FISCHER & PORTER CO, PREM14A, 1994-04-29

FISCHER & PORTER CO
PREM14A, 1994-04-29
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL

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<PAGE> 1

SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

[ X ] Filed by the Registrant
[ ] Filed by a Party other than the Registrant

Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

Fischer & Porter Company
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Fischer & Porter Company
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ X ] Fee computed on table below per exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:
Common Stock

2) Aggregate number of securities to which transaction applies:
5,295,250 shares of Common Stock outstanding and stock
options and warrants to purchase 1,850,209 shares of
Common Stock

3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:* $24.25
per share of Common Stock outstanding and an aggregate
of $28,604,859.50 in consideration of the cancellation
of all outstanding stock options and warrants

4) Proposed maximum aggregate value of transaction:
$128,409,812.50 in consideration of the outstanding
shares of Common Stock and an aggregate of $28,604,859.50
in consideration of the cancellation of all outstanding
stock options and warrants for a total maximum aggregate
value of $157,014,672

* Set forth the amount on which the filing fee is calculated and state
how it was determined.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
___________________________________________________________

2) Form, Schedule or Registration Statement No.:
___________________________________________________________

3) Filing Party:
___________________________________________________________

4) Dated Filed:
___________________________________________________________
<PAGE> 2
FISCHER & PORTER COMPANY
125 EAST COUNTY LINE ROAD
WARMINSTER, PENNSYLVANIA 18974

_____ May 1994

Dear Shareholder:

You are invited to attend the Special Meeting of Shareholders of
Fischer & Porter Company (the "Company") to be held on [Day], ___ May 1994 at
10:00 a.m., local time, at the Company's principal executive offices, 125 East
County Line Road, Warminster, Pennsylvania.

The purpose of the Special Meeting is to consider and vote upon
approval and adoption of the Agreement and Plan of Reorganization (the
"Reorganization Agreement"), the related Plan of Merger and the merger to be
effected thereby (the "Merger"), and all related transactions, pursuant to
which an indirect wholly-owned subsidiary of Elsag Bailey Process Automation
N.V. ("Bailey") will be merged with and into the Company (the "Merger
Proposal"). If the Merger is consummated, the Company will become an indirect
wholly-owned subsidiary of Bailey, and each share of common stock, par value
$1.00 per share, of the Company (the "Common Shares") that is issued and
outstanding at the effective time of the Merger, other than shares held by
shareholders who perfect their statutory dissenters rights, will be canceled
and extinguished and converted automatically into the right to receive an
amount, in cash, without interest, equal to $24.25 per Common Share.
Copies of the Reorganization Agreement and the Plan of Merger are included
as Annex A to the attached Proxy Statement.

Approval and adoption of the Merger Proposal requires the affirmative
vote of a majority of the votes cast by the holders of the outstanding Common
Shares. Detailed information concerning the Merger is set forth in the
attached Proxy Statement, which we urge you to read carefully.

THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER PROPOSAL AND RECOMMENDS THAT YOU VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER PROPOSAL. In reaching its determination, the Board
considered, among other things, the opinion of CS First Boston Corporation, the
Company's financial advisor, as to the fairness, from a financial point of
view, of the consideration to be received by the shareholders of the Company
pursuant to the Merger. The opinion of CS First Boston Corporation is included
as Annex B to the attached Proxy Statement.

Whether or not you plan to attend the Special Meeting in person and
regardless of the number of Common Shares you own, we urge you to complete,
sign, date and return the enclosed proxy card promptly in the accompanying
prepaid envelope. You may, of course, attend the Special Meeting and vote in
person, even if you have previously returned your proxy card.

Sincerely,

Jay H. Tolson
Chairman and Chief Executive Officer

STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED PROXY CARD.
IF THE MERGER IS CONSUMMATED, SHAREHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR
EXCHANGING THEIR COMMON SHARES FOR CASH.
<PAGE> 3
FISCHER & PORTER COMPANY
125 EAST COUNTY LINE ROAD
WARMINSTER, PENNSYLVANIA 18974

_________________________

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _____ MAY 1994

_________________________

To the Shareholders of Fischer & Porter Company:

Notice is hereby given that a Special Meeting of Shareholders of
Fischer & Porter Company, a Pennsylvania corporation (the "Company"), will be
held on [Day], ___ May 1994 at 10:00 a.m., local time, at the Company's
principal executive offices, 125 East County Line Road, Warminster,
Pennsylvania, for the following purposes:

1. To consider and vote upon approval and adoption of the
Agreement and Plan of Reorganization dated as of 13 April 1994 among
the Company, Elsag Bailey Process Automation N.V., a Netherlands
corporation ("Bailey"), and EBPA Acquisition, Inc., a Pennsylvania
corporation and an indirect wholly-owned subsidiary of Bailey
("Acquisition"), the related Plan of Merger and the merger to be
effected thereby (the "Merger"), and all related transactions,
pursuant to which (a) Acquisition will be merged with and into the
Company, and the Company will become an indirect wholly-owned
subsidiary of Bailey; and (b) each share of common stock, par value
$1.00 per share, of the Company (the "Common Shares") that is issued
and outstanding at the effective time of the Merger, other than shares
held by shareholders who perfect their statutory dissenters rights,
will be canceled and extinguished and converted automatically into the
right to receive an amount, in cash, without interest, equal to $24.25
per share (the "Merger Proposal").

2. To transact such other business as may properly come
before the Special Meeting or any adjournment or postponement thereof.

The Merger Proposal and other related matters are more fully described
in the attached Proxy Statement and the Annexes attached thereto.

Holders of Common Shares have the right to dissent from the Merger and
obtain payment for their shares by following the procedures prescribed in
Subchapter 15D of the Pennsylvania Business Corporation Law of 1988, which is
attached as Annex C to, and summarized under "The Merger - Dissenters Appraisal
Rights" in, the attached Proxy Statement.

The Board of Directors has fixed the close of business on 18 April
1994 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Special Meeting and any adjournment and
postponement thereof.

Those shareholders entitled to vote who attend, in person or by proxy,
any adjournment or adjournments of the Special Meeting that have been
previously adjourned for one or more periods aggregating at least 15 days
because of an absence of a quorum, although less than a quorum as fixed by law
or in the Articles of Incorporation or Bylaws of the Company, shall
nevertheless constitute a quorum for the purposes of acting upon the Merger
Proposal.

By Order of the Board of Directors,

Joseph P. Garay
Secretary

Warminster, Pennsylvania
_____ May 1994
<PAGE> 4
FISCHER & PORTER COMPANY
125 EAST COUNTY LINE ROAD
WARMINSTER, PENNSYLVANIA 18974

___________________

PROXY STATEMENT

___________________

SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ___ MAY 1994

The purpose of the Special Meeting is to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Reorganization dated as
of 13 April 1994 (the "Reorganization Agreement") among the Company, Elsag
Bailey Process Automation N.V., a Netherlands corporation ("Bailey"), and EBPA
Acquisition, Inc., a Pennsylvania corporation and an indirect wholly-owned
subsidiary of Bailey ("Acquisition"), the related Plan of Merger (the "Plan of
Merger") and the merger to be effected thereby (the "Merger"), and all related
transactions, pursuant to which Acquisition will be merged with and into the
Company (the "Merger Proposal"). Upon consummation of the Merger, the Company
will become an indirect wholly-owned subsidiary of Bailey, and each share of
common stock, par value $1.00 per share (the "Common Shares"), of the Company
that is issued and outstanding at the effective time of the Merger, other than
shares held by shareholders who perfect their statutory dissenters rights, will
be converted into the right to receive an amount, in cash, without interest,
equal to $24.25 per Common Share. As a result of the Merger, all shareholders
of the Company will cease to have an equity interest in, or possess any rights
as shareholders of, the Company. See "The Merger - General." Copies of the
Reorganization Agreement and the Plan of Merger are included in this Proxy
Statement as Annex A. The summaries of the portions of the Reorganization
Agreement and the Plan of Merger set forth in this Proxy Statement do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, the text of the Reorganization Agreement and the Plan of
Merger.

THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER PROPOSAL AND RECOMMENDS THAT YOU VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER PROPOSAL.

___________________

This Proxy Statement is first being mailed to the Company's
shareholders on or about ___ May 1994.

___________________
<PAGE> 5
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

VOTING AND PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Record Date; Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Stock Ownership of Management and Certain Beneficial Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Reasons for the Merger; Recommendation of the Board of Directors; Opinion of Financial Advisor . . . . . . . . . . . . 8
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Payment for Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Effect of Merger on Control-Share Acquisition and Other Antitakeover Restrictions . . . . . . . . . . . . . . . . . . 15
Certain Other Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Antitrust Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conditions to Consummation of the Merger; Representations and Warranties; Certain Covenants . . . . . . . . . . . . . 17
Termination; Fees and Expenses; Plans of the Company in Event Merger is Not Consummated . . . . . . . . . . . . . . . 20
Source and Amount of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Dissenters Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ANNEXES
Agreement and Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Opinion of CS First Boston Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Subchapter 15D of the Pennsylvania Business Corporation Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>

(ii)
<PAGE> 6
SUMMARY

The following is a summary of certain information contained elsewhere
in this Proxy Statement. This Summary does not purport to be complete and
should be read in conjunction with, and is qualified in its entirety by
reference to, the more detailed information appearing elsewhere in this Proxy
Statement and the Annexes hereto.

PARTIES TO THE MERGER

FISCHER & PORTER COMPANY

Fischer & Porter Company, a Pennsylvania corporation (the "Company"),
is engaged in the manufacture of process control instrumentation and systems.
The Company's products include flow meters, transmitters, process controllers,
microcomputers, distributed control systems, analytical instruments and various
types of disinfection equipment. The instruments and systems are an integral
part of such varied enterprises as chemical plants, pharmaceutical plants, food
and beverage processing facilities, pulp and paper mills, mines, metal
refineries, and municipal and industrial water and wastewater treatment plants.
The mailing address of the Company's principal executive offices is 125 East
County Line Road, Warminster, Pennsylvania 18974, and its telephone number is
(215) 674-6000. For more information relating to the business and operations
of the Company, reference is made to the documents of the Company which are
incorporated by reference in this Proxy Statement. See "Additional
Information - Incorporation of Certain Documents by Reference."

ELSAG BAILEY PROCESS AUTOMATION N.V.

Elsag Bailey Process Automation N.V., a Netherlands corporation
("Bailey"), is a global supplier of process automation systems, field
instrumentation products, and related services. Bailey's INFI 90(R)
distributed control systems and other technologies are installed throughout a
wide range of process industries including electric utilities, oil and gas,
pulp and paper, chemicals and pharmaceutical, water and wastewater, metals and
ceramics, food and beverage, and others. The mailing address of Bailey's
principal executive offices is Welplaathoek, 20, 3197 KP Rotterdam, The
Netherlands, and its telephone number is 31-10-416-9696. The mailing address
of Bailey's executive office in the United States is 30100 Chagrin Boulevard,
Suite 101, Pepper Pike, Ohio 44124, and its telephone number in the United
States is 216-595-3728.

EBPA ACQUISITION, INC.

EBPA Acquisition, Inc., a Pennsylvania corporation ("Acquisition"), is
a corporation recently organized by Bailey for the purpose of effecting the
Merger. It has no material assets and has not engaged in any activities except
in connection with such proposed transaction. The mailing address of
Acquisition's executive office is 30100 Chagrin Boulevard, Suite 101, Pepper
Pike, Ohio 44124, and its telephone number is 216-595-3728.

SPECIAL MEETING

PURPOSE OF THE MEETING; DATE, TIME AND PLACE

A Special Meeting of Shareholders (the "Special Meeting") of the
Company will be held on [Day], ___ May 1994 at 10:00 a.m., local time, at the
Company's principal executive offices, 125 East County Line Road, Warminster,
Pennsylvania, to consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Reorganization dated as of 13 April 1994 (the
"Reorganization Agreement") among the Company, Bailey and Acquisition, the
related Plan of Merger (the "Plan of Merger") and the merger to be effected
thereby (the "Merger"), and all related transactions, pursuant to which
Acquisition will be merged with and into the Company (the "Merger Proposal").
See "Introduction."

In the Merger, each share of common stock, par value $1.00 per share
(the "Common Shares"), of the Company that is issued and outstanding at the
effective time of the Merger, other than Common Shares held by shareholders who
perfect their statutory dissenters rights, will be canceled and extinguished
and converted automatically into the right to receive an amount, in cash,
without interest, equal to $24.25 per Common Share (the "Merger Price").
Copies of the Reorganization Agreement and the Plan of Merger are included in
this Proxy Statement as Annex A. See "The Merger - General."

(iii)
<PAGE> 7
VOTE REQUIRED; RECORD DATE

Approval and adoption of the Merger Proposal requires the affirmative
vote of the majority of the votes cast by the holders of the outstanding Common
Shares entitled to vote thereon. Only shareholders of record at the close of
business on 18 April 1994 (the "Record Date") are entitled to vote at the
Special Meeting or any adjournment or postponement thereof. As of the Record
Date, 5,295,250 Common Shares, held by approximately 2,800 holders of record,
were issued and outstanding and entitled to vote at the Special Meeting. See
"Voting and Proxies - Record Date; Solicitation of Proxies."

As of the Record Date, the executive officers and directors of the
Company beneficially owned a total of 644,727 Common Shares, constituting
approximately 12.18% of the outstanding Common Shares entitled to vote at the
Special Meeting. See "Voting and Proxies - Stock Ownership of Management and
Certain Beneficial Owners." These Common Shares exclude 1,664,465 Common
Shares subject to the presently exercisable stock options and warrants
beneficially owned by executive officers and directors of the Company, which
options and warrants will be canceled immediately prior to the Merger. See
"Voting and Proxies - Vote Required" and "The Merger - Interests of Certain
Persons in the Merger."

THE MERGER

BACKGROUND OF THE MERGER

For a description of events leading up to the approval of the Merger
Proposal, see "The Merger - Background of the Merger."

RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGER

The Board of Directors of the Company, at a special meeting held on
12-13 April 1994, unanimously approved and adopted the Merger Proposal and
directed that it be submitted to the shareholders for their approval and
adoption. THE BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER PROPOSAL IS
FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER PROPOSAL. For
a discussion of the factors considered by the Board in reaching its
determination, see "The Merger - Reasons for the Merger; Recommendation of the
Board of Directors; Opinion of Financial Advisor." Certain members of the Board
of Directors have certain interests which may present them with possible
conflicts of interest in connection with the Merger. See "The Merger -
Interests of Certain Persons in the Merger."

OPINION OF FINANCIAL ADVISOR

CS First Boston Corporation ("CS First Boston") has acted as the
Company's financial advisor in connection with the sale of the Company. CS
First Boston has delivered its opinion to the Company's Board of Directors to
the effect that, as of 13 April 1994, the consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to the shareholders
from a financial point of view. The full text of CS First Boston's opinion,
dated 13 April 1994, is included in this Proxy Statement as Annex B.
Shareholders are urged to read the opinion in its entirety for the assumptions
made, matters considered and limits of the review undertaken by CS First
Boston. CS First Boston's opinion is directed only to the fairness of the
consideration to be received by the shareholders of the Company and does not
constitute a recommendation to any shareholder of the Company as to how such
shareholder should vote such shareholder's Common Shares. See "The Merger -
Reasons for the Merger; Recommendation of the Board of Directors; Opinion of
Financial Advisor."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of the Board of Directors with
respect to the Merger, shareholders should be aware that members of the
Company's management and Board of Directors have certain interests which may
present them with possible conflicts of interest in connection with the Merger.

The Company has agreements with nine of its executives, including
Messrs. Tolson, Hochreiter, Finnegan, Hughes and Garay, which provide that if
there is both a "change in control" of the Company and termination of the
executive during the "contract period" except for "cause" or disability, or if
the executive terminates his employment for "good reason," the executive shall
be entitled to separation pay equal to two times the highest total compensation
received by him during the

(iv)
<PAGE> 8
year of termination or any of the four preceding calendar years, with the
current year's compensation annualized. See "The Merger - Interests of Certain
Persons in the Merger." In the event of such termination, any stock options
previously granted to the executive immediately fully vest and become
exercisable as of the date of termination and continue to be exercisable
thereafter for a period of at least 60 days. Further, the Company is required
to maintain for the terminated executive, for a period of two years after the
termination date, certain insurance, employee benefit plans, automobile,
outplacement and other benefits and the terminated executive is entitled to an
additional two years service credit under Company pension plans or comparable
benefits if the plan does not permit continued participation by a terminated
employee. See "The Merger - Interests of Certain Persons in the Merger" for
additional information concerning these change in control agreements and other
agreements, including the specific amounts payable to certain executive
officers of the Company pursuant thereto.

Immediately prior to the Merger, each outstanding Company stock option
and warrant, whether or not then vested or exercisable, will become exercisable
in full, will then be canceled, and the holder thereof will be entitled to
receive from the Company an amount equal to the excess of (i) the Merger Price
multiplied by the number of Common Shares subject to the stock option or
warrant, over (ii) the exercise price of the stock option or warrant multiplied
by the number of Common Shares subject thereto. See "The Merger - Interests of
Certain Persons in the Merger" for additional information concerning these
stock options and warrants, including the specific amounts payable to certain
executive officers of the Company in respect thereof.

EFFECTIVE TIME OF THE MERGER; PAYMENT FOR COMMON SHARES

The Merger will become effective (the "Effective Time") upon the
filing of Articles of Merger with the Department of State of the Commonwealth
of Pennsylvania in accordance with the Pennsylvania Business Corporation Law of
1988 (the "BCL"). The Articles of Merger will be presented for filing as soon
as practicable after the satisfaction or waiver of all conditions to
consummation of the Merger set forth in Article IV of the Reorganization
Agreement. See "The Merger - Conditions to Consummation of the Merger;
Representations and Warranties; Certain Covenants." Detailed instructions with
regard to the surrender of certificates, together with a letter of transmittal,
will be forwarded to holders of certificates formerly evidencing Common Shares
as promptly as practicable following the Effective Time by _____________ (the
"Paying Agent"). Payment will be made to such former holders of Common Shares
as promptly as practicable following receipt by the Paying Agent of
certificates for their Common Shares and other required documents. No interest
will be paid or accrued on the cash payable upon the surrender of certificates.
See "The Merger - Payment for Common Shares."

CERTAIN OTHER EFFECTS OF THE MERGER

If the Merger is consummated, the Company's shareholders will not have
the opportunity to continue their equity interest in the Company as an ongoing
corporation and therefore will not share in any future earnings and growth of
the Company. Moreover, if the Merger is consummated, public trading of the
Common Shares will cease, the Common Shares will cease to be listed on the
American Stock Exchange, and the registration of the Common Shares under the
Securities Exchange Act of 1934, as amended, will be terminated. See
"Additional Information - Available Information."

CONDITIONS TO CONSUMMATION OF THE MERGER

The obligations of Bailey and Acquisition to consummate the Merger are
subject to the satisfaction, at or before the Effective Time, of certain
conditions, including approval of the Company's shareholders. See "The
Merger - Conditions to Consummation of the Merger; Representations and
Warranties; Certain Covenants."

(v)
<PAGE> 9
TERMINATION; FEES AND EXPENSES

The Reorganization Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, before or after the approval
by the shareholders of the Company, (a) by mutual consent of the Boards of
Directors of the Company, Bailey and Acquisition; (b) by the Company, Bailey or
Acquisition if the Merger shall not have been consummated on or before 13
October 1994, or such later date as may be mutually agreed to by the parties;
(c) by the Company, Bailey or Acquisition if any court or governmental agency
of competent jurisdiction shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the Merger and
such order, decree, ruling, or other action shall have become final and
nonappealable; (d) by the Company if Bailey or Acquisition shall have failed to
comply in any material respect with any of the covenants or agreements
contained in the Reorganization Agreement and such failure has not been cured
within 30 days after receipt of notice thereof; (e) by the Company if the Board
of Directors of the Company shall have withdrawn or modified in a manner
adverse to Bailey or Acquisition its approval or recommendation of the Merger
in order to approve an acquisition transaction with a third party; (f) by
Bailey and Acquisition if the Company shall have failed to comply in any
material respect with any of the covenants or agreements contained in the
Reorganization Agreement and such failure has not been cured within 30 days
after receipt of notice thereof; (g) by Bailey and Acquisition if any condition
to the Merger as set out in the Reorganization Agreement to the obligations of
Bailey and Acquisition has not been satisfied for any reason; or (h) by Bailey
and Acquisition if the Board of Directors of the Company shall withdraw or
modify in a manner adverse to Bailey or Acquisition its approval or
recommendation of the Merger, or shall take any other action to facilitate an
acquisition transaction with a third party.

If the Company terminates the Reorganization Agreement in order to
approve an acquisition transaction with any third party, or if Bailey and
Acquisition terminate the Reorganization Agreement because the Board of
Directors of the Company has not recommended to its shareholders the approval
of the Reorganization Agreement, or if the Board of Directors of the Company
has withdrawn or modified in a manner adverse to Bailey or Acquisition its
approval or recommendation of the Merger or has taken any other actions to
facilitate an acquisition transaction with any third party, then the Company
shall, within ten business days following the termination of the Reorganization
Agreement, pay Bailey a termination fee payable in cash of approximately $5.6
million.

FEDERAL INCOME TAX CONSEQUENCES

The receipt of cash for Common Shares pursuant to the Merger or
pursuant to the exercise of dissenters appraisal rights under Pennsylvania law
will be a taxable transaction for United States federal income tax purposes and
may also be a taxable transaction for state, local, foreign and other tax
purposes. See "The Merger - Federal Income Tax Consequences of the Merger."
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT
OF STATE, LOCAL, FOREIGN AND OTHER TAXES.

DISSENTERS APPRAISAL RIGHTS

Under Pennsylvania law, shareholders of the Company who file a written
objection prior to the vote on the Merger Proposal and do not vote in favor of
approval and adoption of the Merger Proposal have the right to demand an
appraisal of the "fair value" of their Common Shares if the required procedures
under Subchapter 15D of the BCL are followed. Appraisal rights will be
forfeited if the requirements of Subchapter 15D are not fully and precisely
satisfied. See "The Merger - Dissenters Appraisal Rights" and a copy of the
text of Subchapter 15D of the BCL included in this Proxy Statement as Annex C.

(vi)
<PAGE> 10
MARKET PRICES AND DIVIDENDS

The Common Shares are traded on the American Stock Exchange under the
symbol "FP." The following table sets forth, for the fiscal quarters
indicated, the high and low sale prices for the Common Shares:

<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C> <C>
1994:

First Quarter . . . . . . . . . . . . . . . . . $ 22 7/8 $ 16 7/8
Second Quarter (through , 1994) . .

1993:

First Quarter . . . . . . . . . . . . . . . . . $ 10 1/2 $ 8 5/8
Second Quarter . . . . . . . . . . . . . . . . . 9 5/8 8
Third Quarter . . . . . . . . . . . . . . . . . 9 1/4 7 5/8
Fourth Quarter . . . . . . . . . . . . . . . . . 17 7/8 11

1992:

First Quarter . . . . . . . . . . . . . . . . . $ 8 3/8 $ 6 1/2
Second Quarter . . . . . . . . . . . . . . . . . 9 7 3/8
Third Quarter . . . . . . . . . . . . . . . . . 8 5/8 7
Fourth Quarter . . . . . . . . . . . . . . . . . 11 1/2 7 1/8
</TABLE>

On 30 September 1993, the last full trading day prior to the first
public announcement of the Company's intention to explore strategic
alternatives, including a possible sale of the Company, the last reported sales
price for the Common Shares on the American Stock Exchange was $8.625 per
share. On 17 March 1994, the last full trading day prior to the first public
announcement that the Company had entered into a merger agreement with Moorco
International, Inc., which agreement was terminated by the Company on 13 April
1994, the last reported sales price for the Common Shares on the American Stock
Exchange was $18.75. On 12 April 1994, the last full trading day prior to the
first public announcement of the Merger, the last reported sales price was
$24.625. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
COMMON SHARES. No dividends were paid in 1993 or 1992 or the quarter ending 31
March 1994 and the Company does not currently intend to pay dividends on the
Common Shares.

(vii)
<PAGE> 11
SELECTED FINANCIAL DATA

The following table sets forth selected historical financial
information of the Company and its consolidated subsidiaries for each of the
five years ended 31 December 1993. Such information is based upon and should
be read in conjunction with the historical consolidated financial statements
and notes thereto of the Company which are incorporated by reference in this
Proxy Statement.
<TABLE>
<CAPTION>
Year Ended 31 December
---------------------------------------------------------
(dollars in thousands, except per share data)

1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net Sales $221,644 $231,317 $236,976 $237,955 $225,324

Income (loss) from operations 4,223 9,117 (14,817) (1,567) 11,680
Interest expense, net 2,608 2,901 3,189 4,170 1,952
Foreign exchange loss (gain) 366 468 289 (1,250) 38
Other income(2) - - - 2,124 -

Income (loss) before taxes and
accounting change 1,249 5,748 (18,295) (2,363) 9,690
Income taxes 143 4,006 4,236 5,775 6,183

Income (loss) before accounting change 1,106 1,742 (22,531) (8,138) 3,507
Accounting change (1) - - 2,821 - -

Net income (loss)(2) 1,106 1,742 (25,352) (8,138) 3,507

Depreciation 6,302 6,878 7,082 7,350 5,924
Capital expenditures 4,517 6,997 6,356 9,155 23,079
YEAR-END POSITION
Current assets 87,452 86,178 107,329 123,706 125,319
Current liabilities 41,712 40,174 63,668 47,931 50,370
Working capital 45,740 46,004 43,661 75,775 74,949
Current ratio 2.10 2.15 1.69 2.58 2.49
Property, plant and equipment, net 36,638 39,963 42,039 43,958 46,109
Total assets 131,993 132,969 153,901 174,967 178,604
Asset turnover rate 1.68 1.74 1.54 1.36 1.26

Long-term debt 17,266 19,176 12,297 26,897 26,943
Total debt 28,840 25,697 30734 31,961 33,963
Preferred stock - 710 1,425 2,140 3,427
Shareholders' equity 38,169 41,986 45,359 71,566 75,328
Total capitalization 67,009 68,393 77,518 105,667 112,718
Debt to shareholders' equity ratio .76 .61 .68 .45 .45
Debt to total capitalization ratio .43 .38 .40 .30 .30

PER SHARE DATA(1)(2)
Earnings (loss) before accounting change .19 .31 (4.36) (1.61) .62
Earnings (loss) per share .19 .31 (4.90) (1.61) .62
Dividends - - - 5% Stock 5% Stock
Shareholders' equity 7.21 8.04 8.69 13.74 14.54
</TABLE>

__________________
(1) In 1991, the Company adopted FASB #106 "Accounting for Postretirement
Benefits other than Pensions."
(2) In 1991, there was an aftertax charge of $17,704,000 for a major
restructuring; in 1990, there was an aftertax charge of $6,000,000 for
personnel reductions and additional inventory reserves and an aftertax
gain of $2,124,000 on the sale of a facility.

(viii)
<PAGE> 12
INTRODUCTION

This proxy statement (the "Proxy Statement") is being furnished to the
shareholders of Fischer & Porter Company, a Pennsylvania corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at a Special Meeting of Shareholders to be
held on [Day], ___ May 1994 at 10:00 a.m., local time, at the Company's
principal executive offices, 125 East County Line Road, Warminster,
Pennsylvania and at any adjournment or postponement thereof (the "Special
Meeting"). This Proxy Statement, the attached Notice of Special Meeting and
the enclosed form of proxy are first being mailed to shareholders of the
Company entitled to notice of and to vote at the Special Meeting on or about
___ May 1994.

The purpose of the Special Meeting is to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Reorganization dated as
of 13 April 1994 (the "Reorganization Agreement") among the Company, Elsag
Bailey Process Automation N.V., a Netherlands corporation ("Bailey"), and EBPA
Acquisition, Inc., a Pennsylvania corporation and an indirect wholly-owned
subsidiary of Bailey ("Acquisition"), the related Plan of Merger (the "Plan of
Merger") and the merger to be effected thereby (the "Merger"), and all related
transactions, pursuant to which Acquisition will be merged with and into the
Company (the "Merger Proposal"). The Company will be the surviving corporation
in the Merger (the "Surviving Corporation"). Upon consummation of the Merger,
the Company will become an indirect wholly-owned subsidiary of Bailey, and each
share of common stock, par value $1.00 per share, of the Company (the "Common
Shares") that is issued and outstanding at the effective time of the Merger,
other than shares held by shareholders who perfect their statutory dissenters
rights, will be converted into the right to receive an amount, in cash, without
interest, equal to $24.25 per Common Share (the "Merger Price"). As a result
of the Merger, all shareholders of the Company will cease to have an equity
interest in, or possess any rights as shareholders of, the Company. See "The
Merger-General." Copies of the Reorganization Agreement and Plan of Merger
are included in this Proxy Statement as Annex A. The summaries of the portions
of the Reorganization Agreement and Plan of Merger set forth in this Proxy
Statement do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, the text of the Reorganization Agreement and
Plan of Merger.

THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER PROPOSAL AND RECOMMENDS THAT YOU VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER PROPOSAL. CS First Boston Corporation ("CS First
Boston") has delivered its opinion to the Company's Board of Directors to the
effect that, as of 13 April 1994, the consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to the shareholders
from a financial point of view. The full text of CS First Boston's opinion,
dated 13 April 1994, is included in this Proxy Statement as Annex B.
Shareholders are urged to read the opinion in its entirety for the assumptions
made, matters considered and limits of the review undertaken by CS First
Boston. CS First Boston's opinion is directed only to the fairness of the
consideration to be received by the shareholders of the Company and does not
constitute a recommendation to any shareholder of the Company as to how such
shareholder should vote such shareholder's Common Shares.

VOTING AND PROXIES

RECORD DATE; SOLICITATION OF PROXIES

The Board of Directors of the Company has fixed the close of business
on 18 April 1994 as the record date (the "Record Date") for the determination
of shareholders entitled to notice of and to vote at the Special Meeting.
Accordingly, only holders of Common Shares of record on the books of the
Company at the close of business on the Record Date will be entitled to vote at
the Special Meeting. At the close of business on the Record Date, there were
5,295,250 Common Shares issued and outstanding and entitled to vote at the
Special Meeting held by approximately 2,800 holders of record.

-1-
<PAGE> 13
Common Shares which are represented by properly executed proxies,
unless such proxies shall have previously been properly revoked, will be voted
in accordance with the instructions indicated in such proxies. If no contrary
instructions are indicated, such shares will be voted FOR approval and adoption
of the Merger Proposal and in the discretion of the proxy holder as to any
other matter which may properly come before the Special Meeting. Under the
rules of the American Stock Exchange, brokers may not give a proxy to vote
without instructions from beneficial owners when the matter to be voted upon
involves a merger or consolidation. The Merger Proposal requires the
affirmative vote of a majority of the votes cast at the Special Meeting at
which a quorum is present for such purpose. Under the Pennsylvania Business
Corporation Law of 1988 (the "BCL"), if a shareholder (including a nominee or
other record owner) either records the fact of abstention or otherwise
withholds authority to vote or fails to vote in person or by proxy, such action
would not be considered a "vote cast" and would have no effect in the approval
of the Merger Proposal, other than to reduce the number of affirmative votes
needed for such approval. A shareholder who has given a proxy may revoke it at
any time prior to its exercise at the Special Meeting by delivering a written
notice of revocation of the proxy being revoked, or by submission of a properly
executed proxy bearing a later date than the proxy being revoked, to the
Secretary of the Company at 125 East County Line Road, Warminster, Pennsylvania
18974, or by voting the Common Shares covered thereby in person at the Special
Meeting.

In addition to soliciting proxies by mail, officers and employees of
the Company, without receiving additional compensation therefor, may solicit
proxies personally or by telephone, telegram or other forms of wire or
facsimile communication. The Company has also retained Morrow & Co., Inc. to
assist it in the solicitation of proxies. The fee for such services will be
approximately $5,000 plus out-of-pocket expenses. Any questions or requests
for assistance regarding proxies and related materials may be directed to
Morrow & Co., Inc. in writing at 909 Third Avenue, New York, New York 10012, or
by telephone at (800) 662-5200. The Company will bear the cost of the Special
Meeting and of soliciting proxies therefor, including the cost of printing and
mailing of this Proxy Statement and related materials, and the reasonable
expenses incurred by brokerage houses, custodians, nominees and fiduciaries in
forwarding proxy material to the beneficial owners of Common Shares.

VOTE REQUIRED

In general, a majority of the outstanding Common Shares entitled to
vote, represented in person or by proxy, is required for a quorum at the
Special Meeting. However, those shareholders entitled to vote who attend, in
person or by proxy, any adjournment or adjournments of the Special Meeting that
have been previously adjourned for one or more periods aggregating at least 15
days because of an absence of a quorum, although less than a quorum as fixed by
law or in the Articles of Incorporation or Bylaws of the Company, shall
nevertheless constitute a quorum for the purposes of acting upon the Merger
Proposal. Provided that a quorum is present at the Special Meeting, the
affirmative vote of the majority of the votes cast by the holders of the
outstanding Common Shares as of the Record Date is required for approval and
adoption of the Merger Proposal. Any other matter which may properly come
before the Special Meeting at which a quorum is present for such purpose
requires the affirmative vote of the majority of the votes cast on the matter
unless a greater vote is required by law or the Articles of Incorporation or
Bylaws of the Company. Holders of Common Shares are entitled to one vote at
the Special Meeting for each Common Share held of record at the Record Date.
Shareholders have the right to dissent from the Merger Proposal and, subject to
certain conditions provided under the BCL, to receive payment for the fair
value of their Common Shares. See "The Merger - Dissenters Appraisal Rights"
and Annex C hereto.

As of the Record Date, the executive officers and directors of the
Company beneficially owned a total of 644,727 Common Shares, constituting
approximately 12.18% of the outstanding Common Shares entitled to vote at the
Special Meeting. See "Stock Ownership of Management and Certain Beneficial
Owners." These Common Shares exclude 1,664,465 Common Shares subject to
presently exercisable stock options and warrants beneficially owned by
executive officers and directors of the Company, which options and warrants
will be canceled immediately prior to the Merger. See "The Merger - Interests
of Certain Persons in the Merger." The executive officers and directors of the
Company have informed the Company that they intend to vote all of the
outstanding Common Shares beneficially owned by them in favor of the approval
and adoption of the Merger Proposal, unless the Board of

-2-
<PAGE> 14
Directors of the Company approves an Acquisition Transaction (as herein
defined) with a third party. See "The Merger - Termination; Fees and Expenses;
Plans of the Company in Event Merger is Not Consummated."

THE TRANSACTION TO BE CONSIDERED AT THE SPECIAL MEETING INVOLVES A
MATTER OF GREAT IMPORTANCE TO THE SHAREHOLDERS OF THE COMPANY. ACCORDINGLY,
SHAREHOLDERS ARE URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED
IN THIS PROXY STATEMENT, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE. STOCK CERTIFICATES
SHOULD NOT BE SENT WITH THE ENCLOSED PROXY CARD. IF THE MERGER IS CONSUMMATED,
SHAREHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR EXCHANGING THEIR COMMON SHARES
FOR CASH.

STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of the Record
Date with respect to Common Shares beneficially owned by (i) persons who are
known to be beneficial owners of more than 5% of the outstanding Common Shares,
(ii) each director of the Company, (iii) the Chief Executive Officer of the
Company, (iv) the Company's four most highly compensated executive officers
other than the Chief Executive Officer and (v) all executive officers and
directors of the Company as a group.

<TABLE>
<CAPTION>
Name of Beneficial Number of Common Percent of Outstanding
Owner(1) Shares(2) Common Shares(2)
-------------------- ---------------------- ---------------------
<S> <C> <C>
Transamerica Corporation
600 Montgomery Street
San Francisco, CA 94111 (3) . . . 739,952 13.97%

Dimensional Fund Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401 (4) . . . . 295,569 5.58%

Gloria T. Chisum . . . . . . . . . 353 *

Laurence P. Finnegan, Jr. (5) . . . 78,752 1.47%

Joseph P. Garay (6) . . . . . . . . 49,056 *

E. Joseph Hochreiter (7) . . . . . 241,000 4.38%

Daniel T. Hughes (8) . . . . . . . 66,411 1.24%

William E. Learnard . . . . . . . . 2,000 *

John J. Manion, Jr. . . . . . . . . 700 *

Frank J. Ryan . . . . . . . . . . . 2,500 *

Jay H. Tolson
125 East County Line Road
Warminster, PA 18974 (9) . . . . . 1,819,921 27.94%

Robert G. Williams . . . . . . . . 3,000 *

All executive officers and directors
as a group (12 persons) (10) . . . 2,309,192 33.18%
</TABLE>

-3-
<PAGE> 15
*Less than 1%

(1) Except as indicated in the footnotes to this table, the shareholders
listed in this table have sole voting and investment power with
respect to the shares owned by them. Certain information as to
shareholdings of such holders has been derived from filings made by
them with the Securities and Exchange Commission (the "Commission").
(2) Includes Common Shares subject to outstanding stock options or
warrants which were exercisable as of the Record Date or within 60
days of such date. All of these options and warrants will be canceled
immediately prior to the Merger. See "The Merger - Interests of
Certain Persons in the Merger." The percent of the outstanding stock
is calculated as required by Rule 13d-3 under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and does not
necessarily indicate the percent of the outstanding Common Shares
which may be voted at the Special Meeting.
(3) Transamerica Occidental Life Insurance Company ("Occidental") owns
739,952 Common Shares for its own account. Transamerica Insurance
Corporation of California ("TICC"), the parent of Occidental, and
Transamerica Corporation, the parent of TICC, are deemed to be the
beneficial owners of the 739,952 Common Shares owned by Occidental.
In addition, Transamerica Investment Services, Inc. ("TIS") is deemed
to be the beneficial owner of the 739,952 Common Shares owned by
Occidental pursuant to separate arrangements whereby TIS acts as
investment adviser to certain individuals and entities, including
Occidental. Each of the individuals and entities for which TIS acts
as investment advisor has the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, the
securities purchased or held pursuant to such arrangements.
Transamerica Corporation files one Schedule 13G to report the
beneficial ownership by all such entities of the Common Shares.
(4) Dimensional Fund Advisors Inc. has sole voting power with respect to
184,711 Common Shares. Persons who are officers of Dimensional Fund
Advisors Inc. also serve as officers of DFA Investment Dimensions
Group Inc. (the "Fund"), and The Investment Trust Company (the
"Trust"), each an open-end management investment company registered
under the Investment Company Act of 1940. In their capacities as
officers of the Fund and the Trust, these persons vote 106,658
additional Common Shares which are owned by the Fund and 4,200 Common
Shares which are owned by the Trust.
(5) Includes stock options to purchase 78,747 Common Shares.
(6) Includes stock options to purchase 49,054 Common Shares.
(7) Includes 2,200 Common Shares held by Mr. Hochreiter's son; 4,400
Common Shares held by Mr. Hochreiter as custodian for his sons; and
2,200 Common Shares held by Mr. Hochreiter as custodian for his
daughter. Also includes stock options to purchase 150,000 Common
Shares held by Mr. Hochreiter and warrants to purchase 42,400 Common
Shares held by Mr. Hochreiter; warrants to purchase 4,400 Common
Shares held by Mr. Hochreiter's son; warrants to purchase 8,800 Common
Shares held by Mr. Hochreiter as custodian for his sons and warrants
to purchase 4,400 Common Shares held by Mr. Hochreiter as custodian
for his daughter.
(8) Includes stock options to purchase 63,411 Common Shares and 1,000
Common Shares held by the wife of Mr. Hughes as custodian for their
daughter.
(9) Includes 11,052 Common Shares held in an IRA account for the benefit
of Mr. Tolson; nine Common Shares held by Mr. Tolson as custodian for
his son; and 220,000 Common Shares held by the Jay H. Tolson
Charitable Remainder Unitrust. Also includes stock options to
purchase 150,000 Common Shares and warrants to purchase 1,068,994
Common Shares.
(10) Includes stock options to purchase 535,471 Common Shares and warrants
to purchase 1,128,994 Common Shares.

-4-
<PAGE> 16
THE MERGER

GENERAL

The following information with respect to the Merger is qualified in
its entirety by reference to the complete text of the Reorganization Agreement
and the Plan of Merger, copies of which are included in this Proxy Statement as
Annex A. The Reorganization Agreement sets forth the terms and conditions upon
which the Merger is to be effected. If the Merger Proposal is approved and
adopted by the majority of the votes cast by the holders of the outstanding
Common Shares at the Special Meeting at which a quorum is present and all other
conditions to the obligations of the parties thereto are satisfied or waived,
the Merger will be consummated. At the Effective Time, (as herein defined),
Acquisition will merge with and into the Company. The Company will be the
Surviving Corporation in the Merger and will thereby become an indirect
wholly-owned subsidiary of Bailey. Pursuant to the Merger, each Common Share
that is issued and outstanding at the Effective Time, other than Common Shares
held by shareholders who perfect their statutory dissenters rights, will be
canceled and extinguished and converted automatically into the right to receive
the Merger Price. Upon consummation of the Merger, holders of Common Shares
will possess no further interest in, or rights as shareholders of, the Company.

BACKGROUND OF THE MERGER

After the completion of a program of down-sizing, cost control, cash
management and tactical and strategic initiatives initiated by the Board of
Directors of the Company in mid-1991, management believed in mid-1993 that the
Company was in a position to consider strategic alternatives available to
enhance shareholder value, including a possible sale of the Company. The
principal factor motivating the Company's decision to consider strategic
alternatives was that, through a series of unrelated acquisitions, a
substantial number of major competitors of the Company had become constituents
of larger industrial groups, with the relative financial, marketing and
research and development advantages associated with such status. This factor
suggested that the long-term viability of the Company might require that it too
become a member of a strong and well-financed industrial group.

In mid-1993, two executive officers of the Company, Messrs. Tolson and
Hochreiter, had voting control of the Company through their beneficial
ownership of shares of the Company's then outstanding Class B Capital Stock
(the "Class B Stock"). Each share of Class B Stock carried ten votes per share
and was convertible at the option of the holder into one Common Share. Mr.
Tolson, the Chairman and Chief Executive Officer of the Company, owned Class B
Stock and Common Shares of the Company having in the aggregate approximately
52% of the voting power of the Company. Mr. Hochreiter, the President and
Chief Operating Officer of the Company, owned Class B Stock and Common Shares
having in the aggregate approximately three percent of the voting power. At
this time, the Company believed that the absence of a predetermined allocation
of any potential purchase price for the Company between the Common Shares and
the Class B Stock could delay a transaction and could be a significant
impediment to maximizing value for all shareholders, and accordingly it
determined that the best way to maximize value for all shareholders in the sale
of the Company was first to negotiate with Messrs. Tolson and Hochreiter with
the objective of eliminating their voting control. Messrs. Tolson and
Hochreiter were willing to relinquish their voting control if the Board of
Directors would agree to use its best efforts to sell the Company.

As a result of these efforts, on 30 September 1993, Mr. Hochreiter and
members of his family (collectively, the "Hochreiters"), Mr. Tolson and the
Company entered into a Conversion Agreement (the "Conversion Agreement"). The
Company was represented in the negotiations leading up to the Conversion
Agreement by a special committee of the Board of Directors (the "Special
Committee"), which had been formed on 27 July 1993, consisting entirely of
independent, non-management directors who did not own any shares of Class B
Stock. The Special Committee was advised in these negotiations by its own
special counsel and its own financial advisor, Bear Stearns & Co. Inc., which
delivered an opinion that the transactions contemplated by the Conversion
Agreement and the Warrant Agreements entered into between the Company and Mr.
Tolson and the Hochreiters (the "Warrant Agreements") were fair, from a
financial point of view, to the public holders of Common Shares.

-5-
<PAGE> 17
The Conversion Agreement provided for the conversion of all issued and
outstanding shares of Class B Stock into an equal number of Common Shares (the
"Converted Shares") and other related matters, including the following: (a) as
an inducement and in consideration for their agreement to effect the
conversion, the Company entered into the Warrant Agreements pursuant to which
Mr. Tolson and the Hochreiters received warrants to acquire two Common Shares
for each share of their Class B Stock converted (the "Warrant Shares"); (b) the
Company agreed to continue to employ Mr. Tolson as Chief Executive Officer; (c)
the Board of Directors of the Company agreed to use its best efforts to cause
Mr. Tolson and Mr. Hochreiter to remain as directors of the Company; (d) the
Company and Mr. Tolson agreed to certain modifications to the Change in Control
Agreement with Mr. Tolson dated 5 August 1991, as previously amended on 1
February 1993, and the Company agreed to similar modifications to a similar
agreement with Mr. Hochreiter; (e) the Board of Directors of the Company agreed
to use its best efforts to sell the Company; and (f) Mr. Tolson and the
Hochreiters agreed not to sell the Converted Shares or the Warrant Shares,
except in certain agreed upon transactions. In addition, in the Conversion
Agreement Mr. Tolson and the Hochreiters agreed to vote the Warrant Shares (in
the event the warrants were exercised and converted into Common Shares)
proportionally to the votes cast by all other holders of Common Shares, except
that (i) Mr. Tolson may vote his Warrant Shares to the extent necessary to
enable him to cast, together with all other votes which he is entitled to cast,
up to 11% of the total number of votes then entitled to be cast by all
shareholders, (ii) Mr. Tolson and the Hochreiters may vote their Warrant Shares
for the election of Mr. Tolson and Mr. Hochreiter as directors of the Company,
and (iii) Mr. Tolson and the Hochreiters may vote their Warrant Shares to the
extent necessary to enable them to cast, together with all other votes which
they are entitled to cast, up to the largest number of votes then entitled to
be cast by any other unaffiliated shareholder or group of shareholders who have
filed a Form 13D or 13G under the Exchange Act, plus 5% of the total number of
votes then entitled to be cast by all shareholders.

The warrants are exercisable at $8.625 a share (the closing price of
the Common Shares on the American Stock Exchange on the day before the date of
issuance) and expire on 31 March 1995 (subject to extension in certain
circumstances involving a change in control of the Company). The Warrant
Agreements also (a) restrict Mr. Tolson's and the Hochreiters' rights to assign
or transfer their warrants; (b) provide for certain anti-dilution and other
adjustments; and (c) grant Mr. Tolson and the Hochreiters certain demand and
piggy-back registration rights.

As a result of the foregoing transactions, Mr. Tolson's voting power
was reduced from approximately 52% to approximately 28% (assuming the exercise
of all of his options and warrants), and was further subject to the voting
restrictions described above. The warrants issued to Mr. Tolson and the
Hochreiters pursuant to the Warrant Agreement will be canceled immediately
prior to the Merger. See "The Merger - Interests of Certain Persons in the
Merger" and "Additional Information - Legal Proceedings."

As described above, pursuant to the terms of the Conversion Agreement,
the Board of Directors of the Company agreed to use its best efforts to sell
the Company. In connection therewith, on 30 September 1993 the Board of
Directors of the Company established a special committee of the Company (the
"Sale Policy Committee") consisting of Mr. Tolson, as Chairman, Messrs.
Hochreiter, Manion, Ryan and Williams and Mr. Walter Witoshkin, a nondirector
selected by Mr. Tolson. On 30 September 1993, the Sale Policy Committee
recommended, and the Board of Directors authorized, the retention of CS First
Boston to act as its exclusive financial advisor in connection with a possible
sale of the Company.

CS First Boston contacted or was contacted by approximately 91 parties
to determine whether they would be interested in acquiring the Company. Of
these 91 parties, 48 requested information about the Company and entered into
confidentiality agreements in order to receive and review confidential
information about the Company. By mid-December 1993, nine parties, including
Moorco International Inc. ("Moorco") and Bailey, submitted preliminary
proposals indicating a preliminary range of possible purchase prices or
indicating a serious interest in being included in the final bidding process.
At a meeting of the Company's Board of Directors held on 16 December 1993,
representatives of CS First Boston reviewed these preliminary indications of
interest with the Board and presented certain financial analyses of the Company
described below under "Reasons for the Merger; Recommendation of the Board of
Directors; Opinion of Financial Advisor." Based on the Board's review of the
preliminary indications of interest, seven parties, including Moorco and
Bailey, were invited to conduct a due

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<PAGE> 18
diligence review of the Company in preparation for the submission of final
acquisition proposals. On 2 March 1994, CS First Boston delivered final
bidding instructions to six parties, including Moorco and Bailey, with detailed
instructions setting forth the manner in which final bidders should submit
proposals for the Company. In addition to the final bid letter, such parties
received a draft Agreement and Plan of Reorganization, which bidders were asked
to mark up and return with their final bids.

On 14 March 1994, six bidders, including Moorco and Bailey, submitted
final written proposals. On 18 March 1994, the Sale Policy Committee and the
Board of Directors convened to review the final written proposals submitted by
the final bidders. CS First Boston reviewed the terms and conditions of each
of the final bids with the Sale Policy Committee and the Board of Directors.
Moorco submitted a proposal to acquire all of the Common Shares at a cash price
of $23.25 per Common Share, which was subject to a financing condition but was
supported by an executed bank commitment letter pursuant to which such bank
would provide the necessary financing (the "Moorco Proposal"). Bailey
submitted a proposal to acquire all of the Common Shares at a cash price of
$23.00 per Common Share, which was not subject to a financing condition and was
supported by an executed commitment letter from Chemical Bank pursuant to which
Chemical Bank would, subject to certain conditions, provide necessary
financing. Following presentations by the Company's independent legal and
financial advisors, the Sale Policy Committee unanimously recommended approval
of the Moorco Proposal and the Board of Directors unanimously approved the
Moorco Proposal. In determining to accept the Moorco Proposal over the other
competing bids, the Sale Policy Committee and the Board of Directors gave
primary consideration to the fact that the Moorco Proposal was the highest in
price to the shareholders of the Company with the fewest closing conditions
that might delay or impede the closing of the transaction. The Company and
Moorco executed an Agreement and Plan of Reorganization on 18 March 1994 (the
"Moorco Agreement").

On Friday, 8 April 1994, the Company received an unsolicited proposal
from Bailey in which Bailey expressed its desire to enter into a merger with
the Company at a price of $24.25 per Common Share (the "Revised Bailey
Proposal"). Promptly thereafter, representatives of the Company advised
representatives of Moorco of the receipt of the Revised Bailey Proposal, as
required by the terms of the Moorco Agreement, and contacted Bailey's financial
advisor to seek clarification of certain aspects of such proposal. As
permitted under the terms of the Moorco Agreement, discussions between the
Company and its legal and financial advisors and Bailey and its legal and
financial advisors continued throughout the weekend and into the early morning
hours of Wednesday, 13 April 1994. On Monday morning, 11 April 1994, the
Company issued a press release announcing that it had received the Revised
Bailey Proposal. At a series of informational meetings held on Monday, 11
April 1994, and Tuesday, 12 April 1994, members of the Sale Policy Committee
and the Board of Directors of the Company were kept apprised of the status of
the ongoing discussions with Bailey. Early Tuesday evening, 12 April 1994, the
Sale Policy Committee and the Board of Directors of the Company formally
convened to consider the Revised Bailey Proposal. At the outset of the
meeting, a representative of CS First Boston advised the Sale Policy Committee
and the Board of Directors of the Company that he believed that the Revised
Bailey Proposal was more favorable to the Company and its shareholders from a
financial point of view than the terms of the Moorco Agreement. Based on such
advice (which was subsequently confirmed in writing), the Board of Directors
was permitted, under the terms of the Moorco Agreement, to terminate the Moorco
Agreement and accept the Revised Bailey Proposal if it determined to do so.
The meeting adjourned several times as the discussions with Bailey continued.
By late in the evening, Bailey had executed a copy of the Reorganization
Agreement and delivered it to the Company. After receiving the executed
Reorganization Agreement from Bailey, a representative of the Company contacted
representatives of Moorco to inform them that the Board of Directors was
prepared to act on the Revised Bailey Proposal and to inquire whether Moorco
was prepared to increase the price it was proposing to pay for the Common
Shares. The Moorco representatives stated that Moorco was not prepared to
increase its price. After the Sale Policy Committee and the Board of Directors
were informed of Moorco's position, the Company's legal and financial advisors
reviewed the terms and conditions of the Reorganization Agreement with the Sale
Policy Committee and the Board of Directors. CS First Boston then advised the
Sale Policy Committee and the Board of Directors that, in its opinion, the
consideration to be received by the shareholders of the Company pursuant to the
terms of the Revised Bailey Proposal was fair to the shareholders from a
financial point of view and that it was prepared to deliver its written opinion
to that effect. Following the presentations by the Company's legal and
financial advisors, the Sale Policy

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<PAGE> 19
Committee unanimously recommended, and the Board of Directors unanimously
approved, the withdrawal of the Board's prior approval of the Moorco Proposal,
the termination of the Moorco Agreement and the execution of the Reorganization
Agreement with Bailey. In the early morning hours on Wednesday, 13 April 1994,
the Company executed the Reorganization Agreement with Bailey and sent a notice
of termination of the Moorco Agreement to Moorco. Later that morning, the
Company and Bailey issued a joint press release with Bailey announcing the
execution of the Reorganization Agreement. In connection with the termination
of the Moorco Agreement on or about 25 April 1994, the Company tendered to
Moorco a termination fee payment of approximately $5.4 million. The Company
and Moorco are currently in dispute as to the effect and the calculation of
such termination fee, and on 26 April 1994 the Company and Bailey commenced
litigation against Moorco in the Court of Common Pleas of Bucks County,
Pennsylvania, seeking a declaratory judgment with respect thereto.

REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS; OPINION OF
FINANCIAL ADVISOR

Reasons for the Merger; Recommendation of the Board of Directors

At its 13 April 1994 meeting, the Company's Board of Directors
determined that the Merger is fair to, and in the best interests of, the
Company and its shareholders. Therefore the Board of Directors approved the
Merger Proposal. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER
PROPOSAL. Certain members of the Board of Directors have certain interests
which may present them with possible conflicts of interest in connection with
the Merger. See "Interests of Certain Persons in the Merger."

The determination of the Board of Directors to approve the Merger
Proposal was based upon consideration of a number of factors, including the
following:

(1) The results of efforts by CS First Boston and the
Company's management to conduct an active auction of the Company;

(2) The presentation by representatives of CS First Boston at
the meeting of the Board of Directors held on 16 December 1993 which
discussed the financial analyses of the Company performed by CS First
Boston and described under "Opinion of Financial Advisor" below;

(3) The fact that the $24.25 Merger Price represents a
substantial premium over the closing price of $8.625 per share on 30
September 1993, the last full trading day prior to the first public
announcement of the Company's intention to explore strategic
alternatives, including a possible sale of the Company;

(4) The fact that the $24.25 Merger Price proposed to be paid
by Bailey was higher than the price proposed to be paid by Moorco
under the Moorco Agreement;

(5) Moorco's unwillingness to increase the price it proposed
to pay for the Common Shares;

(6) The fact that the Revised Bailey Proposal contained a
limited number of conditions that might delay or impede the closing of
the transaction;

(7) The fact that the Revised Bailey Proposal was supported
by an executed commitment letter from Chemical Bank pursuant to which
Chemical Bank would provide necessary financing, and unlike the Moorco
Agreement, was not subject to a financing condition;

(8) Bailey's willingness to loan the Company $5.3 million to
assist the Company in making the termination payment payable to Moorco
as a result of the termination of the Moorco Agreement (see
"Conditions to Consummation of the Merger; Representations and
Warranties; Certain Covenants - Bailey Loan to the Company" below);

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<PAGE> 20
(9) The fact that the Reorganization Agreement permits the
Board, under certain circumstances, to negotiate with third parties
and to accept more favorable proposals, if any, that include an all
cash purchase price in excess of the $24.25 Merger Price; and

(10) The opinion of CS First Boston, which was delivered
orally to the Board at its 13 April 1994 meeting and subsequently
confirmed in writing, as to the fairness, from a financial point of
view, of the consideration to be received by the shareholders of the
Company pursuant to the Merger. See "Opinion of Financial Advisor"
below.

The Board of Directors recognizes that the Merger will deprive
shareholders of the opportunity to continue their equity interest in any future
growth of the Company as an independent entity. See "Certain Other Effects of
the Merger." However, the Board of Directors placed special consideration on
the fact that (i) the Merger Price represents a substantial premium over the
price at which the Common Shares had been trading prior to the first public
announcement of the Company's intention to explore strategic alternatives,
including a possible sale of the Company, and (ii) the prospect of generating a
return for shareholders greater than the Merger Price has been decreasing in
light of recent operating results and competitive pressures in the industry.
See "Summary - Selected Financial Data."

Opinion of Financial Advisor

At the meeting of the Company's Board of Directors held on 12-13 April
1994, CS First Boston delivered its oral opinion (which it subsequently
confirmed in writing) to the effect that, as of 13 April 1994, and based upon
the assumptions made, matters considered and limits of the review undertaken,
as set forth in such opinion, the consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to the shareholders
from a financial point of view.

THE FULL TEXT OF CS FIRST BOSTON'S OPINION, DATED 13 APRIL 1994, IS
INCLUDED AS ANNEX B TO THIS PROXY STATEMENT. SHAREHOLDERS ARE URGED TO READ
THE OPINION IN ITS ENTIRETY FOR THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS OF THE REVIEW UNDERTAKEN BY CS FIRST BOSTON. CS FIRST BOSTON'S OPINION
IS DIRECTED ONLY TO THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED BY THE
SHAREHOLDERS OF THE COMPANY AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
SHAREHOLDER OF THE COMPANY AS TO HOW SUCH SHAREHOLDER SHOULD VOTE SUCH
SHAREHOLDER'S COMMON SHARES. THE SUMMARY OF THE OPINION OF CS FIRST BOSTON SET
FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF SUCH OPINION.

In arriving at its opinion, CS First Boston (i) reviewed the
Reorganization Agreement, (ii) reviewed certain publicly available business and
financial information relating to the Company, (iii) reviewed certain other
information, including financial forecasts, provided to CS First Boston by the
Company, and (iv) met with the management of the Company to discuss the
business and prospects of the Company. CS First Boston also considered certain
financial and stock market data of the Company, compared that data with similar
data for other publicly-held companies in businesses similar to those of the
Company and considered the financial terms of certain other business
combinations that have recently been effected. CS First Boston also considered
such other information, financial studies, analyses and investigations and
financial, economic and market criteria which it deemed relevant.

In connection with its review, CS First Boston did not independently
verify any of the foregoing information and relied on all such information
being complete and accurate in all material respects. With respect to the
financial forecasts provided to CS First Boston by the Company, CS First Boston
assumed that such forecasts were reasonably prepared on bases reflecting the
best currently available estimates and judgments of the management of the
Company as to the future financial performance of the Company. In addition, CS
First Boston did not make an independent evaluation or appraisal of the assets
of the Company, nor was it furnished with any such appraisals.

In arriving at its opinion and making its presentations to the Board
of Directors of the Company on 16 December 1993, 18 March 1994 and 12-13 April
1994, CS First Boston performed a variety of financial analyses,

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<PAGE> 21
including those summarized below. The summary set forth below includes
summaries of all of the material financial analyses discussed by CS First
Boston with the Board of Directors of the Company, but does not purport to be a
complete description of the analyses performed by CS First Boston in arriving
at its opinion. Arriving at a fairness opinion is a complex process that
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular
circumstances and, therefore, such an opinion is not necessarily susceptible to
partial analysis or summary description. CS First Boston believes that its
analyses must be considered as a whole and that selecting portions of its
analyses or portions of the factors considered by it, without considering all
analyses and factors, could create an incomplete view of the evaluation process
underlying its opinion. In performing its analyses, CS First Boston made
numerous assumptions with respect to industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of the Company. Any estimates incorporated in the analyses
performed by CS First Boston are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, estimates of the value of businesses
and securities neither purport to be appraisals nor necessarily reflect the
prices at which businesses or securities actually may be sold. Accordingly,
such analyses and estimates are inherently subject to substantial uncertainty.
No public company utilized as a comparison is identical to the Company, and
none of the acquisition transactions utilized as a comparison is identical to
the Merger. Accordingly, an analysis of publicly traded comparable companies
and comparable acquisition transactions is not mathematical; rather it involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the comparable companies and other factors that
could affect the public trading value of the comparable companies or company to
which they are being compared.

The following is a summary of the analyses performed by CS First
Boston in connection with its fairness opinion:

Discounted Cash Flow Analysis. CS First Boston calculated the
estimated unlevered after-tax cash flows that the Company could be expected to
generate over the ten-year period ending 31 December 2003, using two different
sets of projections of the Company's future financial performance. The first
set of projections (the "Management Case") was based on projections prepared
and provided by the Company's management for the years 1993 through 1997 and
extrapolated by CS First Boston for the years 1998 through 2003. The second
set of projections (the "Moderate Case") was prepared by CS First Boston based
on the Management Case but using somewhat lower growth and margin assumptions
that CS First Boston believed were more consistent with the Company's
historical performance. Using each set of projections, CS First Boston then
calculated estimated terminal values for the Company at the end of the ten-year
period by applying multiples ranging from 4.5x to 6.0x (which CS First Boston
believed to be appropriate for the Company's business) to each of the
projections' terminal year operating cash flow. For each set of projections,
the unlevered cash flows for the projected ten-year period and the range of
terminal values were then discounted to present value using discount rates
ranging from 12% to 15% (chosen to reflect different assumptions regarding the
required rates of returns of holders or prospective buyers of the Common
Shares) to imply hypothetical enterprise values for the Company. This
discounted cash flow analysis indicated a hypothetical reference range of
between $29.81 and $33.31 per Common Share using the Management Case and of
between $13.72 and $15.81 per Common Share using the Moderate Case.

Comparable Companies Analysis. CS First Boston reviewed certain
publicly available historical and estimated 1993 and 1994 financial results
(reflecting a composite of research analysts' estimates) of certain companies
considered by CS First Boston to be reasonably comparable to the Company,
including EG&G, Inc., Emerson Electric Co., General Signal Corp., Honeywell
Inc., IMO Industries Inc., Instron Corp., Johnson Controls Inc., Measurex
Corp., MTS Systems Corp. and Thermo Instrument Systems Inc. CS First Boston
also looked at the current market value of the Company as a multiple of various
measures of the Company's latest 12- month and projected 1994 financial
performance (including sales, operating income, operating cash flow, net income
and book value) and compared such multiples with the corresponding multiples
for each of the comparable companies. CS First Boston then applied the
comparable companies' multiples to the Company's latest 12-month and projected
1994 financial results to imply hypothetical enterprise values for the Company.
This comparable companies' analysis

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indicated a hypothetical reference range of between $10.21 and $15.81 per
Common Share using the Management Case and of between $8.82 and $14.41 per
Common Share using the Moderate Case.

Comparable Acquisitions Analysis. CS First Boston reviewed certain
recent transactions involving the acquisition of all or part of companies
considered by CS First Boston to be reasonably comparable to the Company,
including Eaton Corporation's 1993 acquisition of the distribution and control
operations of Westinghouse Electric Corp., Emerson Electric Co.'s 1992
acquisition of Fisher Controls, Schneider SA's 1991 acquisition of Square D Co.
and Siebe plc's 1990 acquisition of Foxboro Company. CS First Boston then
calculated certain multiples (including sales, operating cash flow, operating
income, net income and book value) of the prices paid in such acquisitions and
applied such multiples to the Company's latest 12-month and projected 1994
financial results to imply hypothetical enterprise values for the Company.
This comparable acquisitions analysis indicated a hypothetical reference range
of between $18.61 and $23.51 per Common Share using both the Management Case
and the Moderate Case.

CS First Boston is an internationally recognized investment banking
firm engaged in the evaluation of businesses and their securities in connection
with mergers and acquisitions and for other purposes. CS First Boston was
selected as financial advisor to the Company based on such expertise.

In the ordinary course of its business, CS First Boston may trade the
debt and equity securities of the Company for CS First Boston's own account and
for the accounts of its customers and, accordingly, may at any time hold a long
or short position in such securities.

Pursuant to an engagement letter dated 30 September 1993, the Company
has agreed to pay CS First Boston an advisory fee of $50,000 and a transaction
fee equal to 1.5% of the aggregate consideration to be received by the
shareholders of the Company in the Merger upon consummation of the Merger
(against which the advisory fee will be credited). For purposes of calculating
the fee payable to CS First Boston, the aggregate consideration to be received
by the shareholders of the Company in the Merger shall also be deemed to
include all debt remaining on the balance sheet of the Company at the time the
Merger is consummated. The Company has also agreed to reimburse CS First
Boston for its reasonable out-of-pocket expenses, including the fees and
disbursements of its counsel, and to indemnify CS First Boston and certain
related entities and persons against certain liabilities in connection with its
engagement, including certain liabilities under the Federal securities laws.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Employment Agreement. The Company has entered into an employment
agreement with Mr. Hochreiter, pursuant to which he is entitled to receive a
minimum annual salary of $289,700; to be included in various Company benefit
plans made available to other executive officers, including life, health or
disability insurance plans, supplemental income and supplemental retirement
income plans, and pension plans; and to receive severance compensation equal to
1.5 times his annual base salary in effect at the time of termination in the
event of termination by the Company without cause, as defined, or termination
by him because of a breach by the Company of any of the terms of the employment
agreement. The agreement is terminable by either party upon thirty days
notice, except that it terminates earlier in the event of Mr. Hochreiter's
death or at the end of six months in the event of his continuous inability
during that period to perform his duties due to illness or other incapacity.

Change in Control Agreements. The Company has agreements (the "Change
in Control Agreements") with nine of its executives, including Messrs. Tolson,
Hochreiter, Finnegan, Hughes and Garay, which provide that if there is both a
"change in control" (as defined below) of the Company and termination of the
executive during the "contract period" (as defined below) except for "cause"
(as defined below) or disability, or if the executive terminates

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<PAGE> 23
his employment for "good reason" (as defined below), the executive shall be
entitled to separation pay equal to two times the highest total compensation
received by him during the year of termination or any of the four preceding
calendar years, with the current year's compensation annualized. Compensation
is defined under the Change in Control Agreements as the amount reported or
reportable as U.S. federal wages on Form W-2, plus the employees' contributions
to 401K, pension or similar plans and programs. In the event of such
termination, any stock options previously granted to the executive immediately
fully vest and become exercisable as of the date of termination and continue to
be exercisable thereafter for a period of a least 60 days.

In the Change in Control Agreements with Messrs. Tolson and
Hochreiter, the "contract period" commences thirty days preceding a change in
control and ends on the second anniversary of the change in control. The
Tolson and Hochreiter Change in Control Agreements, as amended by the
Conversion Agreement, define a "change in control" as (a) a consolidation or
merger of the Company with and into another entity whereby the Company is not
the surviving corporation if such merger is effected pursuant to action by the
shareholders, (b) a consolidation or merger whereby the Company is the
surviving corporation and all or part of the outstanding Common Shares are
changed into or exchanged for stock or other securities of another person or
cash or any other property if such merger is effected pursuant to action by the
shareholders, (c) the sale or transfer of more than 75% of the assets or
operating income of the Company, (d) the acquisition by a person or group of
30% of the Common Shares then outstanding, (e) the commencement of a tender or
exchange offer by a person where such person would be the beneficial owner of
more than 30% of the Common Shares then outstanding, or (f) the termination of
the executive without "cause" or termination by the executive of his employment
for "good reason."

The Change in Control Agreements, as amended, of the other seven
executives define the "contract period" as the period commencing on the 30th
day immediately preceding a change in control and ending on the second
anniversary of a "relevant transaction." Under the Change in Control
Agreements of these executives, a change in control will be deemed to occur if
Mr. Tolson ceases to own shares of the Company sufficient for him alone to cast
40% of all votes shareholders can cast when voting as a single class and which
may be cast for the election of directors, and in certain other circumstances.
Pursuant to this provision, the contract period commenced on 1 September 1993
when Mr. Tolson transferred a portion of his shares in accordance with the
terms of the Conversion Agreement. A "relevant transaction" means any of the
events described in items (a) through (e) of the immediately preceding
paragraph.

"Cause," as a basis for termination of the executive's employment,
means willful and repeated significant actions or omissions against the best
interest of the Company after receipt of a written warning, done in bad faith
and without a belief that the action or omission was in the best interest of
the Company. "Good reason," for purposes of an executive's voluntary
termination of employment, includes a reduction in pay or benefits, a material
reduction in duties, responsibilities and function, a transfer to another
geographic area or a failure by the Company to cause any successor to the
Company to assume its obligations under the agreement.

Under the terms of the Change in Control Agreements, the Company is
required to maintain for the terminated executive, for a period of two years
after the termination date, certain insurance, employee benefit plans,
automobile, outplacement and other benefits and the terminated executive is
entitled to an additional two years service credit under Company pension plans,
including, if applicable, the Supplemental Retirement Income Plan described
below, or comparable benefits if the plan does not permit continued
participation by a terminated employee. Certain monies otherwise paid on
account of such termination, such as required severance (including the
severance compensation provided in Mr. Hochreiter's employment contract) is
credited to the monies due under the Change in Control Agreements.

Assuming that, following the Merger and during the relevant contract
period, the covered executives of the Company are terminated without cause or
any such person terminates his employment for good reason, and that the
compensation at the time of such termination is equal to the amount of such
person's compensation as of the date hereof, the Company would be obligated to
pay Messrs. Tolson, Hochreiter, Finnegan, Hughes and Garay $860,800, $805,000,
$445,000, $493,800, and $357,900, respectively under such Change in Control
Agreements, excluding

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<PAGE> 24
amounts which may be due for payment of taxes on account of the
applicability of Section 2806 of the Internal Revenue Code of 1986, as amended,
and further excluding the effect of stock options.

Severance Agreement. Mr. Stamford, an executive of the Company,
entered into an agreement with the Company on 2 December 1993 whereby, upon the
involuntary termination of his employment that is not a termination for cause
or disability, which termination occurs within one year following the effective
date of a change in control of the Company, he will be entitled to receive (a)
one month of separation pay for each full $10,000 in base pay (maximum 12
months); (b) continuation of all Company benefits for the duration of the
separation pay period (minimum six months); (c) all accrued and unused vacation
pay; and (d) one-on-one outplacement counseling. In addition, Mr. Stamford is
entitled to receive a "stay-around" bonus of $60,000 cash which will be paid by
the Company six months after the effective day of a change in control or prior
thereto if Mr. Stamford is terminated involuntarily during the first six months
after a change in control. The determination of when a change in control will
have occurred is to be determined by Mr. Hochreiter in his sole discretion.
Assuming that, within one year following the Merger, Mr. Stamford's employment
is involuntarily terminated, and further assuming that Mr. Stamford's
compensation at the time of the termination is equal to the amount of his
compensation as of the date hereof, the Company would be obligated to pay Mr.
Stamford severance equal to $120,000. In addition, Mr. Stamford will be
entitled to the $60,000 "stay-around" bonus if he is employed by the Company
for six months after the Merger or if Mr. Stamford is terminated involuntarily
during the first six months after a change in control.

Supplemental Retirement Income Plan. In 1983, the Company adopted a
program, pursuant to which the Company will provide Messrs. Tolson, Hochreiter,
Finnegan and one other current employee with (i) supplemental retirement income
to begin when the individual attains age 65 and retires and (ii) a
preretirement death benefit. A participating individual is entitled to
supplemental retirement income equal to 35% (excepting Mr. Finnegan, who is
entitled to 30%) of his Average Annual Salary, subject to a possible deduction
based on amounts payable under Company-paid retirement plans and Social
Security. The benefits are payable in equal monthly installments for the
lifetime of the individual, or for ten years, whichever is longer. "Average
Annual Salary" means the individual's salary during any five of the last ten
consecutive calendar years immediately preceding his normal retirement date or
the termination date if his employment with the Company terminates prior to
attaining age 65, divided by five, which produces the highest average. In
addition, if the participating individual dies while an active employee, the
Company will pay to the designated beneficiary an aggregate sum equal to 60% of
the participating individual's annual base salary, payable in 12 equal monthly
installments and thereafter each year for a minimum of fourteen years a sum
equal to 30% of the participating individual's base salary. The retirement
benefits are vested upon the individual completing five years of service. All
participants, except Mr. Hochreiter, have completed five years of service;
therefore their retirement benefits are fully vested. Participating
individuals who are vested and whose employment with the Company terminates
prior to attaining age 65 are entitled to the supplemental retirement benefit,
beginning at age 65. However, no supplemental retirement benefits are payable
under this plan if an individual's employment is terminated for cause as
defined in the plan. The estimated annual supplemental retirement benefits
payable under the Supplemental Retirement Income Plan for Messrs. Tolson and
Finnegan, assuming that the highest Average Annual Salary is the average of the
salaries for years 1989 through 1993 (and further assuming that the benefit
limitations relating to Company paid retirement plans and Social Security
benefits received, which can not be evaluated at this time, do not apply),
would be $101,400 and $43,700, respectively. As a benefit under the Change in
Control Agreements, in the event Messrs. Tolson, Hochreiter or Finnegan die
during the two year period after their date of termination of employment, their
estate or beneficiary would be entitled to the preretirement death benefit.
The estimated preretirement death benefits payable, assuming that the
individual's annual base salary is equal to the annual base salary of such
person on the date hereof are as follows: Mr. Tolson, $195,276 for the first
twelve months and $97,638 per year thereafter for a minimum of fourteen years;
Mr. Hochreiter, $196,072 for the first twelve months and $98,036 per year
thereafter for a minimum of fourteen years; and Mr. Finnegan, $102,966 for the
first twelve months and $51,483 per year thereafter for a minimum of fourteen
years.

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Stock Options and Warrants. Immediately prior to the Effective Time,
each outstanding Company stock option and warrant, whether or not then vested
or exercisable, will become exercisable in full and will then be canceled, and
the holder thereof shall be entitled to receive from the Company an amount
equal to the excess of (i) the Merger Price multiplied by the number of Common
Shares subject to the stock option or warrant, over (ii) the exercise price of
the stock option or warrant multiplied by the number of Common Shares subject
thereto. Accordingly, the Company will be obligated to pay Messrs. Tolson,
Hochreiter (or his children), Finnegan, Hughes and Garay the following amounts
in cancellation of their respective stock options and warrants: $19,109,281,
$3,343,750, $1,131,489, $934,571 and $728,716, respectively. See "Background
of the Merger" for a description of the Conversion Agreement and the Warrant
Agreements with Messrs. Tolson and Hochreiter.

Stock Appreciation Rights. In November 1990, the base compensation of
nonemployee directors, the Chairman and Chief Executive Officer, and 21
additional executives was reduced for a period of one year. The reductions
were: 20% for nonemployee directors, 10% for the Chairman and Chief Executive
Officer, 5% for executives on the Chairman's staff including Messrs. Hughes,
Finnegan and Garay and 2 1/2% for other management employees in the United
States who reported to the Chairman or were on the Chairman's staff. Each
person whose salary was reduced received Units of Appreciation Rights
("Units"), under which such person is entitled to receive a sum of money from
the Company equal to the increase in the market price of the Common Shares
above $7.38 per share (the market price of the Common Shares on the date of
grant of the Units), times the number of Units. The number of Units granted
was calculated to result in a payment to the recipient equal to the reduction
in the individual's base compensation when the price of the Common Shares
traded on the American Stock Exchange equaled $11.00 per share. The Units are
exercisable by the recipient at any time not later than the earlier of 1
December 1995, or three months after termination of employment.

If the Units are exercised at the Merger Price, the Company would be
obligated to pay the following officers and directors of the Company the
following amounts: Mr. Tolson - $134,831; Mr. Hughes - $39,487;
Dr. Chisum - $13,416; and Messrs. Ryan, Williams and Manion - $10,041 each.

Indemnification Under the Reorganization Agreement. Pursuant to the
Reorganization Agreement, Bailey has agreed that the Surviving Corporation will
indemnify and hold harmless each person who is, or has been prior to the date
of the Reorganization Agreement or who becomes prior to the Effective Time, an
officer or director of the Company or any of its subsidiaries (the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses, settlement
payments or liabilities arising out of or in connection with any claim, demand,
action, suit, proceeding or investigation based in whole or in part on, or
arising in whole or in part out of, the fact that such person is or was an
officer or director of the Company or any of its subsidiaries, whether or not
pertaining to any matter existing or occurring at or prior to the Effective
Time and whether or not asserted or claimed prior to or at or after the
Effective Time ("Indemnified Liabilities") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to the Reorganization Agreement, any other agreement related to the
Reorganization Agreement or the transactions contemplated by the Reorganization
Agreement or such other agreement, in each case to the fullest extent required
or permitted under applicable law or under the Surviving Corporation's Articles
of Incorporation or Bylaws or any indemnification agreements in effect on the
date of the Reorganization Agreement. Bailey has agreed that the Surviving
Corporation's Articles of Incorporation and Bylaws shall not be amended in a
manner that adversely affects the rights of any Indemnified Party thereunder or
under the Reorganization Agreement, unless otherwise required by applicable
law. Bailey has agreed that to the extent available on terms satisfactory to
the Surviving Corporation, the Surviving Corporation will maintain, for not
less than ten years after the Effective Time, directors' and officers'
liability insurance covering each indemnified person on terms not materially
less favorable than the insurance maintained in effect by the Company on the
date of the Reorganization Agreement.

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<PAGE> 26
EFFECTIVE TIME OF THE MERGER

The Merger will become effective (the "Effective Time") upon the
filing of Articles of Merger with the Department of State of the Commonwealth
of Pennsylvania in accordance with the BCL. The Articles of Merger are
expected to be presented for filing as soon as practicable after the approval
and adoption of the Merger Proposal by the Company's shareholders at the
Special Meeting and upon satisfaction or waiver of all other conditions to
consummation of the Merger. See "Conditions to Consummation of the Merger;
Representations and Warranties; Certain Covenants."

PAYMENT FOR COMMON SHARES

As a result of the Merger, holders of certificates formerly
representing Common Shares will cease to have any equity interest in the
Company. After consummation of the Merger, all certificates formerly
evidencing Common Shares (other than Common Shares held in the treasury of the
Company or Common Shares in respect of which dissenters appraisal rights have
been properly exercised) will be required to be surrendered to _____________
(the "Paying Agent") in order to receive the Merger Price to which holders
thereof will be entitled as a result of the Merger. No interest will be paid
or accrued on the cash payable upon the surrender of such certificates.
Detailed instructions with regard to the surrender of certificates, together
with a letter of transmittal, will be forwarded to former holders of Common
Shares by the Paying Agent as promptly as practicable following the Effective
Time. Holders of Common Shares should not submit their certificates to the
Paying Agent until they have received such materials. Upon surrender of stock
certificates and other required documents to the Paying Agent, the Paying Agent
will distribute by bank check the Merger Price for each share represented by
such stock certificates to the holder thereof. See "Terms of the Merger." If
payment in respect of canceled Common Shares is to be made to a person other
than the person in whose name a surrendered certificate or instrument is
registered, it shall be a condition to such payment that the certificate or
instrument so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of such payment in a name
other than that of the registered holder of the certificate or instrument
surrendered or shall have established to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax either has been paid or is not
payable.

SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.

EFFECT OF MERGER ON CONTROL-SHARE ACQUISITION AND OTHER ANTITAKEOVER
RESTRICTIONS

The BCL contains a control-share acquisition statute, codified in
Subchapter 25G, which provides that, before an acquiror of at least 20%, 33
1/3% or 50% of the voting power of a "registered" corporation may exercise
voting power with respect to "control shares" (as defined therein), the
shareholders of the corporation must have approved such exercise by a vote of
(i) a majority of all outstanding voting power, and (ii) a majority of
outstanding "disinterested shares" (as defined therein). The control-share
provisions do not apply to certain specified transactions, including mergers or
similar transactions effected in compliance with the statute and to which the
registered corporation is a party, such as the Merger.

The BCL also contains a disgorgement statute, codified in Subchapter
25H, which requires disgorgement to the corporation of profits by a
"controlling person" (defined generally to mean a person or group seeking a 20%
voting interest or making a bid for control) on a trade in shares of the
corporation during the 18 months following acquisition of "controlling person"
status, unless the shares involved were purchased more than 24 months before or
18 months after the acquisition of such status. The disgorgement provisions do
not apply to certain transactions, including transactions consummated by the
Company, such as the Merger.

Article VI of the Company's Articles of Incorporation provides
generally that, subject to a number of exclusions set forth therein, a
controlling person or group (defined generally to mean a person or group which
acquires at least 20% of the voting power to elect directors of the Company),
upon becoming such, must give prompt

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<PAGE> 27
notice to each shareholder of record and to the Company. The other
shareholders are thereupon entitled to demand that the controlling person pay
them the "fair value" of their shares under procedures which are similar to
those which apply to the exercise of dissenters rights in connection with
mergers and other corporate transactions. Article VI does not apply to a
control transaction that has been approved by (i) a majority vote of the
directors not affiliated with the controlling person or group, and (ii) the
affirmative vote or consent of the holders of Common Shares entitled to cast a
majority of the votes which all holders of Common Shares, voting as a single
class, are entitled to cast thereon.

Article VII of the Company's Articles of Incorporation generally
prohibits the Company from engaging in any "business combination," which is
broadly defined, with an "interested shareholder" of the Company (defined
generally to mean a person or group which acquires at least 20% of the voting
power to elect directors of the Company) for a set period of time following the
date on which the interested shareholder became such, unless, among other
exceptions, the business combination or the purchase of stock by means of which
the interested shareholder became such is approved in advance by the Company's
Board of Directors. Since the Merger has been approved by the Company's Board
of Directors, Article VII does not apply to the Merger.

CERTAIN OTHER EFFECTS OF THE MERGER

If the Merger is consummated, the Company's shareholders will not have
an opportunity to continue their equity interest in the Company as an ongoing
corporation and therefore will not share in future earnings and growth of the
Company.

If the Merger is consummated, public trading of the Common Shares will
cease, the Common Shares will cease to be listed on the American Stock
Exchange, and the registration of the Common Shares under the Exchange Act,
will be terminated. See "Additional Information - Available Information" for
information concerning the effect of the Merger on the Surviving Corporation's
obligation to file periodic reports and other information with the Commission.

For information concerning the income tax consequences of the Merger,
see "Federal Income Tax Consequences of the Merger."

ANTITRUST MATTERS

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations thereunder (the "HSR Act") provide that certain
acquisition transactions (including the Merger) may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice ("Justice") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied. The required
information was supplied by the Company and by Bailey on ___ May 1994 and the
applicable waiting period under the HSR Act will expire on ___ June 1994. The
German law controlling the restraint against competition, called the Gesetz
gegen Wettbewerbsbeschrankugen (the "GWB"), provides that certain acquisition
transactions (including the Merger) may not be consummated unless a pre-merger
notification has been filed with the German Cartel Office, called the
Bundeskartellamt (the "BKartA"). The BkartA must communicate its intention to
investigate a merger within one month of receipt of a pre-merger notification.
The information was supplied by Bailey on ___ May 1994 and the applicable
one-month waiting period under the GWB will expire on __ June 1994. At any
time before or after the consummation of the Merger, Justice, the FTC, the GWB
or some other person could seek to enjoin or rescind the Merger on antitrust
grounds. See "Conditions to Consummation of the Merger; Representations and
Warranties; Certain Covenants."

ACCOUNTING TREATMENT

The Merger will be accounted for by Bailey as a "purchase" for
accounting and financial reporting purposes.

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<PAGE> 28
TERMS OF THE MERGER

General. The Company has agreed in the Reorganization Agreement to
submit the Merger Proposal to its shareholders for approval and adoption at a
meeting to be held as soon as practicable in accordance with the BCL and the
Company's Articles of Incorporation and Bylaws and, in connection therewith,
prepare and file a proxy statement and cause the proxy statement to be mailed
to the Company's shareholders as soon as practicable. If the Merger Proposal
is approved and adopted by the shareholders, and the other conditions contained
in the Reorganization Agreement are satisfied or waived, Acquisition will be
merged with and into the Company. Upon the filing of Articles of Merger, or at
such later time as specified in such filing, each outstanding Common Share,
other than shares held by shareholders of the Company who have properly
exercised their dissenters rights under applicable law, will be converted into
the right to receive $24.25 in cash, without interest, and each share of common
stock of Acquisition will be converted into one Common Share of the Company.
The obligations of the Company, Bailey and Acquisition to effect the Merger are
subject to the fulfillment of certain conditions set forth in the
Reorganization Agreement, including the approval and adoption of the Merger
Proposal by the majority of votes cast by the holders of the outstanding Common
Shares of the Company. See "Conditions to Consummation of the Merger;
Representations and Warranties; Certain Covenants."

The terms of the Merger are set forth in the Reorganization Agreement
and the Plan of Merger which appear as Annex A to this Proxy Statement, and the
description of the Merger Proposal contained herein is qualified in its
entirety by reference to the Reorganization Agreement and the Plan of Merger.
Shareholders are urged to review the Reorganization Agreement and the Plan of
Merger carefully.

Amendments. The Reorganization Agreement may be amended at any time
before or after shareholder approval by written agreement of Bailey,
Acquisition and the Company, except that after approval of the Merger by the
shareholders of the Company, no amendment may be made, without the further
approval of the shareholders of the Company, which either decreases the amount
of cash to which the shareholders of the Company are entitled pursuant to the
Reorganization Agreement or otherwise materially adversely affects the
shareholders of the Company.

CONDITIONS TO CONSUMMATION OF THE MERGER; REPRESENTATIONS AND WARRANTIES;
CERTAIN COVENANTS

Conditions to Consummation of the Merger. Under the Reorganization
Agreement, the obligations of the Company, Bailey and Acquisition to effect the
Merger are subject to the satisfaction, on or before the Effective Time, of
certain conditions or the waiver thereof. Among such conditions are that (a)
the Reorganization Agreement, the Plan of Merger and the Merger shall have been
approved and adopted by the requisite vote of the holders of the outstanding
Common Shares in accordance with the BCL and the Company's Articles of
Incorporation and Bylaws; (b) no order, decree, ruling or other action of a
court or governmental agency of competent jurisdiction, restraining, enjoining
or otherwise prohibiting the Merger, shall be in effect; and (c) the waiting
periods under the HSR Act and its counterpart provisions under German law shall
have terminated or early termination thereof shall have been granted or all
approvals required in connection therewith, if any, shall have been obtained.

Under the Reorganization Agreement, the obligations of Bailey and
Acquisition to effect the Merger are also subject to each of the following
conditions: (a) the aggregate number of Dissenting Shares (as defined in the
Plan of Merger) shall not exceed 10% of the outstanding Common Shares; (b) the
representations and warranties of the Company contained in the Reorganization
Agreement shall be true in all material respects at and as of the closing date
(except to the extent that such representation and warranty speaks as of
another date) and no material adverse change shall have occurred to the
business, financial condition, property or prospects of the Company taken as a
whole since 31 December 1993 provided that payment of the break-up fee to
Moorco and the loss reflected on the 28 February 1994 consolidated income
statement of the Company and the subsidiaries for the two months then ended
shall not be included in any determination of a material adverse change; (c) in
a manner reasonably satisfactory to the parties, (i) Jay H. Tolson and E.
Joseph Hochreiter ("Tolson and Hochreiter") shall expressly indemnify the
Company, Bailey and Acquisition from any and all liability arising out of or
related to the issuance on 30 September

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<PAGE> 29
1993 of Company warrants, which indemnity will be secured by the
deposit of $10,000,000 received by them in the Merger into an interest bearing
escrow account at Mellon Bank, N.A to be invested in U.S. Treasury obligations
having maturities of not more than five years, (ii) Tolson and Hochreiter
expressly shall waive any indemnities running to them from the Company, by
contract (including, without limitation, the Reorganization Agreement),
charter, by-law or otherwise for any liability arising out of or connected with
the issuance of such warrants, and (iii) Bailey shall agree that the Company
shall pay the reasonable defense costs and expenditures incurred in connection
with the defense of any claim or action relating to such warrants up to the
$500,000 self-insured retention under the Company's directors and officers'
liability insurance policy and will work with Tolson and Hochreiter on a best
efforts basis to secure coverage for any additional expenditures from the
directors and officers' insurance carrier (the "Tolson and Hochreiter
Conditions"); and (d) the Company shall have complied in all material respects
with its covenants regarding the treatment of its foreign subsidiaries. See
"Certain Covenants." In order to induce Bailey to enter into the transactions
contemplated by the Reorganization Agreement, Messrs. Tolson and Hochreiter
entered into a Memorandum Agreement dated 13 April 1994 with the Company
pursuant to which Messrs. Tolson and Hochreiter agreed to accept and be bound
by the Tolson and Hochreiter Conditions and to execute such further documents
as may be reasonably requested by the Company or Bailey to effect the
fulfillment of the Tolson and Hochreiter Conditions. See "Additional
Information - Legal Proceedings."

Representations and Warranties. The representations and warranties of
the Company and of Bailey and Acquisition contained in the Reorganization
Agreement include various representations and warranties typical in such
agreements and are included in Sections 2.01 and 2.02, respectively, of the
Reorganization Agreement, a copy of which is included in this Proxy Statement
as Annex A.

Certain Covenants. The Company, Bailey and Acquisition covenanted to
certain matters in the Reorganization Agreement including, among others, the
following:

Conduct of Business by the Company Pending the Merger. The
Reorganization Agreement provides that between the date of the Reorganization
Agreement and the Effective Time, unless Bailey and the Company shall otherwise
agree in writing or except as otherwise expressly contemplated by the
Reorganization Agreement, (a) the Company shall use its reasonable best efforts
to maintain its relationships with its suppliers and customers and, if and as
requested by Bailey or Acquisition, (i) the Company shall make reasonable
arrangements as reasonably requested by Bailey or Acquisition for
representatives of Bailey or Acquisition to meet with customers and suppliers
of the Company and (ii) the Company shall schedule, and the management of the
Company shall participate in, meetings of the representatives of Bailey or
Acquisition with employees of the Company; (b) the Company shall not make any
new commitments for capital expenditures in excess of $100,000 individually or
$500,000 in the aggregate, except for expenditures for maintenance of capital
assets in the ordinary course of its business consistent with past practice;
(c) the Company shall not otherwise conduct its business except in the ordinary
course consistent with past practice; and (d) the Company shall obtain (i)
agreements in form and substance reasonably satisfactory to Bailey from holders
of all Company stock options and holders of all Company warrants to cancel such
options and warrants in accordance with Section 3(d) of the Plan of Merger, and
(ii) an agreement in form and substance reasonably satisfactory to Bailey from
Hochreiter waiving any and all rights Mr. Hochreiter has or may have, by virtue
of the transactions contemplated by the Reorganization Agreement, to receive
the severance payment described in his Employment Agreement. See "Interests of
Certain Persons in the Merger." The Company has also agreed to certain
additional restrictions with respect to the conduct of its business prior to
the Effective Time, as set forth in Section 3.02 of the Reorganization
Agreement.

Inquiries and Negotiations. Pursuant to, and except as otherwise
provided in, the Reorganization Agreement, the Company agreed on the date of
the Reorganization Agreement, immediately to cease and cause to be terminated
any existing activities, discussions or negotiations with any parties in
respect of the acquisition of all or any substantial part of the business and
properties of the Company (an "Acquisition Transaction"). The Company agreed
in the Reorganization Agreement that it would not, and would not permit its
officers, employees, representatives or agents to (a) solicit or initiate
discussions or negotiations with, or provide any nonpublic

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<PAGE> 30
information to, any person other than Bailey or its affiliates
concerning an Acquisition Transaction, or (b) otherwise solicit, initiate or
encourage inquiries or the submission of any proposal contemplating an
Acquisition Transaction. The Company also agreed in the Reorganization
Agreement to communicate promptly to Bailey the terms of any inquiry or
proposal which it may receive in respect of an Acquisition Transaction. The
Reorganization Agreement permits the Company to (i), if advised in writing by
counsel to be required by fiduciary obligations under applicable law, provide
nonpublic information to, and participate in negotiations with, a person who
has made a bona fide offer to effect an Acquisition Transaction for an all cash
purchase price in excess of the Merger Price and (b) accept an offer for an
Acquisition Transaction which the Board of Directors of the Company, on the
advice in writing of its financial advisor, believes is more favorable to the
Company or to its shareholders than the Merger contemplated by the
Reorganization Agreement.

Bailey Loan to the Company. Pursuant to the Reorganization
Agreement, Bailey loaned the Company $5.3 million, which was used by the
Company to pay a portion of the termination fee to Moorco under the Moorco
Agreement. See "Background of the Merger." The Company's obligation to repay
the loan is evidenced by a promissory note (the "Note"), on which interest will
accrue from the date of the loan until the Note is paid in full at the annual
rate of 9 1/2 percent. The Company's obligations to pay the Note are secured
by a perfected security interest in certain of the Company's United States
assets. The Note and the security interests are, in all respects, subordinated
to the right of all other secured lenders to the Company. If the
Reorganization Agreement is terminated by the Company or Bailey pursuant to its
terms, then the due date of the Note will be ten business days after the date
of such termination, provided that if the Reorganization Agreement is
terminated as a result of conditions or circumstances beyond the Company's
control, or because Bailey or Acquisition shall have failed to comply in any
material respect with any of the covenants or agreements contained in the
Reorganization Agreement and such failure has not been cured within 30 days
after receipt of notice thereof, then the Note will be payable in three annual
equal installments on 13 April 1995, 1996 and 1997 and accrued interest will be
payable with each annual installment. The failure to obtain shareholder
approval of the Merger shall be deemed to be within the Company's control and,
as a result, termination of the Reorganization Agreement because of a failure
of that condition will not extend the due date beyond ten business days after
termination. If the Reorganization Agreement is not terminated, then the due
date will be such date after the Effective Time as Bailey may select.

Foreign Subsidiaries. Following approval of the Reorganization
Agreement by the shareholders of the Company and immediately prior to the
Effective Time, Bailey shall have the right to cause such of its affiliates as
it shall select to purchase the non-United States subsidiaries of the Company
and, if Bailey so elects, the Company shall sell or otherwise cause such
subsidiaries of the Company to be sold to such affiliates of Bailey on such
terms and in such manner as Bailey shall select provided that (a) such purchase
and sale transactions do not have an adverse effect on the Company, and (b) no
such transaction will be deemed to constitute a breach of any representation,
warranty, or covenant of the Company contained in the Reorganization Agreement.

Company Stock Options. The Company agreed in the Reorganization
Agreement to grant no additional options, warrants or similar rights. Under
the Plan of Merger, immediately prior to the Effective Time, each outstanding
Company stock option and warrant, whether or not then vested or exercisable,
shall become exercisable in full, and shall then be canceled, and the holder
thereof shall be entitled to receive from the Company immediately prior to the
Effective Time an amount equal to the excess of (i) the Merger Price multiplied
by the number of Common Shares subject to the stock option or warrant, over
(ii) the exercise price of the stock option or warrant multiplied by the number
of Common Shares subject thereto. See "Interests of Certain Persons in the
Merger."

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<PAGE> 31
TERMINATION; FEES AND EXPENSES; PLANS OF THE COMPANY IN EVENT MERGER
IS NOT CONSUMMATED

Termination. The Reorganization Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time, before or after the
approval by the shareholders of the Company, (a) by mutual consent of the
Boards of Directors of the Company, Bailey and Acquisition; (b) by the Company,
Bailey or Acquisition if the Merger shall not have been consummated on or
before 13 October 1994, or such later date as may be mutually agreed to by the
parties; (c) by the Company, Bailey or Acquisition if any court or governmental
agency of competent jurisdiction shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling, or other action shall have become final
and nonappealable; (d) by the Company if Bailey or Acquisition shall have
failed to comply in any material respect with any of the covenants or
agreements contained in the Reorganization Agreement and such failure has not
been cured within 30 days after receipt of notice thereof; (e) by the Company
if the Board of Directors of the Company shall have withdrawn or modified in a
manner adverse to Bailey or Acquisition its approval or recommendation of the
Merger in order to approve an Acquisition Transaction with a third party; (f)
by Bailey and Acquisition if the Company shall have failed to comply in any
material respect with any of the covenants or agreements contained in the
Reorganization Agreement and such failure has not been cured within 30 days
after receipt of notice thereof; (g) by Bailey and Acquisition if any condition
to the Merger, as set out in the Reorganization Agreement, to the obligations
of Bailey and Acquisition has not been satisfied for any reason; or (h) by
Bailey and Acquisition if the Board of Directors of the Company shall not
recommend to its shareholders the approval of the Reorganization Agreement, or
shall withdraw or modify in a manner adverse to Bailey or Acquisition its
approval or recommendation of the Merger, or shall take any other action to
facilitate an Acquisition Transaction with a third party.

Termination Fees. If the Company terminates the Reorganization
Agreement in order to approve an Acquisition Transaction with any third party,
or if Bailey and Acquisition terminate the Reorganization Agreement because the
Board of Directors of the Company has not recommended to its shareholders the
approval of the Reorganization Agreement, or if the Board of Directors of the
Company has withdrawn or modified in a manner adverse to Bailey or Acquisition
its approval or recommendation of the Merger or has taken any other actions to
facilitate an Acquisition Transaction with any third party, then the Company
shall, within ten business days following the termination of the Reorganization
Agreement, pay Bailey a termination fee payable in cash of approximately $5.6
million.

SOURCE AND AMOUNT OF FUNDS

Bailey will require approximately $157 million to pay the Merger Price
for all of the outstanding Common Shares of the Company and to pay for the
cancellation of all outstanding Company stock options and warrants. Bailey has
executed a commitment letter with Chemical Bank to provide the financing
necessary for Bailey and Acquisition to complete the Merger.

FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

THE DISCUSSION SET FORTH BELOW CONCERNING FEDERAL INCOME TAX
CONSEQUENCES TO A PARTICULAR SHAREHOLDER MAY VARY DEPENDING UPON SUCH
SHAREHOLDER'S PARTICULAR CIRCUMSTANCES. FOR EXAMPLE, THE FOLLOWING DISCUSSION
MAY NOT BE APPLICABLE TO A SHAREHOLDER WHO ACQUIRED COMMON SHARES PURSUANT TO
THE EXERCISE OF STOCK OPTIONS OR OTHERWISE AS COMPENSATION. EACH SHAREHOLDER
IS URGED TO CONSULT SUCH SHAREHOLDER'S OWN TAX ADVISOR WITH RESPECT TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH SHAREHOLDER OF THE MERGER OR THE EXERCISE
OF DISSENTERS APPRAISAL RIGHTS, INCLUDING THE APPLICABILITY AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAXES.

Exchange of Common Shares pursuant to the Merger (and the receipt of
cash in respect of the exercise of dissenters appraisal rights) will be taxable
transactions for federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be taxable transactions under applicable state,
local and other tax laws.

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<PAGE> 32
For federal income tax purposes, each holder of Common Shares whose
shares are exchanged in the Merger will generally recognize gain or loss equal
to the difference between the amount of cash received by such shareholder in
the Merger and such shareholder's tax basis in such shares. Gain or loss
recognized will be treated as a long-term capital gain or loss if the Common
Shares are held as capital assets and if the Common Shares exchanged have a
holding period of more than one year at the Effective Time.

If a noncorporate shareholder recognizes a capital loss in connection
with the sale of Common Shares, the shareholder may offset such capital loss
against any other capital gains realized by such shareholder in the taxable
year and against up to $3,000 of such shareholder's ordinary income (for
individuals filing joint returns). Any excess loss may be carried forward
indefinitely. A corporate shareholder may use a capital loss recognized in
connection with the Merger to offset any capital gains realized by it in the
same taxable year but not to offset ordinary income. Any unused capital loss
of a corporation may generally be carried back to its three preceding taxable
years and then, to the extent unused, forward for five succeeding taxable
years, in each case to offset capital gains, if any.

DISSENTERS APPRAISAL RIGHTS

For purposes of this section, the term "Company" will be deemed to
also refer to the Surviving Corporation with respect to actions taken after the
Effective Time.

Pursuant to the Plan of Merger and the BCL, the owners of Common
Shares will have dissenters rights in connection with the Merger under BCL
Subchapter 15D (hereinafter "Subchapter 15D"), a copy of which is included in
this Proxy Statement as Annex C, and may object to the Merger Proposal and
demand in writing that the Company pay the fair value of their Common Shares.

Failure by any dissenting shareholder to comply with any procedure
required by Subchapter 15D may cause a termination of such shareholder's
dissenters rights. The Company will not give any notice of the following
requirements other than as described in this Proxy Statement and as required by
the BCL.

A holder of record of Common Shares may assert dissenters rights as to
fewer than all of the Common Shares registered in such holder's name only if
the holder dissents with respect to all the Common Shares beneficially owned by
any one person and discloses the name and address of the person or persons on
whose behalf the holder dissents. In that event, the holder's rights shall be
determined as if the shares as to which the holder has dissented and the other
shares were registered in the names of different holders. A beneficial owner
of Common Shares who is not also the record holder of such shares may assert
dissenters rights with respect to shares held on the owner's behalf and shall
be treated as a dissenting shareholder under the terms of Subchapter 15D if the
beneficial owner submits to the Company not later than the time of filing the
Notice of Intention to Dissent (as defined below) a written consent of the
record holder. Such beneficial owner may not dissent with respect to some but
less than all Common Shares of the same class or series so owned.

Holders of Common Shares (or beneficial owners thereof as provided
above) who follow the procedures of Subchapter 15D as outlined below will be
entitled to receive from the Company the fair value of their Common Shares
immediately before the Effective Time, taking into account all relevant factors
but excluding any appreciation or depreciation in anticipation of the
effectuation of the Plan of Merger. Holders of Common Shares (or a beneficial
owner thereof) who elect to exercise their dissenters rights must comply with
all of the following procedures to preserve those rights.

Holders of Common Shares (or beneficial owners thereof) who wish to
exercise dissenters rights must file a written notice of intention to demand
the fair value of their Common Shares if the Merger is effectuated (the "Notice
of Intention to Dissent"). Such dissenters must file the Notice of Intention
to Dissent with the Secretary of the Company prior to the vote by shareholders
on the Merger Proposal; they must make no change in their beneficial ownership
of Common Shares from the date of such filing until the Effective Date; and
they must refrain from voting

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<PAGE> 33
their Common Shares for the adoption of the Merger Proposal. Neither a
proxy nor a vote against the Merger Proposal will constitute the giving of the
Notice of Intention to Dissent.

If the Merger Proposal is approved by the required vote at the Special
Meeting, the Company will mail a notice (the "Notice of Approval") to all
dissenters who filed a Notice of Intention to Dissent prior to the vote on the
Merger Proposal and who refrained from voting for the adoption of the Merger
Proposal. The Company expects to mail the Notice of Approval promptly after
effectuation of the Merger. The Notice of Approval will state where and when
(the "Demand Deadline") a demand for payment must be sent and certificates for
Common Shares must be deposited in order to obtain payment; it will supply a
form for demanding payment (the "Demand Form") which includes a request for
certification of the date on which the holder, or the person on whose behalf
the holder dissents, acquired beneficial ownership of Common Shares; and it
will be accompanied by a copy of Subchapter 15D. Dissenters must ensure that
the Demand Form and their certificates for Common Shares are received by the
Company on or before the Demand Deadline. All mailings to the Company are at
the risk of the dissenter. However, the Company recommends that the Notice of
Intention to Dissent, the Demand Form and the holder's stock certificates be
sent by certified mail.

Any holder (or beneficial owner) of Common Shares who fails to file a
Notice of Intention to Dissent, fails to complete and return the Demand Form,
or fails to deposit stock certificates with the Company, each within the time
periods provided above, will lose the holder's (or beneficial owner's)
dissenters rights under Subchapter 15D. A dissenter will retain all rights of
a shareholder, or beneficial owner, as the case may be, until those rights are
modified by effectuation of the Plan of Merger.

Upon timely receipt of the completed Demand Form, the Company is
required by the BCL either to remit to dissenters who have returned the Notice
of Intention to Dissent and the completed Demand Form and have deposited their
certificates, the amount the Company estimates to be the fair value for their
shares or to give written notice that no such remittance will be made. The
Company does not intend to make payment of any part of the amounts payable to
dissenters until the fair value of the Common Shares affected by the Merger has
been finally determined. The remittance or notice will be accompanied by:

(1) the closing balance sheet and statement of income of
the Company for the fiscal year ended 31 December 1993, together with
the latest available interim financial statements;

(2) a statement of Company's estimate of the fair value
of the Common Shares (which will be the $24.25 per share Merger
Price); and

(3) a notice of the right of the dissenter to demand
payment or supplemental payment, as the case may be, accompanied by a
copy of Subchapter 15D.

If the Company does not remit the amount of its estimate of the fair
value of the Common Shares, it will return any certificates that have been
deposited, and may make a notation on any such certificates that a demand for
payment in accordance with Subchapter 15D has been made. If shares carrying
such notation are thereafter transferred, each new certificate issued therefor
may bear a similar notation, together with the name of the original dissenting
holder or owner of such shares. A transferee of such shares will not acquire
by such transfer any rights in the Company other than those which the original
dissenter had after making demand for payment of their fair value.

After the Company gives notice of its $24.25 estimate of the fair
value of the shares as provided above, without remitting that amount, and the
dissenter believes that the Merger Price is less than the fair value of the
shares, the dissenter may send to the Company the dissenter's own estimate (the
"Holder's Estimate") of the fair value of the shares as contemplated by BCL
Section 1578, which will be deemed a demand for payment of the amount of the
deficiency. If a dissenter does not file a Holder's Estimate within 30 days
after the mailing by the Company of its remittance or notice, the dissenter
will be entitled to no more than the Merger Price.

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<PAGE> 34
If, within 60 days after the Effective Time or after the timely
receipt by the Company of any Holder's Estimate, whichever is later, any
demands for payment remain unsettled, the Company may file in the Court of
Common Pleas of Bucks County, Pennsylvania an application for relief requesting
that the fair value of the Common Shares be determined by the court. There is
no assurance that the Company will file such an application. All dissenters,
wherever residing, whose demands have not been settled will be made parties to
any such appraisal proceeding. The court may appoint an appraiser to receive
evidence and recommend a decision on the issue of fair value. Each dissenter
who is made a party will be entitled to recover the amount by which the fair
value of the dissenter's Common Shares is found to exceed the amount, if any,
previously remitted, plus interest. Interest shall be payable from the
Effective Date until the date of payment at such rate as is fair and equitable
under all the circumstances, taking into account all relevant factors,
including the average rate currently paid by the Company on its principal bank
loans. If the Company fails to file an application for relief, any dissenter
who has made a demand and who has not already settled the dissenter's claim
against the Company may do so in the name of the Company at any time within 30
days after the expiration of the 60-day period. If a dissenter does not file
an application within the 30-day period, each dissenter entitled to file an
application shall be paid the Merger Price and no more, and may bring an action
to recover any amount not previously remitted.

The costs and expenses of such court proceedings, including the
reasonable compensation and expenses of the appraiser appointed by the court,
will be determined by the court and assessed against the Company, except that
any part of the costs and expenses may be apportioned and assessed as the court
deems appropriate against all or some of the dissenters who are parties and
whose action in demanding supplemental payment the court finds to be dilatory
or in bad faith. Fees and expenses of counsel and of experts for the
respective parties may be assessed as the court deems appropriate against the
Company, and in favor of any or all dissenters, if the Company fails to comply
substantially with the requirements of Subchapter 15D. Such fees and expenses
may be assessed against either the Company or a dissenter, if the court finds
that the party against whom the fees and expenses are assessed acted in bad
faith or in a dilatory manner. If the court finds that the services of counsel
for any dissenter were of substantial benefit to other dissenters similarly
situated and should not be assessed against the Company, it may award such
counsel reasonable fees to be paid out of the amounts awarded to the dissenters
who were benefitted.

Under the BCL, a shareholder of the Company has no right to obtain, in
the absence of fraud or fundamental unfairness, an injunction against the
Merger, nor any right to valuation and payment of the fair value of the
holder's shares because of the Merger, except to the extent provided by the
dissenters rights provisions of Subchapter 15D. The BCL also provides that
absent fraud or fundamental unfairness, the rights and remedies provided by
Subchapter 15D are exclusive.

The foregoing description of the rights of dissenters under Subchapter
15D should be read in conjunction with Annex C to this Proxy Statement, and is
qualified in its entirety by the provisions of Subchapter 15D.

ADDITIONAL INFORMATION

LEGAL PROCEEDINGS

In December 1991, a putative class action and derivative action was
commenced in the United States District Court for the Eastern District of
Pennsylvania against, as the complaint was amended in February 1992, the
Company, Jay H. Tolson, Geoffrey H. Sayer, and almost all of the persons who
are now, or were at any time on or after 1 January 1989, directors of the
Company. The suit (the "Federal Action") was brought by two Company
shareholders, Howard Weiner and Lepow Equities Corporation, on behalf of a
class consisting of all persons who purchased Company stock since 1 January
1989, and, derivatively, on behalf of the Company against the named individual
defendants. The class action complaint alleges, in substance, that certain of
the Company's publicly filed or disseminated financial statements, reports and
other documents contained misstatements or omissions of material facts about
the Company's business and finances, and principally alleges deficiencies in
the description of certain of the Company's product lines and of the effects
thereof on the Company's financial condition, operations and prospects. The

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<PAGE> 35
derivative claims allege, in substance, breach of fiduciary duty,
breach of the duty of loyalty, and waste of corporate assets by the individual
defendants by failing to detect, prevent or disclose such alleged problems, and
alleged mismanagement relating thereto. The plaintiffs seek damages in an
unspecified amount. The defendants have denied the allegations. In March
1993, the parties stipulated to the dismissal of all class action claims and
the dismissal of one of the plaintiffs, Howard Weiner, from the action. A
third amended complaint, alleging only the derivative claims, was filed in May
1993. On 22 June 1993, the parties reached a settlement of this matter and
filed a Stipulation of Settlement with the Court, which was later amended in
August 1993. On 12 August 1993, the Honorable James McGirr Kelly held a
hearing on the proposed settlement after notice of the hearing and of the
settlement had been provided to all shareholders of record. Two shareholders,
Alvin Hoffman and Henry J. Schmidt, appeared at the hearing to object to the
proposed settlement. On 19 August 1993, the Court issued an order denying
approval of the settlement.

On 30 September 1993, the Company entered into and announced the
Conversion and Warrant Agreements with Messrs. Tolson and Hochreiter. In
response to the Company's announcement of those Agreements, a class action suit
(the "Bucks County Action") was filed on 6 October 1993 in the Court of Common
Pleas of Bucks County challenging the Conversion and Warrant Agreements.
Shortly thereafter, the plaintiff in the Federal Action filed a fourth amended
complaint which included the derivative claims as previously set forth as well
as a class action claim challenging the Conversion and Warrant Agreements
announced on 30 September 1993. Negotiations to achieve a revised settlement
in the Federal Action were subsequently conducted among the parties and counsel
for one of the objectors to the previous settlement which resulted in agreement
on a revised settlement agreement. On 21 March 1994, the parties filed a
Second Amended Stipulation of Settlement in the Federal Action. As part of the
Second Amended Stipulation of Settlement, the plaintiff will withdraw the
fourth amended complaint and the third amended complaint will then be the
operative complaint. The effect of that withdrawal is that the Second Amended
Stipulation of Settlement will resolve only the derivative claims; the claims
relating to the Conversion and Warrant Agreements will be litigated in the
Bucks County Action. The Second Amended Settlement Agreement is contingent on
the approval of the Court after a hearing, which has been set for 3 June 1994.
The terms of the Second Amended Settlement Agreement will not have a material
impact on the Company's operations or financial condition.

The complaint in the Bucks County Action is asserted as a class action
on behalf of all shareholders by shareholder Roger Copland. The defendants are
the Company, Jay H. Tolson and E. Joseph Hochreiter. The complaint alleges
claims for breach of fiduciary duty against the individual defendants with
respect to the Conversion and Warrant Agreements. Plaintiff seeks to enjoin
the individual defendants from exercising the warrants and seeks rescission of
the Conversion and Warrant Agreements. Discovery is ongoing in the Bucks
County Action. Defendants have not yet responded to the complaint and expect
to receive an amended complaint before a response (by way of answer, motion or
preliminary objection) is filed.

In order to induce Bailey to enter into the transactions contemplated
by the Reorganization Agreement, Messrs. Tolson and Hochreiter entered into a
Memorandum Agreement dated 13 April 1994 with the Company pursuant to which
Messrs. Tolson and Hochreiter agreed to accept and be bound by the Tolson and
Hochreiter Conditions and to execute such further documents as may be
reasonably requested by the Company or Bailey to effect the fulfillment of the
Tolson and Hochreiter Conditions. See "The Merger - Conditions to Consummation
of the Merger; Representations and Warrants; Certain Covenants."

INDEPENDENT PUBLIC ACCOUNTANTS

A representative of Arthur Andersen & Co., independent accountants and
auditors of the Company's financial statements, is expected to be present at
the Special Meeting, will have an opportunity to make a statement if such
representative so desires and will be available to respond to appropriate
questions.

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<PAGE> 36
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith file periodic reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the
Commission at the Northwest Atrium Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661; and 7 World Trade Center, New York, New York 10048.
In addition, copies of such materials may also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
450 Fifth Street, N.W., Washington, D.C. 20549.

After the Effective Time, the Common Shares will cease to be traded on
the American Stock Exchange. Moreover, the Surviving Corporation will be
relieved of the obligation to file informational reports under the Exchange
Act, such as proxy statements, and its officers, directors and more than 10%
shareholders will be relieved of the reporting requirements under, and the
"short-swing" profit recapture provisions of, Section 16 of the Exchange Act.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated herein by reference:

1. Annual Report on Form 10-K for the year ended 31 December 1993;

2. Report on Form 8-K filed with the Commission on 31 March 1994;

3. Report on Form 8-K filed with the Commission on 21 April 1994;

4. Form 10-K/A (Amendment No. 1) filed with the Commission on 28
April 1994; and

5. Quarterly Report on Form 10-Q for the quarter ended 31 March 1994.

All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Proxy Statement and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference in this Proxy Statement and to be part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement.

These documents (without exhibits, unless such exhibits are
specifically incorporated by reference into the information that this Proxy
Statement incorporates by reference herein) are available without charge to
each person, including each beneficial owner, to whom a copy of this Proxy
Statement is delivered, upon written or oral request of such person and by
first class mail or other equally prompt means within one business day of
receipt of request. Requests should be directed to Fischer & Porter Company,
125 East County Line Road, Warminster, Pennsylvania 18974, telephone number:
(215) 674-6000, attention: Secretary.

OTHER MATTERS

The Board of Directors of the Company does not intend to bring any
other matters before the Special Meeting and does not know of any other matters
that may be brought before the Special Meeting by others. If any other matter
should come before the Special Meeting, the persons named in the enclosed proxy
will have discretionary authority to vote the Common Shares thereby represented
in accordance with their best judgment.

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<PAGE> 37
Annex A

===================================================================

AGREEMENT AND PLAN OF REORGANIZATION

Among

FISCHER & PORTER COMPANY

MOORCO INTERNATIONAL INC.

and

F&P ACQUISITION, INC.

Dated as of March 18, 1994

==================================================================
<PAGE> 38
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
ARTICLE I

PLAN OF REORGANIZATION
<S> <C> <C>
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Conversion and Cancellation of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.03. Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II

REPRESENTATIONS AND WARRANTIES

SECTION 2.01. Representations and Warranties by F&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02. Representations and Warranties
by Buyer and Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE III

ADDITIONAL COVENANTS AND AGREEMENTS

SECTION 3.01. Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.02. Conduct of F&P's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.04. Inquiries and Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.05. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.06. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.07. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.08. Indemnification;
Director's and Officer's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE IV

CONDITIONS TO THE MERGER

SECTION 4.01. Conditions to the Merger
Relating to Buyer and Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.02. Conditions to the Merger Relating to F&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE V

TERMINATION AND ABANDONMENT

SECTION 5.01. Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.02. Termination by F&P, Buyer or Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.03. Termination by F&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.04. Termination by Buyer and Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

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<PAGE> 39
<TABLE>
<S> <C> <C>
SECTION 5.05. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.06. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.07. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE VI

MISCELLANEOUS

SECTION 6.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.02. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.03. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.04. No Survival of Representations or Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.05. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.06. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.07. No Rights; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.08. No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
EXHIBIT A Plan of Merger

SCHEDULES

SCHEDULE 2.01(b) Options and Warrants
SCHEDULE 2.01(e) Required Consents
SCHEDULE 2.01(i) Employee Benefit Plans
</TABLE>

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<PAGE> 40
AGREEMENT AND PLAN OF REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION, dated as of March 18, 1994
(the "Agreement"), among FISCHER & PORTER COMPANY, a Pennsylvania corporation
("F&P"), MOORCO INTERNATIONAL INC., a Delaware corporation ("Buyer"), and F&P
ACQUISITION, INC., a Pennsylvania corporation and a wholly-owned subsidiary of
Buyer ("Acquisition").

W I T N E S E T H

WHEREAS, the respective boards of directors of F&P, Buyer and
Acquisition have each approved the acquisition of F&P by Buyer through a
merger (the "Merger") of Acquisition with and into F&P (Acquisition and
F&P being sometimes hereinafter together referred to as the "Constituent
Corporations") in accordance with the provisions of this Agreement and
the Plan of Merger set forth as Exhibit A hereto (the "Plan of Merger"),
in which outstanding shares of F&P common stock, par value $1.00 per
share (the "F&P Common Stock"), will be converted into the right to
receive cash, without interest, in the amount of $23.25 (the "Merger
Price") per share.

NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying
the same into effect, the parties hereto, intending to be legally bound, hereby
agree as follows:

ARTICLE I

PLAN OF REORGANIZATION

SECTION 1.01. The Merger. At the Effective Time (as hereinafter
defined), Acquisition shall be merged with and into F&P pursuant to this
Agreement and the Plan of Merger and the separate corporate existence of
Acquisition shall cease. F&P, as it exists from and after the Effective Time,
is sometimes hereinafter referred to as the "Surviving Corporation".

SECTION 1.02. Conversion and Cancellation of Securities. At the
Effective Time, by virtue of the Merger and without any action on the part of
Buyer, Acquisition, F&P or any holder of any shares of capital stock of F&P,
the shares of capital stock of each of the Constituent Corporations shall be
converted as set forth in the Plan of Merger.
<PAGE> 41

SECTION 1.03. Timing.

(a) Shareholder Approval. F&P shall submit this Agreement, the
Plan of Merger and the Merger to its shareholders for approval and adoption at
a meeting to be held as soon as practicable and will use its best efforts to
hold such meeting within 60 days in accordance with Section 3.01 hereof. In
connection with such meeting, F&P shall take all steps as shall be necessary
for the prompt preparation and filing by F&P of a proxy statement (the "Proxy
Statement"), as contemplated by Rules 14a-1 et. seq. under the Securities
Exchange Act of 1934 (the "Exchange Act"), with the Securities and Exchange
Commission (the "SEC") and shall use its best efforts to cause the Proxy
Statement to be mailed to the holders of shares of F&P Common Stock as soon as
practicable.

(b) Closing and Effective Time. Subject to the Merger
receiving all requisite shareholder approvals and subject to the provisions of
this Agreement, the parties shall hold a closing (the "Closing") on (i) the
later of (A) the second business day following the meeting of the shareholders
of F&P to consider and vote upon this Agreement, the Plan of Merger and the
Merger and (B) the first business day on which the last of the conditions set
forth in Article IV to be fulfilled prior to the Closing is fulfilled or waived
or (ii) such other date as the parties hereto may agree (the "Closing Date"),
at 10:00 A.M. (local time) at the offices of Morgan, Lewis & Bockius,
Philadelphia, Pennsylvania, or at such other time or place as the parties
hereto may agree. On the Closing Date, Articles of Merger shall be filed with
the Secretary of the Commonwealth of Pennsylvania in accordance with the
provisions of the BCL, and the Merger shall become effective upon such filing
or at such later time on the Closing Date as may be specified in the filing
with the Secretary of the Commonwealth of Pennsylvania (the "Effective Time").
As a result of the Merger, the Surviving Corporation shall become a
wholly-owned subsidiary of Buyer at the Effective Time.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

SECTION 2.01. Representations and Warranties by F&P. F&P
represents and warrants to Buyer and Acquisition as follows:

(a) Organization and Qualification. F&P and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as it has been and now is being
conducted, and is duly qualified as a foreign corporation to do business, and
is in

A-2
<PAGE> 42
good standing, in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except for such jurisdictions where the failure so to qualify would not have a
material adverse effect on F&P and its subsidiaries taken as a whole.

(b) Capitalization. The authorized capital stock of F&P
consists of (i) 8,000,000 shares of F&P common stock, par value $1 per share
(previously defined as the F&P Common Stock), (ii) 50,000 shares of F&P
convertible exchangeable preferred stock, par value $100 per share (the "F&P
Preferred Stock"), (iii) 1,000,000 share of F&P series preference stock, par
value $1 per share (the "F&P Series Stock"), and (iv) 700,000 shares of F&P
class B capital stock, par value $1 per share (the "F&P Class B Stock"). At
the close of business on March 17, 1994, [5,295,250] shares of F&P Common Stock
were issued and outstanding and 13 shares of F&P Common Stock were held in
treasury by F&P, and no shares of F&P Preferred Stock, F&P Series Stock or F&P
Class B Stock were issued and outstanding. All of such issued and outstanding
shares of F&P Common Stock were validly issued, and are fully paid and
nonassessable and were issued in compliance with all applicable Federal and
state securities laws. Since March 17, 1994, no shares of F&P Common Stock,
F&P Preferred Stock, F&P Series Stock or F&P Class B Stock have been issued.
Except for options and warrants described in Schedule 2.01(b) hereto, there are
no options, warrants, calls, agreements or other rights to purchase or
otherwise acquire from F&P at any time, or upon the happening of any stated
event, any shares of the capital stock of F&P or any of its subsidiaries,
whether or not presently issued or outstanding.

(c) Authority Relative to Agreements. F&P has all requisite
corporate power and authority to execute and deliver this Agreement and the
agreements and instruments to be executed and delivered by F&P in connection
herewith (collectively, the "Other F&P Agreements") and, subject only to the
requisite approval of its shareholders, the requisite approval to perform its
obligations hereunder and thereunder. This Agreement has been approved the
Board of Directors of F&P. The execution and delivery of this Agreement and
the Other F&P Agreements by F&P and the consummation by F&P of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of F&P and, except for the approval and adoption of this Agreement,
the Plan of Merger and the Merger by its shareholders, no other corporate
proceedings on the part of F&P are necessary to authorize the Merger and the
other transactions contemplated hereby and thereby. This Agreement has been,
and each Other F&P Agreement will be, duly executed and delivered by F&P and,
subject only to the requisite approval of its shareholders, this Agreement
constitutes, and each Other F&P Agreement when executed and delivered will
constitute, a valid

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and binding obligation of F&P, enforceable against F&P in accordance with its
terms.

(d) Lack of Conflict With Other Agreements. The execution and
delivery of this Agreement and the Other F&P Agreements by F&P and the
consummation by F&P of the transactions contemplated hereby and thereby will
not (i) conflict with any provision of the Articles of Incorporation or Bylaws
of F&P or (ii) except for agreements between F&P or any of its subsidiaries and
its or their lenders, result in any violation of or default or loss of a
benefit under, or permit the acceleration of any obligation under, any
mortgage, indenture, lease, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to F&P or any of its subsidiaries, which
violation, default, loss or acceleration would have a material adverse effect
on F&P and its subsidiaries, taken as a whole.

(e) Consents. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Federal, state, local or
foreign governmental or regulatory authority is required to be obtained or made
by F&P in connection with the execution and delivery of this Agreement or the
Other F&P Agreements by F&P or the consummation by F&P of the transactions
contemplated hereby and thereby, except for (i) filings pursuant to Section 14
of the Exchange Act and the rules and regulations promulgated by the SEC
thereunder, (ii) the filing of a premerger notification and the expiration or
early termination of the waiting period required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), (iii) as described in
Schedule 2.01(e) hereto and (iv) the filing of Articles of Merger with the
Secretary of the Commonwealth of Pennsylvania.

(f) SEC Filings. F&P has made available to Buyer and
Acquisition a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by F&P with the SEC since
January 1, 1990 (together referred to as the "SEC Filings"). As of their
respective dates, the SEC Filings did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except, in the case of any SEC Filing,
any statement or omission therein which has been corrected or otherwise
disclosed or updated in a subsequent SEC Filing. The financial statements of
F&P included in the SEC Filings have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present the financial
position of F&P as at the dates thereof and the results of its operations and
changes in financial position for the periods then ended, subject, in the

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case of the unaudited interim financial statements, to the omission of footnote
information and to normal year-end audit adjustments.

(g) F&P has furnished to Buyer its balance sheet as of December
31, 1993, together with a statement of income for the year then ended (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of F&P as of December 31, 1993 and
the results of its operations and changes in financial position for the year
then ended.

(h) Proxy Statement. None of the information included in the
Proxy Statement (as amended or supplemented) will, at the time the proxy
statement is mailed or at the time of the meeting of shareholders to which the
Proxy Statement relates, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation or warranty is made with respect to information relating
to Buyer or Acquisition supplied by Buyer or Acquisition for inclusion in the
Proxy Statement. The Proxy Statement will comply in all material respects, as
to form and otherwise, with the requirements of the Exchange Act and the rules
and regulations promulgated by the SEC thereunder.

(i) Litigation. There are no actions, suits or proceedings
pending, or to the knowledge of F&P threatened against F&P or any of its
subsidiaries, which if determined or resolved adversely to F&P or any of its
subsidiaries is reasonably likely to have a material adverse effect on F&P and
its subsidiaries, taken as a whole.

(j) Employee Benefit Plans. Schedule 2.01(i) hereto lists all
employee benefit plans, contracts, agreements or arrangements sponsored,
maintained or contributed to by F&P or any of its United States subsidiaries
(collectively, the "Employee Benefit Plans") including without limitation all
employment, pension, retirement, deferred compensation, incentive, bonus,
profit-sharing, stock purchase, stock option, performance share, stock
appreciation right, phantom stock, life insurance, death or survivor's benefit,
health insurance, sickness, disability, medical, surgical, hospital, severance,
layoff or vacation plans, contracts, agreements or arrangements. Accurate
summaries of the material benefits provided under all Employee Benefit Plans
have been delivered to Buyer and Acquisition. Except as described in Schedule
2.01(i) hereto, (i) neither F&P nor any of its subsidiaries has incurred any
obligation to contribute any material amount to any multi- employer plan, as
defined in Section 3(37) of the Employee

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<PAGE> 45
Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) neither F&P
nor any of its subsidiaries has incurred any material liability under Title IV
of ERISA arising in connection with the termination of, or complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA,
and (iii) each Employee Benefit Plan is in compliance with all applicable laws
and regulations in all material respects.

(k) Brokers. Except for the arrangement regarding CS First
Boston heretofore disclosed to Buyer, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of F&P.

(l) Environmental Matters.

(1) F&P is not subject to any existing or pending (or to the
knowledge of F&P threatened) action, suit, investigation, inquiry or proceeding
by any governmental authority or private party under, or is currently in
violation of, or subject to, any remedial obligation under, any environmental
law except for (i) violations or obligations that would not have, either
individually or in the aggregate, a material adverse effect on the business,
prospects, results of operations or condition (financial or otherwise) of F&P,
taken as a whole, and (ii) actions, suits, investigations, inquiries or
proceedings that, if adversely determined, would not have, either individually
or in the aggregate, a material adverse effect on the business, prospects,
results of operations or condition (financial or otherwise) of F&P, taken as a
whole; and

(2) all environmental notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in connection with the
operation of the business of F&P have been obtained or filed, except where the
failure to obtain or file the same would not have, either individually or in
the aggregate, a material adverse effect on the business, prospects, results of
operations or condition (financial or otherwise) of F&P, taken as a whole.

SECTION 2.02. Representations and Warranties by Buyer and Acquisition.
Buyer and Acquisition each represent and warrant to F&P as follows:

(a) Organization and Qualification; Etc. Each of Buyer and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as it is now being conducted. Buyer
owns beneficially and of record all the issued and outstanding capital stock of
Acquisition.

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(b) Authority Relative to Agreements. Each of Buyer and
Acquisition has all requisite corporate power and authority to enter into this
Agreement and the agreements and instruments to be executed and delivered by
Buyer or Acquisition in connection herewith (collectively, the "Other Buyer
Agreements") and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Other Buyer Agreements by
Buyer and Acquisition and the consummation by Buyer and Acquisition of the
transactions contemplated hereby and thereby have been duly authorized by the
Boards of Directors of Buyer and Acquisition and no other corporate proceedings
on the part of Buyer or Acquisition are necessary to authorize the Merger and
the other transactions contemplated hereby and thereby. This Agreement has
been, and each Other Buyer Agreement will be, duly executed and delivered by
Buyer or Acquisition and this Agreement constitutes, and each Other Buyer
Agreement when executed and delivered will constitute, a valid and binding
obligation of Buyer or Acquisition, as the case may be, enforceable against
Buyer and Acquisition in accordance with its terms.

(c) Lack of Conflicts with Other Agreements. The execution and
delivery of this Agreement and the Other Buyer Agreements by Buyer and
Acquisition and the consummation by Buyer and Acquisition of the transactions
contemplated hereby and thereby will not (i) conflict with any provision of the
charter or organizational documents of Buyer or Acquisition or (ii) result in
any violation of or default or loss of a benefit under, or permit the
acceleration of any obligation under, any mortgage, indenture, lease, agreement
or other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Buyer
or Acquisition, which violation, default, loss or acceleration would have a
material adverse effect on Buyer or Acquisition.

(d) Consents. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Federal, state, local or
foreign governmental or regulatory authority is required to be made or obtained
by Buyer or Acquisition in connection with the execution and delivery of this
Agreement or any Other Buyer Agreement by Buyer or Acquisition or the
consummation by Buyer or Acquisition of the transactions contemplated hereby
and thereby, except for (i) the filing of a premerger notification and the
expiration or early termination of the waiting period required by the HSR Act
and (ii) the filing of Articles of Merger with the Secretary of the
Commonwealth of Pennsylvania.

(e) Proxy Statement and Other Information. None of the
information relating to Buyer or Acquisition which is supplied by Buyer for
inclusion in the Proxy Statement (as such information is amended or
supplemented) will, at the time the

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proxy statement is mailed or at the time of the meeting of shareholders to
which the Proxy Statement relates, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is otherwise made by
Buyer or Acquisition with respect to the Proxy Statement.

(f) Brokers. Except for Wasserstein Perella & Co., no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of Buyer or Acquisition.

(g) Financing. Buyer has on hand or access to, and will make
available to Acquisition on or prior to the Effective Time, funds sufficient to
pay the Merger Price for all issued and outstanding shares of F&P Common Stock
pursuant to the Merger and to pay all other amounts owing by F&P or Acquisition
in connection with the transactions contemplated by this Agreement.

(h) Buyer, as of the date of this Agreement, has been advised
by NationsBank of Texas, N.A. ("NationsBank") that:

(i) no additional diligence of F&P is required by NationsBank
in connection with the loans contemplated by the commitment
letter from NationsBank to Buyer dated March 11, 1994; and

(ii) all authorizations internal to the NationsBank approval
process have been obtained; and

(iii) a condition precedent to the loans contemplated by the
aforementioned commitment letter is that no material
adverse change shall have occurred to the business,
financial condition, property or prospect(s) of (i) F&P,
taken as a whole, or (ii) Buyer and its subsidiaries (on a
consolidated basis) and F&P, taken as a whole, since
December 31, 1993.

ARTICLE III

ADDITIONAL COVENANTS AND AGREEMENTS

SECTION 3.01. Shareholder Approval.

(a) As soon as reasonably practicable following the date of
this Agreement, F&P shall take all action necessary in accordance with the
Exchange Act, the laws of the Commonwealth of Pennsylvania and its Articles of
Incorporation and Bylaws to

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call, give notice of and convene a meeting (the "Meeting") of its shareholders
to consider and vote upon the approval and adoption of this Agreement, the Plan
of Merger and the Merger and for such other purposes as may be necessary or
desirable. The Board of Directors of F&P shall, subject to its fiduciary
duties, recommend without qualification of any nature that F&P's shareholders
vote to approve and adopt this Agreement, the Plan of Merger and the Merger and
any other matters to be submitted to F&P's shareholders in connection
therewith. The Board of Directors of F&P shall, subject to its fiduciary
duties, use its reasonable best efforts to solicit and secure from shareholders
of F&P such approval and adoption, which efforts may include without limitation
causing F&P to solicit shareholder proxies therefor and to advise Buyer upon
its request from time to time as to the status of the shareholder vote then
tabulated.

(b) Promptly following the date of this Agreement, F&P shall
prepare and file with the SEC under the Exchange Act and the rules and
regulations promulgated by the SEC thereunder, a preliminary draft of the Proxy
Statement. Buyer and Acquisition shall cooperate fully with F&P in the
preparation and filing of the Proxy Statement and any amendments and
supplements thereto. The Proxy Statement shall not be filed, and no amendment
or supplement thereto shall be made by F&P, and no communication with the SEC
shall be had, without in each case prior consultation with Buyer and
Acquisition and their counsel. F&P will use its best efforts to have any
review of the Proxy Statement conducted by the SEC promptly. As soon as
reasonably practicable following the date of this Agreement, F&P shall cause to
be mailed a definitive Proxy Statement to its shareholders entitled to vote at
the Meeting promptly following completion of any review by, or in the absence
of such review, the termination of any applicable waiting period of, the SEC.

SECTION 3.02. Conduct of F&P's Business. F&P covenants and
agrees that, from the date of this Agreement to the Effective Time, unless
Buyer or Acquisition shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement:

(a) F&P shall not directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber any assets of F&P
other than in the ordinary course of its business consistent with past
practice, (ii) amend or propose to amend its Articles of Incorporation or
Bylaws, (iii) split, combine or reclassify any outstanding shares of its
capital stock, or declare, set aside or pay any dividend payable in cash,
stock, property or otherwise with respect to such shares, (iv) redeem,
purchase, acquire or offer to acquire any shares of its capital stock or (v)
enter into any agreement with respect to any of the matters set forth in this
Section 3.02(a);

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(b) F&P shall not (i), except in connection with the exercise
of any Company Stock Options or Company Warrants (each as defined in the Plan
of Merger), issue, sell, pledge or dispose of, or agree to issue, sell, pledge
or dispose of, any additional shares of, or securities convertible or
exchangeable for, or any options, warrants or rights of any kind to acquire any
shares of, its capital stock of any class or other property or assets whether
pursuant to any rights agreement, stock plan or otherwise, (ii) acquire (by
merger, consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof, (iii) incur any
indebtedness for borrowed money or issue any debt securities, except in the
ordinary course of its business consistent with past practice, (iv) enter into
or modify any material contract, lease or agreement except in the ordinary
course of its business consistent with past practice, (v) terminate, modify,
assign, waive, release or relinquish any material contract rights or amend any
material rights or claims not in the ordinary course of its business consistent
with past practice or except as expressly provided herein or (vi) dissolve or
otherwise alter its corporate existence;

(c) F&P shall not grant any increase in the salary or other
compensation of its employees or grant any bonus to any employee, except in the
ordinary course of its business consistent with past practice. F&P shall not
enter into any employment agreement or make any loan to or enter into any
material transaction of any other nature with any officer or other executive
employee of F&P;

(d) F&P shall not take any action to institute any new
severance or termination pay practices with respect to any directors, officers
or employees of F&P or to increase the benefits payable under its severance or
termination pay practices;

(e) F&P shall not hire any new employees except for employees
having an annualized salary of less than $100,000 who are terminable at will;

(f) F&P shall not adopt or amend, in any respect, except as may
be required by applicable law or regulation, any bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust,
fund, plan or arrangement for the benefit or welfare of any directors, officers
or employees, except in the ordinary course of its business consistent with
past practice;

(g) F&P shall not mortgage, pledge or otherwise subject to any
lien, security interest, encumbrance or change of any nature, any of its
property or assets, or become committed so

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to do, or permit or suffer any of such property or assets to become subject to
any mortgage, pledge, lien, security interest, encumbrance or change of any
nature, other than liens of current taxes not yet due and payable, or become
committed to do so;

(h) F&P shall use its reasonable best efforts to maintain its
relationships with its suppliers and customers and, if and as requested by
Buyer or Acquisition, (i) F&P shall make reasonable arrangements as reasonably
requested by Buyer or Acquisition for representatives of Buyer or Acquisition
to meet with customers and suppliers of F&P (if Buyer shall give F&P reasonable
notice of such meetings) and (ii) F&P shall schedule, and the management of F&P
shall participate in, meetings of representatives of Buyer or Acquisition with
employees of F&P;

(i) F&P shall not make any new commitments for capital
expenditures in excess of $100,000 individually or $500,000 in the aggregate,
except for expenditures for maintenance of capital assets in the ordinary
course of its business consistent with past practice;

(j) F&P shall maintain all of the assets used or useful to the
business of F&P in good repair, order and condition, maintain in full force and
effect all franchises, licenses, permits, consents, approvals, rights, waivers
and other authorizations, governmental or otherwise, currently in effect and
maintain in full force all policies of insurance or satisfactory substitute
insurance policies insuring against the risks, damages and losses covered by
the insurance policies currently in force, in each case consistent with its
past practice.

(k) F&P shall not otherwise conduct its business except in the
ordinary course consistent with past practice; and

(l) F&P shall obtain agreements in form and substance
reasonably satisfactory to Buyer from holders of all Company Stock Options and
holders of all Company Warrants to cancel such options and warrants in
accordance with section 3(d) of the Plan of Merger.

SECTION 3.03. Other Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including without limitation using its reasonable best efforts to
obtain all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, including without limitation filings
required under the HSR Act and the Exchange Act.

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SECTION 3.04. Inquiries and Negotiations. F&P shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore in respect of the
acquisition of all or any substantial part of the business and properties of
F&P, whether by sale of assets or shares of capital stock of F&P, or by merger,
consolidation, recapitalization, liquidation or similar transaction including
F&P (collectively, an "Acquisition Transaction"). F&P shall not, and shall not
permit its officers, employees, representatives or agents to, directly or
indirectly, (a) solicit or initiate discussions or negotiations with, or
provide any nonpublic information to, any person other than Buyer or its
affiliates concerning an Acquisition Transaction, or (b) otherwise solicit,
initiate or encourage inquiries or the submission of any proposal contemplating
an Acquisition Transaction. F&P shall promptly communicate to Buyer the terms
of any inquiry or proposal which it may receive in respect of an Acquisition
Transaction. F&P's notification under this Section 3.04 shall include the
identity of the person making such proposal or any other such information with
respect thereto as Buyer may reasonably request. Nothing contained in this
Agreement shall be construed to prohibit F&P from (a), if advised in writing by
counsel to be required by fiduciary obligations under applicable law, providing
non-public information to, and participating in negotiations with, a person who
has made a bona fide offer to effect an Acquisition Transaction for an all cash
purchase price in excess of the Merger Price and (b) accepting an offer for an
Acquisition Transaction which the Board of Directors of F&P, on the advice in
writing of its investment banker, believes is more favorable to F&P or to its
shareholders than the Merger contemplated hereby.

SECTION 3.05. Notification of Certain Matters. F&P shall give
prompt notice to Buyer and Acquisition, and Buyer and Acquisition shall give
prompt notice to F&P, of (i) the occurrence, or failure to occur, of any event
which such party believes would likely cause any of its representations or
warranties contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Effective
Time and (ii) any material failure of F&P, Buyer or Acquisition, as the case
may be, or any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.

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SECTION 3.06. Access to Information.

(a) F&P shall, shall cause its officers, directors and
employees to, and shall use its reasonable best efforts to cause its
representatives and agents (including without limitation its attorneys and
accountants) to, afford, from the date of this Agreement to the Effective Time,
the officers, employees and agents of Buyer and Acquisition complete access at
all reasonable times to its officers, employees, agents, properties, books,
records, work papers, and shall furnish Buyer and Acquisition all financial,
operating and other data and information as Buyer or Acquisition, through its
officers, employees or agents, may reasonably request.

(b) If this Agreement is terminated, the parties hereto shall
comply with the terms of the letter agreement dated October 8, 1993 between F&P
and Buyer regarding confidentiality of all proprietary information of F&P and
Buyer and its affiliates, including without limitation the return of all
materials provided by the other party or certification of their destruction.

SECTION 3.07. Public Announcements. Neither F&P, Buyer nor
Acquisition shall make, issue or release any oral or written public
announcement or statement concerning, or acknowledgment of the existence of, or
reveal the terms, conditions or status of, the transactions contemplated by
this Agreement, or make any other communication to its shareholders or the
investing public, directly or indirectly (including without limitation press
releases and statements to securities analysts), without first making a good
faith attempt to obtain the prior approval of, or concurrence in, the contents
of such announcement, acknowledgment or statement by the other of them, which
approval or concurrence shall not be unreasonably withheld or delayed.

SECTION 3.08. Indemnification; Director's and Officer's
Insurance. After the Effective Time, the Surviving Corporation shall indemnify
and hold harmless (and shall also advance expenses as incurred to the fullest
extent permitted under applicable law to) each person who is now, or has been
prior to the date hereof or who becomes prior to the Effective Time, an officer
or director of F&P or any of its subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs, expenses (including without
limitation counsel fees and expenses), settlement payments or liabilities
arising out of or in connection with any claim, demand, action, suit,
proceeding or investigation based in whole or in part on, or arising in whole
or in part out of, the fact that such person is or was an officer or director
of F&P or any of its subsidiaries, whether or not pertaining to any matter
existing or occurring at or prior to the Effective Time and whether or not
asserted or

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claimed prior to or at or after the Effective Time ("Indemnified Liabilities")
and (ii) all Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to this Agreement, any Other F&P
Agreement or the transactions contemplated hereby or thereby, in each case to
the fullest extent required or permitted under applicable law or under the
Surviving Corporation's Articles of Incorporation or Bylaws (which in relevant
part are and shall remain identical to F&P's Articles of Incorporation and
Bylaws) or any indemnification agreements in effect on the date hereof (to the
extent consistent with applicable law). Any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under applicable law or the Surviving Corporation's
Articles of Incorporation or Bylaws shall be made by independent counsel
mutually acceptable to F&P and the Indemnified Party. The parties hereto
intend, to the extent not prohibited by applicable law, that the
indemnification provided for in this Section 3.08 shall apply without
limitation to negligent acts or omissions by an Indemnified Party. The
Surviving Corporation's Articles of Incorporation and Bylaws shall not be
amended in a manner that adversely affects the rights of any Indemnified Party
thereunder or under this Section 3.08, unless otherwise required by applicable
law. To the extent available on terms satisfactory to the Surviving
Corporation, the Surviving Corporation shall maintain, for not less than ten
years after the Effective Time, director's and officer's liability insurance
covering each indemnified person on terms not materially less favorable than
the insurance maintained in effect by F&P on the date hereof in terms of
coverage (including without limitation types of claims, time period of claims,
exclusions and persons covered), amounts and deductibles (but in no event shall
the coverage be less than that being maintained for the benefit of the officers
and directors of Buyer). Buyer hereby guarantees the payment and performance
of the Surviving Corporation's obligations in this Section 3.08. Each
Indemnified Party is intended to be a third party beneficiary of this Section
3.08 and may specifically enforce its terms. This Section 3.08 shall not limit
or otherwise adversely affect any rights any Indemnified Party may have under
any agreement with F&P or under F&P's Articles of Incorporation or Bylaws.

ARTICLE IV

CONDITIONS TO THE MERGER

SECTION 4.01. Conditions to the Merger Relating to Buyer and
Acquisition. The obligation of Buyer and Acquisition to effect the Merger is
subject to the satisfaction prior to the Effective Time of the following
conditions:

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(a) Shareholder Approval and Dissenters Rights. This
Agreement, the Plan of Merger and the Merger shall have been approved and
adopted by the requisite vote of the holders of the outstanding F&P Common
Stock in accordance with the BCL and F&P's Articles of Incorporation and
Bylaws. The aggregate number of Dissenting Shares (as defined in the Plan of
Merger) shall not exceed 10% of the outstanding shares of F&P Common Stock.

(b) No Injunction. No order, decree, ruling or other action of
a court or governmental agency of competent jurisdiction, restraining,
enjoining or otherwise prohibiting the Merger, shall be in effect.

(c) HSR Act. The waiting period under the HSR Act shall have
terminated or early termination thereof shall have been granted.

(d) Financing. NationsBank shall have made available to Buyer
the funds necessary for the Merger at the Closing Date pursuant to the letter
agreement between NationsBank and Buyer dated March 11, 1994, heretofore
provided to F&P.

(e) Truth of Representations and Warranties and Absence of
Material Adverse Change. The representations and warranties of F&P herein
shall be true at and as of the Closing Date and no material adverse change
shall have occurred to the business, financial condition, property or prospects
of F&P taken as a whole since the date of the Financial Statements.

(f) In a manner reasonably satisfactory to the parties:

(1) Jay H. Tolson and E. Joseph Hochreiter ("Tolson and
Hochreiter") will expressly indemnify F&P, Buyer and
Acquisition from any and all liability arising out of
and/or related to the issuance of the common stock purchase
warrants, which indemnity will be secured by the deposit of
$10,000,000 received by them in the Merger into an interest
bearing escrow account at Mellon Bank, N.A. to be invested
in U.S. Treasury obligations having maturities of not more
than 5 years;

(2) Tolson and Hochreiter expressly shall waive any indemnities
running to them from F&P, by contract, charter, by-law or
otherwise for any liability arising out of or connected
with the issuance of the warrants;

(3) Buyer shall agree that F&P shall pay the reasonable defense
costs and expenditures incurred in connection with the
defense of any claim or

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action relating to said warrants up to the $500,000 self-
insured retention under F&P's present directors and officers'
liability insurance policy and will work with Tolson and
Hochreiter on a best efforts basis to secure coverage for any
additional expenditures from the directors and officers'
insurance carrier.

SECTION 4.02. Conditions to the Merger Relating to F&P. The
obligation of F&P to effect the Merger is subject to the satisfaction prior to
the Effective Time of the following conditions:

(a) Shareholder Approval. This Agreement, the Plan of Merger
and the Merger shall have been approved and adopted by the requisite vote of
the holders of the outstanding F&P Common Stock in accordance with the BCL and
F&P's Articles of Incorporation and Bylaws.

(b) No Injunction. No order, decree, ruling or other action of
a court of competent jurisdiction, restraining, enjoining or otherwise
prohibiting the Merger, shall be in effect.

(c) HSR Act. The waiting period under the HSR Act shall have
terminated or early termination thereof shall have been granted.

ARTICLE V

TERMINATION AND ABANDONMENT

SECTION 5.01. Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval by holders of shares of Company
Capital Stock, by the mutual consent of the F&P, Buyer and Acquisition, by
action of their respective Boards of Directors.

SECTION 5.02. Termination by F&P, Buyer or Acquisition. This
Agreement may be terminated and the Merger may be abandoned by action of either
the Board of Directors of the F&P or the Boards of Directors of Buyer and
Acquisition if (a) the Merger shall not have been consummated on or before
[six] months after the date hereof, or such later date as may be mutually
agreed to by the parties hereto (but only if the party seeking to terminate
this Agreement is not otherwise in breach in any material respect of any of its
obligations hereunder) or (b) any court or governmental agency of competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Merger and

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such order, decree, ruling, or other action shall have become final and
nonappealable.

SECTION 5.03. Termination by F&P. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of F&P if (a) Buyer or Acquisition shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement to
be complied with or performed by it at or prior to the Effective Time and such
failure has not been cured within 30 days after receipt of notice thereof, or
(b) the Board of Directors of F&P shall have withdrawn or modified in a manner
adverse to Buyer or Acquisition its approval or recommendation of the Merger in
order to approve an Acquisition Transaction with any third party.

SECTION 5.04. Termination by Buyer and Acquisition. This
Agreement may be terminated and the Merger may be abandoned by action of the
Boards of Directors of Buyer and Acquisition if (a) F&P shall have failed to
comply in any material respect with any of the covenants or agreements
contained in this Agreement to be complied with or performed by it at or prior
to the Effective Time and such failure has not been cured within 30 days after
receipt of notice thereof, (b) any condition to the Merger as set out in
Section 4.01 has not been satisfied for any reason or (c) the Board of
Directors of F&P shall not recommend to its shareholders the approval of this
Agreement, or shall withdraw or modify in a manner adverse to Buyer or
Acquisition its approval or recommendation of the Merger, or shall take any
other action to facilitate an Acquisition Transaction with any third party.

SECTION 5.05. Effect of Termination. Except as provided in
Section 3.06(b) hereof with respect to information obtained in connection with
the transactions contemplated hereby, in the event of the termination of this
Agreement and the abandonment of the Merger, this Agreement shall thereafter
become void and have no effect, and no party thereto shall have any liability
to any other party hereto or its shareholders or directors or officers in
respect thereof, and each party shall be responsible for its own expenses,
except that nothing herein shall relieve any party from liability for any
willful breach thereof. Notwithstanding the foregoing, in the event that F&P
terminates this Agreement pursuant to clause (b) in Section 5.03 hereof, or
Buyer and Acquisition terminate this Agreement pursuant to clause (c) of
Section 5.04 hereof, then F&P shall, within ten business days following the
termination of this Agreement, pay Buyer a termination fee payable in cash of $
[3% of aggregate consideration called for by the Merger which, for purposes
hereof, is defined to be the aggregate Merger Price plus the indebtedness of
F&P set forth in the Financial Statements]. Except as provided in the
immediately preceding sentence, and whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions

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contemplated hereby shall be paid by the party incurring such expenses.

SECTION 5.06. Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto; except that after approval of the Merger by the shareholders of F&P, no
amendment may be made which decreases the amount of cash to which the
shareholders of F&P are entitled pursuant to this Agreement or otherwise
materially adversely affects the shareholders of F&P without the further
approval of a majority of the votes cast by the shareholders of F&P.

SECTION 5.07. Waiver. Any time prior to the Effective Time, any
party hereto may (a) in the case of the Buyer or Acquisition, extend the time
for the performance of any of the obligations or other acts of F&P or, subject
to the provisions contained in Section 5.06 hereof, waive compliance with any
of the agreements of F&P or with any conditions to the respective obligations
of Buyer or Acquisition, or (b) in the case of F&P, extend the time for the
performance of any of the obligations or other acts of Buyer or Acquisition, or
waive compliance with any conditions to its own obligations. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid if
set forth in an instrument in writing signed on behalf of such party by a duly
authorized officer.

ARTICLE VI

MISCELLANEOUS

SECTION 6.01. Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if sent by
facsimile transmission, registered or certified mail, postage prepaid, or
Federal Express or similar overnight delivery addressed, in the case of F&P, to
it at

Fischer & Porter Company
125 East County Line Road
Warminster, PA 18974
Attention: Mr. Jay H. Tolson
Chairman and Chief Executive Officer
Facsimile No. 215-674-6622

with a required copy to:

Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
Attention: William E. Zeiter, Esq.
Facsimile No. 215-963-5299

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<PAGE> 58
or, in the case of Buyer and Acquisition, to them at:

Moorco International Inc.
2800 Post Oak Boulevard
Suite 5701
Houston, TX 77056-6111
Attention: Michael L. Tiner,
President and Chief Executive Officer
Facsimile No. 713-993-7488

with a required copy to:

Moorco International Inc.
2800 Post Oak Boulevard
Suite 5701
Houston, TX 77056-6111
Attention: James J. Nelson,
Vice President, General Counsel
and Secretary
Facsimile No. 713-993-7488

or such other address as shall be furnished in writing by any party to the
others prior to the giving of the applicable notice or communication.

SECTION 6.02. Counterparts. This Agreement 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.

SECTION 6.03. Headings. The headings herein are for convenience
of reference only, do not constitute a part of this Agreement, and shall not be
deemed to limit or affect any of the provisions of this Agreement.

SECTION 6.04. No Survival of Representations or Warranties. None
of the representations or warranties included or provided for herein or in any
schedule or certificate or other document delivered pursuant to this Agreement
shall survive consummation of the Merger.

SECTION 6.05. Entire Agreement. This Agreement, which includes
the Exhibit and Schedules hereto, constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties, with respect to the subject matter of this Agreement.

SECTION 6.06. Cooperation. Subject to the terms and conditions
of this Agreement, each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken,

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such action, to execute and deliver, or cause to be executed and delivered,
such governmental notifications and additional documents and instruments and to
do, or cause to be done, all things necessary, proper or advisable under the
provisions of this Agreement and under applicable law to consummate and make
effective the transactions contemplated by this Agreement.

SECTION 6.07. No Rights; Etc. Nothing in this Agreement express
or implied is intended to confer upon any other person, other than the
Indemnified Parties, any rights or remedies under or by reason of this
Agreement.

SECTION 6.08. No Assignment. This Agreement shall not be
assigned, by operation of law or otherwise.

SECTION 6.09. Governing Law. This Agreement shall be governed in
all respects, including without limitation validity, interpretation and effect,
by the laws of the Commonwealth of Pennsylvania, applicable to contracts made
and to be performed in the Commonwealth.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.

FISCHER & PORTER COMPANY

By /s/ Jay H. Tolson
-----------------------
As its Chairman and
Chief Executive Officer

MOORCO INTERNATIONAL INC.

By /s/ Michael L. Tiner
-----------------------
As its President

F&P ACQUISITION, INC.

By /s/ Michael L. Tiner
-----------------------
As its President

A-20
<PAGE> 60
Exhibit A

PLAN OF MERGER
MERGING
F&P ACQUISITION, INC.
(A PENNSYLVANIA CORPORATION)
WITH AND INTO
FISCHER & PORTER COMPANY
(A PENNSYLVANIA CORPORATION)

BACKGROUND

FISCHER & PORTER COMPANY, a Pennsylvania corporation ("F&P"),
MOORCO INTERNATIONAL INC., a Delaware corporation ("Buyer"), and F&P
ACQUISITION, INC., a Pennsylvania corporation and a wholly-owned
subsidiary of Buyer ("Acquisition"), are parties to an Agreement and
Plan of Reorganization, dated as of March 18, 1994 (the "Merger
Agreement"), providing for the merger (the "Merger") of Acquisition with
and into F&P upon the terms and conditions set forth in this Plan of
Merger and pursuant to the Pennsylvania Business Corporation Law of 1988
(the "BCL"). Acquisition and F&P are sometimes hereinafter together
referred to as the "Constituent Corporations". Terms used herein that
are not defined herein shall have the meaning ascribed thereto in the
Merger Agreement.

TERMS AND CONDITIONS

1. Merger. The Constituent Corporations shall effect the Merger
upon the terms and subject to the conditions set forth in this Plan of Merger.

(a) The Merger. At the Effective Time (as hereinafter defined),
Acquisition shall be merged with and into F&P pursuant to this Plan of Merger,
the separate corporate existence of Acquisition shall cease (except as it may
be continued by operation of law) and F&P shall continue as the surviving
corporation under the corporate name "Fischer & Porter Company", all upon the
terms and subject to the conditions provided for in this Plan of Merger and
pursuant to the BCL. F&P, as it exists from and after the Effective Time, is
sometimes hereinafter referred to as the "Surviving Corporation".

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<PAGE> 61
(b) Effect of the Merger. The Merger shall have the effect
provided therefor by the BCL; including, without limitation, that all the
property, real, personal and mixed, and franchises of each of the Constituent
Corporations, and all debts due on whatever account to either of them,
including subscriptions for shares and other choses in action belonging to
either of them, shall be deemed to be transferred to and vested in the
Surviving Corporation without further action; and title to any real estate, or
any interest therein, vested in either of the Constituent Corporations shall
not revert or be in any way impaired by reason of the Merger; and the Surviving
Corporation shall thenceforth be responsible for all the liabilities of each of
the Constituent Corporations; but liens upon the property of Constituent
Corporations shall not be impaired by the Merger and any claim existing or
action or proceeding pending by or against either of the Constituent
Corporations may be prosecuted to judgment as if the Merger had not taken place
or the Surviving Corporation may be proceeded against or substituted in its
place.

(c) Consummation of the Merger On the Closing Date, Articles of
Merger shall be filed with the Secretary of the Commonwealth of Pennsylvania in
accordance with the provisions of the BCL, and the Merger shall become
effective upon such filing or at such later time on the Closing Date as may be
specified in the filing with the Secretary of the Commonwealth of Pennsylvania
(the "Effective Time").

2. Articles of Incorporation; Bylaws; Directors and Officers.
The Articles of Incorporation of the Surviving Corporation from and after the
Effective Time shall be the Articles of Incorporation of Acquisition until
thereafter amended in accordance with the provisions therein and as provided by
the BCL. The Bylaws of the Surviving Corporation from and after the Effective
Time shall be the Bylaws of Acquisition as in effect immediately prior to the
Effective Time, continuing until thereafter amended in accordance with their
terms and the Articles of Incorporation of the Surviving Corporation and as
provided by the BCL. The initial directors of the Surviving Corporation shall
be the directors of Acquisition immediately prior to the Effective Time, in
each case until their successors are elected and qualified, and the initial
officers of the Surviving Corporation shall be the officers of F&P immediately
prior to the Effective Time, in each case until their successors are duly
elected and qualified.

3. Conversion and Cancellation of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of
Acquisition, F&P or any holder of any shares of capital stock of F&P:

(a) Conversion of Subsidiary Common Stock. Each share of Common
Stock, par value [$.01] per share, of Acquisition

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<PAGE> 62
shall be converted into a share of Common Stock, par value [$.01] per share, of
the Surviving Corporation.

(b) Cancellation of Treasury Stock. Each share of F&P common
stock, par value $1.00 per share (the "F&P Common Stock") that may be held in
the treasury of F&P shall be canceled and retired and no capital stock of the
Surviving Corporation, cash or other consideration shall be paid or delivered
in exchange therefor.

(c) Conversion of F&P Common Stock. Except for any Dissenting
Shares (as hereinafter defined), each remaining outstanding share of F&P Common
Stock shall be converted into the right to receive cash, without interest, in
the amount of $23.25 (the "Merger Price") per share.

(d) Cancellation of Stock Options and Warrants. Immediately
prior to the Effective Time, each option to purchase shares of Company Common
Stock (individually, a "Company Stock Option" and collectively, the "Company
Stock Options") issued pursuant to F&P's Nonqualified Stock Option Plan, its
Nonqualified Stock Option Plan (1991) or its 1982 Incentive Stock Option Plan
(collectively, the "Company Stock Option Plans"), and each outstanding warrant
to purchase shares of Company Common Stock (individually, a "Company Warrant"
and collectively, the "Company Warrants"), which is then outstanding, whether
or not then vested or exercisable, shall become exercisable in full, shall be
canceled, and the holder thereof shall be entitled to receive from F&P
immediately prior to the Effective Time an amount equal to the excess, if any,
of (i) the Merger Price multiplied by the number of shares of Company Common
Stock subject to the Company Stock Option or Company Warrant, over (ii) the
exercise price of the Company Stock Option or Company Warrant multiplied by the
number of shares of Company Common Stock subject thereto. The funds required
to make such payments shall be made available to F&P by Acquisition immediately
prior to the Effective Time. Appropriate arrangements shall be made for
reduction of the amount to be paid to each holder of canceled Company Stock
Options for any applicable withholding taxes or other amounts required by law
to be paid or withheld, either through reducing the amount paid to, or by
obtaining a cash payment from, such holder. Prior to the Effective Time, the
Board of Directors of F&P shall take such action as may be required under the
Company Stock Option Plans, the governing option agreements and warrant
agreements or otherwise to effectuate the foregoing.

(e) Dissenting Shares. Notwithstanding anything herein to the
contrary, shares of F&P Common Stock that are outstanding immediately prior to
the Effective Time and that are held by shareholders, if any, who are entitled
to assert a right to dissent from the Merger and who demand and validly perfect

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<PAGE> 63
their rights to receive the "fair value" of their shares with respect to the
Merger under Section 1574 of the BCL (the "Dissenting Shares") shall not be
converted into or be exchangeable for the right to receive the Merger Price,
but the holders of such shares of F&P Common Stock shall be entitled solely to
payment of the "fair value" of such shares in accordance with the provisions of
the BCL; except that (i) if such demand to receive "fair Value" shall be
withdrawn upon the consent of the Surviving Corporation, (ii) if this Plan of
Merger shall be terminated, or the Merger shall not be consummated, (iii) if no
demand or petition for the determination of "fair value" by a court shall have
been made or filed within the time provided in the provisions of the BCL or
(iv) if a court of competent jurisdiction shall determine that such holder of
Dissenting Shares is not entitled to the relief provided by the provisions of
the BCL, then the right of such holder of Dissenting Shares to be paid the
"fair value" of his shares of F&P Common Stock shall cease and with respect to
clauses (i), (iii) and (iv) above such Dissenting Shares shall thereupon be
deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the amount into which such shares
would have been converted in the Merger in accordance with Section 3(c) hereof,
without any interest thereon, and with respect to clause (ii) above the status
of such shareholder shall be restored retroactively without prejudice to any
corporate proceeding which may have been taken during the interim.

(f) No Convertible Securities. At the Effective Time, there
shall not be any securities, rights, warrants, options or other instruments
originally issued by F&P which, after consummation of the Merger, would be
convertible into or exercisable for securities of the Surviving Corporation.

4. Merger Payment Procedure.

(a) Merger Paying Agent. Acquisition and F&P agree that
NationsBank of Texas, N.A. or another bank or trust company reasonably
acceptable to F&P shall be designated by Acquisition as the paying agent for
the Merger (the "Merger Paying Agent"). The Surviving Corporation shall
deposit with the Merger Paying Agent at the Effective Time such funds as are
required for the conversion of shares of F&P Common Stock pursuant to Section
3(c) hereof (the "Payment Fund").

(b) Payment Procedure. As soon as practicable after the
Effective Time, the Surviving Corporation shall cause the Merger Paying Agent
to distribute to holders of F&P Common Stock so converted, upon surrender to
the Merger Paying Agent of one or more certificates for such shares of F&P
Common Stock for cancellation, a bank check for the cash being paid in respect
of the aggregate number of shares of F&P Common Stock previously

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<PAGE> 64
represented by the stock certificates surrendered. If for any reason
(including without limitation losses) the Payment Fund is inadequate to pay the
amounts to which the holders of shares of F&P Common Stock shall be entitled
under Section 3(c) hereof, the Surviving Corporation shall be liable for the
payment thereof. In no event shall the holder of any surrendered certificates
for shares of F&P Common Stock be entitled to receive interest on any of the
funds to be received in the Merger. If a check is to be sent to a person other
than the person in whose name the certificates for shares of F&P Common Stock
surrendered for conversion are registered, it shall be a condition of the
payment that the certificate so surrendered shall be properly endorsed and the
signatures thereon properly guaranteed and otherwise in proper form for
transfer and that the person requesting such payment shall pay to the Merger
Paying Agent any transfer or other taxes required by reason of the delivery of
such check to a person other than the registered holder of the certificate
surrendered, or shall establish to the satisfaction of the Merger Paying Agent
that such tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the Merger Paying Agent nor either party to this Plan of
Merger shall be liable to a holder of shares of F&P Common Stock for any amount
paid to a public official pursuant to any applicable abandoned property,
escheat or similar laws.

(c) No Further Ownership Rights. The cash paid, issued and
distributed upon the surrender of certificates representing shares of F&P
Common Stock in accordance with the terms of this Plan of Merger shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
shares of F&P Common Stock.

(d) Return of Payment Funds. Any cash delivered or made
available to the Merger Paying Agent pursuant to this Section 4, and not
exchanged pursuant to this Section 4 for certificates representing shares of
F&P Common Stock within six months after the Effective Time, shall be returned
by the Merger Paying Agent to the Surviving Corporation which shall thereafter
act as paying agent subject to the rights of holders of unsurrendered
certificates representing shares of F&P Common Stock hereunder.

(e) Closing of Stock Transfer Books. At the Effective Time, the
stock transfer books of F&P shall be closed and no transfer of shares of F&P
Common Stock shall thereafter be made.

5. Termination. This Plan of Merger may be terminated at any
time on or before the Effective Time by agreement of the Boards of Directors of
the Constituent Corporations. This Plan of Merger shall be automatically

5
<PAGE> 65
terminated if F&P, Buyer or Acquisition validly terminate the Merger Agreement.

6. Amendment. This Plan of Merger may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto; except
that after approval of the Merger by the shareholders of F&P, no amendment may
be made which decreases the amount of cash to which the shareholders of F&P are
entitled pursuant to this Plan of Merger or otherwise materially adversely
affects the shareholders of F&P without the further approval of a majority of
the votes cast by the shareholders of F&P.

7. Waiver. Any time prior to the Effective Time, either party
hereto may (a) in the case of Acquisition, extend the time for the performance
of any of the obligations or other acts of F&P or, subject to the provisions
contained in Section 6 hereof, waive compliance with any of the agreements of
F&P or with any conditions to the respective obligations of or Acquisition, or
(b) in the case of F&P, extend the time for the performance of any of the
obligations or other acts of Acquisition, or waive compliance with any
conditions to its own obligations. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party by a duly authorized officer.

8. Further Assurances. If at any time the Surviving Corporation,
or its successors or assigns, shall consider or be advised that any further
assignments or assurances in law or any other acts are necessary or desirable
to (a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its rights, title or interest in, to or under any of the rights,
properties or assets of the Constituent Corporations acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger,
or (b) otherwise carry out the purposes of this Plan of Merger, each
Constituent Corporation and its proper officers and directors shall be deemed
to have granted to the Surviving Corporation an irrevocable power of attorney
to execute and deliver all such proper deeds, assignments and assurances in law
and to do all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation
and otherwise to carry out the purposes of this Plan; and the proper officers
and directors of the Surviving Corporation are fully authorized in the name of
each Constituent Corporation or otherwise to take any and all such action.

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<PAGE> 66

ANNEX B

OPINION OF CS FIRST BOSTON CORPORATION

April 13, 1994

Board of Directors
Fischer & Porter Company
125 East County Line Road
Warminster, PA 18974

Dear Sirs:

You have asked us to advise you with respect to the fairness to the
shareholders of Fischer & Porter Company (the "Company") from a financial point
of view of the consideration to be received by such shareholders pursuant to
the terms of the Agreement and Plan of Reorganization, dated as of April 13,
1994 (the "Reorganization Agreement"), among the Company, Elsag Bailey Process
Automation N.V. (the "Acquiror"), and EBPA Acquisition, Inc. ("the Sub"). The
Reorganization Agreement provides for the merger of the Company with the Sub
pursuant to which the Company will become a wholly owned subsidiary of the
Acquiror and each outstanding share of the Company's Common Stock, par value
$1.00 per share, will be converted into the right to receive $24.25 in cash
(the "Transaction").

In arriving at our opinion, we have reviewed the Reorganization Agreement and
certain publicly-available business and financial information relating to the
Company. We have also reviewed certain other information, including financial
forecasts, provided to us by the Company, and have met with the management of
the Company to discuss the business and prospects of the Company.

We have also considered certain financial and stock market data of the Company
and we have compared that data with similar data for other publicly-held
companies in businesses similar to those of the Company and we have considered
the financial terms of certain other business combinations which have recently
been effected. We also considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria which
we deemed relevant.

In connection with our review, we have not independently verified any of the
foregoing information and have relied on its being complete and accurate in all
material respects. With respect to the financial forecasts, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of the Company as to the
future financial performance of the Company. In addition, we have not made an
independent evaluation or appraisal of the assets of the Company, nor have we
been furnished with any such appraisals.

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<PAGE> 67
We have acted as financial advisor to the Board of Directors in connection with
the Transaction and will receive a fee for our services which is primarily
contingent on the closing of the Transaction.

In the ordinary course of our business, we may actively trade the debt and
equity securities of the Company for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.

It is understood that this letter is for the information of the Board of
Directors only and may be published in its entirety in the proxy statement to
be distributed to shareholders of the Company in connection with the
Transaction so long as we give our prior written consent to any summary of,
excerpt from or reference to such opinion. This letter is not to be quoted or
referred to, in whole or in part, in any registration statement, prospectus or
in any other document used in connection with the offering or sale of
securities, nor shall this letter be used for any other purposes without CS
First Boston's prior written consent.

Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the consideration to be received by the shareholders of the Company
pursuant to the Transaction is fair to such shareholders from a financial point
of view.

Very truly yours,

CS FIRST BOSTON CORPORATION

By:/s/ J. Craig Oxman
------------------
J. Craig Oxman
Managing Director

B-2
<PAGE> 68
ANNEX C

SUBCHAPTER 15D OF THE PENNSYLVANIA BUSINESS CORPORATION LAW

DISSENTERS RIGHTS

<TABLE>
<CAPTION>
Section
- -------
<S> <C>
1571. Application and effect of subchapter.
1572. Definitions.
1573. Record and beneficial holders and owners.
1574. Notice of intention to dissent.
1575. Notice to demand payment.
1576. Failure to comply with notice to demand payment, etc.
1577. Release of restrictions or payment for shares.
1578. Estimate by dissenter of fair value of shares.
1579. Valuation proceedings generally.
1580. Costs and expenses of valuation proceedings.
</TABLE>

Section 1571. APPLICATION AND EFFECT OF SUBCHAPTER.

(a) General rule.--Except as otherwise provided in
subsection (b), any shareholder of a business corporation shall have the right
to dissent from, and to obtain payment of the fair value of his shares in the
event of, any corporate action, or to otherwise obtain fair value for his
shares, where this part expressly provides that a shareholder shall have the
rights and remedies provided in this subchapter. See:

Section 1906(c) (relating to dissenters rights upon
special treatment).

Section 1930 (relating to dissenters rights).

Section 1931(d) (relating to dissenters rights in
share exchanges).

Section 1932(c) (relating to dissenters rights in
asset transfers).

Section 1952(d) (relating to dissenters rights in
division).

Section 1962(c) (relating to dissenters rights in
conversion).

Section 2104(b) (relating to procedure).

Section 2324 (relating to corporation option where a
restriction on transfer of a security is held
invalid).

Section 2325(b) (relating to minimum vote
requirement).

Section 2704(c) (relating to dissenters rights upon
election).

Section 2705(d) (relating to dissenters rights upon
renewal of election).

Section 2907(a) (relating to proceedings to terminate
breach of qualifying conditions).

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<PAGE> 69
Section 7104(b)(3) (relating to procedure).

(b) Exceptions.--

(1) Except as otherwise provided in paragraph
(2), the holders of the shares of any class or series of shares that,
at the record date fixed to determine the shareholders entitled to
notice of and to vote at the meeting at which a plan specified in any
of section 1930, 1931(d), 1932(c) or 1952(d) is to be voted on, are
either:

(i) listed on a national securities
exchange; or

(ii) held of record by more than 2,000
shareholders;

shall not have the right to obtain payment of the fair value of any such shares
under this subchapter.

(2) Paragraph (1) shall not apply to and
dissenters rights shall be available without regard to the exception
provided in that paragraph in the case of:

(i) Shares converted by a plan if the shares
are not converted solely into shares of the acquiring,
surviving, new or other corporation or solely into such shares
and money in lieu of fractional shares.

(ii) Shares of any preferred or special
class unless the articles, the plan or the terms of the
transaction entitle all shareholders of the class to vote
thereon and require for the adoption of the plan or the
effectuation of the transaction the affirmative vote of a
majority of the votes cast by all shareholders of the class.

(iii) Shares entitled to dissenters rights
under section 1906(c) (relating to dissenters rights upon
special treatment).

(3) The shareholders of a corporation that
acquires by purchase, lease, exchange or other disposition all or
substantially all of the shares, property or assets of another
corporation by the issuance of shares, obligations or otherwise, with
or without assuming the liabilities of the other corporation and with
or without the intervention of another corporation or other person,
shall not be entitled to the rights and remedies of dissenting
shareholders provided in this subchapter regardless of the fact, if it
be the case, that the acquisition was accomplished by the issuance of
voting shares of the corporation to be outstanding immediately after
the acquisition sufficient to elect a majority or more of the
directors of the corporation.

(c) Grant of optional dissenters rights.--The bylaws or a
resolution of the board of directors may direct that all or a part of the
shareholders shall have dissenters rights in connection with any corporate
action or other transaction that would otherwise not entitle such shareholders
to dissenters rights.

(d) Notice of dissenters rights.--Unless otherwise
provided by statute, if a proposed corporate action that would give rise to
dissenters rights under this subpart is submitted to a vote at a meeting of
shareholders, there shall be included in or enclosed with the notice of
meeting:

(1) a statement of the proposed action and a
statement that the shareholders have a right to dissent and obtain
payment of the fair value of their shares by complying with the terms
of this subchapter; and

(2) a copy of this subchapter.

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(e) Other statutes.--The procedures of this subchapter
shall also be applicable to any transaction described in any statute other than
this part that makes reference to this subchapter for the purpose of granting
dissenters rights.

(f) Certain provisions of articles ineffective.--This
subchapter may not be relaxed by any provision of the articles.

(g) Cross references.--See sections 1105 (relating to
restriction on equitable relief), 1904 (relating to de facto transaction
doctrine abolished) and 2512 (relating to dissenters rights procedure).

Section 1572. DEFINITIONS.

The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the context
clearly indicates otherwise:

"Corporation." The issuer of the shares held or
owned by the dissenter before the corporate action or the successor by
merger, consolidation, division, conversion or otherwise of that
issuer. A plan of division may designate which of the resulting
corporations is the successor corporation for the purposes of this
subchapter. The successor corporation in a division shall have sole
responsibility for payments to dissenters and other liabilities under
this subchapter except as otherwise provided in the plan of division.

"Dissenter." A shareholder or beneficial owner who
is entitled to and does assert dissenters rights under this subchapter
and who has performed every act required up to the time involved for
the assertion of those rights.

"Fair value." The fair value of shares immediately
before the effectuation of the corporate action to which the dissenter
objects, taking into account all relevant factors, but excluding any
appreciation or depreciation in anticipation of the corporate action.

"Interest." Interest from the effective date of the
corporate action until the date of payment at such rate as is fair and
equitable under all of the circumstances, taking into account all
relevant factors including the average rate currently paid by the
corporation on its principal bank loans.

Section 1573. RECORD AND BENEFICIAL HOLDERS AND OWNERS.

(a) Record holders of shares.--A record holder of shares
of a business corporation may assert dissenters rights as to fewer than all of
the shares registered in his name only if he dissents with respect to all the
shares beneficially owned by any one person and discloses the name and address
of the person or persons on whose behalf he dissents. In that event, his
rights shall be determined as if the shares as to which he has dissented and
his other shares were registered in the names of different shareholders.

(b) Beneficial owners of shares.--A beneficial owner of
shares of a business corporation who is not the record holder may assert
dissenters rights with respect to shares held on his behalf and shall be
treated as a dissenting shareholder under the terms of this subchapter if he
submits to the corporation not later than the time of the assertion of
dissenters rights a written consent of the record holder. A beneficial owner
may not dissent with respect to some but less than all shares of the same class
or series owned by the owner, whether or not the shares so owned by him are
registered in his name.

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Section 1574. NOTICE OF INTENTION TO DISSENT.

If the proposed corporate action is submitted to a vote at a
meeting of shareholders of a business corporation, any person who wishes to
dissent and obtain payment of the fair value of his shares must file with the
corporation, prior to the vote, a written notice of intention to demand that he
be paid the fair value for his shares if the proposed action is effectuated,
must effect no change in the beneficial ownership of his shares from the date
of such filing continuously through the effective date of the proposed action
and must refrain from voting his shares in approval of such action. A
dissenter who fails in any respect shall not acquire any right to payment of
the fair value of his shares under this subchapter. Neither a proxy nor a vote
against the proposed corporate action shall constitute the written notice
required by this section.

Section 1575. NOTICE TO DEMAND PAYMENT.

(a) General rule.--If the proposed corporate action is
approved by the required vote at a meeting of shareholders of a business
corporation, the corporation shall mail a further notice to all dissenters who
gave due notice of intention to demand payment of the fair value of their
shares and who refrained from voting in favor of the proposed action. If the
proposed corporate action is to be taken without a vote of shareholders, the
corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of
the plan or other corporate action. In either case, the notice shall:

(1) State where and when a demand for payment
must be sent and certificates for certificated shares must be
deposited in order to obtain payment.

(2) Inform holders of uncertificated shares to
what extent transfer of shares will be restricted from the time that
demand for payment is received.

(3) Supply a form for demanding payment that
includes a request for certification of the date on which the
shareholder, or the person on whose behalf the shareholder dissents,
acquired beneficial ownership of the shares.

(4) Be accompanied by a copy of this subchapter.

(b) Time for receipt of demand for payment.--The time set
for receipt of the demand and deposit of certificated shares shall be not less
than 30 days from the mailing of the notice.

Section 1576. FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.

(a) Effect of failure of shareholder to act.--A
shareholder who fails to timely demand payment, or fails (in the case of
certificated shares) to timely deposit certificates, as required by a notice
pursuant to section 1575 (relating to notice to demand payment) shall not have
any right under this subchapter to receive payment of the fair value of his
shares.

(b) Restriction on uncertificated shares.--If the shares
are not represented by certificates, the business corporation may restrict
their transfer from the time of receipt of demand for payment until
effectuation of the proposed corporate action or the release of restrictions
under the terms of section 1577(a) (relating to failure to effectuate corporate
action).

(c) Rights retained by shareholder.--The dissenter shall
retain all other rights of a shareholder until those rights are modified by
effectuation of the proposed corporate action.

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Section 1577. RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES.

(a) Failure to effectuate corporate action.--Within 60
days after the date set for demanding payment and depositing certificates, if
the business corporation has not effectuated the proposed corporate action, it
shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of the
demand for payment.

(b) Renewal of notice to demand payment.--When
uncertificated shares have been released from transfer restrictions and
deposited certificates have been returned, the corporation may at any later
time send a new notice conforming to the requirements of section 1575 (relating
to notice to demand payment), with like effect.

(c) Payment of fair value of shares.--Promptly after
effectuation of the proposed corporate action, or upon timely receipt of demand
for payment if the corporate action has already been effectuated, the
corporation shall either remit to dissenters who have made demand and (if their
shares are certificated) have deposited their certificates the amount that the
corporation estimates to be the fair value of the shares, or give written
notice that no remittance under this section will be made. The remittance or
notice shall be accompanied by:

(1) The closing balance sheet and statement of
income of the issuer of the shares held or owned by the dissenter for
a fiscal year ending not more than 16 months before the date of
remittance or notice together with the latest available interim
financial statements.

(2) A statement of the corporation's estimate of
the fair value of the shares.

(3) A notice of the right of the dissenter to
demand payment or supplemental payment, as the case may be,
accompanied by a copy of this subchapter.

(d) Failure to make payment.--If the corporation does not
remit the amount of its estimate of the fair value of the shares as provided by
subsection (c), it shall return any certificates that have been deposited and
release uncertificated shares from any transfer restrictions imposed by reason
of the demand for payment. The corporation may make a notation on any such
certificate or on the records of the corporation relating to any such
uncertificated shares that such demand has been made. If shares with respect
to which notation has been so made shall be transferred, each new certificate
issued therefor or the records relating to any transferred uncertificated
shares shall bear a similar notation, together with the name of the original
dissenting holder or owner of such shares. A transferee of such shares shall
not acquire by such transfer any rights in the corporation other than those
that the original dissenter had after making demand for payment of their fair
value.

Section 1578. ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES.

(a) General rule.--If the business corporation gives
notice of its estimate of the fair value of the shares, without remitting such
amount, or remits payment of its estimate of the fair value of a dissenter's
shares as permitted by section 1577(c) (relating to payment of fair value of
shares) and the dissenter believes that the amount stated or remitted is less
than the fair value of his shares, he may send to the corporation his own
estimate of the fair value of the shares, which shall be deemed a demand for
payment of the amount or the deficiency.

(b) Effect of failure to file estimate.--Where the
dissenter does not file his own estimate under subsection (a) within 30 days
after the mailing by the corporation of its remittance or notice, the dissenter
shall be entitled to no more than the amount stated in the notice or remitted
to him by the corporation.

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Section 1579. VALUATION PROCEEDINGS GENERALLY.

(a) General rule.--Within 60 days after the latest of:

(1) effectuation of the proposed corporate action;

(2) timely receipt of any demands for payment
under section 1575 (relating to notice to demand payment); or

(3) timely receipt of any estimates pursuant to
section 1578 (relating to estimate by dissenter of fair value of
shares);

if any demands for payment remain unsettled, the business corporation may file
in court an application for relief requesting that the fair value of the shares
be determined by the court.

(b) Mandatory joinder of dissenters.--All dissenters,
wherever residing, whose demands have not been settled shall be made parties to
the proceeding as in an action against their shares. A copy of the application
shall be served on each such dissenter. If a dissenter is a nonresident, the
copy may be served on him in the manner provided or prescribed by or pursuant
to 42 Pa.C.S. Ch. 53 (relating to bases of jurisdiction and interstate and
international procedure).

(c) Jurisdiction of the court.--The jurisdiction of the
court shall be plenary and exclusive. The court may appoint an appraiser to
receive evidence and recommend a decision on the issue of fair value. The
appraiser shall have such power and authority as may be specified in the order
of appointment or in any amendment thereof.

(d) Measure of recovery.--Each dissenter who is made a
party shall be entitled to recover the amount by which the fair value of his
shares is found to exceed the amount, if any, previously remitted, plus
interest.

(e) Effect of corporation's failure to file application.
- --If the corporation fails to file an application as provided in subsection
(a), any dissenter who made a demand and who has not already settled his claim
against the corporation may do so in the name of the corporation at any time
within 30 days after the expiration of the 60-day period. If a dissenter does
not file an application within the 30-day period, each dissenter entitled to
file an application shall be paid the corporation's estimate of the fair value
of the shares and no more, and may bring an action to recover any amount not
previously remitted.

Section 1580. COSTS AND EXPENSES OF VALUATION PROCEEDINGS.

(a) General rule.--The costs and expenses of any
proceeding under section 1579 (relating to valuation proceedings generally),
including the reasonable compensation and expenses of the appraiser appointed
by the court, shall be determined by the court and assessed against the
business corporation except that any part of the costs and expenses may be
apportioned and assessed as the court deems appropriate against all or some of
the dissenters who are parties and whose action in demanding supplemental
payment under section 1578 (relating to estimate by dissenter of fair value of
shares) the court finds to be dilatory, obdurate, arbitrary, vexatious or in
bad faith.

(b) Assessment of counsel fees and expert fees where
lack of good faith appears.--Fees and expenses of counsel and of experts for
the respective parties may be assessed as the court deems appropriate against
the corporation and in favor of any or all dissenters if the corporation
failed to comply substantially with the requirements of this subchapter and
may be assessed against either the corporation or a dissenter, in favor of any

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other party, if the court finds that the party against whom the fees and
expenses are assessed acted in bad faith or in a dilatory, obdurate, arbitrary
or vexatious manner in respect to the rights provided by this subchapter.

(c) Award of fees for benefits to other dissenters.--If
the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and should not be
assessed against the corporation, it may award to those counsel reasonable
fees to be paid out of the amounts awarded to the dissenters who were
benefitted.

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PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

FISCHER & PORTER COMPANY

The undersigned hereby appoints as Proxies, each with
power of substitution, Joseph A. Gaudiosi, Nathan T. Schelle and Frances O.
Trace, and each of them, to represent and vote the stock of the undersigned at
the Special Meeting of Shareholders of Fischer & Porter Company (the "Company")
on __ May 1994, at 10:00 a.m., Philadelphia Time, and any adjournment or
postponement thereof, with all the powers the undersigned would have if present
in person, with respect to the following matter as described in the Proxy
Statement and, in their discretion, upon such other business as may properly
come before the meeting or any adjournment thereof:

(CONTINUED AND TO BE MARKED, DATED AND SIGNED ON THE REVERSE SIDE)

<PAGE> 76
1. Approval and adoption of the Agreement and Plan of
Reorganization dated as of 13 April 1994 among the Company, Elsag Bailey
Process Automation N.V. and EBPA Acquisition, Inc., the related Plan of Merger
and the merger to be effected thereby and all related transactions.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. To transact such other business as may properly come
before the meeting.

IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE LISTED PROPOSAL.

Please sign exactly as name appears
below. When shares are held by joint tenants,
both should sign. Were signing as attorney,
executor, administrator, trustee or please
give full title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.

Dated 1994
------------------------------------

----------------------------------------------
(Signature)

----------------------------------------------
(Signature if held jointly)

PLEASE SIGN AND MAIL PROMPTLY. The Board of
Directors recommends a vote FOR the listed
proposal.