GOSS GRAPHIC SYSTEMS INC, S-1, 1996-07-19

GOSS GRAPHIC SYSTEMS INC
S-1, 1996-07-19

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 1996

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GOSS GRAPHIC SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3555 13-3888069
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

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700 OAKMONT LANE
WESTMONT, ILLINOIS 60559
TELEPHONE: (708) 850-5600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive office)
-------------------

JACK E. MERRYMAN, ESQ.
700 OAKMONT LANE
WESTMONT, ILLINOIS 60559
TELEPHONE: (708) 850-5600
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
-------------------

WITH COPIES TO:

<TABLE>
<S> <C>
ANDREW R. BROWNSTEIN, ESQ. MORTON A. PIERCE, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ DEWEY BALLANTINE
51 WEST 52ND STREET 1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10019
(212) 403-1000 (212) 259-8000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. / /
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CALCULATION OF REGISTRATION FEE

[CAPTION]
<TABLE>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY(A) PRICE(A) REGISTRATION FEE
<S> <C> <C> <C> <C>
% Senior Subordinated Notes due
2006........................... $225,000,000 100% $225,000,000 $77,586
</TABLE>

(a) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
registration fee.
-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED , 1996
PROSPECTUS
[LOGO]
$225,000,000
Goss Graphic Systems, Inc.
% Senior Subordinated Notes due 2006
Interest payable and
Due , 2006
--------------
The % Senior Subordinated Notes due 2006 (the "Notes") of Goss Graphic
Systems, Inc. (the "Company") are being offered (the "Offering") in connection
with the acquisition by the Company of the Graphic Systems business unit from
Rockwell International Corporation (the "Acquisition"). Interest on the Notes
will be payable semi-annually on and of each year commencing
, 1997. The Notes are redeemable at the option of the Company, on one
or more occasions, at any time on or after , 2001, at the redemption
prices set forth herein, together with accrued and unpaid interest, if any, to
the date of redemption. Prior to , 1999, up to % of the original
principal amount of the Notes will be redeemable at the option of the Company,
on one or more occasions, from the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company,
at a redemption price of % of the principal amount of the Notes, together with
accrued and unpaid interest, if any, to the date of redemption; provided that at
least $ million in aggregate principal amount thereof remains outstanding after
each such redemption. Upon a Change of Control (as defined herein), the Company
is obligated to make an offer to purchase the outstanding Notes at a purchase
price in cash equal to 101% of the aggregate principal amount of the Notes,
together with accrued and unpaid interest to the date of repurchase. There can
be no assurance that the Company will have the financial ability or will be
permitted by its other financing instruments to purchase the Notes upon the
occurrence of a Change of Control. See "Description of Notes."
The Notes will be senior subordinated unsecured obligations of the Company, will
be subordinated in right of payment to all Senior Debt (as defined herein)
of the Company, will rank pari passu with all senior subordinated debt of
the Company and will be senior in right of payment to all existing and
future subordinated debt of the Company. The Notes will be effectively
subordinated to all indebtedness and other liabilities of the
Company's subsidiaries. As of March 31, 1996, after giving effect
to the Transactions (as defined herein), the aggregate amount
of Senior Debt of the Company would have been approximately
$27.3 million (excluding approximately $7.5 million of
letters of credit), all of which would have been secured
borrowings by the Company and its subsidiaries
under the New Bank Credit Agreement (as defined
herein) and the aggregate amount of indebtedness
and other liabilities of the Company's
subsidiaries would have been approximately
$228.1 million (excluding approximately
$28.5 million of letters of credit).
See "Use of Proceeds" and
"Capitalization."
The Company is a newly organized corporation formed on behalf of Stonington
Capital Appreciation 1994 Fund, L.P. to consummate the Acquisition. Consummation
of the Offering will occur simultaneously with and is conditioned upon
consummation of the Acquisition and certain other related transactions, which
are subject to certain conditions. See "The Acquisition."
--------------

FOR DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE NOTES, SEE "RISK FACTORS."
--------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE><CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Company(2)
------------ ------------- --------------
<S> <C> <C> <C>
Per Note....................................................... % % %
Total.......................................................... $ $ $
</TABLE>

<TABLE>
<C> <S>
(1) Plus accrued interest, if any, from .
(2) Before deducting expenses payable by the Company estimated at $ .
</TABLE>
--------------

The Notes are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes will be made on or about , 1996, against payment in immediately
available funds.

CS First Boston BT Securities Corporation

The date of this Prospectus is , 1996.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

[FOLD OUT WITH PICTURES]

------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OPEN MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE NOTES PURSUANT TO EXEMPTIONS FROM RULES 10B-6, 10B-7
AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

2
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information set forth elsewhere in this
Prospectus. Unless the context requires otherwise, (i) references in this
Prospectus to "Goss" mean, at all times prior to the date of consummation of the
Offering (the "Closing Date"), the Graphic Systems business unit of Rockwell
International Corporation, a Delaware corporation ("Rockwell") and, at all times
on or after the Closing Date, Goss Graphic Systems, Inc. and its subsidiaries,
and (ii) references in this Prospectus to the "Company" mean Goss Graphic
Systems, Inc. and its subsidiaries. In addition, unless the context requires
otherwise, references in this Prospectus to "Management" mean the management of
Goss Graphic Systems, Inc. after the Closing Date. Consummation of the Offering
is conditioned upon consummation of the Transactions (as defined herein).

GOSS

GENERAL

Goss is the leading manufacturer of web offset newspaper press systems
worldwide and of insert web offset press systems in North America. Goss also
manufactures commercial web offset printing presses in North America and
provides aftermarket parts and service to its newspaper and commercial printing
customers. Founded in 1885, Goss is the only U.S.-based manufacturer of
large-scale web offset printing presses and has pioneered many major industry
innovations, including the conversion from letter press printing to web offset
lithography, the development of computerized electronic control systems and the
introduction of back-to-back color printing. The Company is the only global
producer of newspaper printing presses with manufacturing and sales capabilities
in North America, Europe and Asia. Goss generated approximately 51% of its
fiscal 1995 net revenue of $709 million overseas (including exports from the
U.S.). The Company operates through three business categories:

. Newspaper. Goss is a widely recognized trade name in the newspaper
printing press industry. Management estimates that approximately 57% of
daily newspapers worldwide (excluding the People's Republic of China
("PRC")) print on Goss presses (approximately 70% in the U.S. and Canada).
Goss provides sophisticated, computer-controlled press systems for a wide
variety of newspaper publications which vary significantly in circulation,
page count and color content and operate in markets around the world. Goss
presses print such publications as The Wall Street Journal, USA Today, The
New York Times and The Los Angeles Times in the U.S., The Financial Times
in the United Kingdom, Zero Hora in Brazil, The Asahi Shimbun in Japan,
The Straits Times in Singapore and The People's Daily in China. Goss's
newspaper press business generated approximately $512 million in revenues
in fiscal year 1995, or approximately 72% of Goss's total revenues.

. Insert. Goss pioneered the development of specialized web offset presses
for printing advertising inserts and continues to be the leader in the
insert press business with an estimated market share of approximately 70%
in the U.S. and Canada, the principal markets for such equipment. Goss's
insert presses combine newspaper press designs for high speed with
selected commercial press features for enhanced print quality, low
maintenance and high productivity. The Company's customers include leading
insert printers such as Big Flower Press Holdings, Inc. and Sullivan
Graphics, Inc. Goss's insert press business generated approximately $94
million in revenues in fiscal year 1995, or approximately 13% of Goss's
total revenues.

3
<PAGE>
regional and local printers, including R.R. Donnelley & Sons Company,
Quebecor, Inc. and Banta Corporation. The commercial press business
generated approximately $103 million in revenues in fiscal year 1995, or
approximately 15% of Goss's total revenues.

-----------------

The principal executive offices of Goss are located at 700 Oakmont Lane,
Westmont, Illinois 60559 and its telephone number is (708) 850-5600.

BUSINESS STRATEGY

The Company's business strategy is to (i) capitalize on its substantial
installed base of newspaper presses and market share in its traditional markets,
(ii) continue to lead in the development of innovative products that respond to
customers' needs while increasing their productivity and efficiency, (iii)
expand its strong presence in developing regions such as Asia, (iv) draw on the
manufacturing and marketing strengths of its newspaper and insert businesses to
improve the performance of its commercial business, and (v) pursue business
process improvements and cost-saving opportunities. Key elements underlying this
strategy include:

. Leading Installed Base of Newspaper Presses. Goss is the market leader in
newspaper presses with approximately 57% of daily newspapers worldwide
(excluding PRC) utilizing Goss presses. The Company believes that this
installed base and the Company's established customer relationships
provide it with a competitive advantage in obtaining repeat business,
including color capability upgrades, press line extensions and new press
purchases. In addition, the Company's significant installed base provides
a relatively stable source of aftermarket parts and service business.

. Established Global Newspaper Presence. Goss is one of only seven major
global suppliers of newspaper press systems and is the only supplier with
manufacturing, engineering and sales operations in North America, Europe
and Asia. The Company believes this global presence provides it with a
competitive advantage in light of the significant cost of transporting
newspaper press systems and the degree to which such presses require
custom engineering and manufacturing to address each customer's particular
production requirements and press configurations.

. Technology Leader. Management believes that it enjoys a reputation in the
newspaper industry as a leader in technological innovation, having
engineered several major technological advancements, including the
conversion from letterpress to web offset lithography, the development of
computerized electronic control systems and the introduction of
back-to-back process color printing, each of which has improved its
customers' print quality and productivity. With the Company's recent
introduction of an advanced inking system, and its ongoing development of
an optical color quality adjustment mechanism and of an automatic image
make-ready ("AIM") press system, Management believes the Company is
well-positioned to maintain its technology leadership. See
"Business -- Research and Development."

. Growth in Developing Markets. The Company believes that increasing incomes
and literacy rates are driving the establishment and growth of newspapers
in developing countries, particularly in South America and Asia (excluding
the more mature Japanese market). The Company believes it is
well-positioned to benefit from such growth since approximately 52% and
61%, respectively, of daily newspapers in South America and Asia/Pacific
(excluding Japan and PRC) print on Goss presses. In addition, Goss is the
only foreign-owned manufacturer of printing presses in PRC through the
Company's joint venture.

4
<PAGE>
See "--Identified Cost Savings" and "Unaudited Pro Forma Combined
Financial Statements." Management believes that efficiencies not reflected
in the pro forma financial statements included herein can be realized
through improvement of business processes, including enhanced material
procurement practices, more efficient flow of work-in-process through both
machining and assembly operations, increased outsourcing, and
restructuring of factory support functions. In addition, the Company will
seek to generate cost savings by improving efficiency in the process of
configuring presses for specific customer requirements. The Company also
has in place integrated product development teams which include design and
manufacturing engineers and other disciplines which work to identify and
implement product cost reduction initiatives such as component redesign,
lower cost component suppliers, and design modifications to improve
manufacturability. However, there can be no assurance that such
efficiencies or cost savings can be realized.

IDENTIFIED COST SAVINGS

Although no assurance can be given either that any specific level of cost
savings will be achieved or as to the timing thereof, Management currently plans
to achieve substantial savings in the base of operating costs which are
reflected in the pro forma combined financial statements (the "Identified Cost
Savings"). Once these plans are completed, annual savings are expected to amount
to approximately $19 million per year associated with the closing of redundant
facilities and reduction in staffing, revision of employee benefit plans, and
more cost effective corporate services as a stand alone company. It is expected
that, upon consummation of the Acquisition, a reserve of $16.3 million, net of a
$3.9 million provision reflected in the first six months of 1996, will be
established associated primarily with severance, outplacement and relocation
payments to be incurred in connection with headcount reductions and costs in
connection with planned facility closings. See "Unaudited Pro Forma Combined
Financial Statements."

GGS HOLDINGS, INC. AND GOSS GRAPHIC SYSTEMS, INC.

GGS Holdings, Inc. ("Holdings") and the Company are newly formed Delaware
corporations organized by Stonington Partners, Inc. ("Stonington") on behalf of
Stonington Capital Appreciation 1994 Fund, L.P. (the "Fund") to effect the
acquisition of Goss from Rockwell. The Acquisition will be effected through the
purchase by the Company and certain foreign subsidiaries to be formed by it of
the outstanding capital stock of certain entities which constitute a part of
Goss and certain of the assets and liabilities of other entities that constitute
the remainder of Goss. Neither Holdings nor the Company is expected to have any
assets or liabilities other than those arising in connection with the
Acquisition, or to engage in any business activities other than those incident
to its formation, the Acquisition and the financing of the Acquisition, until
the Acquisition becomes effective. Holdings will, directly or indirectly, own
all of the capital stock of, and assets of, and will assume all of the
liabilities of, Goss. Pursuant to the terms of the Stockholders Agreement (as
defined herein), the Fund will have the right to nominate and to remove all
directors of Holdings, and each of the Stockholders (as defined herein) will
agree to vote in favor of such nomination or removal.

STONINGTON AND THE FUND

Stonington was formed in 1993 and, through the Fund, has raised $1 billion
in funds available for investments of this nature. The senior principals of
Stonington have been organizing investments of this nature since 1981, having
closed an aggregate of 44 transactions with total consideration of approximately
$21 billion.

The Fund is a Delaware limited partnership which was organized by Stonington
to finance investments in industrial and other companies. Its principal
investors include major pension funds, U.S. and foreign banks, insurance
companies and corporations.

5
<PAGE>
THE ACQUISITION

The Company has entered into a Stock and Asset Purchase Agreement dated as
of April 26, 1996, as amended on July 18, 1996 (the "Purchase Agreement") with
Rockwell to effect the acquisition of Goss from Rockwell. The Acquisition will
be effected through the purchase by the Company of all the outstanding stock of
Rockwell Graphic Systems, Inc., a Delaware corporation ("Goss Delaware") and
Rockwell Systemes Graphiques Nantes, a societe anonyme organized under the laws
of the Republic of France ("Goss France"), and through the purchase by the
Company and certain wholly owned foreign subsidiaries of the assets and the
assumption of liabilities which constitute the remainder of Goss. Immediately
after the Acquisition, the Company will merge with and into Goss Delaware. The
purchase price for the Acquisition will consist of $552.5 million in cash,
subject to certain adjustments (the "Cash Consideration"), and 47,500 shares of
Preferred Stock (as defined herein), $1,000 liquidation preference per share,
issued by Holdings to Rockwell. Simultaneously with the closing of the
Acquisition (the "Acquisition Closing"), Holdings will raise $112.5 million of
equity financing, comprised of $ million in cash from the sale of common
stock, par value $.01 per share, of Holdings (the "Common Stock") to the Fund
(the "Stonington Investment"), and $ million in cash from the sale (the
"Management Placement") of the Management Shares (as defined herein) to certain
members of the Company's Management (the "Management Investors"). Holdings will
simultaneously therewith contribute all such amounts to the Company in exchange
for all of the capital stock of the Company. Holdings will finance $
million of the Management Placement. Upon consummation of the Transactions, the
Fund will own % of the outstanding Common Stock of Holdings and the
Management Investors will own the remaining % (the "Management Shares"). In
addition, upon consummation of the Transactions, Holdings will also grant to
certain members of Management who are not Management Investors shares of
nonvoting common stock, par value $.01 per share, of Holdings (the "Nonvoting
Common Stock"), representing 100% of the Nonvoting Common Stock that will be
outstanding after the Acquisition, pursuant to restricted stock granted under
the Plan (as defined herein). Rockwell will own all of the outstanding Preferred
Stock of Holdings. The balance of the funds needed to consummate the Acquisition
will come from borrowings under a credit agreement, dated , 1996,
among the Company, Bankers Trust Company as agent, the co-agents named therein
and the lenders named therein (the "New Bank Credit Agreement"), the proceeds of
the Offering and the proceeds from the sale of a portfolio of notes receivable
issued in connection with customer financing provided by Goss to purchasers of
Goss's products (collectively, the "Customer Notes"). The foregoing equity and
debt financings, together with the Acquisition, are collectively referred to as
the "Transactions." The Offering is conditioned upon, among other things,
consummation of the Transactions. See "The Acquisition," "Description of New
Bank Credit Agreement," "Description of Sale of Customer Notes" and "Description
of Preferred Stock."

6
<PAGE>
The following table sets forth the sources and uses of funds related to the
Acquisition:

(IN MILLIONS)
-------------

SOURCES OF FUNDS
New Bank Credit Agreement(a).................................... $ 77.3
Senior Subordinated Notes....................................... 225.0
-------------
Total Debt.................................................. 302.3
Sale of Customer Notes.......................................... 163.7
Issuance of Equity(b)........................................... 160.0
-------------
Total..................................................... $ 626.0
-------------
-------------
USES OF FUNDS
Cash Consideration.............................................. $ 552.5
Issuance of Preferred Stock of Holdings......................... 47.5
Transaction Costs............................................... 26.0
-------------
Total..................................................... $ 626.0
-------------
-------------

- ------------

<TABLE>
<C> <S>
(a) The Bank Facilities (as defined herein) provide for a Term Loan Facility (as defined
herein) aggregating $75 million and a Revolving Credit Facility (as defined herein) of
$150 million (approximately $2.3 million of which will be drawn down on the Closing
Date in cash in connection with the Acquisition and approximately $36 million of which
will be drawn down on the Closing Date in connection with the issuance, assumption or
replacement of letters of credit, comprised of approximately $6.9 million relating to
the sale of Customer Notes and approximately $29.1 million relating to the assumption
or replacement of certain outstanding letters of credit). See "Description of New Bank
Credit Agreement" and "Description of Sale of Customer Notes." The Purchase Agreement
provides for a post-closing purchase price adjustment, pursuant to which the Company
may receive from Rockwell or be required to make to Rockwell additional payments. The
Company intends to pay down the Revolving Credit Facility or draw down additional
amounts under the Revolving Credit Facility, as the case may be, as a result of such
purchase price adjustments. See "The Acquisition--Purchase Price; Adjustments."
(b) Includes the issuance of shares of common stock, par value $.01 per share, of Goss
for an aggregate of $112.5 million in cash and 47,500 shares of Preferred Stock that
will be issued by Holdings to Rockwell and that will be pushed down to the Company for
accounting purposes in accordance with generally accepted accounting principles
("GAAP").
</TABLE>

RISK FACTORS

The Notes offered hereby involve a high degree of risk. See "Risk Factors."

7
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
(DOLLARS IN MILLIONS)

The following table sets forth summary historical combined financial data
with respect to Goss for the periods ended and as of the dates indicated. The
summary historical combined financial data for the fiscal years ended September
30, 1993, 1994 and 1995 are derived directly from the audited combined financial
statements of Goss included elsewhere in this Prospectus, except for business
line net sales, business line operating income, Customer Notes operating and bad
debt expenses, interest income (expense), net, Customer Notes interest income
(expense), net, ratio of earnings to fixed charges and backlog. The summary
historical combined financial data for the six months ended March 31, 1995 and
1996 are derived directly from the unaudited combined financial statements of
Goss included elsewhere in this Prospectus, except for business line net sales,
business line operating income, Customer Notes operating and bad debt expenses,
interest income (expense), net, Customer Notes interest income (expense), net,
ratio of earnings to fixed charges and backlog. Such unaudited combined
financial statements, in the opinion of Management, include all adjustments
necessary for the fair presentation of the financial condition and the results
of operations of Goss for such periods and as of such dates. Operating results
for the six months ended March 31, 1996 are not necessarily indicative of the
results of operations that may be expected for the year ended September 30,
1996. This information should be read in conjunction with the combined financial
statements of Goss and the notes thereto appearing elsewhere in this Prospectus
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations." See "Selected Combined Financial Data." The summary historical
statement of operations for the fiscal years ended September 30, 1991 and 1992
are derived from unaudited combined financial statements of Goss that are not
included in this Prospectus.

The following table also sets forth certain unaudited summary pro forma
combined financial data of the Company for the periods ended and as of the dates
indicated. The unaudited summary pro forma combined statements of operations for
the fiscal year ended September 30, 1995 and for the six months ended March 31,
1996 give effect to the Transactions as if they had occurred as of October 1,
1994 and October 1, 1995, respectively. The unaudited summary pro forma combined
balance sheet data give effect to the Transactions as if they had occurred as of
March 31, 1996. See "Use of Proceeds" and "The Acquisition." The unaudited
summary pro forma combined financial data do not purport to represent what the
Company's results of operations or financial condition would actually have been
had the Transactions in fact occurred as of such dates or to project the
Company's results of operations or financial condition for any future period or
as of any future date. The unaudited summary pro forma combined financial data
should be read in conjunction with the Unaudited Pro Forma Combined Financial
Statements and the notes thereto. See "Unaudited Pro Forma Combined Financial
Statements" and the separate historical combined financial statements of Goss
and the notes thereto appearing elsewhere in this Prospectus and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

8
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
------------------------------------------------- ----------------------------
HISTORICAL HISTORICAL
------------------------------------------------- PRO FORMA --------------- PRO FORMA
1991 1992 1993 1994 1995 1995(A) 1995 1996 1996(A)
-------- -------- --------- ------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Business line sales:
Newspaper...................... $ 785.5 $ 527.8 $ 390.8 $435.8 $512.2 $ 512.2 $247.8 $268.9 $ 268.9
Insert......................... 81.8 87.5 143.5 110.7 93.7 93.7 45.2 48.0 48.0
Commercial..................... 93.7 72.7 92.7 101.7 103.4 103.4 58.7 26.2 26.2
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Total net sales.............. 961.0 688.0 627.0 648.2 709.3 709.3 351.7 343.1 343.1
Business line operating income
(b):
Newspaper...................... 139.9 47.8 27.0 40.6 68.4 70.9 36.2 33.1 34.2
Insert......................... 0.3 (7.4) 11.7 9.4 7.8 7.0 2.7 3.8 3.5
Commercial..................... (35.0) (32.9) (34.8) (17.0) (13.7) (6.6) (4.0) (22.8)(c) (19.4)(c)
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Total business line operating
income.......................... 105.2 7.5 3.9 33.0 62.5 71.3 34.9 14.1 18.3
Rockwell common expense
allocation (d).................. (11.5) (8.1) (7.5) (6.8) (8.3) (4.5) (4.0) (4.1) (2.2)
Patent litigation (e)........... 0.0 0.0 0.0 0.0 (3.0) 0.0 0.0 (1.0) 0.0
Restructuring charge (f)........ (49.5) (2.2) (5.4) 0.0 0.0 0.0 0.0 (3.9) 0.0
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Operating (loss) profit
before customer
note expenses............... 44.2 (2.8) (9.0) 26.2 51.2 66.8 30.9 5.1 16.1
Customer notes operating and bad
debt
expenses (g)................... (6.9) (3.4) (10.0) (19.6) (5.1) 0.0 (1.9) (1.7) 0.0
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Operating (loss) profit...... 37.3 (6.2) (19.0) 6.6 46.1 66.8 29.0 3.4 16.1
Other income (expense), net..... (0.5) 1.2 0.8 (2.1) 1.9 1.9 3.5 1.0 1.0
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Income (loss) before
interest, taxes and
cumulative effect........... 36.8 (5.0) (18.2) 4.5 48.0 68.7 32.5 4.4 17.1
Interest income (expense),
net........................... (19.1) (15.3) (8.7) (3.4) 0.0 (35.2) 0.1 (1.0) (17.6)
Customer notes interest income
(expense), net................. 13.5 16.6 19.6 13.6 12.4 0.0 5.4 6.9 0.0
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Income (loss) before taxes
and cumulative effect of
accounting change........... 31.2 (3.7) (7.3) 14.7 60.4 33.5 38.0 10.3 (0.5)
Income tax expense (benefit).... 13.2 (0.8) (1.8) 5.3 24.2 13.4 15.5 5.2 0.9
Cumulative effect of change in
accounting principle, net...... 0.0 0.0 (4.6) 0.0 0.0 0.0 0.0 0.0 0.0
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Net income (loss)............ $ 18.0 $ (2.9) $ (10.1) $ 9.4 $ 36.2 $ 20.1 $ 22.5 $ 5.1 $ (1.4)
-------- -------- --------- ------ ------ --------- ------ ------ ---------
-------- -------- --------- ------ ------ --------- ------ ------ ---------
Other Data:
Backlog (at period end) (h)..... $ 525.1 $ 421.3 $ 549.8 $537.7 $480.7 $ 480.7 $506.9 $453.1 $ 453.1
EBITDA (i)...................... 130.4 34.9 26.5 55.7 83.9 102.9 46.0 23.9 33.2
Depreciation and amortization... 36.7 35.5 30.1 29.5 29.7 36.1 15.1 13.9 17.1
Capital expenditures............ 29.6 21.2 12.5 11.6 11.5 11.5 4.7 2.0 2.0
Cash interest expense (j)....... 32.8 0.1 0.6 16.4
Ratio of EBITDA to cash interest
expense......................... 3.1 460.0 39.8 2.0
Ratio of earnings to fixed
charges (k)..................... 1.9 0.8 0.6 2.4 9.9 1.8 12.8 3.1 1.0

Balance Sheet Data (at period
end):
Total assets.................... 1,093.0 1,011.7 1,007.7 950.9 947.0 964.8 936.3 835.0
Total debt...................... 4.6 3.2 12.5 4.1 2.6 3.7 49.8 302.3
Rockwell's net investment
(shareholders' equity--pro
forma).......................... 639.1 623.8 627.3 628.7 543.1 602.1 515.7 160.0
</TABLE>

9
<PAGE>
- ------------

(a) The pro forma combined financial data for the year ended September 30, 1995
gives pro forma effect to the Transactions and the Identified Cost Savings,
as if they had occurred as of October 1, 1994, with respect to the
statement of operations data and other data, and on September 30, 1995,
with respect to the balance sheet data. The pro forma summary financial
data for the six months ended March 31, 1996 gives pro forma effect to the
Transactions and Identified Cost Savings, as if they had occurred as of
October 1, 1995 with respect to the statement of operations data and other
data, and on March 31, 1996, with respect to the balance sheet data. The
pro forma financial data are not necessarily indicative of the results that
actually would have been achieved had such transactions been consummated as
of the dates indicated or that may be achieved in the future. See "The
Acquisition" and "Unaudited Pro Forma Combined Financial Statements"
included elsewhere herein.

(b) Business line operating income represents, for each of the Company's three
business lines, net sales less cost of sales and operating expenses.
Business line operating income is before Rockwell common expense
allocation, patent litigation and restructuring charges, which, due to
their nature, are disclosed separately in the financial statements. In
addition, business line operating income excludes operating expenses, bad
debt expenses and interest income (expense), net related to Customer Notes.

(c) For the six months ended March 31, 1996 (Historical and Pro Forma),
includes a $12.7 million charge for warranty and post-shipment expenses
incurred in fiscal 1996 in respect of certain commercial presses shipped in
fiscal 1993, 1994 and 1995. For other periods presented, charges for
warranty and post-shipment expenses incurred are reflected in the period in
which the sale was recorded.

(d) Rockwell common expense allocation represents expenses charged by Rockwell
on a percentage of sales basis for administrative and management services
such as cash management, treasury, legal, patent, tax, insurance, general
management and administration, corporate accounting and communication
services.

(e) Patent litigation represents expenses related to the Heidelberger patent
infringement litigation liability which is being retained by Rockwell.
These expenses have been excluded from the pro forma results. See Note (w)
to the Unaudited Pro Forma Combined Financial Statements. See
"Business--Legal Proceedings" included elsewhere herein.

(f) The restructuring charge recorded in the second quarter of 1996 represents
reserves associated primarily with severance payments for terminated
employees and the closure of certain redundant facilities. This charge has
been excluded from the pro forma results. The restructuring charges
recorded in the 1991 through 1993 time frame were associated with the
closure of a major manufacturing facility in the United Kingdom and the
associated relocation of product lines and consolidation of manufacturing
operations at several locations. See Note (x) to the Unaudited Pro Forma
Combined Financial Statements.

(g) Customer notes operating expenses and bad debt expenses represent expenses
associated with the Company's portfolio of Customer Notes. These charges
have been excluded from the pro forma results. See Notes (s) and (t) to the
Unaudited Pro Forma Combined Financial Statements.

(h) Backlog represents the aggregate dollar value of unfilled press orders
under contract with the Company at the end of each period.

(i) EBITDA represents business line operating income less Rockwell common
expense allocation plus depreciation and amortization. EBITDA is presented
because it is a widely accepted financial indicator of a company's ability
to incur and service debt. EBITDA should not be considered by investors as
an alternative to operating income "as determined in accordance with GAAP,"
as an indicator of the Company's operating performance or as an alternative
to net cash provided by (used for) operating activities "as determined in
accordance with GAAP." See "The Combined Financial Statements," including
the Combined Statements of Cash Flows, included elsewhere herein.

(j) Cash interest expense on a pro forma basis represents interest (income)
expense, net, excluding amortization of deferred financing costs.

(k) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of income before taxes and cumulative effect of changes in
accounting plus fixed charges less capitalized interest. "Fixed charges"
consist of cash/intercompany interest expense, capitalized interest,
scheduled debt payments, amortization of deferred financing costs, pre-tax
preferred stock dividends and one-third of rental expense (the portion
deemed representative of the interest factor).

10
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
ISSUER......................... Goss Graphic Systems, Inc.

SECURITIES OFFERED............. $225.0 million aggregate principal amount of the Company's
% Senior Subordinated Notes due , 2006.

MATURITY DATE.................. , 2006.

INTEREST PAYMENT DATES......... Interest accrues from the date of issuance at an annual
rate of % and will be payable semi-annually in arrears on
and of each year, commencing , 1996.
Interest will be paid on the basis of a 360-day year,
comprised of twelve 30-day months.

OPTIONAL REDEMPTION............ Except as described below, the Notes are not redeemable at
the Company's option prior to , 2001.
Thereafter the Notes will be subject to redemption at the
option of the Company, in whole or in part, at the
redemption prices set forth herein, together with accrued
and unpaid interest, if any, to the date of redemption.

Notwithstanding the foregoing, prior to ,
1999, the Company may redeem up to % of the original
principal amount of the Notes, on one or more occasions,
from the proceeds of one or more Public Equity Offerings
(as defined herein) or private sales of common stock of,
or contributions to the common equity capital of, the
Company, at a redemption price of % of the principal
amount of the Notes, together with accrued and unpaid
interest, if any, to the date of redemption; provided that
at least $ million in aggregate principal amount of the
Notes remains outstanding after each such redemption.

CHANGE OF CONTROL.............. Upon a Change of Control each holder of Notes may require
the Company to purchase the Notes held by such holder at a
purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any,
to the date of purchase. See "Risk Factors--Limitation on
a Change of Control."

RANKING........................ The Notes will be senior subordinated unsecured
obligations of the Company, will be subordinated in right
of payment to all Senior Debt (as defined herein) of the
Company, will rank pari passu with all senior subordinated
debt of the Company and will be senior in right of payment
to all existing and future subordinated debt of the
Company. The Notes will be effectively subordinated to all
indebtedness and other liabilities of the Company's
subsidiaries. As of March 31, 1996, on a pro forma basis
after giving effect to the Transactions, the aggregate
amount of Senior Debt of the Company would have been
approximately $27.3 million (consisting of $25 million of
the Term Loan Facility and $2.3 million of the Revolving
Credit Facility and excluding approximately $7.5 million
of letters of credit), all of which would have been
secured borrowings by the Company and its subsidiaries
under the New Bank Credit
</TABLE>

11
<PAGE>

<TABLE>
<S> <C>
Agreement. The aggregate amount of indebtedness and other
liabilities of the Company's subsidiaries would have been
approximately $228.1 million (including the remaining $50
million of the Term Loan Facility and excluding
approximately $28.5 million of letters of credit). See
"Use of Proceeds," "Capitalization" and "Description of
Notes-- Ranking."

CERTAIN COVENANTS.............. The Indenture (as defined herein) will contain certain
covenants that will, among other things, limit the ability
of the Company and its Subsidiaries (as defined herein) to
Incur (as defined herein) additional Debt (as defined
herein), issue Preferred Stock, pay dividends or
distributions or make investments or make certain other
Restricted Payments (as defined herein), enter into
certain transactions with affiliates, dispose of certain
assets, incur liens securing pari passu and subordinated
indebtedness of the Company and engage in mergers and
consolidations. See "Description of Notes--Certain
Covenants."

USE OF PROCEEDS................ The net proceeds of the Notes offered hereby (estimated to
be approximately $ million in the aggregate after
deduction of underwriting discounts and commissions and
expenses of the Offering) will be used to pay a portion of
the consideration for, and the payment of transaction
costs incurred in connection with, the Acquisition. See
"Use of Proceeds."

CONDITIONS..................... The closing of the Offering will be conditioned upon,
among other things, the simultaneous closing of the
Transactions.
</TABLE>

12
<PAGE>
RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the Notes
offered by this Prospectus.

SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS

The Company will incur substantial indebtedness in connection with the
Acquisition and, following the Offering, the Company will be highly leveraged.
As of March 31, 1996, after giving pro forma effect to the Transactions, the
Company would have had total indebtedness of $302.3 million and stockholders'
equity of $160 million. Of the total $626 million used to consummate the
Acquisition, $302.3 million (48.3%) will be supplied by debt (excluding $36.0
million of letters of credit), $163.7 million (26.2%) will be supplied through
the sale of Customer Notes, and $160 million (25.6%) will be supplied by equity.
After giving pro forma effect to the Transactions, the Company's ratio of
earnings to fixed charges would have been 1.8x for the fiscal year ended
September 30, 1995 and 1.0x for the six months ended March 31, 1996. Pro forma
interest expense, net for the six months ended March 31, 1996 and fiscal year
ended September 30, 1995 would have been $17.6 million and $35.2 million,
respectively. The Company may incur additional indebtedness in the future,
subject to limitations imposed by the Indenture and the New Bank Credit
Agreement. See "Capitalization" and "Unaudited Pro Forma Combined Financial
Statements."

The Company's ability to make scheduled principal payments of, to pay
interest on or to refinance its indebtedness (including the Notes) depends on
its future performance and financial results, which, to a certain extent, is
subject to general economic, financial, competitive, legislative, regulatory and
other factors beyond its control. There can be no assurance that the Company's
business will generate sufficient cash flow from operations or that future
working capital borrowings will be available in an amount sufficient to enable
the Company to service its indebtedness, including the Notes, or make necessary
capital expenditures. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The degree to which the Company will be
leveraged following the Offering could have important consequences to holders of
the Notes, including, but not limited to, the following: (i) a substantial
portion of the Company's cash flow from operations will be required to be
dedicated to debt service and will not be available for other purposes; (ii) the
Company's ability to obtain additional financing in the future could be limited;
(iii) certain of the Company's borrowings are at variable rates of interest,
which could result in higher interest expense in the event of increases in
interest rates; and (iv) the Indenture and the New Bank Credit Agreement will
contain financial and restrictive covenants that limit the ability of the
Company to, among other things, borrow additional funds, dispose of assets or
pay cash dividends. Failure by the Company to comply with such covenants could
result in an event of default which, if not cured or waived, could have a
material adverse effect on the Company. In addition, the degree to which the
Company is leveraged could prevent it from repurchasing all Notes tendered to it
upon the occurrence of a Change of Control. See "Description of Notes" and
"Description of New Bank Credit Agreement."

RANKING OF THE NOTES; ASSET ENCUMBRANCES

The Notes will be subordinated in right of payment to all existing and
future Senior Debt. At March 31, 1996, on a pro forma basis after giving effect
to the Transactions, there would have been outstanding approximately $27.3
million of Senior Debt of the Company (including $25 million of the Term Loan
Facility and $2.3 million of the Revolving Credit Facility and excluding
approximately $7.5 million of letters of credit), all of which would have been
secured borrowings by the Company and its subsidiaries under the New Bank Credit
Agreement. In addition, the Notes will be effectively subordinated to
approximately $228.1 million of indebtedness and other liabilities and
commitments (including trade payables and lease obligations and the remaining
$50 million of the Term Loan Facility

13
<PAGE>
and excluding approximately $28.5 million of letters of credit) of the Company's
subsidiaries. By reason of such subordination, in the event of the insolvency,
liquidation, reorganization, dissolution or other winding-up of the Company or
upon a default in payment with respect to, or the acceleration of, any Senior
Debt, the holders of such Senior Debt and any other creditors who are holders of
Senior Debt and creditors of subsidiaries must be paid in full before the
Holders (as defined herein) of the Notes may be paid. If the Company incurs any
additional pari passu debt, the holders of such debt would be entitled to share
ratably with the Holders of the Notes in any proceeds distributed in connection
with any insolvency, liquidation, reorganization, dissolution or other
winding-up of the Company. This may have the effect of reducing the amount of
proceeds paid to Holders of the Notes. In addition, no payments may be made with
respect to the principal of (and premium, if any) or interest on the Notes if a
payment default exists with respect to Designated Senior Debt and, under certain
circumstances, no payments may be made with respect to the principal of (and
premium, if any) or interest on the Notes for certain periods of time if a
non-payment default exists with respect to Designated Senior Debt. In addition,
certain portions of the borrowings under the New Bank Credit Agreement will be
lent directly to certain of the Company's foreign subsidiaries, and such
borrowings will therefore have a direct, prior claim against such respective
foreign subsidiaries. See "Description of Notes."

The Company's obligations under the New Bank Credit Agreement will be
secured by security interests in all of the capital stock of the Company and
substantially all of the current and future assets of the Company and its
subsidiaries (including a pledge of all of the issued and outstanding shares of
capital stock of the Company's domestic subsidiaries and 66% of the capital
stock of the Company's foreign subsidiaries). In the event of a default on
secured indebtedness (whether as a result of the failure to comply with a
payment or other covenant, a cross-default, or otherwise), the parties granted
such security interests will have a prior secured claim on the capital stock of
the Company and the assets of the Company. If such parties should attempt to
foreclose on their collateral, the Company's financial condition and the value
of the Notes will be materially adversely affected. See "Description of New Bank
Credit Agreement."

OPERATIONS AS AN INDEPENDENT COMPANY; ABSENCE OF PARENT GUARANTEES

Prior to the Acquisition, the business of Goss had been operated as a
division of Rockwell. In the past, Rockwell has been party to, and guarantor of
Goss's obligations under, certain of the agreements providing for the sale of
Goss's products, including agreements for the sale of large newspaper printing
presses to domestic and foreign publishers. In addition, Goss has also posted
letters of credit in connection with certain sales agreements. In connection
with such sales, Goss normally receives a down payment and progress payments
from the customer in advance of delivery and acceptance of the product
purchased. There can be no assurance that, following the Acquisition, customers
will continue to make such down payments and progress payments or that sales
will not be adversely affected without Rockwell acting as a party to and/or
guarantor under the Company's sales contracts. In addition, customers may
request that the Company post letters of credit as security for such down
payments and progress payments. Although the New Bank Credit Agreement will
include a Revolving Credit Facility in an original amount of $150.0 million
under which, among other things, letters of credit may be issued up to a
sublimit (including limits which may be based upon the country in which the
entity posting the letter of credit is incorporated) to be agreed upon (see
"Description of New Bank Credit Agreement"), there can be no assurance that, if
customers request such letters of credit, the Company will be able to provide
them. Approximately $36.0 million of the Revolving Credit Facility will be drawn
down in connection with the issuance, assumption or replacement of letters of
credit on the Closing Date. The total amount of letters of credit issued for the
account of Goss that was outstanding as of March 31, 1996 was approximately
$29.1 million, representing an increase of approximately $24.8 million since
March 31, 1995. The contracts to which Rockwell is a party or under which
Rockwell has acted as guarantor represented sales of $103.1 million, or 14.5% of
total Goss sales, for the fiscal year ended September 30, 1995.

14
<PAGE>
In addition, Rockwell performs certain engineering and product development
work for Goss at Rockwell's Science Center, the costs of which have been
directly billed to Goss. Goss also has received certain administrative and
management services from Rockwell for which Goss has paid Rockwell at a flat
rate, and certain other services for which Rockwell billed Goss for direct
expense items (and related administration costs). Rockwell has agreed to provide
certain transitional services to the Company for a limited period of time
following the consummation of the Acquisition. Following the transitional
period, the Company will be required to establish an internal capability for
these functions or obtain such facilities and services from third-party
suppliers on an arm's-length basis, which may be at rates or prices that differ
from those paid by the Company to Rockwell. The Company will also be required to
obtain from third parties on an arm's-length basis certain control devices and
drive systems used with its press systems that are currently supplied by
Allen-Bradley Company, Inc., a wholly-owned subsidiary of Rockwell
("Allen-Bradley"). Such third parties may include Allen-Bradley. Purchases by
Goss from this subsidiary, which have been made on an arm's-length basis,
totaled approximately $31.6 million during the fiscal year ended September 30,
1995.

CUSTOMER FINANCING; CUSTOMER NOTES

Historically, Goss regularly made seller financing available to certain
customers in connection with their purchases of Goss's products. In early 1994,
Goss determined that, in most instances, traditional financing sources were able
to offer financing to its customers on reasonable terms. As a result, Goss has
deemphasized the use of financing in the selling process. After consummation of
the Acquisition, the Company generally does not intend to make financing
available to its customers. Rather, it will continue to assist customers in
securing financing from third-party lending sources. Management believes,
however, that certain competitors of Goss have regularly provided financing to
customers in the past and will continue to make such financing available in the
future. Although the Company believes that limiting the availability of seller
financing has not materially affected the sale of its products, there can be no
assurance that the lack of availability of seller financing in the future will
not have an adverse impact on the Company.

The Acquisition will be financed in part by the sale of Customer Notes. In
connection with this sale, the Company is guaranteeing to the purchaser of the
Customer Notes the payment of an aggregate of approximately $20 million in
principal and interest on certain Customer Notes. Certain of these guarantees
will be secured by letters of credit in an aggregate amount of approximately
$6.9 million. In the event that the obligors on these Customer Notes fail to
make regularly scheduled payments of principal and interest as and when due, the
Company may be required to make such payments to the purchaser of the Customer
Notes. See "Description of Sale of Customer Notes."

CYCLICALITY; MARKET CHARACTERISTICS

Like most printing press manufacturers, Goss's business is highly cyclical.
The timing of a printing press purchase can be influenced by numerous factors
beyond the Company's control which may temporarily affect the customer's
willingness to commit to a press acquisition. They include the age and
capabilities of the customer's current equipment, general economic conditions,
total advertising revenues, the price of newsprint, paper and other raw
materials, and competition with print and non-print media in the marketplace. As
a result of these factors, sales of the Company's products can vary
significantly from period to period. There can be no assurance that such factors
will not adversely affect the Company's results of operations in the future.

The market for Goss's products depends in part on the demand for printed
material and for print-based advertising. There can be no assurance that
competition from alternative methods of information delivery, including radio,
television, personal computers, on-line information services and other
electronic media, will not erode the demand for print-based advertising.

15
<PAGE>
COMPETITION

The global newspaper printing press, insert printing press and commercial
printing press industries are highly competitive in most product categories and
geographic regions. Competition is based on price, product features, quality,
reliability, customer service and ability to meet the specialized needs of
customers. Present and potential competition in the various markets served by
Goss comes from companies of various sizes, many of which are larger and have
greater financial and other resources than the Company. Companies not currently
in direct competition with Goss may introduce competing products in the future.

In particular, over the past several years certain foreign suppliers of
large newspaper printing presses have sought to increase their U.S. sales by
offering aggressive pricing and terms. On July 16, 1996 the U.S. Department of
Commerce (the "Commerce Department") issued final determinations that large
newspaper printing presses and components thereof imported from Japan and
Germany have been sold at less than fair value. The International Trade
Commission (the "ITC") is scheduled to issue a final determination in late
August on whether such imports are causing material injury, or the threat of
material injury, to a U.S. industry. If the ITC's final determination is
affirmative, antidumping duties may be assessed on imports covered by the case.
The assessment of duties could be forestalled, or the duty rate could be
reduced, through further administrative proceedings, judicial proceedings or
both. Moreover, the extent to which antidumping duties would benefit the
Company's competitive position in the U.S. market, if at all, cannot be
projected with assurance. See "Business--Legal Proceedings."

In addition, the Company has faced and continues to face increased
competition in terms of price from its competitors in the insert printing press
industry. Although Goss has established a presence in the commercial press
industry in North America, this industry is subject to intense competition,
primarily from one commercial press manufacturer, and the Company has a
significantly lower market share in the commercial business compared to the
Company's other businesses. See "Business-- Competition."

COMMERCIAL BUSINESS PERFORMANCE ISSUES

Goss has experienced certain performance problems with its World 16 and, to
a lesser extent, its G25W, commercial press systems which it introduced in 1993
and 1992, respectively. Certain customers have alleged that such press systems
failed to meet performance expectations and contract specifications, including
certain customers which have requested rescission of the initial purchase
contract and/or damages and have threatened litigation to resolve their claims
against the Company relating to their commercial presses. In addition, Goss has
had one customer delay shipment of a World 16 press, has not yet received full
payment from other customers due to performance issues and has had two customers
initiate litigation seeking rescission and damages. See Note 19 to the Combined
Financial Statements included elsewhere in this Prospectus.

Since the introduction of these products, Goss has incurred significant
expenses to identify and correct product performance issues and make necessary
modifications to commercial presses at customers' locations. The Company has
established reserves relating to customer satisfaction issues and continues to
review the adequacy of such reserves on an ongoing basis. Also as a result of
performance issues, Goss modified the World 16 press and reintroduced it to the
marketplace in October 1995 under the designation World 16E.

Although the Company believes it has identified and has remedied or is in
the process of remedying all significant performance issues relating to its
commercial presses, there can be no assurance that additional performance issues
will not develop or that significant additional expenditures will not be
required to resolve existing or potential future performance issues. Any such
significant performance issues or expenditures, including with respect to the
resolution of pending or threatened claims, could materially adversely affect
the Company.

16
<PAGE>
LABOR RELATIONS

Certain of the Company's hourly employees located at its Cedar Rapids, Iowa;
Reading, Pennsylvania; and Westmont, Illinois facilities are represented by
national unions and covered by various collective bargaining agreements, which
expire at various times over the next two years. The Company's hourly employees
located at the Preston, United Kingdom and Nantes, France facilities are
represented by local trade groups, those located at the Sayama, Japan facility
are represented by a company union, and all such foreign employees are covered
by collective bargaining agreements, which are renewed annually.

The labor contract between Goss and the International Association of
Machinists and Aerospace Workers covering approximately 550 hourly employees at
Goss's Cedar Rapids, Iowa facility expires on August 2, 1996. Management
believes that it has a good relationship with this union. However, there can be
no assurance that a contract will be entered into on or before August 2, 1996 or
that there will be no work stoppage or other labor disruption in connection with
the negotiation of the new labor contract.

Although the Company considers its relationships with all of its hourly
employees to be satisfactory, a prolonged labor dispute with any union could
significantly impair the Company's business, substantially increase the
Company's costs or otherwise have a material adverse effect on the Company's
business as well as the Company's results of operations and financial condition.
In addition, the Company's ability to readily manufacture and deliver its
products could be impaired by work stoppages by its employees.

TECHNOLOGY AND THE DEVELOPMENT OF NEW PRODUCTS

Technology in the printing industry continues to evolve. As a result, the
future success of the Company will depend in part upon the ability of the
Company to continue to enhance its existing products and to develop, manufacture
and market new products. Goss has invested over $84 million since 1993 in
engineering, new product development and research. In addition, following a
limited transition period, the Company will no longer conduct research and
development activities at Rockwell's Science Center. The Company has over 400
engineers at four locations around the world and believes that, following the
transition, it will continue to have the necessary engineering, product
development and research capabilities. There can be no assurance, however, that
the Company will be successful in the development, introduction, marketing and
cost-effective manufacture of any new products or enhancements to its existing
products or that there will be sufficient cash flow to fund planned engineering
and research and development expenditures or that financing for such
expenditures will be available on favorable terms. The failure to develop
products and introduce them successfully and in a timely manner could adversely
affect the Company's competitive position and results of operations.

INTERNATIONAL OPERATIONS

The Company operates manufacturing facilities in various countries.
Furthermore, it relies on source materials and components shipped from, and
markets for finished products located in, various countries. During fiscal 1995,
38% of Goss's revenue was generated by international sales of its foreign
subsidiaries (based on foreign currencies). International operations and
international shipments are subject to a number of special risks, including, but
not limited to, risks with respect to currency exchange rates, economic and
political destabilization, other disruption of markets, restrictive governmental
actions (such as restrictions on transfer of funds, trade duties and quotas,
customs and tariffs and unexpected changes in regulatory environments),
difficulty in obtaining distribution and support, nationalization, laws and
policies affecting trade, foreign investment and loans, and foreign tax laws.
There can be no assurance that these factors will not have a material adverse
impact on the Company's

17
<PAGE>
ability to increase or maintain its foreign sales or on its results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--International Operations."

The Company's ability to service its indebtedness will be dependent, in
part, on its ability to utilize the cash flow generated by its foreign
operations. In general, U.S. federal and international tax laws provide that
income of international subsidiaries is subject to tax only in the local
jurisdiction and is not subject to U.S. federal income tax unless, and only to
the extent, such income is distributed as a dividend to the U.S. parent company.
The Company has not determined whether to cause its international subsidiaries
to pay dividends to the Company or to cause the net income of such subsidiaries
to be retained abroad. The Company may make loans to its foreign subsidiaries,
and, in that event, payments by the Company's foreign subsidiaries to the
Company on such intercompany loans may result in the repatriation of a
substantial portion of the cash flow of such subsidiaries without the payment of
taxes abroad. In addition, certain of the Company's subsidiaries may make
royalty payments to the Company. There can be no assurance, however, that the
interest payments on such intercompany loans or such royalty payments will not
be recharacterized as dividends, which could have adverse tax consequences to
the Company. In addition, certain portions of the borrowings under the New Bank
Credit Agreement will be lent directly to certain of the Company's foreign
subsidiaries, and such borrowings will therefore have a direct, prior claim
against such respective foreign subsidiaries.

STRUCTURE OF THE COMPANY

The Company will conduct a substantial portion of its business through
subsidiaries. The Company will, in part, be dependent on the cash flow of such
subsidiaries and distributions thereof from such subsidiaries to the Company in
order to meet its debt service obligations. It is not expected that Holdings
will have any assets other than the common stock of the Company.

As a result of the structure of the Company, the Holders of the Notes will
be structurally subordinated to all creditors of the subsidiaries of the
Company. In the event of the insolvency, liquidation, reorganization,
dissolution or other winding-up of the subsidiaries, the Company will not
receive funds available to pay to the Holders of the Notes in respect of the
Notes until after the payment in full of the claims of the creditors of the
subsidiaries. As of March 31, 1996, on a pro forma basis after giving effect to
the Transactions, the aggregate amount of indebtedness and other obligations of
the subsidiaries (including trade payables and lease obligations) would have
been approximately $228.1 million (excluding approximately $28.5 million of
letters of credit).

DEPENDENCE ON KEY PERSONNEL

Goss's business is managed by a small number of key executive officers. The
loss of the services of certain of these executives could have an adverse impact
on the Company. There can be no assurance that the services of such personnel
will continue to be made available. The Company has entered into employment
arrangements with certain key executive officers and the Management Investors
will invest $ in exchange for % of the outstanding capital stock of
Holdings. See "The Acquisition" and "Management."

CONTROL OF THE COMPANY

The Fund will own % of the outstanding voting equity of Holdings and
pursuant to the terms of the Stockholders Agreement, each of the Management
Investors (who will own the remaining % of the outstanding voting equity of
Holdings) will agree to elect an initial slate of directors of Holdings who have
been nominated by the Fund. After the initial slate of directors has been
elected, the Fund will have the right, subject to the right of the holders of
Preferred Stock to elect two directors in the event certain provisions of the
Preferred Stock are not complied with, to nominate at any time and from time to
time all directors of Holdings (including the right to expand the board of
directors of Holdings and to

18
<PAGE>
fill vacancies created thereby) and will have the right to remove such directors
at any time and from time to time and each of the Management Investors will
agree to vote in favor of such nomination or removal of directors. As a result,
the Fund will have the ability to elect all of the directors of Holdings and the
Company, appoint new management and approve any action requiring the approval of
Holdings' or the Company's stockholders, including adopting amendments to the
Company's certificate of incorporation and approving mergers or sales of
substantially all of the Company's assets, in each case, subject to whatever
contractual restrictions that apply to the Company. There can be no assurance
that the interests of the Fund will not conflict with the interests of the
Holders of the Notes. See "Management," "Ownership of Capital Stock," "Certain
Transactions" and "Description of Preferred Stock."

LIMITATION ON A CHANGE OF CONTROL

Upon the occurrence of a Change of Control, the Company is obligated to make
an offer to purchase all outstanding Notes at a price equal to 101% of the
principal amount of the Notes, plus accrued interest thereon. The New Bank
Credit Agreement will prohibit the Company from purchasing any Notes, and will
also provide that the occurrence of certain change of control events with
respect to the Company would constitute a default thereunder. In the event a
Change of Control occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition but it has no obligation to do so. If the Company does not obtain
such a consent or repay such borrowings, the Company will remain prohibited from
purchasing Notes. In such case, the Company's failure to purchase tendered Notes
would constitute a default under clause (iv) under the definition of "Event of
Default" under the Indenture, which, in turn, would constitute a default under
the New Bank Credit Agreement. There can be no assurance that the Company will
have the financial ability to purchase the Notes upon the occurrence of a Change
of Control. There can be no assurance that the Company will be able to comply
with all of its obligations under the New Bank Credit Agreement, the Indenture
and the other indebtedness upon the occurrence of a Change of Control. See
"Description of Notes--Change of Control."

ABSENCE OF PUBLIC MARKET FOR NOTES; POSSIBLE VOLATILITY OF NOTES

There is currently no established trading market for the Notes, and there
can be no assurance regarding the future development of a market for the Notes,
the ability of the Holders to sell their Notes or the price at which the Holders
may be able to sell their Notes. The Company does not intend to have the Notes
listed for trading on any national securities exchange or quoted on any
automated dealer quotation system.

The Underwriters have advised the Company that the Underwriters currently
intend to make a market in the Notes, but the Underwriters are not obligated to
do so and any such market-making may be discontinued at any time at their sole
discretion. The liquidity of any market for the Notes will depend upon the
number of holders of the Notes, the interest of securities dealers in making a
market in the Notes and other factors. The absence of an active market for the
Notes could adversely affect the liquidity of the Notes. The liquidity of, and
trading markets for, the Notes may also be adversely affected by general
declines in the market for non-investment grade debt. Such declines may
adversely affect the liquidity of, and trading markets for, the Notes,
independent of the financial performance of, or prospects for, the Company.

Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of securities
similar to the Notes. There can be no assurance that the market for the Notes
will not be subject to similar disruptions. Any such disruptions may have a
material adverse effect on the value of the Notes.

19
<PAGE>
FRAUDULENT CONVEYANCE

Management believes that the indebtedness represented by the Notes is being
incurred for proper purposes and in good faith, and that, based on present
forecasts, asset valuations and other financial information, after the
consummation of the Transactions, the Company will be solvent, will have
sufficient capital for carrying on its business and will be able to pay its
debts as they mature. See, however, "--Substantial Leverage; Ability to Service
Indebtedness." Notwithstanding Management's belief, however, under federal or
state fraudulent transfer laws, if a court of competent jurisdiction in a suit
by an unpaid creditor or a representative of creditors (such as a trustee in
bankruptcy or a debtor-in-possession) were to find that, at the time of the
incurrence of such indebtedness, the Company was insolvent, was rendered
insolvent by reason of such incurrence, was engaged in a business or transaction
for which its remaining assets constituted unreasonably small capital, intended
to incur, or believed that it would incur, debts beyond its ability to pay such
debts as they matured, or intended to hinder, delay or defraud its creditors,
and that the indebtedness was incurred for less than reasonably equivalent
value, then such court could, among other things, (a) void all or a portion of
the Company's obligations to the Holders of the Notes, the effect of which would
be that the Holders of the Notes may not be repaid in full and/or (b)
subordinate the Company's obligations to the Holders of the Notes to other
existing and future indebtedness of the Company to a greater extent than would
otherwise be the case, the effect of which would be to entitle such other
creditors to be paid in full before any payment could be made on the Notes.

20
<PAGE>
USE OF PROCEEDS

The net proceeds of the Offering are estimated to be $ million after
deduction of underwriting discounts and commissions and expenses of the
Offering. The net proceeds of the Offering will be used to pay a portion of the
cash consideration payable to Rockwell in the Acquisition and to meet a portion
of certain other cash requirements arising out of or in connection with the
Transactions, including transaction costs.

The following table sets forth the sources and uses of funds related to the
Transactions:

(IN MILLIONS)
-------------

- ------------

<TABLE>
<C> <S>
(a) The Bank Facilities provide for a Term Loan Facility aggregating $75 million and a
Revolving Credit Facility of $150 million (approximately $2.3 million of which will be
drawn down on the Closing Date in cash in connection with the Acquisition and
approximately $36 million of which will be drawn down on the Closing Date in connection
with the issuance, assumption or replacement of letters of credit, comprised of
approximately $6.9 million relating to the sale of Customer Notes and approximately
$29.1 million relating to the assumption or replacement of certain outstanding letters
of credit). See "Description of New Bank Credit Agreement" and "Description of Sale of
Customer Notes." The Purchase Agreement provides for a post-closing purchase price
adjustment, pursuant to which the Company may receive from Rockwell or be required to
make to Rockwell additional payments. The Company intends to pay down the Revolving
Credit Facility or draw down additional amounts under the Revolving Credit Facility, as
the case may be, as a result of such purchase price adjustments. See "The
Acquisition--Purchase Price; Adjustments."
(b) Includes the issuance of shares of common stock, par value $.01 per share, of Goss
for an aggregate of $112.5 million in cash and 47,500 shares of Preferred Stock that
will be issued by Holdings to Rockwell and that will be pushed down to the Company for
accounting purposes in accordance with GAAP.
</TABLE>

21
<PAGE>
CAPITALIZATION

The following table sets forth the actual capitalization, as of March 31,
1996, of Goss on a historical basis and of the Company on a pro forma basis to
give effect to the Transactions. See "Unaudited Pro Forma Combined Financial
Statements."
<TABLE>
<CAPTION>
AS OF MARCH 31,
1996
-------------------
ACTUAL PRO FORMA
------ ---------
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents............................... $ 24.0 $ 0.0
------ ---------
------ ---------
Debt:
Revolving Credit Facility............................. 48.1 2.3
Term Loan Facility.................................... 1.7 75.0
Senior Subordinated Notes............................. 0.0 225.0
------ ---------
Total debt.......................................... 49.8 302.3
Shareholders' equity:
Holdings Preferred Stock(a)........................... -- 47.5
Common Stock.......................................... -- 112.5
Rockwell's net investment in Rockwell Graphic
Systems............................................. 515.7 --
------ ---------

Rockwell's net investment (total shareholders'
equity--pro forma).............................. 515.7 160.0
------ ---------

Total capitalization.................................... $565.5 $ 462.3
------ ---------
------ ---------
</TABLE>

- ------------

<TABLE>
<C> <S>
(a) Includes 47,500 shares of Preferred Stock that will be issued by Holdings to Rockwell
and that will be pushed down to the Company for accounting purposes in accordance with
GAAP.
</TABLE>

22
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The unaudited pro forma combined balance sheet of the Company as of March
31, 1996 (the "Pro Forma Balance Sheet") and the unaudited pro forma combined
statements of operations of the Company for the year ended September 30, 1995
and the six months ended March 31, 1996 (the "Pro Forma Statements of Income,"
together with the Pro Forma Balance Sheet, the "Pro Forma Financial Statements")
have been prepared to illustrate the estimated effect of the Transactions and
the Identified Cost Savings described elsewhere in this Prospectus and in the
accompanying Notes to the Pro Forma Combined Financial Statements. See "The
Acquisition." The Pro Forma Financial Statements do not purport to represent
what the Company's results of operations or financial condition would actually
have been had the Transactions and Identified Cost Savings in fact occurred as
of such dates or to project the Company's results of operations or financial
condition for any future period or as of any date. In addition, there can be no
assurance that the Identified Cost Savings can be achieved.

The Pro Forma Statement of Income for the fiscal year ended September 30,
1995 has been derived from the audited combined financial statements of the
Company included elsewhere in this Prospectus, adjusted to give pro forma effect
to (i) the Transactions and (ii) the Identified Cost Savings, as if they had
occurred as of October 1, 1994. The Pro Forma Balance Sheet and the Pro Forma
Statement of Income for the six months ended March 31, 1996 have been derived
from the unaudited combined financial statements of the Company included
elsewhere in this Prospectus, adjusted to give pro forma effect to (i) the
Transactions and (ii) the Identified Cost Savings, as if they had occurred as of
March 31, 1996 with respect to the Pro Forma Balance Sheet and as of October 1,
1995 with respect to the Pro Forma Statement of Income.

The Acquisition will be accounted for using the purchase method of
accounting. Under purchase accounting, the total purchase cost and fair value of
liabilities assumed will be allocated to the tangible and intangible assets and
liabilities based on their respective fair values as of the closing. The Pro
Forma Balance Sheet reflects preliminary estimates, which are subject to final
determination, of the allocation of the purchase price and the elimination of
certain liabilities that will not be assumed by the Company in connection with
the Acquisition. The pro forma adjustments represent Management's preliminary
determination of purchase accounting adjustments and are based upon available
information and certain assumptions that the Company considers reasonable under
the circumstances. Consequently, the amounts reflected in the Pro Forma Balance
Sheet are subject to change. Management does not expect that differences between
the preliminary and final purchase price allocation will have a material impact
on the Company's financial position and/or results of operations.

The Pro Forma Statements of Operations give pro forma effect to (i)
estimated annual cost savings of approximately $14.0 million associated
primarily with the termination of certain employees, (ii) estimated annual cost
savings of $1.2 million associated primarily with the elimination of selected
employee benefit plans and (iii) estimated annual stand-alone cost savings of
$3.8 million from replicating Rockwell-provided services at a lower cost, as if
such transactions had occurred on the first day of the period presented. The Pro
Forma Statements of Operations exclude (i) an estimated reserve of $20.2 million
associated primarily with severance payments for the termination of certain
employees as part of the Identified Cost Savings which will be reflected as a
reserve as part of the purchase price allocation, (ii) an estimated non-cash
charge of $24.0 million associated with the amortization of the inventory
write-up to fair market value, (iii) patent litigation expense associated with
the Heidelberger litigation liability which is being retained by Rockwell and
(iv) interest income, interest expense, bad debt expense, operating expense and
franchise tax expense related to the Customer Notes. In accordance with the
purchase method of accounting, the Company will establish reserves for the
estimated severance costs, and write-up of inventory to fair value on the Pro
Forma Balance Sheet.

The Pro Forma Financial Statements should be read in conjunction with the
historical combined financial statements of the Company and the notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus.

23
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
ASSETS HISTORICAL ADJUSTMENTS PRO FORMA
- --------------------------------------------------------- --------- ----------- ---------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents.............................. $ 24.0 $ (24.0)(a) $ 0.0
Accounts receivable, net............................... 136.9 136.9
Customer notes receivable, current portion............. 37.0 (32.1)(b) 4.9
Inventories............................................ 207.4 45.0(c) 252.4
Deferred income taxes.................................. 38.6 (32.1)(d) 6.5
Other current assets................................... 8.7 8.7
--------- ----------- ---------
Total current assets............................... 452.6 (43.2) 409.4
Property and equipment................................... 149.5 50.0(e) 199.5
Customer notes receivable................................ 180.7 (180.7)(b) 0.0
Goodwill and other intangible assets, net................ 136.4 57.7(f) 194.1
Financing fees........................................... 18.0(g) 18.0
Deferred income taxes.................................... 3.1 (3.1)(d) 0.0
Other assets............................................. 14.0 14.0
--------- ----------- ---------
Total assets............................................. $ 936.3 $(101.3) $ 835.0
--------- ----------- ---------
--------- ----------- ---------

<CAPTION>
LIABILITIES AND ROCKWELL'S NET INVESTMENT
- ---------------------------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable....................................... $ 66.3 $ 66.3
Advance payments from customers........................ 127.1 127.1
Accrued compensation................................... 14.1 14.1
Due to related parties................................. 11.2 11.2
Income taxes payable................................... 10.2 (10.2)(h) 0.0
Revolving credit facilities............................ 48.1 (48.1)(i) 2.3
2.3(j)
Long-term debt, current portion........................ 0.7 (0.7)(i) 0.0
Other current liabilities.............................. 118.3 16.3(k) 134.6
--------- ----------- ---------
Total current liabilities.......................... 396.0 (40.4) 355.6
Other liabilities........................................ 13.9 (3.5)(l) 19.4
9.0(m)
Deferred income taxes.................................... 9.7 (9.7)(d) 0.0
Long-term debt, less current portion..................... 1.0 (1.0)(i) 0.0
Senior term loan......................................... 75.0(j) 75.0
% Senior Subordinated Notes due 2006..................... 225.0(j) 225.0
--------- ----------- ---------
Total liabilities........................................ 420.6 254.4 675.0
--------- ----------- ---------
Rockwell's net investment in Rockwell Graphic Systems.... 515.7 (515.7)(o) 0.0
--------- ----------- ---------
Holdings Preferred Stock, 6.5% dividend.................. 47.5(n) 47.5
Common Stock............................................. 112.5(o) 112.5
--------- ----------- ---------
Total shareholders' equity............................... 0.0 160.0 160.0
--------- ----------- ---------
Total liabilities, Rockwell's net investment in Rockwell
Graphic Systems and shareholders' equity................. $ 936.3 $(101.3) $ 835.0
--------- ----------- ---------
--------- ----------- ---------
</TABLE>

See Notes to the Pro Forma Combined Financial Statements.

24
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
(UNAUDITED)
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Net sales............................................ $709.3 $ 709.3
Cost of sales........................................ 543.2 (6.0)(p) 543.5
6.3(q)
---------- ----------- ---------
Gross profit......................................... 166.1 (0.3) 165.8
---------- ----------- ---------
Operating expenses:
Engineering........................................ 28.6 (3.0)(p) 25.6
Sales and marketing................................ 35.1 (1.1)(p) 34.0
General and administrative......................... 45.0 (3.9)(p) 34.9
(1.2)(r)
(3.5)(s)
(1.6)(t)
0.1(u)
Rockwell common expense allocation................. 8.3 (3.8)(v) 4.5
Patent litigation.................................. 3.0 (3.0)(w) 0.0
---------- ----------- ---------
Total operating expenses............................. 120.0 (21.0) 99.0
---------- ----------- ---------
Operating profit..................................... 46.1 20.7 66.8
Interest income...................................... 15.4 (15.4)(y) 0.0
Interest (expense):
Related party...................................... (2.8) 3.0(y) 0.0
(0.2)(z)
Other.............................................. (0.2) (35.0)(aa) (35.2)
Other income (expense), net.......................... 1.9 1.9
---------- ----------- ---------
Income (loss) before income taxes.................... 60.4 (26.9) 33.5
Provision (credit) for income taxes.................. 24.2 (10.8)(bb) 13.4
---------- ----------- ---------
Net income........................................... $ 36.2 $ (16.1) $ 20.1
---------- ----------- ---------
---------- ----------- ---------
Other Data:
Business line operating income..................... $ 62.5 $ 71.3(cc)
EBITDA............................................. 83.9 102.9(dd)
Depreciation and amortization...................... 29.7 36.1(ee)
Cash interest expense.............................. 0.2 32.8(ff)
Ratio of earnings to fixed charges................. 9.9 1.8
Ratio of EBITDA to cash interest expense........... 419.5 3.1
</TABLE>

See Notes to the Pro Forma Combined Financial Statements.

25
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Net sales................................................ $343.1 $ 343.1
Cost of sales............................................ 277.8 (3.0)(p) 277.9
3.1(q)
---------- ----------- ---------
Gross profit........................................... 65.3 (0.1) 65.2
---------- ----------- ---------
Operating expenses:
Engineering............................................ 15.4 (1.5)(p) 13.9
Sales and marketing.................................... 17.5 (0.5)(p) 17.0
General and administrative............................. 20.0 (2.0)(p) 16.0
(0.4)(r)
(0.9)(s)
(0.8)(t)
0.1(u)
Related party administrative........................... 4.1 (1.9)(v) 2.2
Patent litigation...................................... 1.0 (1.0)(w) 0.0
Restructuring charge................................... 3.9 (3.9)(x) 0.0
---------- ----------- ---------
Total operating expenses................................. 61.9 (12.8) 49.1
---------- ----------- ---------

Operating profit......................................... 3.4 12.7 16.1
Interest income.......................................... 9.2 (9.2)(y) 0.0
Interest expense:
Related party.......................................... (2.7) 2.3(y) 0.0
0.4(z)
Other.................................................. (0.6) (17.0)(aa) (17.6)
Other income (expense), net............................ 1.0 1.0
---------- ----------- ---------
Income (loss) before income taxes........................ 10.3 (10.8) (0.5)
Provision (credit) for income taxes...................... 5.2 (4.3)(bb) 0.9
---------- ----------- ---------
Net income............................................... $ 5.1 $ (6.5) $ (1.4)
---------- ----------- ---------
---------- ----------- ---------

Other Data:
Business line operating income......................... $ 14.1 $ 18.3(cc)
EBITDA................................................. 23.9 33.2(dd)
Depreciation and amortization.......................... 13.9 17.1(ee)
Cash interest expense.................................. 0.6 16.4(ff)
Ratio of earnings to fixed charges..................... 3.1 1.0
Ratio of EBITDA to cash interest expense............... 39.8 2.0
</TABLE>

See Notes to the Pro Forma Combined Financial Statements

26
<PAGE>
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN MILLIONS)

The aggregate purchase price, including related fees and expenses, for Goss
is approximately $626.0 (subject to adjustment as a result of changes in
selected accounts of Goss). See "The Acquisition--Purchase Price; Adjustments."
The purchase price has been allocated on a preliminary basis to the net assets
of the Company based on estimated fair values at the date of acquisition with
the excess of cost over fair value allocated to goodwill. The purchase price
allocation to property and equipment will be amortized over the estimated useful
lives ranging from 3 to 50 years. Goodwill and other intangible assets will be
amortized on a straight line basis over 40 years. Financing costs will be
amortized over the life of the debt (5 to 10 years).

The preliminary allocation of the total purchase price to the assets and
liabilities acquired is as follows:

PURCHASE PRICE
Purchase Price of Common Stock and Assets......................... $600.0
Commissions, Fees and Expenses.................................... 26.0
------
Total Purchase Price.............................................. $626.0
------
------
PRELIMINARY ALLOCATION OF PURCHASE PRICE
Total Current Assets, Net of Deferred Taxes....................... $402.9
Property and Equipment............................................ 199.5
Customer Notes.................................................... 163.7
Other Long Term Assets............................................ 14.0
Goodwill and Other Intangible Assets.............................. 194.1
Financing Fees.................................................... 18.0
Reserve for costs associated with Identified Cost Savings, Net of
Deferred Income Taxes and Restructure Reserve..................... (9.8)
Liabilities Assumed............................................... (356.4)
------
Total Purchase Price.............................................. $626.0
------
------

Pro forma adjustments reflect estimates which will be refined as additional
information is obtained, particularly in the areas of fair value of property and
equipment and related depreciation expense, and the liability for severance
payments and any adjustment to be made to the cash purchase price in accordance
with the Purchase Agreement.

Pro forma adjustments have been made to the Pro Forma Balance Sheet to
reflect the following:

<TABLE>
<S> <C>
(a) Elimination of cash which is not being received by the Company pursuant to the
Purchase Agreement.
(b) Elimination of Customer Notes which will be sold as of the Closing Date. Certain
short-term date-certain notes held by Rockwell Graphic Systems--Japan Corporation
will be retained by the Company.
(c) Record write-up of inventory from LIFO cost to fair value in accordance with the
purchase method of accounting.
(d) Record (i) elimination of current portion of deferred tax assets ($38.6), long term
portion of deferred tax assets ($3.1) and deferred income tax liability ($9.7) in
accordance with the purchase method of accounting and (ii) deferred taxes ($6.5)
associated primarily with severance payments for employees to be terminated and
closure of redundant facilities as part of the Indentified Cost Savings.
</TABLE>

27
<PAGE>
<TABLE>
<S> <C>
(e) Record write-up of property and equipment to fair value in accordance with the
purchase method of accounting.
(f) Elimination of previously recorded goodwill and other intangible assets ($136.4)
and the recording of goodwill and other intangible assets resulting from the
Acquisition ($194.1) in accordance with the purchase method of accounting.
(g) Record capitalization of financing fees incurred in connection with the
Acquisition.
(h) Elimination of income taxes payable which, pursuant to the Purchase Agreement, will
not be assumed by the Company.
(i) Elimination of debt which, pursuant to the Purchase Agreement, will not be assumed
by the Company.
(j) Record issuance of debt in connection with the Acquisition. The debt consists of
$2.3 initial borrowing under the Revolving Credit Facility, $75 borrowing under the
Term Loan Facility ($25 of which will be held by the Company and $50 of which will
be held by the Company's foreign subsidiaries) and $225.0 borrowing under the Notes
to be issued pursuant to the Offering. In addition, approximately $6.9 of the
Revolving Credit Facility will be drawn down on the closing date in connection with
the issuance of letters of credit relating to the sale of Customer Notes and
approximately $29.1 of the Revolving Credit Facility will be drawn down on the
closing date in connection with the assumption or replacement of certain letters of
credit which are currently outstanding.
(k) Record costs associated primarily with severance payments for employees to be
terminated as part of the Identified Cost Savings made by the Company, less related
restructuring reserves previously recorded, as follows:
</TABLE>

MARCH 31,
1996
---------

Reserve for costs associated with Identified Cost Savings........ $20.2
Less: Restructuring reserves previously recorded................. (3.9)
---------
Pro Forma Adjustment....................................... $16.3
---------
---------

<TABLE>
<S> <C>
(l) Elimination of liability for post-employment benefits for those employees on
long-term disability, which pursuant to the Purchase Agreement is being retained by
Rockwell. The expense associated with this benefit was not eliminated, since the
Company will continue to offer this benefit.
(m) Record liability for post-retirement benefit obligations for active employees at
the Reading facility, which pursuant to the Purchase Agreement will be retained by
the Company.
(n) Record issuance of preferred stock with a 6 1/2% dividend by Holdings to Rockwell
which is pushed down to the Company in accordance with GAAP.
(o) Elimination of Rockwell's net investment in Goss and a contribution by Holdings of
$112.5 from the proceeds of the Stonington Investment and Management Placement in
exchange for common stock of the Company.
</TABLE>

28
<PAGE>
Pro forma adjustments have been made to the Pro Forma Statements of Income
to reflect the following:

<TABLE>
<S> <C>
(p) Record estimated cost savings as a result of a reduction of headcount and the
closure of certain facilities pursuant to the Identified Cost Savings, as follows:
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1995 MARCH 31, 1996
------------------ ----------------
<S> <C> <C>
Cost of sales............................. $ 6.0 $3.0
Engineering............................... 3.0 1.5
Sales and marketing....................... 1.1 0.5
General and administrative................ 3.6 1.8
----- ---
Sub-total headcount reduction............. 13.7 6.8
Rent savings (general and
administrative)........................... 0.3 0.2
----- ---
Total............................... $ 14.0 $7.0
----- ---
----- ---
</TABLE>

<TABLE>
<S> <C>
The Company anticipates that it will be able to reduce its manufacturing costs by
closing redundant facilities and transferring the production to other under
utilized facilities. In addition, the Company plans on reducing its engineering,
sales and marketing and general and administrative expenses by reducing headcount
and outsourcing certain non-strategic activities. The Company has identified
specific employees and/or functional areas where employees will be terminated. The
Company plans to implement its operating improvement plan over a six-month period
following the Acquisition. See "Business--Identified Cost Savings."

(q) Record incremental depreciation expense on property and equipment.

(r) Estimated cost savings as a result of the elimination or revision of selected
employee benefit plans pursuant to the Identified Cost Savings, as follows:
</TABLE>

FISCAL YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1995 MARCH 31, 1996
------------------ ----------------

General and administrative........... $1.2 $0.4
--- ---
Total.......................... $1.2 $0.4
--- ---
--- ---

<TABLE>
<S> <C>
Certain U.S. employees are covered by the Rockwell Retirement Plan for eligible
employees. Goss will not assume any of the assets or liabilities of this plan and
will not replicate this employee benefit. In addition, certain U.S. employees of
Goss are covered by the Rockwell Retirement Income Plan for Certain Salaried
Employees in General Industries Operations, a subplan of the Rockwell Retirement
Plan for Eligible Employees. The Company will not assume any of the assets or
liabilities associated with this subplan and will not replicate this employee
benefit.

(s) Elimination of bad debt expense incurred in connection with the Customer Notes
which will be sold as of the Closing Date. See "Description of Sale of Customer
Notes."

(t) Elimination of operating expenses and franchise tax expense associated with
Customer Notes. These Customer Notes will be sold as of the Closing Date. See
"Description of Sale of Customer Notes."

(u) Record incremental amortization of goodwill and other intangible assets.
</TABLE>

29
<PAGE>
<TABLE>
<S> <C>
(v) Goss has received certain administrative and management services from Rockwell such
as cash management, treasury, legal, patent, tax, insurance administration,
corporate accounting and communication services. The historical expenses that Goss
was charged by Rockwell and an estimate of future stand-alone costs, which are
Management's best estimate of the incremental costs to replicate these services by
Rockwell, are as follows:
</TABLE>

FISCAL YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1995 MARCH 31, 1996
------------------ ----------------

Rockwell common expense allocation..... $ 8.3 $ 4.1
Less: Estimated stand-alone costs...... (4.5) (2.2)
----- -----
Total............................ $ 3.8 $ 1.9
----- -----
----- -----

<TABLE>
<S> <C>
(w) Elimination of expense associated with the litigation with Heidelberger
Druckmaschinen AG, which pursuant to the Purchase Agreement will not be assumed by
the Company. This item is reflected in Rockwell's net investment in Goss as of
March 31, 1996.

(x) Elimination of $3.9 of restructuring expense. This expense consisted primarily of
severance costs associated with the reorganization of the commercial sales
organization and reduction of engineering positions at redundant facilities. The
cost savings associated with this restructuring have been included in (p) above.

(y) Elimination of interest income and interest expense related to the Customer Notes.
These Customer Notes will be sold as of the Acquisition Closing.

(z) Elimination of interest income and interest expense related to transactions with
Rockwell.

(aa) Adjustments to interest (income) expense, net as follows:
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1995 MARCH 31, 1996
------------------ ----------------
<S> <C> <C>
Interest expense on Revolving Credit Facility
(assuming an interest rate of 8.25%)............. $ 0.2 $ 0.1
Interest expense on Term Loan Facility (assuming
an interest rate of 8.25%)....................... 6.2 3.1
Interest expense on Senior Subordinated Notes
(assuming an interest rate of 11.75%)............ 26.4 13.2
Amortization of financing costs.................. 2.4 1.2
Elimination of interest expense.................. (0.2) (0.6)
----- -----
Total pro forma adjustments................ $ 35.0 $ 17.0
----- -----
----- -----
</TABLE>

<TABLE>
<S> <C>
Following the Acquisition, the Company intends to utilize excess cash to reduce
debt and, therefore, does not expect to have excess cash to invest to generate
interest income. A one- half of one percent change in assumed interest rates would
impact interest expense on the Revolving Credit Facility by less than $0.1,
interest expense on the Term Loan Facility by $0.4 and interest expense on the
Senior Subordinated Notes by $1.1.

(bb) Record income tax effect of the pro forma adjustments at an assumed effective rate
of 40%.

(cc) Business line operating income represents net sales less cost of sales and
operating expenses identifiable to the Company's business lines. Business line
operating income excludes related party administrative, patent litigation and
restructuring charges, which, due to their nature, are disclosed separately in the
financial statements. In addition, business line operating income excludes
operating expenses and bad debt expenses related to Customer Notes. See "Selected
Combined Financial Data" included elsewhere herein.
</TABLE>

30
<PAGE>
<TABLE>
<S> <C>
(dd) EBITDA represents business line operating income less related party administrative
expenses plus depreciation and amortization. EBITDA is presented because it is a
widely accepted financial indicator of a company's ability to incur and service
debt. EBITDA should not be considered by investors as an alternative to operating
income as determined in accordance with GAAP, as an indicator of the Company's
operating performance or as an alterative to net cash provided by (used for)
operating activities as determined in accordance with GAAP. See "Selected Combined
Financial Data" included elsewhere herein.
(ee) Record incremental depreciation on property and equipment (see note (q)) plus
incremental amortization of goodwill and other intangible assets (see note (u)).
(ff) Cash interest expense represents interest expense, excluding the amortization of
financing costs of $2.4 and $1.2 for the year ended September 30, 1995 and the six
months ended March 31, 1996, respectively.
</TABLE>

31
<PAGE>
SELECTED COMBINED FINANCIAL DATA
(DOLLARS IN MILLIONS)

The following table sets forth selected historical combined financial data
with respect to Goss for the periods ended and as of the dates indicated. The
selected historical combined financial data for the fiscal years ended September
30, 1993, 1994 and 1995 are derived directly from the audited combined financial
statements of Goss included elsewhere in this Prospectus, except for business
line net sales, business line operating income, Customer Notes operating and bad
debt expenses, interest income (expense), net, Customer Notes interest income
(expense), net, ratio of earnings to fixed charges and backlog. The selected
historical combined financial data for the six months ended March 31, 1995 and
1996 are derived directly from the unaudited combined financial statements of
Goss included elsewhere in this Prospectus, except for business line net sales,
business line operating income, Customer Notes operating and bad debt expenses,
interest income (expense), net, Customer Notes interest income (expense), net,
ratio of earnings to fixed charges and backlog. Such unaudited combined
financial statements, in the opinion of Management, include all adjustments
necessary for the fair presentation of the financial condition and the results
of operations of Goss for such periods and as of such dates. Operating results
for the six months ended March 31, 1996 are not necessarily indicative of the
results of operations that may be expected for the year ended September 30,
1996. This information should be read in conjunction with the combined financial
statements of Goss and the notes thereto appearing elsewhere in this Prospectus
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations." The selected historical statement of operations for the fiscal
years ended September 30, 1991 and 1992 are derived from unaudited combined
financial statements of Goss that are not included in this Prospectus.

32
<PAGE>
SELECTED COMBINED FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEARS ENDED SEPTEMBER 30, ENDED MARCH 31,
------------------------------------------------ ---------------
HISTORICAL HISTORICAL
------------------------------------------------ ---------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Business line sales:
Newspaper................................. $ 785.5 $ 527.8 $ 390.8 $435.8 $512.2 $247.8 $268.9
Insert.................................... 81.8 87.5 143.5 110.7 93.7 45.2 48.0
Commercial................................ 93.7 72.7 92.7 101.7 103.4 58.7 26.2
-------- -------- -------- ------ ------ ------ ------
Total net sales......................... 961.0 688.0 627.0 648.2 709.3 351.7 343.1
Business line operating income (a):
Newspaper................................. 139.9 47.8 27.0 40.6 68.4 36.2 33.1
Insert.................................... 0.3 (7.4) 11.7 9.4 7.8 2.7 3.8
Commercial................................ (35.0) (32.9) (34.8) (17.0) (13.7) (4.0) (22.8)(b)
-------- -------- -------- ------ ------ ------ ------
Total business line operating income.... 105.2 7.5 3.9 33.0 62.5 34.9 14.1
Rockwell common expense allocation (c)..... (11.5) (8.1) (7.5) (6.8) (8.3) (4.0) (4.1)
Patent litigation (d)...................... 0.0 0.0 0.0 0.0 (3.0) 0.0 (1.0)
Restructuring charge (e)................... (49.5) (2.2) (5.4) 0.0 0.0 0.0 (3.9)
-------- -------- -------- ------ ------ ------ ------
Operating (loss) profit before customer
note expenses......................... 44.2 (2.8) (9.0) 26.2 51.2 30.9 5.1
Customer notes operating and bad debt
expenses(f)................................ (6.9) (3.4) (10.0) (19.6) (5.1) (1.9) (1.7)
-------- -------- -------- ------ ------ ------ ------
Operating (loss) profit................. 37.3 (6.2) (19.0) 6.6 46.1 29.0 3.4
Other income (expense), net................ (0.5) 1.2 0.8 (2.1) 1.9 3.5 1.0
-------- -------- -------- ------ ------ ------ ------
Income (loss) before interest, taxes and
cumulative effect..................... 36.8 (5.0) (18.2) 4.5 48.0 32.5 4.4
Interest income (expense), net............. (19.1) (15.3) (8.7) (3.4) 0.0 0.1 (1.0)
Customer notes interest income (expense),
net........................................ 13.5 16.6 19.6 13.6 12.4 5.4 6.9
-------- -------- -------- ------ ------ ------ ------
Income (loss) before taxes and
cumulative effect of accounting
change..................................... 31.2 (3.7) (7.3) 14.7 60.4 38.0 10.3
Income tax expense (benefit)............... 13.2 (0.8) (1.8) 5.3 24.2 15.5 5.2
Cumulative effect of change in accounting
principle, net............................. 0.0 0.0 (4.6) 0.0 0.0 0.0 0.0
-------- -------- -------- ------ ------ ------ ------
Net income.............................. $ 18.0 $ (2.9) $ (10.1) $ 9.4 $ 36.2 $ 22.5 $ 5.1
-------- -------- -------- ------ ------ ------ ------
-------- -------- -------- ------ ------ ------ ------
Other Data:
Backlog (at period end) (g)................ $ 525.1 $ 421.3 $ 549.8 $537.7 $480.7 $506.9 $453.1
EBITDA(h).................................. 130.4 34.9 26.5 55.7 83.9 46.0 23.9
Depreciation and amortization.............. 36.7 35.5 30.1 29.5 29.7 15.1 13.9
Capital expenditures....................... 29.6 21.2 12.5 11.6 11.5 4.7 2.0
Cash interest expense (i).................. 0.1 0.6
Ratio of EBITDA to cash interest expense... 460.0 39.8
Ratio of earnings to fixed charges(j)...... 1.9 0.8 0.6 2.4 9.9 12.8 3.1

Balance Sheet Data (at period end):
Total assets............................... 1,093.0 1,011.7 1,007.7 950.9 947.0 964.8 936.3
Total debt................................. 4.6 3.2 12.5 4.1 2.6 3.7 49.8
Rockwell's net investment in Rockwell
Graphic Systems............................ 639.1 623.8 627.3 628.7 543.1 602.1 515.7
</TABLE>

33
<PAGE>
- ------------

<TABLE>
<C> <S>
(a) Business line operating income represents, for each of the Company's three business
lines, net sales less cost of sales and operating expenses. Business line operating
income is before Rockwell common expense allocation, patent litigation and
restructuring charges, which, due to their nature, are disclosed separately in the
financial statements. In addition, business line operating income excludes operating
expenses, bad debt expenses and interest income (expense), net related to Customer
Notes.
(b) For the six months ended March 31, 1996, includes a $12.7 million charge for warranty
and post-shipment expenses incurred in fiscal 1996 in respect of certain commercial
presses shipped in fiscal 1993, 1994 and 1995. For other periods presented, charges for
warranty and post-shipment expenses incurred are reflected in the period in which the
sale was recorded.
(c) Rockwell common expense allocation represents expenses charged by Rockwell on a
percentage of sales basis for administrative and management services such as cash
management, treasury, legal, patent, tax, insurance, general management and
administration, corporate accounting and communication services.
(d) Patent litigation represents expenses related to the Heidelberger patent infringement
litigation liability which is being retained by Rockwell. See "Business--Legal
Proceedings" included elsewhere herein.
(e) The restructuring charge recorded in the second quarter of 1996 represents reserves
associated primarily with severance payments for terminated employees and the closure
of certain redundant facilities. This charge has been excluded from the pro forma
results. The restructuring charges recorded in the 1991 through 1993 timeframe were
associated with the closure of a major manufacturing facility in the United Kingdom and
the associated relocation of product lines and consolidation of manufacturing
operations at several locations. See Note (x) in the Unaudited Pro Forma Combined
Financial Statements.
(f) Customer notes operating expenses and bad debt expenses represent expenses associated
with the Company's portfolio of Customer Notes. These charges have been excluded from
the pro forma results. See Note (s) and (t) to the Unaudited Pro Forma Combined
Financial Statements.
(g) Backlog represents the aggregate dollar value of unfilled press orders under contract
with the Company at end of each period.
(h) EBITDA represents business line operating income less Rockwell common expense
allocation plus depreciation and amortization. EBITDA is presented because it is a
widely accepted financial indicator of a company's ability to incur and service debt.
EBITDA should not be considered by investors as an alternative to operating income "as
determined in accordance with GAAP," as an indicator of the Company's operating
performance or as an alternative to net cash provided by (used for) operating
activities "as determined in accordance with GAAP." See the Combined Financial
Statements, including the Combined Statements of Cash Flows, included elsewhere herein.
(i) Cash interest expense on a pro forma basis represents interest (income) expense, net,
excluding amortization of deferred financing costs.
(j) For purposes of computing the ratio of earnings to fixed charges, "earnings" consist of
income before taxes and cumulative effect of changes in accounting plus fixed charges
less capitalized interest. "Fixed charges" consist of cash/intercompany interest
expense, capitalized interest, scheduled debt payments, amortization of deferred
financing costs, pre-tax preferred stock dividends and one-third of rental expense (the
portion deemed representative of the interest factor).
</TABLE>

34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Combined
Financial Statements, the Selected Combined Financial Data, the Unaudited Pro
Forma Combined Financial Statements, and the other financial information and
data appearing elsewhere herein.

The following discussion and analysis of the financial condition and the
results of operations covers periods before completion of the Transactions.
Accordingly, the discussion and analysis of such periods do not reflect the
significant impact that the Transactions will have on the Company. In addition,
the financial information included in the following discussion may not
necessarily reflect the results of operations, financial position and cash flows
of the Company in the future or what the results of operations, financial
position and cash flows would have been had the Company been a separate, stand-
alone entity during the periods presented. This is due to the historical
operation of Goss as part of the larger Rockwell enterprise.

GENERAL

Goss operates through three business categories: (i) newspaper, which
produces both double-width and single-width web offset newspaper press systems
for publishers worldwide, (ii) insert, which manufactures specialized web offset
presses for printing advertising inserts, and (iii) commercial, which produces
web offset presses that print a broad variety of commercial products, including
brochures and promotional materials, catalogs, magazines, books, financial
publications and directories. Goss's newspaper, insert and commercial businesses
accounted for 72%, 13% and 15%, respectively, of fiscal 1995 net sales of $709
million.

Goss serves its global markets from its principal production and assembly
facilities located in the U.S. (Cedar Rapids, IA and Reading, PA), Europe
(Preston, England and Nantes, France) and Japan. Goss generally serves the North
and South American markets from the U.S.; sells into Europe, the Middle East,
Africa and India from Europe; and serves Japan, China and Korea from its
Japanese facility. Other markets in the Asia/Pacific region generally are
serviced from the U.S. or Europe depending upon factors such as customer
equipment preferences and manufacturing capacity.

Goss's operating expenses are comprised of engineering, sales and marketing,
and general and administrative expenses. Engineering expenses for a particular
business category can vary significantly from period to period because such
expenses are charged to the three business categories based upon the product
development projects undertaken in such period by such business. In addition,
certain engineering expenses appear in cost of goods sold to the extent they are
associated with engineering and design for a specific customer contract. General
and administrative expenses are generally allocated to each business category
over the course of the fiscal year based on budgeted sales, although bad debt
provisions are applied to the segment giving rise to such provisions. Sales and
marketing expenses generally are direct expenses incurred by each business.

35
<PAGE>
The results of the combined operations of Goss and of the newspaper, insert
and commercial businesses are set forth below.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
-------------------------- ----------------
1993 1994 1995 1995 1996
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET SALES FROM:
Newspaper business................................ $390.8 $435.8 $512.2 $247.8 $268.9
Insert business................................... 143.5 110.7 93.7 45.2 48.0
Commercial business............................... 92.7 101.7 103.4 58.7 26.2
------ ------ ------ ------ ------
Total Net Sales............................... 627.0 648.2 709.3 351.7 343.1
COST OF SALES FROM:
Newspaper business................................ 299.2 336.7 379.1 179.4 220.8
Insert business................................... 117.5 87.7 74.6 36.3 38.9
Commercial business............................... 102.6 100.4 89.5 49.2 38.1
------ ------ ------ ------ ------
Total Cost of Sales........................... 519.3 524.8 543.2 264.9 297.8
OPERATING EXPENSES FROM:
Newspaper business................................ 64.6 58.5 64.7 32.2 35.0
Insert business................................... 14.3 13.6 11.3 6.2 5.3
Commercial business............................... 24.9 18.3 27.6 13.6 10.9
------ ------ ------ ------ ------
Total Business Line Operating Expenses........ 103.8 90.4 103.6 52.0 51.2
OPERATING INCOME FROM:
Newspaper business................................ 27.0 40.6 68.4 36.2 33.1
Insert business................................... 11.7 9.4 7.8 2.7 3.8
Commercial business............................... (34.8) (17.0) (13.7) (4.0) (22.8)
------ ------ ------ ------ ------
Total Business Line Operating Income.......... 3.9 33.0 62.5 34.9 14.1
Rockwell common expense allocation................ (7.5) (6.8) (8.3) (4.0) (4.1)
Restructuring Charges............................. (5.4) -- -- -- (3.9)
Patent Litigation................................. -- -- (3.0) -- (1.0)
------ ------ ------ ------ ------
Operating Profit Before Customer Note
Expenses.......................................... (9.0) 26.2 51.2 30.9 5.1
NEWSPAPER BUSINESS (AS A % OF NET SALES)
Net Sales......................................... 100% 100% 100% 100% 100%
------ ------ ------ ------ ------
Gross Profit...................................... 23% 23% 26% 28% 25%
------ ------ ------ ------ ------
Business Line Operating Income.................... 7% 9% 13% 15% 12%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
INSERT BUSINESS (AS A % OF NET SALES)
Net Sales......................................... 100% 100% 100% 100% 100%
------ ------ ------ ------ ------
Gross Profit...................................... 18% 21% 20% 20% 19%
------ ------ ------ ------ ------
Business Line Operating Income.................... 8% 8% 8% 6% 8%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
COMMERCIAL BUSINESS (AS A % OF NET SALES)
Net Sales......................................... 100% 100% 100% 100% 100%
------ ------ ------ ------ ------
Gross Profit...................................... (11%) 1% 13% 16% (45%)
------ ------ ------ ------ ------
Business Line Operating Income.................... (38%) (17%) (13%) (7%) (87%)
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

36
<PAGE>
RESULTS OF OPERATIONS

Six Months Ended March 31, 1996 Compared to Six Months Ended March 31, 1995

NET SALES

Net sales decreased $8.6 million or 2.5% to $343.1 million for the six
months ended March 31, 1996 from $351.8 million for the six months ended March
31, 1995. This decrease was primarily attributable to a softening of the market
in the commercial business, which more than offset increased sales in the
newspaper and insert businesses.

Net sales in the newspaper business increased $21.1 million or 8.5% to
$268.9 million for the six months ended March 31, 1996 from $247.8 million for
the six months ended March 31, 1995. Net sales in the large newspaper business
increased $31.8 million or 16.0% to $230.0 million for the six months ended
March 31, 1996 from $198.2 million for the six months ended March 31, 1995. For
the small newspaper business, sales declined $10.8 million or 21.8% to $38.8
million from $49.6 million for the comparable periods. The overall increase in
newspaper sales increase was primarily attributable to the shipment of several
double width newspapers press orders to customers in the Asia/Pacific region,
partially offset by lower shipments of small newspapers presses, particularly in
Europe. Two orders for large newspaper press systems together accounted for
approximately 30% of net sales in the newspaper business for the six months
ended March 31, 1996.

Net sales in the insert business increased $2.8 million or 6.2% to $48.0
million for the six months ended March 31, 1996 from $45.2 million for the six
months ended March 31, 1995.

Net sales in the commercial business decreased $32.5 million or 55.4% to
$26.2 million for the six months ended March 31, 1996 from $58.7 million for the
six months ended March 31, 1995. This decrease was primarily attributable to a
soft market in the U.S., and performance issues with the World 16 commercial
press which slowed market acceptance of that press. In addition, significant
press inventory in Europe was sold in the first six months of 1995 in connection
with Goss's decision to concentrate on the U.S. commercial market. See "Risk
Factors--Commercial Business Performance Issues."

GROSS PROFIT

Gross profit decreased $21.5 million or 24.9% to $65.3 million for the six
months ended March 31, 1996 from $86.9 million for the six months ended March
31, 1995. The gross profit margin declined to 19.0% for the six months ended
March 31, 1996 from 24.7% for the six months ended March 31, 1995. This decline
in gross profit margin was primarily attributable to $12.7 million in charges
recorded in 1996 related to warranty and product performance issues in the
commercial business.

Gross profit in the newspaper business decreased $0.3 million or 0.4% to
$68.1 million for the six months ended March 31, 1996 from $68.4 million for the
six months ended March 31, 1995. The gross profit margin declined to 25.3% for
the six months ended March 31, 1996 from 27.6% for the six months ended March
31, 1995. This decline in gross profit margin was primarily attributable to
substantially lower margins on a large order for a customer in the Asia/Pacific
region. Excluding this large Asia/Pacific order, the gross margin in the
newspaper business was approximately 28% for the six months ended March 31,
1996.

Gross profit in the insert business increased $0.2 million or 2.2% to $9.1
million for the six months ended March 31, 1996 from $8.9 million for the six
months ended March 31, 1995. This increase was primarily attributable to
increased sales volume. The gross profit margin decreased slightly to 19.0% for
the six months ended March 31, 1996 from 19.7% for the six months ended March
31, 1995. The decline in gross profit margin was due to a less favorable mix of
contracts in 1996.

37
<PAGE>
Gross profit in the commercial business decreased $21.4 million or 225.3% to
a loss of $11.9 million for the six months ended March 31, 1996 from $9.5
million profit for the six months ended March 31, 1995. This decrease was
primarily attributable to charges recorded in 1996 relating to the resolution of
customer and product performance issues on sales of newly introduced commercial
presses in 1993 and 1994. New products which were shipped in 1993 and 1994
continued to experience high warranty and post-shipment expenses and as a result
charges of $12.7 million were recorded in the six months ended March 31, 1996.
These charges were to complete equipment modifications and to resolve certain
customer issues. In addition to these charges, gross profits were negatively
impacted by the significant reduction in sales volume and the impact of fixed
production costs. See "Risk Factors--Commercial Business Performance Issues."

BUSINESS LINE OPERATING EXPENSES

Operating expenses decreased $0.8 million or 1.5% to $51.2 million for the
six months ended March 31, 1996 from $52.0 million for the six months ended
March 31, 1995. This decrease was primarily attributable to lower general and
administrative expenses; partially offset by higher engineering expenses being
charged to operating expenses as compared to cost of sales. As a percent of net
sales, operating expenses increased to 14.9% for the six months ended March 31,
1996 from 14.8% for the six months ended March 31, 1995.

Operating expenses in the newspaper business increased $2.8 million or 8.7%
to $35.0 million for the six months ended March 31, 1996 from $32.2 million for
the six months ended March 31, 1995. This increase was primarily attributable to
a greater allocation of engineering expenditures ($2.8 million) being charged to
operating expenses associated with general product development in 1996 as
compared to 1995 when a greater portion of engineering was charged to cost of
sales for work relating to the first shipment of the Newsliner product in 1995
as discussed below. As a percent of net sales, operating expenses remained
constant at 13.0% for both six month periods.

Operating expenses in the insert business decreased $0.9 million or 14.5% to
$5.3 million for the six months ended March 31, 1996 from $6.2 million for the
six months ended March 31, 1995. This decrease was primarily attributable to a
reduction in general and administrative expenses.

Operating expenses in the commercial business decreased $2.7 million or
19.9% to $10.9 million for the six months ended March 31, 1996 from $13.6
million for the six months ended March 31, 1995. This decrease was primarily
attributable to lower general and administrative and engineering expenditures.

BUSINESS LINE OPERATING INCOME

Operating income decreased $20.8 million or 59.6% to $14.1 million for the
six months ended March 31, 1996 from $34.9 million for the six months ended
March 31, 1995. As a percent of net sales, operating income declined to 4.1% for
the six months ended March 31, 1996 from 9.9% for the six months ended March 31,
1995. This decline was primarily attributable to the $12.7 million of commercial
warranty and product performance charges recorded in 1996 and significantly
lower commercial sales.

Operating income for the newspaper business decreased $3.1 million or 8.6%
to $33.1 million for the six months ended March 31, 1996 from $36.2 million for
the six months ended March 31, 1995. As a percent of sales, operating income
decreased to 12.3% for the six months ended March 31, 1996 from 14.6% for the
six months ended March 31, 1995. This decrease was primarily attributable to the
relatively higher engineering expenditures allocated to operating expenses in
respect of general product development work versus allocation to cost of sales
for work related to specific customer contracts and the decline in the gross
profit margin percentage attributable to the significant contract in the
Asia/Pacific region each as discussed above.

38
<PAGE>
Operating income for the insert business increased $1.1 million or 40.7% to
$3.8 million for the six months ended March 31, 1996 from $2.7 million for the
six months ended March 31, 1995. As a percent of sales, operating income
increased to 7.9% for the six months ended March 31, 1996 from 6.0% for the six
months ended March 31, 1995. Both increased sales and a reduction in operating
expenses contributed to this improvement in operating income.

Operating income for the commercial business decreased $18.8 million or
470.0% to a loss of $22.8 million for the six months ended March 31, 1996 from a
loss of $4.0 million for the six months ended March 31, 1995. This decrease was
primarily attributable to the $12.7 million of commercial warranty and product
performance charges recorded in 1996 and to the significant $32.6 million
decrease in sales.

Year Ended September 30, 1995 Compared to Year Ended September 30, 1994

NET SALES

Net sales increased $61.1 million or 9.4% to $709.3 million in 1995 from
$648.2 million in 1994. This increase was primarily attributable to an increase
in net sales in Goss's newspaper business of $76.4 million or 17.5% partially
offset by a decline in net sales in the insert business of $17.0 million or
15.4%.

Net sales in the newspaper business increased $76.4 million or 17.5% to
$512.2 million in 1995 from $435.8 million in 1994 primarily as a result of a
$73.7 million increase in sales from the U.S. locations as the U.S. and South
American markets continued to improve following a cyclical downturn in 1992 and
1993. In addition, Goss benefitted from (i) increases in press additions as
several newspapers added more color capacity and (ii) its first shipment of the
Newsliner product in 1995, to a large U.S. metropolitan daily newspaper. Goss
also benefitted from an increase in net sales of $25.3 million or 15.7% in
Europe, largely a result of the success of Universal single-width press sales to
the Asia/Pacific region. These increases were partially offset by results in
Japan where the Company experienced a decrease in net sales of $22.7 million or
28.2% due to a weakening of export sales to China attributable to an increase in
the Yen (in which Goss's Japanese costs are denominated) versus the U.S. dollar
(in which export revenues to China are denominated).

Net sales in the insert business decreased $17.0 million or 15.4% to $93.7
million in 1995 from $110.7 million in 1994. This decrease is primarily
attributable to decreased demand for new insert presses due to consolidation
among insert printers and decline from a peak purchasing period which occurred
in 1993.

Net sales in the commercial business increased $1.7 million or 1.7% to
$103.4 million in 1995 from $101.7 million in 1994. This increase was primarily
attributable to an increase in European sales of $6.2 million or 44.6%, as Goss
sold off inventory in connection with its decision to concentrate on the U.S.
commercial market. Net sales in the U.S. declined $4.5 million or 5.1% primarily
as a result of soft market conditions relative to 1994 and product performance
issues which impacted market acceptance of the World 16 press. See "Risk
Factors--Commercial Business Performance Issues."

GROSS PROFIT

Gross profit increased $42.7 million or 34.6% to $166.1 million in 1995 from
$123.4 million in 1994. The gross profit margin improved to 23.4% in 1995 from
19.0% in 1994. This improvement was primarily attributable to increased sales
volume in the newspaper business, improved pricing and the impact of cost
reduction initiatives, particularly in the commercial business.

Gross profit in the newspaper business increased $34.0 million or 34.3% to
$133.1 million in 1995 from $99.1 million in 1994. The gross profit margin
improved to 26.0% in fiscal 1995 from 22.7% in fiscal 1994 due to improved
pricing in both large newspapers and small newspapers. In large newspapers, Goss
benefitted in the U.S. from a better mix of both higher margin export business
and higher margin color press additions, which was partially offset by lower
margins from Japan due to a 28.2%

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reduction in sales. In small newspapers, Goss benefitted from increased volume
due to global market acceptance of the Universal single width newspaper press
which is produced in Europe.

Gross profit in the insert business decreased $3.9 million or 17.0% to $19.1
million in 1995 from $23.0 million in 1994. This decrease was primarily
attributable to lower sales volume. The gross profit margin decreased slightly
to 20.4% in 1995 compared to 20.8% in 1994.

Gross profit in the commercial business increased $12.6 million or 969.2% to
$13.9 million in 1995 from $1.3 million in 1994. The gross profit margin
increased to 13.4% in 1995 from 1.3% in 1994. This increase was primarily
attributable to the favorable impact of product cost reduction programs and a
reduction in post-shipment expenses associated with three World 16 and two G25W
presses installed in 1993 and 1994, each of which required incurring additional
expenses in 1994 to address performance issues that arose in the field.

BUSINESS LINE OPERATING EXPENSES

Operating expenses increased $13.2 million or 14.6% to $103.6 million in
1995 from $90.4 million in 1994. This increase was primarily attributable to
higher general and administrative expenses, international sales agent
commissions and engineering expenses. As a percent of net sales, operating
expenses decreased slightly to 14.6% in 1995 from 13.9% in 1994.

Operating expenses in the newspaper business increased $6.2 million or 10.6%
to $64.7 million in 1995 from $58.5 million in 1994. This increase was primarily
attributable to higher agents commissions incurred in connection with the
increase in sales. As a percent of sales, operating expenses declined to 12.6%
in 1995 to 13.4% in 1994. This improvement as a percent of sales is primarily
attributable to operating leverage as overhead costs remained relatively
constant while sales and gross profit increased.

Operating expenses in the insert business decreased $2.3 million or 16.9% to
$11.3 million in 1995 from $13.6 million in 1994. This decrease was primarily
attributable to lower marketing and engineering expenses caused by lower sales
volume.

Operating expenses in the commercial business increased $9.3 million or
50.8% to $27.6 million in 1995 from $18.3 million in 1996. This increase was
primarily attributable to an increase in the allocation of general and
administrative costs to this business line.

BUSINESS LINE OPERATING INCOME

Operating income increased $29.5 million, or 89.4%, to $62.5 million in 1995
from $33.0 million in 1994. As a percent of sales, operating income increased to
8.8% in 1995 from 5.1% in 1994. The increase was primarily attributable to the
higher newspaper sales volume and improved gross profit margins in the
commercial and newspaper businesses, partially offset by increased operating
expenses.

Operating income for the newspaper business increased $27.8 million or 68.5%
to $68.4 million in 1995 from $40.6 million in 1994. As a percent of net sales,
operating income increased to 13.4% in 1995 from 9.3% in 1994. This increase was
primarily attributable to higher sales and improved gross profit margins.

Operating income for the insert business decreased $1.6 million or 17.0% to
$7.8 million in 1995 from $9.4 million in 1994. As a percent of net sales,
operating income was relatively constant at 8.3% and 8.5% in 1995 and 1994,
respectively. A decline in gross profit was partially offset by lower operating
expenses.

Operating income for the commercial business improved $3.3 million or 19.4%
to a loss of $13.7 million in 1995 from a loss of $17.0 million in 1994. This
improvement was primarily attributable to an improvement in gross profit margin
in 1995, partly related to product cost reduction initiatives and a reduction in
warranty and post shipment expenses.

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Year Ended September 30, 1994 Compared to Year Ended September 30, 1993

NET SALES

Net sales increased $21.2 million or 3.4% to $648.2 million in 1994 from
$627.0 million in 1993. This increase was primarily attributable to an increase
in net sales in the newspaper business of $45.0 million or 11.5% and an increase
in the commercial business of $9.0 million or 9.7% partially offset by a decline
in net sales in the insert business of $32.8 million or 22.9%.

Net sales in the newspaper business increased $45.0 million or 11.5% to
$435.8 million in fiscal 1994 from $390.8 million in fiscal 1993. This increase
is primarily attributable to growth in shipments from Goss's European locations.
European net sales were $160.7 million in 1994, a $35.7 million or 28.6%
increase over 1993. This increase was driven by significant large newspaper
product shipments to Australia and New Zealand from Europe. In addition, sales
of small newspaper presses in Europe increased by 43.6% as the Universal press
continued to gain market acceptance. Sales in the Americas and Japan were
relatively constant. Net sales in Goss's large newspaper business increased
$27.3 million or 8.6% to $343.0 for the year-ended September 30, 1994 from
$315.7 million for the year ended September 30, 1995. During this same period,
small newspaper sales increased $17.7 million or 23.6% to $92.8 million from
$75.1 million.

Net sales in the insert business decreased $32.8 million or 22.9% to $110.7
million in 1994 from the peak sales of $143.5 million in 1993. In 1993, sales
were unusually high due to the introduction of three new products. In 1994,
there was a consolidation of insert printers which lead to capacity
rationalization by these customers. This rationalization continued into 1995 but
at a reduced level.

Net sales in the commercial business increased $9.0 million or 9.7% to
$101.7 million in 1994 from $92.7 million in 1993. This increase was primarily
attributable to the introduction of new catalog and directory presses in 1994.

GROSS PROFIT

Gross profit increased $15.7 million or 14.6% to $123.4 million in 1994 from
$107.7 million in 1993. The gross profit margin improved to 19.0% in 1994 from
17.2% in 1993, primarily attributable to increased sales volume and pricing in
Goss's small newspaper business and improved margins in the commercial business.

Gross profit in the newspaper business increased $7.5 million or 8.2% to
$99.1 million in fiscal 1994 from $91.6 million in 1993. The gross profit margin
remained relatively stable at 22.7% in 1994 compared to 23.4% in 1993. The
increase in gross profit was primarily attributable to higher sales volume in
Europe partially offset by less favorable product mix in the U.S. and Japan.

Gross profit in the insert business decreased $3.0 million or 11.5% to $23.0
million in 1994 from $26.0 million in 1993. This decrease was primarily
attributable to lower sales volume. The gross profit margin improved to 20.8% in
1994 from 18.1% in 1993. This improvement was primarily attributable to the
negative impact of production start-up expenses and low introductory pricing for
new products on the gross profit margins in 1993.

Gross profit in the commercial business improved $11.2 million or 113.1% to
$1.3 million in 1994 from a loss $9.9 million in 1993. The gross profit margin
increased to 1.3% in 1994 from negative 10.7% in 1993. This increase was
primarily attributable to a reduction in warranty and post-shipment expenses
which had been experienced in 1993 in conjunction with the introduction of the
World 16 and G25W presses.

BUSINESS LINE OPERATING EXPENSES

Operating expenses decreased $13.4 million or 12.9% to $90.4 million in 1994
from $103.8 million in 1993. This decrease was primarily attributable to reduced
engineering expenditures, lower sales and

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marketing expenses and lower general and administrative costs partially
attributable to restructuring actions which occurred in 1993. As a percent of
insert sales, operational expenses improved to 13.9% in 1994 from 16.6% in 1993.

Operating expenses from the newspaper business decreased $6.1 million or
9.4% to $58.5 million in 1994 from $64.6 million in 1993. As a percent of net
sales, operating expenses declined to 13.4% in 1994 from 16.5% in 1993. This
decrease was primarily attributable to lower sales and marketing expenses and
lower general and administrative expenses associated with the 1993 restructuring
actions.

Operating expenses for the insert business decreased $0.7 million or 4.9% to
$13.6 million in 1994 from $14.3 million in 1993. This decrease is primarily
attributable to lower engineering expenses. As a percent of net sales, operating
expenses increased to 12.3% in 1994 from 10.0% in 1993. This increase was
primarily attributable to significantly lower sales in 1994.

Operating expenses for the commercial business decreased $6.6 million or
26.5% to $18.3 million in 1994 from $24.9 million in 1993. This decrease was
primarily attributable to lower engineering and general and administrative costs
partially due to a lower allocation of expenses to this business line. As a
percent of net sales, operating expenses decreased to 18.0% in 1994 from 26.9%
in 1993.

BUSINESS LINE OPERATING INCOME

Operating income increased $29.1 million or 746.2% to $33.0 million in 1994
from $3.9 million in 1993. As a percent of net sales, operating income increased
to 5.1% in 1994 from 0.6% in 1993. This increase was primarily attributable to
higher newspaper business sales volume, improved sales volume and gross profit
margins in the commercial business.

Operating income for the newspaper business increased $13.6 million or 50.4%
to $40.6 million in 1994 from $27.0 million in 1993. As a percent of net sales,
operating income increased to 9.3% in 1994 from 6.9% in 1993. This improvement
was primarily attributable to the increase in sales volume, as well as the
decrease in operating expenses attributable to cost reduction efforts.

Operating income for the insert business decreased $2.3 million or 19.7% to
$9.4 million in 1994 from $11.7 million in 1993. As a percent of net sales,
operating income increased to 8.5% in 1994 from 8.2% in 1993. This decrease was
primarily attributable to the reduction in sales volume.

Operating income for the commercial business increased $17.8 million to a
loss of $17.0 million in 1994 from a loss of $34.8 million in 1993. This
improvement was primarily attributable to improved gross profit margins in 1994
following significant production start-up expenses, low introductory pricing on
new products and high warranty and post-shipment expenses in 1993 and also a
reduction in overall operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Acquisition, Goss's surplus cash in the U.S. and U.K. was
remitted to, and its funding requirements were provided by, Rockwell. The
funding requirements of Goss were provided from Rockwell's own resources through
the use of intercompany accounts. While intercompany purchases from
Allen-Bradley, a Rockwell company, are principally transacted through non-cash,
intercompany accounts, subsequent to the Acquisition, these transactions will
generate normal trade payables of the Company which will require cash. It is
expected that, upon consummation of the Acquisition, a reserve of $16.3 million,
net of a $3.9 million provision reflected in the first six months of 1996, will
be established associated primarily with severance, outplacement and relocation
payments to be incurred in connection with headcount reductions and costs in
connection with planned facility closings. See "Unaudited Pro Forma Combined
Financial Statements."

Goss reported net cash provided by operating activities of $6.6 million,
$157.5 million, $71.3 million and negative $6.2 million for the six months ended
March 31, 1996 and the years ended

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September 30, 1995, 1994 and 1993, respectively. In general, changes in reported
net cash provided by operating activities can be primarily attributed to the
dollar value of inventories, receivables and advance payments from customers
driven by the timing and level of new order activity.

The net cash provided by operating activities of $6.6 million for the six
months ended March 31, 1996 was primarily attributable to a $13.1 million
decrease in customer notes as repayments reduced the outstanding principal
balance while fewer new notes were added, and a $9.8 million reduction in
inventory levels associated with lower new orders, particularly in the newspaper
business. The net cash provided by operating activities was partially offset by
$24.9 million of lower advance payments from customers which corresponded to the
reduction in new orders.

The net cash provided by operating activities of $157.5 million for 1995 was
primarily attributable to a $59.1 million increase in customer advances
primarily associated with several large newspaper press orders. In addition, a
$37.7 million decrease in accounts receivable attributable to the collection of
date-certain letters of credit for 1994 sales contributed to the net cash
provided by operating activities. The net cash provided was partially offset by
a $50.4 million increase in customer notes primarily related to the financing of
a large newspaper press sale.

Net cash provided by operating activities was $71.3 million for 1994. The
balance of advances from customers declined slightly but was offset by lower
inventory levels. A $12.4 million reduction in the balance of customer notes
increased net cash provided by operating activities due to increased reserves
and payments on outstanding customer notes. A $17.6 million increase in other
assets and liabilities caused primarily by the termination of a lease agreement
in Europe, reduced overall net cash provided by operating activities.

Net cash used by operating activities of $61.2 million for 1993 was
primarily attributable to an $84.9 million increase in customer notes to insert
and commercial press customers. In addition, $68.7 million of customer notes
were sold during the year.

As a result of the Transactions, the Company's total indebtedness will
increase substantially. See "Risk Factors--Substantial Leverage; Ability to
Service Indebtedness." Immediately following the consummation of the
Transactions, the Company and its subsidiaries will have approximately $77.3
million of indebtedness outstanding under the Bank Facilities (excluding
approximately $36.0 million in letters of credit) and $225 million of Notes
outstanding. The Company will also be capitalized with equity of $160.0 million.
The Company will also have the ability to borrow an additional $107.7 million
for general corporate purposes pursuant to the Revolving Credit Facility,
subject to certain conditions. See "Description of New Bank Credit Agreement."
The Company's ability to incur additional indebtedness will be subject to
certain limitations, including limitations imposed by the Indenture and the New
Bank Credit Agreement. The Company's ability to service its indebtedness will be
dependent, in part, on its ability to utilize the cash flow generated by its
foreign operations. See "Risk Factors--International Operations."

After consummation of the Transactions, the Company intends to fund its cash
needs through cash flow from operations, existing cash balances and the
Revolving Credit Facility under the New Bank Credit Agreement. See "Description
of New Bank Credit Agreement." A substantial portion of the Company's available
cash will be required to be applied to service the indebtedness incurred to
finance the Acquisition. The Company may also utilize the Revolving Credit
Facility to issue letters of credit that it may be required to post in
connection with certain sales agreements. See "Risk Factors-- Operations as an
Independent Company; Absence of Parent Guarantees." The amount of advance
payments received by the Company in any period affects the Company's working
capital position and liquidity during that period. The Company's capital
expenditure requirements for fiscal year 1996 are expected to be approximately
$8 million and for fiscal year 1997 are expected to be approximately $19
million.

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Given the long delivery times and large size of newspaper orders, the
Company typically receives progress payments from newspaper customers in advance
of actual press deliveries. The Company recognizes revenue only after press
delivery and therefore progress payments are recorded as a current liability in
the balance sheet, under customer advances. In addition, certain customers
request that the Company post a letter of credit to guarantee performance under
their respective contracts. As of March 31, 1996 Goss had $127.1 million of
customer advances, and $25.2 million of outstanding letters of credit related
thereto. See "Risk Factor--Operations as an Independent Company; Absence of
Parent Guarantee."

The Indenture and the New Bank Credit Agreement of the Company will contain
financial and operating covenants and significant restrictions on the ability of
the Company to pay dividends, incur indebtedness, make investments and take
certain other corporate actions. See "Description of New Bank Credit Agreement"
and "Description of Notes."

The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness (including the Notes) depends on
its future performance and financial results, which, to a certain extent, is
subject to general economic, financial, competitive, legislative, regulatory and
other factors beyond its control. Based upon the current level of operations and
anticipated growth, Management of the Company believes that available cash flow,
together with available borrowings under the New Bank Credit Agreement and other
sources of liquidity, will be adequate to meet the Company's anticipated future
requirements for working capital, capital expenditures and scheduled payments of
principal of, and interest on, its Senior Debt, and interest on the Notes.
However, a portion of the principal payments at maturity on the Notes may
require refinancing. There can be no assurance that the Company's business will
generate sufficient cash flow from operations or that future borrowings will be
available in an amount sufficient to enable the Company to service its
indebtedness, including the Notes, or to make necessary capital expenditures, or
that any refinancing would be available on commercially reasonable terms or at
all. See "Risk Factors."

VARIABILITY IN THE COMPANY'S BUSINESS

There are a number of factors that contribute to variability in the
Company's business. This variability can produce wide fluctuations in revenues,
earnings, cash flows and working capital balances. The Company expects this
variability to continue.

Factors contributing to this cyclicality include general economic
conditions, which affect demand for press capacity, and the timing of press
replacement, as well as innovations in printing technology, which have caused
significant periodic increases in press demand over the last thirty years. In
addition, Goss's revenue and profitability are influenced by the profitability
of its customers. Accordingly, when newspaper publishers and commercial printers
experience large decreases in sales (for example, during periods of recession
and the resulting downturn in advertising revenues) or large increases in costs
(for example, significant increases in raw material costs such as paper and
newsprint), their willingness to commit to press acquisitions or upgrades could
be temporarily affected.

INTERNATIONAL OPERATIONS

For the year ended September 30, 1995, 38% of Goss's revenue was generated
by international sales of its foreign subsidiaries. Historically, Goss had
entered into foreign currency forward exchange contracts to protect it from
adverse currency risk fluctuations on foreign currency commitments. As a result,
the financial performance of the Company's foreign operations on a U.S. dollar
denominated basis has historically not been significantly affected by changes in
currency exchange rates. In addition, certain portions of the Company's
borrowings under the New Bank Credit Agreement will be lent directly to certain
of the Company's foreign subsidiaries in local currency, which may have the
effect of hedging against changes in currency exchange rates. However, although
the Company's foreign currency forward exchange arrangements and the
foreign-based borrowings will mitigate the effect of

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fluctuating currency exchange rates, unfavorable changes in certain exchange
rates could have adverse effects on the financial performance of the Company's
foreign operations in the future.

BACKLOG

As of September 30, 1995, the total contract price of the backlog of orders
for presses was approximately $481 million, and approximately 82% of orders or
services represented thereby have been or are currently expected to be filled
during fiscal year 1996. As of September 30, 1994, such backlog was
approximately $538 million. The decrease from September 30, 1994 to September
30, 1995 is primarily attributable to the shipment in 1995 of a large commercial
order for G25W presses. As of March 31, 1996, the total contract price of the
backlog of orders for presses had decreased to approximately $453 million. As of
March 30, 1995, such total was approximately $507 million. The decrease from
March 31, 1995 to March 31, 1996 is primarily attributable to lower orders in
the Newspaper and Commercial segments in 1996.

IMPACT OF INFLATION

Goss has historically offset the impact of inflation through price increases
and expense reductions. Periods of high inflation could have an adverse effect
on the Company to the extent that increased borrowing costs for floating rate
debt may not be offset by increases in revenue.

ENVIRONMENTAL MATTERS

The Company's operations are subject to a range of environmental
requirements in the various jurisdictions in which it operates. These
environmental requirements relate to, among others, air emissions, wastewater
discharges, and waste management. Over the past five years, Goss has incurred
less than $1.0 million of expenditures in connection with environmental
remediation matters. Based on the underlying facts giving rise to its
environmental regulatory obligations and technical advice received from the
Company's environmental consultants, the Company can be expected to continue to
incur capital and operating expenses to maintain compliance with applicable
environmental requirements, to upgrade existing equipment at its facilities, to
continue existing remedial activities and to meet new regulatory requirements.
The Company does not anticipate that any such capital and operating expenses
will have a material adverse effect on the Company's results of operations.
Rockwell has agreed to indemnify the Company and its subsidiaries and affiliates
against all environmental costs associated with Goss's facility in Peterborough,
United Kingdom (which Rockwell is retaining) and against all environmental costs
associated with Hall Processing Systems. For a period of four years after the
Closing Date, Rockwell will also indemnify the Company against one-half of
certain environmental costs incurred by the Company in excess of $1.0 million,
provided that such costs result from the disposal, discharge or release of any
hazardous wastes, hazardous substances, pollutants or contaminants on or from
the facilities of Goss (or its predecessors) prior to the Closing, and provided
that such costs result from activities which are (i) required by an enforcement
order or decree entered by a governmental authority as a result of an
environmental proceeding; (ii) necessary to comply with an environmental law in
response to an environmental proceeding, the outcome of which environmental
proceeding is reasonably likely to result in material costs or expenses to the
Company; or (iii) necessary to comply with an environmental law in response to a
written, threatened environmental proceeding, which environmental proceeding is
reasonably likely to result in material costs or expenses to the Company,
provided that, in the case of this clause (iii), all such costs and expenses are
consented to in writing by Rockwell prior to being incurred. There can be no
assurance that unanticipated, future regulatory programs or previously
unidentified environmental conditions will not impose material capital and
operating expenses.

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BUSINESS

GENERAL

Goss is the leading manufacturer of web offset newspaper press systems
worldwide and of insert web offset press systems in North America. Goss also
manufactures commercial web offset printing presses in North America and
provides aftermarket parts and service to its newspaper and commercial printing
customers. Founded in 1885, Goss is the only U.S.-based manufacturer of
large-scale web offset printing presses and has pioneered many major industry
innovations, including the conversion from letter press printing to web offset
lithography, the development of computerized electronic control systems and the
introduction of back-to-back color printing. Goss is the only global producer of
newspaper printing presses with manufacturing and sales capabilities in North
America, Europe and Asia. Goss generated approximately 51% of its fiscal 1995
net revenue of $709 million overseas (including exports from the U.S.). Goss
operates through three business categories:

. Newspaper. Goss is a widely recognized trade name in the newspaper
printing press industry. Management estimates that approximately 57% of
daily newspapers worldwide (excluding PRC) print on Goss presses
(approximately 70% in the U.S. and Canada). The Company provides
sophisticated, computer-controlled press systems for a wide variety of
newspaper publications which vary significantly in circulation, page count
and color content and operate in markets around the world. Goss presses
print such publications as The Wall Street Journal, USA Today, The New
York Times and The Los Angeles Times in the U.S., The Financial Times in
the United Kingdom, Zero Hora in Brazil, The Asahi Shimbun in Japan, The
Straits Times in Singapore and The People's Daily in China. Goss's
newspaper press business generated approximately $512 million in revenues
in fiscal year 1995, or approximately 72% of Goss's total revenues.

. Commercial. Goss also manufactures commercial web offset printing presses
in North America used to print a broad variety of commercial products,
including brochures and promotional materials, catalogs, magazines, books,
financial publications and directories. The Company sells its commercial
presses principally in North America, and its customers include large
multinational, regional and local printers, including R.R. Donnelley &
Sons Company, Quebecor, Inc., and Banta Corporation. The commercial press
business generated approximately $103 million in revenues in fiscal year
1995, or approximately 15% of Goss's total revenues.

BUSINESS STRATEGY

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. Leading Installed Base of Newspaper Presses. Goss is the market leader in,
and only domestic manufacturer of, newspaper presses in the U.S. and
Canada (the world's largest market for such presses). Management estimates
that approximately 70% of daily newspapers in this market print on Goss
presses. In addition, management estimates that approximately 52%, 48% and
61%, respectively, of daily newspapers in South America; Europe, Middle
East and Africa; and Asia/Pacific (excluding Japan and PRC) utilize Goss
presses. Management believes that this installed base and the Company's
established customer relationships provide it with a competitive advantage
in obtaining repeat business, including color capability upgrades, press
line extensions and new press purchases. In addition, the Company's
significant installed base provides a relatively stable source of
aftermarket parts and service business.

. Technology Leader. Management believes that it enjoys a reputation in the
newspaper industry as a leader in technological innovation, having
engineered several major technological advancements, including the
conversion from letterpress to web offset lithography, the development of
computerized electronic control systems and the introduction of
back-to-back process color printing, each of which has improved its
customers' print quality and productivity. With the Company's recent
introduction of an advanced inking system, and its ongoing development of
an optical color quality adjustment mechanism and of an automatic image
make-ready press system, Management believes the Company is
well-positioned to maintain its technology leadership. See "--Research and
Development."

. Business Process Improvements. A key element of the Company's business
strategy is to further improve its operating performance. Management has
identified certain specific cost saving opportunities that are reflected
in the pro forma financial statements included herein. See
"Business--Identified Cost Savings" and "Unaudited Pro Forma Combined
Financial Statements." Management believes that efficiencies not reflected
in the pro forma financial statements included herein can be realized
through improvement of business processes, including enhanced material
procurement practices, more efficient flow of work-in-process through both
machining and assembly operations, increased outsourcing, and
restructuring of factory support functions. In addition, the Company will
seek to generate cost savings by improving efficiency in the process of
configuring presses for specific customer requirements. The Company also
has in place integrated product development teams which include design and
manufacturing engineers and other disciplines which work to identify and
implement product cost reduction initiatives such as component redesign,
lower cost component suppliers, and design modifications to improve
manufacturability. However, there can be no assurance that such
efficiencies or cost savings can be realized.

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. Low-Cost Operations. Goss has reduced its cost structure significantly
since 1991 through headcount reductions and facility rationalization.
Management believes that these efforts, together with the Company's global
manufacturing capabilities, which enable the Company to deliver its
products at lower transportation costs, provide it with one of the lowest
cost operating structures in the industry. In the large newspaper press
system business, the Company believes that it is the lowest cost operator
in the industry. See "--Identified Cost Savings."

IDENTIFIED COST SAVINGS

Although no assurance can be given either that any specific level of cost
savings will be achieved or as to the timing thereof, Management currently plans
to achieve substantial savings in the base of operating costs which are
reflected in the pro forma combined financial statements. Once these plans are
completed, annual savings are expected to amount to approximately $19 million
per year associated with the closing of redundant facilities and reduction in
staffing, revision of employee benefit plans, and more cost effective corporate
services as a stand alone company. It is expected that, upon consummation of the
Acquisition, a reserve of $16.3 million, net of a $3.9 million provision
reflected in the first six months of 1996, will be established associated
primarily with severance, outplacement and relocation payments to be incurred in
connection with headcount reductions and costs in connection with planned
facility closings. See "Unaudited Pro Forma Combined Financial Statements."

The Company anticipates that it will be able to reduce its manufacturing
costs by closing redundant facilities and transferring the production to other
under-utilized facilities. In addition, the Company plans on reducing its
engineering, sales and marketing and general and administrative expenses by
reducing headcount and outsourcing certain non-strategic activities. The Company
has identified specific employees and/or functional areas where employees will
be terminated. The Company plans to implement its operating improvement plan
over a six month period following the Acquisition. Annual savings from these
actions are expected to amount to approximately $14 million per year.

In addition, the Company intends to modify selected employee benefit plans
at an annual savings of $1.2 million. Finally, Goss has received certain
administrative and management services from Rockwell such as general management,
cash management, treasury, legal, patent, tax, insurance administration,
corporate accounting and communication services. The Company expects incremental
annual savings of $3.8 million as a result of providing these services on a
stand-alone basis. The Company has also identified certain other cost saving
measures which may be implemented in the future.

HISTORY

The Goss Printing Company was established in 1885 in Chicago and soon
thereafter introduced the first of a number of technological advancements in the
industry, a newspaper press that printed on both sides of the paper
simultaneously. Goss established itself as a global company early, recording its
first international sale in 1898 and building its first international plant in
England in 1910.

In the 1960s, Goss introduced web lithographic offset newspaper presses that
led the industry's conversion from letterpress printing. In 1969, Rockwell
acquired Goss, which had grown to become a Fortune 500 company. Goss continued
to be an industry leader over the ensuing decades, enhancing its product
portfolio by introducing faster presses, new paper roll pasters, advanced folder
designs, automated press controls, expanded flexible color printing capabilities
and advanced inking systems.

In the early 1980s, Goss recognized that certain of its customers were
requesting modifications on its small newspaper presses to accommodate the
printing of advertising inserts, a business which began to develop rapidly. Goss
responded to this demand by adapting its existing newspaper press systems to
include certain commercial press features, ultimately creating a separate line
of specialized insert

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presses. Goss continues to be a leader in this business with a market share of
approximately 70% in the U.S. and Canada, the principal markets for such
equipment.

Following on Goss's success in the insert niche of the commercial printing
press industry, management embarked on a strategy to expand into the broader
commercial printing business through acquisitions. In 1987, Goss acquired the
Hantscho Company, a supplier of short- and medium-run commercial presses, and in
1989, Goss acquired the long-run publication product line of APV Baker-Perkins.
As a result of these acquisitions, Goss established a presence in the North
American commercial press market. The Company intends to present customers with
a competitive alternative to the commercial press industry leader, Heidelberg
Harris, a subsidiary of Heidelberger Druckmaschinen A.G. of Germany ("Heidelberg
Harris").

INDUSTRY OVERVIEW

Goss's products fall into three broad categories: (i) newspaper press
systems for publishers of national, regional and local newspapers; (ii) insert
press systems for printers of advertising inserts, including Sunday newspaper
inserts and direct mail/point-of-purchase inserts and (iii) commercial press
systems for printers of brochures and promotional materials, catalogs,
magazines, books, financial publications and directories. Management believes
that annual worldwide sales of press equipment for newspapers and commercial
printers between 1992 and 1995 averaged approximately $5.0 billion, of which
approximately $2.5 billion constituted sales of web offset press equipment.

The following is an overview of the global industry for web offset press
equipment for newspapers, insert printers and general commercial printers.

NEWSPAPER PRINTING PRESS INDUSTRY

The global newspaper printing press industry serves a wide variety of
newspaper publications which vary significantly in circulation, page count and
color content based on regional, demographic and economic fundamentals. These
attributes drive newspaper press equipment requirements.

Newspaper printing presses are typically categorized as either
"double-width" or "single-width" presses. A double-width press is capable of
producing twice as many pages per cylinder rotation as a single-width press.
Newspapers with large circulations (i.e., over 50,000 copies) or high page
counts typically require double-width printing presses, while those with smaller
circulations and page counts tend to use single-width presses. A newspaper
generally purchases press capacity sufficient for its highest use requirement,
which is usually the printing of its Sunday edition. Although the number of
single-width printing presses installed worldwide far exceeds the number of
double-width presses, the majority of capital spending for newspaper printing
presses typically is for more complex, double-width press systems. Goss supplies
double-width and single-width web offset presses to newspaper publishers
worldwide.

The purchase of a newspaper press, which typically has a replacement cycle
of approximately twenty-five years, usually represents the most significant
capital expenditure by a newspaper publisher. As such, the purchasing decision
involves extensive capital planning and budgeting. Lead times for deliveries
range from nine to eighteen months from the placement of an order for
double-width presses, and two to eight months for single-width presses.

DEMAND CHARACTERISTICS. Given the significant cost of newspaper presses,
both industry and Company sales can vary substantially period-over-period
depending upon the timing of large press purchases. This phenomenon is
exacerbated by the long useful life of newspaper presses and the concomitant
deferability of press replacement. In addition, during periods of economic
growth, higher advertising expenditures and personal incomes lead to an increase
in the profitability of publishers, causing demand for printing presses to
generally increase; similarly during periods of economic

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recession, demand for press capacity generally decreases. However, Management
believes that, over the longer term, continued demand for newspaper presses will
be driven by a number of factors, including:

. Economic Growth in Developing Countries. Strong economic growth typically
results in increased advertising expenditures and higher personal incomes.
These factors, together with higher literacy rates, increase newspaper
circulation and page counts which in turn drive demand for additional
press capacity. Management believes these dynamics make developing
countries attractive markets for its newspaper presses.

. Innovation. Press demand has historically increased significantly in
response to press innovations before returning to more normalized levels
of demand. The conversion from letterpress to offset which was started by
Goss in the 1960s, for example, was driven by compelling productivity and
quality improvements offered by offset printing. More recently, Goss's
introduction of "four-high" tower configuration, back-to-back color
presses (which consist of four vertically stacked printing units) in the
late 1980s permitted newspapers to offer color advertising and thus
increase their advertising revenue. This in turn contributed to additional
demand for new presses and add-on units for color printing--demand that
continues as advertisers and consumers insist on increasing amounts of
color in newspapers. A newspaper's ability to enhance quality and increase
productivity while reducing paper waste and staffing are important
considerations as it evaluates whether and when to add a new press or
replace an older press. Accordingly, the aggregate demand for printing
presses as well as the demand for a particular manufacturer's products is
driven in part by the development of new products which achieve market
acceptance.

. Replacement. The useful life of a newspaper press is approximately 25
years, although press life can be extended through refurbishing,
enhancements and proper maintenance. Nevertheless, it has been the
Company's experience that declining productivity and quality, in each case
relative to that offered by a new press, ultimately require that, over
time, older presses be replaced. The timing of press replacement is
influenced by economic factors as well as the productivity and quality
improvements available from new presses. This replacement cycle of older,
first-generation offset presses purchased in the late 1960s to mid-1970s
has begun in the U.S., Canada, Western Europe and Japan, which are mature
markets. In addition, Management believes that there are still over 70
newspapers using letterpresses in the U.S. and Canada alone, and that many
of these presses will be replaced in the forseeable future.

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INSTALLED BASE. Goss is the leading manufacturer of newspaper presses in the
world. Management estimates that approximately 57% of daily newspapers worldwide
(excluding PRC) print on Goss presses. Goss is one of only seven major global
suppliers of web offset newspaper press systems and is the only supplier to have
manufacturing, engineering and sales operations in North America, Europe and
Asia. The table below sets forth the Company's estimate of the approximate
number of newspapers in each of the regional markets Goss serves and the
approximate percentage of daily newspapers in such regions utilizing Goss
presses:

<TABLE>
<CAPTION>
NUMBER OF % WITH GOSS
REGION NEWSPAPERS PRESSES
- --------------------------------------------------------------- --------- -------------------
<S> <C> <C>
U.S. & Canada.................................................. 1,500 70%
Asia/Pacific(1)................................................ 960 61%
South America.................................................. 550 52%
Europe, Middle East & Africa................................... 2,000 48%
Japan(2)....................................................... 68 15%
--
---------
Total.................................................... 5,078 57%
--
--
---------
---------
</TABLE>

- ------------

(1) Excludes People's Republic of China and Japan.

(2) Double-width presses only.

INSERT PRINTING PRESS INDUSTRY

A segment of the commercial press industry unique to North America is the
specialized printing press for advertising inserts, which are typically found in
newspapers or distributed by direct mail or at point-of-purchase locations.
Advertising insert printing presses combine high-speed, multi-web newspaper
press designs with selected commercial press features for enhanced print
quality, low maintenance and high productivity. The two leading printers of
advertising inserts in North America, Big Flower Press Holdings, Inc. and
Sullivan Graphics, Inc., are each customers of Goss. Goss has an estimated
market share of approximately 70% in the U.S. and Canada, the principal markets
for such equipment.

Major factors considered by purchasers of insert press systems include net
productivity (especially speed, reduced paper waste and print quality), service
and support, new technologies (which enhance or lower product cost), product
value and a press system's flexibility to produce multiple formats.

COMMERCIAL PRINTING PRESS INDUSTRY

The commercial press industry serves a broad variety of commercial printers
who print brochures and promotional materials, catalogs, magazines, books,
financial publications, directories and other printed materials. In contrast to
newspaper publishers who print their own publications, commercial printers are
"contract printers" who generally print for publishers and other customers.

Commercial press systems can be configured with a variety of component
choices and auxiliary equipment. Commercial press suppliers act as systems
integrators who are generally expected to provide complete press systems,
including third-party auxiliary equipment such as dryers and chillers associated
with "heatset" printing. Outsourced auxiliary equipment generally comprises 30%
to 40% of the contract value of a commercial press order.

Commercial presses generally operate 24 hours per day, with downtime only
for necessary maintenance and repair. As a result, the average life of a
commercial printing press ranges up to ten years, resulting in much shorter and
generally more predictable replacement and/or rebuilding cycles than for
newspaper presses. Lead times for deliveries of commercial press systems
typically run two to eight months from the placement of an order.

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Major factors considered by purchasers of commercial press systems include
price, net productivity, reliability, efficiency, quality, and service and
support. Commercial printers also continually seek feature and technological
innovations to improve net production output and job turnaround time. In
addition, Goss has assisted in the past, and the Company intends to continue to
assist in the future, smaller commercial printers in obtaining the financing of
press purchases through third-party financing sources.

Goss supplies commercial press systems in the U.S. and Canada, with limited
sales in certain other countries. Management estimates that there are
approximately 2,000 commercial printers in the U.S. and Canada who utilize web
offset presses. The U.S. and Canadian commercial print industry has been
consolidating, as large printers seeking to increase press utilization have
begun to serve customers traditionally addressed by local printers. Many larger
U.S. and Canadian commercial printers are becoming more international in scope
and have formed joint ventures and other alliances in an increasing number of
developed and developing regions.

PRODUCTS AND SERVICES

WEB OFFSET TECHNOLOGY

Goss introduced offset lithography to newspaper printing in the 1960s as a
replacement for the letterpress printing process. The letterpress system relied
on highly-skilled technicians operating complex machines that used a keyboard
connected to a series of circular matrices to create each line of type in the
form of a metal slug. The slugs that came out of the machine would then be
arranged in forms and made into thick, semi-cylindrical metal plates mounted on
a press. The paper was printed in direct contact with these plates. In contrast
to the old letterpress system, offset lithography is far less mechanically
complex, as the process relies on photographic and chemical processes instead of
mechanical ones.

The initial step in the offset process involves transferring the text and
images of a publication onto the printing plates that will be used in the press.
These plates are wrapped around "plate cylinders" in the press unit. As the
plate cylinder rotates, it is first coated with a water-based solution, and then
with an oil-based ink. As the ink is oil-based it adheres only to the areas of
the plate that are not covered with water (i.e., the text or image). The ink on
the plate is then transferred in a mirror image to a "blanket cylinder" which
rotates to come into contact with the paper, where the ink is transferred again,
reversing from a mirror-image back to a normal image.

In most web offset presses both sides of the paper are printed at the same
time, each with its own set of plate and blanket cylinders. The paper is pressed
between the two blanket cylinders as it passes through the unit. After the paper
passes through each of the press units, it travels to a "former," where it is
joined with the other pages, and finally to a folding component where it is
folded and cut to the proper size (or "cutoff").

In process color printing, each color on a page is imaged separately onto
its own plate. Each page of a color publication must pass through four separate
printing units, each loaded with a different color. Process color printing thus
requires four times the number of printing units to print the same number of
pages as does a black and white publication.

Goss primarily produces web offset presses. The term "web" refers to the
fact that the paper is fed through the press from a large paper roll in a long
ribbon that forms a complex web of paper. The other common form of press is a
sheet-fed press, which prints on individual sheets of paper fed through the
press one-by-one. Sheet-fed presses are generally used only for shorter-run,
high quality posters, some high-end magazines, and similar applications because,
historically, the lower speeds necessary to

52
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achieve the highest print quality were not economical for larger commercial
print runs. Newspapers are almost exclusively printed on web-fed presses.

NEWSPAPER PRESS SYSTEMS

Goss's core business, in which it has been engaged for 111 years, is the
production of newspaper press systems. Goss produces customized double-width
press systems for large national and metropolitan newspapers and single-width
press systems for smaller regional and local newspapers, all sold under the
"Goss" name. The Company typically configures its press units to meet the
specific printing requirements and physical space limitations of its customers.
Goss is a worldwide supplier of web offset newspaper press systems.
Approximately three out of four U.S. daily newspapers and many prestigious
newspapers in over 100 other countries are printed on Goss's presses. Goss has
sold over 4,500 newspaper press systems around the world to publications such as
The Wall Street Journal, The New York Times, The Los Angeles Times, and USA
Today in the U.S., Zero Hora in Brazil, The Financial Times in the U.K., The
Melbourne Age in Australia, The Asahi Shimbun in Japan, The Straits Times in
Singapore and The People's Daily in China.

Sales of new equipment to, as well as additions and modifications to
existing equipment for, large newspaper customers accounted for approximately
45% of Goss's fiscal year 1995 sales. Sales to and additions and modifications
for small newspaper customers accounted for approximately 14% of Goss's fiscal
year 1995 sales.

Goss's current newspaper press product portfolio, which consists of a range
of double-width and single-width press systems, is set forth in the table below:
<TABLE>
<CAPTION>
NEWSPAPER PRESS PRODUCT PORTFOLIO
YEAR
PRODUCT INTRODUCED SIZE SPEED(A)
- ---------------------------------------------------------- ---------- ------------ --------
<S> <C> <C> <C>
Colorliner 80............................................. 1995 Double-Width 80,000
Newsliner................................................. 1994 Double-Width 70,000
MetroColor................................................ 1992 Double-Width 70,000
HT........................................................ 1990 Double-Width 70,000
Colorliner................................................ 1987 Double-Width 75,000
Universal................................................. 1991 Single-Width 50,000
Community................................................. 1963 Single-Width 30,000
Urbanite.................................................. 1962 Single-Width 50,000
</TABLE>

- ------------

<TABLE>
<C> <S>
(a) Straight run copies per hour
</TABLE>

In 1995, Goss formalized a standard global product strategy for its new
press offerings. Management believes that the common designs of newspaper
presses will allow Goss to reduce its product costs and provide flexibility to
utilize global manufacturing resources more effectively. Accordingly, Management
has initiated programs to standardize most of the core design components of its
newspaper press systems, while retaining the flexibility to configure and
assemble each press system to specific customer needs.

The Newsliner, introduced in 1994, is Goss's first standard double-width
press system designed for global markets. The Newsliner contains many advanced
features used by newspaper publishers worldwide while providing customers with
flexibility by offering three inking system alternatives: traditional open
fountain, digital injector and Goss's advanced positive-feed keyless, a patented
process which significantly reduces press start-up time, thereby reducing paper
waste. Goss's premier Colorliner press system which Management believes offers
the industry's widest range of features and options, has also been recently
redesigned as a standard global product offering.

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Goss introduced the Universal press system in 1991 for medium circulation
newspapers and certain commercial printers as Goss's single-width standard
global product offering. The Universal also provides flexibility in that it can
be configured in a variety of arrangements, including both "tower" and satellite
configurations.

The MetroColor is a press upgrade package that is designed to allow
customers with the Metroliner press system to enhance their press systems to add
tower color printing capabilities. The HT is a premier double-width newspaper
press system based on the Colorliner design and targeted exclusively to European
and Asian customers. The HT system incorporates buyer-specific control packages,
folder designs, paging configurations and inking systems geared toward the
requirements of customers located in Europe and Asia.

The Community and the Urbanite press systems represent Goss's first
generation of single-width web offset printing presses, and are still a popular
choice for smaller to medium circulation newspapers due to their simplicity of
operation, quality print reproduction, configuration flexibility and relatively
low price. The Urbanite, which has a single-width press with two plates around
the cylinder and which therefore permits relatively more paging capacity (in
contrast to the single-plate design on the Universal and Community), is marketed
to medium circulation newspapers which require such greater capacity. The
Community is marketed to smaller to medium circulation regional newspapers and
to printers of advertising inserts.

INSERT PRESS SYSTEMS

Goss is a leading supplier of insert presses in the United States and
Canada, which are the source of almost all demand for this specialty product,
with an estimated market share of approximately 70% in the U.S. and Canada.
Management attributes its position as a leading supplier of both new insert
presses and service and parts for existing insert presses to its full range of
product offerings, its strong technical expertise and its ability to respond to
customer needs.

Sales from Goss's insert press business represented approximately 13% of
Goss's sales for the fiscal year ended September 30, 1995.

Goss's current insert printing press product portfolio is set forth in the
table below:

INSERT PRESS PRODUCT PORTFOLIO
YEAR
PRODUCT INTRODUCED SPEED(A)
- ------------------------------------------------------ ---------- --------

Magnum................................................ 1993 35,000
C450.................................................. 1992 50,000
C700.................................................. 1985 85,000
Community............................................. 1963 30,000

- ------------

(a) Copies per hour

Goss's insert presses combine newspaper press designs with selected
commercial press features for enhanced print quality, low maintenance and high
productivity. The Magnum is an adaptation of the proven Community newspaper
press with a modest amount of commercial features, and serves the most
price-sensitive insert printers. The C450 is Goss's mid-range advertising insert
press. The C700 serves national printers, offering the speed of a large
newspaper press with the color capability and turnaround flexibility of a
commercial press.

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<PAGE>
COMMERCIAL PRESS SYSTEMS

Goss produces web offset press systems for commercial printers of brochures
and promotional materials, catalogs, magazines, books, financial publications
and directories. Goss sells commercial press systems under the "Goss
Commercial", "Baker-Perkins" and "Hantscho" tradenames. Goss's commercial press
customers include large multinational, regional and local printers, such as R.R.
Donnelley & Sons Company, Quebecor Inc. and Banta Corporation. Goss's commercial
presses have been used to print leading publications such as Time, Newsweek,
Fortune, Business Week, Sports Illustrated and Elle and major catalogs such as
those for Victoria's Secret, Saks Fifth Avenue and Williams-Sonoma.

Sales from Goss's commercial press business represented approximately 14.6%
of its total sales for the fiscal year ended September 30, 1995.

Goss provides complete commercial printing press systems, including
third-party auxiliary equipment. Outsourced auxiliary equipment typically
comprises between 30% and 40% of the contract value of Goss's commercial press
orders. Goss has a broad folder portfolio, which provides customers with
flexibility in the customization of their press configurations.

Goss's commercial press product portfolio is set forth in the table below:
<TABLE>
<CAPTION>
COMMERCIAL/PUBLICATION PRESS PRODUCT PORTFOLIO
YEAR
PRODUCT CUSTOMER TYPE INTRODUCED SPEED(A)
- ------------------------------------------- ----------------------------- ---------- --------
<S> <C> <C> <C>
World 16E.................................. General commercial, book 1995 1,600
G25........................................ Magazine, general commercial 1995 2,750
C700LGD.................................... Speciality printers 1995 2,500
C700D...................................... Directory 1993 2,500
G25W....................................... Catalog, magazine 1992 2,750
</TABLE>

- ------------

(a) Feet per minute

Goss's commercial/publication press product portfolio serves a wide variety
of commercial printers who require reliable and cost-effective printing systems
with the flexibility to provide fast turnaround time and high print quality. To
enhance the profitability of this business, Goss rationalized its
commercial/publication press product portfolio during the 1990's and introduced
new presses to replace existing models and focus on a selected number of core
press systems.

The World 16E is a 16-page commercial press designed for the short to medium
run production of magazines, catalogs, books and general printing. The G25 is a
32-page press which provides enhanced productivity for the long run production
of magazines, catalogs, magazine insert products and general commercial
printing. The G25W is a 48 page press which prints products similar to the G25,
but has a wide format for higher volume printing requirements. The C700D is a
high speed telephone directory press; and, the C700LGD is a high sped, high page
output press used for the production of digest sized publications for national
and regional printers.

The World 16 and, to a lesser extent, the G25W, commercial press systems,
which were introduced in 1993 and 1992, respectively, experienced certain
performance problems during their initial installations. As a result, Goss has
incurred significant expenses to identify and implement the corrective actions
necessary to insure the press meets customer expectations. In addition, the
Company modified the press to improve its performance and introduced the World
16E to the marketplace in October 1995. See "Risk Factors--Commercial Business
Performance Issues" and Note 19 to the Combined Financial Statements contained
elsewhere in this Prospectus.

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<PAGE>
AFTERMARKET PARTS AND CUSTOMER SERVICE

Goss's large global installed base provides it with a relatively stable
source of aftermarket parts and service business. Goss capitalizes on these
opportunities through its field support network, which provides worldwide
coverage. In fiscal 1995, Goss generated $79 million, or 11%, of net sales from
the sale of aftermarket parts and the provision of maintenance services. The
newspaper segment is the primary contributor to the aftermarket, due to its
large installed base of presses and working relationships with newspaper
customers.

The Company believes that a high level of customer service, technical
support and training are important factors in establishing and maintaining
long-term relationships with customers and in encouraging repeat business.
Service and technical support relates to site preparation and inspection,
equipment installation, preventive and corrective maintenance, press line
extensions and color capability upgrades. The Company employs a staff of 321
field service engineers who are located throughout the world in proximity to the
Company's customers. These engineers not only provide support to customers, but
also provide the Company with feedback from the customers' sites, thus enabling
the Company to monitor and respond to customer needs.

SALES AND MARKETING

Goss maintains an extensive sales and service network consisting of a direct
sales force, service representatives and local agents covering over 100
countries. Goss utilizes "relationship" selling, which stresses value-added
customer services, including field service, spare parts, support and training.
Due to the significance of each press investment, Goss's sales effort also
includes a multi-tier team marketing effort targeted at both the customer's
corporate management and plant managers at individual sites. Goss's technical
personnel play a major role in sales activity. Goss's senior Management also
supports marketing efforts to cultivate prospects and complete sales.

A sale to a prospective newspaper customer generally takes several years
from the initial planning phase to the actual sale. Goss's direct sales
personnel typically assist in customers' design, engineering and capital
budgeting processes and maintain the close and consistent long-term customer
contact required to sell complex, customized printing press systems. Management
believes that this installed base and the Company's established customer
relationships provide it with a competitive advantage in obtaining repeat
business.

The commercial press sales process is generally significantly shorter, as
commercial press purchases involve shorter production times and are typically
driven by shorter replacement cycles or specific print contract commitments.
Goss's direct sales force typically works closely with commercial customers in
designing a complete printing press system solution which includes outsourced
auxiliary equipment.

Goss's worldwide sales network allows responsiveness to local customers'
unique requirements. Compensation for Goss's newspaper direct sales force is
salary-based with a relatively small percentage of compensation derived from
commissions. Compensation for Goss's commercial press direct sales force is
largely commission-based with a base salary component.

Goss enters into detailed contracts with all agents in its sales network.
Most agents are exclusive suppliers of Goss's web offset presses. Typically,
agent compensation is based on specific revenue targets. Most agents in the Goss
sales network have extensive experience in the graphic arts industry as well as
personal industry contacts.

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COMPETITION

Major suppliers of double-width newspaper presses are MAN Roland A.G. ("MAN
Roland") and Koenig & Bauer-Albert A.G. ("KBA") of Germany; Wifag A.G. of
Switzerland ("Wifag"); and Mitsubishi Heavy Industries Ltd. ("Mitsubishi") and
Tokyo Kikai Seisakusho, Ltd. of Japan ("TKS"). Competing major suppliers of
single-width newspaper presses are MAN Roland, KBA and Heidelberg Harris. The
major supplier of commercial presses in the U.S. is Heidelberg Harris. Other
competitors include KBA, MAN Roland and Mitsubishi. The only other major
supplier of insert printing press systems is Heidelberg Harris.

RESEARCH AND DEVELOPMENT

Management believes that its position as a technological industry leader is
due in large part to its engineering, product development and research
capabilities as well as to its commitment to continual investment in press
innovation. Goss led the newspaper industry's conversion from letterpress
printing to the offset process, which began in the 1960's, and in the late
1980's introduced the "four-high" tower configuration to provide process color
printing advances for newspapers. Other Goss innovations, such as computerized
press controls, have provided for increased net production output through
greater automation, decreased waste and enhanced reliability and quality.

During the past three years, Goss has invested over $84 million in
engineering, product development and research and the Company expects to
continue to invest at similar levels throughout fiscal year 1996. Major recent
product development projects have included the launch of two advanced newspaper
presses (Newsliner and Universal), six new commercial press systems or product
enhancements (World 16E, G25W/G25, C450, C700D and C700LGD) and a series of new
commercial folders. Research projects during the past three years included the
development of a positive feed keyless inking system and its evolution to
single-fluid lithography, as well as the completion of prototypes for color
correction, auto imposition and magnetic cutoff control. In addition, the
technology concepts for a future digital press with direct-to-press imaging was
also developed.

Goss currently is developing the AIM press system. The design concept of AIM
is to allow customers to print directly from a computer file without any
intermediary steps. Today's lithographic printing process requires text and
images to be made-up on paper and then imaged on a printing plate which in turn
is affixed to a rotating cylinder for the printing process. The ability to
transfer text and images in digital form directly to a printing cylinder without
the make-ready process and printing plates would provide customers with greater
productivity and flexibility. In contrast to other direct-to-press technology
currently available for short-run commercial printing, AIM, if developed
successfully, would maintain the speed and print quality of the lithographic
printing process while significantly reducing pre-press time and expense.
Although the Company believes that it can incorporate its AIM technology into
its presses in the future, there can be no assurance that the Company will be
successful in developing and commercializing AIM.

Management believes that Goss possesses the core skills (including
mechanical, electronic and software expertise) developed over many years of
printing press industry experience necessary to engineer, design and enhance
printing press systems and to introduce new technologies. The Company believes
that its research staff has knowledge and expertise to direct, integrate and
manage research programs in a wide range of disciplines, including materials
science, physical and organic chemistry, ink rheology, magnetics, microwave
technology, vision systems and artificial intelligence.

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Goss maintains a staff of over 400 engineers at four locations around the
world (Westmont, Illinois; Preston, United Kingdom; Nantes, France and Sayama,
Japan). The Westmont engineering group has engineering, research and development
responsibilities for newspaper and commercial press designs, software
development, development and testing of new print technologies and the
customization of orders for U.S.-sourced newspaper and commercial press systems.
Goss's Westmont, Illinois facility includes a 12,600 square foot press hall, an
ink chemistry lab and software and electronics labs used for research, product
development and testing. Engineering at Goss's other locations is based on the
core skills of its resident engineers and includes such functions as new press
design and the customization of newspaper and commercial press systems.

Goss has also directed and funded certain research and development projects
conducted at the Rockwell Science Center. The financial data contained in this
Prospectus include expenses charged to Goss for the work performed on its behalf
at the Science Center. During fiscal years 1993, 1994 and 1995, such direct
charges were $594,000, $670,000 and $830,000, respectively. Rockwell has agreed
to provide continuing support to the Company following consummation of the
Acquisition at its Science Center for a period to be agreed upon by the Company
and Rockwell for certain ongoing projects at a fee to be determined. Management
believes that following this transition period it will continue to have the
engineering, product development and research capabilities which have made it a
technological industry leader.

As a result of Goss's research and development efforts, it has obtained more
than 100 U.S. patents and more than 100 foreign patents in countries and
territories including Australia, Canada, Japan, Mexico, Great Britain, Germany
and the European Patent Community. Although the Company believes that these
patents are enforceable against its competitors, there can be no assurance that
they are enforceable, or that they can be used to prevent competitors from
making, using or selling products the same as or substantially the same as
Goss's products. Similarly, there is no assurance that Goss's existing product
line, or the Company's future products, are or will be free of infringement of
third-party patents, in the U.S. or any other country.

EMPLOYEES

As of March 31, 1996, Goss had 2,825 employees, consisting of 1,345 hourly
employees and 1,480 salaried employees. Employees are divided along functional
lines as shown in the table below:

SALARIED
Executive Management................................................ 17
Operations.......................................................... 351
Sales, Marketing and Customer Service............................... 386
Engineering
Design and Production Engineering................................. 341
Research and Development.......................................... 34
Support........................................................... 90
Finance and Information Systems..................................... 219
Human Resources and Other........................................... 42
-----
Total Salaried.................................................. 1,480
HOURLY.............................................................. 1,345
-----
TOTAL............................................................... 2,825
-----
-----

Average industry experience across the salaried workforce is approximately
15 years.

UNIONS AND TRADE GROUPS. Goss's approximately 850 hourly employees located
at its Cedar Rapids, Iowa; Reading, Pennsylvania and Westmont, Illinois
facilities are represented by national

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unions. The approximately 500 hourly employees located at the Preston, England
and Nantes, France facilities are represented by local trade groups and the
approximately 120 employees at Goss's Sayama, Japan facility are represented by
a company union. The labor contract with the International Association of
Machinists and Aerospace Workers covering approximately 500 hourly workers at
Goss's Cedar Rapids, Iowa facility expires on August 2, 1996. See "Risk
Factors--Labor Relations."

PROPERTIES

As of March 31, 1996 Goss owned the facilities set forth below:
<TABLE>
<CAPTION>
MAJOR FACILITIES
FACILITY FUNCTION SQUARE FEET
- ----------------------------------------------- --------------------------------- -----------
<S> <C> <C>
Cedar Rapids, Iowa............................. Machining, assembly, engineering 585,500
Reading, Pennsylvania.......................... Machining, assembly, engineering 458,628
Preston, England............................... Machining, assembly, engineering 300,000
Nantes, France................................. Assembly, engineering 263,300
Sayama, Japan.................................. Assembly, engineering 75,280
Westmont, Illinois............................. Headquarters, sales, engineering 280,674
</TABLE>

MANUFACTURING FACILITIES. Goss owns and operates five manufacturing
facilities in North America, Europe and Asia. The manufacturing plants in Cedar
Rapids, Iowa, Reading, Pennsylvania and Preston, United Kingdom utilize flexible
machining systems and cell technology to produce high-quality press components.
The Cedar Rapids, Iowa and Preston, United Kingdom facilities primarily produce
large newspaper and commercial presses. The Reading, Pennsylvania facility is
primarily involved in the production of smaller newspaper and commercial
presses.

The facilities in Nantes, France and Sayama, Japan are assembly-only
operations. Goss's joint venture in China, in which Goss had 38% interest as of
December 31, 1995 owns a fully-integrated manufacturing and support facility in
Shanghai, comprised of approximately 500,000 square feet.

The Company maintains high-quality manufacturing capability for critical,
close-tolerance parts and components and possesses a workforce skilled in both
machining and assembly. Most of Goss's machine tools have numerical control
capabilities and many have internal inspection capabilities. In addition,
statistical process control is used at all Goss machining facilities. The
Company also seeks to maximize the cost effectiveness of its manufacturing
processes and capacity utilization. In that regard, it may from time to time opt
to outsource the manufacture of certain components and subsystems for certain
printing presses.

ENGINEERING FACILITIES. Goss's primary design engineering capabilities are
maintained at its Westmont, Illinois headquarters. Goss has additional
engineering capabilities at all of its facilities.

OTHER FACILITIES. Various sales offices are leased to provide a base for
Goss's sales personnel around the world. Additional warehouse space is leased
primarily for the storage of customer-owned presses awaiting installation.

LEGAL PROCEEDINGS

Goss is currently, and is from time to time, subject to claims and suits
arising in the ordinary course of its business, including those relating to
product liability, safety and health and employment matters. In certain such
actions, plaintiffs request punitive or other damages that may not be covered by
insurance. It is the opinion of Management that the various asserted claims and
litigation in which Goss is currently involved will not have a material adverse
effect on the Company's financial position. However, no assurance can be given
as to the ultimate outcome with respect to such claims and

59
<PAGE>
litigation. The resolution of such claims and litigation could be material to
the Company's operating results for any particular period, depending upon the
level of income for such period.

Goss is a defendant in a lawsuit (Heidelberger Druckmaschinen AG v. Hantscho
Commercial Products, Inc. and Rockwell Graphic Systems, Inc.) involving patent
infringement issues. Rockwell has agreed to indemnify the Company for any
damages that may be determined to be payable in such action. Goss no longer
incorporates the disputed technology into its presses. See "The Acquisition--
Representations and Warranties; Indemnity."

Over the past several years, certain foreign suppliers of large newspaper
printing presses have sought to increase their U.S. sales by offering aggressive
pricing and terms. As a result of pricing actions by Goss's foreign competitors,
on June 30, 1995, Rockwell and Goss filed an antidumping duty petition with the
Commerce Department and the ITC alleging that competitors from Japan and Germany
were selling large newspaper printing presses and components thereof in the U.S.
at less than fair value and were materially injuring a U.S. industry.

As a result of such petition, the Commerce Department and the ITC initiated
antidumping investigations and, in its preliminary injury determination issued
in August 1995, the ITC determined that there is a reasonable indication that
the U.S. large newspaper printing press industry was materially injured by
reason of imports from Japan and Germany.

On July 16, 1996, the Commerce Department issued final determinations that
the imports covered by this case, from Japan and Germany, respectively, have
been sold at less than fair value. Based on these determinations, the U.S.
Customs Service has been directed to require a cash deposit or the posting of a
bond with respect to such imports at rates that range from 31% to 63% ad
valorem. The ITC is scheduled to issue a final determination in late August on
whether such imports are causing material injury, or the threat of material
injury, to a U.S. industry.

If the ITC's final determination is affirmative, antidumping duties might be
assessed on Japanese and German imports covered by the case. The assessment of
duties could be forestalled, or the duty rate could be reduced, through further
administrative proceedings, judicial proceedings, or both. Moreover, the extent
to which antidumping duties would benefit the Company's competitive position in
the U.S. market, if at all, cannot be projected with assurance. See "Risk
Factors--Competition."

ENVIRONMENTAL

The Company's operations are subject to federal, state, local, and foreign
environmental laws and regulations that impose limitations on the discharge of,
and establish standards for the handling, generation, emission, release,
discharge, treatment, storage, and disposal and clean up of, certain materials,
substances and wastes. To the best of the Company's knowledge, its operations
are in material compliance with all applicable environmental laws and
regulations as currently interpreted. The Company's belief is based upon its
understanding of the underlying facts giving rise to its obligations and the
technical advice received from the Company's environmental consultants. Rockwell
has agreed to indemnify the Company and its subsidiaries and affiliates against
all environmental costs associated with Goss's facility in Peterborough, United
Kingdom (which Rockwell is retaining) and

60
<PAGE>
against all environmental costs associated with Hall Processing Systems ("Hall
Processing"). For a period of four years after the Closing Date, Rockwell will
also indemnify the Company against one-half of certain environmental costs
incurred by the Company in excess of $1.0 million, provided that such costs
result from the disposal, discharge or release of any hazardous wastes,
hazardous substances, pollutants or contaminants on or from the facilities of
Goss (or its predecessors) prior to the Closing, and provided that such costs
result from activities which are (i) required by an enforcement order or decree
entered by a governmental authority as a result of an environmental proceeding;
(ii) necessary to comply with an environmental law in response to an
environmental proceeding, the outcome of which environmental proceeding is
reasonably likely to result in material costs or expenses to the Company; or
(iii) necessary to comply with an environmental law in response to a written,
threatened environmental proceeding, which environmental proceeding is
reasonably likely to result in material costs or expenses to the Company,
provided that, in the case of this clause (iii), all such costs and expenses are
consented to in writing by Rockwell prior to being incurred. See "The
Acquisition--Representations and Warranties; Indemnity."

The Company's Reading, Pennsylvania facility has been operating a
groundwater remediation system (at an immaterial cost) under a 1981 Consent
Order with the Commonwealth of Pennsylvania as a result of its, and its
predecessor company's, historical waste disposal practices. Recent data indicate
that certain hazardous constituents in the groundwater have decreased over time,
while the data on other constituents is inconclusive. The Company plans to
submit a proposal to the Pennsylvania Department of Environmental Resources
(PADER) to terminate remediation at the site pursuant to recent statutory
authority to determine cleanup limits consistent with the results of a
site-specific risk assessment. Management has been advised that, given the site
location and aquifer use, the proposal is technically appropriate and may result
in the termination of groundwater remediation at this site. The Company believes
that any liability with respect to either continuing groundwater remediation or
conducting a site-specific risk assessment in order to complete such remediation
will not have a material adverse effect on the Company's business or financial
condition or its financial statements taken as a whole.

Goss has received either notices of potential liability, or third-party
contribution claims, under the federal Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") at six off-site disposal facilities.
Goss has entered into de minimis settlement agreements with the Environmental
Protection Agency (the "EPA") at two of these sites, and a de minimis settlement
proposal is pending review by the EPA at a third site. With respect to the
fourth site, the Interstate Pollution Control site in Rockford, Illinois, at
which Goss has been named a potentially responsible party ("PRP"), Goss's share
of the costs for cleanup of the site has been determined by the EPA to be 1.89%
of the total costs. Goss has been advised by the EPA that the potential
estimated cost for the final remedy at the site may be $10.0 million, with
Goss's share equaling approximately $200,000. At the fifth site, Berks County
Landfill, Spring Township, Berks County, Pennsylvania, where Goss has been
implicated as potentially responsible through a third-party lawsuit and by a
special notice letter from the EPA, Management believes its involvement, if any,
is de minimis. In May 1996, Goss received a PRP notice from the EPA for the
sixth site, the Southeast Rockford Groundwater site. Management believes it has
been implicated as a PRP at this site because of its involvement at the
Interstate Pollution Control site, which is located within the boundaries of the
larger Southeast Rockford Groundwater site. In addition, based upon Management's
understanding of the underlying facts giving rise to its obligations and the
technical advice received from Goss's environmental consultants, Management
believes that its potential liability with respect to these sites will not have
a material adverse effect on the Company's results of operations, cash flows, or
financial condition.

Management cannot predict with any certainty whether future events, such as
changes in existing laws and regulations or the discovery of conditions not
currently known to the Company, may give rise to additional environmental costs.
Furthermore, actions by federal, state, local and foreign governments concerning
environmental matters could result in laws or regulations that could increase
the cost of producing the Company's products, or providing its services, or
otherwise adversely affect the demand for its products or services. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Environmental Matters."

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<PAGE>
THE ACQUISITION

The following summary of the material provisions of the Purchase Agreement
is subject to and is modified in its entirety by reference to all the provisions
of the Purchase Agreement, including the definitions therein of certain terms.
The Purchase Agreement provides for the acquisition of Goss through the purchase
by the Company and certain foreign subsidiaries to be formed by it of all the
outstanding stock of Goss Delaware and Goss France, and, as to the remainder of
Goss, through the purchase of assets and the assumption of liabilities from
Rockwell and certain subsidiaries of Rockwell. The Company will effect the
Acquisition by purchasing all of the outstanding capital stock of Goss Delaware
and Goss France. In addition, a Japanese corporation that is newly-formed and
wholly owned by the Company ("Goss Japan") will purchase for cash all of the
outstanding stock of Rockwell Graphic Systems-Japan Corporation, currently a
wholly owned subsidiary of Goss Delaware and the Company, together with a
newly-formed, wholly owned English company ("Goss U.K.") (which will purchase
substantially all the assets of Rockwell Graphic Systems Ltd.), will purchase
the assets and assume the liabilities of the remainder of Goss. Immediately
after the Acquisition, the Company will merge with and into Goss Delaware, and
Goss Japan will merge with Rockwell Graphic Systems-Japan Corporation. The
assets that the Company will purchase include a portfolio of notes receivable
issued in connection with customer financing provided by Rockwell to purchasers
of Goss's products. Simultaneously with the closing of the Acquisition and of
the Offering, the Company will sell the Customer Notes to BT Commercial
Corporation for an estimated purchase price of approximately $163.7 million. The
proceeds of this sale of the Customer Notes will be used in part to finance the
Acquisition and the payment of expenses incurred in connection therewith. See
"Use of Proceeds."

PURCHASE PRICE; ADJUSTMENTS

The Company will acquire Goss for a purchase price which will consist of
$552.5 million in cash and 47,500 shares of Preferred Stock issued by Holdings
to Rockwell, plus (i) the aggregate amount of interest on each Customer Note
which is not more than 60 days past due with respect to the interest thereon
accrued (but not yet received) from the date of the last interest payment
thereon through and including the day preceding the date of the closing of the
Acquisition and (ii) an amount equal to 50% of the excess of the amount received
by the Company for the sale of the Customer Notes over $170.0 million (adjusted
for payments with respect to principal (up to an aggregate of $170.0 million)
actually received by Rockwell in respect of the Customer Notes between March 1,
1996 and the day preceding the Closing Date); and minus (i) the amount of all
payments with respect to principal (up to an aggregate of $170.0 million)
actually received by Rockwell in respect of the Customer Notes between March 1,
1996 and the day preceding the Closing Date and (ii) the aggregate amount of
prepaid interest on each Customer Note actually received by Rockwell between
April 26, 1996 and the day preceding the Closing Date to the extent it was not
earned for periods through and including the day preceding the Closing Date.

In addition, the purchase price is subject to certain post-closing
adjustments as follows: (i) the purchase price will be increased
dollar-for-dollar by the amount, if any, by which certain selected assets set
forth below of Goss on the day preceding the Closing Date (the "Selected Closing
Assets") minus the amount of certain selected liabilities set forth below of
Goss on the day preceding the Closing Date (the "Selected Closing Liabilities")
is greater than $200.0 million; and (ii) the purchase price will be decreased
dollar-for-dollar by the amount, if any, by which the Selected Closing Assets
minus the Selected Closing Liabilities is less than $200.0 million. The Selected
Closing Assets will consist of accounts receivable (before any reserves
including unbilled receivables), inventories (before any reserves), cash and
cash equivalents held by Goss France and by Rockwell Graphic Systems-Japan
Corporation, a corporation organized under the laws of Japan, and the
outstanding principal amount of any new Customer Notes entered into between
March 1, 1996 and the day preceding the Closing Date, with the consent of the
Company. The Selected Closing Liabilities will consist of accounts payable

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<PAGE>
(including outstanding checks), liabilities for payables to Allen-Bradley during
the 30-day period preceding the Closing Date, and customer advances.

REPRESENTATIONS AND WARRANTIES; INDEMNITY

The Purchase Agreement contains customary representations and warranties,
including those concerning corporate organization and authorization, outstanding
capital stock, compliance with laws, taxes, litigation, intellectual property
and employee benefit plans. Each representation and warranty of Rockwell will
survive for a period of one year after the Closing Date, except for the
representations and warranties of Rockwell (which will survive until all
applicable statutes of limitation have expired) relating to (i) the incurrence
of broker's or finder's fees in connection with the Acquisition; (ii) the filing
of tax returns, the payment of taxes and certain other tax-related matters;
(iii) the capitalization and ownership by Rockwell of the authorized capital
stock of certain of the entities that constitute Goss; (iv) due authorization of
the Purchase Agreement and the Acquisition; and (v) ownership of real property.

Rockwell has agreed to indemnify the Company and its subsidiaries and
affiliates against any liabilities incurred in connection with (i) the breach of
any covenant or agreement of Rockwell contained in the Purchase Agreement (with
certain exceptions); (ii) the breach of any of Rockwell's representations and
warranties contained in the Purchase Agreement (subject to de minimis
exceptions); (iii) any settlement of or judgment in respect of certain patent
litigation; (iv) the liquidation of Hall Processing, a partnership in which a
subsidiary of Goss is the general partner; (v) liabilities retained by Rockwell;
and (vi) taxes for any taxable period that ends on or before the Closing Date
and certain other tax-related matters. Rockwell's indemnity obligations with
respect to covenants, agreements and tax-related matters terminate upon the
expiration of all applicable statutes of limitations; with respect to
representations and warranties, terminate upon the expiration of the applicable
representation or warranty; and otherwise do not terminate. Claims based upon
Rockwell's indemnity with respect to breaches of representations and warranties
are not payable until the aggregate amount of damages incurred by the Company
exceeds one percent of the purchase price, in which event Rockwell is only
responsible for damages that are in excess of one-half percent of the purchase
price and that are, in the aggregate, no greater than the purchase price.

In addition, Rockwell has also agreed to indemnify the Company and its
subsidiaries and affiliates against all environmental costs associated with
Goss's facility in Peterborough, United Kingdom (which Rockwell is retaining)
and against all environmental costs associated with Hall Processing. For a
period of four years after the Closing Date, Rockwell will also indemnify the
Company against one-half of certain environmental costs incurred by the Company
in excess of $1.0 million, provided that such costs result from the disposal,
discharge or release of any hazardous wastes, hazardous substances, pollutants
or contaminants on or from the facilities of Goss (or its predecessors) prior to
the Closing, and provided that such costs result from activities which are (i)
required by an enforcement order or decree entered by a governmental authority
as a result of an environmental proceeding; (ii) necessary to comply with an
environmental law in response to an environmental proceeding, the outcome of
which environmental proceeding is reasonably likely to result in material costs
or expenses to the Company; or (iii) necessary to comply with an environmental
law in response to a written, threatened environmental proceeding, which
environmental proceeding is reasonably likely to result in material costs or
expenses to the Company, provided that, in the case of this clause (iii), all
such costs and expenses are consented to in writing by Rockwell prior to being
incurred.

For purposes of the Company's indemnity to Rockwell in connection with the
Acquisition, each representation and warranty of the Company will survive for a
period of one year after the Closing Date, except for the Company's
representation that it has not authorized any broker's or finder's fees in
connection with the Acquisition, which representation will survive until all
applicable statutes of limitation have expired.

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<PAGE>
The Company has agreed to indemnify Rockwell and its subsidiaries and
affiliates against any liabilities incurred in connection with (i) the breach of
any covenant or agreement of the Company contained in the Purchase Agreement;
(ii) the breach of any of the Company's representations and warranties contained
in the Purchase Agreement; (iii) any obligations or liabilities of Goss Delaware
and its subsidiaries and Goss France, whether incurred before, on or after the
Closing Date, except for those obligations and liabilities for which Rockwell
has indemnified the Company; (iv) liabilities assumed by the Company; (v) any
guarantees or obligations to assure performance or to perform given or made by,
or other liabilities or obligations of, Rockwell or any of its subsidiaries or
affiliates with respect to Goss or certain agreements and contracts relating to
Goss; and (vi) any obligations or liabilities arising out of the operation of
Goss on or after the Closing Date. The Company's indemnity obligations with
respect to covenants and agreements terminate upon the expiration of all
applicable statutes of limitation; with respect to representations and
warranties, terminate upon the expiration of the applicable representation or
warranty; and otherwise do not terminate.

CERTAIN COVENANTS

The Purchase Agreement contains certain customary covenants, including
covenants (i) by Rockwell to conduct the business of Goss in the ordinary
course; to cancel certain intercompany indebtedness; to grant to the Company a
license to use certain intellectual property being retained by Rockwell; and
(ii) by the Company to phase out use of Rockwell's trademarks, tradenames,
logos, etc.; to assume Rockwell's obligations under certain contracts and
agreements relating to the business of Goss; and to grant to Rockwell a license
to use certain intellectual property being acquired by the Company.

In addition, with respect to employee benefits, the Company and Rockwell
have, among other things, agreed that Goss employees will cease participation in
Rockwell retirement plans as of the Closing Date and that Rockwell will retain
all liability under such plans. The Company has agreed to provide welfare
benefits no less favorable in the aggregate than currently provided (with
certain exceptions). The Company may, however, amend or terminate such plans
after the Closing Date. In addition, the Company will assume all stand-alone
retirement plans (including those for employees in the United Kingdom, Germany
and Japan).

CONDITIONS TO CLOSING

The obligation of the Company to consummate the transactions contemplated by
the Purchase Agreement is subject to the satisfaction or waiver by the Company,
on or prior to the Closing Date, of certain conditions, including the following:
(i) no judgment, decree or order may be in effect on the Closing Date which
restrains or prohibits consummation by the Company of the Acquisition and no
litigation shall be pending which would be reasonably likely to enjoin the
Acquisition or which would be reasonably likely to result in material damages to
the Company or Goss as a result of the Acquisition; (ii) the applicable waiting
period under the Hart-Scott-Rodino Act of 1976, as amended, shall have expired
or been terminated; (iii) the Company must have obtained the financing set forth
in certain exhibits to the Purchase Agreement; (iv) there must not have been any
material adverse effect with respect to Goss since September 30, 1995; (v)
Rockwell must have obtained all consents required in connection with
consummation of the Acquisition other than any such consents which if not
obtained would not reasonably be likely to have a material adverse effect; (vi)
the Company must have no reasonable basis to believe that Goss is not in
compliance in all material respects with all environmental laws except where the
failure to so comply would not reasonably be likely to have a material adverse
effect; and (vii) there must be no short-term or long-term borrowings by Goss
outstanding as of the Closing Date, other than overdraft borrowings of Goss
Japan and of Goss France. The obligation of Rockwell to consummate the
transactions contemplated by the Purchase Agreement is subject to the
satisfaction or waiver by Rockwell, on or prior to the Closing Date, of certain
conditions, including each

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of the following: (i) no judgment, decree or order may be in effect on the
Closing Date which restrains or prohibits consummation by Rockwell of the
Acquisition and no litigation shall be pending which would be reasonably likely
to enjoin the Acquisition or which would be reasonably likely to result in
material damages to Rockwell or any of its subsidiaries as a result of the
Acquisition; and (ii) the applicable waiting period under the Hart-Scott-Rodino
Act of 1976, as amended, shall have expired or been terminated.

AGREEMENT NOT TO COMPETE

Rockwell has agreed that, for a period of three years after the Closing
Date, neither Rockwell nor any company controlled by Rockwell will, directly or
indirectly, without the written consent of the Company, enter into, or acquire
control of more than a five percent interest in, any business more than ten
percent of whose revenues are derived from operations engaged in the
development, manufacture, sale or provision of web offset printing press
systems; provided that Rockwell may acquire control of any business deriving
less than 50% of its revenues from such operations so long as it shall use
reasonable best efforts to divest such operations as promptly as practicable and
in any event not later than two years following such acquisition. Rockwell or
any company controlled by Rockwell shall not be prohibited or restricted from
entering into any business engaged in, acquiring control of or any interest in
any business engaged in, engaging in or continuing to engage in any activity
which comprises or is an extension or expansion of those business operations
conducted by Rockwell through any of its divisions or subsidiaries other than
Goss as of April 26, 1996. In addition, Rockwell has agreed that its Science
Center will not, for a period of three years after the Closing Date, provide to
competitors of Goss support services which cover substantially similar matters
as the support services which Rockwell's Science Center is performing with
respect to certain projects.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information concerning the individuals who
are expected to be the executive officers and directors of the Company upon
consummation of the Acquisition:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Robert M. Kuhn............................ 54 Chairman and Chief Executive Officer
Gerald S. Armstrong....................... 53 Director
Alexis P. Michas.......................... 38 Director
Robert J. Mylod........................... 29 Director
William A. Boston......................... 48 Vice President, Commercial Products
Barbara L. Gora........................... 44 Director of Marketing and Communications
Frank D. Jurenka.......................... 59 Vice President, U.S. Operations
P. Michael Kienzle........................ 61 Vice President, Newspaper Products
Jack E. Merryman.......................... 49 Vice President and General Counsel
M. Eric Schroeder......................... 49 Vice President, Finance and Administration
Alan P. Sheng............................. 52 Vice President, Engineering and Technology
Brian J. Smith............................ 42 Vice President, Human Resources
Richard J. Sutis.......................... 53 Vice President, Asia Pacific
Michael C. Szymaszek...................... 51 Vice President, Quality Assurance & Plant
Manager, Cedar Rapids
Randall Thomas............................ 47 Vice President & General Manager, Europe
</TABLE>

ROBERT M. KUHN joined Goss as President in October 1995 and will serve as
the Company's Chairman and Chief Executive Officer after the Acquisition. Prior
to joining Goss, he had served as Senior Vice President, Business Development of
United Technologies Corporation and President, Hamilton Standard, the aerospace
subsidiary of United Technologies since 1991. Mr. Kuhn has also held senior
management positions at United Technologies, Hamilton Standard, Pratt & Whitney
and Armtek Corporation, where he served as a Corporate Director.

GERALD S. ARMSTRONG is a Partner and a Director of Stonington, a position he
has held since 1993. Mr. Armstrong is also a Partner and a Director of
Stonington Partners, Inc. II, a Delaware corporation ("Stonington II"), a
position he has held since 1994. Mr. Armstrong has also been a Director of
Merrill Lynch Capital Partners, Inc. ("MLCP"), a private investment firm
associated with Merrill Lynch & Co., since 1988, a Partner of MLCP from 1993 to
1994, an Executive Vice President of MLCP from 1988 to 1993, and a Managing
Director of Merrill Lynch & Co. since 1988. From January to November 1988, he
was President and Chief Executive Officer of Printing Finance Company, Inc., a
printing company. From March 1985 to January 1988, Mr. Armstrong was Executive
Vice President and Chief Operating Officer of PACE Industries, Inc., a
manufacturing and printing company. Mr. Armstrong is also a director of Ann
Taylor Stores Corporation, Blue Bird Corporation, First USA, Inc., World Color
Press, Inc., Beatrice Foods, Inc., and several privately-held corporations.

ALEXIS P. MICHAS is a Managing Partner and a Director of Stonington, a
position that he has held since 1993. Mr. Michas is also a Managing Partner and
a Director of Stonington II, a position he has held since 1994. Mr. Michas has
also been a Director of MLCP since 1989. He was a Partner of MLCP from 1993 to
1994 and Senior Vice President of MLCP from 1989 to 1993. Mr. Michas was also a
Managing Director of the Investment Banking Division of Merrill Lynch & Co. from
1991 to July 1994 and a Director in the Investment Banking Division of Merrill
Lynch from 1990 to 1991. Mr. Michas is also a Director of Blue Bird Corporation,
Borg-Warner Automotive, Inc., Borg-Warner Security Corporation, Dictaphone
Corporation, Pathmark Stores, Inc., Supermarkets General Holdings Corp. and
several privately-held corporations.

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ROBERT J. MYLOD is a Principal of Stonington, a position he has held since
January 1996. Mr. Mylod was an Associate of Stonington from 1993 to 1995. Mr.
Mylod was also an Associate of MLCP from 1993 to 1994 and an Analyst of MLCP
from 1989 to 1992. Mr. Mylod is also a Director of a privately-held corporation.

WILLIAM A. BOSTON joined Goss in 1970 and has served as Regional Manager of
Goss's Asia Pacific Operations and Director of International Marketing. Since
1981, Mr. Boston has been responsible for Goss's commercial printing press
business as Vice President, Commercial Products.

BARBARA L. GORA joined Goss in 1978 as Manager of Public Relations, and
subsequently served in a series of business line positions involving contract
administration and sales support. In 1985, she was named Marketing Manager for
the newly formed insert/small newspaper business and later named Marketing
Manager for the Americas commercial business. In 1992, she was promoted to
Americas Marketing Director for both Newspaper and Commercial products. In
December 1995, she was promoted to company-wide Director of Marketing and
Communications, reporting to the President.

FRANK D. JURENKA began his career at Goss in 1977 as Plant Manager of the
Reading, Pennsylvania facility. His 18 years of experience with Goss have
included various senior management positions, including Vice President and
General Manager, Asia Pacific; Vice President, Manufacturing; and Vice
President, Engineering. Mr. Jurenka assumed his current role of Vice President,
U.S. Operations in late 1995 after serving as Vice President and General
Manager, Asia Pacific from 1990-1995.

P. MICHAEL KIENZLE began his career at Goss in 1961 as a Field Erector.
Since that time he has held a number of positions within Goss, including key
management positions such as Director of Customer Service, Director of Sales and
Service, Director of Marketing and Sales, General Manager of Newspaper Products
and Vice President, Goss Newspaper Products. In 1992, he was promoted to his
current position of Vice President, Newspaper Products, with expanded
responsibilities within the Americas newspaper business, after serving as Vice
President, Goss Newspaper Products from 1991 to 1992.

JACK E. MERRYMAN joined Goss in June 1996 as Vice President and General
Counsel. Prior to joining Goss, Mr. Merryman served as General Counsel and
Secretary for Reliance Electric Company, a subsidiary of Rockwell which makes
industrial motors and drive systems, since 1995. Mr. Merryman had served as
Assistant General Counsel & Assistant Secretary of Reliance Electric Company
from 1993 to 1995, and as Senior Counsel from 1987 to 1993. Prior to joining
Reliance Electric Company in 1985, Mr. Merryman served in various legal
capacities for The Sherwin-Williams Company, Roadway Express, Inc., and the City
of Cleveland, Ohio. He is certified to practice before the U.S. Supreme Court
and the U.S. Tax Court.

M. ERIC SCHROEDER joined Goss in June 1995 as Vice President, Finance and
Administration. Prior to joining Goss, Mr. Schroeder served as the Director of
Finance and Controller for Rockwell Switching Systems, a business unit of
Rockwell which designs and manufactures phone call distribution systems, since
April 1988. He has been with Rockwell's organization for 22 years, serving in
financial management positions at both division and corporate staff levels for
Rockwell's government and commercial businesses.

ALAN P. SHENG began his career with Goss in 1985 as Director, Advanced
Technology and Software. After serving in several positions with increasing
engineering, research and development responsibilities, including Executive
Director, Advanced Technology from 1991 to 1992, he was promoted to his present
position of Vice President, Engineering and Technology in 1992. His prior
experience includes six years as a research physicist at Rutgers University and
Caltech and nine years with Bell Laboratories.

67
<PAGE>
BRIAN J. SMITH joined Goss in February 1996 as Vice President, Human
Resources. Prior to joining Goss, Mr. Smith was Director of Global Human
Resources Strategy for the Colgate-Palmolive Company, a consumer products
company, since 1991. Prior to joining Colgate-Palmolive in 1983, Mr. Smith held
a number of human resources management positions at Bankers Trust Company,
Freeport-McMoran, Inc., and American Standard, Inc. Mr. Smith has also served as
Vice Chairman for "Jobs For Youth," a not-for-profit organization based in New
York City, and on the Board of Trustees of Adelphi University.

RICHARD J. SUTIS rejoined Goss in January 1996 as Vice President, Asia
Pacific. From August 1994 to January 1996, Mr. Sutis served as Vice President,
Business Development and Strategy for Stevens International, Inc., a
manufacturer and marketer of complete web fed printing and packaging systems.
Prior to August 1994, and since 1965, Mr. Sutis worked for Goss (or its
predecessors), serving in numerous engineering, marketing and senior management
positions, including Director, Program Management from 1991 to August 1994.

MICHAEL C. SZYMASZEK joined Goss as Vice President, Quality Assurance in
June 1995, after serving as Director of Quality at Square D Corporation, a maker
of electrical distribution, automation and industrial control products, systems
and services, since 1991. Mr. Szymaszek also assumed the position of Plant
Manager, Cedar Rapids, in May 1996. He worked for Square D Corporation for 27
years, where he served in various management positions in engineering, customer
service and quality.

RANDALL THOMAS joined Goss in 1989 after a decade of serving as Managing
Director of two other divisions of Rockwell in the United Kingdom. In 1989, Mr.
Thomas became Managing Director of Goss's operations at its Preston, England
facility before being promoted in 1992 to his current position of Vice President
& General Manager, Europe.

Messrs. Armstrong, Michas and Mylod will serve as members of the Audit and
Compensation Committees. They are employees of Stonington and serve on the Board
of Directors as representatives of Stonington.

MANAGEMENT INVESTMENT

Simultaneously with the Acquisition Closing, Holdings will issue
shares of Common Stock to the Management Investors, who are comprised of
, and other key members of Management, in the Management Placement for
$ . Holdings will finance $ of this amount by non-recourse loans
(the "Management Notes"); the remaining $ will be paid in cash by the
Management Investors. Shares of Common Stock and Management Notes have been
offered to and the executive officers named in the Summary Compensation
Table below in the following amounts: . The Management Notes will bear
interest at a rate equal to , and will be secured by the pledge of all the
Common Stock held by the Management Investors. As a condition to the closing of
the Management Placement, the Management Investors will be required to enter
into the Stockholders Agreement. See "Certain Transactions--Stockholders
Agreement."

68
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth the cash compensation paid by Goss to its
President and to each of its four most highly compensated executive officers
(other than the President) whose total cash compensation exceeded $100,000, for
the year ended September 30, 1995:

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
------------------ ----------------------------
AWARDS PAYOUTS
------------ ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS LTIP PAYOUTS
- ------------------------------------- ---- ------- ------- ------------ ------------
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
Robert L. Swift (a).................. 1995 256,000 275,000 20,000(b) 199,300(c)
President
William A. Boston.................... 1995 191,400 214,800 -- --
Vice President,
Commercial Products
Frank D. Jurenka..................... 1995 168,000 100,000 -- --
Vice President,
U.S. Operations
P. Michael Kienzle................... 1995 138,200 93,000 -- --
Vice President,
Newspaper Products
Randall Thomas....................... 1995 177,361 151,500 -- --
Vice President & General
Manager, Europe
</TABLE>

- ------------

<TABLE>
<C> <S>
(a) Robert M. Kuhn is currently the President of Goss and will serve as Chairman and Chief
Executive Officer of the Company immediately following the Acquisition. Mr. Swift
joined Goss and served as its President from April 1994 until October 1995.
(b) Options to purchase Rockwell stock were granted in fiscal year 1995 to Mr. Swift
pursuant to the Rockwell 1988 Long-Term Incentives Plan. There were no options for
securities of the Company granted during the year ended September 30, 1995. Options to
purchase Rockwell stock will not be converted into options to purchase securities of
Goss.
(c) None of the other officers, besides Mr. Swift, received long-term incentive plan
payouts. Mr. Swift received his long-term incentive plan payout as a participant in the
Allen-Bradley Supplemental Performance Unit Plan. The value for his payout is the
aggregate of the value of the payout of performance units, which is based on
Allen-Bradley's sales growth and return-on-sales performance.
</TABLE>

69
<PAGE>
OPTION GRANTS TO PURCHASE ROCKWELL STOCK IN LAST FISCAL YEAR (A)

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------- ANNUAL RATES OF
% OF ROCKWELL
TOTAL STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR
SECURITIES GRANTED OPTION TERM
UNDERLYING TO EXERCISE EXPIRATION AS OF
OPTIONS EMPLOYEES OR BASE DATE SEP. 30, 1995 (C)
GRANTED IN FISCAL PRICE AS OF ---------------------
NAME (#) YEAR ($/SH) SEP. 30, 1995 (B) 5%($) 10%($)
- --------------------------- ---------- --------- -------- ----------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Swift............ 20,000 1.0% $ 35.625 December 7, 2004 $448,087 $1,135,542
William A. Boston.......... 0 N/A N/A N/A N/A N/A
Frank D. Jurenka........... 0 N/A N/A N/A N/A N/A
P. Michael Kienzle......... 0 N/A N/A N/A N/A N/A
Randall Thomas............. 0 N/A N/A N/A N/A N/A
</TABLE>

- ------------

<TABLE>
<C> <S>
(a) Options to purchase Rockwell stock were granted in fiscal year 1995 to Mr. Swift
pursuant to the Rockwell 1988 Long-Term Incentives Plan. There were no options for
securities of Goss granted in fiscal year 1995. Options to purchase stock will not be
converted into options to purchase securities of the Company.

(b) Except for Mr. Swift, all other named executive officers' employment with Rockwell will
terminate as of the Closing Date. As a result, it is expected that all options to
purchase Rockwell stock held by such officers to the extent they are not exercisable
will terminate and be forfeited on the Closing Date and to the extent they are
exercisable, will remain exercisable for a period of three months. Mr. Swift, who
retired from Rockwell effective December 31, 1995, will be entitled to exercise his
options for three years from the date of retirement.

(c) Options to purchase Rockwell stock held by all named executive officers will terminate
or remain exercisable as discussed in footnote (b) above. As a result, the named
executive officers may not benefit from any appreciation of the common stock of
Rockwell as indicated in these two columns.
</TABLE>

AGGREGATED EXERCISES OF OPTIONS TO PURCHASE ROCKWELL STOCK
IN LAST FISCAL YEAR AND 1995 FISCAL YEAR END OPTION VALUES(A)

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
ACQUIRED AT 1995 FISCAL YEAR END 1995 FISCAL YEAR END($)
ON --------------------------- ---------------------------
NAME EXERCISE(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Swift............ 0 N/A 10,000 20,000 $ 96,250 $ 232,500
William A. Boston.......... 0 N/A 33,500 0 684,250 0
Frank D. Jurenka........... 0 N/A 22,500 0 519,813 0
P. Michael Kienzle......... 3,100 65,681 16,300 0 367,100 0
Randall Thomas............. 0 N/A 2,400 0 54,600 0
</TABLE>

- ------------
(a) This table reflects options to purchase Rockwell stock granted to the named
executive officers pursuant to the Rockwell 1988 Long-Term Incentives Plan
as described in footnote (b) to the Summary Compensation Table above.

70
<PAGE>
PENSION PLANS

Certain employees of Goss currently participate in either the Rockwell
Retirement Income Plan for Certain Salaried Employees or the Rockwell Retirement
Income Plan for Certain Salaried Employees in General Industries Operations,
each a subplan of the Rockwell Retirement Plan for Eligible Employees
(collectively, the "Rockwell Retirement Plans"). The Rockwell Retirement Plans
have virtually the same "Normal Retirement Benefit" formula which is calculated
as follows: (i) 2 2/3 of final 5-year average compensation multiplied by years
of service (up to 15 years of service) plus 1/2% of final 5-year average
compensation multiplied by years of service in excess of 15 years (up to 20
years of service); minus (ii) an offset percentage equal to .455%, .425% or
.400% (depending on an individual's Social Security Retirement Age (which is
based on year of birth)) applied to the first 15 years of service, plus .250%
applied to years of service between 15 years and 20 years of service, multiplied
by Social Security Covered Compensation.

For accrued benefit determinations prior to age 62, benefit service is
determined as if the employee remained in service until age 62 (or 85 points
(where "points" are equal to the sum of age plus years of service) for certain
grandfathered participants, if earlier under the Rockwell Retirement Income Plan
for Certain Salaried Employees), and the resulting benefit is then multiplied by
the ratio of actual service to service projected to age 62. Compensation is
determined based on total wages, up to the Internal Revenue Service limits. The
Normal Retirement Age is age 65, but the Rockwell Retirement Plans provide for
substantial early retirement subsidies.

Pursuant to the Purchase Agreement, employees of the Company who participate
in the Rockwell Retirement Plans immediately prior to the Closing will cease to
accrue benefits under the Rockwell Retirement Plans and will have a fully
nonforfeitable right to such employee's benefits payable at Normal Retirement
Age under the Rockwell Retirement Plans accrued as of the last business day of
the month in which the Closing occurs. Rockwell will retain full power and
authority with respect to the amendment and termination of the Rockwell
Retirement Plans. Rockwell will remain solely responsible for, and the Company
will have no liability under, relating to or arising out of the Rockwell
Retirement Plans. If the Closing had occurred on July 31, 1996, the estimated
annual benefits at age 62 payable to the named executive officers under the
Rockwell Retirement Plans are as follows: Mr. Boston-- $74,556; Mr.
Jurenka--$93,924; Mr. Kienzle--$68,916; Mr. Thomas--$38,940 (Mr. Thomas
participates in the Rockwell U.K. Executive Plan and his estimated annual
benefits assume an exchange rate of 1.5601 U.S. dollars per pound sterling; and
Mr. Swift--not applicable, since Mr. Swift retired from Rockwell effective
December 31, 1995.

After the consummation of the Acquisition, the Company intends to offer
participation in a defined contribution plan to be established by the Company.

EMPLOYMENT AGREEMENTS

On October 9, 1995, Rockwell entered into a letter employment agreement with
Robert Kuhn providing for Mr. Kuhn's employment as President of Goss. The
agreement provides for an annual base salary of $400,000, and, in the event Mr.
Kuhn is removed as President of Goss during the first 12 months following any
sale by Rockwell of Goss, Mr. Kuhn will receive $400,000 annually for two years,
provided that he is unemployed during such period. The agreement also provides
that Mr. Kuhn will receive a lifetime retirement benefit of $32,000 annually
beginning on his 62nd birthday, provided that Mr. Kuhn does not voluntarily
terminate his employment with Goss (or any successor entity) within five years
of the date of the agreement. In the event that Mr. Kuhn becomes entitled to the
$800,000 payment following his removal as President of Goss during the first
twelve months following a sale of Goss, he will not be entitled to the
retirement benefit. In addition, Mr. Kuhn is entitled to receive incentive
compensation from Rockwell, based on a sale of Goss, determined by reference to
the

71
<PAGE>
purchase paid for Goss. Based on the terms of the Acquisition, Mr. Kuhn is
expected to receive incentive compensation not to exceed $1,000,000.

MANAGEMENT STOCK INCENTIVE PLAN

At the Acquisition Closing, Holdings intends to adopt the Management Stock
Incentive Plan (the "Plan") pursuant to which officers and key employees of
Holdings and its subsidiaries (the "Participants") will be granted shares of
Nonvoting Common Stock as restricted stock (the "Restricted Stock") and stock
options exercisable into shares of Common Stock (the "Options"). The Plan is not
related to the Rockwell 1988 Long-Term Incentives Plan discussed above and will
be a separate plan established by Holdings at the Acquisition Closing. The Plan
will be administered by either the Compensation Committee of the Board of
Directors (the "Committee") or the Board of Directors (the "Board"). The
Committee or the Board will have the discretion to select those to whom certain
Options will be granted (from among those eligible) and to determine the
exercise price, the duration and other terms and conditions of such Options (the
"Discretionary Options"). Under the Plan, shares of Common Stock will
initially be available for purchase pursuant to Discretionary Options. It is
presently anticipated that certain other Options and the Restricted Stock will
be granted at the Acquisition Closing, as described below. The Board or the
Committee will have the authority to interpret and construe the Plan and any
interpretation or construction of the provisions of the Plan or of any Options
or Restricted Stock granted under the Plan by the Board or the Committee will be
final and conclusive.

It is expected that, at the Acquisition Closing, Options to purchase up to
shares of Common Stock at an exercise price equal to $ per share
will be granted (the "Incentive Options"). Twenty percent of the Incentive
Options granted will vest and become exercisable per year on each of the first
through fifth anniversaries of the date of grant, provided that the Participant
continues to be employed by Holdings or a subsidiary of Holdings. It is also
expected that, at the Acquisition Closing, Options to purchase up to
shares at an exercise price equal to $ per share will be granted
(the "Performance Options"). Up to 20% of the Performance Options will be
eligible to vest and become exercisable each year on each of the first through
fifth anniversaries of the date of grant. Whether such Performance Options vest
and, if so, what fraction of those eligible actually vest will be determined
based upon the Company's achievement of certain predetermined financial
performance goals. In any case, the Performance Options will vest no later than
on the tenth anniversary of the Acquisition Closing, provided that the
applicable Participant continues to be employed by Holdings or a subsidiary of
Holdings. It is also expected that, at the Acquisition Closing, approximately
shares of Nonvoting Common Stock will be issued as Restricted Stock to
certain key employees of Goss who are not Management Investors. Twenty percent
of the Restricted Stock will vest at the Acquisition Closing, and 20% will vest
per year on each of the first through fourth anniversaries of the date of grant,
provided that the Participant continues to be employed by Holdings or a
subsidiary of Holdings. In the event of an Extraordinary Transaction (as defined
in the Plan) of Holdings prior to the fifth anniversary of the Acquisition
Closing (or the fourth anniversary in the case of the Restricted Stock), all
outstanding Incentive Options, a portion of the outstanding Performance Options
(determined in accordance with the Plan), and all outstanding Restricted Stock
will become fully vested upon consummation of the Extraordinary Transaction.

The terms and condition of an Option grant will be set forth in a related
Option agreement (the "Option Agreement"). Options granted under the Plan will
terminate upon the earliest to occur of (a) the tenth anniversary of the date of
the Option Agreement; (b) the date on which Holdings acquires any shares of
Common Stock or Options held by the Participant in connection with the exercise
of a Put Right (as defined in the Stockholders Agreement); (c) the
one-hundred-eighty-day anniversary of the date of death, Retirement (as defined
in the Stockholders Agreement) or Disability (as defined in the Stockholders
Agreement) of the Participant; (d) the thirty-day anniversary of the date that
the Participant ceases to be a full-time employee of Holdings or its
subsidiaries for any reason other than as set forth in (c) above or in (e)
below; and (e) immediately upon a Participant's voluntary termination of

72
<PAGE>
employment other than due to death, Retirement or Disability, or termination for
Cause (as defined in the Stockholders Agreement). Payment of the Option exercise
price must be made in cash.

The terms and conditions of a grant of Restricted Stock will be set forth in
a related Restricted Stock agreement. Restricted Stock granted under the Plan,
to the extent that it has not previously vested, will be forfeited immediately
upon the Participant's ceasing to be a full-time employee of Holdings or its
subsidiaries for any reason. A Participant who has been granted Restricted Stock
will have, with the respect to the shares of Nonvoting Common Stock underlying
the grant, all of the rights of a holder of the Nonvoting Common Stock. The
shares of Nonvoting Common Stock issued as Restricted Stock will have all the
rights of shares of Common Stock, including the right to receive any cash
dividends, except that shares of Nonvoting Common Stock will not have any voting
rights.

It is presently anticipated that grants of Options and Restricted Stock will
be made to the executive officers and employees of Holdings or its subsidiaries
at the Acquisition Closing as set forth in the Management Stock Incentive Plan
Table below. Except for a grant of Options for shares to and a grant
of shares of Restricted Stock to , no grants are anticipated to be
made to non-employee directors or any nominees for election as a director or to
any associates of any directors, executive officers or nominees.

MANAGEMENT STOCK INCENTIVE PLAN TABLE

<TABLE>
<CAPTION>
INCENTIVE PERFORMANCE RESTRICTED
OPTIONS OPTIONS STOCK
---------------- ---------------- ---------
DOLLAR DOLLAR NUMBER OF
NAME AND POSITION NUMBER AMOUNT NUMBER AMOUNT SHARES
- --------------------------------------------------- ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C>

</TABLE>

The number of shares of Common Stock that will be available for Options
under the Plan is shares and the number of shares of Nonvoting Common
Stock that will be available for Restricted Stock under the Plan is
shares. If Options granted under the Plan are repurchased by Holdings
pursuant to the "Put Rights" and "Call Rights" contained in the Stockholders
Agreement, the shares covered by such Options will again be available for grant
under the Plan. In the event of the declaration of a stock dividend, or a
reorganization, merger, consolidation, acquisition, disposition, separation,
recapitalization, stock split, split-up, spin-off, combination or exchange of
any shares of Common Stock or Nonvoting Common Stock or like event, the number
or character of the shares subject to the Option or the exercise price of any
Option, or the number or character of the shares granted as Restricted Stock, as
applicable, may be appropriately adjusted as deemed appropriate by the Committee
or the Board.

The Plan will terminate upon, and no Options or Restricted Stock will be
granted after, the tenth anniversary of the Acquisition Closing, unless the Plan
has sooner terminated due to (i) grant and full exercise of Options covering all
the shares of Common Stock available for grant under the Plan and (ii) grant and
either vesting or forfeiture of all the shares of Nonvoting Common Stock
available for grant under the Plan. The Board may at any time amend, suspend or
discontinue the Plan; provided, however, that the Board may not alter, amend,
discontinue or revoke or otherwise impair any outstanding Options or Restricted
Stock granted under the Plan and which remain unexercised (in the case of
Options) or which have not been vested or forfeited (in the case of Restricted
Stock) in a manner adverse to the holders thereof, except if the written consent
of such holder is obtained.

73
<PAGE>
OWNERSHIP OF CAPITAL STOCK

The following table sets forth certain information regarding beneficial
ownership of the common stock of Holdings, the nonvoting common stock of
Holdings and the preferred stock of Holdings after the consummation of the
Transactions by (i) each stockholder who is known by the Company to own
beneficially more than 5% of the outstanding common stock of Holdings, the
outstanding nonvoting common stock of Holdings or the outstanding preferred
stock of Holdings, and (ii) each director, each executive officer and all
directors and officers as a group. Except as set forth in the footnotes to the
table, each stockholder listed below has informed the Company that such
stockholder has (i) sole voting and investment power with respect to such
stockholder's shares of capital stock of Holdings and (ii) record and beneficial
ownership with respect to such stockholder's shares of capital stock of
Holdings. Holdings will own all of the capital stock of the Company.

HOLDINGS COMMON STOCK

<TABLE>
<CAPTION>
SHARES OF HOLDINGS
NAME AND ADDRESS OF COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED
- ------------------------------------------------------------------- ----------------------
<S> <C> <C>
NUMBER PERCENT
--------- ---------
Stonington Capital Appreciation
1994 Fund, L.P. (a).............................................. %
Directors and executive officers
as a group ( persons) (b)....................................... %
</TABLE>

- ------------

<TABLE>
<C> <S>
(a) After consummation of the Acquisition, the Fund will be the record holder of shares
of Common Stock. The Fund also controls, but disclaims beneficial ownership of, the
Management Shares, pursuant to the Stockholders Agreement. The Fund is a Delaware
limited partnership whose limited partners consist of certain institutional investors,
formed to invest in corporate acquisitions organized by Stonington. Stonington Partners,
L.P. ("SPLP"), a Delaware limited partnership, is the general partner of Stonington with
a 1% economic interest in Stonington. Except for such economic interest, SPLP disclaims
beneficial ownership of the shares set forth above. Stonington II is the general partner
of SPLP with a 1% economic interest in SPLP. Except for such economic interests,
Stonington II disclaims beneficial ownership of the shares set forth above. The limited
partners of SPLP are certain employees of Stonington and partnerships controlled by
certain employees of Stonington.
Pursuant to a management agreement with the Fund, Stonington has full discretionary
authority with respect to the investments of the Fund, including the authority to make
and dispose of such investments. Stonington disclaims beneficial ownership of the shares
set forth above. The address for each of the entities and individuals listed in this
footnote is c/o Stonington Partners, Inc., 767 Fifth Avenue, New York, NY 10153.
(b) Excludes shares held by the Fund of which Mr. Armstrong and Mr. Michas may be deemed to
be beneficial owners as a result of their ownership of stock in, and membership on the
Boards of Directors of, Stonington and Stonington II, but they disclaim such beneficial
ownership.
</TABLE>

74
<PAGE>
HOLDINGS NONVOTING COMMON STOCK

<TABLE>
<CAPTION>
SHARES OF HOLDINGS
NONVOTING COMMON
NAME AND ADDRESS OF STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED
- ---------------------------------------------------------------------- --------------------
<S> <C> <C>
NUMBER PERCENT
-------- --------
......................................................................
</TABLE>

HOLDINGS PREFERRED STOCK

<TABLE>
<CAPTION>
SHARES OF HOLDINGS
PREFERRED
NAME AND ADDRESS OF STOCK BENEFICIALLY
BENEFICIAL OWNER OWNED
- --------------------------------------------------------------------- ---------------------
<S> <C> <C>
NUMBER PERCENT
-------- ---------
Rockwell International Corporation................................... 47,500 100%
2201 Seal Beach Boulevard
Seal Beach, California 90740
</TABLE>

75
<PAGE>
CERTAIN TRANSACTIONS

Stonington is receiving a structuring fee with respect to its activities in
structuring the Acquisitions and related transactions. In addition, Stonington
is having reimbursed certain fees and expenses incurred by Stonington in
establishing investment entities and arranging for financing for the
Acquisition.

STOCKHOLDERS AGREEMENT

Holdings, the Fund, the Management Investors and employees of Holdings who
are granted Restricted Stock at the Acquisition Closing ("Restricted
Stockholders") (each, a "Stockholder") will enter into a stockholders agreement
(the "Stockholders Agreement"), which will contain, among other terms and
conditions, provisions relating to corporate governance, certain restrictions
with respect to the transfer of Common Stock or Nonvoting Common Stock by
certain parties thereunder, certain rights related to puts and calls and certain
registration rights granted by Holdings with respect to shares of Common Stock
and Nonvoting Common Stock.

Pursuant to the terms of the Stockholders Agreement, each of the
Stockholders will agree to elect an initial slate of directors of Holdings who
have been nominated by the Fund. After the initial slate of directors has been
elected, the Fund will have the right to nominate at any time and from time to
time all directors of Holdings (including the right to expand the Board of
Directors and to fill vacancies created thereby) and will have the right to
remove such directors at any time and from time to time and each of the
Stockholders will agree to vote in favor of such nomination or removal of
directors. Holdings currently has three Board members.

Pursuant to the terms of the Stockholders Agreement, in the event that,
prior to an Initial Public Offering (as defined in the Stockholders Agreement),
the Fund proposes to sell securities which, in the aggregate, represent 50% or
more of the common equity on a fully diluted basis to a third party which is
not, and following such sale will not be, an affiliate of the Fund, the
Management Investors and the Restricted Stockholders will have the right to
elect to participate in such sale with respect to a certain number of shares of
Common Stock and Nonvoting Common Stock. In the event that, prior to an Initial
Public Offering, the Fund proposes to sell securities which, in the aggregate,
represent 50% or more of the common equity on a fully diluted basis to a third
party which is not, and following such sale will not be, an affiliate of the
Fund, the Fund has the right to require each Management Investor each Restricted
Stockholder and such other stockholders who have agreed to be bound by the
Stockholders Agreement to participate in such sale with respect to a certain
number of shares of Common Stock and Nonvoting Common Stock.

Management Investors and Restricted Stockholders will not be permitted to
sell or transfer Common Stock or Nonvoting Common Stock, as the case may be,
other than to permitted transferees (i.e., family members and, upon the death of
a Management Investor or a Restricted Stockholder, to his or her estate or
executors), prior to the occurrence of the earlier of the fifth anniversary of
the Acquisition Closing and an Initial Public Offering. Following an Initial
Public Offering, Management Investors and Restricted Stockholders may transfer
shares subject to applicable restrictions under the Securities Act of 1933, as
amended (the "Securities Act"), and other federal and state securities laws. On
or after the fifth anniversary and prior to the tenth anniversary of the
Acquisition Closing, if an Initial Public Offering has not occurred, Management
Investors and Restricted Stockholders will be permitted to sell Common Stock or
Nonvoting Common Stock, as the case may be, to third parties after first giving
the Company and the other Management Investors and Restricted Stockholders a
right of first refusal for the same number of shares of Common Stock or
Nonvoting Common Stock, as the case may be, at the same price.

Prior to the earlier of an Initial Public Offering or the tenth anniversary
of the Acquisition Closing, Holdings will have the right to require a Management
Investor or a Restricted Stockholder to sell his or

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her shares of Common Stock or Nonvoting Common Stock, as the case may be, and
Options upon a termination of employment for any reason. Such right will be
exercisable within a period of 190 days after the date of termination of
employment, subject to certain extensions, at a price per share, depending on
the reason for termination of employment and whether such shares are Protected
Shares (as defined in the Stockholders Agreement), equal to the Fair Value Price
(as defined in the Stockholders Agreement) or the original per share purchase
price of a share of Common Stock or Nonvoting Common Stock, as the case may be,
(and including, in certain circumstances, a reduction in the unpaid principal
amount of the note issued to Holdings by such Management Investor in connection
with the Management Placement) and at a price per Option equal to the difference
between the Fair Value Price or the original per share purchase price of the
shares of Common Stock covered by such Option and the exercise price of the
shares of Common Stock covered by such Option, multiplied by the number of
shares of Common Stock covered by the Option. Prior to the earlier of an Initial
Public Offering or the tenth anniversary of the Acquisition Closing, the
Management Investor and the Restricted Stockholder will have the right to
require the Company to purchase his or her shares of Common Stock or Nonvoting
Common Stock, as the case may be, or Options upon termination of employment due
to death, Disability, Retirement or Involuntary Termination (as defined in the
Stockholders Agreement). Such a right will be exercisable within a period of 180
days after the date of termination of employment due to death, Disability,
Retirement or Involuntary Termination, subject to certain extensions, (a) at a
price per share of Common Stock or Nonvoting Common Stock, as the case may be,
equal to the Fair Value Price thereof; and (b) at a price per Option equal to
the difference between the Fair Value Price of the shares of Common Stock
covered by such Option and the exercise price of the shares of Common Stock
covered by such Option, multiplied by the number of shares of Common Stock
covered by the Option.

Stockholders are, subject to certain limitations, entitled to register
shares of Common Stock or Nonvoting Common Stock in connection with a
registration statement prepared by Holdings to register common equity
beneficially owned by the Fund. The Fund will have the right to require Holdings
to take such steps as necessary to register all or part of the Common Stock held
by the Fund under the Securities Act pursuant to the provisions of the
Stockholders Agreement. The Stockholders Agreement contains customary terms and
provisions with respect to, among other things, registration procedures and
certain rights to indemnification granted by parties thereunder in connection
with the registration of Common Stock or Nonvoting Common Stock subject to such
agreement.

DESCRIPTION OF NOTES

GENERAL

The Notes are to be issued under an Indenture, to be dated as of ,
1996 (the "Indenture"), between the Company and , as Trustee (the
"Trustee").

A copy of the form of the Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following summary
of certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Indenture, including the definitions of certain terms therein and those
terms made a part thereof by the Trust Indenture Act of 1939, as amended.
Certain terms used herein are defined below under "--Certain Definitions."

Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which initially shall
be the corporate trust office of the Trustee, at , New York, New York
), except that, at the option of the Company, payment of interest may be
made by check mailed to the address of the Holders as such address appears in
the Note register.

The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
shall be made for any registration of transfer or

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exchange of Notes, but the Company may require payment of a sum sufficient to
cover any transfer tax or other similar governmental charge payable in
connection therewith.

TERMS OF THE NOTES

The Notes will be unsecured senior subordinated obligations of the Company,
limited to $ million aggregate principal amount, and will mature on
, 2006. The Notes will bear interest at the rate per annum shown on the
cover page hereof from , or from the most recent date to which interest
has been paid or provided for, payable semiannually to Holders of record at the
close of business on the or immediately preceding the interest
payment date on and of each year, commencing , 1996. The Company
will pay interest on overdue principal at such rate, and it will pay interest on
overdue installments of interest at such rate to the extent lawful. Interest on
the Notes will be computed on the basis of a 360-day year of twelve 30-day
months.

OPTIONAL REDEMPTION

Except as set forth in the following paragraph, the Notes will not be
redeemable at the option of the Company prior to , 2001. Thereafter, the
Notes will be redeemable, at the Company's option, in whole or in part, at any
time or from time to time, upon not less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), if redeemed during the 12-month period
commencing on of the years set forth below:

REDEMPTION
PERIOD PRICE
- ---------------------------------------------------------------- ----------

2001............................................................ %
2002............................................................ %
2003............................................................ %
2004 and thereafter............................................. 100.00%

Notwithstanding the foregoing, at any time and from time to time prior to
, 1999, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Notes with the net proceeds of one or more Public Equity
Offerings following which there is a Public Market or private sales of common
stock of, or contributions to the common equity capital of, the Company or
Holdings, at a redemption price (expressed as a percentage of principal amount)
of % plus accrued and unpaid interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); provided, however, that at least
$ million aggregate principal amount of the Notes must remain
outstanding after each such redemption.

In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate,
although no Note of $1,000 in original principal amount or less shall be
redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note.

RANKING

The Debt evidenced by the Notes will be senior subordinated unsecured
obligations of the Company. The payment of the principal of, premium (if any)
and interest on the Notes will be subordinate in right of payment, as set forth
in the Indenture, to the prior payment in full in cash or cash

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equivalents of all Senior Debt, whether outstanding on the Issue Date or
thereafter incurred, including the Company's obligations under the Credit
Agreement.

At March 31, 1996, after giving pro forma effect to the Transactions, the
Company's Senior Debt would have been approximately $27.3 million (including $25
million under the Term Loan Facility and excluding approximately $7.5 million of
letters of credit and excluding guarantees by the Company of subsidiary
borrowings under the Term Loan Facility), all of which would have been secured,
and the aggregate principal amount of subordinated debt of the Company would
have been approximately $ million. Although the Indenture contains
limitations on the amount of additional Debt that the Company may incur, under
certain circumstances the amount of such Debt could be substantial and, in any
case, such Debt may be Senior Debt. See "--Certain Covenants--Limitation on
Debt."

A portion of the operations of the Company are conducted through its
subsidiaries. Claims of creditors of such subsidiaries, including trade
creditors, secured creditors and creditors holding debt and guarantees issued by
such subsidiaries, and claims of preferred stockholders (if any) of such
subsidiaries generally will have priority with respect to the assets and
earnings of such subsidiaries over the claims of creditors of the Company,
including holders of the Notes, even though such obligations will not constitute
Senior Debt. The Notes, therefore, will be effectively subordinated to creditors
(including trade creditors) and preferred stockholders (if any) of subsidiaries
of the Company. At March 31, 1996, after giving pro forma effect to the
Transactions, the aggregate liabilities of the Company's subsidiaries would have
been approximately $228.1 million, including $50 million under the Term Loan
Facility and trade payables and excluding approximately $28.5 million of letters
of credit. Although the Indenture limits the incurrence of Debt and the issuance
of preferred stock of certain of the Company's subsidiaries, such limitation is
subject to a number of significant qualifications. Moreover, the Indenture does
not impose any limitation on the incurrence by such subsidiaries of liabilities
that are not considered Debt under the Indenture. See "--Certain
Covenants--Limitation on Debt and Preferred Stock of Subsidiaries" and
"--Limitation on Restrictions on Distributions from Subsidiaries."

Only Debt of the Company that is Senior Debt will rank senior to the Notes
in accordance with the provisions of the Indenture. The Notes will in all
respects rank pari passu with all other Senior Subordinated Debt of the Company.
The Company has agreed in the Indenture that it will not Incur, directly or
indirectly, any Debt that is subordinate or junior in ranking in right of
payment to its Senior Debt unless such Debt is Senior Subordinated Debt or is
expressly subordinated in right of payment to Senior Subordinated Debt.
Unsecured Debt is not deemed to be subordinated or junior to Secured Debt merely
because it is unsecured.

The Company may not pay principal of, premium (if any) or interest on, the
Notes or make any deposit pursuant to the provisions described under
"Defeasance" below and may not repurchase, redeem or otherwise retire any Notes
(collectively, "pay the Notes") if (i) any Designated Senior Debt is not paid
when due (after giving effect to any applicable grace periods) or (ii) any other
default (a "non-payment default") on Designated Senior Debt occurs and the
maturity of such Designated Senior Debt is accelerated in accordance with its
terms unless, in either case, the default has been cured or waived or has ceased
to exist and any such acceleration has been rescinded or such Designated Senior
Debt has been discharged or paid in full. However, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of the Designated Senior
Debt with respect to which either of the events set forth in clause (i) or (ii)
of the immediately preceding sentence has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the second preceding sentence) with respect to any Designated Senior Debt
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay the Notes for a period (a "Payment Blockage Period") commencing upon the
receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the Representative of the

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holders of such Designated Senior Debt specifying an election to effect a
Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee and
the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Debt has been discharged or repaid in
full). Notwithstanding the provisions described in the immediately preceding
sentence, unless the holders of such Designated Senior Debt or the
Representative of such holders have accelerated the maturity of such Designated
Senior Debt, the Company may resume payments on the Notes after the end of such
Payment Blockage Period. The Notes shall not be subject to more than one Payment
Blockage Period in any consecutive 360-day period, irrespective of the number of
defaults with respect to Designated Senior Debt during such period. No
non-payment default with respect to Designated Senior Debt that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Debt initiating such Payment Blockage Period
will be, or can be, made the basis for the commencement of a second Payment
Blockage Period, unless such default has been cured or waived for a period of
not less than 90 consecutive days.

Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization of or similar proceeding
(including in bankruptcy, insolvency or receivership proceedings or upon any
assignment for the benefit of creditors or any other marshalling of the
Company's assets and liabilities) relating to the Company or its property, the
holders of Senior Debt will be entitled to receive payment in full of such
Senior Debt before the Noteholders are entitled to receive any payment or
distribution of cash securities (subject to certain exceptions) or other
property with respect to the principal of or interest on the Notes, and until
the Senior Debt is paid in full, any payment or distribution to which
Noteholders would be entitled but for the subordination provisions of the
Indenture will be made to holders of such Senior Debt as their interests may
appear. If a distribution is made to Noteholders that, due to the subordination
provisions, should not have been made to them, such Noteholders are required to
hold it in trust for the holders of Senior Debt and pay it over to them as their
interests may appear.

If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of Designated Senior
Debt or the Representative of such holders of the acceleration.

By reason of the subordination provisions contained in the Indenture, in the
event of insolvency, creditors of the Company who are holders of Senior Debt may
recover more, ratably, than the Noteholders, and creditors of the Company who
are not holders of Senior Debt may recover less, ratably, than holders of Senior
Debt and may recover more, ratably, than the Noteholders.

The terms of the subordination provisions described above will not apply to
payments from money or the proceeds of U.S. Government Obligations held in trust
by the Trustee for the payment of principal of and interest on the Notes
pursuant to the provisions described under "--Defeasance."

CHANGE OF CONTROL

Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder shall have the right to require that the Company
repurchase such Holder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date):

(i) Prior to the earlier to occur of the first public offering of common
stock of the Company or the first public offering of common stock of
Holdings, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Voting Stock of the

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Company or Holdings, whether as a result of issuance of securities of the
Company or Holdings, any merger, consolidation, liquidation or dissolution
of the Company or Holdings, any direct or indirect transfer of securities or
otherwise (for purposes of this clause (i) and clause (ii) below, the
Permitted Holders shall be deemed to beneficially own any Voting Stock of a
corporation (the "specified corporation") held by any other corporation (the
"parent corporation") so long as the Permitted Holders beneficially own (as
so defined), directly or indirectly, in the aggregate a majority of the
voting power of the Voting Stock of the parent corporation);

(ii) on or after the earlier to occur of the first public offering of
common stock of the Company or Holdings referred to in clause (i) above, (A)
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (i) above, except that for purposes
of this clause (ii) such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 40% of the total voting power of
the Voting Stock of the Company or Holdings; provided, however, that the
Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Company or Holdings than such other
person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors (for the purposes of this clause (ii), such other person shall be
deemed to beneficially own any Voting Stock of a specified corporation held
by a parent corporation, if such other person is the beneficial owner (as
defined in this clause (ii)), directly or indirectly, of more than 40% of
the voting power of the Voting Stock of such parent corporation and the
Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the voting
power of the Voting Stock of such parent corporation and do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such parent
corporation);

(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
or Holdings (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company or Holdings, as the case may be, was approved by a vote of 66 2/3%
of the directors of the Company or Holdings, as the case may be, then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in
office; or

(iv) the merger or consolidation of the Company or Holdings with or into
another Person or the merger of another Person with or into the Company or
Holdings, or the sale or transfer in one or a series of transactions of all
or substantially all the assets of the Company or Holdings to another
Person, and, in the case only of any such merger or consolidation, the
securities of the Company or Holdings, as the case may be, that are
outstanding immediately prior to such transaction and which represent 100%
of the aggregate voting power of the Voting Stock of the Company or Holdings
are changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or exchanged
for, in addition to any other consideration, securities of the surviving
corporation that represent immediately after such transaction, at least a
majority of the aggregate voting power of the Voting Stock of the surviving
corporation.

Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require the Company
to purchase such Holder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase

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(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); (2) the
circumstances and, to the extent available, relevant facts regarding such Change
of Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of Control); (3)
the repurchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed); and (4) the instructions, determined
by the Company consistent with the covenant described hereunder, that a Holder
must follow in order to have its Notes purchased.

The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to the covenant described
hereunder. To the extent that the provisions of any securities laws and
regulations conflict with the provisions of the covenant described hereunder,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.

The Change of Control purchase feature is a result of negotiations between
the Company and the Underwriters. Management has no present intention to engage
in a transaction involving a Change of Control, although it is possible that the
Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancing or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of debt outstanding at such time or otherwise affect
the Company's capital structure or credit ratings.

The Credit Agreement generally will prohibit the Company from purchasing any
Notes, and will also provide that the occurrence of certain change of control
events with respect to the Company would constitute a default thereunder. In the
event a Change of Control occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition but it has no obligation to do so. If the Company does not obtain
such a consent or repay such borrowings, the Company will remain prohibited from
purchasing Notes. In such case, the Company's failure to purchase tendered Notes
would constitute an Event of Default under the Indenture which would, in turn,
constitute a default under the Credit Agreement. In such circumstances, the
subordination provisions in the Indenture would likely restrict payment to the
Holders of Notes.

Future debt of the Company may contain prohibitions on the occurrence of
certain events that would constitute a Change of Control or require such debt to
be repurchased upon a Change of Control. Moreover, the exercise by the holders
of their right to require the Company to repurchase the Notes could cause a
default under such debt, even if the Change of Control itself does not, due to
the financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to the holders of Notes following the occurrence of a Change
of Control may be limited by the Company's then existing financial resources.
There can be no assurance that sufficient funds will be available when necessary
to make any required repurchases.

The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a takeover of the Company, and,
thus, removal of incumbent management.

CERTAIN COVENANTS

The Indenture contains covenants including, among others, the following:

Limitation on Debt. (a) The Company shall not Incur, directly or indirectly,
any Debt unless, on the date of such Incurrence, the Consolidated Coverage Ratio
exceeds 2.0 to 1.75 to 1 if such Debt is Incurred on or prior to , 1999 or
2.0 to 1 if such Debt is Incurred thereafter.

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(b) Notwithstanding the foregoing paragraph (a), the Company may Incur any
or all of the following Debt: (1) Debt Incurred pursuant to the Revolving Credit
Facility; provided, however, that, after giving effect to any such Incurrence,
the aggregate principal amount of such Debt then outstanding does not exceed the
greater of $ million and the sum of (A) 50% of the gross book value of
the inventory of the Company and its Subsidiaries (other than any Foreign
Subsidiary that has Debt then outstanding Incurred pursuant to clause (e) of the
covenant described under "--Limitation on Debt and Preferred Stock of
Subsidiaries") and (B) 80% of the gross book value of the accounts receivable of
the Company and its Subsidiaries (other than any Foreign Subsidiary that has
Debt then outstanding Incurred pursuant to clause (e) of the covenant described
under "--Limitation on Debt and Preferred Stock of Subsidiaries"; (2) Debt
Incurred pursuant to the Term Loan Facility or any other credit or loan
agreement or indenture in an aggregate outstanding principal amount not to
exceed the aggregate lending commitments under the Term Loan Facility on the
Issue Date outstanding at any one time less the aggregate amount of all
principal repayments of any such Debt actually made after the Issue Date (other
than any such principal repayments made as a result of the Refinancing of any
such Debt); (3) the Customer Notes Guarantees in an aggregate amount not to
exceed $ million (less the aggregate amount of all payments actually
made thereon after the Issue Date); (4) Debt owed to and held by a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of any
Capital Stock which results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of such Debt (other than to
another Wholly Owned Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Debt by the Company; (5) the Notes; (6) Debt outstanding
on the Issue Date (other than Debt described in clause (1), (2), (3), (4) or (5)
of this covenant); (7) Refinancing Debt in respect of Debt Incurred pursuant to
paragraph (a) or pursuant to clause (5) or (6) or this clause (7); (8) Hedging
Obligations with respect to (x) Debt permitted to be Incurred by the Company
pursuant to the Indenture or the Credit Agreement or (y) transactions
denominated in foreign currencies; (9) Capital Lease Obligations not to exceed
$ in the aggregate at any one time outstanding; (10) Debt constituting
purchase money obligations for property acquired in the ordinary course of
business or other similar financing transactions not to exceed $ ; (11)
Debt constituting reimbursement obligations with respect to letters of credit,
performance bonds, surety bonds, etc. not to exceed $ ; and (12) Debt in
an aggregate principal amount which, together with all other Debt of the Company
outstanding on the date of such Incurrence (other than Debt permitted by clauses
(1) through (11) of this paragraph (b) or paragraph (a) above) does not exceed
$ .

(c) Notwithstanding paragraphs (a) and (b), the Company shall not Incur any
Debt if the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations unless such Debt shall be subordinated to the Notes to
at least the same extent as such Subordinated Obligations.

(d) Notwithstanding paragraphs (a) and (b) above, (i) the Company shall not
Incur any Debt if such Debt is subordinated or junior in ranking to any Senior
Debt, unless such Debt is Senior Subordinated Debt or is expressly subordinated
in right of payment to Senior Subordinated Debt and (ii) the Company shall not
issue any Secured Debt which is not Senior Debt unless contemporaneously
therewith effective provision is made to secure the Notes equally and ratably
with such Secured Debt for so long as such Secured Debt is secured by a Lien.

(e) For purposes of determining compliance with clause (b) of this covenant,
(i) in the event that an item of Debt meets the criteria of more than one of the
types of Debt described in clause (b), the Company, in its sole discretion, will
classify such item of Debt and only be required to include the amount and type
of such Debt in one of the subclauses of clause (b) and (ii) an item of Debt may
be split between more than one of the types of Debt described in clause (b).

Limitation on Debt and Preferred Stock of Subsidiaries. The Company shall
not permit any Subsidiary to Incur, directly or indirectly, any Debt or
Preferred Stock except: (a) Guarantees by the Subsidiaries of Debt of the
Company described in clause (b)(1), (2) and (3) of the covenant described

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under "--Limitation on Debt"; (b) Debt or Preferred Stock issued to and held by
the Company or a Wholly Owned Subsidiary; provided, however, that any subsequent
issuance or transfer of any Capital Stock which results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of
such Debt or Preferred Stock (other than to the Company or a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the issuance of such
Debt or Preferred Stock by the issuer thereof; (c) Debt or Preferred Stock of a
Subsidiary Incurred and outstanding on or prior to the date on which such
Subsidiary was acquired by the Company (other than Debt or Preferred Stock
Incurred in connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Company); provided, however, that on the date of such
acquisition and after giving effect thereto, the Company would have been able to
Incur at least $1.00 of additional Debt pursuant to clause (a) of the covenant
described under "--Limitation on Debt"; (d) Debt or Preferred Stock outstanding
on the Issue Date (other than Debt described in clause (a), (b) or (c)); (e)
Debt of a Foreign Subsidiary (in addition to Debt permitted by clauses (a)
through (d) above or clause (f) below) if, at the time of Incurrence of such
Debt, and after giving effect thereto, the aggregate amount of Debt outstanding
of such Foreign Subsidiary (excluding Debt permitted by clauses (a) through (d)
above or clause (f) below) does not exceed the sum of 80% of the gross book
value of the accounts receivable of such Foreign Subsidiary and 50% of the gross
book value of the inventories of such Foreign Subsidiary; and (f) Refinancing
Debt Incurred in respect of Debt or Preferred Stock referred to in clause (a),
(c) or (d) or this clause (f); provided, however, that to the extent such
Refinancing Debt directly or indirectly Refinances Debt or Preferred Stock of a
Subsidiary described in clause (c), such Refinancing Debt shall be Incurred only
by such Subsidiary.

Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any Subsidiary, directly or indirectly, to make a Restricted Payment if
at the time the Company or such Subsidiary makes such Restricted Payment: (1) a
Default shall have occurred and be continuing (or would result therefrom); (2)
the Company is not able to Incur an additional $1.00 of Debt pursuant to
paragraph (a) of the covenant described under "--Limitation on Debt"; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
since the Issue Date would exceed the sum of: (A) 50% of the Consolidated Net
Income accrued during the period (treated as one accounting period) from the
beginning of the fiscal quarter during which the Notes are originally issued to
the end of the most recent fiscal quarter ending at least 45 days prior to the
date of such Restricted Payment (or, in case such Consolidated Net Income shall
be a deficit, minus 100% of such deficit); (B) the aggregate Net Cash Proceeds
and aggregate Deemed Asset Value received by the Company from the issuance or
sale of its Capital Stock (other than Disqualified Stock) or capital
contributions with respect thereto subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company and except as set forth in
clause (C) other than an issuance or sale to an employee stock ownership plan or
to a trust established by the Company or any of its Subsidiaries for the benefit
of their employees); (C) the aggregate Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock (other than Disqualified Stock) to
an employee stock ownership plan subsequent to the date on which the Notes were
originally issued; provided, however, that if such employee stock ownership plan
issues any Debt, to finance the purchase for which the Company or any Subsidiary
is liable as guarantor or otherwise, such aggregate amount shall be limited to
an amount equal to the sum of (x) the amount by which the Net Cash Proceeds
received by the Company in connection with such purchase by such plan or trust
exceeds such Debt and (y) to any subsequent increases in the Consolidated Net
Worth of the Company resulting from principal repayments made by such employee
stock ownership plan with respect to Debt issued by it to finance the purchase
of such Capital Stock; and (D) the amount by which Debt of the Company is
reduced on the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) subsequent to the Issue Date, of any Debt
of the Company convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less (but not more than the amount by which
Debt was so reduced) the amount of any cash, or the fair value of any other
property, distributed by the Company upon such conversion or exchange).

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(b) The provisions of the foregoing paragraph (a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the Company or any of
its Subsidiaries for the benefit of their employees to the extent the purchase
by such plan or trust is financed by Debt of such plan or trust and for which
the Company or any Subsidiary is liable as guarantor or otherwise); provided,
however, that (A) such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale shall be excluded from the calculation of amounts under clauses
(3)(B) and (3)(C) of paragraph (a) above; (ii) any purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value of
Subordinated Obligations together with any premium payable in connection
therewith made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Debt of the Company which is permitted to be Incurred
pursuant to the covenant described under "--Limitation on Debt"; provided,
however, that such purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in the calculation of the
amount of Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under "--Limitation
on Sales of Assets and Subsidiary Stock" below; provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments; (iv) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would have
complied with this covenant; provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or would
result therefrom); and provided, further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments; or (v) the
repurchase of shares of, or options to purchase shares of, common stock of the
Company or any of its Subsidiaries from employees, former employees, directors
or former directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former directors),
pursuant to the terms of the agreements (including employment agreements) or
plans (or amendments thereto) approved by the Board of Directors under which
such individuals purchase or sell or are granted the option to purchase or sell,
shares of such common stock; provided, however, that the aggregate amount of
such repurchases in any calendar year shall not exceed the sum of (x) $
and (y) the aggregate Net Cash Proceeds from any reissuance during such calendar
year of Capital Stock to employees, officers or directors of the Company or its
Subsidiaries; provided further, however, that to the extent that the aggregate
amount of such repurchases is less than $ in any calendar year, the
unused portion of such $ may be carried forward to the succeeding
calendar year (provided that the aggregate amount of the repurchases in any
calendar year shall, in no event, exceed $ plus the amount of aggregate
Net Cash Proceeds from any reissuance of Capital Stock described above) in any
calendar year; and provided, further, however, that such repurchases shall be
excluded in the calculation of the amount of Restricted Payments, (v)
Investments in an aggregate amount, if after giving pro forma effect to such
Investment, the Consolidated Coverage Ratio is (A) less than to ,
not to exceed $ , or (B) greater than, or equal to to , not
to exceed $ ; provided, however, that the amount of such Investments
shall be excluded in the calculation of the amount of Restricted Payments; or
(vi) the payment of any cash dividend on the Common Stock of the Company
following a Public Equity Offering; provided that the aggregate amounts of all
such dividends under this clause shall not exceed % of the Net Cash Proceeds
received by the Company in such Public Equity Offering in any calendar year;
provided further, however, that such dividends shall be included in the
calculation of Restricted Payments.

Limitation on Restrictions on Distributions from Subsidiaries. The Company
shall not, and shall not permit any Subsidiary to, create or otherwise cause or
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary (a) to pay dividends or make any other
distributions on its Capital Stock to the Company or a Subsidiary or pay any
Debt owed to the Company, (b) to make any loans or advances to the Company or
(c) transfer any of its property or

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assets to the Company, except: (i) any encumbrance or restriction pursuant to an
agreement in effect or entered into on the Issue Date or pursuant to the
issuance of the Notes; (ii) any encumbrance or restriction with respect to a
Subsidiary pursuant to an agreement relating to any Debt Incurred by such
Subsidiary on or prior to the date on which such Subsidiary was acquired by the
Company (other than Debt Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company) and outstanding on such date; (iii)
any encumbrance or restriction pursuant to an agreement effecting a Refinancing
of Debt Incurred pursuant to an agreement referred to in clause (i) or (ii) of
this covenant or contained in any amendment to an agreement referred to in
clause (i) or (ii) of this covenant; provided, however, that the encumbrances
and restrictions contained in any such refinancing agreement or amendment are no
less favorable to the Noteholders than encumbrances and restrictions contained
in such agreements; (iv) any encumbrance or restriction (A) that restricts in a
customary manner the subletting, assignment or transfer of any property or asset
that is a lease, license, conveyance or contract or similar property or asset
the subject of such encumbrance or restriction, (B) existing by virtue of any
transfer of, agreement to transfer, option or right with respect to, or Lien on,
any property or assets of the Company or any Subsidiary not otherwise prohibited
by the Indenture or (C) arising or agreed to in the ordinary course of business,
not relating to any Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of the Company or any
Subsidiary in any manner material to the Company or any Subsidiary; provided
that, in each case, such encumbrance or restriction relates to, and restricts
dealings with, only the property or asset the subject of such encumbrance or
restriction; provided further, that such encumbrance or restriction does not
prohibit, limit or otherwise restrict the making or payment of any dividend or
other distribution to the Company or any Subsidiary; (v) in the case of clause
(c) above, restrictions contained in security agreements or mortgages securing
Debt of a Subsidiary to the extent such restrictions restrict the transfer of
the property subject to such security agreements or mortgages; (vi) any
encumbrance or restriction imposed solely upon a Foreign Subsidiary pursuant to
an agreement relating to Indebtedness Incurred by such Foreign Subsidiary which
is permitted under the covenant described under "--Limitation on Debt and
Preferred Stock of Subsidiaries"; and (vii) any restriction with respect to a
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of such
Subsidiary pending the closing of such sale or disposition.

Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall
not, and shall not permit any Subsidiary to, directly or indirectly, consummate
any Asset Disposition unless (i) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash consideration), as
determined in good faith by the Board of Directors, of the shares and assets
subject to such Asset Disposition and at least 75% of the consideration thereof
received by the Company or such Subsidiary is in the form of cash or cash
equivalents and (ii) to the extent that the Net Available Cash received by the
Company or any Subsidiary from one or more Asset Dispositions occurring on or
after the Issue Date in any period of 12 consecutive months exceeds $
million as of the beginning of such 12-month period, the Company (x) within 180
days (in the case of (A) below) or 360 days (in the case of (B) below) after the
date such Net Available Cash so received exceeds $ million and to the
extent the Company elects (or is required by the terms of any Senior Debt) (A)
applies an amount equal to such excess Net Available Cash to repay, prepay,
redeem or purchase Senior Debt of the Company or Debt (other than any
Disqualified Stock of Wholly Owned Subsidiary (in each case other than Debt
owned to the Company or an Affiliate of the Company) or (B) invests or commits
to invest an equal amount, or the amount not so applied pursuant to clause (A),
in Additional Assets; provided, however, that in the case of any commitment to
invest such investment must be made within six months thereafter, and any amount
not so invested shall be treated as Excess Proceeds (as defined below); and (y)
applies such excess Net Available Cash (to the extent not applied pursuant to
clause (x)) as provided in the following paragraphs of this covenant. The amount
of such excess Net Available Cash required to be applied

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during the applicable period and not applied as so required by the end of such
period shall constitute "Excess Proceeds". Pending application of Net Available
Cash pursuant to this covenant, such Net Available Cash shall be invested in
Permitted Investments.

For the purposes of this covenant, the following are deemed to be cash
equivalents: (x) the assumption of Debt of the Company or any Subsidiary and the
release of the Company or such Subsidiary from all liability on such Debt in
connection with such Asset Disposition, (y) Temporary Cash Investments, and (z)
securities received by the Company or any Subsidiary from the transferee that
are promptly converted by the Company or such Subsidiary into cash.

(b) If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below) totals at least $ million, the Company must, not later than the
fifteenth Business Day of such month, make an offer (an "Excess Proceeds Offer")
to purchase from the Holders (and to purchase Debt from the holders of any pari
passu Debt) on a pro rata basis an aggregate principal amount of Notes equal to
the Excess Proceeds (rounded down to the nearest multiple of $1,000) on such
date, at a purchase price equal to 100% of the principal amount of such Notes,
plus, in each case, accrued interest (if any) to the date of purchase (the
"Excess Proceeds Payment").

(c) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this clause by virtue thereof.

Limitation on Affiliate Transactions. (a) The Company shall not, and shall
not permit any Subsidiary to, enter into or permit to exist any transaction or
series of similar transactions (including the purchase, sale, lease or exchange
of any property, employee compensation arrangements or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless
the terms thereof (1) are no less favorable to the Company or such Subsidiary
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate, (2) if such
Affiliate Transaction involves an amount in excess of $ million, (i) are
set forth in writing and (ii) have been approved by a majority of the members of
the Board of Directors having no personal stake in such Affiliate Transaction
and (3) if such Affiliate Transaction involves as amount in excess of $
million, have been determined by a nationally recognized investment banking firm
to be fair, from a financial standpoint to the Company and its Subsidiaries.

(b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the covenant described under
"--Limitation on Restricted Payments", (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors, (iii) the grant of stock options or similar
rights to employees and directors of the Company pursuant to plans approved by
the Board of Directors, (iv) loans or advances to employees in the ordinary
course of business in accordance with the past practices of the Company or its
Subsidiaries and their predecessors including loans or advances to Management
Investors in connection with the Management Placement, but in any event not to
exceed $ in the aggregate outstanding at any one time, (v) the payment
of reasonable and customary fees to directors of the Company and its
Subsidiaries who are not employees of the Company or its Subsidiaries and (vi)
any Affiliate Transaction between the Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries.

Merger and Consolidation. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets

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to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the laws of
the U.S. of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and the Indenture; (ii) immediately after giving effect to such transaction (and
treating any Debt which becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as having
been Incurred by such Successor Company or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing; (iii)
immediately after giving effect to such transaction, the Successor Company would
be able to Incur an additional $1.00 of Debt pursuant to paragraph (a) of the
covenant described under "--Limitation on Debt"; (iv) immediately after giving
effect to such transaction, the Successor Company shall have Consolidated Net
Worth in an amount that is not less than the Consolidated Net Worth of the
Company prior to such transaction; and (v) the Company shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental indenture (if
any) comply with the Indenture.

The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Notes.

SEC Reports. So long as any of the Notes are outstanding, the Company will
furnish to the holders of the Notes all quarterly and annual financial reports
that the Company is required to file with the Commission under the Exchange Act
(or similar reports in the event that the Company is not at the time required to
file such reports with the Commission).

DEFAULTS

An Event of Default is defined in the Indenture as (i) a default in the
payment of interest on the Notes when due, continued for 30 days, (ii) a default
in the payment of principal of any Note when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
(iii) the failure by the Company to comply with its obligations under "--Certain
Covenants --Merger and Consolidation" above, (iv) the failure by the Company to
comply for 30 days after notice with any of its obligations in the covenants
described above under "--Change of Control" (other than a failure to purchase
Notes if the preconditions thereto shall have been satisfied) or under
"--Certain Covenants" under "--Limitation on Debt", "--Limitation on Debt and
Preferred Stock of Subsidiaries", "-- Limitation on Restricted Payments",
"--Limitation on Restrictions on Distributions from Subsidiaries", "--Limitation
on Sales of Assets and Subsidiary Stock" (other than a failure to purchase
Notes), "--Limitation on Affiliate Transactions" or "--SEC Reports", (v) the
failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) a default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Debt for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is Guaranteed by the Company or any of its
Subsidiaries) whether such Debt or Guarantee now exists, or is created after the
date of the Indenture, which default (A) is caused by failure to pay principal
of or premium, if any, or interest on such Debt prior to the expiration of the
grace period provided in such Debt on the date of such default ("Payment
Default") or (B) results in the acceleration of such Debt prior to its express
maturity and, in each case, the principal amount of any such Debt, together with
the principal amount of any other such Debt under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $
million or more and such default or acceleration continues for 30 days after
notice, (vii) certain events of bankruptcy, insolvency or reorganization of the
Company or a Significant Subsidiary (the "bankruptcy provisions"), or (viii) any
judgment or decree for the payment of money in excess of $ million is
rendered against the Company or a Significant Subsidiary, remains outstanding
for a period of 60

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days following such judgment and is not discharged, waived or stayed within 10
days after notice (the "judgment default provision"), provided that the amount
of such money judgment or decree shall be calculated net of any insurance
coverage that the Company has determined in good faith is available in whole or
in part with respect to such money judgment or decree. However, a default under
clauses (iv) and (v) will not constitute an Event of Default until the Trustee
or the holders of 25% in principal amount of the outstanding Notes notify the
Company of the default and the Company does not cure such default within the
time specified after receipt of such notice.

If an Event of Default (other than certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary) occurs and is
continuing, the Trustee or the holders of at least 25% in principal amount of
the outstanding Notes may declare the principal of and accrued but unpaid
interest on all the Notes to be due and payable. Upon such a declaration, such
principal and interest shall be due and payable immediately, subject to the
subordination provisions of the Indenture. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary occurs and is continuing, the principal of and interest
on all the Notes will ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any holders
of the Notes. Under certain circumstances, the holders of a majority in
principal amount of the outstanding Notes may rescind any such acceleration with
respect to the Notes and its consequences.

Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of the Notes unless
such holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder of a Note
may pursue any remedy with respect to the Indenture or the Notes unless (i) such
holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy, (iii) such holders have
offered the Trustee reasonable security or indemnity against any loss, liability
or expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period. Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other holder of a Note or that would involve the Trustee in personal
liability.

The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes notice
of the Default within 90 days (or such shorter period as may be required by
applicable law) after it occurs. Except in the case of a Default in the payment
of principal of, premium (if any) or interest on any Note, the Trustee may
withhold notice if and so long as a committee of its trust officers determines
that withholding notice is not opposed to the interest of the holders of the
Notes. In addition, the Company is required to deliver to the Trustee, within
120 days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year. The
Company also is required to deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event which would constitute certain
Defaults, their status and what action the Company is taking or proposes to take
in respect thereof.

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AMENDMENTS AND WAIVERS

Subject to certain exceptions, the Indenture may be amended or supplemented
with the consent of the holders of a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange for the Notes) and any past default or compliance with any
provisions may also be waived with the consent of the holders of a majority in
principal amount of the Notes then outstanding. However, without the consent of
each holder of an outstanding Note affected thereby, no amendment may, among
other things, (i) reduce the amount of Notes whose holders must consent to an
amendment, (ii) reduce the rate of or extend the time for payment of interest on
any Note, (iii) reduce the principal of or extend the Stated Maturity of any
Note, (iv) reduce the premium payable upon the redemption of any Note or change
the time at which any Note may be redeemed as described under "--Optional
Redemption", (v) make any Note payable in money other than that stated in the
Note, (vi) impair the right of any holder of the Notes to receive payment of
principal of and interest on such holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such holder's Notes or (vii) make any change in the amendment
provisions which requires each holder's consent or in the waiver provisions or
(viii) make any change to the subordination provisions of the Indenture that
would adversely affect the Noteholders.

Without the consent of any holder of the Notes, the Company and the Trustee
may amend or supplement the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of the Company under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code), to add guarantees with respect
to the Notes, to secure the Notes, to add to the covenants of the Company and
its Subsidiaries for the benefit of the holders of the Notes or to surrender any
right or power conferred upon the Company, to make any change that does not
adversely affect the rights of any holder of the Notes or to comply with any
requirement of the SEC in connection with the qualification of the Indenture
under the TIA. However, no amendment may be made to the subordination provisions
of the Indenture that adversely affects the rights of any holder of Senior Debt
then outstanding unless the holders of such Senior Debt (or their
Representative) consents to such change.

The consent of the holders of the Notes is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.

After an amendment under the Indenture becomes effective, the Company is
required to mail to holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all holders of the Notes,
or any defect therein, will not impair or affect the validity of the amendment.

TRANSFER

The Notes will be issued in registered form and will be transferable only
upon the surrender of the Notes being transferred for registration of transfer.
The Company may require payment of a sum sufficient to cover any tax, assessment
or other governmental charge payable in connection with certain transfers and
exchanges.

DEFEASANCE

The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and

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obligations to register the transfer or exchange of the Notes, to replace
mutilated, destroyed, lost or stolen Notes and to maintain a registrar and
paying agent in respect of the Notes. The Company at any time may terminate its
obligations under "--Change of Control" and under the covenants described under
"-- Certain Covenants" (other than the covenant described under "--Merger and
Consolidation"), the operation of the cross acceleration provision, the
bankruptcy provisions with respect to Significant Subsidiaries and the judgment
default provision described under "--Defaults" above and the limitations
contained in clauses (iii) and (iv) under "--Certain Covenants--Merger and
Consolidation" above ("covenant defeasance").

The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Significant Subsidiaries) or (viii) under "--Defaults" above or because of the
failure of the Company to comply with "--Change of Control" above or because of
the failure of the Company to comply with clause (iii) or (iv) under "--Certain
Covenants--Merger and Consolidation" above.

In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred.

CONCERNING THE TRUSTEE

is to be the Trustee under the Indenture and has been appointed by the
Company as Registrar and Paying Agent with regard to the Notes.

The Holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that if an Event of Default occurs (and is
not cured), the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent man in the conduct of his own affairs. Subject
to such provisions, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request of any Holder of Notes,
unless such Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense and then only to the
extent required by the terms of the Indenture.

GOVERNING LAW

The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.

CERTAIN DEFINITIONS

"Additional Assets" means (i) any property or assets (other than Debt and
Capital Stock) used or useful in a Related Business; (ii) the Capital Stock of a
Person that becomes a Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Subsidiary or (iii) Capital Stock

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constituting a minority interest in any Person that at such time is a
Subsidiary; provided, however, that any such Subsidiary described in clauses
(ii) or (iii) above is primarily engaged in a Related Business.

"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "--Certain Covenants-- Limitation on
Restricted Payments", "--Certain Covenants--Limitation on Affiliate
Transactions" and "--Certain Covenants--Limitations on Sales of Assets and
Subsidiary Stock" only, "Affiliate" shall also mean any beneficial owner of
Capital Stock representing 10% or more of the total voting power of the Voting
Stock (on a fully diluted basis) of the Company or of rights or warrants to
purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.

"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) by the Company or
any Subsidiary, including any disposition by means of a merger, consolidation or
similar transaction (each referred to for the purposes of this definition as a
"disposition"), of (i) any shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be held by
a Person other than the Company or a Subsidiary), (ii) all or substantially all
the assets of any division or line of business of the Company or any Subsidiary
or (iii) any other assets of the Company or any Subsidiary outside of the
ordinary course of business of the Company or such Subsidiary (other than, in
the case of (i), (ii) and (iii) above, (w) any disposition, or related series of
dispositions, of assets with an aggregate fair market value of $1 million or
less for each such disposition or related series of dispositions, (x)
dispositions permitted under "--Certain Covenants--Merger and Consolidation,"
(y) a disposition by a Subsidiary to the Company or by the Company or a
Subsidiary to a Wholly Owned Subsidiary and (z) for purposes of the covenant
described under "--Certain Covenants --Limitation on Sales of Assets and
Subsidiary Stock" only, a disposition that constitutes a Restricted Payment
permitted by the covenant described under "--Certain Covenants--Limitation on
Restricted Payments").

"Average Life" means, as of the date of determination, with respect to any
Debt or Preferred Stock, the quotient obtained by dividing (i) the sum of the
products of numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Debt or redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such
payment by (ii) the sum of all such payments.

"Banks" means the "Lenders" as defined in the Credit Agreement.

"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.

"Business Day" means each day which is not a Legal Holiday.

"Capital Lease Obligation" of any Person means an obligation that is
required to be classified and accounted for as a capital lease on the face of
the balance sheet of such Person prepared in accordance with GAAP, and the
amount of Debt represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.

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"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible or exchangeable into such equity.

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

"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date of
such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (1) if the Company or any Subsidiary has
Incurred any Debt since the beginning of such period that remains outstanding
(other than Debt Incurred under the Revolving Credit Facility (to the extent of
the commitment thereunder in effect on the last day of such period unless any
portion of such Debt is expected in the reasonable judgment of senior management
of the Company or the applicable Subsidiary to remain outstanding for a period
in excess of 12 months from the date of Incurrence of such indebtedness) or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Debt, or both, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving effect on a pro forma
basis to such Debt as if such Debt had been Incurred on the first day of such
period and the discharge of any other Debt repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Debt as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period any Debt of the Company or any Subsidiary has been repaid, repurchased,
defeased or otherwise discharged or if the transaction giving rise to the need
to calculate the Consolidated Coverage Ratio will include any such repayment,
repurchase, defeasement or discharge not otherwise covered in clause (1) above,
or both (in either case other than Debt Incurred pursuant to the Revolving
Credit Facility or any similar arrangement unless such revolving credit Debt has
been permanently repaid and has not been replaced), Consolidated Interest
Expense for such period shall be calculated, after giving effect thereto on a
pro forma basis, as if such Debt had been repaid, repurchased, defeased or
otherwise discharged on the first day of such period, (3) if since the beginning
of such period the Company or any Subsidiary shall have made any Asset
Disposition, the EBITDA for such period shall be reduced by an amount equal to
the EBITDA (if positive) directly attributable to the assets which are the
subject of such Asset Disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for such period
and Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any Debt of
the Company or any Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital Stock
of any Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Debt of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Debt after such
sale), (4) if since the beginning of such period the Company or any Subsidiary
(by merger or otherwise) shall have made an Investment in any Subsidiary (or any
person which becomes a Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction requiring a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Debt) as if such Investment or acquisition occurred on the
first day of such period and (5) if since the beginning of such period any
Person (that subsequently became a Subsidiary or was merged with or into the
Company or any Subsidiary since the beginning of such period) shall have made
any Asset Disposition, any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (3) or (4) above if made by the
Company or a Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto as if such Asset Disposition, Investment or acquisition occurred on the
first day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an acquisition of

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assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Debt Incurred in connection
therewith, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of the Company. If any Debt bears a
floating rate of interest and is being given pro forma effect, the interest of
such Debt shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Debt if such Interest
Rate Agreement has a remaining term in excess of 12 months).

"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries, plus, to the extent
not included in such total interest expense, and to the extent incurred by the
Company or its Subsidiaries, (i) interest expense attributable to Capital Lease
Obligations, (ii) amortization of debt discount and debt issuance cost, (iii)
capitalized interest, (iv) non-cash interest expenses, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs associated with Interest Rate
Agreements (including amortization of fees), (vii) Preferred Stock dividends in
respect of all Preferred Stock (except dividends payable solely in shares of
Capital Stock of the Company (other than Disqualified Stock of the Company))
held by Persons other than the Company or a Wholly Owned Subsidiary, (viii)
interest incurred in connection with Investments in discontinued operations,
(ix) interest accruing on any Debt of any other Person to the extent such Debt
is Guaranteed by the Company or any Subsidiary and (x) the cash contributions to
any employee stock ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest or fees to any
Person (other than the Company) in connection with Debt Incurred by such plan or
trust provided, however, that there shall not be included in such Consolidated
Interest Expense any amount of interest expense of any Subsidiary if the net
income of such Subsidiary is excluded in the calculation of Consolidated Net
Income (but only in the same proportion as such net income is excluded) because
the declaration or payment of dividends or similar distributions by such
Subsidiary of such net income is not at the time permitted by the operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary.

"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income of any
Person if such Person is not a Subsidiary, except that (A) subject to the
exclusion contained in clause (iv) below, the Company's equity in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to the Company or a Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to a
Subsidiary, to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income to the extent of any cash
actually contributed by the Company or a Subsidiary to such Person during such
Period; (ii) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income of any Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Subsidiary, directly or
indirectly, to the Company, except that (A) subject to the exclusion contained
in clause (iv) below, the Company's equity in the net income of any such
Subsidiary for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such Subsidiary during
such period to the Company or another Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to
another Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Subsidiary for such period shall be
included in determining such Consolidated Net Income to the extent of any cash
actually contributed by the Company or a Subsidiary to such Person during such
Period; (iv) any gain or loss net of tax realized upon the sale or other
disposition of any assets of the Company or its consolidated Subsidiaries
(including pursuant to

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any sale-and-leaseback arrangement) which is not sold or otherwise disposed of
in the ordinary course of business and any gain or loss net of tax realized upon
the sale or other disposition of any Capital Stock of any Person; (v)
extraordinary gains or losses net of tax; and (vi) the cumulative effect of a
change in accounting principles, net of tax. Notwithstanding the foregoing, for
the purposes of the covenant described under "Certain Covenants--Limitation on
Restricted Payments" only, there shall be excluded from Consolidated Net Income
any dividends, repayments of loans or advances or other transfers of assets from
a Subsidiary to the extent such dividends, repayments or transfers increase the
amount of Restricted Payments permitted under such covenant pursuant to clause
(a)(3)(D) thereof.

"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as (i) the par
or stated value of all outstanding Capital Stock of the Company plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.

"Credit Agreement" means that certain Credit Agreement, dated as of
, 1996, among the Company, Bankers Trust Company as agent, the
co-agents named therein and the lenders named therein, including (i) any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in connection with any
such amendment, modification, renewal, refunding, replacement or refinancing.

"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.

"Customer Notes Guarantees" means the Guarantees by the Company, in each
case for no more than years from the Issue Date, of (i) $ million of
the principal and interest on a note payable by Sunny Industries, Inc.; (ii) one
half-year's interest (in an amount not to exceed $ million on a note
payable by a certain newspaper customer; (iii) $ million of the
principal on a note payable by the Hersant Group (as defined herein) and (iv)
other Guarantees by the Company of Customer Notes not to exceed $
million.

"Debt" of any Person means, without duplication, (i) the principal of and
premium (if any) in respect of (A) debt of such Person for money borrowed and
(B) debt evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person; (iii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding (x) trade accounts payable and other current
trade liabilities arising in the ordinary course of business and payable in
accordance with customary practices and (y) deferred purchase price obligations
where payment is due within 12 months of delivery); (iv) all obligations of such
Person for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than obligations with respect to
letters of credit and related Hedging Obligations securing obligations (other
than obligations described in (i) through (iii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third Business Day following receipt by such Person
of a demand for reimbursement following payment on the letter of credit); (v)
the amount of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or, with respect to any
Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any
accrued dividends); (vi) all Hedging Obligations of such Person (other than
Hedging Obligations excluded pursuant to

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clause (iv) above); (vii) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee; and (viii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or asset of
such Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured. The amount of
Debt of any Person at any date shall be the aggregate amount of all obligations
as described above determined in conformity with GAAP; provided, however, that
the amount outstanding at any time of any Debt Incurred with original issue
discount is the face amount of such Debt less the remaining unamortized portion
of the original issue discount of such Debt at such time as determined in
conformity with GAAP.

"Deemed Asset Value" means the fair market value of assets (other than cash)
received by the Company from the issuance or sale of its Capital Stock or as a
capital contribution, in either case as determined in good faith by the Board of
Directors.

"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

"Designated Senior Debt" means (i) Debt under the Credit Agreement and (ii)
any other Senior Debt of the Company, the principal amount of which is
$ or more individually at the date of determination and is specifically
designated by the Company in the instrument evidencing or governing such Senior
Debt and in a written instrument delivered to the Trustee as "Designated Senior
Debt" for purposes of the Indenture.

"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Debt or Disqualified Stock or (iii) is
redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the first anniversary of the Stated Maturity of the Notes;
provided, however, that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the first anniversary of
the Stated Maturity of the Notes shall not constitute Disqualified Stock if the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are not more favorable to the holders of such Capital Stock than the provisions
described under "--Certain Covenants--Limitation on Sales of Assets and
Subsidiary Stock" and "--Certain Covenants" and "--Change of Control."

"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income: (a) all income tax expense of the
Company, (b) depreciation expense, (c) amortization expense and (d) all other
non-cash items reducing Consolidated Net Income (other than any non-cash item to
the extent it represents an accrual of, or a reserve for, cash disbursements for
any subsequent period prior to the Stated Maturity of the Notes) and less, to
the extent added in calculating Consolidated Net Income, non-cash items (other
than any non-cash item to the extent it represents an accrual for cash receipts
reasonably expected to be received within 12 months after the date of such
accrual), in each case for such period. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization of, a Subsidiary of the Company shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval other than for the board of directors of such Subsidiary (that has not

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been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Subsidiary or its stockholders.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Foreign Subsidiary" means a subsidiary that is organized under the laws of
any country other than the U.S. and substantially all the assets of which are
located outside of the U.S.

"GAAP" means generally accepted accounting principles in the U.S. of America
as in effect as of the Issue Date, including those set forth (i) in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and (ii) statements and pronouncements of the
Financial Accounting Standards Board. All ratios and computations based on GAAP
contained in the Indenture shall be computed in conformity with GAAP applied on
a consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of the
Indenture shall be made without giving effect to (i) the deduction or
amortization of any premiums, fees and expenses incurred in connection with the
Transactions, (ii) except as otherwise provided, the amortization of any amounts
required or permitted by Accounting Principles Board Opinion Nos. 16 (including
non-cash write-ups and non-cash charges relating to inventory, fixed assets and
in-process research and development, in each case arising in connection with the
Acquisition) and 17 (including non-cash charges relating to intangibles and
goodwill arising in connection with the Acquisition).

"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt or other obligation of any Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning. The term
"Guarantor" shall mean any Person Guaranteeing any obligation.

"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.

"Holder" or "Noteholder" means the Person in whose name a Note is registered
on the Registrar's books.

"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Debt or Capital Stock of a Person existing at
the time such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at
the time it becomes a Subsidiary. The term "Incurrence" when used as a noun
shall have a correlative meaning. The accretion of principal of a non-interest
bearing or other discount security shall be deemed the Incurrence of Debt.

"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect the Company or any Subsidiary against fluctuations in interest rates.

"Investment" in any Person means any loan or advance (other than advances to
customers in the ordinary course of business on commercially reasonable terms
that are recorded as accounts receivable on the balance sheet of such Person)
to, any acquisition of Capital Stock, equity interest, obligation or

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other security of, or capital contribution or other investment in, or any other
credit extension to (including by way of Guarantee of any Debt of), such Person.

"Issue Date" means the date on which the Notes are originally issued.

"Joint Venture Contract" means that certain Joint Venture Contract, dated
October 29, 1993, between Rockwell Graphic Systems, Inc. and Shanghai Printing &
Packaging Machinery Corp., as in effect on the Issue Date.

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to such
properties or assets that are the subject of such Asset Disposition or received
in any other noncash form) in each case net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all Federal, state, provincial, foreign and local taxes required to be accrued
as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Debt which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by its terms,
or in order to obtain a necessary consent to such Asset Disposition, or by
applicable law be, repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Disposition
and (iv) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed in such Asset Disposition and retained by the
Company or any Subsidiary after such Asset Disposition.

"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds (including cash equivalents) of such issuance or sale
net of attorneys' fees, accountants' fees, underwriters' or placement agents'
fees, discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.

"Permitted Holders" means Stonington, the Fund, the Management Investors and
their respective Affiliates, including Holdings.

"Permitted Investment" means (A) an Investment by the Company or any
Subsidiary in (i) a Wholly Owned Subsidiary or a Person that will, upon the
making of such Investment, become a Wholly Owned Subsidiary; (ii) another Person
if as a result of, and contemporaneously with, such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Wholly Owned Subsidiary; (iii)
Temporary Cash Investments; (iv) receivables owing to the Company or any
Subsidiary if created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; (v) payroll, travel
and similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes, that are
made in the ordinary course of business and that do not in the aggregate exceed
$ at any time; (vi) loans or advances to employees, officers or
directors made in the ordinary course of business consistent with past practices
of the Company or a Subsidiary or made in connection with the Management
Placement and that do not in the aggregate exceed $ at any time; (vii)
stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any Subsidiary or in
satisfaction of judgments; and (viii) any Person to the extent such Investment
represents the non-cash portion of the consideration received for an Asset
Disposition as permitted pursuant to the covenant described under

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"--Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock" and
(B) any Investment by the Company in the Permitted Joint Venture at the times
and in the amounts and manner required by the Joint Venture Contract, provided
that such Investments, in the aggregate, may not exceed $ and (C) any
Investment in Customer Notes provided that such Investments, in the aggregate,
may not exceed $ million.

"Permitted Joint Venture" means Shanghai Rockwell Graphic Systems Co., Ltd.,
a joint venture formed by the Company and Shanghai Printing & Packaging
Machinery Corp. pursuant to the Joint Venture Contract.

"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.

"Preferred Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.

"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.

"Public Equity Offering" means a public offering of common stock of the
Company or Holdings pursuant to an effective registration statement under the
Securities Act.

"Public Market" means any time after (x) a Public Equity Offering has been
consummated and (y) at least 15% of the total issued and outstanding common
stock of the Company or Holdings, as the case may be, has been distributed by
means of an effective registration statement under the Securities Act or sales
pursuant to Rule 144 under the Securities Act.

"Refinance" means, in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue other Debt in
exchange or replacement for, such debt. "Refinanced" and "Refinancing" shall
have correlative meanings.

"Refinancing Debt" means Debt that Refinances any Debt of the Company or any
Subsidiary existing on the Issue Date or Incurred in compliance with the
Indenture including Debt that Refinances Refinancing Debt; provided, however,
that (i) such Refinancing Debt has a Stated Maturity no earlier than the Stated
Maturity of the Debt being Refinanced, (ii) such Refinancing Debt has an Average
Life at the time such Refinancing Debt is Incurred that is equal to or greater
than the Average Life of the Debt being Refinanced, (iii) such Refinancing Debt
has an aggregate principal amount (or if Incurred with original issue discount,
an aggregate issue price) that is equal to or less than the aggregate principal
amount (or if Incurred with original issue discount, the aggregate accreted
value) then outstanding or committed (plus fees and expenses, including any
premium and defeasance costs) under the Debt being Refinanced and (iv) with
respect to any Refinancing Debt of Debt other than Senior Debt, such Refinancing
Debt shall rank no more senior, and shall be at least as subordinated, in right
of payment to the Notes as the Debt being so extended, renewed, refunded or
refinanced; provided, further, however, that Refinancing Debt shall not include
Debt of a Subsidiary that Refinances Debt of the Company.

"Related Business" means the business of the Company and its Subsidiaries on
the Issue Date and any business related, ancillary or complementary to the
businesses of the Company and its Subsidiaries on the Issue Date.

"Representative" means any trustee, agent or representative (if any) for an
issue of Senior Debt of the Company.

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"Restricted Payment" with respect to any Person means (i) the declaration or
payment of any dividends or any other distributions of any sort in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving such Person) or similar payment to the direct or
indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) or rights to
acquire its Capital Stock (other than Disqualified Stock)) and dividends or
distributions payable solely to the Company or a Subsidiary, and other than pro
rata dividends or other distributions made by a Subsidiary that is not a Wholly
Owned Subsidiary to minority stockholders (or owners of an equivalent interest
in the case of a Subsidiary that is an entity other than a corporation)), (ii)
the purchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company held by any Person or of any Capital Stock of a
Subsidiary held by any Affiliate of the Company (other than a Subsidiary),
including the exercise of any option to exchange any Capital Stock (other than
into Capital Stock of the Company that is not Disqualified Stock), (iii) the
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment of any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) the making of any Investment in any Person (other than a Permitted
Investment).

"Revolving Credit Facility" means the provisions of the Credit Agreement
pursuant to which lenders thereunder have committed to make available to the
Company a revolving credit facility.

"SEC" means the Securities and Exchange Commission.

"Secured Debt" means Debt of the Company secured by a Lien.

"Senior Debt" means (i) Debt of the Company, whether outstanding on the
Issue Date or thereafter Incurred (including, without limitation, Debt Incurred
pursuant to the Credit Agreement, any Interest Rate Agreement or Currency
Agreement and any Guarantee by the Company of any Debt or monetary obligation of
any of its Subsidiaries under any Interest Rate Agreement or Current Agreement)
and (ii) accrued and unpaid interest thereon (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company at the rate otherwise applicable thereto whether or not post-filing
interest is allowed in such proceeding) unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate in right of payment to the Notes;
provided, however, that Senior Debt shall not include (1) any obligation of the
Company to any Subsidiary, (2) any liability for Federal, state, local or other
taxes owed or owing by the Company, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
guarantees thereof or instruments evidencing such liabilities), (4) any Debt of
the Company (and any accrued and unpaid interest in respect thereof) which is
subordinate or junior in any respect to any other Debt or other obligation of
the Company, (5) that portion of any Debt which at the time of Incurrence is
Incurred in violation of the Indenture, (6) Debt owed, due, or guaranteed on
behalf of, any director, officer or employee of the Company or any Subsidiary
(including without limitation amounts owed for compensation), and (7) Debt which
when Incurred and without respect to any election under Section 1111(b) of Title
11 U.S. Code, is without recourse to the Company.

"Senior Subordinated Debt" means the Notes and any other Debt of the Company
that specifically provides that such Debt is to rank pari passu with the Notes
in right of payment and is not subordinated by its terms in right of payment to
any Debt or other obligation of the Company which is not Senior Debt.

"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.

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"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).

"Subordinated Obligation" means any Debt of the Company (whether outstanding
on the Issue Date or thereafter Incurred) which by its written terms is
subordinate or junior in right of payment to the Notes.

"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.

"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the U.S. of America or any agency thereof or
obligations guaranteed by the U.S. of America or any agency thereof, (ii)
investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 270 days of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the U.S. of America,
any state thereof or any foreign country recognized by the U.S., and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the U.S. of America, any jurisdiction thereof or any
foreign country recognized by the U.S. of America with a rating at the time as
of which any investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and
Poor's Ratings Group, and (v) investments in securities with maturities of nine
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the U.S. of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Moody's Investors Service, Inc.

"Term Loan Facility" means the provisions of the Credit Agreement pursuant
to which lenders thereunder have committed to make term loans available to the
Company.

"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sec.Sec.
77aaa-77bbbb) as in effect on the date of this Indenture.

"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the U.S. of America
(including any agency or instrumentality thereof) for the payment of which the
full faith and credit of the U.S. of America is pledged and which are not
callable at the issuer's option.

"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.

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"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares and shares held by other Persons to the
extent such shares are required by applicable law to be held by a Person other
than the Company or a Subsidiary) is owned by the Company or one or more Wholly
Owned Subsidiaries.

DESCRIPTION OF NEW BANK CREDIT AGREEMENT

Stonington has entered into a commitment letter with Bankers Trust Company
("Bankers Trust"), The Bank of Nova Scotia and Credit Suisse (collectively, the
"Lenders") providing for (i) five-year term loan facilities aggregating $75.0
million (the "Term Loan Facility"), and (ii) five-year revolving credit
facilities aggregating $150.0 million with a sublimit for letters of credit to
be agreed upon (the "Revolving Credit Facility" and, together with the Term Loan
Facility, the "Bank Facilities"). The Lenders intend to arrange for other banks,
financial institutions and other "accredited investors" (as defined in
regulations promulgated by the Commission) to provide a portion of the Bank
Facilities. Bankers Trust will act as administrative agent for the Lenders, The
Bank of Nova Scotia will act as documentation agent for the Lenders and Credit
Suisse will act as syndication agent for the Lenders.

The execution of the Bank Facilities, and the delivery of required
documentation thereunder, will occur simultaneously with the closing of this
Offering and the closing of the Acquisition. The Lenders' obligation to provide
the Bank Facilities is conditioned upon, among other things, the preparation,
execution and delivery of mutually acceptable loan documentation, including a
credit agreement incorporating substantially the terms and conditions outlined
in the commitment letter; the Lenders' satisfaction with the final terms,
conditions and structure of the Acquisition; the consummation of the Acquisition
(including the sale of the Customer Notes) pursuant to the terms of the Purchase
Agreement and other definitive documentation, no provision of which shall have
been amended, supplemented, waived or otherwise modified in any material respect
without the prior written consent of the Lenders; and the absence of any
material adverse change in the business, operations, properties, assets,
liabilities, condition (financial or otherwise) or prospects of Goss since
September 30, 1995.

The Term Loan Facility will consist of a term loan in an original principal
amount of $25 million made to the Company, a term loan in an original principal
amount of the Sterling equivalent of $25 million made to Goss U.K. and a term
loan in an original principal amount of the Yen equivalent of $25 million made
to Goss Japan. The Term Loan Facility will have a final maturity date of five
years after the date of the initial funding under the Bank Facilities (the
"Initial Funding Date"). Quarterly amortization will be required, commencing on
the first anniversary of the Closing Date, in each fiscal year in annual amounts
to be determined.

In addition, the Company will be required to make prepayments on the Term
Loan Facility and/or reduce the commitments under the Revolving Credit Facility
under certain circumstances, including upon certain asset sales and issuance of
debt or equity securities. The Company will also be required to make such
prepayments and/or reductions in an amount equal to 75% of the Company's and its
subsidiaries' Consolidated Excess Cash Flow (as defined) for each fiscal year,
payable within 90 days after the end of the applicable fiscal year. Mandatory
prepayments or commitment reductions required as a result of equity or debt
issuances by Holdings or the Company will be apportioned among the Bank
Facilities provided to the Company, Goss U.K. and Goss Japan in a manner to be
determined. Mandatory prepayments arising as a result of Consolidated Excess
Cash Flow will be applied to the Term Loan Facility in proportion to the amount
of debt outstanding under each term loan. All other mandatory
prepayments/reductions will be applied first to prepay the applicable term loan
facility, and, thereafter, to prepay the applicable revolving credit facility
and to reduce the commitments thereunder and thereafter to the remaining term
loans and revolving credit facilities in a manner to be determined. All
mandatory prepayments of the Term Loan Facility arising as a result of
Consolidated Excess Cash

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Flow will be applied pro rata to the scheduled installments thereof and all
other mandatory prepayments of the Term Loan Facility will be applied in inverse
order of maturity. The Term Loan Facility will bear interest, at the Company's
option, at the customary base rate plus 1.5% or at the customary reserve
adjusted Euro-Dollar rate plus 2.5%. As shown in Note (aa) to the Pro Forma
Consolidated Statements of Income, interest expense for the year ended September
30, 1995, on a pro forma basis, on the $75.0 million of Term Loan Facility would
have been $6.2 million.

The Revolving Credit Facility will mature five years after the Initial
Funding Date and will consist of a revolving credit facility in an original
amount of up to $100 million made available to the Company, a revolving credit
facility in an original amount of up to the Sterling equivalent of $100 million
made available to Goss U.K., and a revolving credit facility in an original
amount of up to the Yen equivalent of $25 million made available to Goss Japan,
and which may not, in the aggregate, exceed the U.S. dollar equivalent of $150
million, in each case under which revolving loans may be made, provided that in
no event will the aggregate outstanding amount of such revolving loans used for
working capital requirements and general corporate purposes exceed the U.S.
dollar equivalent of $110 million at any one time, and under which letters of
credit may be issued up to a sublimit to be agreed upon. A portion of the
Revolving Credit Facility, in an amount to be agreed upon, shall be made
available as a swingline facility. The Revolving Credit Facility will bear
interest, at the Company's option, at the customary base rate plus 1.5% or at
the customary reserve adjusted Euro-Dollar rate plus 2.5%. Loans outstanding
under the swingline facility shall bear interest at the customary base rate plus
1.25% and such outstanding loans shall not constitute usage of the Revolving
Credit Facility for purposes of calculating the commitment fee.

The interest rates with respect to the Bank Facilities may be increased or
decreased based upon leverage ratios to be determined.

The proceeds of the Term Loan Facility and approximately $2.3 million under
the Revolving Credit Facility will be used to pay the cash portion of the
purchase price for the Acquisition of Goss under the Purchase Agreement in an
aggregate maximum amount of approximately $552.5 million (subject to certain
adjustments) and to pay fees and expenses in connection with the Acquisition and
the related financings in an aggregate maximum amount of approximately $26.0
million. The Revolving Credit Facility will also be available to provide for the
working capital requirements and general corporate purposes of the Company and
its subsidiaries and, subject to a sublimit to be agreed upon, to issue
commercial letters of credit and standby letters of credit to support workers'
compensation contingencies and for other corporate purposes to be agreed upon.
To the extent that advances under the Revolving Credit Facility are made
available to other subsidiaries of the Company or to the Company, such
intercompany borrowings will be evidenced by promissory notes subordinated in
right of repayment to the Bank Facilities.

The Bank Facilities will be guaranteed by Holdings and by each of the
Company's domestic subsidiaries and, in addition, the Company shall guarantee
the Bank Facilities provided to Goss U.K. and Goss Japan. In the event that U.S.
tax laws are amended to permit foreign subsidiaries to guarantee the Bank
Facilities provided to the Company or to other foreign subsidiaries without the
incurrence of an investment in U.S. property or other deemed dividend for U.S.
tax purposes or otherwise result in U.S. taxable income for the Company and its
subsidiaries, such foreign subsidiaries will agree to then guarantee the Bank
Facilities. All extensions of credit to each borrower will be secured by all
existing and after-acquired personal property of such borrower and all
guaranties will be secured by all existing and after-acquired personal property
of such guarantors, including a pledge of the stock of all such guarantor's
subsidiaries and a pledge of the Intercompany Notes held by such guarantor;
provided that neither the Company nor any guarantor will be required to pledge
more than 66% of the stock of its foreign subsidiaries unless U.S. tax laws are
amended to permit a pledge of more than 66% of such foreign subsidiaries' stock
without giving rise to U.S. tax liabilities for the Company and its
subsidiaries. All extensions of credit under the Intercompany Notes will be
secured on a subordinated basis by

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existing and after-acquired personal property of such intercompany borrower. All
extensions of credit to each borrower will also be secured by first priority
liens on all existing and after-acquired real property fee and leasehold
interests of the borrower and the guarantors, subject to certain exceptions to
be agreed upon.

The Bank Facilities will contain certain financial covenants, including, but
not limited to, a minimum fixed charge coverage test, a minimum interest
coverage test, a minimum EBITDA test, a minimum net worth test and a maximum
leverage test. In addition, the Bank Facilities will contain other customary
affirmative and negative covenants relating to (among other things) limitations
on other indebtedness, liens, investments, guarantees, restricted junior
payments, mergers and acquisitions, sales of assets, capital expenditures,
leases, transactions with affiliates and conduct of business, with customary
exceptions and baskets to be mutually agreed upon. The Bank Facilities will
contain customary events of default, including failure to make payments when
due, defaults under other agreements or instruments of indebtedness,
noncompliance with covenants, breaches of representations and warranties,
bankruptcy, judgments in excess of specified amounts, invalidity of guaranties,
impairment of security interests in collateral and certain changes of control.

Within 90 days of the Initial Funding Date, the Company is required to
obtain interest rate protection, pursuant to interest rate swaps, caps or other
similar arrangements reasonably satisfactory to the Lenders.

DESCRIPTION OF SALE OF CUSTOMER NOTES

Stonington has entered into a commitment letter with BT Commercial
Corporation ("BTCC") providing for the purchase by BTCC from the Company of a
portfolio of the Customer Notes and related sales contracts, instruments,
agreements, documents and collateral outstanding on February 29, 1996, arising
from the sale of printing and like equipment (the "Equipment"), for a purchase
price of approximately $163.7 million, subject to certain adjustments for new
Customer Notes entered into between February 29, 1996 and the day preceding the
Closing Date and for Customer Notes that are restructured between March 1, 1996
and the Closing Date (except for one Customer Note, the restructuring of which
has been disclosed to BTCC), both of which require the prior consent of BTCC.
The purchase price will be reduced by all reductions in the aggregate unpaid
principal balance of the Customer Notes between March 1, 1996 and the Closing
Date, whether resulting from the receipt of regularly scheduled installments of
principal on the Customer Notes, partial installments of principal on the
Customer Notes, or partial or full prepayment (whether the prepayment is the
result of the liquidation of the collateral securing the Customer Notes or
otherwise).

The obligations of the Company will be non-recourse, except with respect to
representations and warranties by the Company relating to the bona fide nature,
legal enforceability, accuracy and completeness of the documentation, including
the description and location of the Equipment, respecting the Customer Notes and
except with respect to the guarantees described below. BTCC's obligation to
purchase the Customer Notes is conditioned upon, among other things (i) the
execution of a service and remarketing agreement between the Company and BTCC
acceptable to both parties, providing for warranty, maintenance and repair
services and remarketing assistance with respect to the Equipment and for
certain indemnities of BTCC; (ii) Rockwell making a representation in favor of
BTCC that, other than items withheld because of the terms of confidentiality
agreements by which Rockwell is bound, Rockwell has made available to BTCC true
and correct copies of all Customer Notes; (iii) the Company making a
representation in favor of BTCC that, other than items withheld by Rockwell
because of the terms of confidentiality agreements by which Rockwell is bound,
the Company has made or has caused to be made available to BTCC all Customer
Notes, and that all such documentation is and was complete and correct in all
material respects and does not contain any untrue statement of material fact or
omit to state a material fact.

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BTCC's obligations are further conditioned upon (i) the Company guaranteeing
in favor of BTCC (a) approximately $7.0 million of the principal balance and
interest accrued after the Closing Date on the Customer Notes (the "Sunny
Notes") payable by Sunny Industries, Inc. ("Sunny") (secured by a $5.0 million
letter of credit as to the guarantee of principal), (b) one-half of the interest
accrued after the Closing Date on a Customer Note (the "Newspaper Customer
Note"), secured by a letter of credit in an amount of approximately $1.9 million
and (c) $10.5 million of the principal balance on the Customer Note payable by
Socpresse, S.A., Serpo, Presse Ocean and any of their affiliates (including
Robert Hersant, the estate of Robert Hersant and any other successors, assigns
or heirs of Robert Hersant) (the "Hersant Group"); (ii) the execution of an
agreement between Rockwell and BTCC, pursuant to which Rockwell agrees that BTCC
may, between June 1, 1997 and June 30, 1997, sell to Rockwell the Newspaper
Customer Note on certain specified terms, and pursuant to which Rockwell
provides certain guarantees to BTCC; and (iii) Rockwell indemnifying BTCC
against certain claims in connection with the sale of the Newspaper Customer
Note. The letters of credit to be issued in connection with the sale of the
Sunny Notes and the Newspaper Customer Note will be obtained pursuant to draw
downs under the Revolving Credit Facility. See "Description of New Bank Credit
Agreement."

In addition, BTCC's obligation to purchase the Customer Notes is subject to
the execution and delivery of a purchase agreement reasonably satisfactory to
BTCC, consummation of the Acquisition on terms reasonably satisfactory to BTCC
and the absence of any material adverse change in the performance of the
Customer Notes since March 1, 1996.

DESCRIPTION OF PREFERRED STOCK

In connection with the Acquisition, Holdings will issue to Rockwell 47,500
shares of 6 1/2% Redeemable Pay-in-Kind Preferred Stock, par value $.01 per
share (the "Preferred Stock"), having a liquidation preference of $1,000 per
share, or $47.5 million in the aggregate.

The ability of the Company to pay cash dividends on the Preferred Stock and
to redeem or repurchase the Preferred Stock is subject to limitations imposed by
the Company's debt agreements. The following description of the Preferred Stock
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, all of the provisions of the Certificate of Designation
governing the Preferred Stock, a copy of which is attached as an exhibit to the
Registration Statement. See "Available Information."

RANK

The Preferred Stock, with respect to dividend rights, rights upon
liquidation, winding up or dissolution, and redemption rights, ranks (i) junior
to any other series of preferred stock duly established and hereafter created by
the board of directors of Holdings, the terms of which specifically provide that
such series shall rank senior to the Preferred Stock, (ii) on a parity with any
other series of preferred stock duly established by the board of directors of
Holdings, the terms of which shall specifically provide that such series shall
rank on a parity with the Preferred Stock, whether now existing or hereafter
created, and (iii) prior to any other class or series of capital stock of
Holdings, including, without limitation, all classes of the Common Stock and
Nonvoting Common Stock whether now existing or hereafter created (all of such
classes or series of capital stock of Holdings to which the Preferred Stock
ranks prior, including without limitation the Common Stock and the Nonvoting
Common Stock, and including, without limitation, Junior Securities convertible
into or exchangeable for other Junior Securities, are collectively referred to
herein as the "Junior Securities").

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DIVIDENDS

The holders of the shares of Preferred Stock are entitled to receive when
and as declared by the Board of Directors of Holdings, out of funds legally
available therefor, cumulative dividends on the shares of the Preferred Stock,
at a rate per annum of 6 1/2% multiplied by the liquidation preference thereof.
Dividends on shares of Preferred Stock are payable on December 31 of each year,
commencing on December 31, 1996, which date shall be the first day of the next
succeeding dividend period (each such period, an "Annual Dividend Period"), or
if any such date is not a business day, on the next succeeding business day
(each of such dates being a "Dividend Payment Date"), in preference to and in
priority over dividends on the Junior Securities. Dividends on the Preferred
Stock are fully cumulative and accrue (whether or not earned or declared and, to
the extent permitted by law, whether or not there are unrestricted funds of
Holdings legally available for the payment of dividends), without interest, from
the first day of the Annual Dividend Period, except that with respect to the
Annual Dividend Period ending on December 30, 1996, such dividend shall accrue
from the Acquisition Closing and except that with respect to the first Annual
Dividend Period relating to any Additional Shares of Preferred Stock (as defined
below), dividends shall accrue from the respective initial date of issuance
thereof.

On each Dividend Payment Date that occurs prior to the payment (a "Junior
Stock Dividend") of dividends on any class or series of Common Stock or Junior
Securities payable in cash or other property (except for dividends payable in
shares of Common Stock or Junior Securities), Holdings may pay dividends on the
Preferred Stock, at its option, in cash or by issuing a number of additional
shares (or partial shares) of the Preferred Stock (the "Additional Shares of
Preferred Stock") for each such share (or partial share) of Preferred Stock then
outstanding equal to the dividend then payable on each such share (or partial
share) of Preferred Stock for the Annual Dividend Period then ended (or such
shorter period for which dividends are so being paid) (expressed as a dollar
amount) divided by the liquidation value of one share of Preferred Stock
(expressed as a dollar amount).

On each Dividend Payment Date which occurs after a Junior Stock Dividend,
Holdings will pay such dividend amount in cash; provided, however, that Holdings
will not be required to pay cash dividends on shares of Preferred Stock to the
extent that the payment of each dividend on shares of Preferred Stock is
prohibited by the then applicable corporation law of the State of Delaware.

RESTRICTED PAYMENTS

For so long as any shares of Preferred Stock are outstanding, no dividend
will be declared or paid or set aside for payment or other distribution declared
or made (in each case, other than dividends or distributions paid in shares of
Junior Securities, or options, warrants or rights to subscribe for or purchase
shares of Junior Securities) upon any Junior Securities, nor will any Junior
Securities (or any options, warrants or rights to subscribe for or purchase
Junior Securities) be redeemed, purchased or otherwise acquired by Holdings or
any of its subsidiaries for any consideration (except for shares of Junior
Securities, or options, warrants or rights to subscribe for or purchase shares
of Junior Securities), unless, in either case, dividends on the shares of
Preferred Stock are paid in full for all prior periods and are paid or set apart
for payment in full for the current period.

Notwithstanding the foregoing, the Certificate of Designation will not
prevent the redemption, purchase or other acquisition by Holdings or any of its
subsidiaries of shares of Junior Securities pursuant to certain management
investment agreements entered into in connection with, or subsequent to, the
Transactions.

LIQUIDATION PREFERENCE

In the event of any liquidation, dissolution or winding up of Holdings, the
holders of the Preferred Stock will be entitled to receive their full
liquidation preference per share, together with accrued and

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unpaid dividends, before the distribution of any assets of Holdings to the
holders of any Junior Securities.

REDEMPTION

Shares of Preferred Stock may, at the option of Holdings, be redeemed at any
time in whole or in part from time to time, out of funds legally available
therefor, at a redemption price, payable in cash, equal to the per share
liquidation preference thereof, plus, in each case, an amount equal to accrued
and unpaid dividends thereon (whether or not earned or declared), if any, to the
date fixed for redemption.

In addition, prior to the occurrence of (i) any event in which Stonington or
its affiliates cease to own in excess of 50% of the voting securities of
Holdings or the Company (or any company into which the Company is merged) (a
"Control Event"); (ii) the payment of an Extraordinary Dividend (as defined
below); or (iii) a Qualifying Sale (as defined below), Holdings will be required
to offer to purchase (the "Extraordinary Event Offer") on the date of the
Control Event, Extraordinary Dividend or Qualifying Sale, as the case may be,
all shares of Preferred Stock outstanding at such date at a purchase price,
payable in cash, equal to the per share liquidation preference thereof, plus
accrued and unpaid dividends, if any, to the date of the Control Event,
Extraordinary Dividend or Qualifying Sale, as the case may be. Any Extraordinary
Event Offer may be expressly conditioned on the occurrence of a Control Event, a
Qualifying Sale or the payment of the Extraordinary Dividend and if the Control
Event, the Qualifying Sale or the payment of the Extraordinary Dividend does not
occur, Holdings will have no further obligation in respect of such Extraordinary
Event Offer; provided, however, that the termination of an Extraordinary Event
Offer resulting from the failure of such Control Event, such Qualifying Sale or
payment of such Extraordinary Dividend to occur shall not affect the obligation
of Holdings with respect to any subsequent Extraordinary Event Offers.

An Extraordinary Dividend is defined as (i) any dividend or dividends paid
on the Common Stock or any other class of capital stock of Holdings (other than
the Preferred Stock) which other class of capital stock is issued for less than
the then fair market value, (ii) any redemptions or purchases by Holdings (in
one or more transactions) of shares of capital stock of Holdings (other than the
redemption or purchase of equity securities pursuant to management investment
agreements entered into in connection with, or subsequent to, the Closing),
(iii) any dividends (in one or more transactions) by any subsidiary of Holdings
on its capital stock to any person or entity other than Holdings or one of its
subsidiaries or (iv) any redemptions or purchases (in one or more transactions)
by any subsidiary of Holdings of shares of its capital stock from any person or
entity other than Holdings or one of its subsidiaries; pursuant to which (A) the
aggregate value of such dividends set forth in clause (i) in any twelve month
period, plus (B) the aggregate fair market value of such dividends or
redemptions set forth in clauses (ii) to (iv), is equal to or greater than the
aggregate fair market value of 10% of the then outstanding shares of Common
Stock.

A Qualifying Sale is defined as the transfer by Stonington or its affiliates
(other than transfers to an affiliate) of such number of shares of capital stock
of Holdings in one or more transactions (including transfers of shares of
capital stock of Holdings held on the Closing Date or thereafter acquired, but
excluding such shares acquired from Holdings after the Closing Date (other than
in exchange for other capital stock of Holdings) at the fair market value
thereof) as is equal to or greater than 5% of its shares of Common Stock held on
the Closing Date.

TRANSFER RESTRICTIONS

Prior to a Qualified Primary Public Offering (as defined below), Rockwell
will not be permitted to sell, offer, assign, pledge, hypothecate, encumber or
otherwise transfer ("Transfer") its shares of Preferred Stock, other than to
affiliates of Rockwell who agree in writing to be bound by the transfer
restrictions described herein, without the prior written consent of Holdings,
except that no such consent

107
<PAGE>
(other than with respect to a transfer to a competitor of Holdings or any of its
affiliates) shall be required upon the failure by Holdings to declare and pay
any annual dividend on the shares of Preferred Stock or to satisfy its
obligations specified under the second paragraph of "--Redemption." After a
Qualified Primary Public Offering, the holders of shares of Preferred Stock will
have the right to Transfer such shares, except for transfers to a competitor of
Holdings or any of its affiliates.

A Qualified Primary Public Offering is defined as the completion of a sale
of shares pursuant to an effective registration statement under the Securities
Act (other than a registration statement relating to Common Stock issuable upon
the exercise of employee stock options or in connection with any employee
benefit plan and other than a registration statement on Form S-4) of Common
Stock representing more than 15% of the then outstanding shares of Common Stock.

VOTING RIGHTS

The holders of record of shares of Preferred Stock will not be entitled to
any voting rights, except upon the occurrence of (i) the failure by Holdings to
declare and pay a dividend on the Preferred Stock on any Dividend Payment Date
or (ii) the failure of Holdings to satisfy the obligations with respect to the
Preferred Stock described under the second paragraph of "--Redemption." Upon the
occurrence of any of the events set forth in the preceding sentence, the size of
the Board of Directors of Holdings will be increased by two directors, and the
holders of a majority of the outstanding shares of Preferred Stock, voting as a
separate class, will be entitled to elect two additional members of the Board of
Directors of Holdings, provided that such right to elect two additional members
of the Board of Directors of Holdings will terminate when the event giving rise
to such right is cured. Such holders are not entitled to any other voting rights
except as specified herein and except as otherwise required by law.

In addition, the affirmative vote of the holders of at least a majority of
the outstanding shares of Preferred Stock, voting separately as a single class
on a one vote per share (pro rated for fractional shares) basis, in person or by
proxy, at a special or annual meeting of stockholders called for the purpose, or
by consent, shall be required to amend, repeal or change any provisions of the
Certificate of Incorporation of Holdings governing the Preferred Stock in any
manner which would adversely affect, alter or change the powers, preferences or
special rights of any share of Preferred Stock.

FINANCIAL STATEMENTS

Holdings will provide to the holders of the shares of Preferred Stock annual
and quarterly financial statements of the Company within times to be agreed
upon.

RELATED AGREEMENT

In connection with the issuance of the Preferred Stock, the Fund will enter
into a letter agreement with Rockwell providing that, in the event that a
Qualifying Sale occurs and Holdings fails to satisfy its obligations set forth
under the second paragraph of "--Redemption," the Fund will promptly purchase
such number of shares of Preferred Stock from Rockwell (or transferees who
obtain shares of Preferred Stock in compliance with the restrictions set forth
in "--Transfer Restrictions") for its full liquidation preference, together with
accrued and unpaid dividends to the date of purchase, as is equal to the net
proceeds from such Qualifying Sale.

108
<PAGE>
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a general discussion of the principal U.S. federal income
tax consequences of the acquisition, ownership and disposition of the Notes to
initial beneficial owners of the Notes who are U.S. Holders (as defined below)
and the principal U.S. federal income and estate tax consequences of the
acquisition, ownership and disposition of the Notes to initial beneficial owners
of the Notes who are Non-U.S. Holders (as defined below). This discussion is
based on currently existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), existing and proposed Treasury regulations promulgated
thereunder and administrative and judicial interpretations thereof, all as in
effect or proposed on the date hereof and all of which are subject to change,
possibly with retroactive effect, or different interpretations. It does not
include any description of the tax laws of any state, local or foreign
government that may be applicable to the Notes or beneficial owners thereof.
This discussion does not address the tax consequences to subsequent beneficial
owners of the Notes, and is limited to beneficial owners who hold the Notes as
capital assets within the meaning of section 1221 of the Code. This discussion
also does not address the tax consequences to Non-U.S. Holders that are subject
to U.S. federal income tax on a net basis on income realized with respect to a
Note because such income is effectively connected with the conduct of a U.S.
trade or business. Moreover, this discussion is for general information only,
and does not address all of the U.S. federal income tax consequences that may be
relevant to particular initial beneficial owners in light of their personal
circumstances, or to certain types of initial beneficial owners (such as certain
financial institutions, insurance companies, tax-exempt entities, dealers in
securities or persons who have hedged the risk of owning a Note).

PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND
DISPOSITION OF THE NOTES, INCLUDING THE APPLICABILITY OF ANY FEDERAL TAX LAWS OR
ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND ANY CHANGES (OR PROPOSED CHANGES) IN
APPLICABLE TAX LAWS OR INTERPRETATIONS THEREOF.

U.S. FEDERAL INCOME TAXATION OF U.S. HOLDERS

Payments of Interest

In general, interest on a Note will be taxable to a beneficial owner who or
which is (i) a citizen or resident of the U.S. for U.S. federal income tax
purposes, (ii) a corporation created or organized under the laws of the U.S. or
any State thereof, (iii) a person or entity that is otherwise subject to U.S.
federal income tax on a net income basis in respect of income derived from
Notes, or (iv) a partnership to the extent the interest therein is owned by a
person who is described in clause (i), (ii) or (iii) of this paragraph (a "U.S.
Holder") as ordinary income at the time it is (actually or constructively)
received or accrued, depending on the beneficial owner's method of accounting
for U.S. federal income tax purposes.

SALE, EXCHANGE, DISPOSITION AND RETIREMENT OF NOTES

A U.S. Holder's tax basis in a Note will generally be its cost. A U.S.
Holder will generally recognize gain or loss on the sale, exchange, retirement
or other disposition of a Note equal to the difference between the amount
realized on such sale, exchange, retirement or other disposition and the tax
basis of the Note. Gain or loss recognized on such sale, exchange, retirement or
other disposition of a Note (other than gain attributable to accrued but unpaid
interest) will be capital gain or loss and will be long-term capital gain or
loss if the Note was held for more than one year.

109
<PAGE>
U.S. TAXATION OF NON-U.S. HOLDERS

Under present U.S. federal income and estate tax law and subject to the
discussion of backup withholding below:

(i) payments of principal and interest on the Notes by the Company or
any agent of the Company to any beneficial owner of a Note that is not a
U.S. Holder (a "Non -U.S. Holder") will not be subject to U.S. federal
withholding tax, provided that in the case of interest (a)(1) the Non-U.S.
Holder does not actually or constructively own 10 percent or more of the
total combined voting power of all classes of stock of the Company entitled
to vote, (2) the Non-U.S. Holder is not a controlled foreign corporation
that is related to the Company through stock ownership, (3) the Non-U.S.
Holder is not a bank described in Section 881(c)(3)(A) of the Code, and (4)
either (A) the beneficial owner of the Notes certifies to the Company or its
agent on Internal Revenue Service ("IRS") Form W-8 (or a suitable substitute
form), under penalties of perjury, that it is not a "U.S. person" (as
defined in the Code) and provides its name and address, or (B) a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the Notes on behalf of the beneficial
owner certifies to the Company or its agent under penalties of perjury that
such statement has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes the
payor with a copy thereof or (b) the Non-U.S. Holder is entitled to the
benefits of an income tax treaty under which interest on the Notes is exempt
from U.S. withholding tax and provides a properly executed IRS Form 1001
claiming the exemption;

(ii) a Non-U.S. Holder will not be subject to U.S. federal withholding
tax on gain realized on the sale, exchange or redemption of a Note, unless
the Non-U.S. Holder is an individual who is present in the U.S. for a period
or periods aggregating 183 or more days in the taxable year of the
disposition and certain other conditions are met; and

(iii) Notes held at the time of death (or theretofore transferred
subject to certain retained rights or powers) by an individual who at the
time of death is a Non-U.S. Holder will not be included in such holder's
gross estate for U.S. federal estate tax purposes provided that the
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote or hold the Notes in connection with a U.S. trade or business.

INFORMATION REPORTING AND BACKUP WITHHOLDING

For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the beneficial
owner's name, address and taxpayer identification number, the aggregate amount
of interest paid to that beneficial owner during the calendar year and the
amount of tax withheld, if any. This obligation, however, does not apply with
respect to payments to certain U.S. Holders, including corporations, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts, provided that they establish entitlement to an exemption.

In the event that a U.S. Holder subject to the reporting requirements
described above fails to supply its correct taxpayer identification number in
the manner required by applicable law or underreports its tax liability, the
Company, its agents or paying agents or a broker may be required to "backup"
withhold a tax equal to 31% of each payment of interest and principal (and
premium, if any) on the Notes. This backup withholding is not an additional tax
and may be credited against the U.S. Holder's U.S. federal income tax liability,
provided that the required information is furnished to the IRS.

Under current Treasury regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a Non-U.S. Holder

110
<PAGE>
of a Note if such holder has provided the required certification that it is not
a U.S. person as set forth in clause (4) in the first paragraph under "U.S.
Taxation of Non-U.S. Holders," or has otherwise established an exemption
(provided that neither the Company nor its agent has actual knowledge that the
holder is a U.S. person or that the conditions of any exemption are not in fact
satisfied).

Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a U.S. person, a controlled foreign
corporation for U.S. federal income tax purposes or a foreign person 50 percent
or more of whose gross income from all sources for the three-year period ending
with the close of its taxable year preceding the payment was effectively
connected with a U.S. trade or business, information reporting may apply to such
payments. Payment of the proceeds from a sale of a Note to or through the U.S.
office of a broker is subject to information reporting and backup withholding
unless the holder or beneficial owner certifies as to its taxpayer
identification number or otherwise establishes an exemption from information
reporting and backup withholding.

PROPOSED REGULATIONS

The IRS recently issued proposed regulations relating to withholding, backup
withholding and information reporting that, if adopted in their current form,
would, among other things, unify current certification procedures and forms and
clarify certain reliance standards. The regulations are proposed to be effective
for payments made after December 31, 1997 but provide that certificates issued
on or before the date that is 60 days after the proposed regulations are made
final will continue to be valid until they expire. The proposed regulations,
however, may be subject to change prior to their adoption in final form.

111
<PAGE>
UNDERWRITING

Under the terms and subject to the conditions contained in the Underwriting
Agreement (the "Underwriting Agreement") dated , 1996, between the Company
and the underwriters set forth below (the "Underwriters"), the Underwriters have
severally but not jointly agreed to purchase from the Company the respective
principal amount of Notes set forth opposite their names below:

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITERS OF NOTES
- ------------------------------------------------------------------ ---------
<S> <C>
CS First Boston Corporation....................................... $
BT Securities Corporation
---------
Total......................................................... $
---------
---------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all the Notes, if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in certain
circumstances the purchase commitments of the non-defaulting Underwriter may be
increased or the Underwriting Agreement may be terminated.

The Company has been advised that the Underwriters propose to offer the
Notes to the public at the public offering price set forth on the cover page of
this Prospectus and to certain securities dealers at such price less a
concession not in excess of % per $1,000 principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of % per $1,000 principal amount of the Notes to certain other dealers. After
the initial public offering, the public offering price, concession and discount
to dealers may be changed by the Underwriters.

The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
act as market makers for the Notes. However, neither Underwriter is obligated to
make a market in the Notes, and any such market making may be discontinued at
any time at the sole discretion of such Underwriter. There can be no assurance
that an active public market for the Notes will develop.

The Underwriters have informed the Company that they do not expect
discretionary sales by the Underwriters to exceed 5% of the principal amount of
Notes being offered hereby.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.

CS First Boston and its affiliates, and BT Securities Corporation and its
affiliates, have certain interests in the Acquisition in addition to being
underwriters of the Notes. In connection with the New Bank Credit Agreement,
Bankers Trust Company, an affiliate of BT Securities Corporation, will act as
administrative agent and will receive customary fees and have expenses
reimbursed in connection with such services. BT Commercial Corporation, an
affiliate of BT Securities Corporation, will purchase the Customer Notes from
the company in connection with the Acquisition, and will have expenses
reimbursed in connection therewith. Credit Suisse, the parent of CS First
Boston, will act as syndication agent in connection with the New Bank Credit
Agreement. Credit Suisse will receive customary fees and will have expenses
reimbursed in connection with such services.

An affiliate of BT Securities Corporation and an affiliate of CS First
Boston each own a limited partnership interest in the Fund. In addition, each of
BT Securities Corporation and CS First Boston has from time to time provided
investment banking and financial advisory services to Stonington and its

112
<PAGE>
affiliates, for which each has received customary fees, and each of them may
continue to do so in the future.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Securities in Canada is being made only on a private
placement basis exempt from the requirement that the Issuers prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Securities are effected. Accordingly, any resale of the Securities in
Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the Securities.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Securities in Canada who receives a purchase confirmation
will be deemed to represent to the Issuers and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Securities without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, such purchaser is purchasing as principal and not as agent, and
(iii) purchaser has reviewed the text above under "--Resale Restrictions."

RIGHTS OF ACTION AND ENFORCEMENT

The Securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

All of the issuers' directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuers or such persons. All or a substantial portion of the assets of the
issuers and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuers or such persons in
Canada or to enforce a judgment obtained in Canadian courts against such issuers
or persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Securities to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Securities acquired by such purchaser pursuant to the Offerings. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Issuers. Only one
such report must be filed in respect of Securities acquired on the same date and
under the same prospectus exemption.

113
<PAGE>
LEGAL MATTERS

The validity of the Notes will be passed upon for the Company by Wachtell,
Lipton, Rosen & Katz, New York, New York, counsel to the Company, and for the
Underwriters by Dewey Ballantine, New York, New York.

EXPERTS

The balance sheet of Goss Graphic Systems, Inc. as of July 16, 1996 included
in this Prospectus has been audited by Arthur Andersen LLP, independent
auditors, as stated in their report appearing herein. The balance sheet has been
included in this Prospectus in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.

The combined financial statements of Rockwell Graphic Systems, a business
unit of Rockwell International Corporation, as of September 30, 1994 and 1995
and for each of the three years in the period ended September 30, 1995 included
in this Prospectus and the related financial statement schedule included
elsewhere in the Registration Statement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports appearing herein and
elsewhere in the Registration Statement (which reports express an unqualified
opinion and include an explanatory paragraph relating to the preparation of the
financial statements of a business unit of Rockwell International Corporation),
and have been so included in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed a registration statement on Form S-1 (together with
all amendments, exhibits, schedules and supplements thereto, the "Registration
Statement") with the Securities and Exchange Commission (the "Commission") under
the Securities Act with respect to the Notes offered hereby. This Prospectus,
which forms a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain parts of which have
been omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Notes offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract, agreement or other document are
not necessarily complete, and, in each instance, reference is made to the copy
of the document filed as an exhibit to the Registration Statement. The
Registration Statement can be inspected and copied at the offices of the
Commission at Room 1024 Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 or at the Commission's regional offices at Seven World Trade Center
(13th Floor), New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.

The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act"). As a result of the
Offering, the Company will become subject to the informational requirements of
the 1934 Act. The Company will fulfill its obligations with respect to such
requirements by filing periodic reports and other information with the
Commission.

114
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
COMBINED FINANCIAL STATEMENTS OF THE ROCKWELL GRAPHIC SYSTEMS, A BUSINESS UNIT OF
ROCKWELL INTERNATIONAL CORPORATION

Independent Auditors' Report....................................................... F-2

Combined Balance Sheets as of September 30, 1994 and 1995 and (Unaudited) March 31,
1996................................................................................. F-3

Combined Statements of Operations for the Years Ended September 30, 1993, 1994 and
1995 and (Unaudited) for the Six Months Ended March 31, 1995 and 1996................ F-4

Combined Statements of Cash Flows for the Years Ended September 30, 1993, 1994 and
1995 and (Unaudited) for the Six Months Ended March 31, 1995 and 1996................ F-5

Notes to Combined Financial Statements............................................. F-6

CONSOLIDATED BALANCE SHEET OF GOSS GRAPHIC SYSTEMS, INC.

Report of Independent Public Accountants........................................... F-23

Consolidated Balance Sheet as of July 16, 1996..................................... F-24

Notes to Consolidated Balance Sheet................................................ F-25
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

Rockwell Graphic Systems:

We have audited the accompanying combined balance sheets of Rockwell Graphic
Systems, a business unit of Rockwell International Corporation (Rockwell Graphic
Systems--see Note 1), as of September 30, 1995 and 1994, and the related
combined statements of operations and cash flows for each of the three years in
the period ended September 30, 1995. These financial statements are the
responsibility of the management of Rockwell Graphic Systems. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the combined financial position of Rockwell Graphic Systems as of
September 30, 1995 and 1994, and the combined results of its operations and its
cash flows for each of the three years in the period ended September 30, 1995 in
conformity with generally accepted accounting principles.

As discussed in Note 1, the accompanying financial statements have been
prepared from the separate records maintained by Rockwell Graphic Systems and
are not necessarily indicative of the conditions that would have existed or the
results of operations if Rockwell Graphic Systems had been operated as an
unaffiliated company. Portions of certain expenses represent allocations of
corporate expenses applicable to Rockwell International Corporation as a whole.

DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania

November 3, 1995 as to the 1995 and 1994 financial statements and
April 26, 1996 as to the 1993 financial statements, except for the fourth
paragraph of Note 22 as to which the date is July 18, 1996.

F-2
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
COMBINED BALANCE SHEETS
(IN MILLIONS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- MARCH 31,
1994 1995 1996
------ ------ -----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 14.1 $ 6.7 $ 24.0
Accounts receivable, net...................................... 163.3 125.3 136.9
Customer notes receivable, current portion.................... 44.7 41.5 37.0
Inventories................................................... 207.5 223.4 207.4
Deferred income taxes......................................... 37.4 32.9 38.6
Other current assets.......................................... 6.0 5.7 8.7
------ ------ -----------
Total current assets...................................... 473.0 435.5 452.6
Property and equipment, net..................................... 177.9 163.5 149.5
Customer notes receivable, net.................................. 138.9 190.2 180.7
Goodwill, net................................................... 144.8 141.2 136.4
Deferred income taxes........................................... 7.4 4.6 3.1
Other assets.................................................... 8.9 12.0 14.0
------ ------ -----------
Total assets.................................................... $950.9 $947.0 $ 936.3
------ ------ -----------
------ ------ -----------
LIABILITIES AND ROCKWELL'S NET INVESTMENT
Current liabilities:
Accounts payable.............................................. $ 73.7 $ 79.0 $ 66.3
Advance payments from customers............................... 94.9 154.4 127.1
Accrued compensation.......................................... 14.4 16.1 14.1
Due to related parties........................................ 8.1 10.8 11.2
Income taxes payable.......................................... 3.6 5.1 10.2
Revolving credit facilities................................... -- -- 48.1
Long-term debt, current portion............................... 1.5 1.5 0.7
Other current liabilities..................................... 105.8 112.1 118.3
------ ------ -----------
Total current liabilities................................. 302.0 379.0 396.0
Other liabilities............................................... 7.5 13.8 13.9
Deferred income taxes........................................... 10.1 10.0 9.7
Long-term debt, less current portion............................ 2.6 1.1 1.0
Contingencies and commitments--Note 19.......................... -- -- --
Rockwell's net investment in Rockwell Graphic Systems........... 628.7 543.1 515.7
------ ------ -----------
Total liabilities and Rockwell's net investment................. $950.9 $947.0 $ 936.3
------ ------ -----------
------ ------ -----------
</TABLE>

See Notes to Combined Financial Statements.

F-3
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
COMBINED STATEMENTS OF OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED SEPTEMBER 30, ENDED MARCH 31,
-------------------------- --------------------------
1993 1994 1995 1995 1996
------ ------ ------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.................................... $627.0 $648.2 $709.3 $ 351.7 $ 343.1
Cost of sales................................ 519.3 524.8 543.2 264.9 277.8
------ ------ ------ ----------- -----------

Gross profit................................. 107.7 123.4 166.1 86.8 65.3
------ ------ ------ ----------- -----------
Operating expenses:
Engineering................................ 29.2 26.2 28.6 13.6 15.4
Sales and marketing........................ 36.3 31.6 35.1 17.7 17.5
General and administrative................. 48.3 52.2 45.0 22.5 20.0
Rockwell common expense allocation......... 7.5 6.8 8.3 4.0 4.1
Patent litigation.......................... -- -- 3.0 -- 1.0
Restructuring charge....................... 5.4 -- -- -- 3.9
------ ------ ------ ----------- -----------
Total operating expenses................... 126.7 116.8 120.0 57.8 61.9
------ ------ ------ ----------- -----------
Operating (loss) profit...................... (19.0) 6.6 46.1 29.0 3.4
Interest income.............................. 22.8 16.2 15.4 6.8 9.2
Interest expense:
Related parties............................ (10.2) (4.3) (2.8) (1.3) (2.7)
Other...................................... (1.7) (1.7) (.2) -- (.6)
Other income (expense), net.................. .8 (2.1) 1.9 3.5 1.0
------ ------ ------ ----------- -----------
Income (loss) before taxes and cumulative
effect of accounting change................ (7.3) 14.7 60.4 38.0 10.3
Provision (credit) for income taxes.......... (1.8) 5.3 24.2 15.5 5.2
------ ------ ------ ----------- -----------
Income (loss) before cumulative effect of
accounting change............................ (5.5) 9.4 36.2 22.5 5.1
Cumulative effect of accounting change for
postemployment benefits, net of income
taxes of $2.5.............................. (4.6) -- -- -- --
------ ------ ------ ----------- -----------
Net (loss) income............................ $(10.1) $ 9.4 $ 36.2 $ 22.5 $ 5.1
------ ------ ------ ----------- -----------
------ ------ ------ ----------- -----------
</TABLE>

See Notes to Combined Financial Statements.

F-4
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
COMBINED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED SEPTEMBER 30, ENDED MARCH 31,
--------------------------- --------------------------
1993 1994 1995 1995 1996
------ ------ ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income............................ $(10.1) $ 9.4 $ 36.2 $ 22.5 $ 5.1
Adjustments to net (loss) income to arrive at
net cash (used for) provided by operating
activities:
Depreciation............................... 26.8 25.7 24.7 12.7 11.5
Gain on sale of customer notes............. (0.6) -- -- -- --
Intercompany purchases from Allen Bradley.. 16.1 14.8 20.3 8.2 10.3
Allocation of common expenses from
Rockwell................................. 7.5 6.8 8.3 4.0 4.1
Cumulative effect of accounting change..... 7.1 -- -- -- --
Amortization of intangible assets.......... 3.6 3.6 5.0 2.4 2.4
Provision for doubtful accounts
receivable............................... 0.5 1.6 1.9 0.5 0.3
Provision for doubtful customer notes
receivable............................... 7.7 17.7 3.5 1.2 0.9
Deferred income taxes...................... (12.3) (4.8) 6.4 4.9 (4.4)
Changes in assets and liabilities:
Accounts receivable, net................. 3.6 (0.9) 37.7 7.5 (15.2)
Inventories.............................. (31.7) 17.5 (13.7) (16.7) 9.8
Customer notes receivable, net........... (84.9) 12.4 (50.4) (4.6) 13.1
Accounts payable......................... 4.9 (7.8) 4.4 (6.1) (3.9)
Advance payments from customers.......... (9.5) (11.6) 59.1 23.2 (24.9)
Due to related parties................... (2.8) 1.9 2.7 2.0 0.4
Accrued compensation..................... (2.9) 2.6 1.6 .3 (1.7)
Other assets and liabilities............. 15.8 (17.6) 9.8 10.9 (1.2)
------ ------ ------- ----------- -----------
Net cash (used for) provided by operating
activities.............................. (61.2) 71.3 157.5 72.9 6.6
------ ------ ------- ----------- -----------
INVESTING ACTIVITIES:
Property additions........................... (12.5) (11.6) (11.5) (4.7) (2.0)
Investment in joint venture.................. -- (.7) -- -- (0.3)
Other........................................ 2.1 (13.4) 2.1 2.4 1.4
------ ------ ------- ----------- -----------
Net cash used for investing activities... (10.4) (25.7) (9.4) (2.3) (0.9)
------ ------ ------- ----------- -----------
FINANCING ACTIVITIES:
Repayment of long-term debt.................. (5.2) (8.6) (1.5) (1.0) (0.8)
Borrowings................................... -- -- -- -- 49.3
Sale of customer notes....................... 68.7 7.8 -- -- --
Net cash transferred from (to) Rockwell...... 2.7 (36.4) (154.0) (74.4) (36.9)
------ ------ ------- ----------- -----------
Net cash provided by (used for) financing
activities.............................. 66.2 (37.2) (155.5) (75.4) 11.6
------ ------ ------- ----------- -----------
Net (decrease) increase in cash.............. (5.4) 8.4 (7.4) (4.8) 17.3
Cash and cash equivalents at beginning of
year...................................... 11.1 5.7 14.1 14.1 6.7
------ ------ ------- ----------- -----------
Cash and cash equivalents at end of year..... $ 5.7 $ 14.1 $ 6.7 $ 9.3 $ 24.0
------ ------ ------- ----------- -----------
------ ------ ------- ----------- -----------
</TABLE>

See Notes to Combined Financial Statements.

F-5
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1993, 1994 AND 1995 AND THE SIX
MONTHS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying combined financial statements (the Statements) present the
financial position, results of operations and cash flows of Rockwell Graphic
Systems, a business unit of Rockwell International Corporation (Rockwell Graphic
Systems). The Statements have been prepared in accordance with generally
accepted accounting principles utilizing the accounting practices and procedures
of Rockwell Graphic Systems and have been derived from the accounting records of
Rockwell International Corporation and its subsidiaries (Rockwell). The
Statements are not necessarily indicative of the financial position, results of
operations or cash flows had Rockwell Graphic Systems operated as a stand-alone
company.

Rockwell Graphic Systems is a leading manufacturer and supplier of web
offset printing press systems for newspaper, commercial and insert printing.
Rockwell Graphic Systems includes the world headquarters located in Westmont,
Illinois, as well as U.S. manufacturing operations in Cedar Rapids, Iowa and
Reading, Pennsylvania. Substantially all U.S. operations are included within
Rockwell Graphic Systems, Inc., a wholly-owned subsidiary of Rockwell, except
for the Reading facility, which is directly owned by Rockwell. Rockwell Graphic
Systems also includes international operations of indirect wholly-owned
subsidiaries of Rockwell in the United Kingdom, France and Germany and
operations in Japan performed by a wholly-owned subsidiary of Rockwell Graphic
Systems, Inc. Rockwell Graphic Systems also has an investment in a joint venture
in China.

Rockwell's cash resources in the U.S., the United Kingdom and Germany are
managed under a centralized system wherein receipts are deposited to Rockwell
corporate accounts and disbursements are centrally funded. Accordingly, the
Statements do not include cash, marketable securities or borrowings, or related
interest income, expense (except for a 1993 charge to the U.K.), receivables or
payables arising from these cash management activities in the U.S., the United
Kingdom and Germany.

The majority of customer notes receivable relating to Rockwell Graphic
Systems are held and administered by Rockwell International Credit Corporation.
Rockwell subsidiaries in the United Kingdom, France, Australia and Canada also
hold notes receivable from Rockwell Graphic Systems customers. These notes and
related interest income are included in the Statements.

Rockwell Graphic Systems benefits from certain direct services which are
provided by Rockwell, including centralized billing for benefit claim payments
for active U.S. employees, data processing, telecommunications, research and
certain insurance. These direct expenses are included in the Statements. In
addition, Rockwell also provides certain common services, such as cash
management and other treasury services, legal, patent, tax, insurance
administration, corporate accounting, audit, communications, benefit
administration services and general management. These common expenses are
allocated by Rockwell using the proportion of divisional sales to total
corporate sales and such allocations are included in the Statements.

Rockwell Graphic Systems' investment in and operating results of Hall
Processing Systems and the assets at the Peterborough, England site have been
excluded from the Statements because they do not represent ongoing operations of
the business. Hall Processing Systems is a joint venture which is 50% owned by
Rockwell Graphic Systems, and is being liquidated by Rockwell. The Peterborough,
England site is a former Rockwell Graphic Systems facility which is being held
for sale by Rockwell and at which there are no ongoing operations.

F-6
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION--(CONTINUED)
Intercompany accounts have been excluded from the assets and liabilities of
Rockwell Graphic Systems except for the payables by Rockwell Graphic Systems to
Allen-Bradley Company, Inc. (Allen-Bradley), a subsidiary of Rockwell, resulting
from inventory purchases by Rockwell Graphic Systems during the 30 days
preceding the date of the Statements. There are no significant operating
activities with other Rockwell subsidiaries.

INTERIM FINANCIAL INFORMATION

The Statements include information as of March 31, 1996 and for the six
months ended March 31, 1995 and 1996 which is unaudited. This information
includes all adjustments which management considers necessary for a fair
presentation of the data for such periods, all of which were of a normal and
recurring nature. This information does not include all footnotes which would be
required for complete annual financial statements prepared in accordance with
generally accepted accounting principles. The results of operations for the six
months ended March 31, 1996 are not necessarily indicative of the results to be
expected for the year ending September 30, 1996.

2. SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Rockwell Graphic Systems recognizes revenue on a percentage-of-completion
basis, utilizing the units-of-delivery method. Units are considered delivered
when title passes to the customer in accordance with the contract terms, which
may precede actual delivery to the customer. At September 30, 1993, 1994 and
1995, Rockwell Graphic Systems had recorded cumulative revenue of $110.4
million, $198.1 million and $219.8 million, respectively, on presses awaiting
delivery to customers for which title had transferred. At March 31, 1995 and
1996, Rockwell Graphic Systems had recorded cumulative revenue of $140.9 million
and $179.7 million, respectively, on presses awaiting delivery to customers for
which title had transferred. Revenue recognized during the years ended September
30, 1993, 1994 and 1995 for presses awaiting delivery amounted to $16.1, $132.3
and $146.4 million, respectively. Revenue recognized for the six months ended
March 31, 1995 and 1996 for presses awaiting delivery amounted to $6.7 and $24.6
million, respectively. Revenue on installation contracts is recognized using the
completed-contract method except for certain installation contracts, generally
in amounts over $1 million, for which the percentage-of-completion, cost-to-cost
method is utilized.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are comprised of cash and short-term investments
having maturities of three months or less at the time of purchase. The carrying
amount of cash and cash equivalents approximates fair value.

INVENTORIES

Inventories are stated at the lower of cost or market. Inventory cost is
generally determined on a last-in, first-out (LIFO) method for U.S. locations
and on a first-in, first-out (FIFO) method for non-U.S. locations.

F-7
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Reserves are provided for excess inventory on a location-by-location basis
based on an analysis of historical usage and management's estimate of future
inventory requirements. Such reserves are based on the carrying cost (LIFO or
FIFO) of the related inventory.

Inventories are classified as a current asset and include certain amounts
not expected to be realized within one year.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful life of the asset (generally 3 to 13 years for machinery and equipment
and up to 50 years for buildings). Leasehold improvements are amortized over the
shorter of the useful life of the asset or the remaining lease term. Where
applicable, interest has been capitalized and included in property and
equipment. Presses which are maintained as test development units on a long-term
basis are included in property and equipment and depreciated over their
estimated useful life (generally 5 to 12 years). Significant renewals and
betterments are capitalized and replaced units are written off. Maintenance and
repairs, as well as renewals of minor amounts, are charged to expense.

SOFTWARE DEVELOPMENT

Rockwell Graphic Systems expenses all costs associated with the programming
and development of new operating systems for its presses. Costs associated with
specific sales contracts generally are capitalized in inventory and charged to
cost of sales as revenues are recognized.

PRODUCT WARRANTY

Product warranty costs include all costs associated with repairs through the
end of the expressed warranty period. These costs are accrued considering
historical warranty cost experience and a periodic assessment of expected
warranty costs associated with each sale.

Unreimbursed costs to repair equipment after the warranty period are
incurred solely at the discretion of management and are expensed as incurred.

WORKERS' COMPENSATION AND PRODUCT AND GENERAL LIABILITY COSTS

The Statements include Rockwell Graphic Systems' estimated costs, including
costs not reimbursable under insurance contracts, of settling workers'
compensation and product and general liability claims. These estimates are
determined from Rockwell Graphic Systems' historical claims incurred experience,
using actuarial computations of the estimated ultimate settlement cost of such
claims, including claims incurred but not yet reported.

GOODWILL

Goodwill represents the excess of the cost of purchased businesses over the
fair value of their net assets at dates of acquisition. Goodwill is being
amortized generally over 40 years, except for goodwill of $28.6 million arising
from Rockwell's acquisition of Miehle Goss Dexter which occurred prior to 1971,

F-8
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
which is not being amortized. Accumulated amortization of goodwill totaled $18
million and $22 million at September 30, 1994 and 1995, respectively.

Management has reviewed the realizability of goodwill and other intangible
assets based on an overall evaluation of remaining useful lives and projected
cash flows and profitability of Rockwell Graphic Systems and has determined that
there is no impairment at September 30, 1995. Management has not evaluated the
impact of Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," which is effective for Rockwell Graphic Systems in fiscal 1997.

INCOME TAXES

Income taxes are accounted for using the liability method, whereby deferred
income taxes reflect the net effect of temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Based on the weight of both negative
and positive evidence, if it is more likely than not that some portion or all of
a deferred tax asset will not be realized, a valuation reserve is established.

INCURRED BUT UNPAID MEDICAL CLAIMS

Rockwell Graphic Systems provides benefits to active U.S. employees for
medical care, dental care and prescription drugs. The liability for benefit
claims which have been incurred but not paid is estimated to be $1.3 million and
$.7 million at September 30, 1994 and 1995, respectively.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.

3. FINANCIAL INSTRUMENTS AND CREDIT CONCENTRATIONS

The Statements include customer notes receivable, long-term debt and foreign
currency forward exchange contracts.

Rockwell Graphic Systems provides financing for sales to certain customers
in the form of promissory notes. The notes are collateralized by the equipment,
accrue interest at varying rates (6.25% to 13.25%) based on the contractual
terms of each agreement and generally have terms of up to ten years. The accrual
of interest is discontinued when a note becomes 90 days past due or when
Rockwell Graphic Systems is notified by the customer of a significant equipment
problem.

Rockwell Graphic Systems customers are not concentrated by geographic area,
but are concentrated in the publishing and printing businesses. Rockwell Graphic
Systems reviews a customer's credit history before extending credit and
establishes an allowance for uncollectible amounts based on management's
evaluation of the collectibility of outstanding balances considering such
factors as the payment status of the notes and management's estimate of the fair
market value of the collateral. To

F-9
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

3. FINANCIAL INSTRUMENTS AND CREDIT CONCENTRATIONS--(CONTINUED)
reduce credit risk, Rockwell Graphic Systems performs a review of the customer's
credit history and retains a security interest on the equipment financed.

The estimated fair value of customer notes receivable was $177 million and
$223 million, respectively, at September 30, 1994 and 1995 based on prevailing
interest rates for performing notes and on the collateral value of the related
presses for past due notes.

During the years ended September 30, 1992 and 1993, Rockwell Graphic Systems
sold certain of its notes receivable with recourse. At September 30, 1995, the
recourse obligation related to these notes was $10.5 million.

Long-term debt consists of bank loans to Rockwell Graphic Systems Japan
which bear interest at 2.875% per annum and mature in 1996 and 1997.

Rockwell enters into foreign currency forward exchange contracts on behalf
of Rockwell Graphic Systems to protect against adverse currency rate
fluctuations. The notional amounts of these contracts totaled $84 million and
$86 million at September 30, 1994 and 1995, respectively, and the contracts
mature at various dates through March 1997. Rockwell Graphic Systems has
deferred $5.3 million and $2.2 million of losses on these contracts at September
30, 1994 and 1995, respectively.

4. ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows (in millions):

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- MARCH 31,
1994 1995 1996
------ ------ ---------
<S> <C> <C> <C>
Trade accounts receivables....................................... $141.0 $118.0 $ 141.3
Unbilled receivables............................................. 27.4 12.3 --
Less allowance for doubtful accounts............................. (5.1) (5.0) (4.4)
------ ------ ---------
Accounts receivable, net......................................... $163.3 $125.3 $ 136.9
------ ------ ---------
------ ------ ---------
</TABLE>

As of September 30, 1994 and 1995 and March 31, 1996, accounts receivable
include $40.0 million, $37.2 million and $28.4 million of retainage held by
customers pending final acceptance of equipment.

Unbilled receivables consists principally of revenues recognized on
contracts under the units-of-delivery method of accounting. Unbilled receivables
are billed in accordance with the terms of contract provisions and do not
include any amounts subject to uncertainty as to their realization.
Substantially all amounts are expected to be billed and collected within one
year.

F-10
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

5. CUSTOMER NOTES RECEIVABLE

Customer notes receivable are summarized as follows (in millions):

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- MARCH 31,
1994 1995 1996
------ ------ ---------
<S> <C> <C> <C>
Customer notes receivable........................................ $212.6 $256.5 $ 237.1
Less allowance for doubtful notes................................ (29.0) (24.8) (19.4)
------ ------ ---------
Notes receivable, net............................................ 183.6 231.7 217.7
Less current portion............................................. (44.7) (41.5) (37.0)
------ ------ ---------
Long-term notes receivable, net.................................. $138.9 $190.2 $ 180.7
------ ------ ---------
------ ------ ---------
</TABLE>

On October 1, 1995, Rockwell Graphic Systems adopted SFAS No. 114,
"Accounting By Creditors for Impairment of a Loan," as amended by SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan--Income Recognition and
Disclosures," which requires the evaluation of the collectibility of principal
and contractual interest of certain impaired customer notes in assessing the
need for an allowance for customer notes. Customer notes are considered impaired
when, based on current information and events, it is probable that Rockwell
Graphic Systems will be unable to collect all amounts due according to the
contractual terms of the note agreement. Impairment is measured based on the
present value of expected future cash flows discounted at the note's effective
interest rate and/or the fair value of collateral. As of March 31, 1996, $28.5
million of customer notes are considered to be impaired, for which $6.0 million
has been reserved for within the allowance for doubtful notes. The adoption of
SFAS Nos. 114 and 118 did not have a material effect on the results of
operations for the six months ended March 31, 1996.

6. INVENTORIES

Inventories are summarized as follows (in millions):

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- MARCH 31,
1994 1995 1996
------ ------ ---------
<S> <C> <C> <C>
Materials........................................................ $ 76.8 $ 57.4 $ 74.8
Work in process.................................................. 66.3 82.9 66.0
Finished goods................................................... 35.9 45.3 26.3
Long-term contracts.............................................. 28.1 30.4 27.4
Parts............................................................ 24.3 28.0 34.4
Less allowance to reduce certain inventories ($136.7 in 1994 and
$125.9 in 1995) to LIFO.......................................... (23.9) (20.6) (21.5)
------ ------ ---------
Inventories, net................................................. $207.5 $223.4 $ 207.4
------ ------ ---------
------ ------ ---------
</TABLE>

Inventory valuation reserves were $43.6 million, $45.0 million and $40.4
million at September 30, 1994 and 1995 and March 31, 1996, respectively.

Long-term contracts consist of inventoried costs of assembled parts relating
to unit of delivery contracts. Such inventoried costs include direct costs of
manufacturing and allocable overhead costs which are not expected to be realized
within one year. Inventoried costs under long-term contracts do not include any
amounts subject to uncertainty as to their determination or realization.

F-11
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

7. PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows (in millions):

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------ MARCH 31,
1994 1995 1996
------- ------- ---------
<S> <C> <C> <C>
Land and land improvements..................................... $ 35.3 $ 35.4 $ 33.8
Buildings and building improvements............................ 77.8 79.0 78.3
Machinery, equipment and tooling............................... 256.8 255.9 255.3
Construction in progress....................................... 7.6 5.7 2.2
------- ------- ---------
Total...................................................... 377.5 376.0 369.6
Less accumulated depreciation.................................. (199.6) (212.5) (220.1)
------- ------- ---------
Property and equipment, net.................................... $ 177.9 $ 163.5 $ 149.5
------- ------- ---------
------- ------- ---------
</TABLE>

8. INVESTMENT IN JOINT VENTURE

Shanghai Rockwell Graphic Systems Co. Ltd. (SRGSL), a joint venture with
Shanghai Printing & Packaging Machinery Corporation, is accounted for using the
equity method. SRGSL was formed in Shanghai, People's Republic of China, on
December 8, 1993 and the joint venture agreement has an operating term of 40
years. SRGSL is engaged in the manufacture and sale of printing presses.

Rockwell Graphic Systems has a commitment to contribute a total of $9
million, which includes equipment and technical support, and $1.0 million of
cash, to SRGSL for a 60% interest in the joint venture after all such
contributions have been made. As of September 30, 1995, Rockwell Graphic Systems
has contributed $4.8 million to the joint venture, which includes $.7 million of
cash and $3.0 million of machinery and equipment currently being refurbished or
awaiting shipment to China.

9. OTHER CURRENT LIABILITIES

Other current liabilities are summarized as follows (in millions):

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- MARCH 31,
1994 1995 1996
------ ------ ---------
<S> <C> <C> <C>
Product warranty costs........................................... $ 45.3 $ 42.7 $ 48.4
Accrued contract costs........................................... 27.8 38.1 32.0
Accrued product liability and workers' compensation costs........ 13.4 15.0 15.2
Other............................................................ 19.3 16.3 22.7
------ ------ ---------
Other current liabilities........................................ $105.8 $112.1 $ 118.3
------ ------ ---------
------ ------ ---------
</TABLE>

10. PENSION PLANS

Rockwell has a pension plan which covers certain Rockwell Graphic Systems
employees and provides for monthly pension payments to eligible U.S. employees
upon retirement. Pension benefits for U.S. salaried employees are based on years
of credited service and compensation. Pension benefits for certain U.S. hourly
employees are based on years of service and specified benefit amounts. U.S.
pension

F-12
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

10. PENSION PLANS--(CONTINUED)
assets are primarily equity securities, U.S. Government obligations and fixed
income investments whose values are subject to fluctuations of the securities
market.

At September 30, 1994 and 1995, the assets for the entire Rockwell
International Pension Plan for U.S. employees of $7,588 million and $8,398
million, respectively, exceeded the accumulated benefit obligation of the plan
of $6,552 million and $7,266 million, respectively. The accumulated benefit
obligations related to Rockwell Graphic Systems participants in this plan are as
follows (in millions):

<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
Accumulated benefit obligation, principally vested:
Active employees........................................ $ 52.6 $ 58.9
Retired and other....................................... 90.0 100.1
------ ------
Total............................................... $142.6 $159.0
------ ------
------ ------
</TABLE>

Certain Rockwell Graphic Systems employees in the United Kingdom participate
in a pension plan sponsored by Rockwell. At September 30, 1994 and 1995, assets
of $10.9 million and $10.3 million, respectively, exceeded the accumulated
benefit obligations of this plan of $9.3 million and $10.2 million,
respectively. The accumulated benefit obligation related to Rockwell Graphic
Systems participants in this plan were $7.8 million and $8.4 million at
September 30, 1994 and 1995, respectively.

The combined statements of operations include $2.7 million, $3.1 million and
$2.9 million in 1993, 1994 and 1995, respectively, related to Rockwell Graphic
Systems' portion of the service cost of active participants of these pension
plans in the U.S. and U.K. Amounts related to accrued pension obligations for
participants and related assets of these plans are not included in Rockwell
Graphic Systems' combined balance sheets.

Prior to 1994, Rockwell Graphic Systems had certain stand-alone pension
plans covering certain of its U.S. employees. The combined statement of
operations for 1993 includes net periodic pension cost for these plans of $2.2
million.

F-13
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

10. PENSION PLANS--(CONTINUED)
In addition, Rockwell Graphic Systems has stand-alone pension plans covering
certain of its employees in the United Kingdom, Germany and Japan. Amounts
included in the accompanying combined balance sheets for these stand-alone plans
are as follows (in millions):
<TABLE>
<CAPTION>
1994 1995
-------------------------- --------------------------
ACCUMULATED ASSETS ACCUMULATED ASSETS
BENEFITS EXCEEDING BENEFITS EXCEEDING
EXCEEDING ACCUMULATED EXCEEDING ACCUMULATED
ASSETS BENEFITS ASSETS BENEFITS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Accumulated benefit obligation, principally
vested....................................... $ 4.5 $43.1 $29.5 $21.8
Effect of salary increases................... 1.7 4.5 1.8 5.0
----- ----- ----- -----
Projected benefit obligation................. 6.2 47.6 31.3 26.8
Fair value of plan assets.................... 2.0 49.4 24.2 24.1
----- ----- ----- -----
Plan assets greater than (less than)
projected benefit obligation............... (4.2) 1.8 (7.1) (2.7)

Unamortized amounts:
Transition................................. -- (4.5) (1.3) (2.6)
Net actuarial losses....................... -- 2.9 3.2 6.0
Prior service cost......................... .3 4.2 2.8 2.0
Minimum liability adjustment................. (.2) -- (4.4) --
----- ----- ----- -----
Prepaid (accrued) pension costs.............. $(4.1) $ 4.4 $(6.8) $ 2.7
----- ----- ----- -----
----- ----- ----- -----
</TABLE>

Net pension cost for stand-alone Rockwell Graphic Systems plans for non-U.S.
employees included in the accompanying combined statements of operations
consisted of the following (in millions):

<TABLE>
<CAPTION>
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Service cost-benefits earned during the year........................... $ 1.3 $ 1.5 $ 1.5
Interest accrued on accumulated benefit obligation..................... 4.0 3.9 4.2
Expected return on plan assets......................................... (3.7) (3.5) (3.9)
Prior service cost amortization........................................ .1 .4 .4
Amortization of net actuarial gains.................................... .4 .5 .3
Transition asset amortization.......................................... (.5) (.5) (.6)
----- ----- -----
Net pension cost....................................................... $ 1.6 $ 2.3 $ 1.9
----- ----- -----
----- ----- -----
</TABLE>

The above pension amounts were determined using a June 30 measurement date
and the following assumptions:

<TABLE>
<CAPTION>
1993 1994 1995
---------- ----------- ----------
<S> <C> <C> <C>
Discount rate...................... 5.5%-9.0% 5.5%-8.25% 5.5%-7.5%
Salary increase.................... 4.5-5.0 4.5 4.5
Asset return....................... 5.5-9.0 5.5-9.0 5.5-9.0
</TABLE>

Rockwell sponsors defined contribution plans covering all U.S. Rockwell
Graphic Systems salaried employees and certain hourly employees. Employer
contributions to these plans, which were charged to costs and expenses, totaled
$4.6 million, $3.7 million and $3.7 million in 1993, 1994 and 1995,
respectively.

F-14
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

11. RETIREMENT MEDICAL PLANS AND POST EMPLOYMENT BENEFITS

Rockwell has retirement medical plans which cover Rockwell Graphic Systems
U.S. employees and provide for the payment of medical costs of eligible
employees and dependents upon retirement. Since Rockwell Graphic Systems
employees participate in these Rockwell retirement medical plans, accrued
postretirement benefit obligations for participants in these plans are not
included in Rockwell Graphic Systems' combined balance sheets. The retirement
medical obligation related to Rockwell Graphic Systems participants in these
plans is as follows (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------
1994 1995
----- -----
<S> <C> <C>
Retirees.................................................... $33.1 $37.5
Active employees:
Eligible to retire........................................ 6.6 8.4
Not eligible.............................................. 10.9 12.8
----- -----
Retirement medical obligation............................... $50.6 $58.7
----- -----
----- -----
</TABLE>

The combined statements of operations include $.7 million, $.8 million and
$.7 million in charges related to Rockwell Graphic Systems' portion of service
cost of active participants of these plans for 1993, 1994 and 1995,
respectively.

The above retirement medical amounts were computed using a June 30
measurement date and the following assumptions:

<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Discount rate.................................................. 8.25% 7.5%
Health care cost trend rate.................................... 8.5 8.5
</TABLE>

The health care cost trend rate is assumed to decline to 5.5% after 2015.

Rockwell Graphic Systems provides disability benefits to substantially all
of its U.S. employees and salary continuation benefits to certain employees. The
combined balance sheets include accruals for these benefits of $6.0 million and
$6.6 million at September 30, 1994 and 1995, respectively, which amounts have
been determined using actuarial methods.

12. INCOME TAXES

The operations of Rockwell Graphic Systems in the U.S., U.K., France and
Germany are included in the consolidated income tax returns of Rockwell in each
of these countries. Accordingly, the combined balance sheets do not include
current income taxes receivable, payable or tax contingencies related to these
operations. The income tax provisions included in the combined statements of
operations have been determined as if Rockwell Graphic Systems were a separate
taxpayer.

F-15
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

12. INCOME TAXES--(CONTINUED)
The components of the provision for income taxes are as follows (in
millions):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Current:
U.S............................................ $ 6.4 $ 4.7 $ 8.8
Non-U.S........................................ .4 4.6 7.4
State and local................................ 1.2 .8 1.6
----- ----- -----
Total current.................................... 8.0 10.1 17.8
----- ----- -----
Deferred:
U.S............................................ (5.4) (4.7) 4.9
Non-U.S........................................ (3.3) .7 .6
State and local................................ (1.1) (.8) .9
----- ----- -----
Total deferred................................... (9.8) (4.8) 6.4
----- ----- -----
Provision for income taxes....................... $(1.8) $ 5.3 $24.2
----- ----- -----
----- ----- -----
</TABLE>

A reconciliation of the statutory U.S. Federal income tax rate to the
effective income tax rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
30,
-----------------------
1993 1994 1995
----- ---- ----
<S> <C> <C> <C>
Federal statutory rate............................. 34.8% 35.0% 35.0%
Effect of:
State and local taxes............................ (.9) -- 2.7
Goodwill amortization............................ (7.9) 5.7 3.1
Foreign sales corporation benefit................ 15.1 (4.1) (1.0)
Foreign tax expense.............................. (22.0) (1.1) --
Rate change effect............................... 6.9 -- --
Other............................................ (1.3) .6 .3
----- ---- ----
24.7% 36.1% 40.1%
----- ---- ----
----- ---- ----
</TABLE>

The domestic and foreign components of income (loss) before income taxes and
cumulative effect of accounting change are as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1993 1994 1995
------ ----- -----
<S> <C> <C> <C>
Domestic......................................... $ 7.0 $ .6 $41.2
Foreign.......................................... (14.3) 14.1 19.2
------ ----- -----
Total............................................ $ (7.3) $14.7 $60.4
------ ----- -----
------ ----- -----
</TABLE>

F-16
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

12. INCOME TAXES--(CONTINUED)
Current and noncurrent deferred income tax assets arise principally from the
following (in millions):

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------
1994 1995
----- -----
<S> <C> <C>
Current:
Inventory reserves...................................... $12.8 $11.0
Product warranty reserves............................... 11.6 9.9
Self-insurance reserves................................. 6.8 5.7
Other................................................... 6.2 6.3
----- -----
Total current asset................................. $37.4 $32.9
----- -----
----- -----
Noncurrent:
Notes receivable........................................ $12.0 $10.1
Property and equipment.................................. (4.9) (7.2)
Retirement benefits..................................... .9 1.7
Other................................................... (0.6) --
----- -----
Total noncurrent asset.............................. $ 7.4 $ 4.6
----- -----
----- -----
</TABLE>

The noncurrent deferred tax liability of $10.1 million and $10.0 million at
September 30, 1994 and 1995, respectively, related principally to deferred
income taxes provided on property and equipment in Japan.

Rockwell Graphic Systems has not provided for U.S. income and foreign
withholding taxes on undistributed earnings of its Japanese subsidiary because
management intends to permanently reinvest these earnings. Undistributed
earnings of this subsidiary were $15.7 million and $16.8 million at September
30, 1994 and 1995, respectively and the associated taxes would be $1.6 million
and $1.7 million, respectively. Taxes on undistributed earnings of Rockwell
Graphic Systems operations in the U.K. and France have not been provided, as
distributions to their respective parent companies are non-taxable transactions.

13. REVOLVING CREDIT FACILITIES

Rockwell Graphic Systems Japan has revolving credit agreements with various
banks which permit borrowings aggregating approximately $32.0 million and $38.0
million at September 30, 1995 and March 31, 1996. Borrowings under the credit
facilities bear interest at rates ranging from the Japan prime rate (1.625% at
September 30, 1995) to 3.375%. The credit facilities generally do not contain
expiration dates. Borrowings under two of the credit facilities totaling
approximately $20.0 million are guaranteed by Rockwell. There were no borrowings
outstanding at September 30, 1995. As of March 31, 1996, borrowings under all
credit facilities totaled $16.6 million.

During the six months ended March 31, 1996, Rockwell Systems Graphiques
Nantes S.A. (Rockwell Graphic Systems' business in France) entered into credit
facilities with two banks which permit borrowings up to $31.5 million bearing
interest with rates ranging from the Paris Interbank Rate plus .25% to 5.625%.
Borrowings under the credit facilities are guaranteed by Rockwell. As of March
31, 1996, borrowings under the credit facilities totaled $31.5 million.

F-17
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

14. NET INVESTMENT IN ROCKWELL GRAPHIC SYSTEMS

A summary of changes in Rockwell's net investment in Rockwell Graphic
Systems is as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
Balance at beginning of year...................................... $623.8 $627.3 $628.7
Net (loss) income................................................. (10.1) 9.4 36.2
Currency translation and other.................................... (12.5) 5.6 5.2
Additional minimum pension liability.............................. (.2) 1.2 (1.6)
Allocation of common expenses from Rockwell....................... 7.5 6.8 8.3
Non-cash intercompany purchases................................... 16.1 14.8 20.3
Declaration of dividend........................................... -- -- 50.0
Dividend payable--Rockwell........................................ -- -- (50.0)
Net transfers from (to) Rockwell.................................. 2.7 (36.4) (154.0)
------ ------ ------
Balance at end of year............................................ $627.3 $628.7 $543.1
------ ------ ------
------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
----------------
1995 1996
------ ------
<S> <C> <C>
Balance at beginning of period............................................. $628.7 $543.1
Net income................................................................. 22.5 5.1
Currency translation and other............................................. 11.9 (8.4)
Additional minimum pension liability....................................... 1.2 (1.6)
Allocation of common expenses from Rockwell................................ 4.0 4.1
Non-cash intercompany purchases............................................ 8.2 10.3
Net transfers to Rockwell.................................................. (74.4) (36.9)
------ ------
Balance at end of period................................................... $602.1 $515.7
------ ------
------ ------
</TABLE>

15. LEASES

Rockwell Graphic Systems leases certain facilities and equipment under
operating leases, many of which contain renewal options and escalation clauses.
Total rental expense was approximately $6.1 million, $5.5 million and $5.6
million in 1993, 1994 and 1995, respectively. Minimum future rental commitments
under operating leases having noncancelable lease terms in excess of one year
aggregated $3.9 million as of September 30, 1995 and are payable as follows (in
millions): 1996, $1.1; 1997, $0.9; 1998, $0.7; 1999, $0.6; 2000, $0.3; and
thereafter, $0.3.

16. RELATED PARTY TRANSACTIONS

Rockwell Graphic Systems purchases drive systems, press controls and related
products from Allen-Bradley. Such purchases totaled $21.7 million, $24.2 million
and $31.6 million in 1993, 1994 and 1995, respectively.

Direct expenses incurred by Rockwell on behalf of Rockwell Graphic Systems
were $11.3 million, $11.7 million and $12.3 million for the years ended
September 30, 1993, 1994 and 1995, respectively.

F-18
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

16. RELATED PARTY TRANSACTIONS--(CONTINUED)
Common expenses allocated by Rockwell to Rockwell Graphic Systems were $7.5
million, $6.8 million and $8.3 million for the years ended September 30, 1993,
1994 and 1995, respectively.

During the years ended September 30, 1993, 1994 and 1995, Rockwell Graphic
Systems recorded net interest expense of $10.2, $4.3 and $2.8 million related to
intercompany borrowings by Rockwell Graphic Systems from Rockwell International
Limited and borrowings by Rockwell International Credit Corporation from
Rockwell. Such borrowings are included in Rockwell's net investment in Rockwell
Graphic Systems.

At September 30, 1994 and 1995, outstanding checks of $5.4 million and $5.2
million, respectively, under the Rockwell centralized cash management system
have been classified as due to related parties.

17. RESEARCH AND DEVELOPMENT

Research and development expenses were $17.4 million, $17.6 million and
$15.8 million in 1993, 1994 and 1995, respectively, and have been included in
engineering expenses.

18. GEOGRAPHIC AND EXPORT SALES INFORMATION

The following table presents information about Rockwell Graphic Systems by
geographic area (in millions).

<TABLE>
<CAPTION>
ASIA
U.S. EUROPE PACIFIC ELIMINATION TOTAL
------ ------ ------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Net sales to customers..................... 1995 $437.9 $204.8 $66.6 $-- $709.3
1994 400.7 174.7 72.8 -- 648.2
1993 410.6 141.0 75.4 -- 627.0
Transfers between geographic areas......... 1995 11.6 6.5 -- (18.1) --
1994 13.8 7.2 -- (21.0) --
1993 12.8 2.6 -- (15.4) --
Operating profit (loss).................... 1995 36.3 15.0 (5.2) -- 46.1
1994 (2.1) 12.4 (3.7) -- 6.6
1993 (7.4) (13.9) 2.3 -- (19.0)
Identifiable assets........................ 1995 560.8 281.1 105.1 -- 947.0
1994 582.9 274.1 93.9 -- 950.9
</TABLE>

Transfers between geographic areas are recorded at amounts generally in
excess of cost. The resultant income is assigned to the geographic area of
manufacture. In computing operating profit, interest income and expense, other
income and expense and income taxes have not been added or deducted.

Export sales from the U.S. were 20%, 11% and 13% of Rockwell Graphic
Systems' net sales for the years ended December 31, 1993, 1994 and 1995,
respectively. These sales were principally to customers in South America.

F-19
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

19. CONTINGENCIES AND COMMITMENTS

LEGAL CONTINGENCIES

In November 1995, the U.S. District Court for the Southern District of New
York issued a judgment relating to a patent infringement matter that Rockwell
Graphic Systems is liable for damages and interest which management estimates
totals approximately $17 million. Management intends to appeal this judgment. At
November 3, 1995, the date as of which it issued its 1995 statement, it was
management's estimate that the minimum probable liability was $3 million.
Rockwell Graphic Systems has recorded the minimum probable expense of $3 million
in the 1995 combined statement of operations while the related liability has
been excluded from the Statements as any liability will be paid directly by
Rockwell. Subsequent to November 3, 1995, management revised its estimate of the
minimum probable liability to $4 million and, accordingly, recorded an
additional $1 million of expense during the six months ended March 31, 1996.

In the normal course of business, various lawsuits and claims are initiated
against Rockwell Graphic Systems related to sales contracts. Among such claims
that have advanced to litigation are a lawsuit filed by a commercial press
customer in February 1996 seeking unspecified damages and an arbitration
proceeding initiated by another commercial press customer in June 1996 seeking
refunds and damages totaling $3.8 million. While it is not presently possible to
determine whether the ultimate resolution of these matters will exceed the $1.7
million accrued, management believes that such resolution will not have a
material adverse effect on Rockwell Graphic Systems' financial position or
liquidity although it is possible that an adverse outcome could materially
affect the results of operations in a given period.

As part of an asset purchase agreement with an acquirer of certain assets of
the Rockwell Graphic Systems business in 1988, the acquirer agreed to defend and
indemnify Rockwell Graphic Systems for certain product liability claims. The
acquirer has initiated informal mediation proceedings against Rockwell Graphic
Systems and Rockwell alleging that certain information was recently received
from Rockwell Graphic Systems that materially increased the acquirer's risk of
defending and indemnifying against the product liability claims. The acquirer is
seeking to prospectively discharge its obligations for such defense and
indemnity. As part of these proceedings, the acquirer also refused to indemnify
Rockwell Graphic Systems in three pending product liability claims which
collectively are estimated to represent an exposure to Rockwell Graphic Systems
of approximately $1 million. While the ultimate resolution of these proceedings
cannot presently be determined, management intends to vigorously defend against
these matters and believes that their ultimate resolution will not have a
material adverse effect on Rockwell Graphic Systems' financial position, results
of operations or liquidity.

Rockwell Graphic Systems has pending against it or may be subject to various
lawsuits, claims and proceedings related primarily to employment, commercial
(including press performance issues) and safety and health matters. Although it
is not presently possible to determine the outcome of these matters, management
believes their ultimate disposition will not have a material adverse effect on
Rockwell Graphic Systems' financial position or liquidity, although it is
possible that the resolution of such lawsuits, claims and proceedings could be
material to the results of operations in a given period.

ENVIRONMENTAL CONTINGENCIES

Rockwell Graphic Systems has received either notices of potential liability
or third-party claims under the federal Comprehensive Environmental Response,
Compensation and Liability Act at six off-

F-20
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

19. CONTINGENCIES AND COMMITMENTS--(CONTINUED)
site disposal facilities (Superfund Sites). Rockwell Graphic Systems has entered
into settlement agreements with the Environmental Protection Agency (EPA) at two
of these sites and a settlement proposal is pending at a third site, none of
which is material to the Statements either individually or collectively. With
respect to the fourth site, at which Rockwell Graphic Systems has been named a
potentially responsible party (PRP), its share of the clean up costs are
estimated to approximate $200,000 of the potential estimated cost for final site
remediation of $10 million. At the fifth and sixth sites, Rockwell Graphic
Systems has been implicated as a PRP. However, Rockwell Graphic Systems believes
its involvement, if any, is not significant. Although current law imposes joint
and several liability on any party determined to be responsible at a Superfund
Site, management believes, based upon all available information, that the
ultimate resolution of these matters will not have a material adverse effect on
Rockwell Graphic Systems' financial position, results of operations or
liquidity.

Rockwell Graphic Systems' Reading, Pennsylvania facility has been operating
a groundwater remediation system under a 1981 Consent Order with the
Commonwealth of Pennsylvania as a result of its, and its predecessor company's,
historical waste disposal practices. Recent data indicate that certain hazardous
constituents in the groundwater have decreased over time, while the data on
other constituents is inconclusive. The Company plans to submit a proposal to
the Pennsylvania Department of Environmental Resources to terminate remediation
at the site pursuant to recent statutory authority to determine cleanup limits
consistent with the results of a site-specific risk assessment. Management has
been advised that, given the site location and aquifer use, the proposal is
technically appropriate and may result in the termination of groundwater
remediation at this site. Management believes that any liability with respect to
either continuing groundwater remediation or conducting a site-specific risk
assessment in order to complete such remediation will not have a material
adverse effect on Rockwell Graphic Systems' financial position, results of
operation or liquidity.

COMMITMENTS

Rockwell provides letters of credit to guarantee the performance of Rockwell
Graphic Systems under certain long-term contracts. Such letters of credit
outstanding were $2.8 million and $29.1 million as of September 30, 1995 and
March 31, 1996. The fair value of these letters of credit is estimated to
approximate their contractual amounts.

20. CHANGE IN METHOD OF ACCOUNTING

Effective October 1, 1992, Rockwell Graphic Systems adopted the provisions
of SFAS No. 112, "Employers' Accounting for Postemployment Benefits." This
standard requires an accrual method of recognizing the cost of postemployment
benefits, such as disability, severance and workers' compensation benefits. The
effect of the accounting change on 1993 net loss, exclusive of such cumulative
effect, was not material.

F-21
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

21. SUPPLEMENTARY CASH FLOW INFORMATION (IN MILLIONS)

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
30,
--------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Income tax payments (Japan)........................... $2.9 $2.9 $ .1
Interest payments (non-U.S.):
Related parties..................................... 7.5 1.8 --
Others.............................................. 1.6 1.4 .4
Non-cash investment in joint venture.................. -- 1.3 2.8
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED MARCH 31,
---------------
1995 1996
----- ----
<S> <C> <C>
Income tax (refunds) payments (Japan)...................... $(0.4) $1.6
Interest payments (non-U.S.):
Related parties.......................................... -- --
Others................................................... -- .6
Non-cash investment in joint venture....................... 1.2 .7
</TABLE>

22. SUBSEQUENT EVENTS

On November 30, 1995, Rockwell Systemes Graphiques Nantes S.A. (Rockwell
Graphic Systems' business in France) paid a dividend of approximately $50
million to Rockwell. The dividend was paid with proceeds from collection of
intercompany accounts of $21 million and bank borrowings incurred by Rockwell
Systemes Graphiques Nantes S.A. of $29 million (see Note 13). The dividend has
been given retroactive effect in the combined financial statements as of
September 30, 1995.

Subsequent to November 3, 1995, the date as of which it issued its 1995
Statements, Rockwell Graphic Systems changed its estimates with respect to
certain product warranty accruals related to sales recorded prior to October 1,
1995. The most significant change in estimates relates to product warranty
accruals provided for the commercial business line. During the first six months
of 1996, Rockwell Graphic Systems recorded additional product warranty accruals
for the commercial business line of $12.7 million related to sales recorded
prior to October 1, 1995.

In March 1996, Rockwell Graphic Systems recorded a $3.9 million
restructuring charge related principally to the closure of certain facilities
and severance payments.

Rockwell International Corporation entered into a Stock and Asset Purchase
Agreement with Goss Graphic Systems, Inc. dated April 26, 1996 as amended on
July 18, 1996, to sell the stock and the assets, subject to certain liabilities,
of Rockwell Graphic Systems for $552.5 million in cash and 47,500 shares of
preferred stock, $1,000 per share liquidation preference.

F-22
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Goss Graphic Systems, Inc.:

We have audited the accompanying balance sheet of GOSS GRAPHIC SYSTEMS, INC.
as of July 16, 1996. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Company as of July 16, 1996, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
July 16, 1996

F-23
<PAGE>
GOSS GRAPHIC SYSTEMS, INC.
BALANCE SHEET
AS OF JULY 16, 1996

<TABLE>
<S> <C>
ASSETS

CURRENT ASSETS:
Cash............................................................................... $1,000
------
Total Assets................................................................. $1,000
------
------

LIABILITIES & STOCKHOLDER'S EQUITY

STOCKHOLDER'S EQUITY:
Common Stock ($.01 par value per share, 100 shares
authorized, issued and outstanding).............................................. $ 1
Additional paid-in capital......................................................... 999
------
Total Stockholder's equity................................................... $1,000
------
------
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-24
<PAGE>
GOSS GRAPHIC SYSTEMS, INC.
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 16, 1996

1. ORGANIZATION

Goss Graphic Systems, Inc. (the "Company") is a newly formed Delaware
corporation formed on behalf of Stonington Capital Appreciation 1994 Fund, L.P.
("Stonington") to acquire (the "Proposed Acquisition") the operations of the
Graphic Systems business unit ("Goss") of Rockwell International Corporation.

2. THE PROPOSED ACQUISITION

Goss Graphic Systems, Inc. entered into an agreement to acquire the
operations of Goss from Rockwell International Corporation for $600 million
(subject to adjustment) pursuant to the Stock and Asset Purchase Agreement dated
as of April 26, 1996 (the "Acquisition Agreement"). The Proposed Acquisition
will be effected through the purchase by the Company of all the outstanding
stock of Rockwell Graphic Systems, Inc. and Rockwell Systemes Graphiques Nantes,
and through the purchase by the Company and certain wholly owned foreign
subsidiaries of the assets and the assumption of liabilities which constitute
the remainder of Goss. Immediately after the Proposed Acquisition, the Company
will merge with and into Rockwell Graphic Systems, Inc.

3. FINANCING ARRANGEMENTS

Approximately $626 million will be required by the Company to consummate the
Proposed Acquisition as contemplated by the Acquisition Agreement and to pay
related fees and expenses. The Company expects to obtain the financing for the
Proposed Acquisition from the following sources: (i) the receipt of $160 million
in equity from GGS Holdings, Inc. to be obtained by GGS Holdings, Inc. through
the sale of common stock to Stonington for approximately $112.5 million in cash
and the issuance of $47.5 million of pay-in-kind perpetual preferred stock to
Rockwell International; (ii) the sale of senior subordinated notes with an
aggregate principal amount of $225 million; (iii) the borrowing of approximately
$77.3 million under a bank credit agreement which will consist of a term loan
and revolving credit facility; and (iv) the sale of customer notes to BT
Securities Corporation for approximately $163.7 million.

To complete the financing arrangements described above, the Company intends
to authorize the issuance of additional common stock.

F-25
<PAGE>
[INSIDE BACK COVER WITH PICTURES]
<PAGE>
- ---------------------------------------- --------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN [LOGO]
CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT Goss Graphic Systems,
CONSTITUTE AN OFFER TO SELL OR A Inc.
SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE NOTES OFFERED
BY THIS PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE
NOTES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON $225,000,000
MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THAT
DATE.

-------------------

TABLE OF CONTENTS

PAGE
----
Prospectus Summary.................... 3
Risk Factors.......................... 13
Use of Proceeds....................... 21
Capitalization........................ 22
Unaudited Pro Forma Combined Financial % Senior Subordinated
Statements............................ 23 Notes due 2006
Selected Combined Financial Data...... 32
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 35
Business.............................. 46
The Acquisition....................... 62
Management............................ 66
Ownership of Capital Stock............ 74
Certain Transactions.................. 76
Description of Notes.................. 77
Description of New Bank Credit
Agreement............................. 102
Description of Sale of Customer
Notes................................. 104
Description of Preferred Stock........ 105
Description of Certain Federal Income
Tax Consequences...................... 109
Underwriting.......................... 112
Notice to Canadian Residents.......... 113 CS First Boston
Legal Matters......................... 114
Experts............................... 114 BT Securities Corporation
Available Information................. 114
Index to Financial Statements......... F-1

-------------------

UNTIL , 1996 (90 DAYS
AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE
NOTES, WHETHER OR NOT PARTICIPATING IN
THE DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE
OBLIGATIONS OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- ---------------------------------------- --------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is a statement of estimated expenses of the issuance and
distribution of the securities being registered other than underwriting
compensation. All of the amounts shown are estimated except the Securities and
Exchange Commission registration fee.

Securities and Exchange Commission Registration Fee.............. $77,586
NASD Fee......................................................... 23,000
Blue Sky and Expenses (including attorney's fees and expenses)... *
Trustee Fees and Expenses........................................ *
Printing and Engraving Expenses.................................. *
Legal Fees and Expenses.......................................... *
Accounting Fees and Expenses..................................... *
Miscellaneous Expenses........................................... *
-------
Total...................................................... $ *
-------
-------

- ------------

* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is incorporated under the laws of the State of Delaware. Section
145 of the General Corporation Law of the State of Delaware ("Section 145")
provides that a Delaware corporation may indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such person was an officer,
director, employee or agent of another corporation or enterprise. The indemnity
may include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided such person acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests except that no indemnification is permitted
without judicial approval if the officer or director is adjudged to be liable to
the corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.

The Company's Certificate of Incorporation provides for the indemnification
of directors and officers of the Company to the fullest extent permitted by
Section 145.

In that regard, the Company' Certificate of Incorporation provides that the
Company shall indemnify and hold harmless each person who was or is made a party
or is threatened to be made a

II-1
<PAGE>
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she,
or a person of whom he or she is the legal representative, is or was a director
or officer of the Company or is or was serving at the request of the Company as
a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such action, suit or
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director, officer,
employee or agent, against all expense, liability and loss (including attorneys'
fees, judgments, fines, amounts paid or to be paid in settlement, and excise
taxes or penalties arising under the Employment Retirement Income Security Act
of 1974) reasonably incurred or suffered by such person in connection with such
proceeding, to the fullest extent authorized by the General Corporation Law of
the State of Delaware. Expenses incurred by any person in defending any such
action, suit or proceeding in advance of its final disposition shall be paid by
the Company; provided that if the General Corporation Law of the State of
Delaware requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Company of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be indemnified by the Company.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In connection with the closing of the Offering and of the Acquisition, the
Company will issue approximately shares of common stock (par value $.01)
to Holdings for $112.5 million.

Holdings will issue approximately 47,500 shares of 6 1/2% Redeemable
Pay-in-Kind Preferred Stock (par value $.01) to Rockwell in connection with the
closing of the Acquisition.

Such sales will be made in reliance upon the exemption from registration
under the Securities Act set forth in Section 4(2) thereof for transactions not
involving a public offering.

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
1.1* --Form of Underwriting Agreement.
2.1** --Stock and Asset Purchase Agreement dated as of April 26, 1996 by and between
Rockwell International Corporation and Goss Graphic Systems, Inc.
2.2** --Amendment to Stock and Asset Purchase Agreement dated as of July 18, 1996 by
and between Rockwell International Corporation and Goss Graphic Systems, Inc.
3.1* --Amended and Restated Certificate of Incorporation of the Company.
3.2* --By-Laws of the Company.
4.1* --Form of Indenture between the Company and , Trustee, relating to the %
Senior Subordinated Notes due 2006 of the Company.
4.2* --Form of Bank Credit Agreement dated as of , 1996 among the Company
and the Lenders party thereto.
4.3* --Certificate of Designation of the 6 1/2% Redeemable Pay-in-Kind Preferred Stock
of Holdings.
5.1* --Opinion of Wachtell, Lipton, Rosen & Katz as to the validity of the % Senior
Subordinated Notes due 2006.
10.1* --Form of Subscription Agreement for the Management Placement.
10.2* --Form of Subscription Agreement for Stonington Investment.
10.3* --Form of Stockholders Agreement.
10.4* --Employment contracts.
10.5* --Management Stock Incentive Plan and related agreements.
10.6* --Form of Loan Portfolio Purchase Agreement dated as of , 1996 by and
among BT Commercial Corporation, Goss Graphic Systems, Inc. and Rockwell
International Corporation.
12.1 --Statement regarding computation of ratio of earnings to fixed charges of the
Company.
21* --List of subsidiaries of the Company.
23.1 --Consent of Arthur Andersen LLP.
23.2 --Consent of Deloitte & Touche LLP.
23.3* --Consent of Wachtell, Lipton, Rosen & Katz (contained in their opinion filed as
Exhibit 5.1).
24 --Powers of Attorney.
25* --Statement of Eligibility on Form T-1 of , Trustee, under the Indenture
relating to % Senior Subordinated Notes due 2006 of the Company.
</TABLE>

- ------------

* To be filed by amendment.

** The schedules to this exhibit have been omitted. Upon request, the Company
will supplementally furnish a copy of any omitted schedule to the Commission.

(b) Financial Statement Schedules.

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Other financial statement schedules are omitted because they are not
applicable or because the required information is presented in the combined
financial statements or the notes thereto.

II-3
<PAGE>
ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, subject to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York, State of New
York, on July 19, 1996.

GOSS GRAPHIC SYSTEMS, INC.

By: /s/ ROBERT M. KUHN
..................................
Robert M. Kuhn
Chairman and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed on , 1996, by the following persons in the
capacities indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----

<S> <C>
* Chairman and Chief Executive Officer
............................................. (Principal Executive Officer)
Robert M. Kuhn

/s/ M. ERIC SCHROEDER Vice President-Finance and Administration
............................................. (Principal Financial Officer and Principal
M. Eric Schroeder Accounting Officer)

* Director
.............................................
Gerald S. Armstrong

* Director
.............................................
Alexis P. Michas

/s/ ROBERT J. MYLOD Director
.............................................
Robert J. Mylod

*By /s/ M. ERIC SCHROEDER
.........................................
M. Eric Schroeder
Attorney-in-fact
</TABLE>

II-5
<PAGE>
INDEPENDENT AUDITORS' REPORT

Rockwell Graphic Systems:

We have audited the Combined Financial Statements of Rockwell Graphic
Systems, a business unit of Rockwell International Corporation (Rockwell Graphic
Systems--see Note 1 to the Combined Financial Statements) as of September 30,
1995 and 1994 and for each of the three years in the period ended September 30,
1995 and have issued our report thereon dated November 3, 1995 as to the
September 30, 1995 and 1994 financial statements and April 26, 1996 as to the
September 30, 1993 financial statements, except for the fourth paragraph of Note
22, as to which the date is July 18, 1996, included elsewhere in this
Registration Statement. Our report expresses an unqualified opinion and includes
an explanatory paragraph relating to the preparation of the financial statements
of a business unit of Rockwell International Corporation. Our audits also
included the financial statement schedule listed in Item 16(b) of this
Registration Statement. This financial statement schedule is the responsibility
of management of Rockwell Graphic Systems. Our responsibility is to express an
opinion based on our audits. In our opinion, such combined financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania

November 3, 1995 as to the 1995 and 1994 financial information and
April 26, 1996 as to the 1993 financial information.

S-1
<PAGE>
ROCKWELL GRAPHIC SYSTEMS
A BUSINESS UNIT OF
ROCKWELL INTERNATIONAL CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN MILLIONS)

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND DEDUCTIONS END OF
OF PERIOD EXPENSES (A) PERIOD
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Year Ended September 30, 1993:
Allowance for doubtful accounts and notes........ $ 12.1 $8.2 $(3.1) $ 17.2
Inventory valuation reserve...................... 34.4 6.3 (0.5) 40.2
Year Ended September 30, 1994:
Allowance for doubtful accounts and notes........ 17.2 19.3 (2.4) 34.1
Inventory valuation reserve...................... 40.2 7.0 (3.6) 43.6
Year Ended September 30, 1995:
Allowance for doubtful accounts and notes........ 34.1 5.4 (9.7) 29.8
Inventory valuation reserve...................... 43.6 7.3 (5.9) 45.0
</TABLE>

- ------------

(A) Amounts represent write offs and the effects of foreign currency
fluctuations.

S-2
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
PAGE NUMBER IN
SEQUENTIALLY
NUMBERED
REGISTRATION
STATEMENT
---------------
<C> <S> <C>

1.1 Form of Underwriting Agreement. To be filed by
Amendment

2.1 Stock and Asset Purchase Agreement dated as of April 26, 1996 by and
between Rockwell International Corporation and Goss Graphic Systems,
Inc.

2.2 Amendment to Stock and Asset Purchase Agreement dated as of July 18,
1996 by and between Rockwell International Corporation and Goss
Graphic Systems, Inc.

3.1 Amended and Restated Certificate of Incorporation of the Company. To be filed by
Amendment

3.2 By-Laws of the Company. To be filed by
Amendment

4.1 Form of Indenture between the Company and , Trustee, relating to To be filed by
the % Senior Subordinated Notes due 2006 of the Company. Amendment

4.2 Form of Bank Credit Agreement dated as of , 1996 among the To be filed by
Company and the Lenders party thereto. Amendment

4.3 Certificate of Designation of the 6 1/2% Redeemable Pay-in-Kind To be filed by
Preferred Stock of Holdings. Amendment

5.1 Opinion of Wachtell, Lipton, Rosen & Katz as to the validity of the % To be filed by
Senior Subordinated Notes due 2006. Amendment

10.1 Form of Subscription Agreement for the Management Placement. To be filed by
Amendment

10.2 Form of Subscription Agreement for Stonington Investment. To be filed by
Amendment

10.3 Form of Stockholders Agreement. To be filed by
Amendment

10.4 Employment contracts. To be filed by
Amendment

10.5 Management Stock Incentive Plan and related agreements. To be filed by
Amendment

10.6 Form of Loan Portfolio Purchase Agreement dated as of , 1996 To be filed by
by and among BT Commercial Corporation, Goss Graphic Systems, Inc. and Amendment
Rockwell International Corporation.

12.1 Statement regarding computation of ratio of earnings to fixed charges of
the Company.

21 List of subsidiaries of the Company. To be filed by
Amendment

23.1 Consent of Arthur Andersen LLP.

23.2 Consent of Deloitte & Touche LLP.

23.3 Consent of Wachtell, Lipton, Rosen & Katz (contained in their opinion To be filed by
filed as Exhibit 5.1). Amendment

24 Powers of Attorney.

25 Statement of Eligibility on Form T-1 of , Trustee, under the To be filed by
Indenture relating to % Senior Subordinated Notes due 2006 of the Amendment
Company.
</TABLE>

Exhibit 2.1

CONFIDENTIAL
- ------------

============================================================

STOCK AND ASSET PURCHASE AGREEMENT

by and between

ROCKWELL INTERNATIONAL CORPORATION

and

GOSS GRAPHIC SYSTEMS, INC.

_____________________________________

Dated as of April 26, 1996
____________________________________

============================================================

<PAGE>

TABLE OF CONTENTS
-----------------

Section Page
- ------- ----

1. Sale and Purchase of the Shares and Assets . . . . . . . . . . . 4

(a) Sale and Purchase of the Shares and
Assets . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Assets . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Retained Assets . . . . . . . . . . . . . . . . . . . . 8
(d) Nonassignable Contracts . . . . . . . . . . . . . . . . 8
(e) Ownership of Certain Intellectual Property . . . . . . 10

2. Assumption of Liabilities . . . . . . . . . . . . . . . . . . 11

(a) Assumed Liabilities . . . . . . . . . . . . . . . . . 11
(b) Retained Liabilities . . . . . . . . . . . . . . . . . 12

3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 13

(a) Closing Payment . . . . . . . . . . . . . . . . . . . 13
(b) Closing Statement . . . . . . . . . . . . . . . . . . 15
(c) Post-Closing Adjustment . . . . . . . . . . . . . . . 24

4. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

(a) Closing . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Closing Deliveries of Seller . . . . . . . . . . . . . 26
(c) Closing Deliveries of Buyer . . . . . . . . . . . . . 26
(d) Transfer Taxes . . . . . . . . . . . . . . . . . . . . 26
(e) Satisfaction of Conditions . . . . . . . . . . . . . . 27

5. Representations and Warranties of Seller . . . . . . . . . . . 27

(a) Corporate Organization . . . . . . . . . . . . . . . 28
(b) Corporate Authorization . . . . . . . . . . . . . . . 28
(c) No Violation or Conflict . . . . . . . . . . . . . . . 29
(d) Government Authorizations . . . . . . . . . . . . . . 31
(e) Rockwell France and Selling Subsidiaries . . . . . . . 32
(f) Outstanding Capital Stock; Ownership . . . . . . . . . 32
(g) Equity Interests . . . . . . . . . . . . . . . . . . . 33
(h) Financial Statements . . . . . . . . . . . . . . . . . 33
(i) Liabilities . . . . . . . . . . . . . . . . . . . . . 34
(j) Real Property . . . . . . . . . . . . . . . . . . . . 35
(k) Personal Property . . . . . . . . . . . . . . . . . . 36
(l) Contracts . . . . . . . . . . . . . . . . . . . . . . 38
(m) Compliance With Laws . . . . . . . . . . . . . . . . . 40
(n) Permits . . . . . . . . . . . . . . . . . . . . . . . 41
(o) Taxes . . . . . . . . . . . . . . . . . . . . . . . . 42
(p) Litigation . . . . . . . . . . . . . . . . . . . . . . 44
(q) Intellectual Property . . . . . . . . . . . . . . . . 45
(r) Conduct of Business Since September 30,
1995 . . . . . . . . . . . . . . . . . . . . . . . 47
(s) Employees . . . . . . . . . . . . . . . . . . . . . . 49
(t) Insurance . . . . . . . . . . . . . . . . . . . . . . 50
(u) Employee Benefit Plans . . . . . . . . . . . . . . . . 50
(v) Sufficiency of Assets . . . . . . . . . . . . . . . . 55
(w) Customer Notes . . . . . . . . . . . . . . . . . . . . 55

<PAGE>

Section Page
- ------- ----

6. Representations and Warranties of Buyer . . . . . . . . . . . 55

(a) Corporate Organization . . . . . . . . . . . . . . . . 55
(b) Corporate Authorization . . . . . . . . . . . . . . . 55
(c) No Violation or Conflict . . . . . . . . . . . . . . . 56
(d) Government Authorizations . . . . . . . . . . . . . . 57
(e) Litigation . . . . . . . . . . . . . . . . . . . . . . 57
(f) Information . . . . . . . . . . . . . . . . . . . . . 58
(g) Acquisition of Shares for Investment . . . . . . . . . 58
(h) Funds . . . . . . . . . . . . . . . . . . . . . . . . 59

7. Investigation by Buyer; Confidentiality . . . . . . . . . . . 59

8. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 60

(a) Conduct of Business Prior to the Effective Time . . . 60
(b) Post Closing Access; Preservation of Records . . . . . 60
(c) HSR Act Compliance; Foreign Governmental Approvals . . 62
(d) Reasonable Best Efforts . . . . . . . . . . . . . . . 63
(e) Further Assurances . . . . . . . . . . . . . . . . . . 63
(f) Certain Intercompany Indebtedness . . . . . . . . . . 64
(g) Interim Use of Seller's Trademark, Trade
Name and Corporate Symbol . . . . . . . . . . . . . . 64
(h) Assumption of Obligations . . . . . . . . . . . . . . 68
(i) Notification of Certain Matters . . . . . . . . . . . 72
(j) Non-Compete . . . . . . . . . . . . . . . . . . . . . 72
(k) Change of Name . . . . . . . . . . . . . . . . . . . . 74
(l) Intellectual Property . . . . . . . . . . . . . . . . 74
(m) Insurance . . . . . . . . . . . . . . . . . . . . . . 80
(n) Consents . . . . . . . . . . . . . . . . . . . . . . . 81
(o) Allocation of Consideration . . . . . . . . . . . . . 82
(p) Cash Management . . . . . . . . . . . . . . . . . . . 83
(q) Conduct of Business on the Closing Date . . . . . . . 86
(r) Pre-Closing Transfers . . . . . . . . . . . . . . . . 86
(s) Provision of Information . . . . . . . . . . . . . . . 87
(t) Customer Notes . . . . . . . . . . . . . . . . . . . . 88
(u) Buyer Assistance . . . . . . . . . . . . . . . . . . . 88
(v) Allen-Bradley Supply Arrangements . . . . . . . . . . 88
(w) Financing . . . . . . . . . . . . . . . . . . . . . . 89
(x) Transitional Arrangements . . . . . . . . . . . . . . 89
(y) Borrowings . . . . . . . . . . . . . . . . . . . . . . 89
(z) Audit Fees . . . . . . . . . . . . . . . . . . . . . . 90

9. Employment Arrangements, Benefits and Pension
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

(a) Employment . . . . . . . . . . . . . . . . . . . . . . 90
(b) Pension Plans . . . . . . . . . . . . . . . . . . . . 92
(c) Severance Benefits . . . . . . . . . . . . . . . . . . 102
(d) Welfare Plans . . . . . . . . . . . . . . . . . . . . 104
(e) Retiree Medical and Life Insurance . . . . . . . . . . 106

<PAGE>

Section Page
- ------- ----

(f) Compliance with Laws . . . . . . . . . . . . . . . . . 107
(g) Indemnification . . . . . . . . . . . . . . . . . . . 108

10. Conditions Precedent to the Obligation of Buyer . . . . . . . 109

(a) Representations and Warranties . . . . . . . . . . . . 109
(b) Covenants and Agreements . . . . . . . . . . . . . . . 110
(c) Opinions of Counsel . . . . . . . . . . . . . . . . . 110
(d) No Adverse Order . . . . . . . . . . . . . . . . . . . 110
(e) HSR Act . . . . . . . . . . . . . . . . . . . . . . . 111
(f) Resignations . . . . . . . . . . . . . . . . . . . . . 111
(g) Financing . . . . . . . . . . . . . . . . . . . . . . 111
(h) Material Adverse Effect . . . . . . . . . . . . . . . 111
(i) Consents . . . . . . . . . . . . . . . . . . . . . . . 111
(j) Environmental Compliance . . . . . . . . . . . . . . . 111
(k) No Borrowings . . . . . . . . . . . . . . . . . . . . 112

11. Conditions Precedent to the Obligation of Seller . . . . . . . 112

(a) Representations and Warranties . . . . . . . . . . . . 112
(b) Covenants and Agreements . . . . . . . . . . . . . . . 113
(c) Opinions of Counsel . . . . . . . . . . . . . . . . . 113
(d) No Adverse Order . . . . . . . . . . . . . . . . . . . 113
(e) HSR Act . . . . . . . . . . . . . . . . . . . . . . . 114
(f) RGS Company Agreements . . . . . . . . . . . . . . . . 114
(g) Officer's Certificates . . . . . . . . . . . . . . . . 114

12. Finder's Fees; Brokers . . . . . . . . . . . . . . . . . . . . 114

13. Survival of Representations and Warranties . . . . . . . . . . 115

14. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 116

(a) Indemnification by Seller . . . . . . . . . . . . . . 116
(b) Indemnification by Buyer . . . . . . . . . . . . . . . 117
(c) Environmental Indemnification . . . . . . . . . . . . 118
(d) Notice of Circumstance . . . . . . . . . . . . . . . . 123
(e) Certain Limitations . . . . . . . . . . . . . . . . . 125
(f) Termination of Indemnification Obligations . . . . . . 127
(g) Dollar Limitation . . . . . . . . . . . . . . . . . . 128

15. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 128

(a) Preparation and Filing of Tax Returns . . . . . . . . 128

(b) Payment of Taxes . . . . . . . . . . . . . . . . . . . 129
(c) Tax Sharing Agreements . . . . . . . . . . . . . . . . 131
(d) Carryforwards and Carrybacks . . . . . . . . . . . . . 131
(e) Refunds . . . . . . . . . . . . . . . . . . . . . . . 132
(f) Tax Cooperation . . . . . . . . . . . . . . . . . . . 132
(g) Section 338(h)(10) Election . . . . . . . . . . . . . 133
(h) Tax Indemnification . . . . . . . . . . . . . . . . . 134
(i) Timing Adjustments . . . . . . . . . . . . . . . . . . 137
(j) Tax Contests . . . . . . . . . . . . . . . . . . . . . 138

iii

<PAGE>

Section Page
- ------- ----

16. Termination; Effect of Termination . . . . . . . . . . . . . . 141

(a) Termination . . . . . . . . . . . . . . . . . . . . . 141
(b) Effect of Termination . . . . . . . . . . . . . . . . 141

17. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 142

(a) Costs Incident to Preparation of Agreement . . . . . . 142
(b) Parties in Interest . . . . . . . . . . . . . . . . . 142
(c) Assignment . . . . . . . . . . . . . . . . . . . . . . 142
(d) Waiver of Compliance with Bulk Transfer Laws . . . . . 143
(e) Closing Date Schedule Supplement . . . . . . . . . . . 143
(f) Notices . . . . . . . . . . . . . . . . . . . . . . . 143
(g) Waiver; Remedies . . . . . . . . . . . . . . . . . . . 144
(h) Entire Agreement . . . . . . . . . . . . . . . . . . . 145
(i) Amendment . . . . . . . . . . . . . . . . . . . . . . 145
(j) Counterparts . . . . . . . . . . . . . . . . . . . . . 145
(k) Governing Law . . . . . . . . . . . . . . . . . . . . 145
(l) Exhibits and Schedules . . . . . . . . . . . . . . . . 146
(m) Captions, Currency . . . . . . . . . . . . . . . . . . 146
(n) Publicity . . . . . . . . . . . . . . . . . . . . . . 147
(o) No Representations or Warranties . . . . . . . . . . . 147
(p) Severability . . . . . . . . . . . . . . . . . . . . . 148
(q) Consent to Jurisdiction . . . . . . . . . . . . . . . 148
(r) Restrictive Trade Practices Act 1976 . . . . . . . . . 149
(s) Definition of "Knowledge" . . . . . . . . . . . . . . 149
(t) Company Names . . . . . . . . . . . . . . . . . . . . 149
(u) Daily News, L.P. Matters . . . . . . . . . . . . . . . 150
(v) Interpretation . . . . . . . . . . . . . . . . . . . . 150

<PAGE>

EXHIBITS
--------
Exhibit A - Form of Seller's Counsel Opinion

Exhibit B - Form of Buyer's Counsel Opinion

Exhibit C - Transition Agreement Outline of Terms

SCHEDULES
---------

Schedule 1(c) - Retained Assets
Schedule 2(b) - Retained Liabilities
Schedule 5(c) - Consents
Schedule 5(d) - Governmental Authorizations Required by
Seller
Schedule 5(f) - Nominee and RGS Subsidiary Shares
Schedule 5(g) - Equity Interests
Schedule 5(h) - Financial Statements
Schedule 5(j)(i) - Owned Real Property
Schedule 5(j)(ii) - Leased Real Property
Schedule 5(l) - Contracts
Schedule 5(m) - Compliance With Laws
Schedule 5(o) - Taxes
Schedule 5(p) - Seller Litigation
Schedule 5(q) - Intellectual Property
Schedule 5(r) - Conduct of Business Since September 30,
1995
Schedule 5(s) - Employee Matters
Schedule 5(t) - Insurance
Schedule 5(u) - Employee Benefit Plans
Schedule 5(u)(viii) - U.K. Plan Matters
Schedule 6(d) - Governmental Authorizations Required by
Buyer
Schedule 6(e) - Buyer Litigation
Schedule 6(h) - Commitment Letters
Schedule 8(a) - Conduct of Business Prior to the Effective Time
Schedule 8(h)(i) - Assumption of Obligations
Schedule 8(h)(ii) - Shared Agreements
Schedule 8(l)(i) - Seller Licensed Technology
Schedule 8(l)(ii) - Business Licensed Technology
Schedule 8(t) - Customer Notes
Schedule 9(a)(i) - Rockwell Employees
Schedule 9(b)(iv) - Pension Scheme Deed of Substitution
Schedule 9(b)(v) - Assurance Plan Deed of Substitution
Schedule 9(c) - Seller Incentive Payment Obligations

<PAGE>

DEFINED TERMS
-------------

Term Section
---- -------
AA Section 3(b)(iii)

Affiliate Section 1(d)
Agreement Preamble
Allen-Bradley Section 2(a)
Allocation Schedule Section 15(g)
Assets Section 1(b)

Assumed Liabilities Section 2(a)
Assumed Plans Section 9(f)
aware of Section 17(s)

Basket Section 14(g)

Business Preamble
Business Licensed Technology Section 8(l)(ii)
Buyer Preamble
Buyer Foreign Subsidiaries Preamble
Buyer Group Section 14(a)

Buyer Tax Act Section 15(h)(i)

Circumstance Section 14(d)
Closing Section 4(a)
Closing Date Section 4(a)

Closing Date Schedule Supplement Section 17(e)
Closing Purchase Price Notice Section 3(a)
Closing Statement Section 3(b)(i)
Code Section 5(o)(i)
Confidentiality Agreement Section 7

Consideration Allocation Section 8(o)
Consolidated Tax Returns Section 5(o)(ii)(D)
Consolidated Taxes Section 5(o)(ii)(D)
Continued Employees Section 9(a)
Contracts Section 5(l)(i)

Control Licensed Technology Section 8(l)(iii)
Controlled Group Liability Section 5(u)(vi)
Customer Notes Section 3(b)(ii)

D&T Section 3(b)(i)

Damages Section 9(g)
Delivery Date Section 3(b)(i)

Effective Time Section 4(a)
Environmental Costs Section 14(c)(v)(A)

Environmental Law Section 14(c)(v)(C)
Environmental Proceeding Section 14(c)(v)(D)
ERISA Section 5(u)(i)
ERISA Benefit Plan Section 5(u)(i)

Facilities Section 14(c)(v)(A)
Final Closing Statement Section 3(b)(iii)
Financial Statements Section 5(h)
Financing Letters Section 6(h)
Foreign Governmental Approval Section 8(c)

French Shares Preamble

<PAGE>

GAAP Section 3(b)(ii)

Goss Processing Preamble
Governmental Authority Section 5(d)

Hall Processing Section 3(b)(ii)
Hazardous Substance Section 14(c)(v)(E)

Heidelberger Litigation Section 14(a)
HSR Act Section 4(a)

Income Tax(es) Section 5(o)(ii)(C)
Indemnified Party Section 14(d)

Indemnifying Party Section 14(d)
Intellectual Property Section 5(q)
Intellectual Property Assets Section 5(q)

knowledge Section 17(s)

Leased Properties Section 5(j)(i)
Lien Section 5(c)

Material Adverse Effect Section 5(a)

Net Asset Amount Section 3(c)(i)(A)
New Note Principal Amount Section 3(b)(i)
New Welfare Benefit Plans Section 9(d)
Nominee Shares Preamble

Non-Compete Period Section 8(j)(i)
Notice of Disagreement Section 3(b)(iii)

Occurrence Basis Insurance Section 8(m)(ii)
Owned Properties Section 5(j)(i)

Permitted Liens Section 5(k)(i)
Person Section 5(c)
Plans Section 5(u)(i)
PMC Preamble

Pre-Closing Tax Period Section 15(h)(iii)(A)
Purchase Price Section 3(a)

Retained Assets Section 1(c)
Retained Liabilities Section 2(b)

RGS Preamble
RGS Companies Section 1(d)
RGS Environmental Costs Section 14(c)(v)(B)
RGS France Preamble
RGS Japan Preamble

RGS Japan Director Plan Section 9(b)(ix)
RGS Japan Employee Plan Section 9(b)(viii)
RGS Savings Plans Section 9(b)(iii)
RGS Subsidiaries Preamble
RGS Subsidiary Shares Section 5(f)(iii)

RGS U.K. Preamble
RGS U.K. Assurance Plan Section 9(b)(v)
RGS U.K. Pension Scheme Section 9(b)(iv)
RICC Preamble

vii

<PAGE>

Rockwell Australia Preamble
Rockwell Canada Preamble

Rockwell Canadian Retirement Plan Section (b)(x)(A)
Rockwell France Preamble
Rockwell Germany Preamble
Rockwell Germany Plan Section 9(b)(vii)
Rockwell Retirement Plan Section 9(b)(i)(A)

Rockwell Savings Plan Section 9(b)(ii)
Rockwell U.K. Retirement Plan Section 9(b)(vi)(A)
Rockwell Welfare Benefit Plans Section 9(d)

Section 338 Elections Section 15(g)

Seller Preamble
Seller Group Section 9(g)
Seller Licensed Technology Section 8(l)(i)
Seller's Letter Section 3(b)(iv)
Selling Companies Section 1(a)(iii)

Selling Subsidiaries Section 1(a)(iii)
September 30 Balance Sheet Section 3(b)(i)
Shared Agreements Section 8(h)(ii)
Shares Preamble
Straddle Period Section 15(e)

Subsidiary Section 1(d)

Tax(es) Section 5(o)(ii)(A)
Tax Claim Section 15(j)(i)
Tax Return(s) Section 5(o)(ii)(B)

Transfer Taxes Section 4(d)

U.S. Shares Preamble
Unaffiliated Firm Section 3(b)(iv)

Wall Street Journal Exchange Rate Section 3(a)

viii

<PAGE>

STOCK AND ASSET PURCHASE AGREEMENT
----------------------------------

STOCK AND ASSET PURCHASE AGREEMENT (the "Agreement") dated as of

April 26, 1996 by and between ROCKWELL INTERNATIONAL CORPORATION, a Delaware

corporation ("Seller"), and GOSS GRAPHIC SYSTEMS, INC., a Delaware corporation

("Buyer").

W I T N E S S E T H :
- - - - - - - - - -

WHEREAS, Seller is the record and beneficial owner of all of the

issued and outstanding shares of capital stock of Rockwell Graphic Systems,

Inc., a Delaware corporation ("RGS"), consisting of 100 shares of Common Stock,

no par value (the "U.S. Shares");

WHEREAS, Seller is the indirect beneficial owner through one or more

of its Subsidiaries (as defined in Section 1(d)) of all of the issued and

outstanding shares of capital stock (other than shares held by certain nominee

holders) of (i) Rockwell France, a socie'te' anonyme organized under the laws of

the Republic of France ("Rockwell France"), (ii) Rockwell International GmbH, a

corporation organized under the laws of the Federal Republic of Germany

("Rockwell Germany"), (iii) Rockwell Graphic Systems Ltd., a corporation

organized under the laws of the United Kingdom ("RGS U.K."), (iv) Rockwell

International of Canada, Ltd., a corporation organized under the laws of Canada

("Rockwell Canada"), and (v) Rockwell Australia Ltd., a corporation organized

under the laws of Australia ("Rockwell Australia");

WHEREAS, Rockwell France is the record and beneficial owner of all of

the issued and outstanding shares of capital

<PAGE>

stock (other than the shares held by the nominee holders as set forth on

Schedule 5(f) (the "Nominee Shares")) of Rockwell Systemes Graphiques Nantes, a

socie'te' anonyme organized under the laws of the Republic of France ("RGS

France"), consisting of 2,494 ordinary shares, par value FF. 100 per share (the

"French Shares");

WHEREAS, RGS is the record and beneficial owner of all of the issued

and outstanding shares of capital stock of each of Goss Processing Systems,

Inc., a Delaware corporation ("Goss Processing"), Rockwell Graphic Systems-Japan

Corporation, a corporation organized under the laws of Japan ("RGS Japan"), and

Rockwell PMC Inc., an Illinois corporation ("PMC"; RGS Japan and PMC are

sometimes referred to herein collectively as the "RGS Subsidiaries");

WHEREAS, Seller, RGS, the RGS Subsidiaries, Goss Processing, RGS

France, Rockwell Germany, RGS U.K., Rockwell Canada, Rockwell Australia and

Rockwell International Credit Corporation, a Delaware Corporation ("RICC") (and

their respective predecessors), through Seller's Graphic Systems business unit,

have engaged and are engaged in the business of designing, developing,

engineering, manufacturing, selling, installing and servicing printing press

systems for newspaper and commercial printing and other graphic arts and related

equipment and activities related thereto (such business, as heretofore and

currently conducted, is collectively referred to herein as the "Business");

WHEREAS, upon the terms and subject to the conditions hereinafter set

forth, on or prior to the Closing Date (as

<PAGE>

defined in Section 4(a)), Seller will cause (i) all Customer Notes (as defined

in Section 3(b)(ii)) owned by RICC to be assigned and transferred to RGS and all

liabilities of RICC relating to the Business to be assigned and transferred to

and assumed by RGS and (ii) all of the issued and outstanding shares of capital

stock of Goss Processing to be assigned and transferred to Seller;

WHEREAS, upon the terms and subject to the conditions hereinafter set

forth, Seller desires to sell or cause to be sold, and Buyer desires to purchase

(i) the U.S. Shares and the French Shares (collectively, the "Shares") and

(ii) all of the Assets (as defined in Section 1(b)); and

WHEREAS, upon the terms and subject to the conditions hereinafter set

forth, Seller desires to transfer or cause to be transferred, and Buyer desires

to assume and cause the RGS Companies (as defined in Section 1(d)) and any

companies (the "Buyer Foreign Subsidiaries") in the United Kingdom, the Federal

Republic of Germany, Canada and Australia which Buyer may establish (and which

shall be wholly-owned by Buyer or a wholly-owned subsidiary of Buyer) to acquire

the assets and assume the liabilities of RGS U.K., Rockwell Germany, Rockwell

Canada and Rockwell Australia being transferred hereunder (as the case may be)

to assume, all of the Assumed Liabilities (as defined in Section 2(a));

NOW, THEREFORE, in consideration of the premises, the mutual

agreements hereinafter contained and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, Seller and Buyer

hereby agree as follows:

<PAGE>

SECTION 1. Sale and Purchase of the Shares and Assets.
------------------------------------------

(a) Sale and Purchase of the Shares and Assets.
------------------------------------------

Subject to the terms and conditions set forth herein, at the Closing (as defined

in Section 4(a)), for the consideration specified in Section 3(a), subject to

adjustment as provided in Section 3(c), effective as of the Effective Time (as

defined in Section 4(a)):

(i) Seller will sell, assign, convey, transfer and deliver to

Buyer, and Buyer will purchase and acquire from Seller, the U.S. Shares;

(ii) Seller will cause Rockwell France to sell, assign, convey,

transfer and deliver to Buyer, and Buyer will purchase and acquire from

Rockwell France, the French Shares (and Seller will cause the holders of

the Nominee Shares to sell, assign, convey, transfer and deliver to

designees of Buyer notified to Seller prior to the Closing, and such

designees of Buyer will purchase and acquire from the holders of the

Nominee Shares, the Nominee Shares); and

(iii) Seller will, and will cause each of Rockwell Germany,

RGS U.K., Rockwell Canada and Rockwell Australia (Seller, Rockwell

Germany, RGS U.K., Rockwell Canada and Rockwell Australia are sometimes

referred to herein collectively as the "Selling Companies" and Rockwell

Germany, RGS U.K., Rockwell Canada and Rockwell Australia are sometimes

referred to herein collectively as the "Selling Subsidiaries") to, sell,

assign, convey, transfer and deliver to Buyer, and Buyer will purchase and

acquire from the Selling Companies, the Assets.

<PAGE>

(b) Assets. For purposes of this Agreement, the term "Assets" shall

mean all of the Selling Companies' right, title and interest in and to all of

their respective assets (whether tangible or intangible, whether real, personal

or mixed, whether accrued, contingent or otherwise and whether now existing or

hereafter acquired), rights, contracts, leases and agreements used primarily in

or relating primarily to the Business (other than the Retained Assets, as

defined in Section 1(c) and other than the Shares and the shares of the Selling

Subsidiaries), as the same shall exist as of the Effective Time. The Assets

shall include, but are not limited to, the following to the extent the same are

used primarily in or relate primarily to the Business:

(i) all land and the plants, structures, buildings, facilities,

fixtures and improvements located thereon and all easements and

appurtenances relating thereto;

(ii) all machinery, equipment, tooling, trucks, vehicles,

furniture, leasehold improvements, repair parts, tools, plant, laboratory

and office equipment and similar property, together with any rights or

claims of any Selling Company arising out of the breach of any express or

implied warranty by the manufacturers or sellers of any of such assets or

any component part thereof;

(iii) all inventories, including finished goods, work-in-

process, spare parts, materials, replacement and component parts,

accessories and office and other supplies, including all such inventories

held at any location controlled by any Selling Company and inventories

previously

<PAGE>

purchased and in transit to any Selling Company at such locations;

(iv) all accounts and notes receivable, loans receivable,

advances, bonds and other evidences of indebtedness of and rights to

receive payments from any Person (as defined in Section 5(c)) held by the

Selling Companies;

(v) all books, records (including financial, accounting and

operating records), manuals and other materials (in any form or medium)

(other than such books, records, manuals and material (A) to the extent

they relate to Retained Assets or Retained Liabilities (as defined in

Section 2(b)) or (B) to the extent the transfer thereof is prohibited by

applicable law), including, without limitation, all books, records, notes,

sales and sales promotional material and data, advertising materials,

credit information, cost and pricing information, customer and supplier

lists, business plans, reference catalogs, payroll and personnel records,

manufacturing and quality control records and procedures, blue-prints,

research and development files, records, data and laboratory books, sales

order files, litigation files and other similar property, rights and

information;

(vi) all Intellectual Property Assets (as defined in Section

5(q)) and all rights thereunder or in respect thereof, including, but not

limited to, rights to sue for and remedies against past, present and

future infringements thereof, and rights of priority and protection of

interests

<PAGE>

therein under the laws of any jurisdiction worldwide and all tangible

embodiments thereof;

(vii) all leases, subleases, occupancy agreements, license

agreements, contracts, agreements, sales orders, purchase orders, open

bids and other commitments, including, without limitation, any right to

receive payment for products sold or services rendered, and to receive

goods and services, pursuant to such agreements and to assert claims and

take other rightful actions in respect of breaches, defaults and other

violations thereunder;

(viii) all credits, prepaid expenses, deposits and retentions

held by third parties under leases, license agreements, contracts,

agreements, sales orders, purchase orders, open bids and other

commitments;

(ix) all bank accounts;

(x) all governmental licenses, franchises, permits,

authorizations and approvals to the extent such governmental licenses,

franchises, permits, authorizations and approvals are transferable and all

non-governmental licenses, franchises, authorizations and approvals;

(xi) all rights in and to products sold or leased by the

Business (including, but not limited to, products hereafter returned or

repossessed and unpaid sellers' rights of rescission, replevin,

reclamation and rights to stoppage in transit);

(xii) all rights to causes of action, lawsuits, judgments,

claims and demands of any nature available to or

<PAGE>

being pursued by the Selling Companies, whether arising by way of

counterclaim or otherwise;

(xiii) all guarantees, warranties, indemnities and similar

rights in favor of the Selling Companies; and

(xiv) any and all goodwill and going concern value of the

acquired trademarks and the Business.

The term "Assets" will, to the extent not prohibited by this Agreement, include

all additions and replacements to any of the items described in this

Section 1(b) between the date of this Agreement and the Effective Time, and

will, to the extent not prohibited by this Agreement, exclude all deletions,

sales or other disposals of any of the foregoing between the date of this

Agreement and the Effective Time.

any other provision hereof or any Schedule or Exhibit hereto to the contrary

notwithstanding, and regardless of any disclosure to Buyer, the Assets to be

sold, assigned, conveyed, transferred and delivered to Buyer hereunder will not

include, Buyer will not purchase and acquire and the Selling Companies will

retain, the assets, rights, contracts, leases and agreements set forth on

Schedule 1(c) (the "Retained Assets").

(d) Nonassignable Contracts. Anything contained herein to the
-----------------------

contrary notwithstanding, this Agreement shall not constitute an agreement to

assign any lease, license agreement, contract, agreement, sales order, purchase

order, open bid or other commitment or non-governmental license, franchise,

authorization or approval if an assignment or attempted assignment of the same

without the consent of the other party or

<PAGE>

parties thereto would constitute a breach thereof or in any way impair the

rights of Seller, Buyer or any of their respective Subsidiaries (which, for

purposes of this Agreement, shall mean any Person in which a Person owns or

controls, directly or indirectly, capital stock or other equity interests

representing at least 50% of the outstanding voting stock or other equity

interests) or Affiliates (as defined in Rule 12b-2 of the regulations

promulgated under the Securities Exchange Act of 1934, as amended) thereunder.

Without limiting the obligations of the parties under Section 8(d), Seller

shall, prior to the Closing, use reasonable best efforts (it being understood

that such efforts shall not include any requirement of Seller or any of its

Subsidiaries or Affiliates to expend money or offer or grant any financial

accommodation) as requested by Buyer, and Buyer shall cooperate in all

reasonable respects with Seller, to obtain all consents and waivers, to provide

all notices and to resolve all impracticalities of assignments or transfers

necessary to convey to Buyer (i) the Assets and (ii) all the assets and

properties held by RGS, RGS France and the RGS Subsidiaries (RGS, RGS France and

the RGS Subsidiaries are sometimes referred to herein collectively as the "RGS

Companies") by virtue of the sale of the Shares. If any such consent or waiver

is not obtained, any such notice is not provided or if an attempted assignment

would be ineffective or would impair Seller's, Buyer's or any of their

respective Subsidiaries' or Affiliates' rights under any such lease, license

agreement, contract, agreement, sales order, purchase order, open bid or other

commitment or non-governmental license, franchise,

<PAGE>

authorization or approval so that Buyer would not receive all such rights, then

(x) Seller shall use reasonable best efforts (it being understood that such

efforts shall not include any requirement of Seller or any of its Subsidiaries

or Affiliates to expend money or offer or grant any financial accommodation) to

provide, or cause to be provided, to Buyer, to the extent permitted by law, the

benefits of any such lease, license agreement, contract, agreement, sales order,

purchase order, open bid or other commitment or non-governmental license,

franchise, authorization or approval (including by means of any subcontracting,

sublicensing, or subleasing arrangement) and Seller shall promptly pay, or cause

to be paid, to Buyer when received all moneys received by Seller or any of its

Subsidiaries or Affiliates with respect to any such lease, license agreement,

contract, agreement, sales order, purchase order, open bid or other commitment

or non-governmental license, franchise, authorization or approval and (y) Buyer

shall, or shall cause its Subsidiaries to, pay, perform and discharge on behalf

of Seller and its Subsidiaries and Affiliates all of Seller's and its

Subsidiaries' and Affiliates' and the RGS Companies' debts, liabilities,

obligations and commitments thereunder in a timely manner and in accordance with

the terms thereof.

(e) Ownership of Certain Intellectual Property. The parties
------------------------------------------

acknowledge that the RGS Companies do not own (and that Seller and its

Subsidiaries, other than the RGS Companies, have and will retain after the

Closing exclusive ownership interests in) all commercial and technical

information (including engineering, production and other designs, drawings,

<PAGE>

specifications, formulae, technology, computer programs and software, processes

and proprietary information, trade secrets and know-how) which is not used

primarily in or does not relate primarily to the Business; provided, that the
--------

RGS Companies may retain any documentation or materials (including computer

databases) containing, and may use, such commercial and technical information

only to the extent the same exists and is used or held for use in the operation

of the Business as it is conducted as of the Closing Date in perpetuity without

compensation therefor.

SECTION 2. Assumption of Liabilities.
-------------------------

(a) Assumed Liabilities. Subject to the terms and conditions set
-------------------

forth herein, at the Closing, in consideration for the sale, assignment,

conveyance, transfer and delivery of the Shares and the Assets to Buyer,

effective as of the Effective Time, Seller will, and will cause each of the

Selling Subsidiaries to, assign, convey and transfer to Buyer, and Buyer will,

and will cause each of the RGS Companies and the Buyer Foreign Subsidiaries to,

unconditionally assume and undertake to pay, perform and discharge, in a timely

manner and in accordance with the terms thereof, all of the Assumed Liabilities.

For purposes of this Agreement, the term "Assumed Liabilities" shall mean all of

the respective debts, liabilities, obligations and commitments (contractual,

tortious or otherwise) of any nature (whether fixed, contingent or absolute,

matured or unmatured, liquidated or unliquidated, accrued or not accrued, known

or unknown, whenever or however arising and whether or not the same would be

required by GAAP (as

<PAGE>

defined in Section 3(b)(ii)) to be reflected in financial statements) of each of

the Selling Companies to the extent arising out of or relating to the Business

or the Assets (other than the Retained Liabilities), including, without

limitation: (i) all outstanding checks, (ii) all liabilities and obligations in

respect of workers' compensation, automobile, general liability and products

liability claims and matters, (iii) except as otherwise specifically provided in

Section 9, all liabilities and obligations in respect of employee welfare and

fringe benefits (including claims for medical and disability benefits), (iv)

subject to Section 14(c), all liabilities for environmental matters relating to

any facility presently or formerly owned or operated by any of the Selling

Companies (with respect to the Business) or the RGS Companies or any of their

respective predecessors, (v) all liabilities and obligations for payables to

Allen-Bradley Company, Inc., a Wisconsin corporation and a wholly-owned

subsidiary of Seller, and its Subsidiaries (collectively, "Allen-Bradley") in

respect of purchases of drive systems, press controls and related products from

Allen-Bradley during the 30-day period preceding the Closing Date and (vi) all

obligations to make any payments under any lease, license agreement, contract,

agreement, sales order, purchase order, open bid or other commitment in

connection with the termination thereof as a result of the transactions

contemplated hereby or otherwise.

(b) Retained Liabilities. Anything contained in Section 2(a) or any
--------------------

other provision hereof or any Schedule or Exhibit hereto to the contrary

notwithstanding, and regardless of

<PAGE>

any disclosure to Buyer, the Assumed Liabilities to be assumed by Buyer

hereunder will not include, Buyer will not assume, and the applicable Selling

Company will retain, any and all liabilities, obligations and commitments in

respect of the matters set forth on Schedule 2(b) (the "Retained Liabilities").

SECTION 3. Purchase Price.
--------------

(a) Closing Payment. Subject to the terms and conditions set forth
---------------

herein, in consideration for the sale, assignment, conveyance, transfer and

delivery of the Shares and the Assets, Buyer will, at the Closing (i) pay to

Seller, by wire transfer of immediately available U.S. Dollars to Seller's bank

account at Mellon Bank, N.A., Pittsburgh, Pennsylvania, Account No. 102-3474, an

amount equal to the Purchase Price (as defined below) and (ii) assume the

Assumed Liabilities. For purposes of this Agreement, the term "Purchase Price"

shall mean the amount equal to the remainder of (i) the sum of
--------- ---

(A) U.S.$600 million, plus (B) the aggregate amount of interest on each Customer
----

Note which is not more than 60 days past due with respect to interest thereon

accrued (but not yet received) from the date of the last interest payment

thereon through and including the day preceding the Closing Date as set forth on

a statement delivered by Seller to Buyer on the Closing Date (the "Closing

Purchase Price Notice"), plus (C) an amount equal to fifty-percent of the amount
----

obtained by Buyer in respect of the financing of Customer Notes in excess of the

difference between (x) U.S.$170 million, less (y) the amount described in clause

(ii)(A) below, minus (ii) the sum of (A) the amount of all payments with respect
----- ---

to principal (up to an aggregate amount

<PAGE>

equal to U.S. $170 million) actually received by Seller or any of its

Subsidiaries in respect of any Customer Notes (other than those which are

included in the New Note Principal Amount (as defined in Section 3(b)(i)) or

would be so included if not paid in full prior to the close of business on the

day preceding the Closing Date) between March 1, 1996 and the close of business

on the day preceding the Closing Date as set forth on the Closing Purchase Price

Notice, plus (B) the aggregate amount of prepaid interest on each Customer Note
----

actually received by Seller or its Subsidiaries between the date hereof and the

day preceding the Closing Date (and before the due date for such interest) to

the extent it was not earned for periods through and including the day preceding

the Closing Date as set forth on the Closing Purchase Price Notice. For

purposes of calculating the U.S. Dollar equivalent of (1) the amount of any

accrued interest on Customer Notes referred to in clause (i)(B) of the preceding

sentence which is denominated in a currency other than U.S. Dollars, the New

York foreign exchange selling rate applicable to such currency as published in

The Wall Street Journal, Midwest Edition (the "Wall Street Journal Exchange
- -----------------------

Rate"), for the second business day preceding the Closing Date shall be used and

(2) the amount of any payment with respect to principal actually received by

Seller or any of its Subsidiaries in respect of Customer Notes referred to in

clause (ii)(A) of the preceding sentence or the amount of any prepaid interest

actually received by Seller or any of its Subsidiaries in respect of Customer

Notes referred to in clause (ii)(B) of the preceding sentence which, in either

case, is paid in a currency other than U.S. Dollars, the Wall Street

<PAGE>

Journal Exchange Rate for the date any such payment is actually received shall

be used.

(b) Closing Statement.
-----------------

(i) Within 90 days after the Closing Date, Seller will prepare

and deliver to Buyer a statement of selected assets and liabilities of the

Business as of the close of business on the day preceding the Closing Date

(the "Closing Statement"). The Closing Statement will set forth only the

amounts for (A) accounts receivable (before any reserves with respect

thereto), including, without limitation, unbilled receivables,

(B) inventories (before any reserves, including, without limitation, LIFO

reserves, with respect thereto), (C) accounts payable (including

outstanding checks with respect to accounts payable), (D) liabilities for

payables to Allen-Bradley in respect of purchases of drive systems, press

controls and related products from Allen-Bradley during the 30-day period

preceding the Closing Date made in the ordinary course of business

consistent with past practice (before any reserves with respect thereto),

(E) customer advances, (F) cash and cash equivalents held by RGS France

and RGS Japan (without giving effect to any overdraft borrowings, which

will be the subject of Section 8(p)(v)) and (G) the outstanding principal

amount (the "New Note Principal Amount") of all Customer Notes set forth

on Schedule 8(t) or consented to in writing by Buyer pursuant to Section

8(t) entered into between March 1, 1996 and the close of business on the

day preceding the Closing Date (other than those which are solely in

replacement of or in

<PAGE>

substitution for Customer Notes existing as of March 1, 1996), in each

case as of the close of business on the day preceding the Closing Date.

Seller will retain Deloitte & Touche LLP ("D&T") to audit the Closing

Statement and to render their report thereon stating that the Closing

Statement has been prepared in accordance with the terms of

Section 3(b)(ii). Such report of D&T will be delivered to Buyer together

with the Closing Statement. The date on which the Closing Statement and

the report thereon of D&T is delivered to Buyer is referred to herein as

the "Delivery Date". Buyer will cause its employees and the employees of

its Subsidiaries and Affiliates (including the RGS Companies and the Buyer

Foreign Subsidiaries) to provide reasonable assistance to Seller in the

preparation of the Closing Statement and to assist D&T in connection with

their audit of the Closing Statement and their issuance of a report

thereon. Buyer will cause Seller and D&T to be provided access at all

reasonable times, following reasonable notice, to the personnel,

properties, books and records of Buyer and its Subsidiaries and Affiliates

(including the RGS Companies and the Buyer Foreign Subsidiaries) for such

purposes. Without limiting the generality of the foregoing, Buyer will

cause such employees of Buyer and its Subsidiaries and Affiliates

(including the RGS Companies and the Buyer Foreign Subsidiaries) as Seller

or D&T shall reasonably request to execute and deliver representation

letters to D&T in connection with their audit of the Closing Statement and

their issuance of a report thereon with respect to the same

<PAGE>

matters as the matters referred to in the representation letters executed

and delivered by employees of the Selling Subsidiaries and the RGS

Companies in connection with D&T's audit of the balance sheet dated as of

September 30, 1995 (the "September 30 Balance Sheet") included in the

Financial Statements (as defined in Section 5(h)) and D&T's issuance of

its report thereon as they relate to the selected assets and liabilities

to be included in the Closing Statement.

(ii) The Closing Statement will be prepared in accordance with

the same GAAP applied in the preparation of the September 30 Balance Sheet

as they relate to the selected assets and liabilities to be included in

the Closing Statement utilizing the same accounting methods, policies,

practices, procedures, classifications, judgments, estimation

methodologies and accounting standards as were utilized in the preparation

of the September 30 Balance Sheet as they relate to the selected assets

and liabilities to be included in the Closing Statement (including, but

not limited to, asset and liability valuations, cut-off procedures,

revenue recognition, accounting for long-term contracts and materiality

standards), except that (I) no amounts (other than the New Note Principal

Amount) in respect of assets or liabilities related to any Customer Notes

or obligations in respect of the sale or financing of any thereof shall be

included in the Closing Statement, (II) for purposes of calculating the

U.S. Dollar equivalent of the principal amount of any Customer Note

included in the New Note Principal Amount which is denominated in a

currency

<PAGE>

other than U.S. Dollars, the Wall Street Journal Exchange Rate for the

second business day preceding the Closing Date shall be used,

(III) accounts payable in the Closing Statement shall not include any

amounts related to warranty liabilities or costs, accrued contract costs,

product liability and workers' compensation costs, medical claims, capital

expenditures for property, plant or equipment, payroll, severance and

related costs, investments in joint ventures or the transactions

contemplated hereby, (IV) no amounts in respect of liabilities related to

environmental matters shall be included in the Closing Statement, (V) no

amounts in respect of liabilities for Taxes (as defined in Section

5(o)(ii)(A)) shall be included in the Closing Statement, (VI) no amounts

in respect of liabilities shall be included in the Closing Statement to

the extent that Seller or any of its Subsidiaries or Affiliates has paid

such amounts on or after the Closing Date or has an obligation of payment,

reimbursement or indemnification on or after the Closing Date in respect

thereof, (VII) the Closing Statement shall not reflect any adjustments

which result from management decisions made on or subsequent to the

Closing Date which change the operations or the manner in which the

Business is conducted (including, but not limited to, the discontinuation

of any product line or the cessation of any activities at any facility or

similar events) and (VIII) the Closing Statement will reflect the

provisions of Section 8(p) to the extent required therein. Without

limiting the generality of the foregoing, (A) no

<PAGE>

changes in GAAP effective for accounting periods after September 30, 1995

shall be applied in the preparation of the Closing Statement,

(B) inventory amounts in the Closing Statement shall be calculated

utilizing the same standard costs as were utilized in the September 30

Balance Sheet (except with respect to used equipment, which shall be

valued utilizing the same GAAP as was utilized in the September 30 Balance

Sheet), (C) Seller shall, commencing on the Closing Date, conduct a

physical inventory of the inventory of RGS Japan for purposes of the

Closing Statement utilizing the same procedures as were utilized in the

physical inventory of RGS Japan's inventory conducted for purposes of the

September 30 Balance Sheet to the extent permissible under United States

generally accepted auditing standards and (D) no amounts in respect of

assets or liabilities related to (1) any pension plans, (2) any retirement

medical plans, (3) intercompany indebtedness required to be cancelled or

otherwise eliminated pursuant to Section 8(f), (4) the Heidelberger

Litigation (as defined in Section 14(a)) or (5) Hall Processing Systems,

an Ohio partnership in which Goss Processing is a general partner ("Hall

Processing"), shall be included in the Closing Statement. The Closing

Statement shall be prepared based solely on information available on the

day prior to the Delivery Date with regard to conditions that existed on

the day immediately preceding the Closing Date. For purposes of this

Agreement, "GAAP" shall mean United States generally accepted accounting

principles. For purposes of this

<PAGE>

Agreement, "Customer Notes" shall mean those customer notes created as a

result of customer financing provided by the Business set forth under the

heading "Customer Notes and Related Agreements" on Schedule 5(l) or

similar long-term notes entered into after the date hereof (it being

understood that Customer Notes do not include receivables arising from

extended payment terms contained in contracts with customers of a type

included in accounts receivable in the September 30 Balance Sheet). The

parties acknowledge that Section 14(a)(ii) (and not this Section 3)

provides the exclusive remedy with respect to the non-compliance of the

September 30 Balance Sheet with the terms of this Agreement.

(iii) The Closing Statement will be deemed to be the final,

binding and conclusive Closing Statement (the "Final Closing Statement")

for all purposes on the thirtieth day after the Delivery Date unless Buyer

(or Arthur Andersen LLP, independent accountants of Buyer ("AA"), on

behalf of Buyer) delivers to Seller written notice of its disagreement (a

"Notice of Disagreement") prior to such date specifying in reasonable

detail the nature of Buyer's objections to the Closing Statement. Seller

shall use its reasonable best efforts to cause D&T to cooperate with Buyer

and AA to the extent reasonably required by Buyer and AA to review the

Closing Statement (including, without limitation, providing reasonable

access to AA to review the D&T workpapers relating to the D&T audit of the

Closing Statement). To be assertable in a Notice of Disagreement, an

objection by Buyer with respect to any individual item (or group of

<PAGE>

related items) on the Closing Statement must assert that the Closing

Statement was not prepared in accordance with the terms of

Section 3(b)(ii) with respect to such item (or group of related items) and

relate to an adjustment equal to or greater than $100,000. A Notice of

Disagreement and each item (or group of related items) therein shall be

deemed to be ineffective and not to have been delivered to Seller

hereunder unless it is accompanied by a certificate of Buyer's independent

auditors that they concur with each of the positions taken by Buyer in the

Notice of Disagreement that the Closing Statement was not prepared in

accordance with Section 3(b)(ii). Buyer hereby waives the right to

dispute any item on the Closing Statement that is not objected to in a

Notice of Disagreement (accompanied by such auditors' certificate)

delivered to Seller within thirty days after the Delivery Date. If a

Notice of Disagreement (accompanied by such auditors' certificate) is

delivered to Seller within such 30-day period, then the Closing Statement

(as adjusted, if necessary) will be deemed to be the Final Closing

Statement for all purposes on the earlier of (x) the date Seller and Buyer

resolve in writing all differences they have with respect to the Closing

Statement or (y) the date the disputed matters are resolved in writing by

the Unaffiliated Firm (as defined in Section 3(b)(iv)).

(iv) During the 30-day period following the delivery of a Notice

of Disagreement, Seller and Buyer will seek in good faith to resolve any

differences they may have with respect to matters specified in the Notice

<PAGE>

Disagreement. If, at the end of such 30-day period, Seller and Buyer have

not reached agreement on such matters, Seller will have 30 days to advise

Buyer in writing of Seller's position with respect to each of Buyer's

proposed adjustments that are in dispute ("Seller's Letter"). Buyer will

cause Seller and D&T to be provided access at all reasonable times to the

personnel, properties, books and records of Buyer and its Subsidiaries and

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) to enable Seller to prepare Seller's Letter. Promptly

following the delivery to Buyer of Seller's Letter, Seller and Buyer will

jointly engage Price Waterhouse LLP (or, if Price Waterhouse LLP is unable

or unwilling to act in such capacity, Coopers & Lybrand LLP) (the

"Unaffiliated Firm") to resolve the matters which remain in dispute with

respect to the Closing Statement. In connection with such engagement,

each of Seller and Buyer agree to execute, if requested by the

Unaffiliated Firm, a reasonable engagement letter including customary

indemnities. Promptly after such engagement of the Unaffiliated Firm,

Seller or Buyer will provide the Unaffiliated Firm with a copy of this

Agreement, the Closing Statement, the Notice of Disagreement and Seller's

Letter. The Unaffiliated Firm will have the authority to request in

writing such additional written submissions from either Seller or Buyer as

it deems appropriate, provided that a copy of any such submission will be

provided to the other party at the same time as it is provided to the

Unaffiliated Firm. Neither party will

<PAGE>

make (nor permit any of its Subsidiaries or Affiliates to make) any

additional submission to the Unaffiliated Firm except pursuant to such a

written request by the Unaffiliated Firm. Neither party shall communicate

(nor permit any of its Subsidiaries or Affiliates to communicate) with the

Unaffiliated Firm without providing the other party a reasonable

opportunity to participate in such communication with the Unaffiliated

Firm (other than with respect to written submissions in response to the

written request of the Unaffiliated Firm). The Unaffiliated Firm will

have 45 days to review the documents provided to it pursuant to this

Section 3(b)(iv). Within such 45-day period, the Unaffiliated Firm will

furnish simultaneously to both parties its written determination with

respect to each of the adjustments in dispute submitted to it for

resolution. The Unaffiliated Firm will resolve the differences regarding

the Closing Statement based solely on the information provided to the

Unaffiliated Firm by Seller and Buyer pursuant to the terms of this

Agreement (and not independent review). The Unaffiliated Firm's authority

will be limited to resolving disputes with respect to whether the Closing

Statement was prepared in accordance with the terms of Section 3(b)(ii)

with respect to the items on the Closing Statement in dispute (it being

understood that the Unaffiliated Firm will have no authority to make any

adjustments to any financial statements or amounts other than the Closing

Statement and amounts set forth therein). In resolving any disputed item

(or group of related items),

<PAGE>

the Unaffiliated Firm may not assign a value to such item (or group of

related items) greater than the greatest value for such item (or group of

related items) asserted by either party or less than the smallest value

for such item (or group of related items) asserted by either party. The

decision of the Unaffiliated Firm will be, for all purposes, conclusive,

non-appealable, final and binding upon Seller and Buyer. The fees of the

Unaffiliated Firm will be borne by Seller and Buyer in the same proportion

that the dollar amount of disputed items lost by a party bears to the

total dollar amount in dispute resolved by the Unaffiliated Firm. Each

party will bear the fees, costs and expenses of its own accountants and

all of its other expenses in connection with matters contemplated by this

Section 3(b).

(i) Upon the Closing Statement being deemed the Final

Closing Statement in accordance with Section 3(b), the Purchase Price will

be adjusted, up or down, as follows:

(A) if the remainder (the "Net Asset Amount") of (i) the
---------

sum of all the selected assets on the Final Closing Statement, minus
-----

(ii) the sum of all the selected liabilities on the Final Closing

Statement is greater than U.S.$200 million, the Purchase Price will be

increased by the amount by which the Net Asset Amount is greater than

U.S.$200 million and such amount by which the Purchase Price is increased

will be paid by Buyer to Seller; and

(B) if the Net Asset Amount is less than U.S.$200 million,

the Purchase Price will be reduced by the

<PAGE>

amount by which the Net Asset Amount is less than U.S.$200 million and

such amount by which the Purchase Price is reduced will be paid by Seller

to Buyer.

(ii) Any payment required under this Section 3(c) will bear

interest from the Closing Date to the date of payment (calculated based on

actual days elapsed in a 365-day year) at a fluctuating rate per annum

equal to the prime interest rate from time to time of Mellon Bank N.A. and

will be made (together with such interest) by wire transfer of immediately

available U.S. Dollars to a bank account designated by Seller or Buyer, as

the case may be, within three business days after the date that the

Closing Statement is deemed to be the Final Closing Statement in

accordance with Section 3(b).

SECTION 4. Closing.
-------

(a) Closing. The closing of the purchase and sale of the Shares and
-------

the Assets (the "Closing") will take place (i) at the offices of Seller's or

Buyer's counsel (as shall be agreed), at 10:00 a.m. New York time on the fifth

business day following the expiration or termination of the applicable waiting

period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as

amended (the "HSR Act"), and the satisfaction or waiver of all other conditions

set forth in Sections 10 and 11 or (ii) at such other place, date and time as

Seller and Buyer may agree. The date of the Closing is referred to herein as

the "Closing Date". The Closing will be deemed to be effective at the close of

business on the Closing Date (the "Effective Time").

<PAGE>

(b) Closing Deliveries of Seller. At the Closing, Seller will deliver or

cause to be delivered to Buyer (i) stock certificates representing the Shares,

duly endorsed in blank or accompanied by appropriate stock powers duly endorsed

in blank (with all applicable stamps), (ii) such deeds, bills of sale and

instruments of assignment as shall reasonably be requested by Buyer to effect or

evidence the sale, assignment, conveyance, transfer and delivery of the Assets

to Buyer, (iii) such instruments of assignment as shall reasonably be requested

by Buyer to effect the transfer of the Nominee Shares to Buyer's designees,

(iv) resignations or evidence of removal of such officers and directors of the

RGS Companies as the Buyer shall specify prior to the Closing, (v) the minute

books, ledgers and stock transfer books of each of the RGS Companies and

(vi) all closing certificates, opinions of counsel and other documents required

to be delivered by Seller to Buyer at the Closing pursuant to this Agreement.

deliver or cause to be delivered to Seller (i) the Purchase Price pursuant

to Section 3(a), (ii) such instruments of assumption as shall reasonably

be requested by Seller to effect or evidence the assumption by Buyer of

the Assumed Liabilities and (iii) all closing certificates, opinions of

counsel and other documents required to be delivered by Buyer to Seller at

the Closing pursuant to this Agreement.

(d) Transfer Taxes. All applicable sales and transfer taxes
--------------

(including any stock transfer taxes due as a result of the sale of the

Shares and taxes, if any, imposed upon the transfer

<PAGE>

of real and personal property) and filing, recording, registration, stamp,

documentary and other taxes and fees ("Transfer Taxes") payable in

connection with this Agreement, the transactions contemplated by this

Agreement or the documents giving effect to such transactions shall be

shared on an equal basis by Seller and Buyer. The party primarily

responsible under applicable law for paying any Transfer Taxes shall

timely pay such Transfer Taxes and shall timely prepare and file all Tax

Returns (as defined in Section 5(o)) required to be filed in respect of

such Transfer Taxes subject to the other party's prior approval of the

computation of such Transfer Taxes or of any such Tax Returns (which

approval shall not be unreasonably withheld). If neither party is

primarily responsible for paying any Transfer Taxes, Buyer and Seller

shall reasonably agree as to which party shall be deemed to be primarily

responsible for paying such Transfer Taxes for purposes of this Section

4(d). Buyer or Seller, as the case may be, shall reimburse the party

paying any Transfer Taxes for its share of such Transfer Taxes within five

days of receiving notice of any payment of Transfer Taxes from the party

making such payment.

(e) Satisfaction of Conditions. All conditions to the
--------------------------

obligations of Seller and Buyer to proceed with the Closing under this

Agreement will be deemed to have been fully and completely satisfied or

waived for all purposes upon the Closing.

SECTION 5. Representations and Warranties of Seller.
----------------------------------------

Seller hereby represents and warrants to Buyer as follows:

<PAGE>

(a) Corporate Organization. Seller is a corporation duly
----------------------

incorporated, validly existing and in good standing under the laws of the

State of Delaware. Each of Rockwell France, the Selling Subsidiaries,

RICC and the RGS Companies is a corporation duly organized, validly

existing and in good standing under the laws of the jurisdiction of its

incorporation or amalgamation, as the case may be. Each of the Selling

Companies and RICC (with respect to the Business) and the RGS Companies

has all requisite corporate power and authority to carry on its business

as it is currently conducted and to own, lease and operate its properties

where such properties are now owned, leased or operated. Each of the

Selling Companies and the RGS Companies is duly qualified or licensed to

do business and in good standing in each jurisdiction in which the

ownership, leasing or holding of its properties, in the case of the RGS

Companies, and its Assets, in the case of the Selling Companies, makes

such licensing or qualification necessary, except for such jurisdictions

in which the failure to be so qualified, licensed or in good standing

would not, individually or in the aggregate, reasonably be likely to have

a material adverse effect on the business, operations or condition

(financial or otherwise) of the Business, taken as a whole (a "Material

Adverse Effect").

(b) Corporate Authorization. Seller has all requisite
-----------------------

corporate power and authority to enter into this Agreement, to perform its

obligations hereunder and to cause the Selling Subsidiaries to perform

their obligations hereunder. The execution, delivery and performance by

Seller of this Agreement have been, and the execution, delivery and

performance by each of

<PAGE>

the Selling Companies, RICC and Rockwell France of all instruments of

transfer to be delivered by any of the Selling Companies, RICC or Rockwell

France pursuant hereto have been or will be, duly authorized by all

necessary corporate action on behalf of the Selling Companies, RICC and

Rockwell France. This Agreement constitutes a legal, valid and binding

obligation of Seller, and all instruments of transfer to be delivered by

each of the Selling Companies, RICC and Rockwell France pursuant hereto,

when executed and delivered, will constitute legal, valid and binding

obligations of such Selling Company, RICC or Rockwell France, enforceable

against such Selling Company, RICC or Rockwell France in accordance with

their respective terms, except as such enforceability may be limited by

bankruptcy, insolvency, reorganization, moratorium or similar laws

relating to or affecting the enforcement of creditors' rights in general

and by general principles of equity.

or performance of this Agreement by Seller or the consummation by any of

the Selling Companies, RICC or Rockwell France of the transactions

contemplated hereby will (i) conflict with the charter documents or

By-Laws of any of the Selling Companies, RICC, Rockwell France or the RGS

Companies, (ii) violate, conflict with or result in a breach of any

material mortgage, debt instrument, indenture, deed of trust, license,

lease, contract, commitment or agreement to which any of Seller, Rockwell

France, the Selling Subsidiaries or RICC (with respect to the Business) or

the RGS Companies is a party or by which any of their respective

properties, assets or businesses are bound

<PAGE>

(other than with respect to consents, approvals, authorizations, filings,

registrations or notices in connection with the transactions contemplated

hereby under those mortgages, debt instruments, indentures, deeds of

trust, licenses, leases, contracts, commitments and agreements to which

any of the Selling Companies or RICC (with respect to the Business) or the

RGS Companies is a party) or any judgment, decree or order or, subject to

completion of required filings and notifications set forth on Schedule

5(d) and the expiration of any required waiting periods and extensions

thereof, any applicable law, statute or regulation to which any of Seller,

Rockwell France, the Selling Subsidiaries or RICC (with respect to the

Business) or the RGS Companies is subject, or (iii) result in the creation

of any Liens (as defined below), other than Permitted Liens (as defined in

Section 5(k)(i)), upon any of the Assets or upon any of the respective

properties or assets of the RGS Companies, except for such violations,

conflicts, breaches and Liens subject to clauses (ii) or (iii) which

individually or in the aggregate would not reasonably be likely to have a

Material Adverse Effect. For purposes of this Agreement, "Lien" shall

mean any lien, mortgage, pledge, hypothecation, security interest, voting

trust agreement or other encumbrance. Except as set forth on Schedule

5(c), no consent, approval or authorization of, filing or registration

with, or notification to any person, partnership, joint venture, trust,

corporation or other entity (including a Governmental Authority (as

defined in Section 5(d)) (a "Person") is required under any lease,

sublease or occupancy agreement relating to the Leased Properties (as

defined in Section 5(j)(i)) set forth on

<PAGE>

Schedule 5(j)(ii) or Contract (as defined in Section 5(l)(i)) set forth on

Schedule 5(l) in connection with the execution and delivery of this

Agreement and the consummation of the transactions contemplated hereby,

other than any such requirements which, individually or in the aggregate,

if not obtained or made would not reasonably be likely to have a Material

Adverse Effect and any such requirement that is applicable solely as a

result of the specific legal or regulatory status of Buyer or solely as a

result of any other facts that specifically relate to the business or

activities in which Buyer is or proposes to be engaged, other than the

Business.

(d) Government Authorizations. Except as set forth on
-------------------------

Schedule 5(d), no material consent, approval or authorization of, filing

or registration with, or notification to, any governmental or regulatory

authority or agency, domestic or foreign (a "Governmental Authority"), is

required by or with respect to any of the Selling Companies, RICC,

Rockwell France or the RGS Companies in connection with the execution and

delivery of this Agreement by Seller or the consummation by the Selling

Companies, RICC and Rockwell France of the transactions contemplated

hereby, other than any such requirement (i) under any lease, license

agreement, contract, agreement, sales order, purchase order, open bid or

other commitment or (ii) that is applicable solely as a result of the

specific legal or regulatory status of Buyer or solely as a result of any

other facts that specifically relate to the business or activities in

which Buyer is or proposes to be engaged, other than the Business.

<PAGE>

(e) Rockwell France and Selling Subsidiaries. Seller is the
----------------------------------------

indirect beneficial owner through one or more of its Subsidiaries of all

of the issued and outstanding shares of capital stock (other than, in the

case of Rockwell France, the Nominee Shares, and in the case of Rockwell

Australia, shares held by certain nominee holders) of each of Rockwell

France and the Selling Subsidiaries.

(f) Outstanding Capital Stock; Ownership.
------------------------------------

(i) The authorized capital stock of RGS consists of 100

shares of Common Stock, no par value, of which 100 shares,

constituting the U.S. Shares, are duly authorized, validly issued,

fully paid and nonassessable. Seller is the record and beneficial

owner of the U.S. Shares, free and clear of any Liens.

(ii) The authorized capital stock of RGS France consists of

2,500 ordinary shares, par value FF. 100 per share, of which 2,500

shares (2,494 of which constitute the French Shares and 6 of which

constitute the Nominee Shares) are duly authorized, validly issued,

fully paid and nonassessable. Rockwell France is the record and

beneficial owner of the French Shares, free and clear of any Liens.

The Nominee Shares are owned by the individuals and entities set

forth on Schedule 5(f) in order to satisfy the requirements of French

company law regarding the minimum number of stockholders of a socie'te'

anonyme. The Nominee Shares are owned by such individuals and

entities, free and clear of any Liens.

<PAGE>

(iii) The authorized capital stock of each of the RGS

Subsidiaries and the number of shares thereof which are issued and

outstanding (the "RGS Subsidiary Shares") are set forth on

Schedule 5(f). The RGS Subsidiary Shares are duly authorized,

validly issued, fully paid and nonassessable. RGS is the record and

beneficial owner of the RGS Subsidiary Shares, free and clear of any

Liens.

(iv) There are no outstanding rights, options, warrants,

calls, preemptive rights, convertible or exchangeable securities,

subscriptions or other agreements of any nature (other than this

Agreement) pursuant to which any of Seller, Rockwell France, the RGS

Companies or any of their Affiliates is or may be obligated to sell,

issue or acquire any of the outstanding, authorized but unissued or

treasury shares or any other security of any RGS Company.

(g) Equity Interests. Except for the ownership of RICC, the
----------------

RGS Companies and Goss Processing and as set forth on Schedule 5(g), none

of the Selling Companies (with respect to the Business) or the RGS

Companies owns any capital stock or other equity interests in any

corporation, partnership or other entity.

(h) Financial Statements. The combined financial statements of
--------------------

the Business as of and for the fiscal years ended September 30, 1995 and

September 30, 1994 (the "Financial Statements") and the independent

auditors' report thereon are attached hereto as Schedule 5(h). Except as

set forth therein, the Financial Statements present fairly, in all

material respects, the financial position, the results of operations and

the cash flows of the Selling Companies and RICC (with respect to

<PAGE>

the Business) and the RGS Companies at September 30, 1995, September 30,

1994 and for the fiscal years then ended in accordance with GAAP as

described in Schedule 5(h) applied on a consistent basis throughout the

periods covered by such statements. The assets reflected on the

September 30 Balance Sheet constitute all of the assets that are primarily

related to the Business and that are required to be reflected on a balance

sheet prepared in accordance with GAAP, except for (i) assets acquired or

disposed of in the ordinary course of business consistent with past

practice since September 30, 1995 or as otherwise permitted or

contemplated by this Agreement, (ii) Retained Assets, (iii) assets used to

perform common services for the Business described in the Financial

Statements and (iv) assets which individually or in the aggregate are not

material to the financial condition of the Selling Companies and RICC

(with respect to the Business) and the RGS Companies, taken as a whole.

The Financial Statements have been prepared from the books of account and

financial records of the Selling Companies, RICC and the RGS Companies,

which books of account and records have been maintained in accordance with

the Business' applicable accounting practices. The Financial Statements

may not necessarily be indicative of the financial position, results of

operations or cash flows that would have existed if the Selling Companies

and RICC (with respect to the Business) and the RGS Companies had operated

as a stand-alone company.

(i) Liabilities. Except for liabilities (i) set forth or
-----------

reflected on the September 30 Balance Sheet (or referred to in the notes

thereto), (ii) permitted or contemplated by this

<PAGE>

Agreement or set forth or referred to in a Schedule to this Agreement,

(iii) relating to Taxes, (iv) arising in the ordinary course of business

consistent with past practice since September 30, 1995, (v) constituting

Retained Liabilities or any liability for which Seller or any of its

Subsidiaries or Affiliates has an obligation of payment, reimbursement or

indemnification after the Closing Date and (vi) which, individually or in

the aggregate, are not material to the financial condition of the Selling

Companies and RICC (with respect to the Business) and the RGS Companies,

taken as a whole, none of the Selling Companies or RICC (with respect to

the Business) or the RGS Companies has any liabilities of a nature

required to have an amount set forth on a balance sheet prepared in

accordance with GAAP.

(j) Real Property.
-------------

(i) Schedule 5(j)(i) sets forth a list of all material

real property owned in fee by any Selling Company (and which is used

primarily in or relates primarily to the Business) or RGS Company

and, in the case of the Selling Companies, which do not constitute

Retained Assets ("Owned Properties"). Schedule 5(j)(ii) sets forth a

list of all leases to which any Selling Company (with respect to the

Business) or RGS Company is a party (which, in the case of the

Selling Companies, do not constitute Retained Assets) pursuant to

which any thereof is a lessee of any material real property (and, in

the case of the Selling Companies, which is used primarily in or

relates primarily to the Business) ("Leased Properties").

<PAGE>

(ii) Except as set forth on Schedule 5(j)(i) or 5(j)(ii),

each Selling Company (with respect to the Business) and RGS Company

has (A) good and insurable title to its Owned Properties and

(B) valid and subsisting leasehold interests in its Leased

Properties, in each case free and clear of any Liens, except for

Permitted Liens.

(iii) Except as identified on Schedule 5(j)(ii), to

Seller's knowledge, there are no (A) defaults, violations or breaches

on the part of any Selling Company (with respect to the Business) or

RGS Company under the provisions of any leases of Leased Properties

set forth on Schedule 5(j)(ii) and no event has occurred and is

continuing that constitutes or, with notice or the passage of time or

both, would constitute a default, violation or breach by any Selling

Company (with respect to the Business) or RGS Company under any such

lease or (B) defaults, violations or breaches on the part of the

lessor under the provisions of any of such leases of Leased

Properties, except in either case (I) for defaults, violations or

breaches which individually or in the aggregate would not reasonably

be likely to have a Material Adverse Effect and (II) that in order to

avoid a default, violation or breach under such leases the consent of

the lessor thereto may be required in connection with the

transactions contemplated hereby.

(k) Personal Property.
-----------------

(i) A Selling Company or RICC (with respect to the

Business) or an RGS Company has good title to all personal property

reflected as owned on the September 30

<PAGE>

Balance Sheet or which it thereafter acquired ownership of (except as

set forth on the Schedules hereto and except for such property as has

since been sold or otherwise disposed of in the ordinary course of

business consistent with past practice), free and clear of any Liens,

except for Permitted Liens. For purposes of this Agreement,

"Permitted Liens" shall mean those Liens (A) referred to in the

September 30 Balance Sheet, the notes thereto or not required to be

so referred to therein in accordance with GAAP, (B) which have arisen

in the ordinary course of business consistent with past practice

since September 30, 1995, (C) referred to in the Schedules hereto,

(D) for Taxes not yet due or payable or being contested in good faith

and by appropriate proceedings, (E) that constitute mechanics',

carriers', workers' or other like Liens, (F) that, individually or in

the aggregate, are not material to the Selling Companies and RICC

(with respect to the Business) and the RGS Companies, taken as a

whole, in character, amount or extent or (G) which constitute

easements, covenants, rights-of-way, other similar matters that are

matters of record and other matters subject to which the leases of

Leased Properties are granted.

(ii) The trade accounts receivable included on the

September 30 Balance Sheet are based upon shipments of product, the

performance of services or binding contracts.

(iii) The inventories reflected on the September 30

Balance Sheet are stated at the lower of cost or estimated market

value, determined utilizing the accounting practices

<PAGE>

and procedures of the Selling Companies (with respect to the

Business) and the RGS Companies.

(l) Contracts.
---------

(i) Schedule 5(l) lists all:

(A) executory loan agreements, credit agreements, security

agreements, notes, mortgages, indentures and other contracts and

instruments which provide for the borrowing of moneys by or

extensions of credit to any Selling Company or RICC (with respect to

the Business) or RGS Company or the guaranty by any Selling Company

or RICC (with respect to the Business) or RGS Company of obligations

in respect of the borrowings of moneys by or extensions of credit to

any other party, in any case involving in excess of $1,000,000 of

indebtedness or committed credit;

(B) executory employment contracts (other than collective

bargaining agreements) to which any Selling Company (with respect to

the Business) or RGS Company is a party which involve the payment of

more than $250,000 annually to any individual, except those that may

be cancelled by any Selling Company or RGS Company without material

penalty upon not more than 180 days' notice;

distributorship agreements to which any Selling Company (with respect

to the Business) or RGS Company is a party which involve the sale of

greater than $500,000 of product annually, except those that may be

cancelled by any Selling Company or RGS Company without material

penalty upon not more than 180 days' notice; and

<PAGE>

(D) executory leases (other than leases relating to real

property), license agreements, contracts, agreements, commitments,

sales orders and purchase orders to which any Selling Company or RICC

(with respect to the Business) or RGS Company is a party, (other than

(I) those of a type described in clauses (A) through (C) above,

without giving effect to the minimum dollar or term thresholds set

forth therein, and (II) open bids and proposals which can be

withdrawn or which are subject to the execution of definitive

agreements) which expressly provide for future payments (other than

warranty and other contingent payments) to or from any Selling

Company or RICC (with respect to the Business) or RGS Company of more

than $500,000, except those that may be cancelled by any Selling

Company, RICC or RGS Company without material penalty upon not more

than 180 days' notice.

All items required to be set forth on Schedule 5(l) are

referred to herein as "Contracts". Notwithstanding the foregoing,

Schedule 5(l) does not contain a Contract otherwise required to be

set forth thereon which is subject to confidentiality obligations not

to disclose the existence of the same on the part of Seller or any of

its Subsidiaries or Affiliates.

(ii) Except as identified on Schedule 5(l), to Seller's

knowledge, there are no (A) defaults, violations or breaches on the

part of any Selling Company or RICC (with respect to the Business) or

RGS Company under the provisions of any Contracts set forth on

Schedule 5(l) and no event has

<PAGE>

occurred and is continuing that constitutes or, with notice or the

passage of time or both, would constitute a default, violation or

breach by any Selling Company or RICC (with respect to the Business)

or RGS Company under any such Contract or (B) defaults, violations or

breaches on the part of the other party or parties under the

provisions of any Contracts set forth on Schedule 5(l), except, in

either case, (I) for defaults, violations or breaches which,

individually or in the aggregate, would not reasonably be likely to

have a Material Adverse Effect and (II) that in order to avoid a

default, violation or breach under such Contracts the consent of the

other party or parties thereto may be required in connection with the

transactions contemplated hereby.

(iii) To Seller's knowledge, the foreign currency

forward exchange contracts set forth on Schedule 5(l) were entered

into to protect one of the Selling Companies (with respect to the

Business) or the RGS Companies from adverse currency rate

fluctuations on foreign currency commitments entered into in the

ordinary course of business.

(m) Compliance With Laws.
--------------------

(i) Except as set forth on Section 1 of Schedule 5(m),

each of the Selling Companies and RICC (with respect to the Business)

and the RGS Companies is in compliance in all material respects with

all laws, statutes and regulations (other than those pertaining to

pollution or protection of the environment or exposure of persons to

toxic or hazardous substances, raw materials or chemicals)

<PAGE>

of Governmental Authorities applicable to them, the Business or the

Assets, except for failures to so comply which would not,

individually or in the aggregate, reasonably be likely to have a

Material Adverse Effect.

(ii) To Seller's knowledge, except as set forth on Section

2 of Schedule 5(m), there are no claims pending or threatened of any

regulatory authority or other Person that any of the Selling

Companies (with respect to the Business) or the RGS Companies is in

violation of or non-compliance with any Environmental Laws (as

defined in Section 14(c)(v)(C)) or seeking damages or other relief

from any of the Selling Companies (with respect to the Business) or

the RGS Companies under any Environmental Laws, other than claims

which, individually or in the aggregate, would not reasonably be

likely to have a Material Adverse Effect.

(iii) To Seller's knowledge, except as set forth on

Section 2 of Schedule 5(m), none of the Selling Companies (with

respect to the Business) or the RGS Companies have been notified by

any relevant Governmental Authority that any governmental franchise,

license, permit, authorization or approval granted under any

Environmental Law will be adversely modified, suspended, cancelled or

revoked or will not be renewed in the ordinary course of business,

other than notifications involving such matters which would not,

individually or in the aggregate, reasonably be likely to have a

Material Adverse Effect.

(n) Permits. Each of the Selling Companies and RICC (with
-------

respect to the Business) and the RGS Companies possesses

<PAGE>

all governmental franchises, licenses, permits, authorizations and

approvals necessary to enable it to own, lease or otherwise hold its

properties and assets, in the case of RICC and the RGS Companies, or its

Assets, in the case of the Selling Companies, and to carry on its business

as presently conducted, other than any such franchises, licenses, permits,

authorizations or approvals which, individually or in the aggregate, if

not obtained would not reasonably be likely to have a Material Adverse

Effect.

(o) Taxes.
-----

(i) To Seller's knowledge, except as set forth on

Schedule 5(o) or as otherwise made available to Buyer, each of the

Selling Companies and RICC (with respect to the Business) and the RGS

Companies has (A) timely filed or caused to be filed all material Tax

Returns (as defined below) that are required to be filed by each of

them on or before the date hereof and (B) paid or caused to be paid

all material Taxes shown to be due and payable on such Tax Returns

which are not being contested in good faith by or on behalf of any of

the Selling Companies or RICC (with respect to the Business) or the

RGS Companies, as the case may be. To Seller's knowledge, except as

set forth on Schedule 5(o), there are no Tax liens upon any of the

assets of any RGS Company or RICC or the Assets, except for liens for

Taxes not yet due and payable or being contested in good faith.

Except as set forth on Schedule 5(o) or as otherwise made available

to Buyer, no Tax Return that includes any Selling Company or RICC

(with respect to the Business) or RGS

<PAGE>

Company is currently being examined by any taxing authority and no

written notice of such an audit or examination has been received, and

there are no outstanding agreements or waivers extending the statute

of limitations applicable to any of the RGS Companies' Tax Returns.

No claims which, individually or in the aggregate, would reasonably

be likely to have a Material Adverse Effect has been made by a taxing

authority in a jurisdiction where any of the RGS Companies or RICC

(with respect to the Business) do not file Tax Returns that any of

them is or may be subject to taxation by such jurisdiction. RGS has

not filed a consent to the application of Section 341(f)(2) of the

Internal Revenue Code of 1986, as amended (the "Code").

(ii) For the purpose of this Agreement:

(A) "Tax" or "Taxes" shall mean all taxes, charges,

duties, fees, levies or other assessments, including, but not limited

to, income, excise, property, sales, value added, profits, license,

withholding, payroll, employment, net worth, capital gains, transfer,

stamp, social security, environmental, occupation and franchise

taxes, imposed by any Governmental Authority, and including any

interest, penalties and additions attributable thereto;

(B) "Tax Return" or "Tax Returns" shall mean any return,

report, declaration, information return, statement or other document

filed or required to be filed with any Governmental Authority in

connection with the determination, assessment or collection of any

Tax or the administration of

<PAGE>

any laws, regulations or administrative requirements relating to any

Tax;

based upon, measured by, or calculated with respect to (I) net income

or profits (including, but not limited to, Taxes imposed as a result

of any election under Section 338 of the Code or any analogous

provision of state, local or foreign law, any capital gains, minimum

Taxes and any Taxes on items of tax preference, but not including

sales, use, real property gains, real or personal property, gross or

net receipts, transfer or other similar Taxes) or (II) multiple bases

(including, but not limited to, corporate franchise, doing business

or occupation Taxes) if one or more of the bases upon which such Tax

may be based upon, measured by, or calculated with respect to, is

described in clause (I) above; and

(D) "Consolidated Taxes" shall mean all Federal, state,

provincial or local Income Taxes, domestic or foreign, that are paid

or payable on a consolidated, unitary, combined or similar basis with

respect to Tax Returns ("Consolidated Tax Returns") which include any

of the Selling Companies or RICC (with respect to the Business) and

the RGS Companies, on the one hand, and Seller or any of its

Subsidiaries or Affiliates (other than any of the Selling Companies

or RICC (with respect to the Business) and the RGS Companies) on the

other.

(p) Litigation. Except as set forth on Schedule 5(p), none of
----------

the Selling Companies or RICC (with respect to the

<PAGE>

Business) or the RGS Companies is a party to any legal action,

arbitration, suit or other proceeding by or before any court, arbitrator,

administrative agency or other Governmental Authority (i) which

individually or in the aggregate would reasonably be likely to have a

Material Adverse Effect or (ii) which challenges or otherwise relates to

the transactions contemplated by this Agreement, and except as set forth

on Schedule 5(p), Seller is not aware that any such legal action,

arbitration, suit or other proceeding has been threatened. Except as set

forth on Schedule 5(p), there are no outstanding orders, rulings, decrees

or judgments to which any of the Selling Companies or RICC (with respect

to the Business) or the RGS Companies is a party or by which any of them

is bound by or with any court, arbitrator or administrative agency which

(i) would reasonably be likely to have a Material Adverse Effect or

(ii) challenge or otherwise relate to the transactions contemplated by

this Agreement.

(q) Intellectual Property. For purposes of this Agreement,
---------------------

"Intellectual Property" shall mean United States and foreign: (A) patents

(including utility and design patents, industrial designs and utility

models) and patent applications (including docketed patent or invention

disclosures awaiting filing, requests for reexamination, reissues,

divisions, continuations, continuations in part, patents of addition and

extensions), patent or invention disclosures awaiting filing

determination, (B) trademarks, service marks, trade names, trade dress,

logos, business and product names, slogans, and registrations and

applications for registration thereof; (C) copyrights (including software)

and registrations thereof;

<PAGE>

(D) inventions, processes, designs, formulae, trade secrets, know-how,

industrial models, confidential and technical information, manufacturing,

engineering and technical drawings, product specifications and

confidential business information; (E) mask work and other semiconductor

chip rights and registrations thereof; (F) intellectual property rights

similar to any of the foregoing; and (G) copies and tangible embodiments

thereof (in whatever form or medium, including electronic media). For

purposes of this Agreement, "Intellectual Property Assets" shall mean

(i) the Intellectual Property that is listed in Schedule 5(q), all of

which is used primarily in or relates primarily to the Business and

(ii) all other Intellectual Property that is owned by any of the Selling

Companies or the RGS Companies and is used primarily in or relates

primarily to the Business (including, without limitation, confidential and

technical information relating to matters broadly identified as PECAIM

manufacturing process for Ni sleeve, PECAIM sol-gel process for NiO

coating, magnetic cut-off label magnetizing fixture, microwave drying arc

prevention techniques and microwave drying controls to the extent the same

is used primarily in or relates primarily to the Business). The

Intellectual Property Assets include all Intellectual Property that is

owned by any of the Selling Companies or the RGS Companies that is used

primarily in or relates primarily to the Business. To Seller's knowledge,

set forth on Schedule 5(q) and 8(l)(i) are all patents, patent

applications and patent or invention disclosures awaiting filing owned by

any of the Selling Companies or RGS Companies which are used in the

conduct of the Business in the manner as currently

<PAGE>

conducted (other than those covering products of Allen-Bradley or third

parties which are supplied to the Business). Except as set forth on the

Schedules hereto, a Selling Company and/or an RGS Company owns all

Intellectual Property Assets, free from any Liens, other than Permitted

Liens. The Intellectual Property Assets, together with the intellectual

property rights arising from the Contracts, are sufficient Intellectual

Property rights necessary to conduct the Business in the manner as

currently conducted. Except as set forth on Schedules 5(p) or 5(q), to

Seller's knowledge, there are no claims, demands or notices of any Person

pertaining to, or any proceedings which are pending or threatened, which

(i) challenge the ownership interests of any of the Selling Companies

(with respect to the Business) or the RGS Companies in any of the

Intellectual Property Assets, (ii) allege that any product or service of

the Business infringe the intellectual property rights of others or (iii)

state that the practice or use of any of the Intellectual Property Assets

requires the consent or license of such Person, other than any such

claims, demands, notices or proceedings which would not, individually or

in the aggregate, reasonably be likely to have a Material Adverse Effect.

(r) Conduct of Business Since September 30, 1995. Except as
--------------------------------------------

set forth on Schedule 5(r) or as contemplated by this Agreement, since

September 30, 1995 (i) the business of the Selling Companies and RICC

(with respect to the Business) and the RGS Companies has been conducted in

the ordinary course consistent with past practice and (ii) there has not

been any change in the business, operations or condition (financial or

<PAGE>

otherwise) of the Selling Companies and RICC (with respect to the

Business) and the RGS Companies, taken as a whole, which has had or would

reasonably be likely to have a Material Adverse Effect, other than changes

relating to the economy in general or changes resulting from industry-wide

developments affecting other companies in similar businesses. Except as

set forth on Schedule 5(r) or as contemplated by this Agreement, since

September 30, 1995 there has not been:

(A) any general increase in the rate or terms of compensation,

commissions, bonuses, pension or other employee benefit plans,

payments or arrangements payable to or for or with employees of any

of the Selling Companies (with respect to the Business) or the RGS

Companies, except (I) pursuant to collective bargaining agreements or

other labor agreements in effect on the date hereof or entered into

in the ordinary course of business consistent with past practice,

(II) pursuant to periodic performance reviews and related

compensation and benefit increases in the ordinary course of business

consistent with past practice or (III) otherwise in the ordinary

course of business consistent with past practice;

(B) sold, transferred, leased or otherwise disposed of any

material assets of any RGS Company or RICC (with respect to the

Business) or any material Assets, other than inventories and other

assets in the ordinary course of business consistent with past

practice;

RICC (with respect to the Business) or the RGS

<PAGE>

Companies any material loan or other indebtedness, other than in the

ordinary course of business consistent with past practice;

(D) any amendment of the charter documents or By-Laws of any

RGS Company;

(E) paid or declared any dividend in respect of any of the

capital stock of any RGS Company;

(F) issued or sold or authorized for issuance or sale any

additional shares of capital stock of any RGS Company, or any

securities convertible into shares of any class of such capital stock

or granted any option, warrant or other right relating thereto; or

(G) any agreement or commitment (other than this Agreement or

any arrangement provided for in or contemplated by this Agreement)

entered into by any of the Selling Companies or RICC (with respect to

the Business) or the RGS Companies to take any of the types of action

described in clauses (A) through (F) of this Section 5(r).

(s) Employees. Except as set forth on Schedule 5(s), there is
---------

no labor strike, work stoppage or lockout pending or, to Sellers'

knowledge, threatened against any of the Selling Companies (with respect

to the Business) or the RGS Companies which, in any case, would reasonably

be likely to have a Material Adverse Effect. Except as set forth on

Schedule 5(s), none of the Selling Companies (with respect to the

Business) or the RGS Companies is a party to any collective bargaining

agreement relating to its employees.

<PAGE>

(t) Insurance. Schedule 5(t) sets forth a list of all material
---------

current policies of insurance in force as of the date hereof covering the

Selling Companies (with respect to the Business) and the RGS Companies.

(u) Employee Benefit Plans.
----------------------

(i) Schedule 5(u) sets forth each material pension,

retirement, profit sharing, deferred compensation, stock bonus or

other similar plan; each material medical, vision, dental or other

health plan; each material life insurance plan; and any other

material employee benefit plan, in each case, to which any of the

Selling Companies (with respect to the Business) or the RGS Companies

is on the date hereof required to contribute, or which any of the

Selling Companies (with respect to the Business) or the RGS Companies

on the date hereof sponsors or maintains for the benefit of any of

their employees, or under which employees (or their beneficiaries) of

any of the Selling Companies (with respect to the Business) or the

RGS Companies are on the date hereof eligible to receive benefits

(collectively, the "Plans"), including any material "employee benefit

plan" ("ERISA Benefit Plan") as defined in Section 3(3) of the

Employee Retirement Income Security Act of 1974, as amended

("ERISA").

(ii) All ERISA Benefit Plans are in compliance in all

material respects with the provisions of ERISA, the Code and the

rules and regulations promulgated thereunder to the extent that

ERISA,the Code and such rules and regulations are intended to apply.

There is no accumulated funding

<PAGE>

deficiency within the meaning of Section 412 of the Code for which an

excise tax is due with respect to any ERISA Benefit Plan, whether or

not waived. No ERISA Benefit Plan has engaged in a "prohibited

transaction" (as defined in Section 406 of ERISA and Section 4975 of

the Code) for which there is no exemption and no "reportable event"

(as defined in Section 4043 of ERISA) has occurred with respect to

any ERISA Benefit Plan subject to Title IV of ERISA, which prohibited

transaction or reportable event, individually or in the aggregate,

would reasonably be likely to have a Material Adverse Effect. None

of the Selling Companies or RICC (with respect to the Business) or

the RGS Companies participates in, or owes withdrawal liability to,

any "multiemployer" plan as described under Section 4001(a)(3) of

ERISA or a plan that has two or more contributing sponsors at least

two of whom are not under common control, within the meaning of

Section 4063 of ERISA.

(iii) With respect to each Plan set forth on Schedule

5(u), Seller has delivered or made available to Buyer a true, correct

and in all material respects complete copy of such Plan, including

without limitation all plan documents.

(iv) The Internal Revenue Service has issued a favorable

determination letter with respect to each Plan that is intended to be

a "qualified plan" within the meaning of Section 401(a) of the Code

that has not been revoked. To the knowledge of Seller, there are no

existing circumstances or any events that have occurred that could

adversely affect

<PAGE>

qualified status of any such qualified plan or trust related thereto

which, individually or in the aggregate, would reasonably be likely

to have a Material Adverse Effect.

(v) There are no contributions required to be made to any

Plan or payable with respect to insurance policies funding any Plan

or premiums payable to the Pension Benefit Guaranty Corporation that

are past due and owing, except where the failure to pay such

contributions or premiums, individually or in the aggregate, would

not reasonably be likely to result in a Material Adverse Effect.

(vi) There does not now exist, nor do any circumstances

exist that would result in, any Controlled Group Liability (as

defined below) that would be a material liability of Buyer, the RGS

Companies or the Buyer Foreign Subsidiaries following the Closing.

"Controlled Group Liability" means any and all liabilities under

(A) Title IV of ERISA, (B) Section 302 of ERISA, (C) Sections 412 and

4971 of the Code, (D) the continuation of coverage requirements of

Section 601 et Seq. of ERISA or Section 4980B of the Code, and

(E) corresponding or similar provisions of foreign laws or

regulations, in each case related solely to the controlled group of

corporations within the meaning of Section 414(b), (c), (m) or (o) of

the Code of which any RGS Company was a member prior to the Closing

Date, other than such liabilities that arise solely out of, or relate

solely to, the Plans.

(vii) Neither the execution and delivery of this

Agreement nor the consummation of the transactions

<PAGE>

contemplated hereby will (either alone or in conjunction with any

other event) result in, cause the accelerated vesting or delivery of,

or increase the amount or value of, any payment or benefit to any

Continued Employee (as defined in Section 9(a)) or former employee of

any of the Selling Companies (with respect to the Business) or the

RGS Companies under any Plan or other agreement, contract or

arrangement for which Buyer or any RGS Company or Buyer Foreign

Subsidiary has assumed liability pursuant to this Agreement (other

than those set forth in Schedule 5(u)) which, individually or in the

aggregate, would reasonably be likely to result in a Material Adverse

Effect. Without limiting the generality of the foregoing, to the

knowledge of Seller, no amount paid or payable by any Selling Company

(with respect to the Business) or any RGS Company in connection with

the transactions contemplated hereby (either solely as a result

thereof or as a result of such transactions in conjunction with any

other event, except any such other event which constitutes a change

in ownership or control within the meaning of Section 280G(b)(2)(i)

of the Code) will be an "excess parachute payment" within the meaning

of Section 280G of the Code.

(viii) Each of the Rockwell PMC Pension Scheme and the

Rockwell Graphic Systems Limited Pension and Life Assurance Plan

referred to in Sections 9(b)(iv) and 9(b)(v), respectively, is

approved or capable of approval under Chapter 1 of Part XIV of the

Income and Corporation Taxes Act 1988 of the United Kingdom and,

except as set forth on

<PAGE>

Schedule 5(u)(viii), is in material compliance with the provisions of

applicable United Kingdom law.

(ix) There are no private defined benefit pension plans

covering present or former employees of RGS France.

(x) The Pension Plan for the Employees of Rockwell Graphic

Systems Inc. referred to in Section 9(b)(vii) is duly reported as

required by Governmental Authorities and in substantial compliance

with applicable regulations.

(xi) The Employee Retirement Allowance Plan, including the

Employee Retirement Pension Plan, referred to in Sections 9(b)(viii)

is duly registered as required by Governmental Authorities and in

substantial compliance with applicable regulations. The Director

Retirement Allowance Plan referred to in Section 9(b)(ix) is not

required to be registered by Governmental Authorities and is in

substantial compliance with applicable regulations.

(xii) Rockwell Australia has no employees with respect

to the Business.

Anything contained herein to the contrary notwithstanding, none of the

representations and warranties set forth in this Section 5(u) (other than

those representations and warranties set forth in Section 5(u)(vi)) shall

be applicable to or deemed to have been made with respect to the Rockwell

Retirement Plan for Eligible Employees, the Rockwell U.K. Retirement Plan

(as defined in Section 9(b)(vi)(A)) or the Revised Retirement Plan for

Employees of the Allen-Bradley Division of Rockwell International of

Canada.

<PAGE>

(v) Sufficiency of Assets. The assets held by the RGS
---------------------

Companies, the Customer Notes held by RICC, the Assets and the Retained

Assets, together with the assets of Seller and its Subsidiaries and

Affiliates (including Rockwell France, the Selling Subsidiaries and RICC)

used to perform the common services for the Business described in the

Financial Statements, constitute all of the material assets and rights

which are used in the operation of the Business as currently conducted by

Seller and its Subsidiaries.

(w) Customer Notes. The aggregate gross principal amount of
--------------

Customer Notes (before any reserves with respect thereto or accrued

interest thereon) as of February 29, 1996 (calculated by utilizing the

Wall Street Journal Exchange Rate as published on February 27, 1996 for

Customer Notes denominated in currencies other than U.S. Dollars) was

$238,231,000.

SECTION 6. Representations and Warranties of Buyer.
---------------------------------------

Buyer hereby represents and warrants to Seller as follows:

(a) Corporate Organization. Buyer is a corporation duly

incorporated, validly existing and in good standing under the laws of

Delaware. Each of the Buyer Foreign Subsidiaries will be, after the

formation thereof, a corporation duly organized, validly existing and in

good standing under the laws of the jurisdiction of its incorporation or

amalgamation, as the case may be.

(b) Corporate Authorization. Buyer has all requisite corporate
-----------------------

power and authority to enter into this Agreement, to perform its

obligations hereunder and to cause its Subsidiaries

<PAGE>

to perform their obligations hereunder. The execution, delivery and

performance by Buyer of this Agreement have been, and the execution,

delivery and performance by Buyer and its Subsidiaries of all instruments

of assumption to be delivered by any of Buyer or its Subsidiaries pursuant

hereto have been or will be, duly authorized by all necessary corporate

action on behalf of Buyer and its Subsidiaries. This Agreement

constitutes a legal, valid and binding obligation of Buyer, and all

instruments of assumption to be delivered by each of Buyer and its

Subsidiaries pursuant hereto, when executed and delivered, will constitute

legal, valid and binding obligations of Buyer, enforceable against Buyer

or its applicable Subsidiaries in accordance with their respective terms,

except as such enforceability may be limited by bankruptcy, insolvency,

reorganization, moratorium or similar laws relating to or affecting the

enforcement of creditors' rights in general and by general principles of

equity.

or performance of this Agreement by Buyer or the consummation by Buyer or

its Subsidiaries of the transactions contemplated hereby will (i) conflict

with the Certificate of Incorporation or By-Laws of Buyer or any of its

Subsidiaries or (ii) violate, conflict with or result in a breach of any

material mortgage, debt instrument, indenture, deed of trust, license,

lease, contract, commitment or agreement to which Buyer or any of its

Subsidiaries is a party or any material order, ruling, decree, judgment or

arbitration award or, subject to completion of required filings and

notifications set forth in Schedule 6(d) and the expiration of any

required waiting periods and extensions

<PAGE>

thereof, any applicable law, statute or regulation to which Buyer or any

of its Subsidiaries is subject, except for such violations, conflicts, or

breaches subject to this clause (ii) which, individually or in the

aggregate, would not reasonably be likely to have a material adverse

effect on the ability of Buyer or any of its Subsidiaries to consummate

the transactions contemplated hereby.

(d) Government Authorizations. Except as set forth on
-------------------------

Schedule 6(d), no material consent, approval or authorization of, filing

or registration with, or notification to, any Governmental Authority is

required by or with respect to Buyer or any of its Subsidiaries or

Affiliates in connection with the execution and delivery of this Agreement

by Buyer or the consummation by Buyer or any of its Subsidiaries of the

transactions contemplated hereby.

(e) Litigation. Except as set forth on Schedule 6(e), none of
----------

Buyer or its Subsidiaries or Affiliates is a party to any legal action,

arbitration, suit or other proceeding by or before any court, arbitrator,

administrative agency or other Governmental Authority (i) which,

individually or in the aggregate, would reasonably be likely to have a

material adverse effect on the ability of Buyer or any of its Subsidiaries

to consummate the transactions contemplated hereby or (ii) which

challenges or otherwise relates to the transactions contemplated by this

Agreement, and except as set forth on Schedule 6(e), Buyer is not aware

that any such legal action, arbitration, suit or other proceeding has been

threatened. Except as set forth on Schedule 6(e), there are no

outstanding orders, rulings, decrees

<PAGE>

or judgments to which Buyer or any of its Subsidiaries or Affiliates is a

party or by which any of them is bound by or with any court, arbitrator or

administrative agency which (i) would reasonably be likely to have a

material adverse effect on the ability of Buyer or any of its Subsidiaries

to consummate the transactions contemplated hereby or (ii) challenge or

otherwise relate to the transactions contemplated by this Agreement.

(f) Information. Each of Seller, Rockwell France, the Selling
-----------

Subsidiaries, RICC and the RGS Companies has provided Buyer with such

access to the facilities, books, records and personnel of the Selling

Companies and RICC (with respect to the Business) and the RGS Companies as

Buyer has deemed necessary and appropriate in order for Buyer to

investigate to its satisfaction the business and properties of the Selling

Companies and RICC (with respect to the Business) and the RGS Companies

sufficiently to make an informed investment decision to purchase the

Shares and the Assets, to assume the Assumed Liabilities and to enter into

this Agreement. Buyer has such knowledge and experience in financial and

business matters that Buyer is capable of evaluating the merits and risks

of the purchase of the Shares and the Assets and the assumption of the

Assumed Liabilities.

(g) Acquisition of Shares for Investment. Buyer is acquiring
------------------------------------

the Shares for investment only and not with a view toward, or for sale in

connection with, any distribution thereof, nor with any present intention

of distributing or selling the Shares. Buyer agrees that the Shares may

not be sold, transferred, offered for sale, pledged, hypothecated or

otherwise disposed of without registration under the Securities Act of

<PAGE>

1933, as amended, except pursuant to an exemption from such registration

available under such Act.

(h) Funds. Attached as Schedule 6(h) are commitment and
-----

"highly confident" letters from financial institutions for the benefit of

Buyer (the "Financing Letters"). The financing outlined in the Financing

Letters (assuming funding in accordance with the terms thereof), when

combined with funds required to be made available, are sufficient to pay

the Purchase Price and to consummate the other transactions contemplated

by this Agreement to be consummated by Buyer. The Financing Letters and

the fee letters referred to therein have been duly accepted on behalf of

Buyer and are in full force and effect. All fees required to be paid in

respect of any such commitments have been, or will be, paid when due.

SECTION 7. Investigation by Buyer; Confidentiality.
---------------------------------------

Prior to the Closing, or, if earlier, the date this Agreement is

terminated pursuant to Section 16, Seller will, and will cause each of

Rockwell France, the Selling Subsidiaries, RICC and the RGS Companies to,

provide Buyer and its representatives, employees, counsel and accountants

with reasonable access, during normal business hours and upon reasonable

notice, to the facilities, books, records and personnel of each of the

Selling Companies and RICC (with respect to the Business) and the RGS

Companies and will provide, or cause each of Rockwell France, the Selling

Subsidiaries, RICC and the RGS Companies to provide, to Buyer such other

information with respect to the business and properties of each of the

Selling Companies and RICC (with respect to the Business) and the RGS

<PAGE>

Companies as Buyer shall reasonably request; provided, however, that such
-------

access shall not unreasonably interfere with the normal operations of any

of Seller, Rockwell France, the Selling Subsidiaries, RICC or the RGS

Companies. Buyer acknowledges that all such information being provided is

subject to the terms of a confidentiality agreement dated as of December

1, 1995 between Stonington Partners, Inc., the management company of the

investment fund which established Buyer, and Dillon, Read & Co. Inc., on

behalf of Seller (the "Confidentiality Agreement"), the terms of which are

incorporated herein by reference.

SECTION 8. Covenants.
---------

(a) Conduct of Business Prior to the Effective Time. Between
-----------------------------------------------

the date hereof and the Closing, except as set forth on Schedule 8(a) or

as otherwise contemplated by this Agreement, Seller will use reasonable

efforts to cause the Business to be conducted only in the ordinary course

consistent with past practice. Between the date hereof and the Closing,

except as set forth on Schedule 8(a) or as otherwise contemplated by this

Agreement, Seller will not, and will cause each of the Selling Companies

and RICC (with respect to the Business) and the RGS Companies not to,

engage in, without the written consent of Buyer, any transaction which, if

engaged in since September 30, 1995 but on or before the date hereof,

would constitute a breach of the representations and warranties of Seller

contained in Section 5(r).

(b) Post Closing Access; Preservation of Records.
--------------------------------------------

(i) From and after the Closing, Buyer shall make or cause

to be made available to Seller and its agents and

<PAGE>

employees all books, records and documents of Buyer and its

Subsidiaries and Affiliates (including the RGS Companies and the

Buyer Foreign Subsidiaries) relating to the Business (and the

assistance of Buyer's and its Subsidiaries' and Affiliates' employees

responsible for such books, records and documents) during regular

business hours as may be reasonably necessary for (A) preparing tax

returns and financial statements and responding to tax audits

covering operations and transactions at or prior to the Effective

Time, (B) investigating, settling, preparing for the defense or

prosecution of, defending or prosecuting any legal action, suit,

investigation or other proceeding pending, threatened or anticipated

by or against Seller or any of its Subsidiaries or Affiliates or any

of their properties, officers, directors or employees (or for which

Seller or any of its Subsidiaries or Affiliates has any obligations)

before any court, arbitrator, governmental department, commission,

board, bureau or agency, domestic or foreign, (C) preparing reports

to stockholders and government agencies or (D) such other purposes

for which access to such documents is believed by Seller to be

reasonably necessary; provided, however, that access to such books,
-------- -------

records, documents and employees shall not unreasonably interfere

with the normal operations of Buyer and its Subsidiaries and

Affiliates and the reasonable out-of-pocket expenses of Buyer

incurred in connection therewith shall be paid by Seller. Buyer

shall maintain and preserve all such books, records and other

documents for the greater of (aa) seven

<PAGE>

years after the Closing Date or (bb) any applicable statutory or

regulatory retention period, as the same may be extended.

(ii) From and after the Closing, Seller shall make or cause

to be made available to Buyer and its agents and employees all books,

records and documents of Seller and its Subsidiaries and Affiliates

relating to the Business during regular business hours for the same

purposes, to the extent applicable, as set forth in Section 8(b)(i)

above; provided, however, that access to such books, records and
-------- -------

documents shall not unreasonably interfere with the normal operations

of Seller and its Subsidiaries and Affiliates and the reasonable

out-of-pocket expenses of Seller incurred in connection therewith

shall be paid by Buyer.

and Buyer shall each promptly, and in any event within 10 days after

execution and delivery of this Agreement, make all filings or submissions

as are required under the HSR Act and to obtain all Foreign Governmental

Approvals. For the purposes of this Agreement, the term "Foreign

Governmental Approval" shall mean any approval, consent, license,

clearance, exemption, waiver or registration of or with any foreign

Governmental Authority necessary in order to consummate lawfully the

transactions contemplated hereby, including, without limitation, each

Foreign Governmental Approval set forth on Schedules 5(d) and 6(d).

Seller and Buyer shall each promptly furnish to the other such necessary

information and reasonable assistance as the other may request in

connection with its

<PAGE>

preparation of any filing or submission which is necessary under the HSR

Act or to obtain any Foreign Governmental Approval. Seller and Buyer

shall each promptly provide the other with copies of all written

communications (and memoranda setting forth the substance of all oral

communications) between each of them or their representatives, on the one

hand, and any Governmental Authority, on the other hand, with respect to

this Agreement or the transactions contemplated hereby. Without limiting

the generality of the foregoing, Seller and Buyer shall each promptly

notify the other of the receipt and content of any inquiries or requests

for additional information made by any Governmental Authority in

connection therewith and shall (A) comply promptly with any such inquiry

or request and (B) promptly provide the other with a description of the

information provided to any Governmental Authority with respect to any

such inquiry or request. In addition, Seller and Buyer shall each keep

the other apprised of the status of any such inquiry or request.

(d) Reasonable Best Efforts. Buyer and Seller shall each use
-----------------------

its reasonable best efforts to cause to be fulfilled the conditions to the

respective obligations of the other party set forth in Sections 10 and 11.

(e) Further Assurances. From time to time after the Closing,
------------------

as and when requested by either party hereto, the other party shall

execute and deliver, or cause to be executed and delivered, all such

documents and instruments and shall take, or cause to be taken, all such

actions as such party may reasonably request to consummate the

transactions contemplated by this Agreement.

<PAGE>

(f) Certain Intercompany Indebtedness. At or before the
---------------------------------

Closing, Seller shall cause all intercompany indebtedness between Seller

or its Subsidiaries or Affiliates (other than the Selling Companies and

RICC (with respect to the Business) and the RGS Companies), on the one

hand, and any of the Selling Companies or RICC (with respect to the

Business) or the RGS Companies, on the other hand (other than (i)

indebtedness for payables to Allen-Bradley in respect of purchases of

drive systems, press controls and related products from Allen-Bradley

during the 30-day period preceding, and on, the Closing Date and (ii) as

contemplated by item 3 of Schedule 8(a)), to be cancelled or otherwise

eliminated. The parties acknowledge that the amount of purchases of drive

systems, press controls and related products by the Selling Companies

(with respect to the Business) and the RGS Companies from Allen-Bradley

during the 30-day period preceding, and on, the Closing Date shall

constitute accounts payable of the RGS Companies or Assumed Liabilities,

as applicable, on and after the Closing Date and Buyer shall or shall

cause the RGS Companies to pay the amount thereof to Allen-Bradley

promptly when due following the Closing, provided that such purchases are

made in the ordinary course of business consistent with past practice.

(g) Interim Use of Seller's Trademark, Trade Name and Corporate
-----------------------------------------------------------

Symbol.
- ------

(i) Following the Closing, none of Buyer or its Subsidiaries or

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) shall have any rights to use any trademarks, trade

names or logos of Seller or any of its

<PAGE>

Subsidiaries or Affiliates (other than those trademarks, trade names

or logos which are included in Intellectual Property Assets,

including, without limitation, Goss Commercial, Hantscho, Colorliner,

Community and Newsliner), or any contraction, abbreviation or

simulation thereof, and will not hold itself out as having any

affiliation with Seller or its Subsidiaries or Affiliates. However,

(A) Buyer, the RGS Companies and the Buyer Foreign Subsidiaries may

utilize without obligation to pay royalties to Seller the trademark

or trade name "Rockwell" or "Rockwell International" or Seller's

corporate symbol or logo or any thereof in connection with

stationery, supplies, labels, catalogs, vehicles, signs and finished

goods inventory (or other inventory, to the extent so marked) owned

by any RGS Company or constituting Assets as of the Closing Date,

subject to the terms and conditions contained in this Section 8(g)

and (B) Buyer's obligations with respect to the names of the RGS

Companies and other entities set forth on Schedule 5(g) shall be

subject to Section 8(k).

(ii) All documents in the inventory of any RGS Company or

constituting Assets as of the Closing Date within the following

categories may be used for the duration of the periods following the

Closing indicated below or until the supply is exhausted, whichever

is the first to occur:

<PAGE>

Maximum Period
of Permitted
Use Following
Category of Documents the Closing
--------------------- -----------

A. Stationery 3 months
B. Invoices, purchase orders, debit
and credit memos and other similar 3 months
documents of a transactional nature

C. Business cards 3 months

D. Other outside forms such as packing
lists, labels, packing materials 3 months
and cartons, etc.
E. Forms for internal use only 12 months

F. Product literature 12 months;

provided, however, that no document within any of the above
-------- -------

categories A, B or F may be used by Buyer, any RGS Company or any

Buyer Foreign Subsidiary for any purpose after one month within

the stated period unless such document clearly and prominently

displays a statement, the form of which is approved by Seller

(which approval shall not be unreasonably withheld), to the

effect that the Business was formerly owned by Seller.

(iii) All vehicles owned by any RGS Company or

constituting Assets as of the Closing Date may continue to be

used without re-marking (except as to legally required permit

numbers, license numbers, etc.) for a period not to exceed nine

months following the Closing or the date of disposition of the

vehicle, whichever is the first to occur. Buyer shall cause all

such vehicles to be de-marked prior to their disposition.

(iv) Within six months following the Closing, Buyer

shall cause to be removed from display at all facilities owned or

leased by any RGS Company or

<PAGE>

constituting Assets as of the Closing Date all demountable

displays which contain the trademark or trade name "Rockwell",

"Rockwell International" or Seller's corporate symbol or any

thereof and Buyer shall remove all signs displaying any such

trademark, trade name or corporate symbol at all such facilities

no later than six months following the Closing.

(v) Products in finished goods inventory, or other

inventory marked as of the Closing Date, of any RGS Company or

constituting Assets as of the Closing Date may be disposed of or,

with respect to such other inventory, may be completed and

disposed of by Buyer or such RGS Company following the Closing

without re-marking.

(vi) Except as permitted in subsections (i) through (v)

of this Section 8(g), Buyer shall not use and shall cause its

Subsidiaries and Affiliates (including the RGS Companies and the

Buyer Foreign Subsidiaries) not to use the trademark or trade

name "Rockwell" or "Rockwell International" or Seller's corporate

symbol or logo or any thereof or any name or mark which includes

the words "Rockwell", "Rockwell International" or any name or

mark confusingly similar thereto or any special script, type

font, form, style, logo, design, device or symbol used or

possessed by Seller or its Subsidiaries or Affiliates before or

after the Closing which contains the trademark or trade name

"Rockwell" or "Rockwell International" or any name or mark

confusingly similar thereto.

<PAGE>

(vii) If the laws of any country require that

Buyer's or any RGS Company's or Buyer Foreign Subsidiaries' right

to use any marks as permitted herein be registered in order to

fully protect Seller, Buyer and Seller shall cooperate in

constituting Buyer or such RGS Company or Buyer Foreign

Subsidiary as a registered user (or its equivalent) in each of

the countries in which such registration is necessary. Any

expenses for constituting Buyer or such RGS Company or Buyer

Foreign Subsidiary as a registered user in any country shall be

borne by Buyer. Any registration of Buyer or such RGS Company or

Buyer Foreign Subsidiary as a permitted user of any marks

hereunder shall be expunged on termination of the period of

permitted use under this Agreement and Seller shall be entitled

to, and Buyer on request will, take all necessary steps to that

end.

(h) Assumption of Obligations.
-------------------------

(i) Buyer will, and will cause each of the RGS

Companies and the Buyer Foreign Subsidiaries, as appropriate, to,

unconditionally assume at the Closing (effective as of the close

of business on the day preceding the Closing Date) and pay or

perform in a timely manner, in accordance with their terms, any

and all obligations under, and at the Closing shall replace

Seller and its Subsidiaries and Affiliates (other than the RGS

Companies) (effective as of the close of business on the day

preceding the Closing Date) under, all credit facilities,

guarantees, foreign currency forward exchange contracts and

letters of credit set forth in Section I of Schedule 8(h)(i) and

all

<PAGE>

guarantees of indebtedness, foreign currency forward exchange

contracts and letters of credit entered into with respect to the

Business (other than, in the case of foreign currency forward

exchange contracts, those entered into by RGS Japan) prior to the

Closing which are not prohibited by this Agreement (it being

understood that, with respect to letters of credit, it shall be

sufficient for Buyer's bank to provide Seller's or its

Subsidiaries' bank which issued such letters of credit with

documentation reasonably satisfactory to Seller and such issuing

bank pursuant to which Buyer's bank assumes all liability with

respect to such letters of credit). Buyer will, and will cause

each of the RGS Companies and the Buyer Foreign Subsidiaries, as

appropriate, to, unconditionally assume at the Closing (effective

as of the close of business on the day preceding the Closing

Date) and pay or perform in a timely manner, in accordance with

their terms, any and all obligations under, and shall use its

reasonable best efforts to secure the release of Seller and its

Subsidiaries and Affiliates (other than the RGS Companies)

(effective as of the close of business on the day preceding the

Closing Date) from, all bonds, guaranties, comfort letters,

indemnities, assurances, contracts, commitments and agreements

(other than Shared Agreements (as defined in Section 8(h)(ii))

and those set forth in Section I of Schedule 8(h)(i)) under which

Seller or any of its Subsidiaries or Affiliates (other than the

RGS Companies) has any obligations arising out of or relating to

the Business which by their terms will be outstanding or in

<PAGE>

effect as of or at any time following the close of business on

the day preceding the Closing Date, including, without

limitation, those set forth in Section II of Schedule 8(h)(i);

provided, however, that (i) anything contained herein to the
-------- -------

contrary notwithstanding, Buyer shall not assume any debts,

liabilities, obligations or commitments of the Selling Companies

except for the Assumed Liabilities and (ii) with respect to

securing the release of Seller and its Subsidiaries and

Affiliates (other than the RGS Companies) from those "Customer

Agreements" set forth in Section II of Schedule 8(h)(i), none of

Buyer or its Subsidiaries shall be required to offer or grant any

financial accommodation.

(ii) For purposes of this Agreement, "Shared

Agreements" shall mean all letters of credit, surety bonds,

guaranties, comfort letters, indemnities, assurances, contracts,

commitments and agreements under which Seller or any of its

Subsidiaries or Affiliates (other than the RGS Companies) has any

obligations arising out of or relating to the Business, as well

as to other businesses of Seller or any of its Subsidiaries or

Affiliates (other than the Business), which by their terms will

be outstanding or in effect as of or at any time following the

close of business on the day preceding the Closing Date,

including, without limitation, those set forth on

Schedule 8(h)(ii). Buyer will, and will cause each of the RGS

Companies and the Buyer Foreign Subsidiaries, as appropriate, to,

unconditionally assume at the Closing (effective as of the close

of business on the day preceding the Closing Date) and pay or

perform in

<PAGE>

a timely manner, in accordance with their terms, all obligations

arising out of or relating to the Business under the Shared

Agreements and (with respect to those Shared Agreements

identified to Buyer) shall use its reasonable best efforts to

enter into replacement agreements covering (and releasing Seller

and its Subsidiaries and Affiliates from), all obligations

arising out of or relating to the Business under the Shared

Agreements. None of Buyer or its Subsidiaries or Affiliates

(including the RGS Companies and the Buyer Foreign Subsidiaries)

will incur any obligation under any Shared Agreement not existing

as of the close of business on the day preceding the Closing Date

or extend or otherwise amend any Shared Agreement; provided,
--------

however, that anything contained herein to the contrary
-------

notwithstanding, Buyer shall not assume any debts, liabilities,

obligations or commitments of the Selling Companies except for

the Assumed Liabilities.

(iii) Buyer will provide to Seller at the Closing

appropriate documentation in form and substance reasonably

satisfactory to Seller confirming the assumptions and releases

provided for in this Section 8(h).

(iv) Prior to Closing, Seller shall provide reasonable

assistance to Buyer in any reasonable manner requested by Buyer

in connection with the assumptions and releases provided for in

this Section 8(h), provided, however, that such assistance shall
-------- -------

not include any requirement of Seller or any of its Subsidiaries

or Affiliates to expend money or to offer or grant any

<PAGE>

financial accommodation and that Buyer remains responsible for

such assumptions and releases.

(i) Notification of Certain Matters. Seller and Buyer will
-------------------------------

each give prompt notice to the other of (i) its knowledge of the

occurrence, or failure to occur, of any event which would be likely to

cause any representation or warranty contained in this Agreement to be

untrue or inaccurate in any material respect on the Closing Date and

(ii) its knowledge of any failure on its part to comply with or

satisfy any material covenant, condition or agreement to be complied

with or satisfied by it hereunder on or prior to the Closing Date. No

notice pursuant to this Section 8(i) shall affect any representations

or warranties, covenants, agreements, obligations or conditions set

forth herein.

(j) Non-Compete.
-----------

(i) Subject to the next sentence of this subsection (i),

Seller covenants that, for a period of three years after the

Closing Date (the "Non-Compete Period"), neither Seller nor any

company controlled by Seller will, directly or indirectly,

without the written consent of Buyer, enter into, or acquire

control of or more than a five percent interest in, any business

more than ten percent of whose revenues are derived from

operations engaged in development, manufacture, sale or provision

of web offset printing press systems; provided, however, that
-------- -------

Seller may acquire control of any business deriving less than 50%

of its revenues from such operations so long as it shall use

reasonable best efforts to divest such operations as promptly as

practicable and in any event not later than two

<PAGE>

years following such acquisition (it being understood that such

obligation with respect to any such divestiture by Seller shall

expire at the end of the Non-Compete Period for any such

acquisition made within the two-year period preceding the end of

the Non-Compete Period). Anything contained herein to the

contrary notwithstanding, nothing in this Section 8(j) shall

prohibit or restrict Seller or any company now or hereafter

controlled by Seller from entering into any business engaged in,

acquiring control of or any interest in any business engaged in,

engaging in or continuing to engage in any activity which

comprises or is an extension or expansion of those business

operations presently being conducted by Seller through any of its

divisions or Subsidiaries other than the Selling Companies (with

respect to the Business) and the RGS Companies.

(ii) Seller acknowledges that in the event of its

breach of the foregoing covenant, money damages would be an

inadequate remedy. Accordingly, without prejudice to the rights

of Buyer also to seek such damages or other remedies available to

it, Buyer may seek, and Seller acknowledges and covenants that it

will not contest the appropriateness and availability of,

injunctive or other equitable relief in any proceeding which

Buyer may bring to enforce the foregoing covenant not to compete

on its express and explicit terms.

(iii) Seller and Buyer agree that, if any provision

of this Section 8(j) should be adjudicated to be invalid or

unenforceable, such provision shall be deemed deleted herefrom

with respect, and only with respect, to the

<PAGE>

operation of such provision in the particular jurisdiction in

which such adjudication was made; provided, however, that to the
-------- -------

extent any such provision may be made valid and enforceable in

such jurisdiction by limitations on the scope of the activities,

geographical area or time period covered, Seller and Buyer agree

that such provision instead shall be deemed limited to the

extent, and only to the extent, necessary to make such provision

enforceable to the fullest extent permissible under the laws and

public policies applied in such jurisdiction.

(iv) No portion of the Purchase Price or the Assumed

Liabilities shall be allocated to the covenant not to compete

granted to Buyer pursuant to this Section 8(j).

(k) Change of Name. Within ninety days following the
--------------

Closing Date, Buyer shall, at its sole cost and expense, change or

cause to be changed the names of the RGS Companies and the entities

set forth on Schedule 5(g) in order that the "Rockwell" name and any

derivatives thereof shall be deleted therefrom.

(l) Intellectual Property.
---------------------

(i) Seller, in consideration for the rights granted by

Buyer and the RGS Companies in Section 8(l)(ii), shall at the

Closing grant to Buyer, the RGS Companies and the Buyer Foreign

Subsidiaries a world-wide, irrevocable, exclusive, royalty-free

license, with the right to sublicense, under the patents, or

patents resulting from any applications or disclosures, of the

Seller Licensed Technology (as defined below), and any

counterparts thereof, or any divisions, substitutes,

continuations, reissues or

<PAGE>

re-examinations thereof, to make, have made, use, import, sell or

otherwise dispose of products, or to practice any process in

connection therewith, in the field of the Business (or any

related extensions or expansions of the Business as it is

conducted on the Closing Date); said exclusive license being

transferable only in connection with the sale of all or any part

of Buyer's or the RGS Companies' or Buyer Foreign Subsidiaries'

business to which such patents relate. Buyer and the RGS

Companies and Buyer Foreign Subsidiaries shall have the right in

the field of the Business (or any related extensions or

expansions of the Business as it is conducted on the Closing

Date) to institute legal proceedings or otherwise enforce the

patents in the Seller Licensed Technology in their own name to

the extent allowed by law and Seller will reasonably cooperate in

any such proceeding, including by joinder if required by law;

provided, however, that Buyer and the RGS Companies and Buyer
-------- -------

Foreign Subsidiaries shall pay all costs and expenses of Seller

relating to such cooperation. Seller shall at the Closing also

grant to Buyer, the RGS Companies and the Buyer Foreign

Subsidiaries a non-exclusive, royalty-free, world-wide,

irrevocable license, with the right to sublicense, to use any

commercial or technical information (including any copyright or

trade secrets related thereto) relating to the Seller Licensed

Technology and owned or licensable (without payment or

restrictions of any kind) by Seller as of the Effective Time, in

connection with the field of the Business and to transfer such

license solely in

<PAGE>

connection with the sale of all or any part of Buyer's or any RGS

Companies' or Buyer Foreign Subsidiaries' business to which the

license relates. To the extent that Buyer or any RGS Company or

Buyer Foreign Subsidiary do not have copies of any information or

materials relating to the Seller Licensed Technology, Seller

shall promptly supply to Buyer copies of any such information or

materials relating to the Seller Licensed Technology. Seller

makes no representations or warranties of any kind with respect

to the validity, scope or enforceability of any Seller Licensed

Technology or any patents or information licensed hereunder and

Seller has no obligation to file or prosecute any patent

applications or maintain any patents in force in connection

therewith. For purposes of this Agreement, "Seller Licensed

Technology" shall mean those patents, patent applications and

invention disclosures set forth on Schedule 8(l)(i). Seller

will, at no cost to Buyer, promptly execute such further

documents as Buyer may reasonably request to carry out the terms

of this Section 8(l)(i). To the extent any patents obtained by

Seller or any of its Subsidiaries after the Closing result from

the subject matter of the disclosures set forth on Section

8(l)(i) and relate primarily to the Business, the same shall be

assigned to Buyer promptly after issuance and become Business

Licensed Technology (as defined in Section 8(l)(ii)) subject to

the provisions of Section 8(l)(ii).

(ii) Buyer and the RGS Companies and Buyer Foreign

Subsidiaries, in consideration for the rights granted by

<PAGE>

Seller in Section 8(l)(i), shall at the Closing grant to Seller

and its Subsidiaries a world-wide, irrevocable, exclusive,

royalty-free license, with the right to sublicense, under the

patents, or patents resulting from any applications or

disclosures, of the Business Licensed Technology, and any

counterparts thereof, or any divisions, substitutes,

continuations, reissues or re-examinations thereof, to make, have

made, use, import, sell or otherwise dispose of products, or to

practice any process in connection therewith, in fields other

than the Business; said exclusive license being transferable only

in connection with the sale of all or any part of Seller's or any

of its Subsidiaries' business to which such patents relate.

Seller and its Subsidiaries shall have the right in fields other

than the Business to institute legal proceedings or otherwise

enforce the patents in the Business Licensed Technology in their

own name to the extent allowed by law and Buyer and the RGS

Companies and Buyer Foreign Subsidiaries will reasonably

cooperate in any such proceeding, including by joinder if

required by law; provided, however, that Seller and its
-------- -------

Subsidiaries shall pay all costs and expenses of Buyer and the

RGS Companies and Buyer Foreign Subsidiaries relating to such

cooperation. Buyer, the RGS Companies and the Buyer Foreign

Subsidiaries shall at the Closing also grant to Seller and its

Subsidiaries a non-exclusive, royalty-free, world-wide,

irrevocable license, with the right to sublicense, to use any

commercial or technical information (including any

<PAGE>

Business Licensed Technology and owned or licensable (without

payment or restrictions of any kind) by Buyer and the RGS

Companies and Buyer Foreign Subsidiaries as of the Effective

Time, in connection with fields other than the Business and to

transfer such license solely in connection with the sale of all

or any part of Seller's or any of its Subsidiaries' business to

which the license relates. To the extent that Seller or any of

its Subsidiaries do not have copies of any information or

materials relating to the Business Licensed Technology, Buyer and

the RGS Companies and Buyer Foreign Subsidiaries shall promptly

supply to Seller copies of any such information or materials

relating to the Business Licensed Technology. Buyer makes no

representations or warranties of any kind with respect to the

validity, scope or enforceability of any Business Licensed

Technology or any patents or information licensed hereunder and

Buyer has no obligation to file or prosecute any patent

applications or maintain any patents in force in connection

therewith. For purposes of this Agreement, "Business Licensed

Technology" shall mean those patents, patent applications and

invention disclosures set forth on Schedule 8(l)(ii). Buyer

will, at no cost to Seller, promptly execute and cause the RGS

Companies and Buyer Foreign Subsidiaries promptly to execute such

further documents as Seller may reasonably request to carry out

the terms of this Section 8(l)(ii).

<PAGE>

(iii) The parties acknowledge that Seller and its

Subsidiaries (other than with respect to the Business), the

Selling Companies (with respect to the Business) and the RGS

Companies have participated in the design and development of the

technology known as the Meridian Control System or the Global

Control System, with the MIS, console, press, reel and folder

control areas, including communication, interface and control

protocols and all commercial or technical information (including

engineering, production and other designs, drawings,

specifications, formulae, technology, computer programs, software

and processes) relating thereto (collectively the "Control

Licensed Technology"). Accordingly, notwithstanding anything

contained herein to the contrary, effective as of the Effective

Time, Buyer shall be the owner of the Control Licensed Technology

on a worldwide basis and any Intellectual Property rights

pertaining thereto, provided that Buyer, as of the Effective

Time, grants to Seller and its Subsidiaries a world-wide,

irrevocable, non-exclusive, royalty-free license under the

Control Licensed Technology to make, have made, use, import, sell

or otherwise dispose of products of Seller or its Subsidiaries,

and to practice any process in connection therewith; said license

being transferable only in connection with the sale of all or any

part of the business of Seller or its Subsidiaries to which such

license relates. The parties acknowledge that the Control

Licensed Technology shall not include (and that Seller and its

Subsidiaries, other than the RGS Companies, have and will retain

after the

<PAGE>

Closing exclusive ownership interests in) Microsil control

technology and any information of Seller or its Subsidiaries

relating to products of Seller or its Subsidiaries also used

outside the Business as of the Closing Date. Unless otherwise

mutually agreed, to the extent that Buyer or the RGS Companies

and Seller or any of its Subsidiaries determine, in their sole

discretion, to continue joint development of the Control Licensed

Technology subsequent to the Closing Date, each party shall have

the same rights in any information or Intellectual Property

resulting from such joint development as a party is entitled to

in the Control Licensed Technology pursuant to this

Section 8(l)(iii). To the extent Buyer or Seller do not have

copies of any information or materials relating to the Control

Licensed Technology as of the Closing Date, each party shall

promptly supply to the other copies of any such information or

materials relating to the Control Licensed Technology existing as

of the Closing Date.

(m) Insurance.
---------

(i) Seller shall keep, or cause to be kept, all

insurance policies set forth on Schedule 5(t), or suitable

replacements therefor (which may include policies containing

terms less or more favorable than those set forth on Schedule

5(t)), in full force and effect up to the Closing Date. Buyer

hereby acknowledges that it shall be Buyer's responsibility as of

and following the Closing Date to provide for adequate insurance

for the Business, the Assets and the assets of each of the RGS

Companies.

<PAGE>

(ii) With respect to any loss, liability or damage with

respect to the assets of the RGS Companies or the Assets arising

out of events occurring prior to the Closing Date (other than any

loss, liability or damage arising out of or relating to any

environmental matters) for which Seller or any of its

Subsidiaries would be entitled to assert a claim for recovery

under any third-party "occurrence basis" policy of insurance

maintained prior to the Closing Date ("Occurrence Basis

Insurance") in accordance with the terms thereof, at the request

of Buyer, Seller will use reasonable efforts in asserting, or to

assist Buyer in asserting, claims under such Occurrence Basis

Insurance with respect to such loss, liability or damage,

provided that (A) all of Seller's costs and expenses incurred in

connection with the foregoing are promptly paid by Buyer,

(B) Seller and its Subsidiaries may, at any time, amend, buy-out,

extinguish liability under or otherwise modify any Occurrence

Basis Insurance (and such claims shall be subject to any such

amendments, buy-outs, extinguishments and modifications) and

be reduced by the amount of) any applicable deductibles,

retentions, self-insurance provisions or any payment or

reimbursement obligation of Seller or any of its Subsidiaries or

Affiliates in respect thereof.

(n) Consents. Seller shall, prior to Closing, cooperate
--------

with Buyer in any reasonable manner requested by Buyer in connection

with obtaining or making any required consent,

<PAGE>

approval, permit, license, order, certificate, authorization, filing,

registration or notification with respect to the transactions

contemplated by this Agreement (including those necessary for the

conduct of the Business under any Environmental Law); provided,
--------

however, that such cooperation shall not include any requirement of
-------

Seller or any of its Subsidiaries or Affiliates to expend money or to

offer or grant any financial accommodation.

(o) Allocation of Consideration. The Purchase Price (as
---------------------------

adjusted pursuant to Section 3(c)) and the Assumed Liabilities shall

be allocated among the U.S. Shares and the French Shares and the

various assets comprising the Assets in accordance with the procedures

set forth in a schedule (the "Consideration Allocation") to be

delivered by Buyer to Seller within 45 days after the date hereof;

provided, however, that the Consideration Allocation with respect to
-------- -------

the French Shares will be delivered by Buyer to Seller within 30 days

after the date hereof. The Consideration Allocation shall be subject

to Seller's approval, which approval shall not be unreasonably

withheld. Seller and Buyer each agree that they will report and cause

to be reported all Federal, state, provincial, local, foreign and

other Tax consequences of the transactions contemplated hereby in a

manner consistent with the Consideration Allocation and the Allocation

Schedule (as defined in Section 15(g)) and that they will not, except

to the extent required by law, take any position inconsistent

therewith in connection with any Tax return, refund claim, litigation

or otherwise. Each party shall promptly notify the other if the

<PAGE>

Internal Revenue Service or any other taxing authority proposes to

reallocate the Consideration Allocation. In the event of a

determination (as defined in Section 1313 of the Code) or a similar

event under foreign tax law relating to the reallocation of the

Consideration Allocation, the parties shall be free to file amended

returns or claims for refund based on such reallocation.

(p) Cash Management.
---------------

(i) Seller will, and will cause its Subsidiaries and

Affiliates to, forward promptly by check to Buyer any customer

payments in respect of accounts receivable constituting Assets or

owed to any of the RGS Companies received by Seller or any of its

Subsidiaries or Affiliates after the close of business on the day

preceding the Closing Date, whether received in lock boxes, via

wire transfer or otherwise.

(ii) Buyer will, and will cause its Subsidiaries and

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) to, forward promptly by check to Seller any

customer payments in respect of accounts receivable owed to

Rockwell or any of its Subsidiaries or Affiliates (other than

those constituting Assets or owed to any of the RGS Companies)

received by Buyer or any of its Subsidiaries or Affiliates after

the close of business on the day preceding the Closing Date,

whether received in lock boxes, via wire transfer or otherwise.

(iii) Buyer shall, or shall cause the RGS Companies

or Buyer Foreign Subsidiaries to, reimburse Seller (by wire

<PAGE>

transfer), within three business days after Seller's request, for

all amounts funded by Seller or its Subsidiaries or Affiliates

after the close of business on the day preceding the Closing Date

through the Closing Date in respect of outstanding checks

presented for payment in the disbursement accounts of each of the

Selling Companies (with respect to the Business) and the RGS

Companies, other than RGS France and RGS Japan (it being

understood that the amounts so reimbursed shall be reflected as a

liability of the Business on the Closing Statement to the extent

required by Section 3(b)). Buyer acknowledges that it shall be

Buyer's obligation to fund disbursement accounts of the Selling

Companies (with respect to the Business) and of the RGS Companies

(other than RGS France and RGS Japan) after the Closing Date in

respect of outstanding checks presented for payment therein and

to fund or to cause RGS France or RGS Japan to fund disbursement

accounts of RGS France and RGS Japan on and after the Closing

Date in respect of outstanding checks presented for payment

therein (it being understood that outstanding checks of RGS

France and RGS Japan as of the close of business on the day

preceding the Closing Date shall be reflected as a liability of

the Business on the Closing Statement to the extent required by

Section 3(b)).

(iv) Buyer shall, or shall cause the RGS Companies or

Buyer Foreign Subsidiaries to, pay Seller (by wire transfer),

within three business days after the Closing Date, an amount

equal to all balances contained in the bank

<PAGE>

accounts of each of the Selling Companies (with respect to the

Business) which constitute Assets and the RGS Companies (other

than RGS France and RGS Japan) as of the close of business on the

day preceding the Closing Date (it being understood that such

reimbursed amounts shall not be reflected as an asset of the

Business on the Closing Statement).

(v) Seller shall cause to be paid to RGS Japan and RGS

France (by wire transfer), within three business days after the

Closing Date, an amount equal to all overdraft borrowings of RGS

Japan and RGS France as of the close of business on the day

preceding the Closing Date (it being understood that such

reimbursed amounts shall not be reflected on the Closing

Statement).

(vi) Seller will be responsible for the payment of all

payroll checks delivered, and payroll direct deposits made, prior

to the close of business on the day preceding the Closing Date to

employees of the Selling Companies engaged primarily in the

Business, employees of the RGS Companies and employees listed in

Schedule 9(a)(i). Buyer shall, or shall cause the RGS Companies

or Buyer Foreign Subsidiaries to, reimburse Seller (by wire

transfer), within three business days after the Closing Date, for

all amounts funded by Seller or its Subsidiaries or Affiliates

after the close of business on the day preceding the Closing Date

through the Closing Date in respect of any payroll checks delivered or

payroll direct deposits made after the close of business on the day

preceding the Closing Date through the

<PAGE>

Closing Date to employees of the Selling Companies engaged primarily

in the Business, employees of the RGS Companies and employees listed in

Schedule 9(a)(i). Buyer shall, or shall cause the RGS Companies

or Buyer Foreign Subsidiaries to, fund (or, as described in the

preceding sentence, reimburse Seller for) all payroll checks

delivered, and payroll direct deposits made, after the close of

business on the day preceding the Closing Date to employees of

the Selling Companies engaged primarily in the Business,

employees of the RGS Companies and employees listed in

Schedule 9(a)(i).

(q) Conduct of Business on the Closing Date. On the
---------------------------------------

Closing Date, the Business will be conducted only in the ordinary

course and none of Buyer, its Subsidiaries, the Selling Companies or

RICC (with respect to the Business) or the RGS Companies or Buyer

Foreign Subsidiaries will engage in any transaction (other than the

transactions contemplated hereby) which, if engaged in since

September 30, 1995 but on or before the date hereof, would constitute

a breach of the representations and warranties of Seller contained in

Section 5(r).

(r) Pre-Closing Transfers. On or prior to the Closing
---------------------

Date, Seller will cause (without any representations or warranties

with respect thereto) (i) all Customer Notes owned by RICC as the same

shall exist at such time to be assigned and transferred to RGS and, in

exchange therefor, (A) all liabilities of RICC relating to the

Business to be assigned and transferred to and assumed by RGS and (B)

intercompany indebtedness due RGS from Seller equal to the fair market

value of such Customer Notes

<PAGE>

to be assigned and transferred to RICC, (ii) all receivables and

rights to receive all amounts and assets owing or payable or to become

owing or payable by Hall Processing or Goss Processing to RGS to be

assigned and transferred by RGS to Goss Processing, (iii) all of the

issued and outstanding shares of capital stock of Goss Processing to

be assigned and transferred by RGS to Seller and (iv) all rights to

receive all amounts and assets owing or payable or to become owing or

payable to RGS and its Subsidiaries pursuant to, and all liabilities

in respect of any settlement of or judgment in respect of, the

Heidelberger Litigation to be assigned and transferred by RGS to, and

assumed by, Seller. For tax purposes, such assignment of all the

issued and outstanding shares of capital stock of Goss Processing

shall be effected pursuant to a plan of complete liquidation adopted

by Seller pursuant to Section 332 of the Code. Seller will provide

Buyer with a reasonable opportunity to review and approve (which

approval shall not be unreasonably withheld or delayed) the documents

evidencing such assignments, transfers and assumptions described in

the first sentence of this Section 8(r) prior to the execution

thereof. On the Closing Date Seller shall deliver to Buyer copies of

the documents evidencing such assignments, transfers and assumptions.

(s) Provision of Information. Buyer shall (subject to
------------------------

customary confidentiality agreements), prior to and following the

Closing, promptly provide to Seller and its Subsidiaries such

information as any of them shall reasonably request for the purpose of

providing information to and consulting with employee or labor union

representatives in connection with the

<PAGE>

transactions contemplated hereby pursuant to any contractual,

statutory or other obligation, including, without limitation, the

Transfer of Undertakings (Protection of Employment) Regulations 1981

of the United Kingdom.

(t) Customer Notes. Between the date of execution of this
--------------

Agreement and the Closing, Seller will not, and will cause the Selling

Companies and RICC (with respect to the Business) and the RGS

Companies not to, accept any new Customer Notes in connection with

sales of presses or related equipment or replace, refinance or amend

any existing Customer Notes, in any case without the prior written

consent of Buyer, which consent shall not be unreasonably withheld or

delayed, provided that no such consent of Buyer shall be required in

connection with the acceptance, replacement, refinancing or amendment

of any Customer Notes described on Schedule 8(t).

(u) Buyer Assistance. At Seller's request, Buyer will
----------------

cause its employees and the employees of its Subsidiaries and

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) reasonably to assist Seller in connection with all

matters relating to the liquidation of Hall Processing and the

resolution of the Heidelberger Litigation, provided that the

reasonable out-of-pocket expenses and Damages (as defined in Section

9(g)), if any, of Buyer incurred in connection therewith shall be paid

by Seller.

(v) Allen-Bradley Supply Arrangements. Seller and Buyer
---------------------------------

acknowledge and agree that all contracts, agreements, commitments and

arrangements in effect as of the Closing providing for pricing and

other terms of sale with respect to the

<PAGE>

supply by Allen-Bradley to the Business of drive systems, press

controls and related products following the Closing (other than any

such arrangements entered into pursuant to the following sentence)

shall be automatically terminated and of no force or effect as of the

Closing with respect to orders received by Allen-Bradley following the

Closing, it being understood that the foregoing shall have no effect

on amounts owing to Allen-Bradley described in Section 8(f). At the

request of Buyer, Seller will seek to negotiate with Buyer and the RGS

Companies a supply arrangement with respect to drive systems, press

controls and related products on terms acceptable to Seller and Buyer,

each in their sole discretion.

(w) Financing. Prior to Closing, Seller shall, and shall
---------

cause the RGS Companies and the Selling Subsidiaries to, cooperate

with and provide reasonable assistance to Buyer in any reasonable

manner requested by Buyer in connection with its obtaining the

financing referred to in Section 10(g), provided, however, that such
-------- -------

cooperation and assistance shall not include any requirement of Seller

or any of its Subsidiaries or Affiliates to expend money or to offer

or grant any financial accommodation.

(x) Transitional Arrangements. At the Closing, Seller and
-------------------------

Buyer will enter into an agreement with respect to certain

transitional arrangements in conformity with the Outline of Terms set

forth as Exhibit C and such other transitional arrangements as shall

be mutually agreed upon.

(y) Borrowings. Seller shall repay all short-term and
----------

long-term borrowings under loan or credit agreements of any of

<PAGE>

the Selling Companies (with respect to the Business) or the RGS

Companies outstanding as of the close of business on the day preceding

the Closing Date, other than overdraft borrowings of RGS Japan and RGS

France.

(z) Audit Fees. Buyer shall pay Seller (by wire transfer)
----------

at the Closing an amount notified to Buyer by Seller prior to the

Closing equal to one-half of the fees and expenses of D&T for auditing

the combined financial statements of the Business as of and for the

fiscal year ended September 30, 1993.

SECTION 9. Employment Arrangements, Benefits and Pension Plans.
---------------------------------------------------

(a) Employment. Buyer shall or shall cause an RGS Company
----------

or a Buyer Foreign Subsidiary to (i) continue to employ, commencing as

of the Closing Date, each of the employees of the RGS Companies who

are employed (including those who are actively employed or on layoff,

leave or short-term disability or other permitted absence from

employment, but excluding those who are on long-term disability)

immediately prior to the Closing Date, including all employees covered

by the collective bargaining agreements set forth on Schedule 5(s) or

entered into in the ordinary course of business consistent with past

practice, other than those who are on long-term disability leaves

immediately prior to the Closing Date, and (ii) offer employment with

comparable compensation and benefits, commencing as of the Closing

Date, to (A) each of the employees of the Selling Companies engaged

primarily in the Business who are employed (including those who are

actively employed or on layoff, leave or short-term disability or

other permitted absence from employment, but excluding those who are

on long-term disability) immediately

<PAGE>

prior to the Closing Date, including all employees covered by the

collective bargaining agreements set forth on Schedule 5(s) or entered

into in the ordinary course of business consistent with past practice,

other than those who are on long-term disability leaves immediately

prior to the Closing Date, and (B) each of the employees of Seller or

its Subsidiaries or Affiliates set forth on Schedule 9(a)(i);

provided, however, that nothing contained in this Section 9(a) is
-------- -------

intended to confer upon any Continued Employee any right to continued

employment after evaluation by Buyer of its employment needs after the

Closing Date. The employees (i) who accept such an offer of

employment by Buyer, an RGS Company or a Buyer Foreign Subsidiary and,

except with respect to employees who are on layoff, leave or

short-term disability or other permitted leave of absence, actually

commence such employment or (ii) who so continue to be employed are

herein referred to as "Continued Employees". Buyer shall, or shall

cause the RGS Companies or Buyer Foreign Subsidiaries to, provide

immediately after the Closing Date to each Continued Employee

(i) employment and a salary or wage level at least equal to that which

such Continued Employee was entitled to from the Selling Companies,

Rockwell France, the RGS Companies and other Subsidiaries and

Affiliates of Seller immediately prior to the Closing Date and

(ii) employee benefits (other than pension and savings benefits,

except as otherwise provided in Sections 9(b), (c) and (d) hereof)

comparable in all material respects to and no less favorable in the

aggregate than the employee benefits provided to each such Continued

Employee by the Selling Companies, Rockwell France, the RGS Companies

and other

<PAGE>

Subsidiaries and Affiliates of Seller immediately prior to the Closing

Date; provided, however, that after the Closing Date, Buyer expressly
-------- -------

reserves the right to modify any salary or wage level of any Continued

Employee and to amend, modify or terminate any benefit plan or program

established, assumed or maintained by Buyer or any RGS Company or

Buyer Foreign Subsidiary for the benefit of Continued Employees in

accordance with the terms of such plan or program and applicable law.

Buyer shall, or shall cause the applicable RGS Company or Buyer

Foreign Subsidiary to, assume or maintain (as applicable) as of the

Closing Date and perform the obligations of each of the Selling

Companies, Rockwell France, the RGS Companies and other Subsidiaries

and Affiliates of Seller under the collective bargaining agreements

set forth on Schedule 5(s) or entered into in the ordinary course of

business consistent with past practice and any and all collateral

agreements related thereto, including those affecting all terms and

conditions of employment, and to be bound by such agreements.

(b) Pension Plans.
-------------

(i) Rockwell Retirement Plan for Eligible Employees.
-----------------------------------------------

(A) Effective as of the Closing Date, each Continued

Employee who participated in the Rockwell Retirement Plan for

Eligible Employees (the "Rockwell Retirement Plan") immediately

prior to the Closing Date shall cease to accrue benefits under

the Rockwell Retirement Plan and shall have a fully

nonforfeitable right to such Continued Employee's benefit payable

at normal retirement

<PAGE>

age under the Rockwell Retirement Plan accrued as of the Closing

Date or as of the last business day of the month in which the

Closing Date occurs if the Closing Date falls on a day other than

the last business day of the month; provided, however, that no
-------- -------

provision in this Agreement shall be construed to provide any

Continued Employee additional credit for purposes of determining

eligibility for an early retirement or disability pension under

the Rockwell Retirement Plan. None of Buyer or its Subsidiaries

or Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) shall have or acquire any interest in or right with

respect to any of the assets of the Rockwell Retirement Plan, and

Seller shall retain full power and authority with respect to the

amendment and termination of the Rockwell Retirement Plan and the

investment and disposition of assets held in the Rockwell

Retirement Plan to the extent permitted by applicable law. The

Selling Companies shall remain solely responsible for, and none

of Buyer or its Subsidiaries or Affiliates (including the RGS

Companies and the Buyer Foreign Subsidiaries) shall have any

liability under, relating to or arising out of the Rockwell

Retirement Plan.

(B) From and after the Closing Date, none of Seller or

its Subsidiaries or Affiliates or Buyer or its Subsidiaries or

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries), the Rockwell Retirement Plan or the trust

thereunder shall have any obligation or liability with respect to

benefits and entitlements of

<PAGE>

Continued Employees under the Rockwell Retirement Plan, except

with respect to benefits accrued under the Rockwell Retirement

Plan prior to the Closing Date.

(ii) Rockwell International Corporation Savings Plan.
-----------------------------------------------

Effective as of the Closing Date, Seller shall cause each

Continued Employee to have a fully nonforfeitable right to such

Continued Employee's account balances, if any, under the Rockwell

International Corporation Savings Plan (the "Rockwell Savings

Plan"). Each Continued Employee shall be entitled to maintain

such Continued Employee's account balances under the Rockwell

Savings Plan or receive a distribution of such Continued

Employee's account balances under the Rockwell Savings Plan in

accordance with the terms of the Rockwell Savings Plan and

applicable law.

(iii) U.S. Stand-Alone Savings Plans. Effective as
------------------------------

of the Closing Date, Buyer shall assume or shall cause RGS to

continue to maintain the RGS Reading Hourly Employees Retirement

Savings Plan, the RGS Field Service Hourly Employees Savings

Plan, the RGS Defined Contribution Target Benefit Retirement Plan

for Hourly-Rated Employees of the Cedar Rapids, Iowa Plant and

the RGS Cedar Rapids Hourly Employees Savings Plan (collectively,

the "RGS Savings Plans") and their related funding media and

shall, or shall cause RGS to, fully perform, pay and discharge

all of RGS' duties, liabilities and obligations with respect

thereto. Effective as of the Closing Date, none of Seller or its

Subsidiaries or Affiliates shall have any obligation or liability

with respect to the RGS Savings Plans. Buyer

<PAGE>

shall, or shall cause RGS to, take all actions required in

connection with this Section 9(b)(iii), including replacing the

trustees under each RGS Savings Plan with trustees designated by

Buyer.

(iv) Rockwell PMC Pension Scheme. Effective as of the
---------------------------

Closing Date, Buyer shall, or shall cause the applicable Buyer

Foreign Subsidiary to, assume and adopt the Rockwell PMC Pension

Scheme (the "RGS U.K. Pension Scheme"), fully succeed to all of

RGS U.K.'s rights thereunder and fully perform, pay and discharge

all of RGS U.K.'s duties, liabilities and obligations as a

successor employer thereunder, subject to the Inland Revenue's

consent and the governing provisions of the RGS U.K. Pension

Scheme. Effective as of the Closing Date, Buyer shall or shall

cause the applicable Buyer Foreign Subsidiary to nominate (i) an

organization which is a member of the Investment Management

Regulatory Organization as investment manager of the RGS U.K.

Pension Scheme and (ii) an organization registered in the United

Kingdom as custodian of the assets of the RGS U.K. Pension

Scheme, provided that Buyer shall notify Seller or shall cause

Seller to be notified of such nominations at least 10 business

days prior to the Closing Date. Effective as of the Closing

Date, Buyer shall, or shall cause the applicable Buyer Foreign

Subsidiary to, execute a deed of substitution in the form

attached hereto as Schedule 9(b)(iv) relating to the RGS U.K.

Pension Scheme and assume all liabilities and obligations

thereunder and take all such action as described therein. Prior

to the Closing Date,

<PAGE>

Seller and RGS U.K. shall use reasonable efforts to take such

actions, if any, including the adoption of any amendments to the

RGS U.K. Pension Scheme, as may be necessary or appropriate in

connection therewith. On and after the Closing Date, Seller, RGS

U.K. and Buyer shall each take such further actions as may be

necessary or appropriate to establish Buyer or the applicable

Buyer Foreign Subsidiary as the successor to RGS U.K. as to all

rights, duties, liabilities and obligations under and with

respect to the RGS U.K. Pension Scheme and to establish Buyer or

the applicable Buyer Foreign Subsidiary as the principal company

of the RGS U.K. Pension Scheme for the purposes of any applicable

laws. Effective as of the Closing Date, none of Seller or its

Subsidiaries or Affiliates shall have any obligation or liability

with respect to the RGS U.K. Pension Scheme.

(v) The Rockwell Graphic Systems Limited Pension and
------------------------------------------------

Life Assurance Plan. Effective as of the Closing Date, Buyer
-------------------

shall, or shall cause the applicable Buyer Foreign Subsidiary to,

assume and adopt The Rockwell Graphic Systems Limited Pension and

Life Assurance Plan (the "RGS U.K. Assurance Plan"), fully

succeed to all of RGS U.K.'s rights thereunder and fully perform,

pay and discharge all of RGS U.K.'s duties, liabilities and

obligations as a successor employer thereunder, subject to the

Inland Revenue's consent and the governing provisions of the RGS

U.K. Assurance Plan. Effective as of the Closing Date, Buyer

shall or shall cause the applicable Buyer Foreign Subsidiary to

nominate (i) an organization which is a member of the Investment

Management

<PAGE>

Regulatory Organization as investment manager of the RGS U.K.

Assurance Plan and (ii) an organization registered in the United

Kingdom as custodian of the assets of the RGS U.K. Assurance

Plan, provided that Buyer shall notify Seller or shall cause

Seller to be notified of such nominations at least 10 business

days prior to the Closing Date. Effective as of the Closing

Date, Buyer shall, or shall cause the applicable Buyer Foreign

Subsidiary to, execute a deed of substitution in the form

attached hereto as Schedule 9(b)(v) relating to the RGS U.K.

Assurance Plan and assume all liabilities and obligations

thereunder and take all such action as described therein. Prior

to the Closing Date, Seller and RGS U.K. shall use reasonable

efforts to take such actions, if any, including the adoption of

any amendments to the RGS U.K. Assurance Plan, as may be

necessary or appropriate in connection therewith. On and after

the Closing Date, Seller, RGS U.K. and Buyer shall each take such

further actions as may be necessary or appropriate to establish

Buyer or the applicable Buyer Foreign Subsidiary as the successor

to RGS U.K. as to all rights, duties, liabilities and obligations

under and with respect to the RGS U.K. Assurance Plan and to

establish Buyer or the applicable Buyer Foreign Subsidiary as the

principal company of the RGS U.K. Assurance Plan for the purposes

of any applicable laws. Effective as of the Closing Date, none

of Seller or its Subsidiaries or Affiliates shall have any

obligation or liability with respect to the RGS U.K. Assurance

Plan.

<PAGE>

(vi) Rockwell U.K. Executive Plan.
----------------------------

(A) Effective as of the Closing Date, each Continued

Employee who participated in the Rockwell U.K. Executive Plan

(the "Rockwell U.K. Retirement Plan") immediately prior to the

Closing Date shall cease to accrue benefits under the Rockwell

U.K. Retirement Plan and shall have a fully nonforfeitable right

to such Continued Employee's benefit payable at normal retirement

age under the Rockwell U.K. Retirement Plan accrued as of the

Closing Date or as of the last business day of the month in which

the Closing Date occurs if the Closing Date falls on a day other

than the last business day of the month; provided, however, that
-------- -------

no provision in this Agreement shall be construed to provide any

Continued Employee additional credit for purposes of determining

eligibility for an early retirement or disability pension under

the Rockwell U.K. Retirement Plan. None of Buyer or its

Subsidiaries or Affiliates (including the RGS Companies and the

Buyer Foreign Subsidiaries) shall have or acquire any interest in

or right with respect to any of the assets of the Rockwell U.K.

Retirement Plan, and Seller shall retain full power and authority

with respect to the amendment and termination of the Rockwell

U.K. Retirement Plan and the investment and disposition of assets

held in the Rockwell U.K. Retirement Plan to the extent permitted

by applicable law. The Selling Companies shall remain solely

responsible for, and none of Buyer or its Subsidiaries or

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) shall have any

<PAGE>

liability under, relating to or arising out of the Rockwell U.K.

Retirement Plan.

(B) From and after the Closing Date, none of Seller or

its Subsidiaries or Affiliates or Buyer or its Subsidiaries or

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) or the trustees of the Rockwell U.K. Retirement

Plan shall have any obligation or liability with respect to

benefits and entitlements of Continued Employees under the

Rockwell U.K. Retirement Plan, except with respect to benefits

accrued under the Rockwell U.K. Retirement Plan prior to the

Closing Date.

(vii) Pension Plan for the Employees of Rockwell
------------------------------------------

Graphic Systems Inc. Effective as of the Closing Date, Buyer
-------------------

shall, or shall cause the applicable Buyer Foreign Subsidiary to,

assume and adopt the Pension Plan for the Employees of Rockwell

Graphic Systems Inc. (the "Rockwell Germany Plan"), fully succeed

to all of Rockwell Germany's rights thereunder and fully perform,

pay and discharge all of Rockwell Germany's duties, liabilities

and obligations as a successor employer thereunder. Prior to the

Closing Date, Rockwell Germany shall use reasonable efforts to

take such actions, if any, including the adoption of any

amendments to the Rockwell Germany Plan, as may be necessary or

appropriate in connection therewith. On and after the Closing

Date, Rockwell Germany and Buyer shall each take such further

actions as may be necessary or appropriate to establish Buyer or

the applicable Buyer Foreign Subsidiary as the successor to

Rockwell Germany as to all rights,

<PAGE>

duties, liabilities and obligations under and with respect to the

Rockwell Germany Plan and to establish Buyer or the applicable

Buyer Foreign Subsidiary as the sponsor of the Rockwell Germany

Plan for the purposes of any applicable laws. Effective as of

the Closing Date, none of Seller or its Subsidiaries or

Affiliates shall have any obligation or liability with respect to

the Rockwell Germany Plan.

(viii) Employee Retirement Allowance Plan.
----------------------------------

Effective as of the Closing Date, Buyer shall assume or shall

cause RGS Japan to continue to maintain the Employee Retirement

Allowance Plan, including, but not limited to, the Employee

Retirement Pension Plan (the "RGS Japan Employee Plan"), and its

related funding medium and shall, or shall cause RGS Japan to,

fully perform, pay and discharge all of RGS Japan's duties,

liabilities and obligations with respect thereto. Effective as

of the Closing Date, none of Seller or its Subsidiaries or

Affiliates shall have any obligation or liability with respect to

the RGS Japan Employee Plan and its related funding medium.

Buyer shall, or shall cause RGS Japan to, take all actions

required in connection with this Section 9(b)(viii), including

replacing the trustee under the RGS Japan Employee Plan with

trustees designated by Buyer.

(ix) Director Retirement Allowance Plan. Effective as
----------------------------------

of the Closing Date, Buyer shall assume or shall cause RGS Japan

to continue to maintain the Director Retirement Allowance Plan

(the "RGS Japan Director Plan") and its related funding medium

and shall, or shall cause RGS

100

<PAGE>

Japan to, fully perform, pay and discharge all of RGS Japan's

duties, liabilities and obligations with respect thereto.

Effective as of the Closing Date, none of Seller or its

Subsidiaries or Affiliates shall have any obligation or liability

with respect to the RGS Japan Director Plan and its related

funding medium. Buyer shall, or shall cause RGS Japan to, take

all actions required in connection with this Section 9(b)(ix),

including replacing the trustee under the RGS Japan Director Plan

with trustees designated by Buyer.

(x) Revised Retirement Plan for Employees of the
--------------------------------------------

Allen-Bradley Division of Rockwell International of Canada.
----------------------------------------------------------

(A) Effective as of the Closing Date, each Continued

Employee who participated in the Revised Retirement Plan for

Employees of Allen-Bradley Division of Rockwell International of

Canada (the "Rockwell Canadian Retirement Plan") immediately

prior to the Closing Date shall cease to accrue benefits under

the Rockwell Canadian Retirement Plan and shall have a fully

vested right to such Continued Employee's benefit payable in

accordance with the terms of the Rockwell Canadian Retirement

Plan and applicable law at normal retirement age under the

Rockwell Canadian Retirement Plan accrued as of the Closing Date

or as of the last business day of the month in which the Closing

Date occurs if the Closing Date falls on a day other than the

last business day of the month; provided, however, that no
-------- -------

provision in this Agreement shall be construed to provide any

Continued Employee additional credit for purposes of determining

eligibility for an early retirement

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<PAGE>

or disability pension under the Rockwell Canadian Retirement

Plan. None of Buyer or its Subsidiaries or Affiliates (including

the RGS Companies and the Buyer Foreign Subsidiaries) shall have

or acquire any interest in or right with respect to any of the

assets of the Rockwell Canadian Retirement Plan, and Seller shall

retain full power and authority with respect to the amendment and

termination of the Rockwell Canadian Retirement Plan and the

investment and disposition of assets held in the Rockwell

Canadian Retirement Plan to the extent permitted by applicable

law. The Selling Companies shall remain solely responsible for,

and none of Buyer or its Subsidiaries or Affiliates (including

the RGS Companies and the Buyer Foreign Subsidiaries) shall have

any liability under, relating to or arising out of the Rockwell

Canadian Retirement Plan.

(B) From and after the Closing Date, none of Seller or

its Subsidiaries or Affiliates or Buyer or its Subsidiaries or

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries), the Rockwell Canadian Retirement Plan or the trust

thereunder shall have any obligation or liability with respect to

benefits and entitlements of Continued Employees under the

Rockwell Canadian Retirement Plan, except with respect to

benefits accrued under the Rockwell Canadian Retirement Plan

prior to the Closing Date.

for and shall pay when due all liabilities pursuant to those incentive

arrangements set forth on Schedule 9(c) and

102

<PAGE>

all direct and indirect liabilities, claims, losses, damages, costs

and expenses in respect of any claim of (i) any Continued Employee

that such employee's employment has been terminated, either

voluntarily or involuntarily, solely in conjunction with the

transactions contemplated hereby or (ii) any employee to whom Buyer or

an RGS Company or Buyer Foreign Subsidiary is required to offer

employment or continued employment pursuant to Section 9(a) and who

does not accept such employment, that such employee's employment has

been terminated, either voluntarily or involuntarily, solely in

conjunction with the transactions contemplated hereby (excluding in

the case of either clause (i) or (ii) any claim relating (or also

relating) in any manner to any termination of employment, either

voluntary or involuntary, resulting from any action of Buyer or any of

its Subsidiaries or Affiliates, other than the purchase of the Shares

and the Assets and the assumption of the Assumed Liabilities),

including, without limitation, any claim for severance pay,

unemployment benefits or any other liabilities, claims, losses,

damages, costs and expenses (including interest, penalties and fees of

legal counsel), asserted against, imposed upon or incurred by Buyer or

any of its Subsidiaries or Affiliates (including the RGS Companies and

the Buyer Foreign Subsidiaries) or any of the Selling Companies,

Rockwell France or any of their respective Subsidiaries or Affiliates

arising from or relating in any way to such claims (whether or not

such claim is based on any severance policy, agreement, arrangement or

program which may exist or arise under any contract, employment

agreement, collective

103

<PAGE>

bargaining agreement or under any Federal, state, local, provincial or

foreign law).

(d) Welfare Plans. Effective as of the Closing Date,
-------------

subject to Section 9(e)(i), Buyer shall, or shall cause the RGS

Companies or Buyer Foreign Subsidiaries to, establish or maintain

"employee welfare benefit plans," as defined in Section 3(1) of ERISA,

and other employee benefit welfare or fringe benefit arrangements

(collectively, "New Welfare Benefit Plans") for the benefit of

Continued Employees and former employees (except those former

employees who are on long-term disability leave immediately prior to

the Closing Date) of any of the Selling Companies (with respect to the

Business) and the RGS Companies and all of their respective

predecessors which are no less favorable in the aggregate than the

"employee welfare benefit plans" and other employee benefit welfare or

fringe benefit arrangements maintained by Seller and its Subsidiaries

and Affiliates (including Rockwell France, the Selling Subsidiaries

and the RGS Companies) immediately prior to the Closing Date for the

benefit of Continued Employees and former employees (except those

former employees who are on long-term disability leave immediately

prior to the Closing Date) of any of the Selling Companies (with

respect to the Business) and the RGS Companies and all of their

respective predecessors ("Rockwell Welfare Benefit Plans"); provided,
--------

however, that after the Closing Date, Buyer expressly reserves the
-------

right to amend, modify or terminate any benefit plan or program

established, assumed or maintained by Buyer or any RGS Company or

Buyer Foreign Subsidiary for the benefit of Continued Employees or

such former employees in

104

<PAGE>

accordance with the terms of such plan or program and applicable law.

The New Welfare Benefit Plans shall, subject to Section 9(e)(i),

provide for the immediate participation of those Continued Employees

and former employees (except those former employees who are on

long-term disability leave immediately prior to the Closing Date) who

participated in the Rockwell Welfare Benefit Plans immediately prior

to the Closing Date. The New Welfare Benefit Plans shall, subject to

Section 9(e)(i), credit each Continued Employee and each such former

employee with the same service and any other item credited to or

otherwise accumulated for the benefit of such Continued Employee or

former employee under the Rockwell Welfare Benefit Plans, including,

without limitation, service credited for waiting periods, amounts

credited toward any medical or health insurance deductible or

co-payments and unused vacation. Except as provided in

Section 9(e)(i) and except with respect to liabilities retained by

Seller pursuant to Section 9(c), Buyer shall, and shall cause the RGS

Companies and the Buyer Foreign Subsidiaries to, be responsible for

payment of, and to indemnify and hold Seller and each of its

Subsidiaries and Affiliates (including Rockwell France, each Selling

Subsidiary and each of their Subsidiaries and Affiliates) harmless

from and against, all amounts payable on or after the Closing Date in

respect of employee welfare and fringe benefits paid or payable to

Continued Employees or former employees (except those former employees

who are on long-term disability leave immediately prior to the Closing

Date) of any of the Selling Companies (with respect to the Business)

or the RGS Companies (or their respective predecessors) under the

Rockwell

105

<PAGE>

Welfare Benefit Plans, the New Welfare Benefit Plans or otherwise

(including, without limitation, claims for medical, workers'

compensation and disability benefits), whether arising in connection

with (i) incidents occurring before, on or after the Closing Date or

(ii) claims made by Continued Employees or any such former employees

before, on or after the Closing Date. Seller shall retain liability

to pay benefits pursuant to those incentive arrangements set forth on

Schedule 9(c).

(e) Retiree Medical and Life Insurance.
----------------------------------

(i) Seller and its Affiliates or, where appropriate,

Seller's or its Affiliate's ERISA Benefit Plans, shall retain

liabilities for all retiree medical benefits and retiree life

insurance payable on or after the Closing Date to those former

employees of Seller, RGS, PMC, RGS U.K. and Rockwell Canada (in

the case of Seller, RGS U.K. and Rockwell Canada, with respect to

the Business) who (I)(A) are actually retired from, and not

employed by, Seller or any of its Affiliates immediately prior to

the Closing Date and are not Continued Employees or (B) are

Continued Employees age 55 or over as of the Closing Date who

would be eligible to receive retiree medical and retiree life

insurance benefits under any ERISA Benefit Plan of Seller or any

of its Affiliates if they retired from Seller or any of its

Affiliates as of the Closing Date (provided, however, that
-------- -------

nothing in this Agreement shall be construed to provide

additional credit to such employees for service after the Closing

Date for purposes of eligibility to receive such retiree medical

and/or retiree life insurance

106

<PAGE>

benefits under such plans or to permit the payment of retiree medical

and/or retiree life insurance benefits under such plans prior to actual

retirement under the applicable plan) and (II) are covered by the

Rockwell Retirement Plan, the Rockwell U.K. Retirement Plan or the

Rockwell Canadian Retirement Plan (and their beneficiaries).

(ii) Buyer and the RGS Companies and Buyer Foreign

Subsidiaries shall assume or retain responsibility for all

retiree medical benefits and retiree life insurance payable on or

after the Closing Date to (A) all Continued Employees, other than

any Continued Employee referred to in Section 9(e)(i) above for

which Seller, any of its Affiliates or any ERISA Benefit Plan of

Seller or any of its Subsidiaries or Affiliates has retained

liability in accordance with Section 9(e)(i) above, (B) those

former employees of RGS France or any of its predecessors on the

Closing Date (and their beneficiaries) and (C) those former

employees of Seller or any of its Subsidiaries and Affiliates

(including Rockwell France, the Selling Subsidiaries and the RGS

Companies) or any of their respective predecessors on the Closing

Date (and their beneficiaries) for which Buyer or any of the RGS

Companies or Buyer Foreign Subsidiaries have assumed or retained

responsibility for the payment of retirement benefits under the

pension plans set forth in Sections 9(b)(iv), 9(b)(v), 9(b)(vii),

9(b)(viii) and 9(b)(ix).

(f) Compliance with Laws. Buyer shall, and shall cause its
--------------------

Subsidiaries and Affiliates (including the RGS

107

<PAGE>

Companies and the Buyer Foreign Subsidiaries) to, comply with all

laws, rules and regulations relating to the assumption or maintenance

of all collective bargaining agreements and savings, retirement and

pension plans being assumed by Buyer, an RGS Company or a Buyer

Foreign Subsidiary pursuant to this Section 9 ("Assumed Plans") and

their respective funding media.

(g) Indemnification. Buyer shall, and shall cause each of
---------------

its Subsidiaries, including the RGS Companies and the Buyer Foreign

Subsidiaries to, be responsible for, and to indemnify, defend and hold

Seller and each of its Subsidiaries and Affiliates (including Rockwell

France, the Selling Subsidiaries and each of their Subsidiaries and

Affiliates) and each of their employees, directors, officers and

stockholders (collectively, the "Seller Group") harmless from and

against any and all loss, liability, damage or expense, including,

without limitation, reasonable fees and disbursements of legal counsel

(collectively, "Damages"), based upon, arising out of or otherwise in

respect of (i) any claim for benefits or damages brought by or with

respect to any Continued Employee under any Plan (other than the

Rockwell Retirement Plan, the Rockwell U.K. Retirement Plan and the

Rockwell Canadian Retirement Plan) or arising from the cessation of

accrual of benefits or service credit (of any type) under any Plan

(other than the Rockwell Retirement Plan, the Rockwell U.K. Retirement

Plan and the Rockwell Canadian Retirement Plan), (ii) termination by

Buyer or any of its Subsidiaries or Affiliates (including the RGS

Companies and the Buyer Foreign Subsidiaries) of any Continued

Employee (other than such Damages for which Seller is made solely

108

<PAGE>

responsible pursuant to Section 9(c)), or (iii) any claim with respect

to the administration or operation of the Assumed Plans or any of

their respective funding media; provided, however, that such
-------- -------

indemnification shall not include those Damages for which Seller has

agreed to indemnify the Buyer Group (as defined in Section 14(a))

pursuant to Section 14(a).

SECTION 10. Conditions Precedent to the Obligation of Buyer.
-----------------------------------------------

The obligation of Buyer to consummate the transactions

contemplated hereby shall be subject to the satisfaction, or waiver by

Buyer, on or prior to the Closing Date, of each of the following

conditions:

(a) Representations and Warranties. The representations

and warranties of Seller set forth in this Agreement shall be true and

correct in all material respects on and as of the Closing Date with

the same force and effect as though all such representations and

warranties had been made at and as of such date, except (i) to the

extent such representations and warranties are by their express

provisions made as of a specific date, which need be true and correct

as of such date, (ii) for the effect of any activities or transactions

which are contemplated by this Agreement (including those described in

Schedule 8(a)) and (iii) with respect to the representations and

warranties contained in Sections 5(g), 5(j)(i), 5(l)(i), 5(q) (only

with respect to the matters set forth on Sections A through E of

Schedule 5(q) or Schedule 8(l)(i)), the second sentence of Section

5(s) and Section 5(u)(i), the schedules referred to therein need not

contain any matter or obligation otherwise required to be set forth

therein

109

<PAGE>

if such matter or obligation arose or was acquired or entered into

after the date hereof and is not prohibited by this Agreement, and

there shall have been delivered to Buyer a certificate to that effect,

dated the Closing Date, signed by a Vice President of Seller.

(b) Covenants and Agreements. Each and all of the
------------------------

covenants and agreements of Seller to be performed or complied with

prior to the Closing pursuant to this Agreement shall have been duly

performed and complied with in all material respects or duly waived by

Buyer and there shall have been delivered to Buyer a certificate to

that effect, dated the Closing Date, signed by a Vice President of

Seller.

(i) an opinion of Chadbourne & Parke LLP, counsel to Seller, dated the

Closing Date and substantially in the form of Exhibit A and (ii) such

opinions of foreign counsel as Buyer shall reasonably request in form

reasonably satisfactory to Buyer and its counsel (it being understood

that such opinions of foreign counsel shall not cover any subject

matters not covered by the opinion of counsel set forth as Exhibit A).

(d) No Adverse Order. There shall not be in effect on the
----------------

Closing Date any judgment, decree or order issued by any court of

competent jurisdiction which restrains or prohibits the consummation

by Buyer of the transactions contemplated hereby and no litigation

shall be pending which would reasonably be likely to enjoin, or which

would reasonably be likely to result in material damages to Buyer or

the Business as a result of, the consummation by Buyer of the

transactions contemplated hereby.

110

<PAGE>

(e) HSR Act. The applicable waiting period under the HSR
-------

Act shall have expired or terminated.

(f) Resignations. Seller shall have delivered to Buyer the
------------

resignations or evidence of removal of such officers and directors of

the RGS Companies as the Buyer shall have specified prior to Closing.

(g) Financing. Buyer shall have obtained the financing set
---------

forth in the Financing Letters (or replacement commitment letters

reasonably acceptable to Seller), unless the failure to obtain such

financing is due to Buyer's failure to perform any obligation required

thereunder or under the fee letters referred to therein.

(h) Material Adverse Effect. Since September 30, 1995,
-----------------------

other than as set forth on Schedule 5(r) or as contemplated by this

Agreement, there shall not have been any change in the business,

operations or condition (financial or otherwise) of the Business,

taken as a whole, which would reasonably be likely to have a Material

Adverse Effect.

(i) Consents. Seller shall have obtained all consents,
--------

approvals or authorizations required in connection with the execution

and delivery of this Agreement by Seller or the consummation by the

Selling Companies, RICC and Rockwell France of the transactions

contemplated hereby, other than any such requirement which if not

obtained would not reasonably be likely to have a Material Adverse

Effect.

(j) Environmental Compliance. Buyer shall not have any
------------------------

reasonable basis to believe that the Selling Companies (with respect

to the Business) and the RGS Companies are not in

111

<PAGE>

compliance in all material respects with all laws, statutes and

regulations pertaining to pollution or protection of the environment

or exposure of persons to toxic or hazardous substances, raw materials

or chemicals of Governmental Authorities applicable to them, except

where the failure to so comply would not reasonably be likely to have

a Material Adverse Effect.

(k) No Borrowings. There shall be no short-term or long-
-------------

term borrowings under loan or credit agreements by any of the Selling

Companies (with respect to the Business) or the RGS Companies as of

the close of business on the day preceding the Closing Date, other

than overdraft borrowings of RGS Japan and RGS France.

SECTION 11. Conditions Precedent to the Obligation of Seller.
------------------------------------------------

The obligation of Seller to consummate the transactions

contemplated hereby shall be subject to the satisfaction, or waiver by

Seller, on or prior to the Closing Date, of each of the following

conditions:

(a) Representations and Warranties. The representations

and warranties of Buyer set forth in this Agreement shall be true and

correct in all material respects on and as of the Closing Date with

the same force and effect as though all such representations and

warranties had been made at and as of such date, except (i) to the

extent such representations and warranties are by their express

provisions made as of a specific date, which need be true and correct

as of such date and (ii) for the effect of any activities or

transactions which are contemplated by this Agreement, and there

112

<PAGE>

shall have been delivered to Seller a certificate to that effect,

dated the Closing Date, signed by the President or a Vice President of

Buyer.

(b) Covenants and Agreements. Each and all of the
------------------------

covenants and agreements of Buyer to be performed or complied with

prior to the Closing pursuant to this Agreement shall have been duly

performed and complied with in all material respects or duly waived by

Seller and there shall have been delivered to Seller a certificate to

that effect, dated the Closing Date, signed by the President or a Vice

President of Buyer.

(i) an opinion of Wachtell, Lipton, Rosen & Katz, counsel to Buyer,

dated the Closing Date and substantially in the form of Exhibit B and

(ii) such opinions of foreign counsel as Seller shall reasonably

request in form reasonably satisfactory to Seller and its counsel (it

being understood that such opinions of foreign counsel shall not cover

any subject matters not covered by the opinion of counsel set forth as

Exhibit B).

(d) No Adverse Order. There shall not be in effect on the
----------------

Closing Date any judgment, decree or order issued by any court of

competent jurisdiction which restrains or prohibits the consummation

by Seller of the transactions contemplated hereby and no litigation

shall be pending which would reasonably be likely to enjoin, or which

would reasonably be likely to result in material damages to Seller or

any of its Subsidiaries as a result of, the consummation by Seller of

the transactions contemplated hereby.

113

<PAGE>

(e) HSR Act. The applicable waiting period under the HSR
-------

Act shall have expired or terminated.

(f) RGS Company Agreements. Each of the RGS Companies and
----------------------

the Buyer Foreign Subsidiaries shall have agreed in writing in favor

of Seller and its Subsidiaries and Affiliates to perform all

obligations and to be responsible for all liabilities which Buyer has

agreed to cause the RGS Companies and the Buyer Foreign Subsidiaries

to perform and be responsible for pursuant to this Agreement.

(g) Officer's Certificates. Seller shall have received
----------------------

from officers of RGS set forth in Section 17(s) a certificate that the

representations and warranties made herein by Seller are true and

correct on and as of the date hereof and on and as of the Closing

Date, with the same force and effect as though made at and as of the

Closing Date.

SECTION 12. Finder's Fees; Brokers.
----------------------

Except for Dillon, Read & Co. Inc., whose compensation shall

be paid by Seller, Seller represents and warrants to Buyer that it has

not authorized any Person to act as broker, finder or in any other

similar capacity in connection with the transactions contemplated by

this Agreement and the negotiations leading to it which will have a

right to payment from or claim against Buyer or any of its

Subsidiaries or Affiliates. Buyer represents and warrants to Seller

that it has not authorized any Person to act as broker, finder or in

any other similar capacity in connection with the transactions

contemplated by this Agreement and the negotiations leading to it

which will have a right to payment

114

<PAGE>

from or claim against Seller or any of its Subsidiaries or Affiliates.

SECTION 13. Survival of Representations and Warranties.
------------------------------------------

Each and every representation and warranty of Seller or

Buyer contained in this Agreement (other than Seller's and Buyer's

representations and warranties with respect to finder's fees and

brokers contained in Section 12 and Seller's representations and

warranties with respect to Taxes contained in Section 5(o),

authorization contained in Section 5(b), ownership of the Shares and

capitalization contained in Section 5(f) and ownership of real

property contained in Section 5(j)(ii), each of which are covered

below) shall survive the Closing Date solely for purposes of Sections

14(a) and 14(b) until one year after the Closing Date and then expire.

Seller's and Buyer's representations and warranties with respect to

finder's fees and brokers contained in Section 12 and Seller's

representations and warranties with respect to Taxes contained in

Section 5(o), ownership of the Shares and capitalization contained in

Section 5(f), authorization contained in Section 5(b) and ownership of

real property contained in Section 5(j)(ii) shall survive the Closing

Date solely for purposes of Sections 14(a) and 14(b) (or, in the case

of such representations and warranties with respect to Taxes, solely

for purposes of Section 15(h)) until, and shall expire when, all

applicable statutes of limitation (including any extensions thereof)

have expired. Upon and following expiration of any representation or

warranty hereunder, neither Seller nor Buyer shall have any liability

whatsoever with respect to such representation or warranty.

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<PAGE>

SECTION 14. Indemnification.
---------------

(a) Indemnification by Seller. Seller shall indemnify,
-------------------------

defend and hold Buyer, each Subsidiary and Affiliate of Buyer and each

of their employees, directors, officers and stockholders

(collectively, the "Buyer Group") harmless from and against any and

all Damages actually incurred by any member of the Buyer Group based

upon, arising out of or otherwise in respect of (i) any breach of any

covenant or agreement of Seller contained in this Agreement (other

than with respect to matters covered by Section 14(c) or Section 15),

(ii) any breach of any of Seller's representations and warranties

contained in this Agreement (other than with respect to Section 5(o),

which is covered by Section 15(h)), (iii) any settlement of or

judgment in respect of the litigation set forth as item 1. under the

heading "Commercial Litigation" on Schedule 5(p) in which Heidelberger

Druckmaschinen AG is the plaintiff (the "Heidelberger Litigation"),

(iv) the liquidation of Hall Processing and (v) the Retained

Liabilities.

Buyer acknowledges and agrees that, except as set forth in

Section 8(j) and for claims of fraud or similar claims, its sole and

exclusive remedy with respect to any and all claims relating to the

subject matter of this Agreement shall be pursuant to the

indemnification provisions set forth in this Section 14 and

Section 15(h)(i). In furtherance of the foregoing, except for rights,

claims and causes of action arising from or in connection with fraud

or similar claims, Buyer hereby waives, to the fullest extent

permitted under applicable law, any and all rights, claims and causes

of action it or any of its

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Subsidiaries or Affiliates (including the RGS Companies and the Buyer

Foreign Subsidiaries) may have against Seller or any of its

Subsidiaries or Affiliates arising under or based upon any Federal,

state, provincial, local or foreign statute, law, ordinance, rule,

regulation or common law.

(b) Indemnification by Buyer. Buyer shall, and shall cause
------------------------

each of its Subsidiaries (including the RGS Companies and the Buyer

Foreign Subsidiaries) to, indemnify, defend and hold the Seller Group

harmless from and against any and all Damages actually incurred by any

member of the Seller Group based upon, arising out of or otherwise in

respect of (i) any breach of any covenant or agreement of Buyer

contained in this Agreement (other than with respect to matters

covered by Section 15), (ii) any breach of any of Buyer's

representations and warranties contained in this Agreement, (iii) any

obligations or liabilities of any of the RGS Companies, whether

incurred before, on or after the Closing Date (other than those

obligations or liabilities for which Seller has agreed to indemnify

the Buyer Group pursuant to Sections 14(a) and 14(c)), (iv) the

Assumed Liabilities, (v) any guarantees or obligations to assure

performance or perform given or made by, or other liabilities or

obligations of, Seller or any of its Subsidiaries or Affiliates with

respect to the Business, or any obligations in respect thereof,

whether incurred before, on or after the Closing Date, including,

without limitation, any obligations of Seller or any of its

Subsidiaries or Affiliates under (A) letters of credit, bonds,

guaranties, foreign currency forward exchange contracts, comfort

letters, indemnities, assurances, contracts, commitments and

agreements relating to the

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Business and (B) Shared Agreements to the extent relating to the

Business and (vi) any obligations or liabilities arising out of the

operation of the Business on or after the Closing Date.

(i) Seller shall indemnify, defend and hold the Buyer

Group harmless from and against all costs, expenses and damages

(A) relating to RGS U.K.'s Peterborough, U.K. facility referred

to on Schedule 1(c) imposed by, pursuant to or arising under

Environmental Laws or (B) which constitute liabilities of Hall

Processing imposed by, pursuant to or arising under Environmental

Laws.

(ii) In the event that the aggregate amount of RGS

Environmental Costs (as defined below) exceeds $1,000,000, Seller

shall indemnify, defend and hold the Buyer Group harmless from

and against one-half of the amount of RGS Environmental Costs in

excess of $1,000,000 (it being understood that Seller shall not

be liable to indemnify the Buyer Group for any RGS Environmental

Costs unless and until the aggregate amount of RGS Environmental

Costs exceeds $1,000,000, in which event Seller shall be

responsible only for one-half of that portion of RGS

Environmental Costs in excess of $1,000,000).

(iii) The provisions of this Section 14(c)(iii) are

in addition to, and not in limitation of, the procedures set

forth in Section 14(d) (which shall be deemed superseded to the

extent inconsistent with this Section 14(c)(iii)). Buyer shall

provide Seller with prompt notice describing in reasonable detail

any condition or claim in respect of which

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RGS Environmental Costs or other costs, expenses and damages

described in Section 14(c)(i) are or may be incurred by any

member of the Buyer Group, whether or not Buyer or any other

member of the Buyer Group is entitled to seek indemnification

under this Section 14(c). If such notice is not given within a

sufficient period of time or in sufficient detail to apprise

Seller of the nature of any such condition or claim (in each

instance taking into account the facts and circumstances with

respect thereto), the costs and expenses incurred by Buyer or its

Subsidiaries in connection with such condition or claim shall not

constitute RGS Environmental Costs or costs, expenses and damages

described in Section 14(c)(i) to the extent that Seller's

position is prejudiced as a result thereof. Buyer shall keep

Seller reasonably apprised of the status of and any action by or

on behalf of Buyer or any of its Subsidiaries or Affiliates with

respect to all such conditions or claims. If Seller is not

given, within a sufficient period of time or in sufficient

detail, information necessary to reasonably apprise Seller of the

status of and any action by or on behalf of Buyer or any of its

Subsidiaries or Affiliates with respect to any such conditions or

claims (in each instance taking into account the facts and

circumstances with respect thereto), the costs and expenses

incurred by Buyer or its Subsidiaries in connection with such

condition or claim shall not constitute RGS Environmental Costs

or costs, expenses and damages described in Section 14(c)(i) to

the extent that Seller's

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position is prejudiced as a result thereof. At such time as

Buyer anticipates that the monetary threshold in respect of RGS

Environmental Costs set forth in Section 14(c)(ii) may be

exceeded (and in any event if and when such threshold is

exceeded) in respect of any or all conditions or claims with

respect to which any member of the Buyer Group seeks, or may

seek, indemnification under Section 14(c)(ii), Buyer shall

provide Seller with notice thereof as soon as reasonably

practicable, and Seller shall have the option to participate, at

its own expense, in the resolution of any such conditions or

claims (and, in any event, Buyer shall consult in good faith with

Seller in respect of the resolution of any such conditions or

claims), it being understood that Buyer shall control any

negotiations, including those with appropriate Governmental

Authorities, with respect to the resolution of any such

conditions or claims (other than those referred to in Section

14(c)(iv)).

(iv) Anything contained herein to the contrary

notwithstanding, Seller shall control all matters in respect of

the resolution of any conditions or claims in respect of which

costs, expenses or damages described in Section 14(c)(i) have

been or may be incurred, and Buyer shall have no rights to

participate in any respect in connection therewith.

(v) For purposes of this Agreement:

(A) "Environmental Costs" means any necessary cost or

expense resulting from the containment, removal, response,

remedying, clean-up or abatement following the

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Closing Date of any hazardous wastes, Hazardous Substances (as

defined below), pollutants or contaminants in the soil, air,

surface water or groundwater actually paid by Buyer or any RGS

Company, but only to the extent such cost or expense results from

the disposal, discharge or release of any hazardous wastes,

Hazardous Substances, pollutants or contaminants on or from the

facilities of any of the Selling Companies (with respect to the

Business) or the RGS Companies or any of their respective

predecessors (the "Facilities") prior to the Closing Date,

provided that any such containment, removal, response, remedying,

clean-up or abatement shall be (i) required by an enforcement

order or decree entered by a Governmental Authority as a result

of an Environmental Proceeding (as defined below); (ii) necessary

to comply with an Environmental Law in response to an

Environmental Proceeding, the outcome of which Environmental

Proceeding is reasonably likely to result in material costs or

expenses to Buyer or any of the RGS Companies; or (iii) necessary

to comply with an Environmental Law in response to a threatened

Environmental Proceeding, which threat has been made in writing

and the outcome of which Environmental Proceeding is reasonably

likely to result in material costs or expenses to Buyer or any of

the RGS Companies, provided further that, in the case of

clause (iii), all such costs and expenses are consented to in

writing by Seller prior to being incurred, which consent shall

not be unreasonably withheld and which shall be granted or denied

as soon as reasonably practicable after

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request therefor by Buyer (it being understood that it shall not

be reasonable to withhold such consent if there is a reasonable

likelihood that failure to cure such violation would result in

material costs or expenses as a result of the outcome of such an

Environmental Proceeding in addition to the likely cost of curing

the violation itself). Environmental Costs shall not include any

cost or expense incurred in connection with the normal, day-to-

day operation, including maintenance, of the Facilities,

including any discharges pursuant to any permit or authorization

granted by a Governmental Authority, nor shall Environmental

Costs include any cost or expense arising from or relating to

acts or omissions of any member of the Buyer Group or others

after the Closing Date which increase the scope of any required

containment, removal, response, remedying, clean-up or abatement

or otherwise increase the liability of Seller hereunder;

(B) "RGS Environmental Costs" means all Environmental

Costs other than Environmental Costs contained in Section

14(c)(i);

local or foreign statute, ordinance, rule or regulation existing

on the date hereof, and any order, consent decree or judgment

relating thereto which deals with (i) pollution or protection of

the environment or (ii) exposure of persons to toxic or hazardous

substances, raw materials or chemicals; provided, however, that
-------- -------

the term "Environmental Law" shall not include any Federal,

state, local or foreign

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statute, ordinance, rule or regulation or order, consent decree

or judgment relating to product liability matters to the extent

they relate to such matters;

(D) "Environmental Proceeding" means any formal

judicial, administrative or regulatory proceeding before any

Governmental Authority that has been instituted or commenced

against Buyer or an RGS Company or any of their Subsidiaries by a

party other than Buyer or its Subsidiaries or Affiliates

(including the RGS Companies and the Buyer Foreign Subsidiaries)

based on a violation of or to enforce compliance with

Environmental Law (it being understood that "Environmental

Proceeding" shall not include any review, consultation or

investigation by any Governmental Authority); and

(E) "Hazardous Substance" means any substance that:

(i) is or contains asbestos, polychlorinated biphenyls, petroleum

or petroleum derived substances or wastes, (ii) requires removal

or remediation under any Environmental Law, or is defined, listed

or identified as a "hazardous waste" or "hazardous substance"

thereunder, or (iii) is toxic, explosive, corrosive, flammable,

infectious, radioactive, carcinogenic, mutagenic, or otherwise

hazardous and is regulated by any Governmental Authority under

any Environmental Law.

(d) Notice of Circumstance. Promptly after receipt by any
----------------------

member of the Buyer Group or the Seller Group of notice of any action,

proceeding, claim or potential claim or discovery by any member of the

Buyer Group or the Seller Group of any facts

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(any of which is hereinafter individually referred to as a

"Circumstance") which could give rise to a right to indemnification

pursuant to any provision of this Agreement (other than with respect

to Section 15(h), which is covered by Section 15(j)), such Person (the

"Indemnified Party") shall give the party who may become obligated to

provide indemnification hereunder (the "Indemnifying Party") prompt

written notice describing the Circumstance in reasonable detail. If

notice of a Circumstance is not given to the Indemnifying Party within

a sufficient period of time or in sufficient detail to apprise the

Indemnifying Party of the nature of the Circumstance (in each instance

taking into account the facts and circumstances with respect to such

Circumstance), the Indemnifying Party shall not be liable to the

Indemnified Party to the extent that the Indemnifying Party's position

is actually prejudiced as a result thereof. The Indemnifying Party

shall have the right, at its option, to settle, compromise or defend,

at its own expense and by its own counsel, any Circumstance involving

the asserted liability of the Indemnified Party. If any Indemnifying

Party shall undertake to settle, compromise or defend any such

asserted liability, it shall promptly notify the Indemnified Party of

its intention to do so, and the Indemnified Party agrees to cooperate

fully with the Indemnifying Party and its counsel in the settlement or

compromise of, or defense against, any such asserted liability,

provided that the Indemnifying Party shall not agree to any equitable

relief with respect to the Indemnified Party without the written

consent of the Indemnified Party. All out-of-pocket costs and

expenses incurred in connection with such

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cooperation shall be borne by the Indemnifying Party. In any event,

the Indemnified Party shall have the right at its own expense to

participate in the defense of such asserted liability. Under no

circumstances shall the Indemnified Party settle or compromise any

such asserted liability without the written consent of the

Indemnifying Party. Anything contained herein to the contrary

notwithstanding, Seller shall control all matters in respect of the

resolution of the Heidelberger Litigation and the liquidation of Hall

Processing, and Buyer and its Subsidiaries and Affiliates shall have

no rights to participate in any respect in connection therewith.

(e) Certain Limitations.
-------------------

(i) The amount of any Damages or other liability for

which indemnification is provided under this Agreement shall be

net of any amounts recovered or recoverable by the Indemnified

Party from third parties (including, without limitation, amounts

recovered or recoverable under insurance policies) with respect

to such Damages or other liability. Seller and Buyer, as

appropriate, shall, or shall cause each Indemnified Party to, use

its reasonable best efforts to pursue promptly any claims or

rights it may have against all third parties which would reduce

the amount of Damages or other liability for which

indemnification is provided under this Agreement.

(ii) The amount of Damages or other liability for which

indemnification is provided under this Agreement shall be

(A) increased to take account of any Tax cost incurred (grossed

up for such increase) by the Indemnified Party

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arising from the receipt of indemnity payments hereunder (unless

such indemnity payment is treated as an adjustment to the

Purchase Price for tax purposes) and (B) reduced to take account

of any Tax benefit realized by the Indemnified Party arising from

the incurrence or payment of any such Damages or other liability.

In computing the amount of any such Tax cost or Tax benefit, the

Indemnified Party shall be deemed to be subject (x) to the

applicable Federal and/or local country income taxes at the

maximum statutory rate then in effect and (y) to state and local

taxes (if applicable) at a combined state and local tax rate of

9.3 percent, which shall be tax effected at such maximum Federal

rate. Any indemnity payment made pursuant to this Agreement will

be treated as an adjustment to the Purchase Price for Tax

purposes unless a determination (as defined in Section 1313 of

the Code) or a similar event under foreign tax law with respect

to the Indemnified Party causes any such payment not to

constitute an adjustment to the Purchase Price for United States

Federal income tax purposes or foreign tax purposes, as the case

may be.

(iii) Anything contained in this Agreement to the

contrary notwithstanding, Seller shall have no obligation to

indemnify any member of the Buyer Group with respect to any

matter to the extent that the value of an asset has been

decreased or a liability has been recorded with respect to such

matter on the Closing Statement.

(iv) Neither Seller nor Buyer shall have any obligation

to indemnify the other or any other Persons under

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this Agreement pursuant to Section 14(a)(ii) or 14(b)(ii),

respectively, against lost profits or consequential damages

arising out of a breach by such party of its representations and

warranties hereunder.

(f) Termination of Indemnification Obligations. The
------------------------------------------

obligations of each party to indemnify, defend and hold harmless the

other party and other Persons, (w) pursuant to Sections 14(a)(i),

14(b)(i) and 15(h), shall terminate upon the expiration of all

applicable statutes of limitations (giving effect to any extension

thereof), (x) pursuant to Sections 14(a)(ii) and 14(b)(ii), shall

terminate when the applicable representation or warranty expires

pursuant to Section 13, (y) pursuant to Section 14(c)(ii), shall

terminate on the date which is four years after the Closing Date and

(z) pursuant to the other clauses of Sections 14(a) and 14(b),

Section 14(c)(i) and other indemnification obligations under this

Agreement, shall not terminate at any time; provided, however, that as
-------- -------

to clauses (w), (x) and (y) above such obligations to indemnify,

defend and hold harmless shall not terminate with respect to any

individual item as to which the Person to be indemnified shall have,

before the expiration of the applicable period, previously made a

claim by delivering a notice (stating in reasonable detail the basis

of such claim) to the party to be providing the indemnification. Upon

and following termination of any obligation to indemnify, defend and

hold harmless with respect to any matter hereunder, no claim,

arbitration, lawsuit, action or proceeding for indemnification may be

brought with respect to such matter and

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the party who formerly had such obligation shall no longer have any

liability whatsoever with respect to such matter.

(g) Dollar Limitation. No monetary amount shall be payable
-----------------

by Seller to any member of the Buyer Group with respect to the

indemnification of any claims pursuant to Section 14(a)(ii) hereof

(i) until the aggregate amount of Damages actually incurred by the

Buyer Group with respect to such claims shall exceed on a cumulative

basis an amount equal to one percent of the Purchase Price (the

"Basket"), in which event Seller shall be responsible only for the

amount of such Damages in excess of one-half of the Basket, provided

that Seller shall not be responsible for making aggregate payments

with respect to Damages in excess of the Purchase Price or (ii) for

any individual items where the Damages relating thereto are less than

$25,000 and such items shall not be aggregated for purposes of

clause (i) of this Section 14(g). No indemnity payment made pursuant

to this Agreement shall constitute an adjustment to the Purchase Price

for purposes of this Section 14(g).

SECTION 15. Tax Matters.
-----------

(a) Preparation and Filing of Tax Returns. Seller shall
-------------------------------------

prepare and timely file or shall cause to be prepared and timely filed

all appropriate Federal, state, provincial, local and foreign Tax

Returns in respect of the Selling Companies and RICC (with respect to

the Business) and the RGS Companies and their assets or activities

that (i) are required to be filed on or before the Closing Date or

(ii) are required to be filed after the Closing Date and (A) are

Consolidated Tax Returns or (B) are with respect to Income Taxes and

are required to be filed on a

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separate Tax Return basis for any tax period ending on or before the

Closing Date. Buyer shall prepare or cause to be prepared and shall

file or cause to be filed all other Tax Returns required of Buyer and

its Subsidiaries and Affiliates (including the RGS Companies and the

Buyer Foreign Subsidiaries), or in respect of their assets or

activities. Any such Tax Returns that include periods ending on or

before the Closing Date or that include the activities of any of the

Selling Companies and RICC (with respect to the Business) or the RGS

Companies prior to the Closing Date shall be prepared in accordance

with applicable law and shall, insofar as they relate to the Selling

Companies and RICC (with respect to the Business) or the RGS

Companies, be prepared on a basis consistent with the last previous

such Tax Returns filed in respect of the Selling Companies or RICC

(with respect to the Business) or the RGS Companies, unless the party

charged with filing such Tax Return pursuant to this Section 15(a)

concludes that there is no reasonable basis for such position. None

of Buyer or the RGS Companies shall file any amended Tax Returns for

any periods for or in respect of any of the RGS Companies with respect

to which Buyer is not obligated to prepare or cause to be prepared the

original such Tax Returns pursuant to this Section 15(a) without the

prior written consent of Seller.

(b) Payment of Taxes.
----------------

(i) Seller shall timely pay or cause to be paid

(A) all Income Taxes, and all Taxes shown as due other than

Income Taxes, with respect to Tax Returns which Seller is

obligated to prepare and file or cause to be prepared and

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filed pursuant to Section 15(a) and (B) all Taxes other than

Income Taxes due on or before the Closing Date for which no Tax

Return is required to be filed. Buyer shall pay and shall cause

its Subsidiaries (including the RGS Subsidiaries and the Buyer

Foreign Subsidiaries) to pay all Income Taxes shown as due with

respect to separate Tax Returns which Buyer is obligated to

prepare and file or cause to be prepared and filed pursuant to

Section 15(a) and shall be liable for and shall pay and shall

cause its Subsidiaries (including the RGS Subsidiaries and the

Buyer Foreign Subsidiaries) to pay any other Taxes (other than

Taxes described in the preceding sentence) owed by any of the

Selling Companies or RICC (with respect to the Business) or the

RGS Companies, whether due before, on or after the Closing Date.

(ii) With respect to each Tax liability due for a

Straddle Period (as defined in Section 15(e)), Seller shall, upon

receipt of a reasonably documented request from Buyer, promptly

reimburse Buyer for the amount of any such Tax liability that

would have been due for the Pre-Closing Tax Period (as defined in

Section 15(h)(iii)(A)) attributable to the Selling Companies and

RICC (with respect to the Business) and the RGS Companies to the

extent, if any, such Tax liability exceeds the sum of any

estimated payments, deposits or credits made or applied prior to

the Closing Date with respect to such Tax for the Straddle

Period. Buyer shall pay Seller the amount, if any, by which the

sum of any estimated payments, deposits or credits made or

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applied prior to the Closing Date with respect to such Tax for

the Straddle Period exceeds the amount of such Taxes.

sharing agreements and arrangements between (i) any of the Selling

Companies (with respect to the Business) or the RGS Companies, on the

one side and (ii) Seller or any of its Subsidiaries or Affiliates

(other than any of the Selling Companies (with respect to the

Business) or the RGS Companies), on the other side, shall be

terminated and have no further effect for any taxable year or period

(whether a past, present or future year or period), and no additional

payments shall be made thereunder on or after the Closing Date in

respect of a redetermination of tax liabilities or otherwise.

(d) Carryforwards and Carrybacks. Buyer shall cause each
----------------------------

of the RGS Companies to elect, where permitted by law, to carry

forward any net operating loss, net capital loss, charitable

contribution or other item arising after the Closing Date that could,

in the absence of such an election, be carried back to a taxable

period of any of the RGS Companies ending on or before the Closing

Date in which any of the RGS Companies was included in a Consolidated

Tax Return. Buyer, on its own behalf and on behalf of its Affiliates,

hereby waives any right to use or apply any net operating loss, net

capital loss, charitable contribution or other item of any RGS Company

for any tax year ending on any date following the Closing Date to any

period of any RGS Company ending on or before the Closing Date with

respect to which any RGS Company was included in a Consolidated

Return.

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(e) Refunds. Seller shall be entitled to retain, or
-------

receive immediate payment from Buyer or any of its Subsidiaries or

Affiliates (including the RGS Companies and the Buyer Foreign

Subsidiaries) of (i) any refund or credit arising with respect to any

of the Selling Companies or RICC (with respect to the Business) or the

RGS Companies (including, without limitation, refunds and credits

arising by reason of amended Tax Returns filed after the Closing Date

or otherwise) relating to Taxes with respect to any Tax period ending

on or before the Closing Date (including, without limitation, the U.S.

Harbor Maintenance Tax and any sales and use Taxes) and (ii) all

payments received by Buyer from customers pursuant to such customers'

obligation to reimburse Taxes paid by the Selling Companies, RICC or

the RGS Companies with respect to any Tax period ending on or before

the Closing Date. Buyer and the RGS Companies shall be entitled to

retain, or receive immediate payment from Seller of, any refund or

credit with respect to Taxes with respect to any taxable period

beginning after the Closing Date relating to any of the RGS Companies

or with respect to the Business. Buyer and Seller shall equitably

apportion any refund or credit with respect to Taxes and all payments

received by Buyer from customers pursuant to such customers'

obligation to reimburse Taxes paid by the Selling Companies, RICC or

the RGS Companies with respect to any taxable period that includes

(but does not end on) the Closing Date (a "Straddle Period") in

accordance with the principles of Section 15(h)(iii)(A).

(f) Tax Cooperation. Each of Buyer and Seller shall
---------------

provide the other party with such information and records and

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make such of its officers, directors, employees and agents available

as may reasonably be requested by such other party in connection with

the preparation of any Tax Return or any audit or other proceeding

that relates to any of the Selling Companies or RICC (with respect to

the Business) or the RGS Companies. Buyer shall prepare or cause each

of the RGS Companies to prepare, within 60 days after the Closing

Date, in a manner consistent with past practice, the tax work paper

preparation package or packages necessary to enable Seller to prepare

Tax Returns Seller is obligated to prepare or cause to be prepared.

(g) Section 338(h)(l0) Election. Buyer shall make, and,
---------------------------

where necessary, Seller shall join Buyer in making, an election under

Section 338(h)(10) of the Code with respect to the RGS Companies and

any election under state or local tax law comparable to the election

under Section 338(g) of the Code or Section 338(h)(10) of the Code

(together, the "Section 338 Elections") and Seller shall cooperate

with Buyer in the completion and timely filing of such Section 338

Elections in accordance with the provisions of Treas. Reg.

Sec. 1.338(h)(10)-1 (or any comparable provisions of state or local tax

law) or any successor provision. Buyer and Seller agree to report the

transfers under this Agreement consistent with the Section 338

Elections, and shall take no position contrary thereto unless required

to do so by applicable tax laws pursuant to a final determination by a

taxing authority. Buyer shall, no later than 180 days after the

Closing Date, prepare and deliver to Seller a schedule (the

"Allocation Schedule") allocating the total consideration for the

stock in accordance with Treas. Reg.

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Sections 1.338(b)-2T(b) and 1.1060-1T(d) (or any comparable provisions of

state or local tax law) or any successor provision. The Allocation

Schedule shall be subject to Seller's approval, which approval shall

not be unreasonably withheld. Except to the extent otherwise required

by applicable law, Seller and Buyer shall make all tax returns,

reports, forms, declarations, claims and other statements in a manner

consistent with the Allocation Schedule and shall not make any

inconsistent statement or adjustment on any returns or during the

course of any Internal Revenue Service or other tax audit.

(h) Tax Indemnification.
-------------------

(i) Seller shall indemnify, defend and hold the Buyer

Group harmless from and against (A) all liability for Taxes of

the Selling Companies and RICC (with respect to the Business) and

the RGS Companies for any taxable period that ends on or before

the Closing Date and the portion of any Straddle Period ending on

the Closing Date, (B) all liability for any breach of Seller's

representations and warranties contained in Section 5(o) or

Seller's covenants contained in this Section 15, (C) all

liability (as a result of Treasury Regulation Section 1.1502-6(a)

or otherwise) for Income Taxes of Seller or any other Person

(other than any of the RGS Companies) which is or has ever been

affiliated with any of the RGS Companies, or with whom any of the

RGS Companies otherwise joins or has ever joined (or is or has

ever been required to join) in filing any consolidated, combined

or unitary Tax Return, prior to the Closing and (D) all liability

for reasonable legal, accounting and

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appraisal fees and expenses with respect to any item described in

clause (A), (B) or (C) above; provided, however, that the amount
-------- -------

of Seller's indemnity obligation pursuant to this

Section 15(h)(i) shall be reduced to the extent of refunds of

Taxes received by Buyer or any RGS Company on or after the

Closing Date. Notwithstanding the foregoing, Seller shall not

indemnify, defend or hold harmless any member of the Buyer Group

from any liability for Taxes attributable to any action taken

after the Closing by Buyer, any of its Subsidiaries or Affiliates

(including the RGS Companies and the Buyer Foreign Subsidiaries),

or any transferee of Buyer or any of its Subsidiaries or

Affiliates (other than any such action expressly required or

otherwise expressly contemplated by this Agreement) (a "Buyer Tax

Act").

(ii) Buyer shall, and shall cause its Subsidiaries

(including the RGS Companies and the Buyer Foreign Subsidiaries)

to, indemnify, defend and hold the Seller Group harmless from and

against (A) except to the extent Seller is otherwise required to

indemnify Buyer for such Tax pursuant to Section 15(h)(i), all

liability for Taxes of each of the RGS Companies, (B) all

liability for Taxes attributable to a Buyer Tax Act (including

any liability for Taxes attributable to an election by Buyer

under Section 338 of the Code with respect to the purchase of the

RGS Companies if no election is made by Buyer under

Section 338(h)(10) of the Code) and (C) all liability for

reasonable legal, accounting and appraisal fees and expenses

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with respect to any item described in clause (A) or (B) above.

(iii) In the case of any Straddle Period:

(A) The periodic Taxes of each of the RGS Companies

that are not based on income or receipts (e.g., property Taxes)
- -

for the portion of any Straddle Period ending on the Closing Date

(the "Pre-Closing Tax Period") shall be computed based upon the

ratio of the number of days in the Pre-Closing Tax Period and the

number of days in the entire Tax Period;

(B) Taxes of each of the RGS Companies for the

Pre-Closing Tax Period (other than Taxes described in Section

15(h)(iii)(A) above) shall be computed as if such taxable period

ended as of the close of business on the Closing Date, and, in

the case of any Taxes of any of the RGS Companies attributable to

the ownership by any of the RGS Companies of any equity interest

in any partnership or other "flowthrough" entity (other than the

RGS Subsidiaries), as if a taxable period of such partnership or

other "flowthrough" entity ended as of the close of business on

the Closing Date, and, in each case, if such Taxes are Income

Taxes, such Income Taxes shall be computed by determining the

items of income, expense, deduction, loss or credit on a "closing

of the books" basis as of the Closing Date; and

which a Consolidated Tax Return is filed shall be computed in

accordance with the principles of Treasury Regulation

136

<PAGE>

Section 1.1502-76 as if separate returns had been filed for each

of the RGS Companies for such Pre-Closing Tax Period and all

prior taxable periods.

(iv) Notwithstanding the foregoing, Buyer and Seller

shall compute the taxable income or taxable loss of the RGS

Companies for the Closing Date (excluding, for this purpose, any

gain recognized as a result of the Section 338 Elections) and, as

the case may be, Buyer shall compensate Seller for the amount of

Income Taxes attributable to such taxable income and Seller shall

compensate Buyer for the amount of any Tax benefit (in each case

computed pursuant to the principles of Section 15(i)) realized

from any such taxable loss.

(v) Any indemnity payment required to be made pursuant

to this Section 15(h) shall be paid within 30 days after the

indemnified party makes written demand upon the indemnifying

party, but in no case earlier than five business days prior to

the date on which the relevant Taxes are required to be paid (or

would be required to be paid if no such Taxes are due) to the

relevant taxing authority (including estimated Tax payments).

(i) Timing Adjustments. In the event that a final
------------------

determination (which shall include the execution of a Form 870-AD or

successor form) results in a timing difference (e.g., an acceleration
- -

of income or delay of deductions) that would increase Seller's

liability for Taxes pursuant to Section 14 or this Section 15 or

results in a timing difference (e.g., an acceleration of deductions or
- -

delay of income) that would

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<PAGE>

increase Buyer's liability for Taxes pursuant to Section 14 or this

Section 15, Buyer or Seller, as the case may be, shall promptly make

payments to Seller or Buyer as and when Buyer or Seller, as the case

may be, actually realizes any Tax benefits as a result of such timing

difference (or under such other method for determining the present

value of any such anticipated Tax benefits as agreed to by the

parties). In determining the amount of any such Tax benefit, Buyer or

Seller, as the case may be, shall be deemed to be subject (i) to the

applicable Federal and/or local country income taxes at the maximum

statutory rate then in effect and (ii) to state and local taxes (if

applicable) at a combined state and local tax rate of 9.3 percent,

which shall be tax effected at such maximum Federal rate.

(j) Tax Contests.
------------

(i) If a claim shall be made by any taxing authority

which, if successful, might result in an indemnity payment to any

member of the Buyer Group pursuant to Section 15(h), Buyer shall

promptly notify Seller of such claim (a "Tax Claim"); provided,
--------

however, that the failure to give such notice shall not affect
-------

the indemnification provided hereunder except to the extent

Seller has actually been prejudiced as a result of such failure.

(ii) With respect to any Tax Claim relating to Taxes

and relating to a taxable period ending on or before the Closing

Date or to any other taxable period in which any of the RGS

Companies joined in filing any Consolidated Tax Return, Seller

shall control all proceedings and may make all decisions taken in

connection with such Tax Claim

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<PAGE>

(including selection of counsel) and, without limiting the

foregoing, may in its sole discretion pursue or forego any and

all administrative appeals, proceedings, hearings and conferences

with any taxing authority with respect thereto, and may, in its

sole discretion, either pay the Tax claimed and sue for a refund

where applicable law permits such refund suits or contest the Tax

Claim in any permissible manner. Seller shall keep Buyer

informed and shall consider in good faith all requests made by

Buyer with regard to any proceedings to the extent they relate to

Taxes for which Buyer has indemnification responsibility in

respect of all material aspects of such Tax Claims.

Notwithstanding the foregoing, to the extent that such Tax Claim

arises with respect to a Tax Return other than a Consolidated Tax

Return: (A) Buyer shall have the right to receive prompt notice

of all material developments and to participate (at its own

expense) in any material proceedings to the extent they relate to

Taxes for which Buyer has indemnification responsibility pursuant

to Section 15(h)(ii) and to employ its own counsel therefor;

(B) Seller shall consult in good faith with Buyer prior to making

decisions with regard to such proceedings to the extent they

relate to such Taxes; and (C) prior to terminating or settling

any resulting administrative or judicial proceeding, Seller shall

consider in good faith whether to provide and shall not

unreasonably deny Buyer the opportunity, at Buyer's expense, to

assume the defense of any such proceeding solely with respect to

any issue related to Taxes for which Buyer has

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<PAGE>

indemnification responsibility pursuant to Section 15(h)(ii),

provided that, as to any issue as to which Buyer assumes such

defense pursuant to this clause (C): (1) Seller's liability with

respect to such issue under Section 15 hereof shall be limited to

the liability, if any, that Seller would have incurred with

respect to such issue had such proceeding been terminated or

settled on the terms proposed or agreed to by Seller prior to

such assumption of defense by Buyer, and (2) Buyer shall, and

shall cause its Subsidiaries (including the RGS Companies and the

Buyer Foreign Subsidiaries) to, indemnify and hold harmless

Seller against any increase in liability over that which Seller

would have incurred had such proceeding been terminated or

settled on the terms proposed by Seller prior to such assumption

of defense by Buyer.

(iii) Except as otherwise provided in

Section 15(j)(ii), Seller and Buyer shall jointly control and

participate in all proceedings taken in connection with any Tax

Claim relating to Taxes of any of the RGS Companies for any

Straddle Period. Neither Seller nor Buyer shall settle any such

Tax Claim without the prior written consent of the other.

(iv) Each of Buyer, the RGS Companies and their

respective Affiliates, on the one hand, and Seller and its

respective Affiliates, on the other, shall cooperate in

contesting any Tax Claim, which cooperation shall include the

retention and (upon request) the provision to the requesting

party of records and information which are

140

<PAGE>

reasonably relevant to such Tax Claim, and making employees

available on a mutually convenient basis to provide additional

information or explanation of any material provided hereunder or

to testify at proceedings relating to such Tax Claim.

SECTION 16. Termination; Effect of Termination.
----------------------------------

(a) Termination. This Agreement may be terminated at any
-----------

time prior to the Closing:

(i) by mutual written consent of Seller and Buyer;

(ii) by Buyer if any of the conditions specified in

Section 10 shall have become incapable of fulfillment and shall

not have been waived by Buyer;

(iii) by Seller if any of the conditions specified

in Section 11 shall have become incapable of fulfillment and

shall not have been waived by Seller; or

(iv) by either Seller or Buyer if the Closing does not

occur on or prior to August 26, 1996;

provided, however, that the party seeking termination pursuant to
-------- -------

subsection (ii), (iii) or (iv) above is not in breach of its

representations, warranties, covenants or agreements contained in this

Agreement.

(b) Effect of Termination. In the event of the termination
---------------------

of this Agreement pursuant to Section 16(a), this Agreement, other

than with respect to Sections 7, 12, 17(a), 17(n) and 17(t), which

shall continue in effect, shall thereafter become void and have no

effect, and without any liability on the part of either party or its

Subsidiaries or Affiliates in respect

141

<PAGE>

thereof, except that nothing herein will relieve either party from

liability for any breach of this Agreement.

SECTION 17. Miscellaneous.
-------------

(a) Costs Incident to Preparation of Agreement. Seller and
------------------------------------------

Buyer shall each pay, without right of reimbursement from the other,

all costs incurred by it incident to the preparation, execution and

delivery of this Agreement and the performance of its obligations

hereunder, whether or not the transactions contemplated by this

Agreement are consummated, including, without limitation, fees and

disbursements of legal counsel, accountants, brokers, finders and

consultants employed by the respective parties in connection with the

transactions contemplated by this Agreement.

(b) Parties in Interest. This Agreement is binding upon
-------------------

and is for the benefit of the parties hereto and their respective

successors and permitted assigns. This Agreement is not made for the

benefit of any Person not a party hereto, and no Person other than the

parties hereto or their respective successors and permitted assigns

shall acquire or have any right, remedy or claim under or by virtue of

this Agreement, except that members of the Buyer Group and the Seller

Group shall be entitled to the rights to indemnification provided to

the Buyer Group and the Seller Group, respectively, hereunder.

convey, assign or otherwise transfer any of its rights or obligations

under this Agreement without the express written consent of the other

party hereto in its sole and absolute discretion. Any such

conveyance, assignment or transfer without

142

<PAGE>

the express written consent of the other party shall be void ab
--

initio. No assignment of this Agreement shall relieve the assigning
------

party of its obligations hereunder.

(d) Waiver of Compliance with Bulk Transfer Laws. Buyer
--------------------------------------------

hereby waives compliance by the Selling Companies and RICC with the

provisions of any bulk transfer laws which may be applicable to the

transactions contemplated by this Agreement. Seller shall indemnify,

defend and hold the Buyer Group harmless from and against all Damages

incurred by any member of the Buyer Group based upon, arising out of

or otherwise in respect of such noncompliance.

(e) Closing Date Schedule Supplement. Seller shall have
--------------------------------

the right to deliver to Buyer at the Closing a supplement to the

Schedules hereto (the "Closing Date Schedule Supplement") containing

any matters hereafter arising or discovered which are required or

permitted to be set forth or described on any Schedule hereto. The

Closing Date Schedule Supplement shall have no effect for the purposes

of determining the satisfaction of the condition set forth in Section

10(a). The Closing Date Schedule Supplement shall, however, for

purposes of determining whether any Person is entitled to

indemnification pursuant to Section 14(a) or whether Seller has

breached any of its representations and warranties hereunder for any

purpose other than Section 10(a), be deemed to amend the Schedules

hereto to reflect all matters set forth in the Closing Date Schedule

Supplement.

(f) Notices. All notices and other communications required
-------

or permitted to be given hereunder shall be in writing and shall be

delivered by hand, telecopied or sent, postage

143

<PAGE>

prepaid, by registered, certified or express mail or reputable

overnight courier service (and shall be deemed given when so delivered

by hand or telecopied, or if mailed, three days after mailing (one

business day in the case of express mail or overnight courier

service)) addressed as follows:

If to Seller:
------------

Rockwell International Corporation
2201 Seal Beach Boulevard
Seal Beach, California 90740-8250

Attention: William J. Calise, Jr., Esq.
--------- Senior Vice President,
General Counsel and Secretary
with a copy to:

Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112

Attention: Peter R. Kolyer, Esq.
---------

If to Buyer:
-----------

Goss Graphic Systems, Inc. c/o:
Stonington Partners, Inc.
767 Fifth Avenue
New York, New York 10153

Attention: Mr. Alexis P. Michas
---------

with a copy to:

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019

Attention: Andrew R. Brownstein, Esq.
---------

or in any case to such other address or addresses as hereafter shall

be furnished as provided in this Section 17(f) by either party to the

other party.

(g) Waiver; Remedies. No delay on the part of either
----------------

Seller or Buyer in exercising any right, power or privilege

144

<PAGE>

hereunder shall operate as a waiver thereof, nor shall any waiver on

the part of either Seller or Buyer of any right, power or privilege

hereunder operate as a waiver of any other right, power or privilege

hereunder, nor shall any single or partial exercise of any right,

power or privilege hereunder preclude any other or further exercise

thereof or the exercise of any other right, power or privilege

hereunder. Unless otherwise provided, the rights and remedies herein

provided are cumulative and are not exclusive of any rights or

remedies which the parties hereto may otherwise have at law or in

equity.

(h) Entire Agreement. This Agreement and the
----------------

Confidentiality Agreement together constitute the entire agreement

between the parties with respect to the subject matter hereof and this

Agreement and the Confidentiality Agreement supersede all prior

agreements or understandings of the parties relating thereto.

(i) Amendment. This Agreement may be modified, amended or
---------

supplemented only by written agreement of the parties hereto and as

provided in Section 17(e).

(j) Counterparts. This Agreement may be executed in one or
------------

more counterparts, each of which shall be deemed an original, but all

of which together shall constitute a single instrument.

(k) Governing Law. This Agreement shall be governed by and
-------------

construed in accordance with the internal laws of the State of New

York applicable to contracts made and to be performed entirely within

such State, without regard to the conflicts of law principles of such

State.

145

<PAGE>

(l) Exhibits and Schedules. All Exhibits and Schedules
----------------------

attached hereto or referred to herein are hereby incorporated in and

made a part of this Agreement as if set forth in full herein. Matters

reflected on any Schedule to this Agreement are not necessarily

limited to matters required by this Agreement to be reflected on such

Schedules. Such additional matters are set forth for informational

purposes only and do not necessarily include other matters of a

similar nature, provided that neither party shall be prohibited from

asserting the materiality of any such matters. Matters disclosed by

Seller to Buyer pursuant to any Section of or Schedule to this

Agreement (or any Section of any Schedule to this Agreement) shall be

deemed to be disclosed with respect to all Sections of and Schedules

to this Agreement (and all Sections of all Schedules to this

Agreement) to the extent this Agreement requires such disclosure

unless disclosure of such item would not reasonably be made without a

cross-reference thereto. Capitalized terms used in any Schedule to

this Agreement but not otherwise defined therein shall have the

respective meanings assigned to such terms in this Agreement.

(m) Captions, Currency. All section titles or captions
------------------

contained in this Agreement or in any Exhibit or Schedule referred to

herein and the table of contents of this Agreement are for convenience

only and shall not be deemed a part of this Agreement or affect the

meaning or interpretation of this Agreement. Unless otherwise

specified, all references herein to numbered sections are to sections

of this Agreement and all references herein to Schedules or Exhibits

are to Schedules and

146

<PAGE>

Exhibits to this Agreement. Unless otherwise specified, all

references contained in this Agreement, in any Exhibit or Schedule

referred to herein or in any instrument or document delivered pursuant

hereto to dollars shall mean United States Dollars.

(n) Publicity. No press release or announcement concerning
---------

the transactions contemplated hereby shall be issued by either party

without the prior consent of the other party, except as such release

or announcement may be required by law, rule or regulation in which

case the party required to make the release or announcement shall

allow the other party reasonable time to comment on such release or

announcement in advance of such issuance.

(o) No Representations or Warranties. Buyer acknowledges
--------------------------------

that none of Seller or any of its Subsidiaries or Affiliates

(including Rockwell France, the Selling Subsidiaries, RICC and the RGS

Companies) or any other Person has made any representation or

warranty, expressed or implied, as to the accuracy or completeness of

any information regarding any of the Selling Companies, RICC, Rockwell

France, the RGS Companies, the Business, the Shares, the Assets or the

Assumed Liabilities not included in this Agreement, and none of

Seller, any of its Subsidiaries or Affiliates or any other Person will

have or be subject to any liability to Buyer, any of its Subsidiaries

or Affiliates or any other Person resulting from the distribution to

Buyer, or Buyer's use of, any such information. Buyer further

acknowledges that, except as expressly set forth in this Agreement,

there are no representations or warranties of any

147

<PAGE>

kind, expressed or implied, with respect to any of the Selling

Companies, RICC, Rockwell France, the RGS Companies, the Business, the

Shares, the Assets or the Assumed Liabilities.

(p) Severability. If any provision of this Agreement or
------------

the application of any such provision to any Person or circumstance

shall be held invalid, illegal or unenforceable in any respect by a

court of competent jurisdiction, such invalidity, illegality or

unenforceability shall not affect any other provision hereof.

(q) Consent to Jurisdiction. Each of Seller and Buyer
-----------------------

irrevocably submits to the exclusive jurisdiction of (i) the Supreme

Court of the State of New York, New York County and (ii) the United

States District Court for the Southern District of New York for the

purposes of any suit, action or other proceeding arising out of this

Agreement or any transaction contemplated hereby (and agrees not to

commence any action, suit or proceeding relating hereto except in such

courts). Each of Seller and Buyer further agrees that service of any

process, summons, notice or document hand delivered or sent by U.S.

registered mail to such party's respective address set forth in

Section 17(f) shall be effective service of process for any action,

suit or proceeding in New York with respect to any matters to which it

has submitted to jurisdiction as set forth in the immediately

preceding sentence. Each of Seller and Buyer irrevocably and

unconditionally waives any objection to the laying of venue of any

action, suit or proceeding arising out of this Agreement or the

transactions contemplated hereby in (i) the Supreme Court of the State

of New York, New York County or (ii) the United States District Court

for the Southern District of New York, and hereby further irrevocably

148

<PAGE>

and unconditionally waives and agrees not to plead or claim in any

such court that any such action, suit or proceeding brought in any

such court has been brought in an inconvenient forum.

(r) Restrictive Trade Practices Act 1976. No provision of
------------------------------------

this Agreement or any arrangement entered into pursuant hereto by

virtue of which this Agreement or any such arrangement is subject to

registration under the Restrictive Trade Practices Act 1976 of the

United Kingdom shall take effect until the day after particulars of

this Agreement or any such arrangement has been furnished to the

Director General of Fair Trading pursuant to section 24 of the

Restrictive Trade Practices Act 1976 of the United Kingdom.

(s) Definition of "Knowledge". For the purposes of this
-------------------------

Agreement, "knowledge" or "aware of" or a similar phrase with respect

to Seller shall mean the actual knowledge of the Senior Vice

President, Finance and Planning and Chief Financial Officer and the

Senior Vice President, General Counsel and Secretary of Seller and the

President, the Vice President, Finance and Administration, the Vice

President, Asia Pacific, the Vice President, Europe, the Vice

President, Newspaper Products, the Vice President, Commercial

Products, the Vice President, U.S. Operations and the Vice President,

Engineering and Technology of RGS, in each case as of the date of this

Agreement and not any constructive or imputed knowledge of Seller or

any of its Subsidiaries or Affiliates or any of their directors,

officers or employees.

(t) Company Names. Buyer may, in the performance of this
-------------

Agreement, establish a company or companies having a name which

includes the word "GOSS" solely for the purposes of receiving the

Shares or Assets provided to be transferred to Buyer under this

149

<PAGE>

Agreement and obtaining the financing contemplated by the Financing

Letters (or replacement commitment letters reasonably acceptable to

Seller) (and Buyer's name may include the word "GOSS"). In the event

this Agreement is terminated or expires prior to the Closing, Buyer

shall immediately cease any further use of "GOSS" and will promptly

delete "GOSS" from its name and any company established as permitted

above. After the Closing, Buyer's rights in and to the mark "GOSS"

shall be as provided for in this Agreement.

(u) Daily News, L.P. Matters. For so long as Seller has
------------------------

any obligations relating to the Customer Note issued by Daily News,

L.P. (i) Buyer will provide, or cause to be provided, promptly to

Seller copies of all correspondence between Buyer or any of its

Subsidiaries or Affiliates (including RGS) and (A) Daily News, L.P. or

(B) any purchaser of the Customer Note issued by Daily News, L.P. (in

the case of this clause (B) relating to such Customer Note) and (ii)

Buyer will not permit the Sale and Purchase Agreement dated as of

March 21, 1994, as amended, with Daily News, L.P. (or any document

executed in connection therewith) to be amended without Seller's prior

written consent, which consent will not be unreasonably withheld.

(v) Interpretation. For the purposes hereof, (i) words in
--------------

the singular shall be held to include the plural and vice versa and
---- -----

words of one gender shall be held to include the other gender as the

context requires, (ii) the terms "hereof", "herein", and "herewith"

and words of similar import shall, unless otherwise stated, be

construed to refer to this Agreement as a whole and not to any

particular provision of this Agreement, unless otherwise specified,

(iii) the word "including" and words

150

<PAGE>

of similar import when used in this Agreement shall mean "including,

without limitation," unless the context otherwise requires or unless

otherwise specified, and (iv) the word "or" shall not be exclusive.

IN WITNESS WHEREOF, the parties hereto have caused this

Agreement to be executed as of the date first above written.

ROCKWELL INTERNATIONAL CORPORATION

By: /s/ Robert R. Lind
-----------------------------
Title: Vice President,
Corporate Development

GOSS GRAPHIC SYSTEMS, INC.

By: /s/ Alexis P. Michas
-----------------------------
Title: President

EXHIBIT 2.2

AMENDMENT TO STOCK AND ASSET PURCHASE AGREEMENT

THIS AMENDMENT TO STOCK AND ASSET PURCHASE AGREEMENT (hereinafter
called this "Amendment"), is entered into as of July 18, 1996, between
Rockwell International Corporation, a Delaware corporation ("Seller"),
and Goss Graphic Systems, Inc., a Delaware corporation ("Buyer"), and
is made with reference to that certain Stock and Asset Purchase Agreement
dated as of April 26, 1996 (the "Purchase Agreement") between
Seller and Buyer (collectively, the "Parties"). Capitalized terms used
herein shall have the meanings assigned in the Purchase Agreement unless
otherwise defined herein.

WHEREAS, the Parties desire to amend the Purchase Agreement
as set forth herein.

NOW, THEREFORE in consideration of the premises and of the
agreements herein contained and for other good and valuable
consideration, the Parties agree as follows:

1. Purchase Price. Section 3(a) is hereby amended by
--------------
deleting the first two sentences thereof in their entirety and
substituting in place thereof the following:

"Subject to the terms and conditions set forth herein, in
consideration for the sale, assignment, conveyance, transfer
and delivery of the Shares and the Assets, Buyer will, at
the Closing (i) pay to Seller, by wire transfer of
immediately available U.S. Dollars to Seller's bank account
at Mellon Bank, N.A., Pittsburgh, Pennsylvania, Account No.
102-3474, an amount equal to the Cash Consideration (as
defined below), (ii) deliver to Seller, 47,500 shares of
Redeemable Preferred Stock with an aggregate liquidation
preference of $47.5 million (the "Preferred Stock") in form
and substance mutually acceptable to the parties having the
terms set forth in the Term Sheet attached hereto as Exhibit
D registered in the name of Seller or an Affiliate of Seller
(the Preferred Stock and the Cash Consideration being
collectively referred to as the "Purchase Price"), and (iii)
assume the Assumed Liabilities. For purposes of this
Agreement, the term "Cash Consideration" shall mean the
amount equal to the remainder of (i) the sum of (A) U.S.
--------- ---
$552.5 million, plus (B) the aggregate amount of interest on
----
each Customer Note which is not more than 60 days past due
with respect to interest thereon accrued (but not yet
received) from the date of the last interest payment thereon
through and including the day preceding the Closing Date as
set forth on a statement delivered by Seller to

<PAGE>

Buyer on the Closing Date (the "Closing Purchase Price
Notice"), plus (C) an amount equal to fifty-percent of the
----
amount obtained by Buyer in respect of the financing of
Customer Notes in excess of the difference between (x)
U.S.$170 million, less (y) the amount described in clause (ii)
(A) below, minus (ii) the sum of (A) the amount of all
----- ---
payments with respect to principal (up to an aggregate
amount equal to U.S.$170 million) actually received by
Seller or any of its Subsidiaries in respect of any Customer
Notes (other than those which are included in the New Note
Principal Amount (as defined in Section 3 (b) (i)) or would
be so included if not paid in full prior to the close of
business on the day preceding the Closing Date) between
March 1, 1996 and the close of business on the day preceding
the Closing Date as set forth on the Closing Purchase Price
Notice, plus (B) the aggregate amount of prepaid interest on
----
each Customer Note actually received by Seller or its
Subsidiaries between the date hereof and the day preceding
the Closing Date (and before the due date for such interest)
to the extent it was not earned for periods through and
including the day preceding the Closing Date as set forth on
the Closing Purchase Price Notice."

2. Preferred Stock. The Purchase Agreement is hereby
---------------
amended by adding the Preferred Stock Term Sheet, attached as
Annex A hereto, as Exhibit D to the Purchase Agreement.

3. Post Closing Adjustment. Section 3 (c) (i) is hereby
-----------------------
amended by deleting all references to the phrase "Purchase Price"
as they appear throughout such Section and substituting in each case
in place thereof the phrase "Cash Consideration".

4. Closing Deliveries of Buyer. Section 4 (c) is hereby
---------------------------
amended by deleting the phrase "Purchase Price" and substituting
in place thereof "Cash Consideration and Preferred Stock".
Section 4 (c) is hereby further amended by (i) deleting the word
"and" before the phrase "(iii)" and substituting "," therefor and
(ii) adding to the end thereof the phrase "and (iv) the written
agreement of Stonington Capital Appreciation 1994 Fund L.P.
("Stonington"), in form and substance reasonably satisfactory to
the Parties, stating that in the event that (i) Stonington or its
Affiliates transfer (other than to an Affiliate) such number of
shares of capital stock of GGS Holdings, Inc. ("Holdings") in one
or more transactions (including transfers of shares of capital
stock of Holdings held on the Closing Date or thereafter
acquired, but excluding such shares acquired from Holdings after
the Closing Date (other than in exchange for other capital stock of
Holdings) at the fair market value thereof) as is equal to or
greater than 5% of its shares of common stock of Holdings held on
the Closing Date and (ii) Holdings

<PAGE>

fails to satisfy its obligations under the heading "Mandatory
Redemption" of the Preferred Stock Term Sheet, then Stonington
shall promptly purchase such number of shares of Preferred Stock
(and dividends in Preferred Stock paid thereon) from Seller (or a
transferee who obtains such shares from Seller in accordance with
the restrictions set forth under the heading "Transfer
Restrictions" of the Preferred Stock Term Sheet) for its full
liquidation preference, together with accrued and unpaid
dividends as is equal to the net proceeds in such transfers."

5. Funds. Section 6(h) is hereby amended by deleting the
-----
phrase "Purchase Price" and substituting in place thereof "Cash
Consideration".

6. Termination. Section 16 (a) (iv) is hereby amended by
-----------
deleting the phrase "August 26, 1996" and substituting in place
thereof "October 15, 1996".

7. Financing Facilities. Schedule 6 (h) to the Purchase
--------------------
Agreement is hereby amended by deleting the financing letter
dated April 29, 1996 from Bankers Trust Company, The Bank of Nova
Scotia and Credit Suisse and substituting in place thereof the
bank financing letter attached hereto as Annex B and by adding
the confirmatory letter attached hereto as Annex C relating to
the "highly confident" letter from CS First Boston Corporation
dated April 26, 1996.

8. Effect. Except as specifically provided for herein the
------
Purchase Agreement shall otherwise remain in full force and
effect.

9. Counterparts. This Amendment may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.

<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this
Amendment to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written
above.

ROCKWELL INTERNATIONAL CORPORATION

By: /s/ Robert R. Lind
-------------------------------------
Name: Robert R. Lind
Title: Vice President,
Corporate Development

GOSS GRAPHICS SYSTEMS, INC.

By: /s/ Robert J. Mylod
-------------------------------------
Name: Robert J. Mylod
Title: Vice President

EXHIBIT 12.1

GOSS GRAPHIC SYSTEMS, INC.
RATIO OF EARNINGS FROM OPERATIONS TO FIXED CHARGES
(UNAUDITED)
DOLLARS IN MILLIONS

<TABLE>
<CAPTION>
SIX MONTHS PRO FORMA PRO FORMA
1996 ADJUSTMENT BALANCE
---------- ---------- ---------
<S> <C> <C> <C>
Earnings from operations:
Income (loss) before taxes and cumulative effect.......... 10.3 (10.8) (0.5)
Plus: Fixed charges....................................... 4.8 16.3 21.1
--- ----- ---
Earnings from operations (as defined)....................... 15.1 5.5 20.6
--- ----- ---
Fixed Charges:
1/3 of rent expense....................................... 0.9 0.0 0.9
Preferred stock dividends................................. 0 2.6 2.6
Cash/intercompany interest expense........................ 3.2 13.2 16.4
Amortization of financing costs........................... 0 1.2 1.2
Scheduled debt payments................................... 0.7 (0.7) 0
--- ----- ---
Fixed charges (as defined).................................. 4.8 16.3 21.1
--- ----- ---

Ratio of earnings from operations to fixed charges.......... 3.1 -- 1.0
--- ----- ---
Earnings from operations (as defined)....................... 15.1 -- 20.6
--- ----- ---
Less: Fixed charges (as defined)............................ 4.8 -- 21.1
--- ----- ---
Difference.................................................. 10.3 -- (0.5)
--- ----- ---

</TABLE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Goss Graphic Systems, Inc.:

As independent public accountants, we hereby consent to the use of our
report, dated July 16, 1996, and all references to our firm included in or made
a part of the attached registration statement.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Chicago, Illinois
July 16, 1996

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Goss Graphic
Systems, Inc. on Form S-1 of our report on the Combined Financial Statements of
Rockwell Graphic Systems, a business unit of Rockwell International Corporation,
dated November 3, 1995 as to the 1995 and 1994 financial statements and April
26, 1996 as to the 1993 financial statements, except for the fourth paragraph of
Note 22, as to which the date is July 18, 1996 (which expresses an unqualified
opinion and includes an explanatory paragraph relating to the preparation of the
financial statements of a business unit of Rockwell International Corporation)
appearing in the Prospectus, which is part of this Registration Statement, and
of our report on the financial statement schedule of Rockwell Graphic Systems
dated November 3, 1995 as to the 1995 and 1994 financial information and April
26, 1996 as to the 1993 financial information appearing elsewhere in this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania
July 18, 1996

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints M. Eric Schroeder and Robert J. Mylod and each of
them, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for and in his or her name, place and stead,
in any and all capacities, to sign the Registration Statement on Form S-1 of
Goss Graphic Systems, Inc. relating to the registration of its Senior
Subordinated Notes due 2006, and any or all amendments thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.

This power of attorney has been signed as of the 19th day of July, 1996, by
the following persons:

<TABLE>
<S> <C>
/s/ ROBERT M. KUHN
.............................................
Robert M. Kuhn
Chairman and Chief Executive
Officer

/s/ GERALD S. ARMSTRONG
.............................................
Gerald S. Armstrong
Director

/s/ ALEXIS P. MICHAS
.............................................
Alexis P. Michas
Director
</TABLE>