or other  compensation
guarantee or extending  severance  benefits or other benefits after  termination
not  comparable  to  benefits  available  to  employees  of the  Company  or its
Subsidiaries generally;  (iii) agreement, plan or arrangement as of September 3,
1999  under  which any person may  receive  payments  that may be subject to tax
imposed by Section  4999 of the Code or  included in the  determination  of such
person's  "parachute payment" under Section 280G of the Code; and (iv) agreement
or plan as of September 3, 1999, including, but not limited to, any stock option
plan,  stock  appreciation  right plan,  restricted stock plan or stock purchase
plan,  any of the  benefits  of which will be  increased,  or the vesting of the
benefits  of  which  will  be  accelerated,  by  the  occurrence  of  any of the
transactions  contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this  Agreement.  Except as set  forth in  Section  3.1(n) of the  Disclosure
Schedule,  as  of  September  3,  1999  neither  the  Company  nor  any  of  its
Subsidiaries  had entered  into or amended any written  employment  or severance
agreement with any director,  officer or other employee of the Company or any of
its  Subsidiaries  or granted any severance or termination  pay to any director,
officer or  employee  of the Company or any of its  Subsidiaries.  (o)  EMPLOYEE
BENEFIT  PLANS,  ERISA.  (i)  Except  as set  forth in  Schedule  3.1(o)  of the
Disclosure  Schedule,  as of  September  3, 1999 the Company  did not  maintain,
administer,  contribute to or have any liability  under, and had not maintained,
administered,  contributed to or had any liability under any:  employee  pension
benefit  plan (as  defined in Section  3(2) of the  Employee  Retirement  Income
Security Act of 1974, as amended ("ERISA")) ("Pension Plan"), including, without
limitation,  any  multiemployer  plan as  defined  in  Section  3(37)  of  ERISA
("Multiemployer  Plan")  or any  non-qualified  deferred  compensation  plan  or
retirement  plan;  employee  welfare benefit plan (as defined in Section 3(1) of
ERISA)  ("Welfare  Plan"),  including  any other  plan,  program,  agreement  or
arrangement under which former employees of the Company (or their beneficiaries)
are entitled,  or current  employees of the Company will be entitled,  following
termination  of  employment,  to  medical,  health  or life  insurance  or other
benefits other than pursuant to benefit  continuation rights granted by state or
federal law; or bonus,  stock, stock purchase,  or stock option plan,  severance
plan, salary  continuation,  vacation,  sick leave,  fringe benefit,  incentive,
insurance, welfare or similar plan or arrangement ("Employee Benefit Plan"). The
Pension Plans,  Welfare Plans and Employee  Benefit Plans shall be  collectively
referred to herein as the  "Plans".  (ii) As of  September  3, 1999  neither the
Company,  nor any corporation or business which was then or at the relevant time
was an affiliate of the Company, as determined under Section 414(b), (c), (m) or
(o)  of  the  Code  (an  "ERISA   Affiliate"),   (A) maintained,   administered,
contributeed  to or had any  liability  under any  pension  plan  subject to the
minimum  funding  standards  set forth in Section  412 of the Code or subject to
Title IV of ERISA; or (B) had ever maintained,  administered,  contributed to or
had any liability  under any Pension Plan subject to either the Code Section 412
minimum  funding  standards or Title IV of ERISA,  other than a Plan as to which
all liabilities  have been satisfied in full.  (iii) As of September 3, 1999 all
Plans and related trusts,  insurance contracts or other funding arrangements had
been  maintained and  administered  in all respects in material  compliance with
each applicable provision of ERISA, the Code, other federal statutes,  state law
(including,  without  limitation,  state  insurance law) and the regulations and
rules promulgated pursuant thereto or in connection  therewith.  As of September
3, 1999 each Pension Plan which was intended to be qualified  under Code Section
401(a) had been  administered in material  compliance with such requirements and
had  received a post-Tax  Reform Act of 1986  determination  letter from the IRS
that such Pension Plan satisfies the requirements of Section 401(a) of the Code,
and to the Company's knowledge,  nothing has occurred since the issuance of such
letter  that  would  adversely  affect  the tax  qualified  status of any of the
Pension Plans. (iv)  Contributions with respect to all current Plan years (i.e.,
from the first day of the current  plan year to the Closing  Date) shall be made
or accrued  prior to the Closing  Date by Company  with  respect to each Pension
Plan.  With respect to all other Welfare Plans and Employee  Benefit Plans,  all
required  or  recommended  (in  accordance  with plan  terms and past  practice)
payments,  premiums,  contributions,  reimbursements or accruals for all periods
ending  prior to or as of the  Closing  Date  shall  have been made or  properly
accrued on the financial  statements.  As of September 3, 1999 none of the Plans
had any material unfunded  liabilities which were not reflected on the financial
statements of the Company. The Company has no plans,  programs,  arrangements or
made  any  other  commitments  to  its  employees,  former  employees  or  their
beneficiaries  under which it has any obligation to provide any retiree or other
employee  benefit  payments  which are not  adequately  funded  through a trust,
insurance or other funding arrangement.  As of September 3, 1999 there have been
no changes in the operation or interpretation of any of the Plans since the most
recent  annual  report  which  would  have any  material  effect  on the cost of
operating or  maintaining  such Plans.  (v) No Pension Plan has been  terminated
other than a Plan as to which all  liabilities  have been satisfied in full. Any
Plan which has been  terminated has been terminated in compliance with ERISA and
the Code, all required reports,  certifications or notices, have been or will be
appropriately   filed  or  distributed   and  an  application  for  a  favorable
determination  letter has been or will be filed with the IRS.  (vi) The  Company
has made available to Parent true and complete copies of: (A) the plan documents
and any  related  trusts or funding  vehicles,  policies  or  contracts  and the
related summary plan  descriptions  with respect to each Plan as of September 3,
1999; (B) any pending  applications,  filings or notices as of September 3, 1999
with  respect to any of the Plans with the IRS,  the  pension  Benefit  Guaranty
Corporation,  the Department of Labor or any other governmental  agency; (C) the
latest financial statements and annual reports for each of the Plans and related
trusts or funding  vehicles,  policies  or  contracts  as of the end of the most
recent plan year with respect to which the filing date for such  information had
passed as of  September  3, 1999;  and (D) all  corporate  resolutions  or other
documents  pertaining to the adoption of the Plans or any amendments  thereto as
of September 3, 1999. (vii) As of September 3, 1999 there were no pending or, to
the Company's knowledge,  threatened claims, lawsuits or arbitration asserted or
instituted against any of the Plans by any employee or beneficiary covered under
any Plans or  otherwise  involving  any Plans  (other  than  routine  claims for
benefits); and as of September 3, 1999 the Company had no knowledge of any facts
which  would give rise to or could  reasonably  be  expected to give rise to any
such claims,  lawsuits or  arbitrations.  (viii)  Except as provided for in this
Agreement or as disclosed in Section  3.1(o) of the Disclosure  Schedule,  as of
September 3, 1999 the  consummation  of the  transactions  contemplated  by this
Agreement  would not (A)  entitle  any  current or former  director,  officer or
employee of the Company or any ERISA  Affiliate to severance  pay,  unemployment
compensation  or any other  payment,  or  (B) accelerate  the time of payment or
vesting or increase the amount of compensation due any such employee or officer.
(ix) As of  September  3,  1999 no  liability  had  been or was  expected  to be
incurred by the Company or any ERISA  Affiliate under or pursuant to the Code or
Title I or IV of ERISA or the penalty, excise tax or joint and several liability
provisions  of the Code or ERISA  relating to the Plans and, to the knowledge of
the Company as of  September  3, 1999 no event,  transaction  or  condition  had
occurred or existed  that could  result in any such  liability to the Company or
any ERISA Affiliate or, following the Closing, the Company, any ERISA Affiliate,
the  Purchaser or any such Plan.  (x) As of September 3, 1999 at no time had the
Company or any of its  Subsidiaries  contributed to, been required to contribute
to, or incurred any withdrawal  liability (within the meaning of Section 4201 of
ERISA) with respect to any Plan which is a  Multiemployer  Plan.  (xi) Except as
set forth in Schedule  3.1(o) of the  Disclosure  Schedule,  with respect to all
Plans  other than  Multiemployer  Plans,  which are funded,  or are  required by
applicable law to be funded,  the present value of all accrued  benefits (vested
and non  vested) of each such Plan as of the Closing  Date,  will not exceed the
fair market value of the assets of each such Plan as of the Closing Date.  (xii)
As of September 3, 1999 no prohibited transaction (as defined in Section 4975 of
the Code or Section 406 of ERISA) had  occurred  with respect to any Plan listed
other  than a  Multiemployer  Plan,  which  could  subject  any such Plan or any
related trust, the Company,  any ERISA Affiliate,  the Purchaser or any director
or employee of any of them to any tax or penalty  imposed  under Section 4975 of
the Code or Section  502(i) or 502(l) of ERISA,  either  directly or indirectly,
and whether by way of indemnity or otherwise.  (p) ENVIRONMENTAL  MATTERS. Other
than  those  the  failure  to  obtain or  comply  with,  individually  or in the
aggregate,  would not result or could not  reasonably be expected to result in a
Company Material Adverse Effect, as of September 3, 1999 the Company and each of
its  Subsidiaries  had obtained and was in compliance  in all material  respects
with the terms and conditions of all required permits,  licenses,  registrations
and other  authorizations  required under  Environmental  Laws. Other than where
such, individually or in the aggregate, would not result or could not reasonably
be expected to result in a Company Material  Adverse Effect,  as of September 3,
1999 no asbestos in a friable condition,  equipment  containing  polychlorinated
biphenyls,  or leaking underground or above-ground  storage tanks were contained
in or located at any facility then owned, leased or controlled by the Company or
any of its Subsidiaries, nor was any of the foregoing contained in or located at
any facility previously owned, leased or controlled by the Company or any of its
Subsidiaries.  Other  than as set  forth in  Section  3.1(p)  of the  Disclosure
Schedule and where such,  individually or in the aggregate,  would not result or
could not reasonably be expected to result in a Company  Material Adverse Effect
with respect to each of the following  matters,  as of September 3, 1999 neither
the Company nor any of its Subsidiaries had released,  discharged or disposed of
on, under or about any facility then or previously  owned,  leased or controlled
by the Company or any of its  Subsidiaries,  any  Hazardous  Substances,  and no
third party had  released,  discharged  or  disposed  of on,  under or about any
facility then or previously owned, leased or controlled by the Company or any of
its Subsidiaries,  any Hazardous  Substances,  except for ordinary and necessary
quantities  of cleaning,  pest control and office  supplies and other  chemicals
used in the ordinary  course of business and used and stored in compliance  with
applicable  Environmental  Laws, or ordinary  rubbish,  debris and non-hazardous
solid waste stored in garbage  cans or bins for regular  disposal  off-site,  or
petroleum  contained  in,  and de  minimis  quantities  discharged  from,  motor
vehicles in their ordinary  operation on real property owned,  used or leased by
the Company and its  Subsidiaries.  Except as disclosed in Secion  3.1(p) of the
Disclosure  Schedule,  as of  September  3, 1999.  The  Company  and each of its
Subsidiaries was in compliance with all applicable  Environmental  Laws,  except
for such  non-compliances  which,  individually  or in the aggregate,  would not
result or could  not  reasonably  be  expected  to result in a Company  Material
Adverse Effect.  Section 3.1(p) of the Disclosure  Schedule  contains a true and
accurate  list of (i) all past and  present  until  September  3, 1999  material
noncompliance  by the Company and each of its  Subsidiaries  with,  or liability
under,  Environmental  Laws  and (ii) all  past  discharges,  emissions,  leaks,
releases or disposals  by it as of  September 3, 1999 of any  substance or waste
regulated  under or  defined  by  Environmental  Laws that have  formed or could
reasonably be expected to form the basis of any material  claim,  action,  suit,
proceeding,  hearing  or  investigation  against  the  Company  or  any  of  its
Subsidiaries  under any applicable  Environmental  Laws.  Except as set forth in
Section  3.1(p)  of the  Disclosure  Schedule,  with  respect  to  environmental
matters, as of September 3, 1999 neither the Company nor any of its Subsidiaries
had received  notice of any past or present events,  conditions,  circumstances,
activities,  practices,  incidents,  actions  or  plans  of the  Company  or its
Subsidiaries  that have resulted in or threaten to result in any material common
law or legal  liability,  or  otherwise  form the basis of any  material  claim,
action,  suit,  proceeding,  hearing  or  investigation  under,  any  applicable
Environmental  Laws.  For purposes of this Section  3.1(p),  (i)  "Environmental
Laws" mean applicable  federal,  state, local and foreign laws,  regulations and
codes relating in any respect to pollution or protection of the  environment and
(ii) "Hazardous  Substances" means any toxic,  caustic,  or otherwise  dangerous
substance (whether or not regulated under federal,  state or local environmental
statutes, rules, ordinances, or orders),  including (A) "hazardous substance" as
defined in 42 U.S.C.  Section  9601,  and (B) petroleum  products,  derivatives,
byproducts and other hydrocarbons. (q) ASSETS; PROPERTY;  INTELLECTUAL PROPERTY.
(i) As of  September  3, 1999,  the  Company and its  Subsidiaries  owned or had
rights to use all assets necessary to permit the Company and its Subsidiaries to
conduct their businesses as they were currently being conducted,  except where a
failure  to own or have the  right to use such  assets,  individually  or in the
aggregate,  would  not or could not  reasonably  be  expected  to have a Company
Material  Adverse  Effect.  (ii) Except as  disclosed  in Section  3.1(q) of the
Disclosure  Schedule,  as of  September  3, 1999 the  Company  had,  directly or
through its Subsidiaries,  either (A) good, valid and marketable or indefeasible
title to all real property owned by the Company or any Subsidiary,  all of which
is  described in Section  3.1(q) of the  Disclosure  Schedule,  and all personal
property material to its business  operations which was owned by it was owned in
fee,  and,  in the case of both of such  owned  real  property  and  such  owned
personal  property,  free and clear of any liens,  encumbrances,  mortgages  and
security  interests other than Permitted  Liens, or (B) rights by lease or other
agreement  to use all the real and  personal  property  material to its business
operations.  The term "Permitted Liens" shall mean (A) liens or encumbrances for
water,  sewage and similar  charges and current taxes and  assessments,  in each
case,  not yet due and  payable or being  contested  in good faith and for which
adequate reserves have been established,  (B) mechanics',  carriers',  workers',
repairers',   materialmen's,   warehousemen's   and  other   similar   liens  or
encumbrances arising or incurred in the ordinary course of business,  (C) liens,
encumbrances,  mortgages and security  interests  arising or resulting  from any
action  taken  by  Parent,  (D)  liens,  encumbrances,  mortgages  and  security
interests of record or securing indebtedness  described in Section 3.1(q) of the
Disclosure  Schedule and (E) easements,  rights of way,  restrictions  and other
similar  charges  or  encumbrances  that do not  materially  interfere  with the
ordinary  conduct of the  Company's  business.  True and complete  copies of all
mortgages  encumbering  the real  property as of September 3, 1999  described in
Section 3.1(q) of the  Disclosure  Schedule,  and all  amendments  thereto as of
September 3, 1999, have been delivered to Parent. All real property leases under
which  the  Company  or any of its  Subsidiaries  was a lessee  or  lessor as of
September 3, 1999 (the  "Leases")  were valid,  binding and  enforceable  in all
material  respects in  accordance  with their terms,  and there were no existing
defaults  thereunder  as of September 3, 1999.  True and complete  copies of the
Leases,  and all amendments thereto as of September 3, 1999, have been delivered
to Parent.  As of September 3, 1999, the Company had not received  notice of and
did not otherwise have knowledge of any  condemnation,  requisition or taking by
any public authority of all or any portion of its owned or leased real property.
Except  as  disclosed  in  Section  3.1(q)  of the  Disclosure  Schedule,  as of
September 3, 1999 there was no construction  work being done at, or construction
materials  being  supplied to, the real property owned or leased by the Company,
except in connection with routine  maintenance  projects.  The Company is liable
for invoices for construction  occurring prior to September 3, 1999 as set forth
in  Section  3.1(q) of the  Disclosure  Schedule.  (iii)  Section  3.1(q) of the
Disclosure  Schedule  identifies  all of the  following  which  were used in the
Company's or any of its Subsidiaries'  businesses or in which the Company or any
of its  Subsidiaries  claimed any ownership  rights as of September 3, 1999: (A)
all trademarks,  service marks,  slogans,  trade names, trade dress and the like
(collectively with the associated goodwill of each, "Trademarks"), together with
information regarding all registrations and pending applications to register any
such  rights  anywhere  in the world;  (B) all common  law  Trademarks;  (C) all
patents  on, and  pending  applications  to  patent,  any  technology  or design
(collectively "Patents");  (D) all registrations of and applications to register
copyrights since 1978  (collectively,  "Copyrights");  and (E) all rights in and
licenses to Trademarks,  Patents and Copyrights,  whether  licensed to or by the
Company or any of its  Subsidiaries.  The  proprietary  rights required to be so
identified  in clauses (A) - (E) herein are referred to herein  collectively  as
the "Intellectual Property".  (iv) Except as identified in Section 3.1(q) of the
Disclosure  Schedule:  as of  September  3, 1999 (A) the  Company  or one of its
Subsidiaries  was the owner of or duly  licensed to use each  Trademark  and its
associated  goodwill;  (B)  each  Trademark  registration  existed  and had been
maintained in good  standing;  (C) each patent and  application  included in the
Intellectual Property existed, was owned by or licensed to the Company or one of
its Subsidiaries,  and had been maintained in good standing;  (D) each Copyright
existed and was owned by or licensed  to the  Company or its  Subsidiaries;  (E)
other than such as, individually or in the aggregate,  would not or could not be
reasonably  expected to result in a Company  Material  Adverse Effect,  no other
firm, corporation,  association or person claimed the right to use in connection
with similar or related goods and in any geographic  area, any mark, logo, name,
symbol,  device, or slogan which was identical or confusingly  similar to any of
the  Trademarks  or which  could  serve to  dilute  the  distinctiveness  of the
Trademarks;  (F) other than such as, individually or in the aggregate, would not
or could not  reasonably  be  expected to result in a Company  Material  Adverse
Effect,  no third  party  claimed  or  asserted  ownership  rights in any of the
Intellectual Property; (G) other than such as, individually or in the aggregate,
would not or could not  reasonably  be expected to result in a Company  Material
Adverse  Effect,  the  use by the  Company  or  any of its  Subsidiaries  of any
Intellectual Property did not, and had never been alleged to, infringe any right
of any  third  party;  and  (H)  other  than  such  as,  individually  or in the
aggregate,  would not or could not be reasonably expected to result in a Company
Material Adverse Effect, no third party was infringing, or had ever been accused
by the  Company  of  infringing,  on any  rights  of the  Company  or any of its
Subsidiaries  in  any  of  the  Intellectual  Property.  Section  3.1(q)  of the
Disclosure  Schedule sets forth a description  of all known claims made or facts
known  to the  Company  or  any of its  Subsidiaries  as of  September  3,  1999
regarding  any third  party  claims or  actions to use a  trademark  confusingly
similar  to the  Trademarks  then  owned  or used by the  Company  or any of its
Subsidiaries  anywhere in the world or to use technology  which infringes any of
the Company's Intellectual Property,  other than such as, individually or in the
aggregate,  would not or could not reasonably be expected to result in a Company
Material Adverse Effect . (r) SYSTEMS AND SOFTWARE.  As of September 3, 1999 the
Company and its  Subsidiaries  owned or had the right to use  pursuant to lease,
license,  sublicense,  agreement, or permission all computer hardware,  software
and  information  systems  necessary for the operation of the  businesses of the
Company and its Subsidiaries as then conducted (collectively,  "Systems").  Each
System owned or used by the Company or its Subsidiaries immediately prior to the
Effective  Time will be owned or available for use by the Surviving  Corporation
or its Subsidiaries on identical terms and conditions  immediately subsequent to
the  Effective  Time.  As of  September 3, 1999 with respect to each System then
owned by a third party and used by the Company or its  Subsidiaries  pursuant to
lease,  license,  sublicense,  agreement or permission:  (i) the lease, license,
sublicense,  agreement,  or  permission  covering  the System was legal,  valid,
binding and enforceable,  and in full force and effect; (ii) the lease, license,
sublicense,  agreement, or permission will continue to be legal, valid, binding,
enforceable,  and in full  force and effect on  identical  terms  following  the
Effective  Time;  (iii) with  respect to any such  lease,  license,  sublicense,
agreement,  or permission the Company was not in breach or default, and no event
had  occurred  which with notice or lapse of time would  constitute  a breach or
default by the  Company or permit  termination,  modification,  or  acceleration
thereunder; (iv) no party to any such lease, license, sublicense,  agreement, or
permission had repudiated any provision thereof; (v) neither the Company nor its
Subsidiaries had granted any sublicense,  sublease or similar right with respect
to any such lease,  license,  sublicense,  agreement,  or  permission;  (vi) the
Company's or its  Subsidiaries'  use and  continued use of such Systems will not
interfere with, infringe upon,  misappropriate,  or otherwise come into conflict
with,  any  intellectual  property  rights of third  parties  as a result of the
continued  operation of its business as presently  conducted other than such as,
individually or in the aggregate,  would not or could not reasonably be expected
to result in a Company Material Adverse Effect.  (s) LABOR MATTERS.  (i) Neither
the  Company  nor any of its  Subsidiaries  had,  since  June 30,  1999  through
September 3, 1999, (A) been subject to, or threatened with, any material strike,
lockout or other labor dispute or engaged in any unfair labor  practice,  or (B)
received notice of any pending  petition for  certification  before the National
Labor  Relations  Board with respect to any  material  group of employees of the
Company or any of its  Subsidiaries who are not currently  organized.  Except as
set forth in Section 3.1(s) of the Disclosure Schedule,  as of September 3, 1999
neither the Company nor any of its  Subsidiaries  had any collective  bargaining
agreements.  (ii) As of September 3, 1999 the Company and its  Subsidiaries  had
complied in all material respects with the Workers Adjustment and Retraining Act
of 1988,  as  amended,  including,  but not  limited  to, the  provision  of all
required notices or payments in lieu thereof. (t) AFFILIATE TRANSACTIONS. Except
as set forth in Section 3.1(t) of the Disclosure Schedule,  the Company's Annual
Report on Form 10-K for the year ended  December 31, 1998  accurately  describes
all  arrangements,   agreements,  contracts  and  transactions  (the  "Affiliate
Transactions")  to which the Company or any of its  Subsidiaries or any of their
respective  properties  was subject as of  September 3, 1999  involving  (i) any
consultant,  (ii) any person who is an  officer,  director or  affiliate  of the
Company or any of its Subsidiaries,  (iii) any relative of any of the foregoing,
or (iv) any entity of which any of the foregoing is an affiliate. Copies of such
arrangements,  agreements and contracts have  previously  been delivered or made
available  to Parent and Sub,  are listed in  Section  3.1(t) of the  Disclosure
Schedule and are true,  correct and complete.  Each Affiliate  Transaction is on
terms at least as favorable to the Company or any relevant  Subsidiary  as could
have been obtained from an unaffiliated  third party.  (u) YEAR 2000.  Except as
would not reasonably be expected to have a Company Material  Adverse Affect,  as
of September 3, 1999 no Systems have been materially  adversely affected by Year
2000;  provided,  that  the  Company  does not  represent  or  warrant  that the
databases  and systems of its material  suppliers  and  customers  have not been
adversely  affected due to the Year 2000.  As of September 3, 1999,  none of the
Intellectual   Property  or  other  material  assets  of  the  Company  and  its
Subsidiaries  used in their then  current  business  were  materially  adversely
affected  notwithstanding  Year 2000 other than such as,  individually or in the
aggregate,  would not or could not reasonably be expected to result in a Company
Material  Adverse  Effect.  As used  herein,  the term  "Year  2000"  means  the
occurrence of or  calculation  involving  the Year 2000 A.D., or other  calendar
dates occurring through December 31, 2010. (v)  REPRESENTATIONS  AND WARRANTIES.
None of the information  contained in the  representations and warranties of the
Company set forth in this Agreement or in any  certificate or writing  delivered
to Parent  or Sub as  contemplated  by this  Agreement  contains  as of the date
hereof,  or as  amended  and  supplemented  by the  Audited  Statements  and the
Disclosure  Updates referenced in Section 5.13 herein will contain as of Closing
Date,  any  untrue  statement  of a  material  fact or omits or as  amended  and
supplemented by the Audited  Statements and the Disclosure Updates referenced in
Section  5.13 herein will omit to state a material  fact  necessary  to make the
statements   contained   herein  or  therein  not   misleading.   Section   3.2.
REPRESENTATIONS  AND WARRANTIES OF PARENT AND SUB.  Parent and Sub represent and
warrant to the Company as follows:  (a)  ORGANIZATION,  STANDING  AND  CORPORATE
POWER.  Each of Parent  and Sub is a  corporation  duly  organized  and  validly
existing under the laws of the State of Delaware. Neither Parent nor Sub nor any
of their affiliates may be deemed to be a "foreign person" within the meaning of
the Exon-Florio Act, 50 USC 2170. Each of Parent and Sub has the requisite power
(corporate or otherwise) and authority  (corporate or otherwise) to carry on its
business as now being  conducted.  Each of Parent and Sub is duly  qualified  or
licensed to do business and is in good  standing in each  jurisdiction  in which
the nature of its business or the ownership or leasing of its  properties  makes
such  qualification  or licensing  necessary,  other than in such  jurisdictions
where  the  failure  to be so  qualified  or  licensed  would  not have a Parent
Material Adverse Effect (as defined below). As used in this Agreement,  the term
"Parent Material Adverse Effect" means any circumstance, event, change or effect
that, individually or taken together with all adverse circumstances, changes and
effects that are within the scope (excluding any qualification as to materiality
or Parent Material Adverse Effect) of the representations  made by Parent or Sub
in this Agreement,  impairs, or is reasonably likely to impair, the consummation
of the  Merger  or  any  of the  other  transactions  contemplated  hereby.  (b)
AUTHORITY; ENFORCEABILITY;  NONCONTRAVENTION.  Parent and Sub have all requisite
corporate  power and authority to enter into this Agreement and the  Termination
Agreement and to consummate the transactions  contemplated by this Agreement and
the Termination Agreement.  The execution and delivery of this Agreement and the
Termination  Agreement by Parent and Sub and the  consummation by Parent and Sub
of the transactions contemplated by this Agreement and the Termination Agreement
have been  duly  authorized  by all  necessary  corporate  action on the part of
Parent and Sub. Each of this  Agreement and the  Termination  Agreement has been
duly executed and delivered by and,  assuming this Agreement and the Termination
Agreement constitute the valid and binding agreement of the Company, constitutes
a valid and binding  obligation of each of Parent and Sub,  enforceable  against
such party in accordance with their terms, except that the enforceability hereof
may be subject to bankruptcy,  insolvency,  reorganization,  moratorium or other
similar laws now or hereafter in effect relating to creditors'  rights generally
and that the remedy of specific  performance  and  injunctive and other forms of
equitable  relief may be subject to equitable  defenses and to the discretion of
the court before which any proceeding therefor may be brought. The execution and
delivery  of  this  Agreement  and the  Termination  Agreement  do not,  and the
consummation of the  transactions  contemplated by this Agreement and compliance
with the  provisions of this Agreement and the  Termination  Agreement will not,
(i) violate any of the provisions of the Articles of Incorporation or By-laws of
the Parent or Sub or (ii) conflict with,  result in a breach of or default (with
or without  notice or lapse of time, or both) under,  or give rise to a right of
termination,  cancellation  or  acceleration  of any  obligation  or  loss  of a
material  benefit  under,  or  require  the  consent of any  person  under,  any
indenture or other agreement, or undertaking to which the Parent or the Sub is a
party or by which  the  Parent or the Sub or any of its  assets is bound,  which
would  have a Parent  Material  Adverse  Effect or prevent  consummation  of the
transactions  contemplated . (c) PROXY  MATERIALS.  All of the information to be
furnished by Parent or Sub for inclusion in the Definitive  Proxy  Statement (or
any amendment or supplement thereto) will not, on the date it is first mailed to
the Company's stockholders, and, as then amended or supplemented, on the date of
the Company's  stockholders' meeting referred to in Section 5.1 hereof or on the
Closing Date, contain any statement which is false or misleading with respect to
any  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.  (d)  BROKERS.  No
broker,  investment banker, financial advisor or other person is entitled to any
broker's,  finder's,  financial  advisor's or other similar fee or commission in
connection  with  the  transactions  contemplated  by this  Agreement  based  on
arrangements made by or on behalf of Parent or any of its Affiliates. Article IV
COVENANTS  RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER Section 4.1.  CONDUCT
OF BUSINESS OF THE COMPANY.  Except as  contemplated  or otherwise  permitted by
this  Agreement,  during the period from the Audit  Delivery Date (as defined in
Section 5.13) to the Effective  Time, the Company shall use its reasonable  best
efforts to operate, and to cause each Subsidiary to operate, its business in the
ordinary course in all material  respects and comply with applicable laws in all
material respects. Without limiting the generality of the foregoing,  during the
period from the Audit Delivery Date to the Effective  Time,  except as expressly
contemplated  by this  Agreement  and except as set forth in Section  4.1 of the
Disclosure Schedule, the Company shall not, and will not permit its Subsidiaries
to, without the prior written consent of Parent:  (i) (x) declare,  set aside or
pay any dividends on, or make any other distributions (whether in cash, stock or
property or any combination  thereof) in respect of, any of the Company's or any
Subsidiary's  outstanding capital stock, (y) split, combine or reclassify any of
its  outstanding  capital  stock or issue or authorize the issuance of any other
securities  in  respect  of,  in lieu of or in  substitution  for  shares of its
outstanding  capital  stock,  or (z) purchase,  redeem or otherwise  acquire any
shares of its  outstanding  capital stock or any rights,  warrants or options to
acquire any such shares;  (ii)  authorize  for  issuance,  issue,  sell,  grant,
deliver,  or agree or commit to issue,  sell or  deliver  (whether  through  the
issuance or granting of options, warrants, commitments,  subscriptions,  rights,
to exchange,  rights to purchase or otherwise) pledge or otherwise  encumber any
shares of the  Company's or any  Subsidiary's  capital  stock,  any other voting
securities  or any  securities  convertible  into,  or any  rights,  warrants or
options  to  acquire,   any  such  shares,   voting  securities  or  convertible
securities,  except for the issuance of shares of Common Stock upon  exercise of
Options outstanding prior to the date of this Agreement and disclosed in Section
3.1(c),  or take any action that would make the  Company's  representations  and
warranties  set forth in  Section  3.1(c) not true and  correct in all  material
respects;  (iii) except as  contemplated  hereby,  amend or propose to amend the
Company's   Restated  Charter  or  By-laws  or  any  Subsidiary's   articles  of
incorporation or by-laws or other comparable charter, organizational, or similar
constituent   documents;   (iv)  acquire  any   business  or  any   corporation,
partnership,  joint  venture,  association  or other  business  organization  or
division  thereof  (or any  interest  therein)  in a  transaction  or  series of
transactions  involving aggregate  consideration in excess of $1 million or form
any Subsidiary;  (v) lease (other than office  equipment  leases entered into in
the  ordinary  course of  business),  sell or  otherwise  dispose  of any of its
assets,  except in the ordinary course of business or in a transaction or series
of  transactions  involving  assets  with an  aggregate  value  of less  than $1
million; (vi) make any capital expenditures or commitments with respect thereto,
except capital expenditures or commitments not exceeding the Company's forecasts
provided in Schedule 4.1 of the Disclosure Schedule by more than $100,000 in the
aggregate as the Company may, in its  discretion,  deem  appropriate;  (vii) (x)
mortgage  or  pledge  any of its  assets  or create or suffer to exist any liens
thereon (excluding  Permitted Liens),  incur,  assume or prepay any long-term or
short-term debt or issue any debt securities or incur any other indebtedness for
borrowed money or guaranty any such  indebtedness of another person,  other than
(A)  borrowings in the ordinary  course under existing lines of credit (or under
any  refinancing  of such  existing  lines),  or (B)  indebtedness  owing to, or
guaranties  of  indebtedness  owing to,  the  Company,  or (y) make any loans or
advances to any other  person,  other than to the Company and other than routine
advances  to  employees;  (viii)  grant or agree  to grant to any  employee  any
increase in wages or bonus (other than any  increase in the  ordinary  course of
business consistent with past practices), severance, profit sharing, retirement,
deferred compensation, insurance or other compensation or benefits, or establish
any new  compensation  or benefit  plans or  arrangements,  or amend or agree to
amend any  existing  Company  Stock  Option  Plan;  (ix)  merge,  amalgamate  or
consolidate with any other entity in any transaction,  sell all or substantially
all of its  business  or  assets;  (x)  enter  into  or  amend  any  employment,
consulting,  severance or similar  agreement with any individual  which provides
for the payment of an annual base salary in excess of $125,000;  (xi) change its
accounting  policies in any  material  respect,  except as required by generally
accepted accounting principals;  (xii) except as contemplated by Section 5.8 and
Section 7.1(d) hereof, authorize, recommend, propose or announce an intention to
authorize,  recommend or propose,  or enter into an agreement in principle or an
agreement  with  respect to any merger,  consolidation  or business  combination
(other than the Merger),  any acquisition or disposition of a material amount of
assets or securities (including, without limitation, the assets or securities of
any Subsidiary and other than inventory in the ordinary course); (xiii) make any
changes in its senior management; or (xiv) except as contemplated by Section 5.8
and Section 7.1(d) hereof, commit or agree to take any of the foregoing actions.
Article V ADDITIONAL  AGREEMENTS Section 5.1. MEETING OF STOCKHOLDERS.  Promptly
after the Optional  Termination Period (as defined in Section 5.13 herein),  and
so long as this  Agreement  has not been  terminated  the Company  will take all
action  necessary in accordance with applicable law and its Restated Charter and
By-laws to duly call, give notice of, and convene a meeting of its  stockholders
(the  "Stockholders'  Meeting")  to consider  and vote upon the adoption of this
Agreement.  The board of directors of the Company shall  recommend such adoption
and approval,  and subject to fiduciary  obligations under applicable law, shall
not withdraw or modify such recommendation other than in compliance with Section
5.8 and Section 7.1(d) or if the Fairness Opinion (as defined in Section 5.2) is
withdrawn,  and shall take all lawful action  necessary to obtain such approval.
Section 5.2.  PROXY  STATEMENT.  In connection  with the  Stockholders'  Meeting
contemplated  by Section  5.1 above,  promptly  after the  Optional  Termination
Period (as defined in Section 5.13  herein),  and so long as this  Agreement has
not been terminated, the Company will prepare and file (after consultations with
Parent) a preliminary proxy statement relating to the transactions  contemplated
by this Agreement (the "Preliminary  Proxy Statement") with the SEC and will use
its  commercially  reasonable  efforts  to respond  to the  comments  of the SEC
thereon and to cause a final proxy statement (the "Definitive  Proxy Statement")
to be mailed to the Company's  stockholders,  in each case as soon as reasonably
practicable  after  providing  Parent  with  reasonable  opportunity  to comment
thereon.  The  Company  will  notify the Parent  promptly  of the receipt of the
comments of the SEC, if any,  and of any  request by the SEC for  amendments  or
supplements to the Preliminary Proxy Statement or the Definitive Proxy Statement
or for  additional  information,  and will  supply  Parent  with  copies  of all
correspondence between the Company or its representatives,  on the one hand, and
the SEC or  members  of its  staff,  on the  other  hand,  with  respect  to the
Preliminary Proxy Statement, the Definitive Proxy Statement or the Merger. If at
any time prior to the Stockholders' Meeting, (i) any event should occur relating
to the  Company  or any of the  Subsidiaries  which  should  be set  forth in an
amendment of, or a supplement to, the Definitive  Proxy  Statement,  or (ii) any
event  should  occur  relating  to  Parent  or Sub or  any of  their  respective
Associates or  Affiliates,  or relating to the plans of any such persons for the
Surviving Corporation after the Effective Time of the Merger, or relating to the
Financing (as defined in Section 5.5) in either case that should be set forth in
an amendment of, or a supplement to, the Definitive  Proxy  Statement,  then the
Company or Parent (as applicable),  will, upon learning of such event,  promptly
inform the other of such  event and the  Company  shall  prepare,  file and,  if
required,  mail such  amendment or  supplement  to the  Company's  stockholders;
provided  that,  prior to such filing or mailing the Company  shall consult with
Parent with respect to such  amendment  or  supplement  and shall afford  Parent
reasonable  opportunity to comment  thereon.  Parent will furnish to the Company
the  information  relating to Parent and Sub,  their  respective  Associates and
Affiliates and the plans of such persons for the Surviving Corporation after the
Effective Time of the Merger,  and relating to the Financing,  which is required
to be set forth in the  Preliminary  Proxy  Statement  or the  Definitive  Proxy
Statement  under  the  Exchange  Act and the rules  and  regulations  of the SEC
thereunder.  The Definitive  Proxy Statement shall contain a copy of the written
opinion (the "Fairness Opinion") of Allen that the Merger  Consideration is fair
from a  financial  point of view to the  Company's  stockholders.  Section  5.3.
ACCESS TO INFORMATION;  CONFIDENTIALITY.  (a) From the date hereof,  the Parent,
Sub and their  financing  sources  shall be entitled to make or cause to be made
such  reasonable  investigation  of the  Company and its  Subsidiaries,  and the
financial  and legal  condition  thereof,  as  Parent,  Sub and their  financing
sources deem reasonably necessary or advisable, and the Company shall reasonably
cooperate with any such investigation.  In furtherance of the foregoing, but not
in limitation thereof, the Company will, and will cause each of its Subsidiaries
to, provide the Parent,  Sub and their  financing  sources and their  respective
agents and representatives, or cause them to be provided, with reasonable access
to any  and  all  of its  management  personnel,  accountants,  representatives,
premises,  properties,   contracts,   commitments,   books,  records  and  other
information of the Company and each of its Subsidiaries  upon reasonable  notice
during  regular  business  hours and shall furnish such  financial and operating
data,  projections,  forecasts,  business plans,  strategic plans and other data
relating to the Company and its Subsidiaries and their respective  businesses as
the  Parent,  Sub,  their  financing  sources  and their  respective  agents and
representatives  shall  reasonably  request  from  time to time,  including  all
information necessary to satisfy closing conditions for obtaining the Financing;
provided,  that until the Closing Date all information  provided to Parent,  Sub
and their financing sources and representatives  pursuant hereto (other than the
information (i) contained in any offering memorandum prepared in connection with
the registration,  offering,  placement, or syndication of any of the Financing,
(ii) disclosed in the process of marketing the Financing,  or (iii) contained in
any filing with the SEC, NASDAQ or any national securities  exchange),  shall be
subject  to the  confidentiality  provisions  set forth in Section  5.3(b).  The
Company  agrees  to  cause  its  and  its  Subsidiaries'  officers,   employees,
consultants, agents, accountants and attorneys to cooperate with the Parent, Sub
and their financing sources and  representatives  in connection with such review
and the  Financing,  including  the  preparation  by the  Parent,  Sub and their
financing  sources of any offering  memorandum or related  documents  related to
such Financing.  No  investigation  by the Parent or Sub heretofore or hereafter
made shall modify or otherwise affect any  representations and warranties of the
Company,  which shall survive any such  investigation,  or the conditions to the
obligation of the Parent and Sub to  consummate  the  transactions  contemplated
hereby.  (b)  Subject  to  Section  5.7  and  Section  5.3(a),  all  information
disclosed,  whether before or after the date hereof,  pursuant to this Agreement
or in connection with the  transactions  contemplated by, or the discussions and
negotiations   preceding,   this   Agreement   to  any   other   party  (or  its
representatives) shall constitute  confidential  information which shall be kept
confidential by such other party and its  representatives  and shall not be used
by any Person, other than in connection with evaluating and giving effect to the
Merger and the other the transactions  contemplated by this Agreement including,
without  limitation,  in connection  with  procurement of the Financing.  If the
Merger is not  consummated  and this Agreement is terminated in accordance  with
its terms, at the request of the Company,  Parent or Sub (as  applicable)  shall
return or destroy any information provided hereunder.  Section 5.4. COMMERCIALLY
REASONABLE  EFFORTS.  Upon the terms and  subject  to the  conditions  and other
agreements  set  forth in this  Agreement,  each of the  parties  agrees  to use
commercially  reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done,  and to assist and cooperate  with the other parties
in doing,  all things  necessary,  proper or  advisable to  consummate  and make
effective, in the most expeditious manner practicable,  the Merger and the other
transactions  contemplated by this Agreement,  including the satisfaction of the
respective conditions set forth in Article VI.  Notwithstanding the foregoing or
any other provision of this Agreement, nothing in this Section 5.4 shall require
Parent or the Company to dispose or hold  separate  any part of its  business or
operations or agree not to compete in any  geographic  area or line of business.
The Company and Parent  shall each  furnish to one another and to one  another's
counsel  all such  information  as may be required  in order to  accomplish  the
foregoing  actions.  If  any  state  takeover  statute  or  similar  statute  or
regulation becomes applicable to the Merger,  this Agreement or any of the other
transactions   contemplated  hereby,  the  Company  and  Parent  will  take  all
commercially reasonable action necessary to ensure that the Merger and the other
transactions  contemplated  hereby may be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise to minimize the effect
of  such  statute  or  regulation  on the  Merger  and  the  other  transactions
contemplated by this Agreement.  Section 5.5. DEBT FINANCING. Each of Parent and
Sub shall use their commercially  reasonable efforts to obtain debt financing in
an amount sufficient to consummate the transactions  contemplated  hereby and to
pay all fees and expenses in connection therewith (the "Financing") on terms and
conditions  reasonably  satisfactory  to them.  The foregoing  obligation  shall
include, without limitation, Parent's obligation to commence substantial efforts
to fund its  obligations  hereunder,  including  preparing  and,  to the  extent
appropriate,  circulating  any offering  materials and, after  circulating  such
offering materials,  holding any road shows Parent deems necessary or desirable,
no later than the date on which the  Company  holds the  Stockholders'  Meeting.
Section 5.6.  INDEMNIFICATION;  DIRECTORS' AND OFFICERS' INSURANCE. (a) From and
after  the  Effective  Time,   Parent  shall,  and  shall  cause  the  Surviving
Corporation to,  indemnify and hold harmless each person who is now, at any time
has  been or who  becomes  prior  to the  Effective  Time a  director,  officer,
employee or agent of the Company or any of its  Subsidiaries  (the  "Indemnified
Parties")  against  any and all losses,  claims,  damages,  liabilities,  costs,
expenses (including  reasonable fees and expenses of legal counsel),  judgments,
fines or,  subject to the last  sentence  of  Section  5.6(b),  amounts  paid in
settlement  in  connection  with  any  claim,   action,   suit,   proceeding  or
investigation  (each a "Claim") arising in whole or in part out of or pertaining
to any action or omission  occurring  prior to the  Effective  Time  (including,
without  limitation,  any  which  arise  out of or  relate  to the  transactions
contemplated by this  Agreement),  based on or arising out of the fact that such
person is or was a director, officer, employee or agent of the Company or any of
its Subsidiaries,  regardless of whether such Claim is asserted or claimed prior
to, at or after the Effective Time, to the full extent  permitted under Delaware
law or the Surviving  Corporation's  Certificate of  Incorporation or By-laws in
effect as of the Effective Date; provided,  however,  that in no event shall the
Surviving  Corporation  be required to  indemnify,  defend or hold  harmless any
director,  officer or  employee  of the  Company or any of its  Subsidiaries  in
respect of any loss, cost,  damage,  expense or liability incurred by such party
in respect of any Common Stock or Options held by such persons prior to or after
the Effective Time.  Without limiting the generality of the preceding  sentence,
in the event any  Indemnified  Party  becomes  involved in any Claim,  after the
Effective  Time,  Parent shall,  and shall cause the Surviving  Corporation  to,
periodically  advance  to such  Indemnified  Party its legal and other  expenses
(including the cost of any investigation and preparation  incurred in connection
therewith),  subject to the provisions of paragraph (b) of this Section 5.6, and
subject  to the  providing  by  such  Indemnified  Party  of an  undertaking  to
reimburse  all amounts so  advanced  in the event of a final and  non-appealable
determination by a court of competent  jurisdiction  that such Indemnified Party
is not entitled thereto.  (b) The Indemnified Party shall control the defense of
any Claim with counsel selected by the Indemnified Party, which counsel shall be
reasonably  acceptable  to  Parent,  provided  that  Parent  and  the  Surviving
Corporation  shall be permitted to  participate  in the defense of such Claim at
their own expense, and provided further that if any D&O Insurance (as defined in
paragraph  (c) of this  Section  5.5) in effect at the time  shall  require  the
insurance  company to control such defense in order to obtain the full  benefits
of such  insurance and such  provision is consistent  with the provisions of the
Company's  D&O  Insurance  existing as of the date of this  Agreement,  then the
provisions of such policy shall govern the selection of counsel.  Neither Parent
nor the  Surviving  Corporation  shall be  liable  for any  settlement  effected
without its written consent,  which consent shall not be withheld  unreasonably.
(c)  For a  period  of six  years  after  the  Effective  Time  (the  "Insurance
Carry-Over Period"), Parent or the Surviving Corporation shall provide officers'
and directors'  liability insurance ("D&O Insurance")  covering each Indemnified
Party  who is  presently  covered  by the  Company's  officers'  and  directors'
liability  insurance or will be so covered at the Effective Time with respect to
actions or omissions  occurring  prior to the  Effective  Time, on terms no less
favorable than such insurance maintained in effect by the Company as of the date
hereof in terms of coverage and amounts,  provided that Parent and the Surviving
Corporation  shall not be required to pay in the aggregate an annual premium for
D&O  Insurance  in excess of 150% of the last annual  premium  paid prior to the
date hereof,  but in such case shall  purchase as much  coverage as possible for
such amount.  (d) The Certificate of Incorporation  and By-laws of the Surviving
Corporation  shall  contain  substantially  similar  provisions  with respect to
indemnification,  personal liability and advancement of fees and expenses as set
forth in the  Restated  Charter and  By-laws of the Company as of the  Effective
Time,  which  provisions  shall not be amended,  repealed or otherwise  modified
during the Insurance Carry-Over Period in any manner that would adversely affect
the  rights  thereunder  of the  Indemnified  Parties  in  respect of actions or
omissions  occurring  at or  prior to the  Effective  Time  (including,  without
limitation,  the  transactions  contemplated  by this  Agreement),  unless  such
modification  is required  by law.  Parent,  Sub and the Company  agree that all
rights  existing in favor of any  Indemnified  Party  under any  indemnification
agreement  in effect  as of the date  hereof  (each of which  shall be listed on
Section 5.6(d) of the Disclosure  Schedule  hereto) shall survive the Merger and
shall continue in full force and effect,  without any amendment thereto.  In the
event any Claim is asserted or made, any determination  required to be made with
respect to whether an Indemnified  Party's  conduct  complies with standards set
forth under such provisions of the Restated Charter or By-laws or under the DGCL
or any such  indemnification  agreement,  as the  case may be,  shall be made by
independent  legal counsel  selected by such  Indemnified  Party and  reasonably
acceptable to Parent unless the DGCL,  the Restated  Charter or By-laws  provide
otherwise;  and  provided,  that  nothing in this  Section 5.5 shall  impair any
rights or  obligations  of any  current  or former  director  or  officer of the
Company  or  any of  its  Subsidiaries,  including  pursuant  to the  respective
certificates of incorporation or bylaws of Parent, the Surviving  Corporation or
the Company, or their respective Subsidiaries,  under the DGCL or otherwise. (e)
The  provisions  of this  Section 5.5 are intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified  Parties,  his or her heirs and
his or her personal  representatives  and shall be binding on all successors and
assigns of Parent, Sub, the Company and the Surviving Corporation.  Section 5.7.
PUBLIC  ANNOUNCEMENTS.  Parent and Sub, on the one hand, and the Company, on the
other hand, will consult with each other before issuing,  and provide each other
the  opportunity  to review and comment upon,  any press release or other public
statements  with respect to the  transactions  contemplated  by this  Agreement,
including  the  Merger,  and shall not issue any such press  release or make any
such public statement prior to such consultation;  provided, that any such party
may make any public  statement which it in good faith believes,  based on advice
of counsel,  is necessary or advisable in  connection  with any  requirement  of
applicable  law,  court  process  or by  obligations  pursuant  to  any  listing
agreement with any national securities exchange,  it being understood and agreed
that each party shall  promptly  provide the other parties hereto with copies of
such public statement. Section 5.8. ACQUISITION PROPOSALS. (a) The Company shall
not, nor shall it authorize or permit any of its representatives to, directly or
indirectly,  (i) solicit or initiate the submission of any Acquisition  Proposal
(as hereinafter  defined);  (ii)  participate in any discussions or negotiations
regarding,  or furnish to any person any non-public information with respect to,
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 foregoing shall not prohibit
the independent  directors from furnishing  information or requiring the Company
to furnish  information to, or entering into  discussions or negotiations  with,
any person in connection with an unsolicited bona fide  Acquisition  Proposal by
such person.  For purposes of this Agreement,  "Acquisition  Proposal" means any
proposal  with  respect to a merger,  consolidation,  share  exchange,  business
combination  or  similar  transaction  involving  the  Company  or  any  of  its
Subsidiaries  or any equity  interest  greater than 25% in the Company or any of
its  Subsidiaries,  other than the  transactions  contemplated  hereby.  (b) The
Company  shall not enter into any  agreement  with  respect  to any  Acquisition
Proposal or enter into any agreement,  arrangement or understanding requiring it
to abandon, terminate or fail to consummate the Merger or any other transactions
contemplated  by  this  Agreement   unless  the  Company's  Board  of  Directors
determines  in good  faith  by a  majority  vote,  after  consultation  with its
financial  and  legal   advisors  that  such   transaction   (the   "Alternative
Transaction")  is more  favorable  to the  stockholders  of the  Company  from a
financial  point of view than the  transactions  contemplated by this Agreement.
Section 5.9. BOARD ACTION RELATING TO STOCK OPTION PLANS AND OPTIONS. As soon as
reasonably  practicable  following  the date of this  Agreement,  to the  extent
permitted by the Company  Stock Option  Plans and  applicable  law, the Board of
Directors of the Company (or, if  appropriate,  any  committee  administering  a
Company Stock Option Plans) shall adopt such resolutions or take such actions as
may be necessary or appropriate to adjust the terms of all  outstanding  Company
Stock Options in accordance  with Section 2.2, and shall make such other changes
to the Company Stock Option Plans as it deems  necessary or  appropriate to give
effect to the Merger.  In addition,  prior to the Effective  Time,  the Board of
Directors of the Company shall adopt such  resolutions  and take such actions as
may be required to amend the terms of all outstanding Options in accordance with
Section  2.2, to the extent  permitted  by the Company  Stock  Option  Plans and
applicable  law,  and shall make such other  changes to the  Options as it deems
appropriate  to give  effect to the  Merger.  Section  5.10.  NOTICES OF CERTAIN
EVENTS.  The  Company  and Parent  shall  promptly  notify the other of: (a) the
receipt of any notice or other  communication  from any person alleging that the
consent of such person is or may be required in connection with the transactions
contemplated  by  this  Agreement;  (b)  the  receipt  of any  notice  or  other
communication  from any  governmental  or  regulatory  agency  or  authority  in
connection with the  transactions  contemplated  by this Agreement;  and (c) any
actions, suits, claims,  investigations or proceedings commenced or, to the best
of its  actual  knowledge,  threatened  against,  relating  to or  involving  or
otherwise affecting the Company or any Subsidiary, on the one hand, or Parent or
Sub, on the other hand,  which, in either case, could materially  interfere with
the  consummation of the  transactions  contemplated by this Agreement.  Section
5.11.  EXCHANGE ACT AND STOCK  EXCHANGE  FILINGS.  Unless an exemption  shall be
expressly  applicable  to the  Company,  or unless  Parent  agrees  otherwise in
writing,  the Company will file with the SEC and the NASDAQ all reports required
to be filed by it  pursuant  to the  rules  and  regulations  of the SEC and the
NASDAQ  (including,  without  limitation,  all required  financial  statements).
Section  5.12.  AMENDMENT TO  EMPLOYMENT  AGREEMENTS.  Parent,  Sub, the Company
Garret L. Dominy  ("Dominy") and James S. Carter  ("Carter")  hereby agree that,
effective upon the Effective Date and contingent  upon the  consummation  of the
Merger,  each of the  Amended  and  Restated  Employment  Agreement  between the
Company  and (a) Carter  dated as of  November  1, 1997 and (b) the  Amended and
Restated  Employment  Agreement  between  the  Company  and  Dominy  dated as of
November 1, 1997 (each,  an  "Employment  Agreement"),  shall  automatically  be
amended with regard to the provision in each such Employment  Agreement relating
to Termination  Without Cause to the effect that the second  sentence of Section
4.3 in each Employment Agreement shall be deleted and in each case replaced with
the  following:  "If the Executive is  terminated  during the Term without Cause
(including  any  termination  which is deemed to be a  constructive  termination
without  Cause under  Section  4.6  hereof),  the  Company's  obligation  to the
Executive  shall be  limited  solely to (i) the  vesting  of all  stock  options
granted to the  Executive  by the  Company  and (ii) the  payment,  at the times
granted and upon the terms provided for herein, of the Executive's Annual Salary
for a period of 18 months, based on the Annual Salary of the Executive in effect
on the date of  termination  (or, if the  Company  has  reduced the  Executive's
Annual Salary in breach of this Agreement,  the Executive's Annual Salary before
such  reduction),  together with all unpaid Incentive Bonus and Benefits awarded
or accrued up to the date of  termination."  This amendment shall be of no force
and  effect in the event  this  Agreement  is  terminated  or the  Merger is not
otherwise  consummated.  Section 5.13. DELIVERY OF AUDITED STATEMENTS AND UPDATE
OF DISCLOSURE  SCHEDULE.  Promptly  after the  Company's  receipt of its audited
financial  statements  for the year ended  December  31,  1999  together  with a
restatement of its financial  statements  for prior  periods,  if any, which are
currently  being  audited by KPMG Peat Marwick LLP  (collectively,  the "Audited
Statements"),  the  Company  shall  deliver to Parent  such  Audited  Statements
together with any  amendments and  supplements  to the Disclosure  Schedule (the
"Disclosure  Updates")  which  will  bring  the  Company's  representations  and
warranties  herein  current to the date of such delivery (the date on which each
of the Audited Statements, the Disclosure Updates and the Bring Down Certificate
(as defined below) have been delivered to Parent being hereafter  referred to as
the "Audit  Delivery  Date").  In  addition to the  Audited  Statements  and the
Disclosure  Updates,  on the Audit  Delivery  Date the Company  shall deliver to
Parent  and Sub a  certificate  executed  on behalf of the  Company by its Chief
Executive  Officer dated the Audit  Delivery Date which shall become an integral
part   hereof  (the  "Bring  Down   Certificate")   containing   the   identical
representations  and warranties  set forth in Section 3.1 herein,  including the
limitations  thereof,  except (i) the  representations  and warranties  shall be
amended and  supplemented by the Audited  Statements and the Disclosure  Updates
and (ii) each  reference  in Section  3.1 herein to the date  September  3, 1999
shall be changed to the Audit  Delivery  Date and the  verbiage and tense of the
representations and warranties shall be adjusted  accordingly.  It is understood
that  Parent  shall have ten days  commencing  on the Audit  Delivery  Date (the
"Optional   Termination  Period")  in  which  to  terminate  this  Agreement  in
accordance  with Section  7.1(h) herein and,  unless  Parent so terminates  this
Agreement during the Optional  Termination  Period, then Parent and Sub shall be
deemed to have accepted and agreed to the Audited  Statements and the Disclosure
Updates  which shall be fully  incorporated  herein and shall be deemed to be an
integral part of this Agreement.  During the Optional Termination Period, Parent
and its  representatives  shall have reasonable  access to KPMG Peat Marwick LLP
and the  Company in  connection  with their  review of the  Audited  Statements.
Section  5.14.  DELIVERY OF FINANCING  COMMITMENT.  If Parent does not terminate
this Agreement pursuant to Section 7.1(h) during the Optional Termination Period
then  Parent  shall  deliver  to the  Company  on the last  day of the  Optional
Termination  Period  evidence of a commitment  from a financial  institution  to
provide the Financing (the "Financing Commitment Letter"). Article VI CONDITIONS
PRECEDENT  Section  6.1.  CONDITIONS  TO EACH PARTY'S  OBLIGATION  TO EFFECT THE
MERGER. The respective  obligation of each party to effect the Merger is subject
to the  satisfaction  or waiver on or prior to the Closing Date of the following
conditions:  (a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by
the  affirmative  vote of  holders of a majority  of the  outstanding  shares of
Common Stock. (b) GOVERNMENTAL APPROVALS AND FILINGS. All filings required to be
made prior to the Effective Time with, and all consents,  approvals, permits and
authorizations  required  to be  obtained  prior  to  the  Effective  Time  from
governmental  entities in  connection  with the  execution  and delivery of this
Agreement and the  consummation of the transactions  contemplated  hereby by the
Company, Parent and Sub, and which if not obtained would have a Material Adverse
Effect  or would  prevent  consummation  of the  Merger,  will have been made or
obtained.  Section  6.2.  CONDITIONS  TO  OBLIGATIONS  OF  PARENT  AND SUB.  The
obligations  of Parent and Sub to effect the Merger are  further  subject to the
satisfaction  or waiver of the following  conditions:  (a)  REPRESENTATIONS  AND
WARRANTIES.  The  representations  and  warranties  of the  Company set forth in
Section  3.1 shall be true and  correct  as of the date of this  Agreement,  the
representations  and  warranties  of the  Company  set forth in the  Bring  Down
Certificate  shall be true and correct as of the Audit  Delivery  Date and as of
the Closing Date as though made on and as of the Closing Date, except (i) to the
extent such representations and warranties speak as of an earlier date, (ii) for
changes  permitted or  contemplated  by this  Agreement and (iii) for matters or
circumstances  or events which would not have a Company Material Adverse Effect,
and Parent shall have received an officers'  certificate signed on behalf of the
Company by its chief executive officer and chief financial officer to the effect
set forth in this paragraph.  (b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The
Company shall have performed in all material  respects all material  obligations
required to be performed  by it under this  Agreement at or prior to the Closing
Date, and Parent shall have received an officers'  certificate  signed on behalf
of the Company by its chief  executive  officer and chief  financial  officer to
such effect.  (c) THIRD PARTY  CONSENTS.  The Company  shall have  obtained,  or
Parent and Sub shall have waived,  the consent of any third  parties the consent
of whom is  required  under any  agreement,  contract  or  license  to which the
Company or any of its  Subsidiaries is a party or by which the Company or any of
its  Subsidiaries  is bound or licensed for  consummation  of the Merger and the
transactions  contemplated  by this  Agreement and as to which failure to obtain
such  consent  would have a Company  Material  Adverse  Effect.  (d) NO MATERIAL
ADVERSE CHANGE.  There shall have been no event or  circumstance  which caused a
Company  Material  Adverse  Effect from and after the Audit  Delivery  Date. The
parties expressly  acknowledge and agree that the following  developments  since
September 3, 1999, have been disclosed and considered,  and for purposes of this
Agreement shall not as of the date hereof, and will not as of or after the Audit
Delivery Date,  individually  or in the aggregate,  constitute a circumstance or
circumstances  which have caused or will be deemed to cause, a Material  Adverse
Effect  on the  Company:  (i)  notification  that the  Company  may be  deemed a
potentially  responsible  party for some portion of the cleanup costs associated
under  applicable  environmental  statutes with the  municipal  landfill site in
Babylon,  New York;  (ii) the Family  Medical  Leave Act claim and the Americans
with  Disabilities  Act claim filed  against  the  Company's  Marion  Composites
division;  (iii)  the  pending  governmental  investigation  into the  Company's
Alcore,  Inc.  Subsidiary  reflected in the  government's  search warrant served
January 7, 2000, and the affidavit  supporting the  application  for such search
warrant,  copies of each of which  have been  provided  to Parent  and Sub.  The
parties further agree that any and all  consequences or effects on any aspect of
the Company or its Subsidiaries which arise out of the business or operations of
Alcore,  including  without  limitation,  Alcore's  financial  results  and  any
liability or damages  relating to the  allegations  in the pending  governmental
investigation,  shall  specifically  be  excluded  for any  determinations  made
hereunder. Section 6.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger is further  subject to the  satisfaction  or
waiver of the following  conditions:  (a)  REPRESENTATIONS  AND WARRANTIES.  The
representations  and warranties of Parent and Sub set forth in Section 3.2 shall
be true and correct, in each case as of the date of this Agreement and as of the
Closing  Date as though  made on and as of the Closing  Date,  except (i) to the
extent such representations and warranties speak as of an earlier date, (ii) for
changes  permitted or  contemplated  by this  Agreement and (iii) for matters or
circumstances  or events which would not have a Parent Material  Adverse Effect,
and the Company shall have received a certificate  signed on behalf of Parent by
the chief  executive  officer and the chief  financial  officer of Parent to the
effect set forth in this paragraph. (b) PERFORMANCE OF OBLIGATIONS OF PARENT AND
SUB.  Parent  and  Sub  shall  have  performed  in  all  material  respects  all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date,  and the Company  shall have received a certificate  signed on
behalf of Parent by the chief executive  officer and the chief financial officer
of Parent to such effect. Article VII TERMINATION,  AMENDMENT AND WAIVER Section
7.1.  TERMINATION.  This  Agreement may only be  terminated  pursuant to, and in
accordance  with,  this Section 7.1 and any  termination  not in accordance with
this Section 7.1 shall be void and of no force and effect. This Agreement may be
terminated  and  abandoned,  at any time prior to the  Effective  Time,  whether
before or after adoption of this Agreement by the stockholders of the Company or
the Sub (except  with respect to  subsection  7.1(h) which may only be exercised
during the Optional Termination Period): (a) by either the Parent or the Company
in the event that the Parent and Sub are unable to procure the Financing, or are
otherwise unable to pay the Merger  Consideration,  on the Deadline Date; or (b)
by mutual written consent of Parent and the Company;  or (c) by either Parent or
the Company:  (i) if the adoption of this Agreement by the  stockholders  of the
Company  required  by  Delaware  law or of the  amendments,  pursuant to Section
1.6(a) herein, to the Company's Restated Charter shall not have been obtained by
June 20,  2000;  or (ii) if the  Merger  shall not have been  consummated  on or
before the Deadline Date,  provided that the failure to consummate the Merger is
not  attributable  to the  failure  of the  terminating  party  to  fulfill  its
obligations  pursuant to this  Agreement;  or (iii) if any  governmental  entity
shall  have  issued  an order,  decree  or  ruling  or taken  any  other  action
permanently enjoining,  restraining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
or (d) by the Company, provided it is not in breach of Section 5.8, if the Board
of Directors of the Company shall have approved an Alternative Transaction after
determining in good faith that such transaction  Alternative Transaction is more
favorable to the stockholders of the Company from a financial point of view than
the  transactions  contemplated  by this  Agreement;  or (e) by  Parent,  if the
Company shall have (i) breached any provision of Section 5.8, (ii)  withdrawn or
modified,  in a manner  materially  adverse to Parent or Sub,  the  approval  or
recommendation by the Board of Directors of the Company of this Agreement or the
transactions  contemplated hereby or (iii) approved an Alternative  Transaction;
or (f) by the Company,  if Parent or Sub shall have (i) materially  breached any
of their representations or warranties contained herein or (ii) failed to comply
in any material respect with any agreements,  covenants or obligations  provided
herein  applicable to Parent and Sub (other than Section 5.14),  in each case of
(i) and (ii) which breach or failure was not cured such within 10 business  days
after written notice  thereof;  or (g) by Parent,  if the Company shall have (i)
materially breached any of its representations or warranties contained herein or
(ii) failed to comply in any material respect with any agreements,  covenants or
obligations  provided herein applicable to the Company,  in each case of (i) and
(ii) which  breach or failure was not cured such  within 10 business  days after
written notice  thereof;  or (h) by Parent,  (i) at any time during the Optional
Termination  Period if the Audited  Statements,  the Bring Down  Certificate  or
Disclosure  Updates are not acceptable to Parent in its sole discretion and (ii)
any time after April 15, 2000 if the  Company  has not  delivered  to Parent the
Audited Statements, the Bring Down Certificate and Disclosure Updates; or (i) by
the  Company,  in the event that the  Parent  and Sub are unable to provide  the
Company  with the  Financing  Commitment  Letter on the last day of the Optional
Termination  Period.  For  purposes  hereof the  "Deadline  Date" shall mean the
earlier of June 30, 2000 and the tenth day following the day on which the Merger
is approved at the Stockholders' Meeting. Section 7.2. EFFECT OF TERMINATION. In
the event of  termination  of this  Agreement by either the Company or Parent as
provided in Section 7.1, this Agreement shall forthwith  become void and have no
effect,  without any liability or  obligation on the part of Parent,  Sub or the
Company,  except as follows:  (a) if this Agreement is terminated by the Company
pursuant to Section 7.1(d),  or by Parent  pursuant to Section 7.1(e),  then the
Company  shall  immediately  pay to Parent a cash amount equal to  $2,500,000 as
compensation  for lost  opportunities  and shall reimburse Parent for all of its
reasonable and documented  out-of-pocket  expenses  incurred in connection  with
this  transaction up to a maximum amount of $750,000.  The Company  acknowledges
that the amount of damages  that would be incurred by Parent as a result of such
a  termination  are  difficult to  ascertain,  and that the amount of liquidated
damages provided by this Section 7.2(a) is reasonable;  (b) if this Agreement is
terminated by Parent or the Company  pursuant to Section  7.1(c)(i) or by Parent
pursuant  to  Sections  7.1(g) or 7.1(h),  then the  Company  shall  immediately
reimburse Parent for all of its reasonable and documented out-of-pocket expenses
incurred in connection with this transaction up to a maximum amount of $750,000;
and (c) if this  Agreement is  terminated  by Parent or the Company  pursuant to
Section 7.1(a),  then Parent shall  immediately pay to the Company a cash amount
equal to  $3,000,000 as  compensation  for lost  opportunities  and Parent shall
reimburse the Company for all of its  reasonable  and  documented  out-of-pocket
expenses incurred in connection with this transaction (including the expenses of
Allen which the Company is  obligated to bear but  excluding  the fees of Allen,
which the  Company is  obligated  to bear) up to a maximum  amount of  $750,000.
Parent and Sub acknowledge  that the amount of damages that would be incurred by
the Company as a result of such a termination  are  difficult to ascertain,  and
that the  amount  of  liquidated  damages  provided  by this  Section  7.2(c) is
reasonable.  (d) if this  Agreement  is  terminated  by the Company  pursuant to
Section 7.1(f),  then Parent shall immediately  reimburse the Company for all of
its reasonable and documented out-of-pocket expenses incurred in connection with
this transaction (including the expenses of Allen which the Company is obligated
to bear but excluding the fees of Allen, which the Company is obligated to bear)
up to a maximum  amount of  $750,000.  SECTION  7.3  AMENDMENT.  Subject  to the
applicable  provisions  of the DGCL,  at any time prior to the  Effective  Time,
whether before or after adoption of this  Agreement by the  stockholders  of the
Company,  the  parties  hereto may modify or amend  this  Agreement,  by written
agreement  executed and delivered by duly authorized  officers of the respective
parties;  provided,  however,  that  after  adoption  of this  Agreement  by the
stockholders  of the Company or the Sub, no amendment shall be made which by law
would require the further  approval of such  stockholders,  without such further
approval.  This  Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.  SECTION 7.4 EXTENSION;  WAIVER. At any
time prior to the  Effective  Time,  the parties may (a) extend the time for the
performance of any of the  obligations  or other acts of the other parties,  (b)
waive  any  inaccuracies  in the  representations  and  warranties  of the other
parties  contained in this  Agreement or in any document  delivered  pursuant to
this Agreement or (c) waive  compliance with any of the agreements or conditions
of the other parties contained in this Agreement. Any agreement on the part of a
party to any such  extension  or waiver  shall be valid  only if set forth in an
instrument in writing  signed on behalf of such party.  The failure of any party
to this  Agreement to assert any of its rights under this Agreement or otherwise
shall  not  constitute  a waiver  of such  rights.  SECTION  7.5  PROCEDURE  FOR
TERMINATION,  AMENDMENT,  EXTENSION OR WAIVER.  A termination  of this Agreement
pursuant to Section 7.1, an amendment of this Agreement  pursuant to Section 7.3
or an  extension  or  waiver  pursuant  to  Section  7.4  shall,  in order to be
effective and in addition to  requirements of applicable  law,  require,  in the
case of Parent, Sub or the Company, action by its Board of Directors or the duly
authorized  designee of its Board of Directors.  Article VIII GENERAL PROVISIONS
Section  8.1.  NONSURVIVAL  OF  REPRESENTATIONS  AND  WARRANTIES.  None  of  the
representations and warranties in this Agreement or in any instrument  delivered
pursuant to this Agreement  shall survive the Effective  Time.  This Section 8.1
shall not limit any  covenant or  agreement  of the  parties  which by its terms
contemplates   performance   after  the  Effective  Time,   including,   without
limitation,  Section 5.6.  Section 8.2.  FEES AND  EXPENSES.  Except as provided
otherwise  herein,  whether or not the Merger shall be  consummated,  each party
hereto shall pay its own expenses  incident to preparing for,  entering into and
carrying  out  this  Agreement  and  the   consummation   of  the   transactions
contemplated hereby.  Section 8.3. DEFINITIONS.  For purposes of this Agreement:
(a) "Affiliate" and "Associate"  shall have the respective  meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act; (b) "person" or "Person"  means an  individual,  corporation,  partnership,
joint venture, association,  trust, unincorporated organization or other entity.
Section  8.4.  NOTICES.  All  notices,   requests,  claims,  demands  and  other
communications  under this  Agreement  shall be in  writing  and shall be deemed
given if delivered  personally or sent by overnight courier  (providing proof of
delivery)  or  telecopy to the parties at the  following  addresses  (or at such
other address for a party as shall be specified by like notice): if to Parent or
Sub, to c/o The Veritas Capital Fund, L.P. 660 Madison Avenue New York, NY 10021
Attention:  Robert B. McKeon Fax:  212-688-9411  with a copy to:  Whitman  Breed
Abbott & Morgan LLP 200 Park Avenue New York,  NY 10166  Attention:  Benjamin M.
Polk, Esq. Fax:  212-351-3131 if to the Company, to Advanced Technical Products,
Inc. 200 Mansell  Court,  East,  Suite 505  Roswell,  Georgia  30076  Attention:
Garrett L. Dominy Fax:  770-993-1986  with a copy to: Valerie A. Price,  Esq. 76
Parkview  Road South  Pound  Ridge,  NY 10576  Fax:  914-763-2590  Section  8.5.
INTERPRETATION.  When a  reference  is made in this  Agreement  to a Section  or
Schedule,  such  reference  shall be to a Section  of, or a  Schedule  to,  this
Agreement  unless  otherwise  indicated.  The  table of  contents  and  headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation  of this Agreement.  Whenever the words
"include,"  "includes" or "including" are used in this Agreement,  they shall be
deemed to be followed by the words "without limitation." The article and section
headings  contained in this  Agreement  are solely for the purpose of reference,
are not part of the agreement of the parties and shall not in any way affect the
meaning or interpretation  of this Agreement.  Where the context or construction
requires,  all words  applied in the plural shall be deemed to have been used in
the  singular,  and vice versa;  the  masculine  shall  include the feminine and
neuter,  and vice versa; and the present tense shall include the past and future
tense, and vice versa. Section 8.6. COUNTERPARTS. This Agreement may be executed
in one or more  counterparts,  all of which shall be considered one and the same
agreement and shall become  effective  when one or more  counterparts  have been
signed by each of the parties and delivered to the other  parties.  Section 8.7.
ENTIRE  AGREEMENT;  THIRD-PARTY  BENEFICIARIES.  This  Agreement,  including the
exhibits and schedules hereto which are  incorporated  herein by this reference,
the Termination Agreement and the other agreements referred to herein constitute
the entire  agreement,  and supersede all prior  agreements and  understandings,
both written and oral,  among the parties with respect to the subject  matter of
this Agreement.  This Agreement is not intended to confer upon any person, other
than the  parties  hereto and the third party  beneficiaries  referred to in the
following sentence,  any rights or remedies. The parties hereto expressly intend
the  provisions  of Section 5.6 and  Article II to confer a benefit  upon and be
enforceable  by,  as third  party  beneficiaries  of this  Agreement,  the third
persons referred to in, or intended to be benefited by, such provisions. Section
8.8.  GOVERNING  LAW.  This  Agreement  shall be governed  by, and  construed in
accordance with, the laws of the State of Delaware,  regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Section 8.9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations  under this Agreement shall be assigned,  in whole or in part, by
operation  of law or  otherwise  by any of the parties  and any such  assignment
shall be null and void, except that Parent may assign this Agreement without the
consent of the Company  (i) to any  Affiliate  of Parent or (ii) for  collateral
security  purposes to any source of  financing  to the Parent,  Sub or Surviving
Company. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors  and  assigns.  Section  8.10.  ENFORCEMENT.  The parties  agree that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement  were not  performed  in  accordance  with its  specific  terms or was
otherwise breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or  injunctions  to prevent  breaches of this  Agreement and to
enforce  specifically the terms and provisions of this Agreement,  this being in
addition  to any other  remedy to which they are  entitled  at law or in equity.
Section 8.11. SEVERABILITY.  Whenever possible, each provision or portion of any
provision  of  this  Agreement  will be  interpreted  in  such  manner  as to be
effective and valid under  applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid,  illegal or  unenforceable in
any respect under any applicable  law or rule,  such  invalidity,  illegality or
unenforceability  will  not  affect  any  other  provision  or  portion  of  any
provision,  and this  Agreement  will be reformed,  construed and enforced as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained  herein.  Section 8.12.  WAIVER OF JURY TRIAL.  Each of the
parties  hereto  waives any right it may have to trial by jury in respect of any
litigation  based on, arising out of, under or in connection with this agreement
or any course of conduct,  course of  dealing,  verbal or written  statement  or
action of any party hereto.
 IN WITNESS WHEREOF,  Parent,  Sub and the Company
have caused this Agreement to be signed by their respective  officers  thereunto
duly  authorized,  all as of the date first written  above.  ADVANCED  TECHNICAL
PRODUCTS, INC. By:  ___________________________________  Name: Garrett L. Dominy
Title:    Executive    Vice    President   &   CFO   ATP   HOLDING   CORP.   By:
_____________________________________  Name:  Robert B. McKeon Title:  President
ATP ACQUISITION CORP. By:  _____________________________________ Name: Robert B.
McKeon   Title:   President   For   purposes  of  Section   5.12  herein   only:
___________________________________          Garrett          L.          Dominy
___________________________________  James S. Carter
 In consideration  for the
agreements of Advanced  Technical  Products,  Inc. contained herein, The Veritas
Capital Fund, L.P.  agrees to pay to the Company,  or to cause ATP Holding Corp.
("Parent") to pay to the Company,  any and all amounts  payable by Parent to the
Company  pursuant to Section  7.2(c) and 7.2(d) of the  foregoing  January  2000
Agreement  and Plan of Merger in accordance  with all its terms and  conditions.
THE  VERITAS  CAPITAL  FUND,  L.P.  By:______________________________
 EXHIBIT
1.6(a) FORM OF RESTATED  CERTIFICATE  OF  INCORPORATION
 AMENDED AND  RESTATED
CERTIFICATE OF INCORPORATION OF ADVANCED TECHNICAL  PRODUCTS,  INC. (Pursuant to
Section  102  of  the  General   Corporation  Law  of  the  State  of  Delaware)
================================================================================
ARTICLE i The name of the corporation is Advanced Technical Products,  Inc. (the
"Corporation"). ARTICLE II The address of the Corporation's registered office in
the State of Delaware is 1209 Orange Street,  City of Wilmington,  County of New
Castle,  Delaware  19801.  The name of the  Corporation's  registered  agent for
service of process at such address is The Corporation Trust Company. ARTICLE III
The purpose of the  Corporation  is to engage in any lawful act or activity  for
which  corporations  may be organized  under the General  Corporation Law of the
State of  Delaware.  ARTICLE  IV The total  number of shares of stock  which the
Corporation  shall have authority to issue is 1,000 shares of common stock,  par
value  $0.01 per share.  ARTICLE V The number of  directors  of the  Corporation
shall  be as  fixed  from  time to time by or  pursuant  to the  By-laws  of the
Corporation.  Each director shall serve until such director's  successor is duly
elected and qualified or until such  director's  earlier  death,  resignation or
removal.  article vi Unless and  except to the  extent  that the  By-laws of the
Corporation shall so require,  the election of directors of the Corporation need
not be by written ballot.  article vii A director of this Corporation  shall not
be liable to the Corporation or its stockholders for monetary damages for breach
of  fiduciary  duty as a  director,  except to the extent  such  exemption  from
liability or limitation  thereof is not permitted under the General  Corporation
Law of the State of Delaware or as the same exists or may  hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not adversely affect
any right or protection of a director of the Corporation existing hereunder with
respect to any act or omissions  occurring prior to such repeal or modification.
article viii The Corporation shall indemnify to the full extent permitted by law
(such as it presently  exists or may  hereafter be amended) any person made,  or
threatened to be made, a defendant or witness to any action,  suit or proceeding
(whether civil, criminal, administrative or investigative) by reason of the fact
that he is or was a director or officer of the  Corporation  or by reason of the
fact that such director or officer, at the request of the Corporation, is or was
serving any other  corporation,  partnership,  joint  venture,  trust,  employee
benefit plan or other enterprise, in any capacity. Any repeal or modification of
the foregoing  paragraph shall not adversely affect any right to indemnification
provided  hereunder with respect to any act or omission  occurring prior to such
repeal  or  modification.
  EXHIBIT  2.2  TERMINATION  AGREEMENT  TERMINATION
AGREEMENT,  dated January 28, 2000, among ADVANCED TECHNICAL  PRODUCTS,  INC., a
Delaware corporation (the "Company"),  ATP HOLDING CORP., a Delaware corporation
("Parent"),  and ATP ACQUISITION CORP., a Delaware corporation ("Sub"). WHEREAS,
the Company,  Parent and Sub  (collectively,  the "Parties") are parties to that
certain  Agreement and Plan of Merger,  dated September 3, 1999, (the "September
Merger  Agreement");  WHEREAS,  capitalized terms used herein without definition
have the respective  meanings set forth in the September Merger  Agreement;  and
WHEREAS,  as a result of certain events occurring at the Company since September
3, 1999, each of the Parties desires to terminate the September Merger Agreement
and to simultaneously  enter into a new merger agreement  regarding the proposed
merger of Sub with and into the Company upon the terms and  conditions  provided
therein  (the   "January  2000  Merger   Agreement").   FOR  GOOD  AND  VALUABLE
CONSIDERATION,  the receipt and sufficiency which are hereby  acknowledged,  the
Parties  hereto  hereby  agree as follows:  1.  Termination  Pursuant to Section
7.1(b) of the  September  Merger  Agreement,  the  Company  and Parent  mutually
consent to the  termination  of,  and hereby  terminate,  the  September  Merger
Agreement. 2. The Deposit The Deposit,  together with earnings thereon, shall be
disbursed to Parent  forthwith and,  simultaneously  with the execution  hereof,
Parent and the Company  shall  execute  and deliver to the Escrow  Agent a Joint
Written  Instruction  in the form  attached  as Exhibit A hereto  directing  the
disbursement  of the Deposit to Parent in  accordance  with  Section 2(c) of the
Escrow  Agreement.  3. Termination of Obligations In accordance with Section 7.2
of the September Merger Agreement this termination pursuant to Section 7.1(b) of
the September  Merger Agreement shall cause the September Merger Agreement to be
void and have no effect,  without any liability or obligation of Parent,  Sub or
the Company except as may be contained in the January 2000 Merger Agreement.  IN
WITNESS  WHEREOF,  the  parties  hereunto  set their  hands the day first  above
written.  ADVANCED TECHNICAL  PRODUCTS,  INC.  By:______________________________
Name: Garrett L. Dominy Title: Chief Executive Officer and President ATP HOLDING
CORP.  By:______________________________ Name: Robert B. Mckeon Title: President
ATP ACQUISITION CORP.  By:______________________________  Name: Robert B. Mckeon
Title:  President
  EXHIBIT  99.1  ATP  Announces  Execution  of a New  Merger
Agreement with Veritas  Capital  ROSWELL,  Ga., Jan. 31 /PRNewswire/ -- Advanced
Technical  Products,  Inc.  (Nasdaq:  ATPX - news), and  representatives  of The
Veritas Capital Fund,  L.P.,  affiliates of which had been parties to the merger
agreement (the "Buyer"),  announced today that, due to recent  developments at
ATP's  Alcore  Division,  they have  mutually  terminated  the merger  agreement
entered into in September  1999 without  liability to either party and agreed to
release the Buyer's escrow. The parties have  simultaneously  entered into a new
merger agreement  pursuant to which the stockholders of ATP will receive in cash
$12.75 per share,  without  interest.  The new merger  agreement  is subject to,
among other things,  stockholder  approval,  delivery by no later than April 15,
2000 to the Buyer of ATP's  December 31, 1999 audited  financial  statements and
the  Buyer's  ability  to  arrange  financing.  The Buyer  will have ten days to
terminate  the new  merger  agreement  after  receiving  the  audited  financial
statements,  and if it does not terminate within that ten-day period,  the Buyer
must promptly  provide ATP with evidence that the Buyer has obtained  financing.
If the  Buyer  does not  terminate  the  agreement  within  the  ten-day  period
following the delivery of ATP's December 31, 1999 audited financial  statements,
the Buyer will be  obligated  to pay to ATP a cash amount of  $3,000,000  if the
Buyer  does not  obtain  financing  and close the  transaction  on or before the
earlier of ten days after the  approval  of the new  merger  agreement  by ATP's
stockholders and June 30, 2000. ATP designs,  develops and manufactures advanced
composite  based  materials and products from  continuous  high strength  fibers
which optimize  structural  performance while minimizing the components' weight.
ATP  believes  it is one of a very few  with the  ability  to  utilize  multiple
processes,  such as,  autoclave  lamination,  filament  winding,  resin transfer
molding and metal  bonding.  Using  these  processes,  the Company  manufactures
products  for the  aerospace  and  defense  markets,  as well as for  commercial
applications  including  oil and gas  tubulars  and fuel tanks for  Natural  Gas
Vehicles.  The Company is also a leader in the  development  and  production  of
chemical defense systems. This press release includes forward-looking statements
regarding the present  intentions and expectations of managementof ATP. Certain
factors beyond ATP's control could cause results to differ materially from those
in  these  forward-looking   statements.   Among  these  risk  factors  are  the
possibility  that the sale of Advanced  Technical  Products may not close due to
the failure to satisfy certain conditions including the satisfactory  completion
of certain regulatory,  third party and stockholder approval. Other risk factors
include  general  market  conditions,  dependence  on the  aerospace and defense
industries,  the level of military  expenditures  and competition in the markets
for  ATP's  products,  are more  fully  described  in ATP's  Form 10-K and other
documents filed with the Securities and Exchange  Commission.  SOURCE:  Advanced
Technical Products, Inc.
filed with the Securities and Exchange Commission.
SOURCE: Advanced Technical Products, Inc.