LEAR SEATING CORP, S-3, 1996-06-12

LEAR SEATING CORP
S-3, 1996-06-12
PUBLIC BLDG & RELATED FURNITURE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1996

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------

LEAR CORPORATION
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 13-3386776
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>

21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48086-5008
(810) 746-1500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

JAMES H. VANDENBERGHE
21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48086-5008
(810) 746-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------

Copies to:

Robert W. Ericson
John L. MacCarthy
Winston & Strawn
200 Park Avenue
New York, New York 10166
(212) 294-6700
David Mercado
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
(212) 474-1000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the registration statement becomes effective.

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

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------------

CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF NUMBER OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE SHARES TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(1)(2) FEE
<S> <C> <C> <C> <C>
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Common Stock, $.01 par value........... 17,250,000 $38.57 $665,332,500 $229,425
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</TABLE>

(1) Includes 2,250,000 shares to cover the Underwriters' over-allotment options.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) on the basis of the average of the high and low prices
reported on the New York Stock Exchange Composite Tape on June 10, 1996.
---------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

EXPLANATORY NOTE

This Registration Statement covers the registration of 17,250,000 shares of
Common Stock, $.01 par value per share, of Lear Corporation for sale in
underwritten public offerings (the "Offerings") in the United States and Canada
(the "U.S. Offering") and outside the United States and Canada (the
"International Offering"). The complete Prospectus relating to the U.S. Offering
(the "U.S. Offering Prospectus") follows immediately after this Explanatory
Note. Following the U.S. Offering Prospectus is an alternate cover page and
alternate back cover page for the Prospectus to be used in the International
Offering (the "International Prospectus" and, together with the U.S. Offering
Prospectus, the "Prospectuses"). Otherwise, the International Prospectus will be
identical to the U.S. Offering Prospectus.
<PAGE> 3

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

Subject to Completion, dated June 12, 1996
PROSPECTUS

15,000,000 Shares
LEAR CORP. LOGO

COMMON STOCK
---------------------------

Of the 15,000,000 shares of Common Stock ("Common Stock") of Lear
Corporation ("Lear" or the "Company") being offered hereby, 7,500,000 shares are
being offered by the Company and 7,500,000 shares are being offered by certain
stockholders of the Company (the "Selling Stockholders"). See "Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
Common Stock by the Selling Stockholders. Of the 15,000,000 shares of Common
Stock being offered hereby, 12,000,000 shares are being offered initially in the
United States and Canada by the U.S. Underwriters (the "U.S. Offering") and
3,000,000 shares are being offered initially outside the United States and
Canada by the International Managers (the "International Offering" and, together
with the U.S. Offering, the "Offerings"). The public offering price and
underwriting discounts and commissions per share are identical for both
Offerings. See "Underwriting." Concurrently with the Offerings, the Company is
undertaking a public offering (the "Note Offering") of $200,000,000 principal
amount of subordinated notes due 2006. The Offerings are not conditioned upon
the consummation of the Note Offering.

The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "LEA." On June 11, 1996, the reported last sale price of the Common
Stock on the New York Stock Exchange Composite Tape was $38 1/2 per share.

SEE "RISK FACTORS" COMMENCING ON PAGE 11 HEREIN FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Stockholders
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<S> <C> <C> <C> <C>
Per Share.............................. $ $ $ $
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Total(3)............................... $ $ $ $
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</TABLE>

(1) Lear and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters, the International Managers and certain other persons against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(2) Before deducting expenses payable by Lear estimated at $ .
(3) The Selling Stockholders have granted the U.S. Underwriters and the
International Managers a 30-day option to purchase up to an aggregate of
2,250,000 additional shares of Common Stock on the same terms and conditions
as set forth above solely to cover over-allotments, if any. If such option
is exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Selling Stockholders will be $ ,
$ and $ , respectively. See "Underwriting."
---------------------------

The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
U.S. Underwriters and to certain further conditions. It is expected that
delivery of certificates for shares will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1996.
---------------------------
LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED

SCHRODER WERTHEIM & CO.

, 1996
<PAGE> 4
[INSIDE FRONT COVER]

LEAR CORPORATION LOGO

INTERIOR PRODUCT CAPABILITIES

[A PICTURE OF A FORD WINDSTAR SEAT SYSTEM]

[A PICTURE OF A FORD WINDSTAR]

[A PICTURE OF A CHEVROLET CAVALIER DOOR PANEL]

[A PICTURE OF A CHEVROLET CAVALIER]

[DIAGRAM OF AN AUTOMOTIVE INTERIOR]

[A PICTURE OF A SAAB 9000]

[A PICTURE OF A SAAB 9000 HEADLINER]

[A PICTURE OF A JEEP GRAND CHEROKEE]

[A PICTURE OF A JEEP GRAND CHEROKEE FLOOR SYSTEM]
<PAGE> 5

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

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

AVAILABLE INFORMATION

The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports and other information with the
Securities and Exchange Commission (the "Commission"). The registration
statement ("Registration Statement") (which term encompasses any amendments
thereto) and the exhibits thereto filed by the Company with the Commission, as
well as the reports and other information filed by the Company with the
Commission, may 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 are also available for inspection and copying at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048, and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and at the New York Stock Exchange located
at 20 Broad Street, New York, New York 10005. Copies of such material may also
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.

The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of Common Stock offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits and
schedules thereto, to which reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement or
to a document incorporated by reference herein, reference is hereby made to the
exhibit for a more complete description of the matter involved and each such
statement shall be deemed qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference and made a part hereof:

(a) the Company's Annual Report on Form 10-K for the year ended December 31,
1995;

(b) the Company's Quarterly Report on Form 10-Q for the period ended March 30,
1996;

(d) the audited consolidated financial statements of Automotive Industries
Holding, Inc. and the notes thereto included on pages 3 through 36 of the
Company's Current Report on Form 8-K dated August 28, 1995; and

(e) the Company's Registration Statement on Form 8-A filed on April 1, 1994, as
amended by Amendment No. 1 on Form 8-A/A filed on April 5, 1994.

All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the Offerings shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
such documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in any subsequently filed document which is or is 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 Prospectus.

The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to the Company's principal
office: Lear Corporation, 21557 Telegraph Road, P.O. Box 5008, Southfield,
Michigan 48086-5008, Attention: Director of Investor Relations (telephone: (800)
413-5327).

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<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements appearing elsewhere or
incorporated by reference in this Prospectus. As used in this Prospectus, unless
the context otherwise requires, the "Company" or "Lear" refers to Lear
Corporation and its consolidated subsidiaries. A significant portion of the
Company's operations, including the operations of the Company's AI Division and
Masland Division, are conducted through wholly-owned subsidiaries of Lear
Corporation. Effective as of May 9, 1996, Lear changed its name from "Lear
Seating Corporation" to "Lear Corporation." Unless otherwise indicated, all
information contained in this Prospectus is based on the assumption that the
Underwriters' over-allotment option is not exercised.

On May 30, 1996, Lear, through its wholly-owned subsidiary, PA Acquisition
Corp. ("Acquisition Corp."), commenced an offer to purchase (the "Tender Offer")
all of the outstanding shares of common stock of Masland Corporation
("Masland"). The Tender Offer is currently scheduled to expire on June 26, 1996.
The Tender Offer is conditioned on, among other things, there having been
tendered a majority of the outstanding shares ("Shares") of Masland's common
stock on a fully diluted basis. Following consummation of the Tender Offer, the
Company will cause Acquisition Corp. to be merged with and into Masland, such
that Masland will become a wholly-owned subsidiary of Lear (the "Merger"). The
consummation of the Merger is subject to the satisfaction or waiver of a number
of conditions, including the approval of the Merger by the requisite vote of the
stockholders of Masland. Under the General Corporation Law of the State of
Delaware (the "Delaware Law"), the stockholder vote necessary to approve the
Merger will be the affirmative vote of at least a majority of the Shares.
Accordingly, if the Company, through Acquisition Corp., acquires a majority of
Masland's outstanding Shares, it will have the voting power required to approve
the Merger without the affirmative vote of any other stockholders of Masland.
Furthermore, if the Company acquires at least 90% of the outstanding Shares
pursuant to the Tender Offer or otherwise, the Company would be able to effect
the Merger pursuant to the "short-form" merger provisions of Section 253 of the
Delaware Law, without prior notice to, or any action by, any other stockholder
of Masland. In such event, the Company intends to effect the Merger as promptly
as practicable following the purchase of the Shares in the Tender Offer. If the
Company acquires a majority of the Shares in the Tender Offer, but less than
90%, it will take all action necessary, in accordance with the Delaware Law,
Masland's certificate of incorporation and by-laws and applicable securities
laws to convene a meeting of stockholders of Masland as promptly as possible to
approve the Merger. In such event, it is anticipated that the Merger would not
be completed until 45 days or longer after the date of the consummation of the
Tender Offer. Unless otherwise indicated, this Prospectus assumes that the
Tender Offer and the Merger have been consummated.

THE COMPANY

GENERAL

Lear is the largest independent supplier of automotive interior systems in
the estimated $40 billion global automotive interior market and the tenth
largest independent automotive supplier in the world. The Company's principal
products include: finished automobile and light truck seat systems; interior
trim products, such as door panels and headliners; and component products, such
as seat frames, seat covers and various blow molded plastic parts. The Company's
extensive product offerings were recently expanded through the acquisition of
Masland Corporation ("Masland"), a leading Tier I designer and manufacturer of
automotive floor and acoustic systems and interior and luggage trim components.
This acquisition, together with the August 1995 acquisition of Automotive
Industries Holding, Inc. ("AI" or "Automotive Industries"), has made Lear the
world's largest independent automotive supplier with the ability to design,
engineer, test and deliver products for a total vehicle interior. As original
equipment manufacturers ("OEMs") continue their worldwide expansion and seek
ways to improve their vehicle quality while simultaneously reducing the costs of
various vehicle components, management believes that suppliers such as Lear will
be increasingly asked to fill the role of "Systems Integrator" to manage the
design, purchasing and supply of the total automotive interior. Lear's
full-service capabilities make it well-positioned to fill this role.

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<PAGE> 7

December 31, 1995, a compound annual growth rate of 38%. After giving pro forma
effect to the AI and Masland acquisitions, the Company sales would have been
approximately $5.7 billion for the year ended December 31, 1995. The Company's
operating income has grown from approximately $44.7 million for the year ended
June 30, 1991 to approximately $244.8 million for the year ended December 31,
1995, a compound annual growth rate of 46%.

The Company's present customers include 24 OEMs, the most significant of
which are Ford, General Motors, Fiat, Chrysler, Volvo, Saab, Volkswagen, Audi
and BMW. As of June 1, 1996, after giving pro forma effect to the acquisition of
Masland, the Company would have employed approximately 40,000 people in 19
countries and operated 131 manufacturing, research, design, engineering, testing
and administration facilities.

STRATEGY

The Company's principal objective is to expand its position as the leading
independent supplier of automotive interior systems in the world. To this end,
the Company's strategy is to capitalize on two significant trends in the
automotive industry: (i) the outsourcing of automotive components and systems by
OEMs; and (ii) the consolidation and globalization of the OEMs' supply base.
Outsourcing of interior components and systems has increased in response to
competitive pressures on OEMs to improve quality and reduce capital needs, costs
of labor, overhead and inventory. Consolidation among automotive industry
suppliers has occurred as OEMs have more frequently awarded long-term sole
source contracts to the most capable global suppliers. Increasingly, the
criteria for selection include not only cost, quality and responsiveness, but
also certain full-service capabilities including design, engineering and project
management support. With the recent acquisitions of AI and Masland, Lear has
substantial manufacturing capabilities in four of the five principal automotive
interior segments: seat systems; floor and acoustic systems; door panels; and
headliners. The Company intends to enter into the remaining interior segment,
instrument panels, through strategic alliances, acquisitions, supplier
relationships and/or joint ventures.

Elements of the Company's strategy include:

- Strong Relationships with the OEMs. The Company's management has
developed strong relationships with its 24 OEM customers which allow Lear
to identify business opportunities and customer needs in the early stages
of vehicle design. Management believes that working closely with OEMs in
the early stages of designing and engineering automotive interior systems
and components gives it a competitive advantage in securing new business.
Lear maintains an excellent reputation with the OEMs for timely delivery
and customer service and for providing world class quality at competitive
prices.

- Global Presence. In 1995, more than two-thirds of total worldwide
vehicle production occurred outside of the United States and Canada. Due to
the opportunity for significant cost savings and improved product quality
and consistency, OEMs have increasingly required their suppliers to
manufacture automotive interior systems and components in multiple
geographic markets. In recent years, the Company has aggressively expanded
its operations in Western Europe and emerging markets in South America,
South Africa, the Pacific Rim and elsewhere, giving it the capability to
provide its products on a global basis to its OEM customers. In 1995, the
Company's sales outside the United States and Canada, after giving pro
forma effect to the AI and Masland acquisitions, would have grown to
approximately $1.7 billion, or approximately 30% of the Company's total pro
forma sales.

- Product Technology and Product Design Capability. Lear has made
substantial investments in product technology and product design capability
to support its products. The Company maintains four advanced technical
centers (in Southfield, Michigan, Rochester Hills, Michigan, Plymouth,
Michigan and Turin, Italy) where it develops and tests current and future
products to determine compliance with safety standards, quality and
durability, response to environmental conditions and user wear and tear.
The

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Company also has state-of-the art acoustics testing, instrumentation and
data analysis capabilities. At its 16 customer-dedicated engineering
centers, specific program applications are developed and tested. The
Company has also made substantial investments in advanced computer aided
design, engineering and manufacturing ("CAD/CAM") systems.

- Lean Manufacturing Philosophy. Lear's "lean manufacturing"
philosophy seeks to eliminate waste and inefficiency in its own operations
and in those of its customers and suppliers. All of the Company's seat
system facilities and many of its other manufacturing facilities are linked
by computer directly to those of the Company's suppliers and customers.
These facilities receive components from their suppliers on a just-in-time
("JIT") basis, and deliver interior systems and components to their
customers on a sequential just-in-time basis, which provides products to an
OEM's manufacturing facility in the color and order in which the products
are used. This process minimizes inventories and fixed costs for both the
Company and its customers and enables the Company to deliver products on as
little as 90 minutes' notice.

- Growth Through Strategic Acquisitions. Strategic acquisitions have
been, and management believes will continue to be, an important element in
the Company's growth worldwide and in its efforts to capitalize on
automotive industry trends. These acquisitions complement Lear's existing
capabilities and provide new growth opportunities. The Company's recent
acquisitions have expanded its OEM customer base and worldwide presence and
enhanced its relationships with existing customers. The Company's most
recent acquisitions have also given it a significant presence in the
non-seating segments of the automobile and light truck interior market. In
1995, after giving pro forma effect to the AI and Masland acquisitions, the
Company's sales of non-seating systems and components would have been
approximately $1.4 billion, or approximately 25% of the Company's total pro
forma sales.

Implementation of the Company's strategy has resulted in rapid growth of
the Company's net sales from approximately $159.8 million in the fiscal year
ended June 30, 1983 to approximately $4.7 billion in the year ended December 31,
1995, a compound annual growth rate of approximately 33%. This increase in sales
has been achieved through internal growth as well as through acquisitions. In
1995, the Company was the leading independent supplier to the $40 billion global
automotive interior market, with a 12% share after giving pro forma effect to
the AI and Masland acquisitions. The Company's North American content per
vehicle has increased from $12 in 1983 to $227 in 1995. In Europe, the Company's
content per vehicle has grown from $3 in 1983 to $102 in 1995.

RECENT ACQUISITIONS

The Company is acquiring all of the issued and outstanding common stock of
Masland (the "Masland Acquisition") for an aggregate purchase price of
approximately $459.6 million (including the assumption of Masland's existing
indebtedness, net of cash and cash equivalents, of $64.7 million and the payment
of fees and expenses of $10 million in connection with the acquisition). The
acquisition of Masland gives the Company substantial capabilities to produce
automotive floor and acoustic systems, which the Company did not previously
have. In 1995, Masland held a leading 38% share of the estimated $1 billion
North American floor and acoustic systems market. Masland is also a major
supplier of interior and luggage compartment trim components and other
acoustical products which are designed to minimize noise and vibration for
passenger cars and light trucks. Masland supplies the North American operations
of Ford, Chrysler, General Motors, Honda, Isuzu, Mazda, Mitsubishi, Nissan,
Subaru and Toyota, as well as the European operations of Nissan, Peugeot and
Saab. Masland has had a continuous relationship with Ford, its largest customer,
since 1922. For its fiscal year ended June 30, 1995, Masland had net sales,
EBITDA, operating income and net income of $496.6 million, $62.2 million, $47.0
million and $21.3 million, respectively.

In August 1995, the Company acquired all of the issued and outstanding
common stock of Automotive Industries, a leading designer and manufacturer of
high quality interior trim systems and blow molded products principally for
North American and European car and light truck manufacturers. The acquisition
of AI (the "AI Acquisition") afforded Lear a significant presence in the door
panel and headliner segments of the interior market, which account for
approximately 15% of the global automotive interior market. The AI

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<PAGE> 9

Acquisition also gave the Company access to AI's premier program management
systems, CAD/CAM capabilities, product and process variety and technological
expertise.

The acquisitions of AI and Masland have solidified the Company's position
as the leading independent automotive interior supplier in the world. Currently,
Lear has manufacturing capabilities in four of the five principal automotive
interior segments: seat systems; floor and acoustic systems; door panels; and
headliners. Lear intends to enter into the remaining segment, instrument panels,
through strategic alliances, acquisitions, supplier relationships and/or joint
ventures. Management believes that the Company's ability to offer OEMs a total
interior system provides Lear with a competitive advantage as OEMs continue to
reduce their supplier base while demanding improved quality and additional Tier
I services. Management believes that as the outsourcing and supplier
consolidation trends continue, OEMs will increasingly seek global suppliers,
such as Lear, to provide total interiors, resulting in greater value from the
on-going integration of the Lear, AI and Masland businesses and long-term growth
opportunities for the Company.

In addition to the AI and Masland acquisitions, since 1990 Lear has
completed five additional strategic acquisitions. In December 1994, the Company
acquired the primary automotive seat systems supplier to Fiat and certain
related businesses (the "Fiat Seat Business" or the "FSB"), establishing Lear as
the leading independent supplier of automotive seat systems in Europe. In 1993,
the Company significantly expanded its operations in North America by purchasing
certain portions of the North American seat cover and seat systems business (the
"NAB") of Ford (the "NAB Acquisition"). In 1991 and 1992, the Company acquired
the seat systems businesses of Saab in Sweden and Finland and of Volvo in
Sweden. In addition to broadening the Company's geographic coverage, these
acquisitions, like the AI and Masland acquisitions, have expanded the Company's
customer base and solidified relationships with existing customers.

The Company's principal executive offices are located at 21557 Telegraph
Road, Southfield, Michigan 48086-5008. Its telephone number at that location is
(800) 413-5327.

NOTE OFFERING

Concurrently with the Offerings, the Company is undertaking a public
offering of $200 million aggregate principal amount of subordinated notes due
2006 (the "Notes"). The Note Offering is conditioned in its entirety upon the
consummation of the Offerings. The Offerings are not, however, conditioned upon
the consummation of the Note Offering. The net proceeds to the Company from the
Note Offering will be used to repay indebtedness outstanding under the Credit
Agreement (as defined herein).

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<PAGE> 10

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock offered by:
The Company........................... 7,500,000 shares
The Selling Stockholders.............. 7,500,000 shares(1)
----------
Total Common Stock offered......... 15,000,000 shares
==========
Common Stock offered for sale in:
U.S. Offering......................... 12,000,000 shares
International Offering................ 3,000,000 shares
Common Stock to be outstanding after the
Offerings............................. 64,150,532 shares(2)
NYSE Symbol ............................ LEA
Use of Proceeds......................... The net proceeds to the Company from the Offerings
will be used to repay a portion of the indebtedness
outstanding under the Credit Agreement incurred to
finance the Masland Acquisition. The Company will
not receive any proceeds from the sale of Common
Stock by the Selling Stockholders.
</TABLE>

- -------------------------
(1) 9,750,000 shares if the Underwriters' over-allotment option is exercised in
full.

(2) Excludes 4,468,036 shares of Common Stock issuable upon exercise of options
outstanding as of June 1, 1996 and granted pursuant to (i) stock option
agreements between the Company and certain management investors, (ii) the
Company's 1992 Stock Option Plan, (iii) the Company's 1994 Stock Option Plan
and (iv) the Company's 1996 Stock Option Plan. Also excludes (i) 160,653
shares of Common Stock issuable upon exercise of options outstanding as of
June 1, 1996 originally granted under the Automotive Industries Holding,
Inc. 1992 Key Employee Stock Option Plan and (ii) up to 1,256,791 shares of
Common Stock issuable upon exercise of options originally granted under the
Masland Corporation 1991 Stock Purchase and Option Plan and the Masland
Corporation 1993 Stock Option Incentive Plan which may be converted into
options to purchase Common Stock in connection with the Masland Acquisition.
The options described in the preceding two sentences are collectively
referred to herein as the "Options."

RISK FACTORS

Investment in the Company's Common Stock involves certain risks discussed
under "Risk Factors" that should be considered by prospective investors.

7
<PAGE> 11

SUMMARY FINANCIAL DATA OF THE COMPANY

The following summary consolidated financial data were derived from the
consolidated financial statements of the Company. The consolidated financial
statements of the Company for each of the years ended December 31, 1995, 1994
and 1993 have been audited by Arthur Andersen LLP. The consolidated financial
statements of the Company for the three months ended March 30, 1996 and April 1,
1995 are unaudited; however, in the Company's opinion, they reflect all
adjustments, consisting only of normal recurring items, necessary for a fair
presentation of the financial position and results of operations for such
periods. The results for the three months ended March 30, 1996 are not
necessarily indicative of the results to be expected for the full year. The
summary financial data below should be read in conjunction with the other
financial data of the Company included in this Prospectus, the consolidated
financial statements of the Company and the notes thereto incorporated by
reference in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations of the Company."

LEAR CORPORATION

<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS ENDED AS OF OR FOR THE YEAR ENDED
--------------------- --------------------------------------------
MARCH 30, APRIL 1, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994 1993
--------- -------- ------------ ------------ ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND CONTENT PER VEHICLE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.............................. $1,405.8 $1,043.5 $4,714.4 $3,147.5 $1,950.3
Operating income....................... 70.0 47.7 244.8 169.6 79.6
Interest expense(1).................... 24.4 14.2 75.5 46.7 45.6
Net income (loss)(2)................... 25.8 17.0 91.6 59.8 (13.8)
Net income (loss) per share(2)......... .43 .34 1.74 1.26 (.39)
BALANCE SHEET DATA:
Total assets........................... $3,122.2 $1,797.9 $3,061.3 $1,715.1 $1,114.3
Long-term debt......................... 1,033.3 519.9 1,038.0 418.7 498.3
Stockholders' equity................... 612.5 217.1 580.0 213.6 43.2
OTHER DATA:
EBITDA(3).............................. $ 103.2 $ 66.1 $ 336.8 $ 225.7 $ 122.2
Depreciation and amortization.......... 33.2 18.4 92.0 56.1 42.6
Capital expenditures................... 33.7 23.6 110.7 103.1 45.9
North American content per
vehicle(4)........................... 274 182 227 169 112
European content per vehicle(5)........ 107 78 102 48 38
Ratio of EBITDA to interest
expense (1)(3)....................... 4.2x 4.7x 4.5x 4.8x 2.7x
Ratio of earnings to fixed
charges(6)........................... 2.5x 2.9x 2.9x 3.2x 1.5x
</TABLE>

- -------------------------
(1) Interest expense includes non-cash charges for amortization of deferred
financing fees of approximately $.8 million, $.6 million, $2.7 million, $2.4
million and $2.6 million for the three months ended March 30, 1996 and April
1, 1995 and for the years ended December 31, 1995, 1994 and 1993,
respectively.

(2) After extraordinary charges of $2.6 million and $11.7 million ($.05 and $.33
per share) for the years ended December 31, 1995 and 1993, respectively,
relating to the early extinguishment of debt.

(3) "EBITDA" is operating income plus amortization and depreciation. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles.

(4) "North American content per vehicle" is the Company's net automotive sales
in North America divided by total North American vehicle production. "North
American vehicle production" comprises car and light truck production in the
United States, Canada and Mexico estimated by the Company from industry
sources.

(5) "European content per vehicle" is the Company's net automotive sales in
Western Europe divided by total Western European vehicle production.
"Western European vehicle production" comprises car and light truck
production in Western Europe estimated by the Company from industry sources.

(6) "Fixed charges" consist of interest on debt, amortization of deferred
financing fees and that portion of rental expenses representative of
interest (deemed to be one-third of rental expenses). "Earnings" consist of
income (loss) before income taxes, fixed charges, undistributed earnings and
minority interest.

8
<PAGE> 12

SUMMARY FINANCIAL DATA OF MASLAND CORPORATION

The following summary consolidated financial data were derived from the
consolidated financial statements of Masland. The consolidated financial
statements of Masland for each fiscal year presented have been audited by Price
Waterhouse LLP. The consolidated financial statements of Masland for the nine
months ended March 29, 1996 and March 31, 1995 are unaudited; however, in the
opinion of Masland's management, they reflect all adjustments, consisting only
of normal recurring items, necessary for a fair presentation of the financial
position and results of operations for such periods. The results for the nine
months ended March 29, 1996 are not necessarily indicative of the results to be
expected for the full fiscal year. The summary financial data below should be
read in conjunction with the other financial data of Masland included in this
Prospectus, the consolidated financial statements of Masland and the notes
thereto incorporated by reference in this Prospectus and "Management's
Discussion and Analysis of Results of Operations of Masland Corporation."

MASLAND CORPORATION

<TABLE>
<CAPTION>
AS OF OR FOR THE AS OF OR FOR THE FISCAL YEAR
NINE MONTHS ENDED ENDED
----------------------- ----------------------------
MARCH 29, MARCH 31, JUNE 30, JULY 1, JULY 2,
1996 1995 1995 1994 1993
--------- --------- -------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT CONTENT PER VEHICLE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales......................................... $ 343.4 $ 373.8 $496.6 $ 429.9 $ 353.5
Operating income.................................. 26.5 34.2 47.0 45.0 25.8
Net income applicable to common stock............. 11.8 15.0 21.3 20.5 11.7
BALANCE SHEET DATA:
Total assets...................................... $ 276.8 $ 226.0 $228.0 $ 203.8 $ 197.3
Long-term debt.................................... 70.8 40.2 37.0 31.4 50.1
Stockholders' equity.............................. 98.8 82.5 88.2 68.5 60.1
OTHER DATA:
EBITDA(1)......................................... $ 40.2 $ 46.5 $ 62.2 $ 57.6 $ 37.1
Capital expenditures.............................. 20.6 14.7 22.0 17.8 18.0
North American content per vehicle(2)............. 34 31 33 30 26
</TABLE>

- -------------------------
(1) "EBITDA" is operating income plus amortization and depreciation. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles.

(2) "North American content per vehicle" is Masland's net automotive sales in
North America divided by total North American vehicle production. "North
American vehicle production" comprises car and light truck production in the
United States, Canada and Mexico estimated by the Company from industry
sources.

9
<PAGE> 13

SUMMARY PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL DATA

The following summary pro forma unaudited consolidated financial data were
derived from and should be read in conjunction with the pro forma unaudited
consolidated financial data included elsewhere in this Prospectus. The following
summary pro forma unaudited consolidated operating data and other data of the
Company for the three months ended March 30, 1996 and for the year ended
December 31, 1995 were prepared to illustrate the estimated effects of (i) the
Masland Acquisition (including the refinancing of certain debt of Masland with
borrowings under the Credit Agreement), (ii) the AI Acquisition (including the
refinancing of certain debt of AI with borrowings under the Credit Agreement),
(iii) the acquisition of Plastifol GmbH & Co. KG ("Plastifol") by AI in July
1995 prior to the AI Acquisition (the "Plastifol Acquisition"), (iv) the public
offering of Common Stock by the Company and the application of the net proceeds
therefrom in September 1995 (the "1995 Stock Offering"), (v) the refinancing of
the Company's prior credit facility with borrowings under the Credit Agreement,
(vi) the completion of the New Credit Agreement and (vii) the Note Offering and
the Offerings contemplated hereby and the application of the net proceeds to the
Company therefrom to repay indebtedness incurred under the Credit Agreement to
finance the Masland Acquisition (collectively, the "Pro Forma Transactions"), as
if the Pro Forma Transactions had occurred on January 1, 1995. The following
summary pro forma unaudited consolidated balance sheet data were prepared as if
the completion of the New Credit Agreement, the Masland Acquisition, the Note
Offering and the Offerings contemplated hereby and the application of the net
proceeds therefrom to repay indebtedness incurred pursuant to the Credit
Agreement to finance the Masland Acquisition had occurred as of March 30, 1996.
The following summary pro forma unaudited consolidated financial data do not
purport to represent (i) the actual results of operations or financial condition
of the Company had the Pro Forma Transactions occurred on the dates assumed or
(ii) the results to be expected in the future.

<TABLE>
<CAPTION>
AS OF OR AS OF OR
FOR THE FOR THE
THREE MONTHS ENDED YEAR ENDED
MARCH 30, 1996 DECEMBER 31, 1995
------------------- -----------------
(DOLLARS IN MILLIONS, EXCEPT
PER SHARE AND CONTENT PER VEHICLE DATA)
<S> <C> <C>
OPERATING DATA:
Net sales................................................. $ 1,527.3 $ 5,708.0
Operating income.......................................... 81.5 327.1
Interest expense(1)....................................... 29.3 122.5
Net income................................................ 28.3 105.4
Net income per share...................................... .42 1.56
BALANCE SHEET DATA:
Total assets.............................................. $ 3,700.6
Long-term debt............................................ 1,223.9
Stockholders' equity...................................... 900.0
OTHER DATA:
EBITDA(2)................................................. $ 120.7 $ 467.2
Depreciation and amortization............................. 39.2 140.1
Capital expenditures...................................... 41.8 184.2
North American content per vehicle(3)..................... 308 285
European content per vehicle(4)........................... 107 111
Ratio of EBITDA to interest expense(1)(2)................. 4.1x 3.8x
Ratio of earnings to fixed charges(5)..................... 2.5x 2.4x
</TABLE>

- -------------------------
(1) Interest expense includes non-cash charges for amortization of deferred
financing of approximately $1.0 million and $3.7 million for the three
months ended March 30, 1996 and the year ended December 31, 1995,
respectively.
(2) "EBITDA" is operating income plus amortization and depreciation. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles.
(3) "North American content per vehicle" is the Company's pro forma net
automotive sales in North America divided by total North American vehicle
production. "North American vehicle production" comprises car and light
truck production in the United States, Canada and Mexico estimated by the
Company from industry sources.
(4) "European content per vehicle" is the Company's pro forma net automotive
sales in Western Europe divided by total Western European vehicle
production. "Western European vehicle production" comprises car and light
truck production in Western Europe estimated by the Company from industry
sources.
(5) "Fixed charges" consist of interest on debt, amortization of deferred
financing fees and that portion of rental expenses representative of
interest (deemed to be one-third of rental expenses). "Earnings" consist of
income (loss) before income taxes, fixed charges, undistributed earnings and
minority interest.

10
<PAGE> 14

RISK FACTORS

A potential investor should consider carefully all of the information
contained in this Prospectus before deciding whether to purchase the Common
Stock offered hereby and, in particular, should consider the following:

LEVERAGE

A significant portion of the funds needed to finance the Company's recent
acquisitions, including the Masland Acquisition and the AI Acquisition, were
initially raised through borrowings. As a result, the Company has debt that is
greater than its stockholders' equity and a significant portion of the Company's
cash flow from operations will be used to service its debt obligations. As of
March 30, 1996, after giving effect to the Pro Forma Transactions, the Company
would have had total debt of $1,254.2 million and stockholders' equity of $900.0
million, producing a total capitalization of $2,154.2 million, so that total
debt as a percentage of total capitalization would have been approximately 58%.

The Company's leverage may have consequences, including the following: (i)
the ability of the Company to obtain additional financing for working capital,
capital expenditures and debt service requirements or other purposes may be
impaired; (ii) the Company may be more highly leveraged than companies with
which it competes, which may place it at a competitive disadvantage; (iii)
because certain of the Company's obligations under the Credit Agreement and the
New Credit Agreement bear interest at floating rates, an increase in interest
rates could adversely affect the Company's ability to service its debt
obligations; and (iv) the Company may be more vulnerable in the event of a
downturn or disruption in its business or in the economy generally. If the
Company is unable to generate sufficient cash flow to service its debt
obligations, it will have to adopt one or more alternatives, such as reducing or
delaying planned expansion and capital expenditures, selling assets,
restructuring debt or obtaining additional equity capital. There can be no
assurance that any of these strategies could be effected on satisfactory terms.

In addition, the Credit Agreement and the New Credit Agreement, together
with the Senior Subordinated Notes (as defined herein), the Subordinated Notes
(as defined herein) and the Notes, contain or will contain various restrictive
covenants including, among other things, financial covenants relating to the
maintenance of minimum operating profit and net worth levels and interest
coverage ratios as well as restrictions on indebtedness, guarantees,
acquisitions, capital expenditures, investments, loans, liens, dividends and
other restricted payments and asset sales. Such restrictions, together with the
leveraged nature of the Company, could limit the Company's ability to respond to
market conditions, to provide for unanticipated capital investments or to take
advantage of business opportunities.

NATURE OF AUTOMOTIVE INDUSTRY

The Company's principal operations are directly related to domestic and
foreign automotive vehicle production. Automobile sales and production are
cyclical and can be affected by the strength of a country's general economy. In
addition, automobile production and sales can be affected by labor relations
issues, regulatory requirements, trade agreements and other factors. A decline
in automotive sales and production could result in a decline in the Company's
results of operations or financial condition.

RELIANCE ON MAJOR CUSTOMERS AND SELECTED CAR MODELS

Two of the Company's customers, General Motors and Ford, accounted for
approximately 34% and 33%, respectively, of the Company's net sales during
fiscal 1995. After giving effect to the Masland Acquisition, sales to General
Motors and Ford will continue to represent a similar substantial portion of the
Company's total sales. Although the Company has purchase orders from many of its
customers, such purchase orders generally provide for supplying the customers'
annual requirements for a particular model or assembly plant, renewable on a
year-to-year basis, rather than for manufacturing a specific quantity of
products. In addition, certain of the Company's manufacturing and assembly
plants are dedicated to a single customer's automotive assembly plant. The
customer's decision to close any such plant would require the Company to obtain
alternate supply agreements, relocate existing business to such facility or
close such facility. To date, neither

11
<PAGE> 15

model discontinuances nor plant closings have had a material adverse effect on
the Company because of the breadth of the Company's product lines and the
ability of the Company to relocate its facilities with minimal capital
expenditures. There can be no assurances that the Company's loss of business
with respect to either a particular automobile model or a particular assembly
plant would not have a material adverse effect on the Company's results of
operations or financial condition in the future.

There is substantial and continuing pressure from the major OEMs to reduce
costs, including costs associated with outside suppliers such as the Company.
Management believes that the Company's ability to develop new products and to
control its own costs, many of which are variable, will allow the Company to
remain competitive. However, there can be no assurance that the Company will be
able to improve or maintain its gross margins.

FOREIGN EXCHANGE RISK

As a result of recent acquisitions and the Company's business strategy,
which includes plans for the global expansion of its operations, a significant
portion of the Company's revenues and expenses are denominated in currencies
other than U.S. dollars. Changes in exchange rates therefore may have a
significant effect on the Company's results of operations and financial
condition.

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Restated Certificate of Incorporation
and by-laws, as well as provisions of the Delaware General Corporation Law, may
have the effect of delaying, deterring or preventing transactions involving a
change of control of the Company, including transactions in which stockholders
might otherwise receive a substantial premium for their shares over then current
market prices, and may limit the ability of stockholders to approve transactions
that they may deem to be in their best interests. For example, under the
Restated Certificate of Incorporation, the Board of Directors is authorized to
issue one or more classes of preferred stock having such designations, rights
and preferences as may be determined by the Board of Directors. In addition, the
Board of Directors is divided into three classes, each having a term of three
years, with the term of one class expiring each year. A director may be removed
from office only for cause. These provisions could delay the replacement of a
majority of the Board of Directors and have the effect of making changes in the
Board of Directors more difficult than if such provisions were not in place.
Further, Section 203 of the Delaware General Corporation Law restricts certain
business combinations with any "interested stockholder" as defined in such law.
Certain current stockholders of the Company are not, by virtue of their current
holdings, deemed to be "interested stockholders" under this statute. This
statute also may delay, deter or prevent a change of control of the Company. See
"Description of Capital Stock" for additional information regarding these and
certain other anti-takeover provisions adopted by the Company.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. When used in this
document, the words 'anticipate,' 'believe,' 'estimate,' and 'expect' and
similar expressions are generally intended to identify forward-looking
statements. Prospective investors are cautioned that any forward-looking
statements, including statements regarding the intent, belief, or current
expectations of the Company or its management, are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those in the forward-looking statements as a result of
various factors including but not limited to (i) general economic conditions in
the markets in which the Company operates, (ii) fluctuations in worldwide or
regional automobile and light truck production, (iii) labor disputes involving
the Company or its significant customers, and (iv) those items identified under
"Risk Factors." Should one or more of those risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated or
expected. The Company does not intend to update these forward-looking
statements.

12
<PAGE> 16

USE OF PROCEEDS

All the net proceeds to the Company from the Offerings will be used to
repay a portion of the indebtedness outstanding under the Credit Agreement which
was incurred to finance the Masland Acquisition, bearing a rate of interest as
of June 1, 1996 of approximately 6.36%. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Company --
Liquidity and Capital Resources." The Company will not receive any proceeds from
the sale of Common Stock by the Selling Stockholders.

COMMON STOCK PRICE RANGE AND DIVIDENDS

The Common Stock is listed for trading on the New York Stock Exchange under
the symbol "LEA." The following table sets forth the high and low sale prices of
the Common Stock as reported on the New York Stock Exchange for the fiscal
periods indicated:

<TABLE>
<CAPTION>
HIGH LOW
--------- --------
<S> <C> <C>
1994:
Second Quarter............................................... $20 1/4 $16 1/4
Third Quarter................................................ 19 5/8 16
Fourth Quarter............................................... 22 1/8 17
1995:
First Quarter................................................ 20 7/8 16 5/8
Second Quarter............................................... 24 1/4 17 7/8
Third Quarter................................................ 31 1/8 23
Fourth Quarter............................................... 32 1/4 26 1/4
1996:
First Quarter................................................ 34 25 1/4
Second Quarter (through June 11)............................. 39 1/4 27 1/2
</TABLE>

The reported last sale price of the Common Stock on the New York Stock
Exchange Composite Tape as of a recent date is set forth on the cover page of
this Prospectus.

As of June 1, 1996, there were 249 holders of record of the outstanding
Common Stock and the Company estimates that, at such date, there were
approximately 6,400 beneficial holders.

The Company has never paid dividends on its Common Stock. Any future
payment of dividends is subject to the discretion of the Company's Board of
Directors, which may consider the Company's earnings and financial condition and
such other factors as it deems relevant. In addition, the Credit Agreement, the
New Credit Agreement and the Indentures governing Lear's 11 1/4% Senior
Subordinated Notes due 2000 (the "Senior Subordinated Notes") and 8 1/4%
Subordinated Notes due 2002 (the "Subordinated Notes") presently contain, and
the Indenture relating to the Notes will contain, certain restrictions on the
Company's ability to pay dividends. The Company does not intend to pay any cash
dividends in the foreseeable future.

13
<PAGE> 17

CAPITALIZATION

The following table sets forth the capitalization of the Company at March
30, 1996, after giving effect on a pro forma basis to the Masland Acquisition
and the incurrence of indebtedness under the New Credit Agreement and the Credit
Agreement to finance such acquisition, and as adjusted to reflect the Note
Offering and Offerings contemplated hereby and the application of the net
proceeds to the Company therefrom. See "Use of Proceeds" and "Pro Forma
Financial Data."

<TABLE>
<CAPTION>
AS OF MARCH 30, 1996
--------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Short-term debt:
Short-term borrowings.................................. $ 17.3 $ 17.3 $ 17.3
Current portion of long-term debt...................... 12.0 13.0 (1) 13.0
-------- -------- ----------
Total short-term debt............................... 29.3 30.3 30.3
-------- -------- ----------
Long-term debt, less current portion:
Domestic revolving loans............................... 715.5 1,179.5 (2) 704.1(4)
Industrial revenue bonds............................... 20.5 22.5 (1) 22.5
Other.................................................. 27.3 27.3 27.3
11 1/4% Senior Subordinated Notes due 2000............. 125.0 125.0 125.0
8 1/4% Subordinated Notes due 2002..................... 145.0 145.0 145.0
% Subordinated Notes due 2006....................... -- -- 200.0(5)
-------- -------- ----------
Total long-term debt, less current portion.......... 1,033.3 1,499.3 1,223.9
-------- -------- ----------
Stockholders' equity:
Common stock, par value $.01 per share; 150,000,000
shares authorized, 56,589,288 shares issued
(64,089,288 after adjustment for the Offerings)..... .6 .6 .6
Additional paid-in capital............................. 562.9 570.5 (3) 850.4(6)
Notes receivable from sale of Common Stock............. (.9) (.9) (.9)
Treasury stock, 10,230 shares of Common Stock.......... (.1) (.1) (.1)
Retained earnings...................................... 68.0 68.0 68.0
Cumulative translation adjustment...................... (14.5) (14.5) (14.5)
Minimum pension liability.............................. (3.5) (3.5) (3.5)
-------- -------- ----------
Total stockholders' equity.......................... 612.5 620.1 900.0
-------- -------- ----------
Total capitalization.............................. $1,675.1 $2,149.7 $ 2,154.2
======== ======== ==========
OTHER DATA:
Debt to total capitalization........................... 63.4% 71.2 % 58.2%
</TABLE>

- -------------------------
(1) Reflects debt assumed in connection with the Masland Acquisition.

(2) Reflects borrowings under the Credit Agreement of (i) $377.3 million to
acquire all of the outstanding common stock of Masland and retire certain
stock options of Masland in connection with the Masland Acquisition, (ii)
$75.7 million to retire certain debt assumed in connection with the Masland
Acquisition, and (iii) $11 million to pay estimated fees and expenses
related to the Masland Acquisition and the New Credit Agreement. In
connection with the Masland Acquisition, the Company incurred $300 million
of indebtedness under the New Credit Agreement, the proceeds of which were
used to repay borrowings under the Credit Agreement.

(3) Reflects the issuance of options originally granted under the Masland
Corporation 1993 Stock Option Plan which will be converted into options to
purchase Common Stock in connection with the Masland Acquisition.

(4) Reflects the application of the net proceeds from the Offerings of $279.9
million and the Note Offering of $195.5 million.

(5) Reflects the issuance of $200 million aggregate principal amount of the
Notes.

(6) Reflects the issuance of 7,500,000 shares of Common Stock in the Offerings
at $38 5/8 per share, net of $9.8 million in estimated fees and expenses.

14
<PAGE> 18

PRO FORMA FINANCIAL DATA

The following pro forma unaudited consolidated statements of operations of
the Company for the three months ended March 30, 1996 and for the year ended
December 31, 1995 were prepared to illustrate the estimated effects of (i) the
Masland Acquisition (including the refinancing of certain debt of Masland
pursuant to the Credit Agreement), (ii) the AI Acquisition (including the
refinancing of certain debt of AI pursuant to the Credit Agreement), (iii) the
Plastifol Acquisition, (iv) the 1995 Stock Offering, (v) the refinancing of the
Company's prior credit facility with borrowings under the Credit Agreement (vi)
the completion of the New Credit Agreement and (vii) the Note Offering and the
Offerings contemplated hereby and the application of the net proceeds to the
Company therefrom to repay indebtedness incurred pursuant to the Credit
Agreement to finance the Masland Acquisition (collectively, the "Pro Forma
Transactions"), as if the Pro Forma Transactions had occurred on January 1,
1995.

The following pro forma unaudited consolidated balance sheet (collectively
with the pro forma unaudited consolidated statements of operations, the "Pro
Forma Statements") was prepared as if the Masland Acquisition, the completion of
the New Credit Agreement, and the Note Offering and the Offerings contemplated
hereby and the application of the net proceeds therefrom to repay indebtedness
incurred pursuant to the Credit Agreement to finance the Masland Acquisition had
occurred as of March 30, 1996.

The Pro Forma Statements do not purport to represent (i) the actual results
of operations or financial position of the Company had the Pro Forma
Transactions occurred on the dates assumed or (ii) the results to be expected in
the future.

The pro forma adjustments are based upon available information and upon
certain assumptions that management believes are reasonable. The Pro Forma
Statements and accompanying notes should be read in conjunction with the
historical financial statements of the Company, Masland and AI, including the
notes thereto, and the other financial information pertaining to the Company,
Masland and AI, including the information set forth in "Capitalization" and
related notes thereto, included elsewhere or incorporated by reference in this
Prospectus.

PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 30, 1996

<TABLE>
<CAPTION>
OPERATING AND
LEAR MASLAND FINANCING
HISTORICAL HISTORICAL(1) ADJUSTMENTS PRO FORMA
---------- ------------- ------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales.......................................... $ 1,405.8 $ 122.5 $(1.0)(2) $1,527.3
Cost of sales...................................... 1,285.2 99.1 (1.0)(2) 1,383.3
--------- ------- ----- --------
Gross profit....................................... 120.6 23.4 -- 144.0
Selling, general and administrative expenses....... 43.3 10.0 -- 53.3
Amortization....................................... 7.3 .6 1.3(3) 9.2
--------- ------- ----- --------
Operating income................................... 70.0 12.8 (1.3) 81.5
Interest expense................................... 24.4 1.1 3.8(4) 29.3
Other expense, net................................. 3.1 .7 -- 3.8
--------- ------- ----- --------
Income before income taxes......................... 42.5 11.0 (5.1) 48.4
Income taxes....................................... 16.7 4.7 (1.3)(5) 20.1
--------- ------- ----- --------
Net income......................................... $ 25.8 $ 6.3 $(3.8) $ 28.3
========= ======= ===== ========
Net income per share............................... $ .43 $ .42
Weighted average shares outstanding (in
millions)........................................ 60.0 7.7(6) 67.7
EBITDA(7).......................................... $ 103.2 $ 120.7
</TABLE>

15
<PAGE> 19

PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
OPERATING AND
LEAR AI MASLAND FINANCING
HISTORICAL PRO FORMA(8) HISTORICAL(1) ADJUSTMENTS PRO FORMA
---------- ------------ ------------- ------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales............................ $ 4,714.4 $523.7 $ 473.2 $ (3.3)(2) $5,708.0
Cost of sales........................ 4,311.3 428.9 392.8 (3.3)(2) 5,129.7
-------- ------ ----- -------- ------
Gross profit......................... 403.1 94.8 80.4 -- 578.3
Selling, general and
administrative expenses............ 139.0 36.5 39.3 -- 214.8
Amortization......................... 19.3 9.5 2.3 5.3(3) 36.4
-------- ------ ----- -------- ------
Operating income..................... 244.8 48.8 38.8 (5.3) 327.1
Interest expense..................... 75.5 14.0 3.9 29.1(4) 122.5
Other expense, net................... 12.0 -- 3.4 -- 15.4
-------- ------ ----- -------- ------
Income before income taxes........... 157.3 34.8 31.5 (34.4) 189.2
Income taxes......................... 63.1 16.8 14.1 (10.2)(5) 83.8
-------- ------ ----- -------- ------
Income before extraordinary items.... 94.2 18.0 17.4 (24.2) 105.4
-------- ------ ----- -------- ------
Extraordinary loss on early
extinguishment of debt............. 2.6 -- -- (2.6)(9) --
-------- ------ ----- -------- ------
Net income........................... $ 91.6 $ 18.0 $ 17.4 $ (21.6) $ 105.4
======== ====== ===== ======== ======
Net income per share................. $ 1.74 $ 1.56
Weighted average shares outstanding
(in millions)...................... 52.6 15.0(6) 67.6
EBITDA(7)............................ $ 336.8 $ 467.2
</TABLE>

- -------------------------
(1) The Masland historical information represents amounts derived from (i) the
unaudited results of operations for the three months ended March 29, 1996
and (ii) with respect to the year ended December 31, 1995, the audited
results of operations for Masland's fiscal year ended June 30, 1995 and its
unaudited results of operations for the six month periods ending December
29, 1995 and December 30, 1994.

(2) Reflects the elimination of net sales from Masland to the Company.

(3) The adjustment to amortization represents the following:

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 30, 1996 DECEMBER 31, 1995
------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Amortization of goodwill from the Masland
Acquisition.......................................... $ 1.9 $ 7.6
Elimination of the historical goodwill amortization of
Masland.............................................. (.6) (2.3)
------ ------
$ 1.3 $ 5.3
====== ======
</TABLE>

16
<PAGE> 20

(4) Reflects interest expense changes as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Reduction of interest due to application of the
proceeds from the Offerings.......................... $ (4.6) $ (19.6)
Reduction of interest due to application of the
proceeds of the 1995 Stock Offering.................. -- (14.7)
Reduction in interest due to application of the
proceeds from the Note Offering to repay indebtedness
incurred under the Credit Agreement.................. (3.3) (14.0)
Estimated interest on the Notes at 9 3/8%.............. 4.7 18.8
Estimated interest on borrowings to finance
the AI Acquisition................................... -- 39.6
Elimination of interest on AI debt refinanced.......... -- (12.6)
Estimated interest on borrowings to finance the Masland
Acquisition.......................................... 7.6 32.4
Elimination of interest on Masland debt refinanced..... (1.1) (3.8)
Other changes in interest expense, commitment fees and
amortization of deferred finance fees due to the Note
Offering, the New Credit Agreement, and the
refinancing of the prior credit facility with the
Credit Agreement..................................... .5 3.0
------ -------
$ 3.8 $ 29.1
====== =======
</TABLE>

(5) Reflects the income tax effects of the operating and financing adjustments.

(6) The adjustment to weighted average shares outstanding represents the
following:

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 30, 1996 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
Effect of the issuance of 7.5 million shares pursuant
to the Offerings..................................... 7.5 7.5
Effect of the issuance of 10.0 million shares pursuant
to the 1995 Stock Offering........................... -- 7.3
Conversion of certain Masland stock options into Lear
stock options in connection with the Masland
Acquisition.......................................... .2 .2
--- -----
7.7 15.0
=== =====
</TABLE>

(7) "EBITDA" is operating income plus depreciation and amortization. EBITDA
does not represent and should not be considered as an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles.

(8) The AI Pro Forma information reflects (i) AI historical unaudited results
of operations for the period from January 1, 1995 through August 17, 1995,
the date on which AI was acquired by the Company; (ii) the unaudited
historical results of operations of Plastifol from January 1, 1995 through
the date of the AI Acquisition and (iii) adjustments to reflect interest on
borrowings by AI to finance the Plastifol Acquisition, amortization of
goodwill and the related income tax effects of such adjustments. The
results from operations of AI for the three months ended March 30, 1996 and
for the period subsequent to August 17, 1995 are included in the historical
results of the Company.

(9) Reflects the elimination of the extraordinary loss on refinancing of the
prior credit facility. Such loss would have been incurred in a prior period
had the Pro Forma Transactions taken place as of the beginning of the
periods presented.

17
<PAGE> 21

PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET

AS OF MARCH 30, 1996

<TABLE>
<CAPTION>
OPERATING
ACQUISITION AND AND
LEAR MASLAND VALUATION OF FINANCING
HISTORICAL HISTORICAL MASLAND(1) ADJUSTMENTS PRO FORMA
---------- ---------- ---------------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............... $ 21.6 $ 14.0 $ (463.0) $ 463.0(2) $ 35.6
Accounts receivable, net................ 879.0 63.4 -- -- 942.4
Inventories............................. 178.9 18.8 -- -- 197.7
Other current assets.................... 178.4 28.7 -- -- 207.1
-------- ------- -------- -------- --------
1,257.9 124.9 (463.0) 463.0 1,382.8
-------- ------- -------- -------- --------
Property, plant and equipment, net........ 648.4 114.7 -- -- 763.1
Goodwill and other intangibles, net....... 1,093.5 6.9 296.1 -- 1,396.5
Other..................................... 122.4 30.3 -- 5.5(3) 158.2
-------- ------- -------- -------- --------
$3,122.2 $276.8 $ (166.9) $ 468.5 $3,700.6
======== ======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings................... $ 17.3 $ 6.9 $ (6.9) $ -- $ 17.3
Accounts payable and drafts............. 881.7 41.1 -- -- 922.8
Accrued liabilities..................... 395.0 24.6 -- -- 419.6
Current portion of long-term debt....... 12.0 1.0 -- -- 13.0
-------- ------- -------- -------- --------
1,306.0 73.6 (6.9) -- 1,372.7
-------- ------- -------- -------- --------
Long-Term Liabilities:
Long-term debt.......................... 1,033.3 70.8 (68.8) 188.6(4) 1,223.9
Deferred national income taxes.......... 36.7 7.6 -- -- 44.3
Other................................... 133.7 26.0 -- -- 159.7
-------- ------- -------- -------- --------
1,203.7 104.4 (68.8) 188.6 1,427.9
-------- ------- -------- -------- --------
Stockholders' Equity...................... 612.5 98.8 (91.2) 279.9(5) 900.0
-------- ------- -------- -------- --------
$3,122.2 $276.8 $ (166.9) $ 468.5 $3,700.6
======== ======= ======== ======== ========
</TABLE>

- -------------------------
(1) Assumes a purchase price of $473.6 million which consists of (i) $384.9
million to acquire all of the common stock of Masland ($377.3 million to
purchase outstanding shares and $7.6 million in connection with the
retirement of certain stock options of Masland in connection with the
Masland Acquisition), (ii) $78.7 million of debt assumed in connection with
the Masland Acquisition and (iii) $10.0 million to pay estimated fees and
expenses related to the Masland Acquisition. The Masland Acquisition was
accounted for using the purchase method of accounting and the total purchase
cost was allocated first to assets and liabilities based on their respective
fair values, with the remainder allocated to goodwill. The allocation of the
purchase price above is based on historical costs and management's estimates
which may differ from the final allocation.

(2) Reflects proceeds of borrowings under the Credit Agreement of $463.0
million.

(3) Reflects the capitalization of fees incurred in establishing the New Credit
Agreement of $1.0 million, and fees incurred in connection with the Note
Offering of $4.5 million.

(4) Reflects the effects of the Pro Forma Transactions as follows:

<TABLE>
<S> <C>
Borrowings under the Credit Agreement to finance the Masland Acquisition................. $ 463.0
Issuance of the Notes.................................................................... 200.0
Borrowings under the Credit Agreement to pay fees and expenses incurred in establishing
the New Credit Agreement and in the Note Offering...................................... 5.5
Application of the net proceeds of the Offerings......................................... (279.9)
Application of the proceeds of the Note Offering......................................... (200.0)
-------
$ 188.6
=======
</TABLE>

(5) Reflects the net proceeds of the Offerings.

18
<PAGE> 22

SELECTED FINANCIAL DATA OF THE COMPANY

The following income statement and balance sheet data were derived from the
consolidated financial statements of the Company. The consolidated financial
statements of the Company for each of the fiscal years ended December 31, 1995,
1994 and 1993 and June 30, 1993, 1992 and 1991 have been audited by Arthur
Andersen LLP. Effective December 31, 1993, the Company changed its fiscal year
end from June 30 to December 31. The consolidated financial statements of the
Company for the three months ended March 30, 1996 and April 1, 1995 are
unaudited; however, in the Company's opinion, they reflect all adjustments,
consisting only of normal recurring items, necessary for a fair presentation of
the financial position and results of operations for such periods. The results
for the three months ended March 30, 1996 are not necessarily indicative of the
results to be expected for the full fiscal year. The selected financial data
below should be read in conjunction with the consolidated financial statements
of the Company and the notes thereto incorporated by reference in this
Prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations of the Company."

LEAR CORPORATION

<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS ENDED AS OF OR FOR THE YEAR ENDED
------------------- -----------------------------------------------------------------------
MARCH 30, APRIL 1, DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1995 1994 1993 1993 1992 1991
--------- -------- ------------ ------------ ------------ -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND CONTENT PER VEHICLE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales......................... $1,405.8 $1,043.5 $4,714.4 $3,147.5 $1,950.3 $1,756.5 $1,422.7 $1,085.3
Gross profit...................... 120.6 76.6 403.1 263.6 170.2 152.5 115.6 101.4
Selling, general and
administrative expenses......... 43.3 25.8 139.0 82.6 62.7 61.9 50.1 41.6
Incentive stock and other
compensation expense(1)......... -- -- -- -- 18.0 -- -- 1.3
Amortization...................... 7.3 3.1 19.3 11.4 9.9 9.5 8.7 13.8
-------- -------- -------- -------- -------- -------- -------- --------
Operating income.................. 70.0 47.7 244.8 169.6 79.6 81.1 56.8 44.7
Interest expense(2)............... 24.4 14.2 75.5 46.7 45.6 47.8 55.2 61.7
Other expense, net(3)............. 3.1 2.1 12.0 8.1 9.2 5.4 5.8 2.2
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes
and extraordinary items......... 42.5 31.4 157.3 114.8 24.8 27.9 (4.2) (19.2)
Income taxes...................... 16.7 14.4 63.1 55.0 26.9 17.8 12.9 14.0
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) before
extraordinary items............. 25.8 17.0 94.2 59.8 (2.1) 10.1 (17.1) (33.2)
Extraordinary items(4)............ -- -- 2.6 -- 11.7 -- 5.1 --
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)................. $ 25.8 $ 17.0 $ 91.6 $ 59.8 $ (13.8) $ 10.1 $ (22.2) $ (33.2)
======== ======== ======== ======== ======== ======== ======== ========
Net income (loss) per share before
extraordinary items............. $ .43 $ .34 $ 1.79 $ 1.26 $ (.06) $ .25 $ (.62) $ (2.01)
Net income (loss) per share....... $ .43 $ .34 $ 1.74 $ 1.26 $ (.39) $ .25 $ (.80) $ (2.01)
Weighted average shares
outstanding (in millions)(5).... 60.0 49.4 52.6 47.4 35.5 40.0 27.8 16.5
BALANCE SHEET DATA:
Current assets.................... $1,257.9 $ 904.3 $1,207.2 $ 818.3 $ 433.6 $ 325.2 $ 282.9 $ 213.8
Total assets...................... 3,122.2 1,797.9 3,061.3 1,715.1 1,114.3 820.2 799.9 729.7
Current liabilities............... 1,306.0 956.8 1,276.0 981.2 505.8 375.0 344.2 287.1
Long-term debt.................... 1,033.3 519.9 1,038.0 418.7 498.3 321.1 348.3 386.7
Common stock subject to limited
redemption rights, net.......... -- -- -- -- 12.4 3.9 3.5 1.8
Stockholders' equity.............. 612.5 217.1 580.0 213.6 43.2 75.1 49.4 4.4
OTHER DATA:
EBITDA(6)......................... $ 103.2 $ 66.1 $ 336.8 $ 225.7 $ 122.2 $ 121.8 $ 91.8 $ 81.4
Capital expenditures.............. $ 33.7 $ 23.6 $ 110.7 $ 103.1 $ 45.9 $ 31.6 $ 27.9 $ 20.9
Number of facilities(7)........... 116 82 107 79 61 48 45 40
North American content per
vehicle(8)...................... $ 274 $ 182 $ 227 $ 169 $ 112 $ 98 $ 94 $ 84
European content per vehicle(9)... $ 107 $ 78 $ 102 $ 48 $ 38 $ 37 $ 21 $ 11
Ratio of EBITDA to interest
expense(2)(6)................... 4.2x 4.7x 4.5x 4.8x 2.7x 2.6x 1.7x 1.3x
Ratio of earnings to fixed
charges(10)..................... 2.5x 2.9x 2.9x 3.2x 1.5x 1.5x -- --
Fixed charges in excess of
earnings(10).................... $ -- $ -- $ -- $ -- $ -- $ -- $ 6.5 $ 20.7
</TABLE>

- -------------------------
(1) Includes a one-time charge of $18.0 million, of which $14.5 million was
non-cash, for the year ended December 31, 1993 for incentive stock and
other compensation expense.
(2) Interest expense includes non-cash charges for amortization of deferred
financing fees of $.8 million, $.6 million, $2.7 million, $2.4 million,
$2.6 million, $3.0 million, $3.2 million and $4.1 million for the three
months ended March 30, 1996 and April 1, 1995, and for the years ended
December 31, 1995, 1994 and 1993, and the fiscal years ended June 30, 1993,
1992 and 1991.
(3) Consists of foreign currency exchange gain or loss, minority interest in
net income (loss) of subsidiaries, equity (income) loss of affiliates,
state and local taxes and other expense.
(4) The extraordinary items resulted from the prepayment of debt.
(5) Weighted average shares outstanding is calculated on a fully-diluted basis.
(6) "EBITDA" is operating income plus depreciation and amortization. EBITDA
does not represent and should not be considered as an alternative to net
income or cash flows from operations as determined by generally accepted
accounting principles.
(7) Includes facilities operated by the Company's less than majority-owned
affiliates and facilities under construction.
(8) "North American content per vehicle" is the Company's net automotive sales
in North America divided by total North American vehicle production. "North
American vehicle production" comprises car and light truck production in
the United States, Canada and Mexico estimated by the Company from industry
sources.
(9) "European content per vehicle" is the Company's net automotive sales in
Western Europe divided by total Western European vehicle production.
"Western European vehicle production" comprises car and light truck
production in Western Europe estimated by the Company from industry
sources.
(10) "Fixed charges" consist of interest on debt, amortization of deferred
financing fees and that portion of rental expenses representative of
interest (deemed to be one-third of rental expenses). "Earnings" consist of
income (loss) before income taxes, fixed charges, undistributed earnings
and minority interest.

19
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY

RESULTS OF OPERATIONS

Lear's sales have grown rapidly, both internally and through acquisitions,
from approximately $159.8 million in the fiscal year ended June 30, 1983 to
approximately $4.7 billion in the year ended December 31, 1995, a compound
annual growth rate of approximately 33%. As a result of this growth, the Company
has experienced substantial upfront costs for new programs and new facilities.
Such expenses consist of administrative expenses and engineering and design
expenses for new seating programs, including pre-production expenses and
inefficiencies incurred until the customer reaches normal operating levels. The
Company expenses such non-recurring pre-production expenses as they are
incurred.

The following chart shows operating results of the Company by principal
geographic area.

GEOGRAPHIC OPERATING RESULTS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
----------------------- --------------------------------------------
MARCH 30, APRIL 1, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994 1993
--------- --------- ------------ ------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET SALES:
United States and Canada............ $ 916.6 $ 714.4 $3,108.0 $2,378.7 $1,357.0
Europe.............................. 382.9 276.5 1,325.4 572.5 403.8
Mexico and other.................... 106.3 52.6 281.0 196.3 189.5
-------- --------- ---------- ---------- ----------
Net sales......................... $1,405.8 $ 1,043.5 $4,714.4 $3,147.5 $1,950.3
======== ========= ========== ========== ==========
OPERATING INCOME (LOSS):
United States and Canada............ $ 56.7 $ 44.6 $ 204.8 $ 155.6 $ 86.9
Europe.............................. 9.4 .1 26.5 4.4 (9.6)
Mexico and other.................... 3.9 3.0 13.5 9.6 20.3
Unallocated corporate expense(1).... -- -- -- -- (18.0)
-------- --------- ---------- ---------- ----------
Operating income.................. $ 70.0 $ 47.7 $ 244.8 $ 169.6 $ 79.6
======== ========= ========== ========== ==========
</TABLE>

- -------------------------
(1) Unallocated corporate expense consists of incentive stock option expense and
other one-time compensation expense.

Three Months Ended March 30, 1996 Compared With Three Months Ended April 1, 1995

Net sales of $1,405.8 million in the quarter ended March 30, 1996 surpassed
the first quarter of 1995 by $362.3 million or 34.7%. Sales as compared to prior
year benefited primarily from the acquisition of AI in August, 1995 and new
business in North America.

Net sales in the United States and Canada of $916.6 million in the first
quarter of 1996 exceeded the comparable period in the prior year by $202.2
million or 28.3%. Sales in the current quarter benefited from the contribution
of $175.4 million in sales from the AI Acquisition and new Ford passenger car
and Chrysler and Ford truck programs introduced within the past twelve months.
Partially offsetting the increase in sales was a downturn in production build
schedules on mature seat programs by domestic automotive manufacturers and the
impact of a General Motors work stoppage in March, 1996.

Net sales in Europe of $382.9 million increased in the first quarter of
1996 as compared to the first quarter of 1995 by $106.4 million or 38.5%. Sales
in the quarter ended March 30, 1996 benefited from $42.7 million in sales from
the AI Acquisition, additional volume on carryover programs in Italy and
favorable exchange rate fluctuations in Sweden, Germany and Italy.

20
<PAGE> 24

Net sales of $106.3 million in the first quarter of 1996 in the Company's
remaining geographic regions, consisting of Mexico, the Pacific Rim, South
Africa and South America, surpassed the first quarter of the prior year by $53.7
million or 102.1%. Sales in the current quarter benefited from increased
Chrysler truck and General Motors passenger car activity in Mexico and from new
business operations in Australia, South America and South Africa.

Gross profit (net sales less cost of sales) and gross margin (gross profit
as a percentage of net sales) were $120.6 million and 8.6% for the first quarter
of 1996 as compared to $76.6 million and 7.3% in 1995. Gross profit in the
current quarter benefited from the acquisition of AI, the overall growth in
sport utility and light truck seat programs in North America and increased sales
activity on seat programs in Europe and Mexico.

Selling, general and administrative expenses, including research and
development, as a percentage of net sales increased to 3.1% for the quarter
ended March 30, 1996 as compared to 2.5% a year earlier. Actual expenditures and
the percentage increased in comparison to prior year due to the inclusion of
AI's operating expenses and increased U.S. and European engineering and
administrative expenses in support of expansion of existing and potential
business opportunities.

Operating income and operating margin (operating income as a percentage of
net sales) were $70.0 million and 5.0% for the first quarter of 1996 as compared
to $47.7 million and 4.6% for the first quarter of 1995. For the quarter ended
March 30, 1996, operating income benefited from the acquisition of AI, increased
market demand on new and ongoing sport utility and light truck seat programs in
North America and improved performance at the Company's European and Mexican
operations. Partially offsetting the increase in operating income were
engineering and administrative support expenses, preproduction and facility
costs for new seat programs to be introduced globally within the next twelve
months and the adverse impact of the General Motors work stoppage. Non-cash
depreciation and amortization charges were $33.2 million and $18.4 million for
the first quarter of 1996 and 1995, respectively.

Interest expense for the first quarter of 1996 increased by $10.2 million
from the comparable period in the prior year largely as a result of interest
incurred on additional debt utilized to finance the AI Acquisition.

Other expenses for the three months ended March 30, 1996, which include
state and local taxes, foreign exchange, equity income of non-consolidated
affiliates and other non-operating expenses, increased in comparison to prior
year due to increased state and local taxes associated with the AI Acquisition.

Net income for the first quarter of 1996 was $25.8 million, or $.43 per
share, as compared to $17.0 million, or $.34 per share, in the prior year first
quarter. The provision for income taxes in the current quarter was $16.7
million, or an effective tax rate of 39.3%, as compared to $14.4 million, or an
effective tax rate of 45.9% in the previous year. The decline in the effective
tax rate is primarily due to changes in operating performance and related income
levels among the various tax jurisdictions. Earnings per share increased in 1996
by 26.5% despite the impact of the General Motors work stoppage, estimated to be
approximately $.10 per share and an increase in the number of shares outstanding
of approximately 10.6 million shares.

Year Ended December 31, 1995 Compared With Year Ended December 31, 1994

Net sales of $4,714.4 million in the year ended December 31, 1995
represented the Company's fourteenth consecutive year of record sales and
increased by $1,566.9 million or 49.8% over net sales for the year ended
December 31, 1994. Net sales in the current year benefited from the acquisitions
of Automotive Industries on August 17, 1995 and the Fiat Seat Business on
December 15, 1994 which together accounted for $795.3 million of the increase.
Further contributing to the growth in sales were incremental volumes on new
seating programs in North America and increased production in Europe.

Gross profit and gross margin were $403.1 million and 8.6% in 1995 as
compared to $263.6 million and 8.4% in 1994. Gross profit in the current year
benefited from the overall increase in North American and European sales
activity, the acquisitions of AI and FSB, and production of certain new seat
programs in the United States and Mexico. Partially offsetting the increase in
gross profit were new program start-up expenses of $32.1 million versus $23.1
million in the prior year, and costs associated with new business opportunities
in the Pacific Rim, South America and South Africa.

21
<PAGE> 25

Selling, general and administrative expenses, including research and
development, as a percentage of net sales increased to 2.9% in 1995 as compared
to 2.6% in the previous year. Actual expenditures in 1995 increased in
comparison to prior year primarily due to the inclusion of AI and FSB
engineering and administrative expenses in 1995. In addition, research and
development costs increased at the United States and European customer focused
technical centers in support of existing and potential business opportunities.

Operating income and operating margin were $244.8 million and 5.2% in the
year ended December 31, 1995 as compared to $169.6 million and 5.4% in the year
ended December 31, 1994. The increase in operating income was primarily due to
increased volumes on new and existing light truck seating programs, improved
performance at the Company's European operations and the incremental operating
income derived from acquisitions. Partially offsetting the increase in operating
income and contributing to the decline in operating margins were design and
development costs associated with the expansion of business and program start-up
expenses for new seat programs to be introduced worldwide within the next twelve
months. Also contributing to the decline in operating margin were the increased
sales in Europe caused by the FSB which had lower margins. Non-cash depreciation
and amortization charges were $92.0 million and $56.1 million for the years
ended December 31, 1995 and 1994, respectively.

Interest expense in the year ended December 31, 1995 increased in
comparison to prior year as a result of interest incurred on additional debt
utilized to finance the AI and FSB acquisitions as well as higher interest rates
in 1995 under the Company's senior credit facility.

Other expenses in 1995 increased in comparison to prior year as foreign
exchange losses incurred at the Company's North American and European
operations, along with increased state and local taxes associated with the AI
Acquisition, more than offset income derived from joint ventures accounted for
under the equity method.

Net income for the year ended December 31, 1995 was $91.6 million, or $1.74
per share, as compared to $59.8 million, or $1.26 per share in the year ended
December 31, 1994. The provision for income taxes in fiscal 1995 was $63.1
million, or an effective tax rate of 40.1%, versus $55.0 million and 47.9% for
the previous year. The decrease in rate is largely the result of changes in
operating performance and related income levels among the various tax
jurisdictions. Earnings per share increased in 1995 by 38.1% despite an increase
in the number of shares outstanding and an extraordinary loss of $2.6 million
($.05 per share) for the early retirement of debt.

United States and Canadian Operations

Net sales in the United States and Canada were $3,108.0 million and
$2,378.7 million in the years ended December 31, 1995 and 1994, respectively.
Sales in 1995 benefited from new Ford and General Motors passenger car programs,
the contribution of $248.1 million in sales from the AI Acquisition and
incremental volume on light truck seating for previously existing programs.

Operating income and operating margin were $204.8 million and 6.6% in 1995
as compared to $155.6 million and 6.5% in 1994. Operating income in 1995
increased primarily due to increased volumes at certain of the Company's car and
light-truck seating facilities, the benefits derived from the AI Acquisition and
increased productivity and cost reduction programs at existing seat and seat
component facilities. Partially offsetting this increase in operating margin
were engineering and administrative support expenses along with preproduction
costs at new business operations.

European Operations

Net sales in Europe were $1,325.4 million in the year ended December 31,
1995 and $572.5 million in the year ended December 31, 1994. Sales in the
current year benefited from $547.2 million in sales from the FSB and AI
acquisitions, incremental volume on existing programs in Sweden and England and
favorable exchange rate fluctuations in Germany and Sweden.

Operating income and operating margin were $26.5 million and 2.0% in 1995
as compared to $4.4 million and 0.8% in 1994. Operating income in 1995 benefited
from incremental volume on mature Scandinavian and

22
<PAGE> 26

German seat programs and the benefits derived from the FSB and AI Acquisitions.
Partially offsetting the increase in operating income were engineering,
preproduction and facility costs associated with the start-up of a new seat
program in Germany.

Mexico and other Operations

Net sales of $281.0 million in 1995 in the Company's remaining geographic
regions, consisting of Mexico, the Pacific Rim, South Africa and South America,
increased by $84.7 million or 43.1% as compared to $196.3 million in the
comparable period in the prior year. Sales in the year ended December 31, 1995
benefited from the overall growth in Mexican sales activity, including the
production of new General Motors and Ford passenger car and truck seat programs.
Further contributing to the increase in sales was the addition of new business
operations in Australia, South Africa, Brazil and Argentina.

Operating income and operating margin were $13.5 million and 4.8% in the
year ended December 31, 1995 and $9.6 million and 4.9% in the previous year. The
increase in operating income was largely the result of the benefits derived from
increased market demand for new and ongoing seat programs in Mexico. Partially
offsetting the increase in operating income were engineering and preproduction
costs for recently opened manufacturing facilities in the Pacific Rim, South
Africa and South America.

Year Ended December 31, 1994 Compared With Year Ended December 31, 1993

Net sales of $3,147.5 million in the year ended December 31, 1994
represented the thirteenth consecutive year of record sales and surpassed sales
of $1,950.3 million in the year ended December 31, 1993 by $1,197.2 million or
61.4%. Sales in 1994 benefited from internal growth from new programs and
increased seat content per vehicle, higher automotive production in the United
States and Europe and the NAB Acquisition, which accounted for $421.0 million of
the increase.

Gross profit and gross margin were $263.6 million and 8.4%, respectively,
in the year ended December 31, 1994 as compared to $170.2 million and 8.7%,
respectively, in the year ended December 31, 1993. Gross profit in 1994
surpassed gross profit in 1993 due to the benefit of higher sales volume,
including the effect of the NAB Acquisition and the Company's cost reduction
programs. Partially offsetting the increase in gross profit were $23.1 million
of expense for engineering and pre-production costs for new facilities in the
United States, Canada and Europe, lower margin contribution in Mexico and the
$3.9 million increase in post-retirement health care expenses (SFAS 106).

Selling, general and administrative expenses as a percentage of net sales
declined to 2.6% for the year ended December 31, 1994 as compared to 3.2% in the
prior year. The increase in actual expenditures was largely the result of
administrative support expenses and research and development costs associated
with the expansion of domestic and foreign business and expenses related to new
business opportunities.

Operating income and operating margin were $169.6 million and 5.4%,
respectively, in the year ended December 31, 1994 and $79.6 million and 4.1%,
respectively, in the year ended December 31, 1993. The 113.1% increase in
operating income was attributable to the benefits of higher sales volume,
including the effect of the NAB Acquisition, non-recurring incentive stock and
other compensation expense of $18.0 million in 1993 and the Company's cost
reduction programs. Partially offsetting the increase in operating income were
new facility and engineering costs for future seat programs, reduced margins in
Mexico and the effect of the adoption of SFAS 106. Non-cash depreciation and
amortization charges were $56.1 million and $42.6 million, respectively, for the
years ended December 31, 1994 and 1993.

Other expense for the year ended December 31, 1994, including state and
local taxes, foreign exchange gains and losses, minority interests and equity in
income of affiliates, decreased in comparison to the prior year as the
non-recurring write-off of equipment associated with a discontinued program in
Germany and non-seating related assets in the United States, along with a
foreign exchange gain, offset state and local tax expense associated with the
NAB Acquisition. Interest expense in 1994 increased in relation to 1993 as
additional debt incurred to finance the NAB Acquisition and higher short-term
interest expense in Europe

23
<PAGE> 27

offset the benefits derived from the refinancing of subordinated debt at a lower
interest rate and the Company's initial public offering of Common Stock in April
1994.

Net income for the year ended December 31, 1994 was $59.8 million, or $1.26
per share, as compared to a net loss of $13.8 million, or $.39 per share,
realized in the year ended December 31, 1993. The net income of $59.8 million in
1994 reflects a $55.0 million provision for national income taxes of which $26.0
million relates to foreign operations. Further contributing to the improvement
in 1994 net income was the extraordinary expense in 1993 of $11.7 million for
the early extinguishment of debt.

United States and Canadian Operations

Net sales in the United States and Canada increased by 75.3% from $1,357.0
million in the year ended December 31, 1993 to $2,378.7 million for the year
ended December 31, 1994. Sales for the year ended December 31, 1994 benefited
from the full year contribution of the NAB Acquisition, vehicle production
increases on mature seating programs, incremental volume on new Chrysler truck,
Ford truck and Ford passenger car programs and sales generated by a lead vendor
program under which the Company assumed management of components for a seat
program with Ford.

Operating income and operating margin were $155.6 million and 6.5%,
respectively, in the year ended December 31, 1994 and $86.9 million and 6.4%,
respectively, in the year ended December 31, 1993. Operating income and
operating margin in 1994 as compared to the prior year benefited from the NAB
Acquisition, the overall increase in vehicle production and cost reduction
programs which offset new program costs for new facilities, administrative
expenses associated with the expansion of business and increased research and
development expenses.

European Operations

Net sales in Europe increased by 41.8% to $572.5 million for the year ended
December 31, 1994 compared to $403.8 million for the year ended December 31,
1993. The sales increase was due primarily to the addition of new seat programs
in Germany and England and vehicle production increases on established programs
in Germany, Sweden and Austria.

Operating income in Europe was $4.4 million in the fiscal year ended
December 31, 1994 compared to an operating loss of $9.6 million sustained in the
year ended December 31, 1993. Operating income in 1994 as compared to the prior
year benefited from the higher sales levels and cost reduction programs at
existing seat and seat component facilities. Partially offsetting the increase
in operating income were incremental costs associated with the start-up of a new
seat facility in England and the introduction of a replacement component program
within an established facility in Germany.

Mexican Operations

Net sales in Mexico were $196.3 million in the year ended December 31, 1994
and $189.5 million in the year ended December 31, 1993. Sales for the year ended
December 31, 1994 surpassed the prior year due to new Chrysler truck and Ford
passenger car seat programs and incremental volume on mature Ford programs.
Partially offsetting the increase in net sales was the product phase out of a
mature truck program and participation in customer cost reduction programs.

Operating income and operating margin in Mexico were $10.2 million and
5.2%, respectively, in the year ended December 31, 1994 and $20.3 million and
10.7%, respectively, in the prior year. Operating income and operating margin in
1994 declined in relation to the prior year as a result of the Company's
participation in customer cost reduction programs and costs associated with the
introduction of replacement products at new and established facilities.

LIQUIDITY AND CAPITAL RESOURCES

On August 17, 1995, the Company entered into a secured revolving credit
agreement with a syndicate of financial institutions (the "Credit Agreement")
providing for borrowings in the principal amount of up to $1.5 billion.
Borrowings under the Credit Agreement have been used to finance a portion of the
AI and Masland Acquisitions, to refinance certain existing indebtedness of AI
and Masland at the time of their

24
<PAGE> 28

acquisition by Lear, to refinance the Company's prior $500 million credit
facility and for general corporate purposes. As of March 30, 1996, after giving
pro forma effect to the Masland Acquisition, the incurrence of indebtedness
under the New Credit Agreement in connection with the Masland Acquisition
(described below) and the Note Offering and the Offerings and the application of
the net proceeds therefrom, the Company would have had $760.2 million
outstanding under the Credit Agreement ($56.1 million of which was outstanding
under letters of credit), with $1,014.8 million unused and available. In
addition the Company would have had $40.8 million of long term debt outstanding
with various governmental authorities, banks and other financial institutions as
well as $470.0 million of subordinated debt.

On June 1996, the Company entered into a second revolving credit
agreement with a syndicate of financial institutions (the "New Credit
Agreement"). The New Credit Agreement contains substantially identical terms as
the Credit Agreement and permits borrowings of up to $300 million. In connection
with the Masland Acquisition, the Company borrowed the full amount permitted
under the New Credit Agreement and used the proceeds to repay outstanding
indebtedness under the Credit Agreement.

Borrowings under the Credit Agreement and the New Credit Agreement bear
interest at the election of the Company, at a floating rate of interest equal to
(i) the higher of Chemical Bank's prime lending rate and the federal funds rate
plus .5% or (ii) the Eurodollar Rate (as defined in the Credit Agreement) plus a
borrowing margin of .5% to 1.0%. The applicable borrowing margin is determined
based on the level of a specified financial ratio of the Company. Under the
Credit Agreement, Lear is permitted to convert variable rate interest
obligations on up to an aggregate of $500 million in principal amount of
indebtedness into fixed rate interest obligations.

Amounts available under the Credit Agreement and the New Credit Agreement
will be reduced by an aggregate amount of $750 million prior to maturity on
September 30, 2001. The Company's scheduled principal payments on long-term
debt, including debt assumed in connection with the Masland Acquisition, are
approximately $9.0 million, $11.5 million, $7.6 million, $5.5 million and $128.2
million for the remainder of 1996 and for the full years 1997, 1998, 1999 and
2000, respectively.

As of March 30, 1996, the Company had net cash and cash equivalents of
$21.6 million. The Company's actual cash availability on the date hereof will be
less than at March 30 because of greater working capital needs during the
current quarter. Nevertheless, the Company believes that cash flows from
operations and funds available under existing credit facilities (principally the
Credit Agreement) will be sufficient to meet its future debt service
obligations, projected capital expenditures and working capital requirements, as
well as to provide the flexibility to fund future acquisitions.

Concurrently with the Offerings, the Company is undertaking the Note
Offering, which is conditioned in its entirety upon the consummation of the
Offerings. The Offerings are not, however, conditioned upon the consummation of
the Note Offering. The Notes will be subordinated in right of payment to all
existing and future senior indebtedness of the Company, including the
indebtedness evidenced by the Credit Agreement, the New Credit Agreement and the
Senior Subordinated Notes. The Notes will rank pari passu in right of payment
with the Subordinated Notes. The net proceeds to the Company from the Note
Offering will be used to repay indebtedness outstanding under the Credit
Agreement.

The Credit Agreement and the New Credit Agreement, together with the Senior
Subordinated Notes, the Subordinated Notes and the Notes, impose or will impose
various restrictions and covenants on the Company, including, among other
things, financial covenants relating to the maintenance of minimum operating
profit and net worth levels and interest coverage ratios as well as restrictions
on indebtedness, guarantees, acquisitions, capital expenditures, investments,
loans, liens, dividends and other restricted payments and asset sales. Such
restrictions, together with the leveraged nature of the Company, could limit the
Company's ability to respond to market conditions, to provide for unanticipated
capital investments or to take advantage of business opportunities.

25
<PAGE> 29

CAPITAL EXPENDITURES

During the year ended December 31, 1995, the Company's capital expenditures
aggregated approximately $110.7 million. For the years ended December 31, 1994
and 1993, capital expenditures of the Company were $103.1 million and $45.9
million, respectively. For 1996, the Company anticipates capital expenditures of
approximately $175.0 million, reflecting a full year of AI operations and
approximately $10.0 million relating to the Masland Division.

ENVIRONMENTAL MATTERS

The Company is subject to local, state, federal and foreign laws,
regulations and ordinances (i) which govern activities or operations that may
have adverse environmental effects and (ii) that impose liability for the costs
of cleaning up certain damages resulting from sites of past spills, disposal or
other releases of hazardous substances. The Company currently is engaged in the
cleanup of hazardous substances at certain sites owned, leased or operated by
the Company, including soil and groundwater cleanup at its facilities in Mendon,
Michigan and Troy, Michigan. Management believes that the Company will not incur
compliance costs or cleanup cost at its facilities with known contamination that
would have a material adverse effect on the Company's consolidated financial
position or future results of operations.

The Company has been identified as a potentially responsible party ("PRP")
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA" or "Superfund"), for the cleanup of contamination
from hazardous substances at four Superfund sites where liability has not been
completely determined. The Company has also been identified as a PRP at four
additional sites. Management believes that the Company is, or may be,
responsible for less than one percent, if any, of the total costs at the four
Superfund sites. Expected liability, if any, at the four additional sites is not
material.

INFLATION AND ACCOUNTING POLICIES

Lear's contracts with its major customers generally provide for an annual
productivity price reduction and provide for the recovery of increases in
material and labor costs in some contracts. Cost reduction through design
changes, increased productivity and similar programs with the Company's
suppliers generally have offset changes in selling prices. The Company's cost
structure is comprised of a high percentage of variable costs. The Company
believes that this structure provides it with additional flexibility during
economic cycles.

During 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which must be adopted by the Company in 1996 and requires that
stock compensation, including compensation in the form of stock options, be
calculated using a measure of fair value, compared with intrinsic value required
under current accounting principles. The new method may be either reflected in
the financial statements or disclosed in the notes to the statements. The
Company expects to adopt the statement by disclosing the effects of the fair
value method in the notes to its 1996 financial statements.

26
<PAGE> 30

SELECTED FINANCIAL DATA OF MASLAND CORPORATION

The following summary consolidated financial data were derived from the
consolidated financial statements of Masland. The consolidated financial
statements of Masland for each of fiscal years 1995, 1994 and 1993 have been
audited by Price Waterhouse LLP. The consolidated financial statements of
Masland for the nine months ended March 29, 1996 and March 31, 1995 are
unaudited; however, in the opinion of Masland's management, they reflect all
adjustments, consisting only of normal recurring items, necessary for a fair
presentation of the financial position and results of operations for such
periods. The results for the nine months ended March 29, 1996 are not
necessarily indicative of the results to be expected for the full fiscal year.
The selected financial data below should be read in conjunction with the
consolidated financial statements of Masland and the notes thereto incorporated
by reference in this Prospectus and "Management's Discussion and Analysis of
Results of Operations of Masland Corporation."

MASLAND CORPORATION

<TABLE>
<CAPTION>
AS OF OR FOR THE NINE AS OF OR FOR THE FISCAL
MONTHS ENDED YEAR ENDED
---------------------- ----------------------------
MARCH 29, MARCH 31, JUNE 30, JULY 1, JULY 2,
1996 1995 1995 1994 1993
--------- --------- -------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT CONTENT PER VEHICLE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales...................................... $ 343.4 $ 373.8 $496.6 $ 429.9 $ 353.5
Gross profit................................... 57.6 68.4 91.2 86.4 62.0
Selling, general and administrative expenses... 29.4 32.6 42.1 39.5 32.7
Amortization................................... 1.7 1.6 2.1 1.9 3.5
------- ------- ------ ------- -------
Operating income............................... 26.5 34.2 47.0 45.0 25.8
Interest expense, net.......................... 3.0 3.4 4.2 3.7 4.3
Other (income) expense, net(1)................. 2.3 3.4 4.2 4.4 (.3)
------- ------- ------ ------- -------
Income before income taxes..................... 21.2 27.4 38.6 36.9 21.8
Income taxes................................... 9.4 12.4 17.3 15.9 8.7
------- ------- ------ ------- -------
Net income..................................... 11.8 15.0 21.3 21.0 13.1
Preferred dividend............................. -- -- -- .5 1.4
------- ------- ------ ------- -------
Net income applicable to common stock.......... $ 11.8 $ 15.0 $ 21.3 $ 20.5 $ 11.7
======= ======= ====== ======= =======
BALANCE SHEET DATA:
Current assets................................. $ 124.9 $ 111.6 $110.2 $ 101.9 $ 99.0
Total assets................................... 276.8 226.0 228.0 203.8 197.3
Current liabilities............................ 73.6 75.2 71.7 79.6 70.1
Long-term debt................................. 70.8 40.2 37.0 31.4 50.1
Stockholders' equity........................... 98.8 82.5 88.2 68.5 60.1
OTHER DATA:
EBITDA(2)...................................... $ 40.2 $ 46.5 $ 62.2 $ 57.6 $ 37.1
Capital expenditures........................... 20.6 14.7 22.0 17.8 18.0
North American content per vehicle(3).......... 34 31 33 30 26
</TABLE>

- -------------------------
(1) Other (income) expense includes minority interest in consolidated
subsidiaries.

(2) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles.

(3) "North American content per vehicle" is the Company's net automotive sales
in North America divided by total North American vehicle production. "North
American vehicle production" comprises car and light truck production in the
United States, Canada and Mexico estimated by the Company from industry
sources.

27
<PAGE> 31

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS OF MASLAND CORPORATION

Nine Months Ended March 29, 1996 Compared with Nine Months Ended March 31, 1995

Net sales decreased $30.4 million or 8.1% from $373.8 million for the nine
months ended March 31, 1995 to $343.4 million for the nine months ended March
29, 1996. The net sales decrease was due to lower North American light vehicle
production and a slower than anticipated ramp up in production of the redesigned
Ford Taurus/Mercury Sable. Also, the fiscal 1995 period included approximately
$6.5 million in sales from the non-automotive business of H.L. Blachford, Inc.
("Blachford") which was divested in March 1995.

Cost of sales as a percentage of net sales increased from 81.7% for the
nine months ended March 31, 1995 to 83.2% for the nine months ended March 29,
1996. This cost increase was primarily due to the effect of decreased sales on
fixed costs combined with additional costs for several new product and program
launches, including the redesigned Ford F-Series pickup and the redesigned Ford
Taurus/Mercury Sable.

Selling, general and administrative expenses decreased $1.3 million or 6.5%
from $19.4 million for the nine months ended March 31, 1995 to $18.1 million for
the nine months ended March 29, 1996. The decrease was primarily due to lower
incentive compensation expense and cost savings associated with the Blachford
acquisition, which was completed in September 1994. This decrease was partially
offset by reorganization expenses related to streamlining, decentralization and
customer focus efforts.

Research, development and engineering declined from 3.5% of net sales for
the nine months ended March 31, 1995 to 3.3% of net sales for the nine months
ended March 29, 1996. Interest expense decreased from $3.4 million for the nine
months ended March 31, 1995 to $3.0 million for the nine months ended March 29,
1996, primarily due to a decline in interest rates. Other expense decreased $1.1
million for the nine months ended March 29, 1996 compared to the nine months
ended March 31, 1995. The improvement in other expense is primarily due to the
nine months ended March 31, 1995 containing the foreign exchange loss resulting
from the 50% devaluation of the Mexican peso between December 20, 1994 and March
31, 1995. The effective income tax rates for the nine months ended March 31,
1995 and March 29, 1996 were 41.8% and 39.9%, respectively. The decrease in the
effective tax rate was due to a decrease in the state income tax rate in
Masland's primary state tax jurisdiction and due to changes in the distribution
of income among Masland's various foreign and domestic tax jurisdictions.

Net cash flow provided by operating activities for the first nine months of
fiscal 1996 was $15.7 million. This was the result of net income of $11.8
million and non-cash charges of $11.2 million, primarily depreciation, offset by
an increase in non-cash working capital of $7.3 million. Significant
non-operating uses of cash were investments of $23 million in Sommer Masland
(U.K.) Ltd. and Precision Fabrics Group, Inc. ("PFG"), capital expenditures of
$20.6 million and dividends on common stock of $0.05 per share, totaling $2.0
million.

On July 31, 1995, Masland formed a joint venture, Sommer Masland (U.K.)
Ltd. by purchasing 50% of Sommer Allibert S.A.'s existing manufacturing facility
in Washington, England for approximately $8 million. This facility, which
supplies Nissan, Peugeot and Saab, has annual sales of approximately $20
million. Masland and Sommer plan to conduct their acoustic and soft-surface trim
business in the United Kingdom exclusively through the joint venture.

On September 27, 1995, Masland invested $15 million in PFG in exchange for
a 29% equity interest. In connection with the investment, Masland received an
option to acquire the remainder of PFG for 4.1 million shares of Masland. PFG
recently introduced the Precision Technology Airbag which it plans to market to
the automotive industry. PFG is presently a technology leader in the development
and manufacture of highly engineered lightweight fabrics for the aerospace,
medical and computer industries.

28
<PAGE> 32

Fiscal Year Ended June 30, 1995 Compared with Fiscal Year Ended July 1, 1994

Net sales increased $66.7 million, or 15.5%, from $429.9 million in fiscal
1994 to $496.6 million in fiscal 1995. About $33 million of the increase was
associated with the acquisition of Blachford. The remaining increase was
primarily due to participation on several new vehicles during fiscal 1995,
including the Ford Contour/Mystique, the Lincoln Continental/Town Car and the
Toyota Avalon and an overall increase in industry automotive vehicle builds
during fiscal 1995. The increase in industry vehicle builds was concentrated in
the first half of fiscal 1995.

Cost of sales as a percentage of net sales increased from 79.9% in fiscal
1994 to 81.6% in fiscal 1995. This increase in cost of sales as a percentage of
net sales was primarily due to lower margins on the acquired business of
Blachford, costs incurred on several new product launches and product mix. These
increases were partially offset by the effect of the increased sales volume on
fixed costs and the impact of various productivity initiatives.

Selling, general and administrative expenses decreased from 5.9% of net
sales in fiscal 1994 to 5.0% of net sales in fiscal 1995. This improvement was
primarily due to the effect of the increased sales volume on fixed costs,
decreased incentive compensation in fiscal 1995, and a nonrecurring charge of
$0.9 million in fiscal 1994 associated with the vesting of certain stock options
at the date of Masland's initial public offering.

Research, development and engineering expenses increased 21.1% from $14.2
million in fiscal 1994 to $17.2 million in fiscal 1995, primarily due to
increased levels of activity regarding new process and product development at
Masland's Technical Center in Plymouth, Michigan and due to incremental costs
associated with the acquisition of Blachford. Interest expense increased from
$3.7 million in fiscal 1994 to $4.2 million in fiscal 1995 due to incremental
debt arising from the Blachford acquisition and an increase in average interest
rates. Other income and expense consists of foreign currency exchange losses in
fiscal 1994 and fiscal 1995. The loss of $1.0 million incurred in fiscal 1995
relates primarily to the 45% devaluation of the Mexican peso subsequent to
December 20, 1994. The effective income tax rates for fiscal 1994 and fiscal
1995 were 39.0% and 41.3%, respectively. The increase in the effective income
tax rate was due to decreased tax benefits recognized in fiscal 1995 compared to
fiscal 1994 associated with tax net operating loss carryforwards and other tax
credits and due to changes in the distribution of income among Masland's various
foreign and domestic tax jurisdictions.

Fiscal Year Ended July 1, 1994 Compared to the Fiscal Year Ended July 2, 1993

Net sales increased 21.6% from $353.5 million in fiscal 1993 to $429.9
million in fiscal 1994. On May 8, 1993, Masland began to consolidate the results
of Amtex, Inc., a 50% owned joint venture ("Amtex"), as a result of entering
into a revised Joint Venture Agreement with its joint venture partner. Prior to
this date, the results of Amtex were accounted for under the equity method. Had
the results of Amtex been consolidated for all of fiscal 1993, sales for that
year would have been $369.4 million and the increase in Masland's sales for
fiscal 1994 would have been $60.5 million or 16.4%. This increase was due to
overall increases in North American automotive industry vehicle builds during
fiscal 1994 compared to fiscal 1993, and participation on several new vehicles
during fiscal 1994, including the Chrysler Neon and the Ford Mustang.

Cost of sales as a percentage of net sales improved from 82.5% in fiscal
1993 to 79.9% in fiscal 1994. This improvement was a result of Masland's
continuing efforts to improve productivity and reduce costs and the effect of
increased sales on fixed costs in fiscal 1994.

Selling, general and administrative expenses increased by $2.2 million, but
decreased from 6.5% of net sales in fiscal 1993 to 5.9% of net sales in fiscal
1994. The increased costs in fiscal 1994 were primarily due to a charge to
expense of $0.9 million resulting from the immediate vesting of certain stock
options concurrent with Masland's initial public offering, the consolidation of
Amtex and to increased incentive compensation resulting from improved
profitability.

29
<PAGE> 33

Research, development and engineering expenses increased 47.9% from $9.6
million in fiscal 1993 to $14.2 million in fiscal 1994, primarily due to
Masland's Technical Center in Plymouth, Michigan becoming fully operational
during fiscal 1994 and an increase in engineering personnel and related
expenses. Interest expense decreased from $4.3 million in fiscal 1993 to $3.7
million in fiscal 1994 due to a decrease in average interest rates and lower
average borrowings, partially offset by additional interest expense resulting
from the consolidation of Amtex. Earnings of Amtex prior to May 8, 1993 were
recorded under the equity method of accounting and were included in other
(income) expense, primarily accounting for the change in this balance from
income of $0.5 million for fiscal 1993 to expense of $0.4 million in fiscal
1994. The effective income tax rates for fiscal 1993 and fiscal 1994 were 39.4%
and 39.0%, respectively.

30
<PAGE> 34

BUSINESS OF THE COMPANY

GENERAL

Lear is the largest independent supplier of automotive interior systems in
the estimated $40 billion global automotive interior systems market and the
tenth largest independent automotive supplier in the world. The Company's
principal products include: finished automobile and light truck seat systems;
interior trim products, such as door panels and headliners; and component
products, such as seat frames, seat covers and various blow molded plastic
parts. The Company's extensive product offerings were recently expanded through
the acquisition of Masland, a leading Tier I designer and manufacturer of
automotive floor and acoustic systems and interior and luggage trim components.
This acquisition, together with the August 1995 acquisition of Automotive
Industries, has made Lear the world's largest independent automotive supplier
with the ability to design, engineer, test and deliver products for a total
vehicle interior. The Company's present customers include 24 original equipment
manufacturers ("OEMs"), the most significant of which are Ford, General Motors,
Fiat, Chrysler, Volvo, Saab, Volkswagen and BMW. As of June 1, 1996, after
giving pro forma effect to the Masland Acquisition, the Company would have
employed approximately 40,000 people in 19 countries and operated 131
manufacturing, research and development, product engineering and administration
facilities.

The Company has experienced substantial growth in market presence and
profitability over the last five years both as a result of internal growth as
well as acquisitions. The Company's sales have grown from approximately $1.1
billion for the year ended June 30, 1991 to approximately $4.7 billion for the
year ended December 31, 1995, a compound annual growth rate of 38%. After giving
pro forma effect to the AI and Masland acquisitions, the Company's sales would
have been approximately $5.7 billion for the year ended December 31, 1995. The
Company's operating income has grown from $44.7 million for the year ended June
30, 1991 to $244.8 million for the year ended December 31, 1995, a compound
annual growth rate of 46%.

The increase in the Company's sales and the improvement in its operating
performance are attributable primarily to the Company's strategy of capitalizing
on two significant trends in the automotive industry: (i) the outsourcing of
automotive components and systems by OEMs; and (ii) the consolidation and
globalization of the OEMs' supply base. Outsourcing of interior components and
systems has increased in response to competitive pressures on OEMs to improve
quality and reduce capital needs, costs of labor, overhead and inventory.
Consolidation among automotive industry suppliers has occurred as OEMs have more
frequently awarded long-term sole source contracts to the most capable global
suppliers. Increasingly, the criteria for selection include not only cost,
quality and responsiveness, but also certain full-service capabilities,
including design, engineering and project management support. OEMs now have
rigorous programs for evaluating and rating suppliers, which encompass quality,
cost control, reliability of delivery, new technology implementation and overall
management. Under these programs, each facility operated by a supplier is
evaluated independently. The suppliers who obtain superior ratings from an OEM
are considered for new business; those who do not may continue their existing
contracts, but are unlikely to be considered for additional business. As a
result, the OEMs' new supplier policies will continue to reduce the number of
component and system suppliers. The Company believes that OEMs in North America
and Europe will continue to pursue outsourcing and supplier consolidation as a
means of cost reduction.

The Company has positioned itself as the leading global Tier I supplier of
interior systems and components to OEMs. Tier I status typically means that the
supplier is awarded a program for a particular vehicle in the early stages of a
vehicle's design. The Tier I supplier becomes responsible for total product
management, including design, development, component sourcing, quality assurance
procedures, manufacture and delivery to the OEM's assembly plant. The OEMs
benefit from lower costs, improved quality, timely delivery and the
administrative convenience of being able to outsource complete systems to a
single supplier or a small group of suppliers.

In 1995, Lear was the leading independent supplier to the total $40 billion
global automotive interior market, with a 12% share after giving pro forma
effect to the AI and Masland acquisitions. In addition, the Company in 1995 held
a leading 34% share of the estimated $6.9 billion total North American seat
systems market and was the leading independent supplier to the estimated $5.5
billion total Western European seat

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systems market, with a 19% share. The door panel and headliner segments of the
automotive interior market are highly fragmented, contain no dominant
independent supplier and are in the early stages of the outsourcing and/or
consolidation process. The Company believes that the same competitive pressures
that contributed to the rapid expansion of its seat systems business in North
America since 1983 will continue to encourage automakers in the North American
and European markets to outsource more of their door panel and headliner
requirements.

The Company's North American content per vehicle has increased from $12 in
1983 to $227 in 1995. In Western Europe, the content per vehicle has grown from
$3 in 1983 to $102 in 1995. These increases have resulted from the Company's
ability to capitalize on a number of industry trends including outsourcing,
greater design responsibility by Tier I suppliers and the increased
sophistication of seat systems and other interior products as OEMs add
convenience features and luxury items into vehicle models. The increases in
content per vehicle also resulted from several recent acquisitions, including
Automotive Industries and the Fiat Seat Business. See " -- Recent Acquisitions."
In addition, the Company believes it can further increase interior content
through the development of more advanced automobile safety features, such as
side impact airbags and fully integrated seatbelts.

The Company is the successor to a seat frame manufacturing business founded
in 1917 that served as a supplier to General Motors and Ford from its inception.
As a result of the expansion of the Company's business from automotive seat
systems to products for a vehicle's complete interior, the Company changed its
name to "Lear Corporation" from "Lear Seating Corporation" effective May 9,
1996.

BUSINESS STRATEGY

Lear's business objective is to expand its position as the leading
independent supplier of automotive interior systems in the world. To achieve
this objective, the Company will continue to pursue a strategy based upon the
following elements:

- Strong Relationships with the OEMs. The Company's management has
developed strong relationships with its 24 OEM customers which allow Lear to
identify business opportunities and anticipate customer needs in the early
stages of vehicle design. Management believes that working closely with OEMs in
the early stages of designing and engineering vehicle interior systems gives it
a competitive advantage in securing new business. Lear maintains an excellent
reputation with the OEMs for timely delivery and customer service and for
providing world class quality at competitive prices. As a result of the
Company's service and performance record, many of the Company's facilities have
won awards from OEMs with which they do business.

- Global Presence. In 1995, more than two-thirds of total worldwide vehicle
production occurred outside of the United States and Canada. Due to
opportunities for significant cost savings and improved product quality and
consistency, OEMs have increasingly required their suppliers to manufacture
interior systems and other components in multiple geographic markets. In recent
years, the Company has aggressively expanded its operations in Western Europe
and emerging markets in South America, South Africa, the Pacific Rim and
elsewhere, giving it the capability to provide its products on a global basis to
its OEM customers. A global market presence also affords Lear some protection
against cyclical downturns in any single market. During 1995, in furtherance of
its global expansion strategy, the Company entered into three joint ventures and
expanded its wholly-owned operations into South Africa. The first joint venture
agreement was with an affiliate of Industria Espanola del Polieter, S.A., a
Spanish corporation, to supply seat systems in Brazil for the Volkswagen Gol.
The Company also entered into a joint venture agreement with TeknoSeating S.A.,
the largest independent automotive supplier in Argentina, to supply seat systems
to Volkswagen in Argentina for the Gol and the Cordoba models and with
Trambusti, a Brazilian company, to supply seat systems to Fiat in Brazil for the
Palio (Fiat's World Car), the Tempra, and several light truck models. In
addition, Lear further expanded its presence internationally by opening a
facility in South Africa to provide seat systems to BMW. In 1995, the Company's
sales outside the United States and Canada, after giving pro forma effect to the
AI and Masland acquisitions, would have grown to approximately $1.7 billion or
approximately 30% of the Company's total pro forma sales.

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- Increased Interior Content. OEMs increasingly view the interior of the
vehicle as a major selling point to their customers. A major focus of Lear's
research and development efforts is to identify new interior features that make
vehicles safer and more comfortable, while continuing to appeal to consumer
preferences. For example, Lear's involvement in 1994 with Volvo and AutoLiv led
to the automotive industry's first vehicle with side-impact airbags. In
addition, Lear's proprietary Integral Restraint Seat, which will be introduced
in GM's 1997 Buick Park Avenue, offers consumers easy access to the vehicle's
rear seat as well as improved seat comfort and safety. The development of these
and other safety and comfort features has been, and management believes will
continue to be, an important factor in the Company's future growth.

- Product Technology and Design Capability. Lear has made substantial
investments in technology and design capability to support its products. The
Company maintains four research and development centers (in Southfield,
Michigan, Rochester Hills, Michigan, Plymouth, Michigan and Turin, Italy) where
it develops and tests current and future products to determine compliance with
safety standards, quality and durability, response to environmental conditions
and user wear and tear. The Company also has state-of-the-art acoustics testing,
instrumentation and data analysis capabilities. At its 16 customer-dedicated
product engineering centers, specific program applications are developed and
tested. Benchmarking studies are also conducted to aid in developing innovative
interior design features. The Company has also made substantial investments to
upgrade its advanced computer-aided engineering ("CAE") and computer-aided
design/computer-aided manufacturing ("CAD/CAM") systems. Several tools recently
added to electronically create a product and evaluate its performance include
advanced design modeling software, dynamic crash simulation, linear and
non-linear finite element analysis and solids modeling. Lear's "Best-in-Class"
testing program incorporates the use of a state-of-the-art programmable vehicle
model, which allows the Company to evaluate the actual feel and ergonomic
implications of various interior products. In addition, the Company has
developed a program management process to ensure that customers' expectations
are met. The proprietary "Visions" program allows Lear to manage all aspects of
product development. The process ensures that employees, customers and suppliers
of the Company work as a team to deliver high quality, cost-effective products
on a timely basis.

- Lean Manufacturing Philosophy. Lear's "lean manufacturing" philosophy
seeks to eliminate waste and inefficiency in its own operations and in those of
its customers and suppliers. The Company believes that it provides superior
quality automotive interior products at lower costs than the OEMs. All of the
Company's seat system facilities and many of its other manufacturing facilities
are linked by computer directly to those of the Company's suppliers and
customers. These facilities receive components from their suppliers on a JIT
basis, and deliver interior systems and components to customers on a sequential
JIT basis, which provides products to an OEM's manufacturing facility in the
color and order in which the products are used. The process minimizes
inventories and fixed costs for both the Company and its customers and enables
the Company to deliver products on as little as 90 minutes' notice. For the year
ended December 31, 1995, the Company's overall annual inventory turnover rate
was 30 times and up to 200 times in the case of certain of the Company's JIT
plants. The Company also minimizes fixed costs by using existing suppliers to
the OEMs and the OEMs themselves for certain components. In cases where one of
the Company's seating manufacturing facilities is underutilized, the Company is
able to redistribute products to increase facility utilization.

- Growth Through Strategic Acquisitions. Strategic acquisitions have been,
and management believes will continue to be, an important element in the
Company's growth worldwide and in its efforts to capitalize on the outsourcing
and supplier consolidation trends. The Company's recent acquisitions have
expanded its OEM customer base and worldwide presence and enhanced its
relationships with existing customers. The AI and Masland acquisitions also
provide the Company a significant presence in the non-seating segments of the
automobile and light truck interior market. The Company believes that these
markets hold significant growth potential for Lear because currently there is no
dominant independent supplier of these products and they are in the early stages
of the outsourcing and consolidation process that has contributed to the
expansion of the seat systems industry since the early 1980's. In 1995, after
giving pro forma effect to the AI and Masland acquisitions, the Company's sales
of non-seating systems and components would have been approximately $1.4
billion, or approximately 25% of the Company's total pro forma sales. The
Company will continue to consider strategic acquisitions that expand its global
presence, improve its technological capabilities or enhance customer
relationships.

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RECENT ACQUISITIONS

To supplement its internal growth and implement its business strategy, the
Company has made several strategic acquisitions since 1990. The following is a
summary of recent major acquisitions:

Masland Acquisition

The Company is acquiring Masland for an aggregate purchase price of $459.6
million (including the assumption of Masland's existing indebtedness, net of
cash and cash equivalents, of $64.7 million and the payment of fees and expenses
of $10 million in connection with the acquisition). In 1995, Masland held a
leading 38% share of the estimated $1 billion North American floor and acoustic
systems market. Masland is also a major supplier of interior and luggage
compartment trim components and other acoustical products which are designed to
minimize noise and vibration for passenger cars and light trucks. Masland
supplies the North American operations of Ford, Chrysler, General Motors, Honda,
Isuzu, Mazda, Mitsubishi, Nissan, Subaru and Toyota, as well as the European
operations of Nissan, Peugeot and Saab. Masland has had a continuous
relationship with Ford, its largest customer, since 1922. For its fiscal year
ended June 30, 1995, Masland had net sales, EBITDA, operating income and net
income of $496.6 million, $62.2 million, $47.0 million and $21.3 million,
respectively.

In addition to the experience and expertise of Masland's management team,
the Company believes that the Masland Acquisition will provide Lear with several
benefits, including the following:

- Total Interior Systems. The Masland Acquisition enhances Lear's ability
to provide a total interior system. Before the acquisition, the Company
had manufacturing capabilities in three of the five principal automotive
interior system segments. The Masland Acquisition gives Lear
manufacturing capabilities and a leading market position in a fourth
segment, floor and acoustic systems, leaving instrument panels as the
only segment in which the Company does not have a manufacturing
capability. Management believes that the ability to offer a total
interior system provides Lear with a competitive advantage as OEMs
continue to reduce their supplier base while demanding improved quality
and additional Tier I services. Integrating the total interior for a
model through one supplier provides several benefits to an OEM, including
(i) cost reduction, (ii) shorter product development cycles, (iii)
improved interior appearance through better fitting components and color,
grain and material matching and (iv) greater ability to focus on core
competencies.

- Growth Opportunities. Lear's market leadership, expertise and established
relationships with European OEMs (Fiat, Opel, Volvo, Saab and BMW) will
provide Masland with additional access to the European market. In
addition, Lear's entry into global automotive growth areas, particularly
in South America and the Asia-Pacific region, affords further growth
opportunities for Masland.

- Margin Improvements. Operating margins in the floor and acoustic systems
market are generally higher than those in the seating market.
Historically, Masland's operating margins have been higher than the
Company's and should, therefore, improve the Company's consolidated
operating margin. The additional cash flows provided from operations
would be available for debt reduction or reinvestment in new growth
opportunities worldwide. In addition, the Company believes that
additional savings will be realized through purchasing, engineering,
manufacturing and administration consolidation.

- Technology. Masland provides the Company with access to leading-edge
technology. Its 33,000 square foot Technical Center in Plymouth, Michigan
provides complete full service acoustics testing, design, product
engineering, systems integration and program management. Masland's
acoustics lab offers state-of-the-art instrumentation, testing, and
data-analysis capabilities. It also owns one of the few
proprietary-design dynamometers capable of precision acoustics testing of
front, rear, and four wheel drive vehicles. Together with its
custom-designed reverberation room, computer controlled data gathering
and analysis capabilities, Masland provides precisely controlled
laboratory conditions for sophisticated interior and exterior noise,
vibration, and harshness (NVH) testing of parts, materials, and systems,
including powertrain, exhaust, and suspension components. Masland also
owns a 29%

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interest in PFG, which has patented a process to sew and fold an
ultralight fabric into airbags which are 60% lighter than the current
airbags used in the automotive industry.

AI Acquisition

In August 1995, the Company acquired all the outstanding common stock of
AI, a leading designer and manufacturer of high quality interior systems and
blow molded plastic parts to automobile and light truck manufacturers. Prior to
the AI Acquisition, Lear had participated primarily in the seat system segment
of the interior market, which comprises approximately 47% of the total combined
North American and Western European interior markets. By providing the Company
with substantial manufacturing capabilities in door panels and headliners, the
AI Acquisition made Lear the largest independent Tier I supplier of automotive
interior systems in the North American and Western European light vehicle
interior market. Management believes that OEMs will increasingly ask their lead
suppliers to fill the role of "Systems Integrator" to manage the design,
purchase and supply of the total vehicle interior. As a result of the AI
Acquisition, as well as the Masland Acquisition, Lear is well-positioned to fill
this role. The aggregate purchase price for the AI Acquisition was $885.0
million (including the assumption of $250.5 million of AI's existing
indebtedness and fees and expenses of $18.1 million). These funds were provided
by borrowings under the Credit Agreement.

Prior to its acquisition by Lear, Automotive Industries itself augmented
its substantial internal growth with selected strategic acquisitions. The
acquisitions allowed AI to expand its interior trim systems product capabilities
and substantially increased AI's ability to provide advanced design, engineering
and program management services to its customers. At the same time, these
acquisitions increased AI's global presence and provided AI access to new
customers and new technologies. As a division of Lear, AI continues to consider
strategic acquisitions as a means to further growth.

FSB Acquisition

On December 15, 1994, the Company, through its wholly-owned subsidiary,
Lear Seating Italia Holdings, S.r.L., acquired the primary automotive seat
systems supplier to Fiat and certain related businesses (the "Fiat Seat
Business" or the "FSB"). Lear and Fiat also entered into a long-term supply
agreement for Lear to produce all outsourced automotive seat systems for Fiat
and affiliated companies worldwide. The acquisition of the Fiat Seat Business
not only established Lear as the market leader in automotive seat systems in
Europe, but, combined with its leading position in North America, made Lear the
largest automotive seat systems manufacturer in the world. In addition, it gave
the Company access to rapidly expanding markets in South America and has
resulted in the formation of new joint ventures which will supply automotive
seat systems to Fiat or its affiliates in Brazil and Argentina.

NAB Acquisition

On November 1, 1993, Lear significantly strengthened its position in the
North American automotive seating market by purchasing the North American seat
cover and seat systems business (the "NAB") of Ford Motor Company. The NAB
consists of an integrated United States and Mexican operation which produces
seat covers for approximately 80% of Ford's North American vehicle production
(as well as for several independent suppliers) and manufactures seat systems for
certain Ford models. Prior to the NAB Acquisition, the Company outsourced a
significant portion of its seat cover requirements. The expansion of the
Company's seat cover business has provided Lear with better control over the
costs and quality of one of the critical components of a seat system. In
addition, by virtue of the NAB Acquisition, the Company was able to enhance its
relationship with one of its largest OEM customers, entering into a five year
supply agreement with Ford covering models for which the NAB had produced seat
covers and seat systems at the time of the acquisition. The Company also assumed
during the term of the supply agreement primary engineering responsibility for a
substantial portion of Ford's car models, providing Lear with greater
involvement in the planning and design of seat systems and related products for
future light vehicle models.

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Scandinavian Acquisitions

In 1991 and 1992, the Company acquired the seat systems businesses of Saab
in Sweden and Finland and of Volvo in Sweden. In connection with each of these
acquisitions, the Company entered into long-term relationships with the
respective OEMs.

PRODUCTS

Lear's products have evolved from the Company's many years of experience in
the seat frame market where it has been a major supplier to General Motors and
Ford since its inception in 1917. The seat frame has structural and safety
requirements which make it the basis for overall seat design and was the logical
first step to the Company's emergence as a dominant supplier of entire seat
systems and seat components. With the acquisitions of Automotive Industries and
Masland, the Company has expanded its product offerings and can now manufacture
and supply its customers with floor systems, headliners and door panels. The
Company also produces a variety of blow molded products and other automotive
components such as fluid reservoirs, fuel tank shields, exterior airdams, front
grille assemblies, engine covers, battery trays/covers and insulators. Lear
believes that as OEMs continue to seek ways to improve vehicle quality while
simultaneously reducing the costs of the various vehicle components, they will
increasingly look to suppliers such as Lear with the capability to test, design,
engineer and deliver products for a complete vehicle interior.

The following is the approximate composition by product category of the
Company's net sales in the year ended December 31, 1995, after giving pro forma
effect to the AI and Masland acquisitions: seat systems, $3.7 billion; floor and
acoustic systems, $450 million; door panels, $350 million; headliners, $100
million; and other component products, $1.1 billion.

- SEAT SYSTEMS. The seat systems business consists of the manufacture,
assembly and supply of seating requirements for a vehicle or assembly plant.
Seat systems typically represent approximately 50% of the cost of the total
automotive interior. The Company produces seat systems for automobiles and light
trucks that are fully finished and ready to be installed in a vehicle. Seat
systems are fully assembled seats, designed to achieve maximum passenger comfort
by adding a wide range of manual and power features such as lumbar supports,
cushion and back bolsters and leg and thigh supports.

As a result of its product technology and product design strengths, the
Company can provide ergonomic designs which offer styling flexibility at low
cost. In addition, the Company is able to incorporate many convenience features
and safety improvements into its seat designs, such as storage armrests, rear
seat fold down panels, integrated restraint systems, child restraint seats, and
side impact air bags.

Lear's position as a market leader in seat systems is largely attributable
to seating programs on new vehicle models launched in the past five years. The
Company believes that supplying seating for these new vehicle models will
provide it with a revenue stream throughout the lives of these models. The
Company is currently working with customers in the development of a number of
seat systems products to be introduced by automobile manufacturers in the next
six years, which it expects will lead to an increase in opportunities in the
future. In addition, with the AI and Masland acquisitions, the Company believes
it has significant cross-selling opportunities across both customers and vehicle
platforms and is well-positioned to expand its position as the leading
independent supplier of automotive interior systems in the world.

- FLOOR AND ACOUSTIC SYSTEMS. Floor systems consist both of carpet and
vinyl products, molded to fit precisely the front and rear passenger
compartments of cars and trucks, and accessory mats. While carpet floors are
used predominately in passenger cars and trucks, vinyl floors, because of their
better wear and washability characteristics, are used primarily in commercial
and fleet vehicles. The Company, through its Masland Division, is the largest
supplier of vinyl floor systems in North America, and the only supplier of both
carpet and vinyl floor systems. Recently, Masland developed Maslite(TM), a
lightweight material which has replaced vinyl accessory mats on selected
applications. Maslite(TM) is a superior product with improved performance with
the additional significant advantage of 40% less weight than vinyl.

The automotive floor system is multi-purpose. Its performance is based on
the correct selection of materials to achieve an attractive, quiet, comfortable
and durable interior compartment. Automotive carpet

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requirements are more stringent than the requirements for carpet used in homes
and offices. For example, automotive carpet must provide higher resistance to
fading and improved resistance to wear despite being lighter in weight than
carpet found in homes and offices. The Masland Division's significant experience
has enabled it to meet these specialized needs. Carpet floor systems generally
consist of tufted carpet to which a specifically engineered thermoplastic
backcoating has been added. This backcoating, when heated, enables the Company
to mold the carpet to fit precisely the interior of the vehicle. Additional
insulation materials are added to provide noise, heat and vibration resistance.
Floor systems are complex products which are based on sophisticated designs and
use specialized design materials to achieve the desired visual, acoustic and
heat management requirements in the automotive interior.

The Masland Division's primary acoustic product, after floor systems, is
the dash insulator. The dash insulator attaches to the vehicle's sheet metal
firewall, separating the passenger compartment from the engine compartment, and
is the primary component for preventing engine noise and heat from entering the
passenger compartment. The Masland Division's ability to produce both the dash
insulator and the floor system enables the Company to accelerate the design
process and supply an integrated system. The Company believes that OEMs,
recognizing the cost and quality advantages of producing the dash insulator and
the floor system as an integrated system, will increasingly seek suppliers to
coordinate the design, development and manufacture of the entire floor and
acoustic system.

Floor and acoustic systems accounted for approximately 81% of Masland's
total revenues in 1995 when it held a leading 38% share in the estimated $1
billion North American floor and acoustic systems market. In addition, the
Masland Division participates in the European floor system market through its
joint venture with Sommer-Allibert S.A.

- DOOR PANELS. Door panels consist of several component parts that are
attached to a base molded substrate by various methods. Specific components
include vinyl- or cloth-covered appliques, armrests, radio speaker grilles, map
pocket compartments and carpet and sound reducing insulation. Upon assembly,
each component must fit precisely, with a minimum of misalignment or gap, and
must match the color of the base substrate.

In 1995, after giving pro forma effect to the AI Acquisition, the Company
would have held a leading 16% share of the estimated $1.6 billion North American
door panel market. Management believes that this leadership position has been
obtained by offering OEMs the widest variety of manufacturing processes for door
panel production. In Western Europe, the Company held a small position in the
door panel market. These markets are highly fragmented and just beginning to
experience the outsourcing and/or consolidation trends that have characterized
the seat systems market since the 1980's. With its global scope, technological
expertise and established customer relationships, Lear believes that it is
well-positioned to benefit from these positive industry dynamics.

- HEADLINERS. The Company designs and manufactures headliners which consist
of the headliner substrate, covering material, visors, overhead consoles, grab
handles, coat hooks, lighting, wiring and insulators. As with door panels, upon
assembly each component must fit precisely and must match the color of the base
substrate. With its sophisticated design and engineering capabilities, the
Company believes it is able to supply headliners with enhanced quality and lower
costs than OEMs could internally achieve. Through its manufacturing
capabilities, the Company also believes that it is one of the most
process-diverse suppliers of headliners in North America.

The headliner market is highly fragmented, with no dominant independent
supplier. As OEMs continue to seek ways to improve vehicle quality and
simultaneously reduce costs, the Company believes that headliners will
increasingly be outsourced to suppliers such as Lear, providing the Company with
significant growth opportunities.

- COMPONENT PRODUCTS. In addition to the interior systems and other
products described above, the Company is able to supply a variety of interior
trim and other automobile components as well as blow molded plastic parts.

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Lear produces seat covers for integration into its own seat systems and for
delivery to external customers. The Company's major external customers for seat
covers are other independent seat systems suppliers as well as the OEMs. The
Company is currently producing approximately 80% of the seat covers for Ford's
North American vehicles. The expansion of the Company's seat cover business
allows the Company better control over the costs and quality of one of the
critical components of a seat system. Typically, seat covers comprise
approximately 30% of the aggregate cost of a seat system.

Lear produces steel and aluminum seat frames for passenger cars and light
and medium trucks. Seat frames are primarily manufactured using precision
stamped, tubular steel and aluminum components joined together by highly
automated, state-of-the-art welding and assembly techniques. The manufacture of
seat frames must meet strict customer specified safety standards. The Company's
seat frames are either delivered to its own plants where they become part of a
completed seat that is sold to the OEM customer, to customer-operated assembly
plants or to other independent seating suppliers for use in the manufacture of
assembled seating systems.

The Company, through its AI Division, produces a variety of interior trim
products, such as pillars, cowl panels, scuff plates, trunk liners, quarter
panels and spare tire covers, as well as blow molded plastic products, such as
fluid reservoirs, vapor canisters and duct systems. In contrast to AI's interior
trim products, blow molded products require little assembly. However, the
manufacturing process for such parts demands considerable expertise in order to
consistently produce high-quality products. Blow molded parts are produced by
extruding a shaped parison or tube of plastic material and then clamping a mold
around the parison. High pressure air is introduced into the tube causing the
hot plastic to take the shape of the surrounding mold. The part is removed from
the mold after cooling and finished by trimming, drilling and other operations.

MANUFACTURING

All of the Company's facilities use JIT manufacturing techniques and most
of the Company's seating related products and many of the Company's other
interior products are delivered to the OEMs on a JIT basis. The JIT concept,
first broadly utilized by Japanese automobile manufacturers, is the cornerstone
of the Company's manufacturing and supply strategy. This strategy involves many
of the principles of the Japanese system, but was redeveloped for compatibility
with the greater volume requirements and geographic distances of the North
American market. The Company first developed JIT operations in the early 1980s
at its seat frame manufacturing plants in Morristown, Tennessee and Kitchener,
Ontario, Canada. These plants previously operated under traditional
manufacturing practices, resulting in relatively low inventory turnover rates,
significant scrap and rework, a high level of indirect labor costs and long
production set-up times. As a result of JIT manufacturing techniques, the
Company has been able to consolidate plants, increase capacity and significantly
increase inventory turnover, quality and productivity.

The JIT principles first developed at Lear's seat frame plants were next
applied to the Company's growing seat systems business and have now evolved into
sequential parts delivery ("SPD") principles. The Company's seating plants are
typically no more than 30 minutes or 20 miles from its customers' assembly
plants and manufacture seats for delivery to the customers' facilities in as
little as 90 minutes. Orders for the Company's seats are received on a weekly
basis, pursuant to blanket purchase orders for annual requirements. These orders
detail the customers' needs for the ensuing week. In addition, constant computer
and other communication is maintained between personnel at the Company's plants
and personnel at the customers' plants to keep production current with the
customers' demand.

Seat assembly techniques fall into two major categories, traditional
assembly methods (in which fabric is affixed to a frame using Velcro, wire or
other material) and more advanced bonding processes. The Company's principal
bonding technique involves its patented SureBond(TM) process, a technique in
which fabric is affixed to the underlying foam padding using adhesives. The
SureBond(TM) process has several major advantages when compared to traditional
methods, including design flexibility, increased quality and lower cost. The
SureBond(TM) process, unlike alternative bonding processes, results in a more
comfortable seat in which air can circulate freely. The SureBond(TM) process,
moreover, is reversible, so that seat covers that are improperly installed can
be removed and repositioned properly with minimal materials cost. In addition,
the SureBond(TM)

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process is not capital intensive when compared to competing bonding
technologies. Approximately one-third of the Company's seats are manufactured
using the SureBond(TM) process.

The seat assembly process begins with pulling the requisite components from
inventory. Inventory at each plant is kept at a minimum, with each component's
requirement monitored on a daily basis. This allows the plant to devote the
maximum space to production, but also requires precise forecasts of the day's
output. Seats are assembled in modules, then tested and packaged for shipment.
The Company operates a specially designed trailer fleet that accommodates the
off-loading of vehicle seats at the customer's assembly plant.

The Company's AI Division uses numerous molding, bonding, trimming and
finishing manufacturing processes. The wide variety of manufacturing processes
helps to satisfy customers' different cost and functionality specifications.
AI's ability and experience in producing interior products for such a vast array
of applications enhances the Company's ability to provide total interior
solutions to OEMs globally. The AI Division employs many of the same JIT
principles used at the Company's seat facilities.

The core technologies used in the AI Division's interior trim systems
include injection molding, low-pressure injection molding, rotational molding
and urethane foaming, compression molding of Wood-Stock(TM) (a proprietary
process that combines polypropylene and wood flour), glass reinforced urethane
and a proprietary headliner process. One element of the AI Division's strategy
is to focus on more complex, value-added products such as door panels and
armrests. The AI Division delivers these integrated systems at attractive prices
to the customer because certain services such as design and engineering and
sub-assembly are provided more cost efficiently by AI.

The combined pressures of cost reduction and fuel economy enhancement have
caused automotive manufacturers to concentrate their efforts on developing and
employing lower cost, lighter materials. As a result, plastic content in cars
and light trucks has grown significantly. Increasingly, automobile content
requires large plastic injection molded assemblies for both the interior and
exterior. Plastics are now commonly used in such nonstructural components as
interior and exterior trim, door panels, instrument panels, grilles, bumpers,
duct systems, taillights and fluid reservoirs. For interior trim applications,
substitution of plastics for other materials is largely complete, and little
growth through substitution is expected. However, further advances in injection
molding technologies are improving the performance and appearance of parts
molded in reinforced thermoplastics.

The Masland Division produces carpet at its largest plant in Carlisle,
Pennsylvania. Smaller "focused" factories are dedicated to specific groups of
customers and are strategically located near their production facilities. This
proximity improves responsiveness to Masland customers and speeds product
delivery to customer assembly lines, which is done on a JIT basis. Masland's
manufacturing operations are complemented by its research and development
efforts, which have led to the development of a number of proprietary products,
such as their EcoPlus(TM) recycling process as well as Maslite(TM), a
lightweight proprietary material used in the production of accessory mats.

The Company obtains steel, aluminum and foam chemicals used in its seat
systems from several producers under various supply arrangements. These
materials are supplied under various arrangements and are readily available.
Leather, fabric and certain purchased components are generally purchased from
various suppliers under contractual arrangements usually lasting no longer than
one year. Some of the purchased components are obtained through the Company's
own customers. The principal purchased components for interior trim systems are
polyethylene and polypropylene resins which are generally purchased under long-
term agreements and are available from multiple suppliers.

CUSTOMERS

Lear serves the worldwide automobile and light truck market, which produces
approximately 50 million vehicles annually. The Company's OEM customers
currently include Ford, General Motors, Fiat, Chrysler, Volvo, Saab, Opel,
Jaguar, Volkswagen, Audi, BMW, Rover, Honda USA, Daimler-Benz, Mitsubishi,
Mazda, Toyota, Subaru, Nissan, Isuzu, Peugeot, Porsche, Renault, and Suzuki.
During the year ended December 31, 1995, after giving pro forma effect to the AI
and Masland acquisitions, Ford and General

39
<PAGE> 43

Motors, the two largest automobile and light truck manufacturers in the world,
would have accounted for approximately 36% and 31%, respectively, of the
Company's net sales. For additional information regarding customers, foreign and
domestic operations and sales, see Note 17, "Geographic Segment Data," to the
consolidated financial statements of the Company incorporated by reference in
this Prospectus.

In the past six years, in the course of retooling and reconfiguring plants
for new models and model changeovers, OEMs have eliminated seating production
from certain of their facilities, thereby committing themselves to purchasing
seat systems and components from outside suppliers. During this period, the
Company became a supplier of these products for a significant number of new
models, many on a JIT basis.

The purchase of seat systems on a JIT basis has allowed the Company's
customers to realize a competitive advantage as a result of (i) a reduction in
labor costs since suppliers like the Company generally enjoy lower direct labor
and benefit rates, (ii) the elimination of working capital and personnel costs
associated with the production of seat systems by the OEM, (iii) a reduction in
net overhead expenses and capital investment due to the availability of
approximately 60,000 to 80,000 square feet of seat production plant space for
expansion of other OEM manufacturing operations and (iv) a reduction in
transaction costs by utilizing a limited number of sophisticated system
suppliers instead of numerous individual component suppliers. In addition, the
Company offers improved quality and on-going cost reductions to its customers
through continuous, Company-initiated design improvements. The Company believes
that such cost reductions will lead OEMs to outsource an increasing portion of
their seating requirements in the future and provide the Company with
significant growth opportunities.

The Company's sales of value-added assemblies and component systems have
increased as a result of the decision by most OEMs to reduce their internal
engineering and design resources. In recent years, the Company has significantly
increased its capacity to provide complete engineering and design services to
support its product line. Because assembled parts such as door panels, floor and
acoustic systems, armrests and consoles need to be designed at an early stage in
the development of new automobiles or model revisions, the Company is
increasingly given the opportunity to participate earlier in the product
planning process. This has resulted in opportunities to add value by furnishing
engineering and design services and managing the sub-assembly process for the
manufacturer, as well as providing the broader range of parts that are required
for the assembly.

The Company has implemented a program of dedicated teams consisting of
interior trim and seat system personnel who are able to meet all of a customer's
interior needs. These teams provide a single interface for Lear's customers and
avoid duplication of sales and engineering efforts. As innovative designs are
developed which integrate components into a single unit, the potential to
provide the Company's customers with additional cost and time savings should
significantly increase. With the acquisition of Masland, the Company intends to
integrate floor and acoustic systems into its existing marketing strategy.

The Company receives blanket purchase orders from its customers that
normally cover annual requirements for products to be supplied for a particular
vehicle model. Such supply relationships typically extend over the life of the
model, which is generally four to seven years, and do not require the purchase
by the customer of any minimum number of products. Although such purchase orders
may be terminated at any time, the Company does not believe that any of its
customers have terminated a material purchase order prior to the end of the life
of a model. The primary risk to the Company is that an OEM will produce fewer
units of a model than anticipated. In order to reduce its reliance on any one
model, the Company produces interior systems and components for a broad
cross-section of both new and more established models.

The Company's sales for the year ended December 31, 1995 were comprised of
the following vehicle categories: 41% light truck; 23% mid-size; 15% compact and
other; 12% luxury/sport; and 9% full-size. The following table presents an
overview of the major vehicle models for which the Company or its affiliates

40
<PAGE> 44

produce seat systems, floor and acoustic systems, interior trim products or
other components and the locations of such production:

<TABLE>
<S> <C> <C>
UNITED STATES AND CANADA
BMW: FORD (CONT): GENERAL MOTORS (CONT):
3 Series Ford Windstar Minivan GMC Sonoma
Z3 Lincoln Continental GMC Top Kick
SUZUKI: Lincoln Mark VIII Oldsmobile 88
Geo Metro Lincoln Town Car Oldsmobile Achieva
Geo Tracker Mercury Cougar Oldsmobile Aurora
Suzuki Sidekick Mercury Grand Marquis Oldsmobile Ciera
Suzuki Swift Mercury Mystique Oldsmobile Cutlass Supreme
CHRYSLER: Mercury Sable Oldsmobile Eurosport
Chrysler Cirrus Mercury Tracer Oldsmobile Silhouette
Chrysler Concorde Mercury Villager Pontiac Bonneville
Chrysler LeBaron SUBARU/ISUZU: Pontiac Firebird
Chrysler LHS Isuzu Rodeo Pontiac Grand Am
Chrysler Sebring Subaru Legacy Pontiac Grand Prix
Chrysler Town & Country GENERAL MOTORS: Pontiac Sunfire
Dodge Avenger Buick Century Pontiac Transport
Dodge Caravan Buick LeSabre Prizm
Dodge Dakota Pick-up Truck Buick Park Avenue Saturn SC
Dodge Intrepid Buick Regal Saturn SL
Dodge Neon Buick Riviera HONDA:
Dodge Ram Pick-up Truck Buick Skylark Accord
Dodge Ram Van Cadillac DeVille/Concours Civic
Dodge Ram Wagon Cadillac Eldorado Passport
Dodge Viper Chevrolet Astro MAZDA:
Eagle Talon Chevrolet Beretta 626
Jeep Cherokee Chevrolet Blazer B2000
Jeep Grand Cherokee Chevrolet C/K Pick-up Truck MX6
Jeep Wrangler Chevrolet Camaro MITSUBISHI:
Plymouth Neon Chevrolet Cavalier Eclipse
Plymouth Voyager Chevrolet Corsica Gallant
FORD: Chevrolet Corvette NISSAN:
Ford Aerostar Chevrolet Kodiak Altima
Ford Bronco Chevrolet Lumina/Van King Cab Pick-up Truck
Ford Contour Chevrolet Monte Carlo Quest
Ford Crown Victoria Chevrolet Express Sentra
Ford Econoline/Club Wagon Chevrolet/GMC Suburban TOYOTA:
Ford Escort Chevrolet S Pick-up Truck Avalon
Ford Explorer Chevrolet Tahoe/GMC Yukon Camry
Ford F-Series Pick-up Truck GMC 10-30,15-35 Corolla
Ford Mustang GMC C/K Pick-up Truck Tacoma Pick-up Truck
Ford Probe GMC Savana
Ford Ranger GMC Safari
Ford Taurus
Ford Taurus SHO
Ford Thunderbird
MEXICO
BMW: FORD: GENERAL MOTORS (CONT.):
3 Series Ford Contour Opel Corsa
CHRYSLER: Ford Escort Pontiac Sunfire
Chrysler Cirrus Ford F-Series NISSAN:
Dodge Neon Ford Ghia Pick-up
Dodge Ram Mercury Mystique Tsuru
JX Convertible Mercury Tracer VOLKSWAGEN:
Plymouth Neon GENERAL MOTORS: Golf
Chevrolet Cavalier Jetta
Chevrolet C/K Pick-up Truck Derby
Chevrolet Tahoe/GMC Yukon GPA Minivan
</TABLE>

41
<PAGE> 45

<TABLE>
<S> <C> <C>
EUROPE
ALFA ROMEO: OPEL: ROVER (CONT):
Alfa 145/146 Astra 400/Saloon
Alfa 155 Corsa/Van 600
Alfa 164 Omega 800
Coupe Vectra Discovery
Spider HONDA: Land Rover
AUDI: Accord Maestro
A Series Civic Metro
B Series JAGUAR: MGA
BMW: XK8 Mini
3 Series X300 R3
5 Series X330 Range Rover
CHRYSLER: MAN: SAAB:
Voyager Eurostar Heavy Truck Saab 900
DINA: LANCIA: Saab 900 Cabriolet
Heavy Truck Dedra Saab 9000
FIAT: Delta TOYOTA:
126 Kappa Carina
500 Thema Corolla
Barchetta Y11 VOLVO:
Brava/Bravo MERCEDES: 800 Series
Coupe 500 200 Series 900 Series
Croma C-Class VOLKSWAGEN:
Ducato X230 E-Class Golf
Punto S-Class Passat
Tempra PORSCHE: Taro
Tipo 911 Transit
Uno 986 Boxster Transporter T4
FORD: RENAULT: T-4 Multivan
Escort Cabrio Viento
Fiesta ROVER:
Mondeo 200/New 400
Scorpio
OTHER
FIAT (SOUTH AMERICA): GENERAL MOTORS -- BMW (SOUTH AFRICA):
Brava/Bravo HOLDEN (AUSTRALIA): 3 Series
Duno Acclaim PEUGEOT (ARGENTINA):
Fiorino Berlina 306
Palio Caprice 405
Tempra Commodore 504
Tipo Statesman VOLKSWAGEN (SOUTH AMERICA):
Uno OPEL (INDONESIA): Combi
FORD (ARGENTINA): S-10 Blazer Gol
Ranger Polo
Saveiro
VOLVO (THAILAND):
800 Series
900 Series
</TABLE>

Because of the economic benefits inherent in outsourcing to suppliers such
as Lear and the costs associated with reversing a decision to purchase seat
systems and other interior systems and components from an outside supplier, the
Company believes that automotive manufacturers' level of commitment to
purchasing seating and other interior systems and components from outside
suppliers, particularly on a JIT basis, will increase. However, under the
contracts currently in effect in the United States and Canada between each of
General Motors, Ford and Chrysler with the UAW and the CAW, in order for any of
such manufacturers to

42
<PAGE> 46

obtain components that it currently produces itself from external sources, it
must first notify the UAW or the CAW of such intention. If the UAW or the CAW
objects to the proposed outsourcing, some agreement will have to be reached
between the UAW or the CAW and the OEM. Factors that will normally be taken into
account by the UAW, the CAW and the OEM include whether the proposed new
supplier is technologically more advanced than the OEM, whether cost benefits
exist and whether the OEM will be able to reassign union members whose jobs are
being displaced to other jobs within the same factories. As part of its
long-term agreement with General Motors, the Company operates its Grand Rapids,
Michigan, Rochester Hills, Michigan, Wentzville, Missouri and Lordstown, Ohio
facilities with General Motors employees and reimburses General Motors for the
wages of such employees on the basis of the Company's employee wage structure.
The Company enters into these arrangements to enhance its relationship with its
customers.

The collective bargaining agreements between the UAW and the CAW and each
of General Motors, Ford and Chrysler expire in September 1996 and are presently
being renegotiated. Among other items, wage, benefit and outsourcing levels are
anticipated to be issues in such negotiations. There can be no assurance as to
the outcome of such negotiations.

The Company's contracts with its major customers generally provide for an
annual productivity price reduction and, in some cases, provide for the recovery
of increases in material and labor costs. Cost reduction through design changes,
increased productivity and similar programs with the Company's suppliers have
generally offset changes in selling prices. The Company's cost structure is
comprised of a high percentage of variable costs. The Company believes that this
structure provides it with additional flexibility during economic cycles.

MARKETING AND SALES

Lear markets its products by maintaining strong relationships with its
customers fostered during its 79-year history through extensive technical and
product development capabilities, reliable delivery of high quality products,
strong customer service, innovative new products and a competitive cost
structure. Close personal communications with automobile manufacturers are an
integral part of the Company's marketing strategy. Recognizing this, the Company
is organized into seven independent divisions, each with the ability to focus on
its own customers and programs and each having complete responsibility for the
product, from design to installation. By moving the decision-making process
closer to the customer, and instilling a philosophy of "cooperative autonomy,"
the Company is more responsive to, and has strengthened its relationships with,
its customers. Automobile manufacturers have increasingly reduced the number of
their suppliers as part of a strategy of purchasing systems rather than
individual components. This process favors suppliers like Lear with established
ties to OEMs and the demonstrated ability to adapt to the new competitive
environment in the automotive industry.

The Company's sales are originated almost entirely by its sales staff. This
marketing effort is augmented by design and manufacturing engineers who work
closely with automobile manufacturers from the preliminary design to the
manufacture and supply of interior systems or components. Manufacturers have
increasingly looked to suppliers like the Company to assume responsibility for
introducing product innovation, shortening the development cycle of new models,
decreasing tooling investment and labor costs, reducing the number of costly
design changes in the early phases of production and improving interior comfort
and functionality. Once the Company is engaged to develop the design for the
interior system or component of a specific vehicle model, it is also generally
engaged to supply these items when the vehicle goes into production. The Company
has devoted substantial resources toward improving its engineering and technical
capabilities and developing technical centers in the United States and in
Europe. The Company has also developed full-scope engineering capabilities,
including all aspects of safety and functional testing, acoustics testing and
comfort assessment. In addition, the Company has established several engineering
sites in close proximity to its OEM customers to enhance customer relationships
and design activity. Finally, the Company has implemented a program of dedicated
teams consisting of interior trim and seat system personnel who are able to meet
all of a customer's interior needs. These teams provide a single interface for
Lear's customers and avoid duplication of sales and engineering efforts.

43
<PAGE> 47

TECHNOLOGY

The Company conducts advanced product design development at its technical
centers in Southfield, Michigan, Rochester Hills, Michigan, Plymouth, Michigan
and Turin, Italy and at 16 worldwide product engineering centers. At these
centers, the Company tests its products to determine compliance with applicable
safety standards, the products' quality and durability, response to
environmental conditions and user wear and tear. The Company also has
state-of-the-art acoustics testing, instrumentation and data analysis
capabilities.

The Company has and will continue to dedicate resources to research and
development to maintain its position as a leading developer of technology in the
automotive interior industry. Research and development costs incurred in
connection with the development of new products and manufacturing methods, to
the extent not recoverable from the customer, are charged to operations as
incurred. Such costs amounted to approximately $53.3 million, $21.9 million, and
$16.2 million for the years ended December 31, 1995, 1994 and 1993.

In the past, the Company has developed a number of designs for innovative
seat features which it has patented, including ergonomic features such as
adjustable lumbar supports and bolster systems and adjustable thigh supports. In
addition, the Company incorporates many convenience, comfort and safety features
into its seat designs, including storage armrests, rear seat fold down panels,
integrated restraint systems (belt systems integrated into seats), side impact
air bags and child restraint seats. The Company has recently invested to further
upgrade its CAE and CAD/CAM systems, including three-dimensional color graphics,
customer telecommunications and direct interface with customer CAD systems.

Lear uses its patented SureBond(TM) process (the patent for which has
approximately 8 years remaining) in bonding seat cover materials to the foam
pads used in certain of its seats. The SureBond(TM) process is used to bond a
pre-shaped cover to the underlying foam to minimize the need for sewing and
achieve new seating shapes, such as concave shapes, which were previously
difficult to manufacture.

Through its AI Division, the Company has virtually all technologies and
manufacturing processes available for interior trim and under-the-hood
applications. The manufacturing processes include, among other things, high and
low pressure injection molding, vacuum forming, blow molding, soft foam molding,
heat staking, water jet cutting, vibration welding, ultrasonic welding, and
robotic painting. This wide range of capabilities allows the Company to assist
its customers in selecting the technologies that are the most cost effective for
each application. Combined with its design and engineering capabilities and its
state-of-the-art technical center, AI provides comprehensive support to its OEM
customers from product development to production.

The Masland Acquisition also provides the Company with access to
leading-edge technology. The Masland Division owns one of the few
proprietary-design dynamometers capable of precision acoustics testing of front,
rear and four-wheel drive vehicles. Together with its custom-designed
reverberation room, computer-controlled data acquisition and analysis
capabilities provide precisely controlled laboratory testing conditions for
sophisticated interior and exterior noise, vibration and harshness (NVH) testing
of parts, materials and systems, including powertrain, exhaust and suspension
components. Through its Masland Division, the Company also owns a 29% interest
in PFG, which has patented a process to sew and fold an ultralight fabric into
airbags which are 60% lighter than the current airbags used in the automotive
industry. As this new airbag fits into a shirt pocket when folded, it is
adaptable to side restraint systems (door panels and seats) as well as
headliners.

The Company holds a number of mechanical and design patents covering its
products and has numerous applications for patents currently pending. In
addition, the Company holds several trademarks relating to various manufacturing
processes. The Company also licenses its technology to a number of seating
manufacturers.

JOINT VENTURES AND MINORITY INTERESTS

The Company pursues attractive joint ventures in order to facilitate the
exchange of technical information, expand its product offerings, and broaden its
customer base. Several of the Company's recent

44
<PAGE> 48

acquisitions, including Masland and Automotive Industries, have provided the
Company with strategic joint ventures. With the Masland Acquisition, Lear
acquired an interest in PFG, Sommer Masland (U.K.) Ltd. and Amtex. Sommer
Masland helped to expand Masland's geographical presence in Europe and
strengthened its relationship with several existing customers, including Nissan,
Peugeot and Saab. The Amtex joint venture established a relationship with
Hayashi Telempu Co., Ltd., the joint venture partner and a leading Japanese
automotive interior trim supplier. The AI Acquisition included a 40% interest in
Industrias Automotrices Summa, S.A. de C.V., as well as a 33% interest in
Guildford Kast Plastifol Ltd., both of which produce interior trim parts for
automobiles.

The following is a list of the Company's principal joint ventures and
minority-owned affiliates:

<TABLE>
<CAPTION>
PERCENTAGE
LOCATION PRODUCT OWNERSHIP
---------- ---------------- ----------
<S> <C> <C> <C>
Amtex* U.S.A. Interior trim 50%
General Seating of America, Inc. U.S.A. Seat systems 35
General Seating of Canada, Ltd. Canada Seat systems 35
Guildford Kast Plastifol Ltd. England Interior trim 33
Industrias Automotrices Summa, S.A. de C.V. Mexico Interior trim 40
Industrias Cousin Freres Spain Seat components 49
Lear Inespo Comercial, Industrial Ltda.* Brazil Seat systems 50
Lear Seating Thailand Thailand Seat systems 49
and components
Markol Automotiv Yan Sanayi Ve Ticart Turkey Seat systems 35
Precision Fabrics Group, Inc. U.S.A. Fabrics 29
Probel S.A. Brazil Seat components 31
Sommer Masland (U.K.) Ltd. England Interior trim 50
Teknoseating S.A.* Argentina Seat systems 50
</TABLE>

- -------------------------
* Consolidated entities.

COMPETITION

Lear is one of the two primary suppliers in the outsourced North American
seat systems market. The Company's main independent competitor is Johnson
Controls, Inc., and it competes, to a lesser extent, with Douglas & Lomason
Company and Magna International, Inc. The Company's major independent
competitors in Europe, besides Johnson Controls, Inc., are Bertrand Faure
(headquartered in France) and Keiper Recaro (headquartered in Germany). The
Company's primary independent competitors in the other segments of the
automotive interior market include Davidson Interior Trim (a division of
Textron), UT Automotive (a subsidiary of United Technologies), Prince
Corporation, The Becker Group, Collins & Aikman Corp. Automotive Division (a
division of Collins & Aikman Corporation), JPS Automotive Products Corporation,
a subsidiary of Foamex International, the Magee Carpet Company and a large
number of smaller operations. The Company also competes with the OEMs' in-house
seat system and automotive interior suppliers. The Company competes on the basis
of technical expertise, reliability, quality and price. The Company believes its
technical resources, product design capabilities and customer responsiveness are
the key factors that allow it to compete successfully in the automotive interior
market.

SEASONALITY

Lear's principal operations are directly related to the automotive
industry. Consequently, the Company may experience seasonal fluctuation to the
extent automotive vehicle production slows, such as in the summer months when
plants close for model year changeovers and vacation. Historically, the
Company's sales and operating profit have been the strongest in the second and
fourth calendar quarters. After giving pro forma effect to the AI and Masland
acquisitions, net sales for the year ended December 31, 1995 by calendar quarter
broke down as follows: first quarter, 24%; second quarter, 26%; third quarter,
23%; and fourth quarter, 27%.

45
<PAGE> 49

See Note 18, "Quarterly Financial Data," of the notes to the Company's
consolidated financial statements incorporated by reference in this Prospectus.

EMPLOYEES

As of June 1, 1996, after giving pro forma effect to the Masland
Acquisition, the Company would have employed approximately 18,700 persons in the
United States and Canada, 12,100 in Mexico and 7,900 in Europe. Of these, about
6,200 were salaried employees and the balance were paid on an hourly basis.
Approximately 25,500 of the Company's employees are members of unions. The
Company has collective bargaining agreements with several unions including: the
UAW; the Canadian Auto Workers (the "CAW"); the Textile Workers of Canada; the
Confederation of Mexican Workers; the International Brotherhood of Teamsters,
Chauffeurs, Warehousemen, and Helpers of America; the International Association
of Machinists and Aerospace Workers; and the AFL-CIO. Each of the Company's
unionized facilities has a separate contract with the union which represents the
workers employed there, with each such contract having an expiration date
independent of the Company's other labor contracts. The Company has experienced
some labor disputes at its plants, none of which has significantly disrupted
production or had a materially adverse effect on its operations. The Company has
been able to resolve all such labor disputes and believes its relations with its
employees are generally good.

LITIGATION

The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management of the Company does not believe that any
of the litigation in which the Company is currently engaged, either individually
or in the aggregate, will have a material effect on the Company's consolidated
financial position or future results of operations.

The Company is subject to various laws, regulations and ordinances which
govern activities such as discharges to the air and water, as well as handling
and disposal practices for solid and hazardous wastes, and which impose costs
and damages associated with spills, disposal or other releases of hazardous
substances. The Company believes that it is in substantial compliance with such
requirements. Management does not believe that it will incur compliance costs
pursuant to such requirements that would have a material adverse effect on the
Company's consolidated financial position or future results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company -- Environmental Matters."

The Company has been identified as a potentially responsible party ("PRP")
under the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA" or "Superfund"), for the cleanup of contamination
from hazardous substances at four Superfund sites where liability has not been
determined. The Company has also been identified as a PRP at four additional
sites. Management believes that the Company is, or may be, responsible for less
than one percent, if any, of total costs at the four Superfund sites. Expected
liability, if any, at the four additional sites is not material. The Company has
set aside reserves which management believes are adequate to cover any such
liabilities. Management believes that such matters will not result in
liabilities that will have a material adverse effect on the Company's
consolidated financial position or future results of operations.

PROPERTIES

The Company's operations are conducted through 131 facilities, including
111 manufacturing facilities, 16 product engineering centers and 4 research and
development centers, in 19 countries and one Crown Colony employing
approximately 40,000 people worldwide. The Company's management is headquartered
in Southfield, Michigan.

The Company's facilities are located in appropriately designed buildings
which are kept in good repair with sufficient capacity to handle present
volumes. The Company has designed many of its facilities to provide for
efficient JIT manufacturing of its products. No facility is materially
underutilized. Of the 131 facilities, 70 are owned and 61 are leased with
expiration dates ranging from 1996 through 2005. Management believes

46
<PAGE> 50

substantially all of the Company's property and equipment is in good condition
and that it has sufficient capacity to meet its current and expected
manufacturing and distribution needs. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations of the Company -- Capital
Expenditures."

The following table summarizes the locations of the Company's facilities,
including those acquired in connection with the Masland Acquisition:

<TABLE>
<S> <C> <C> <C>
ARGENTINA GERMANY POLAND UNITED STATES (CONTINUED)
Buenos Aires Ebersberg Myslowice Grand Rapids, MI
Eisenach Tychy Marlette, MI
AUSTRALIA Gustavsburg Marshall, MI
Adelaide Munich SOUTH AFRICA Mendon, MI
Brooklyn Plattling Brits Mequon, MI
Quakenbruck Midland, MI
AUSTRIA Rietberg SPAIN Plymouth, MI
Koflach Pamplona Rochester Hills, MI
HONG KONG Romulus, MI
BRAZIL Wanchai SWEDEN Southfield, MI
Belo Horizante Bengtsfors Troy, MI
Sao Paolo INDIA Trollhattan Warren, MI
Holol Bridgeton, MO
CANADA THAILAND Wentzville, MO
Ajax INDONESIA Bangkok Bowling Green, OH
Kitchener Jakarta Fremont, OH
Maple TURKEY Huron, OH
Mississauga ITALY Bursa Lorain, OH
Oakville Bruino Lordstown, OH
St. Thomas Caivano UNITED STATES Sidney, OH
Whitby Cassino Manteca, CA Warren, OH
Woodstock Grugliasco Atlanta, GA Carlisle, PA
Melfi West Chicago, IL Lewistown, PA
ENGLAND Novara Frankfort, IN Duncan, SC
Abington Orbassano Greencastle, IN Morristown, TN
Coventry Pozzilli Hammond, IN El Paso, TX
Lancashire Louisville, KY Lebanon, VA
Nottingham MEXICO Madisonville, KY Luray, VA
Tipton Cuautitlan Allen Park, MI Strasburg, VA
Washington Hermosillo Clawson, MI Winchester, VA
La Cuesta Dearborn, MI Janesville, WI
FRANCE Naucalpan Detroit, MI Sheboygan, WI
Meaux Puebla Fair Haven, MI
Paris Ramos Arizpe Fenton, MI
Rio Bravo Flint, MI
Saltillo
San Lorenzo
Tlahuac
Toluca
</TABLE>

47
<PAGE> 51

MANAGEMENT

Set forth below is certain information concerning the executive officers of
the Company.

<TABLE>
<CAPTION>
YEARS WITH
THE COMPANY,
PREDECESSOR OR
NAME AGE POSITION ACQUIRED COMPANY
- ------------------------- --- --------------------------------------------- ----------------
<S> <C> <C> <C>
Kenneth L. Way........... 57 Chairman of the Board and Chief Executive 30
Officer
Robert E. Rossiter....... 50 President, Chief Operating Officer and 25
Director of the Company
James H. Vandenberghe.... 46 Executive Vice President, Chief Financial 23
Officer and Director of the Company
James A. Hollars......... 51 Senior Vice President and President -- BMW 23
Division of the Company
Roger Alan Jackson....... 50 Senior Vice President -- Human Resources and 1
Corporate Relations
Robert Lawrie............ 51 Senior Vice President -- Global Mergers, --
Acquisitions and Strategic Alliances
Frank J. Preston......... 53 Senior Vice President and President -- 1
Masland Division
Frederick F. Sommer...... 52 Senior Vice President and President -- 5
Automotive Industries Division of the Company
Gerald G. Harris......... 62 Vice President and President -- GM Division 34
of the Company
Terrence E. O'Rourke..... 49 Vice President and President -- Ford Division 2
of the Company
Joseph F. McCarthy....... 52 Vice President, Secretary and General Counsel 2
of the Company
Donald J. Stebbins....... 38 Vice President, Treasurer and Assistant 4
Secretary of the Company
</TABLE>

Set forth below is a description of the business experience of each
executive officer of the Company.

Kenneth L. Way. Mr. Way was elected to and has held the position of
Chairman of the Board and Chief Executive Officer of the Company since 1988.
Prior to this he served as Corporate Vice President, Automotive Group of Lear
Siegler, Inc. ("LSI") since October 1984. During the previous six years, Mr. Way
was President of LSI's General Seating Division. Prior to this, he was President
of LSI's Metal Products Division in Detroit for three years. Other positions
held by Mr. Way during his 30 years at Lear include Manufacturing Manager of the
Metal Products Division and Manager of Production Control for the Automotive
Division in Detroit. Mr. Way also serves as a director of Hayes Wheels
International, Inc.

Robert E. Rossiter. Mr. Rossiter became President of the Company in 1984
and a Director and the Chief Operating Officer of the Company in 1988. He joined
LSI in 1971 in the Material Control Department of the Automotive Division, then
joined the Metal Products Division of LSI as Production Control Manager, and
subsequently moved into sales and sales management. In 1979, he joined the
General Seating Division as Vice President of Sales and worked in that position,
as well as Vice President of Operations, until 1984.

James H. Vandenberghe. Mr. Vandenberghe is currently Executive Vice
President, Chief Financial Officer and Director of the Company. He was appointed
Executive Vice President of the Company in 1993 and became a director in
November 1995. Mr. Vandenberghe also served as a director of the Company from
1988 until the merger of Lear Holdings Corporation ("Holdings"), Lear's former
parent, into Lear. Mr. Vandenberghe previously served as Senior Vice President
- -- Finance, Secretary and Chief Financial Officer of the Company since 1988.

James A. Hollars. Mr. Hollars is currently Senior Vice President and
President -- BMW Division of the Company. He was appointed to this position in
November 1995. Prior to serving in this position, he was Senior Vice President
and President -- International Operations of the Company since November 1994.
Previously he served as Senior Vice President -- International Operations of the
Company since 1993 and Vice President -- International since the sale of LSI's
Power Equipment Division to Lucas Industries in 1988.

48
<PAGE> 52

Mr. Hollars joined LSI's Metal Products Division in 1973 as the Manufacturing
Manager and later served as Vice President -- Manufacturing for No-Sag Spring
Division. In 1979, he was named President of the Foam Products Division and was
subsequently promoted to President at the Anchorlok Division in 1985 and the
Power Equipment Division in 1986.

Roger Alan Jackson. Mr. Jackson was elected Senior Vice President -- Human
Resources and Corporate Relations in October 1995. Previously, he served as Vice
President -- Human Resources for Allen Bradley, a wholly-owned subsidiary of
Rockwell International. Mr. Jackson was employed by Rockwell International or
its subsidiaries from December 1977 to September 1995.

Robert Lawrie. Mr. Lawrie was elected Senior Vice President -- Global
Mergers, Acquisitions and Strategic Alliances in June 1996. Prior to joining the
Company, Mr. Lawrie served as Vice President and Special Counsel to the Chairman
of Magna International Inc. since July 1992. Prior to his tenure with Magna
International, Inc., Mr. Lawrie held positions as an International Consultant to
Consolidated Hydro Inc. in 1992 and as Senior Vice President, General Counsel
and Secretary of Abitibi-Price Inc., an international paper manufacturer, from
January 1991 to July 1992. From 1988 to 1991, Mr. Lawrie was the managing
partner of the Los Angeles office of Broad Schulz Larson & Wineberg, a law firm.

Frank J. Preston. Dr. Preston was elected Senior Vice President and
President -- Masland Division of the Company upon consummation of the Masland
Acquisition. Prior to the Masland Acquisition, he served as President of Masland
since January 1995 and Chief Executive Officer of Masland since January 1996.
During 1995, Dr. Preston also served as Chief Operating Officer of Masland.
Prior to joining Masland, Dr. Preston held various positions with Textron, most
recently President of Textron Automotive Interiors.

Frederick F. Sommer. Mr. Sommer was elected Senior Vice President and
President -- Automotive Industries Division of the Company upon consummation of
the AI Acquisition. Prior to the AI Acquisition, he served as President of AI
since November 1991 and Chief Executive Officer of AI since May 1994. From March
1992 to May 1994, Mr. Sommer served as Chief Operating Officer of AI. Mr. Sommer
also served as Executive Vice President of AI from October 1990 until November
1991. Prior thereto, he served as Vice President -- Manufacturing and Purchasing
of the U.S. subsidiary of Nissan from January 1987 until October 1990.

Gerald G. Harris. Mr. Harris was elected Vice President and President -- GM
Division of the Company since November 1994. Mr. Harris previously served as
Vice President and General Manager -- GM Operations since March 1994. Previously
Mr. Harris served as Director -- Ford Business Unit from March 1992 to March
1994, Director of Sales from August 1990 to March 1992 and Sales Manager from
January 1989 to August 1990. Prior to 1989, Mr. Harris held various managerial
positions with the Company.

Terrence E. O'Rourke. Mr. O'Rourke was elected Vice President and President
- -- Ford Division of the Company in November 1995. Prior to serving in this
position, he was Vice President and President -- Chrysler Division of the
Company since November 1994. Previously, Mr. O'Rourke served as Director --
Strategic Planning since October 1994. Prior to joining Lear, Mr. O'Rourke was
employed by Ford Motor Company as Supply Manager -- Climate Control Department
from 1992 and Procurement Operations Manager from 1988.

Joseph F. McCarthy. Mr. McCarthy was elected Vice President, Secretary and
General Counsel of the Company in April 1994. Prior to joining the Company, Mr.
McCarthy served as Vice President -- Legal and Secretary for both Hayes Wheels
International, Inc. and Kelsey-Hayes Company. Prior to joining Hayes Wheels
International, Inc. and Kelsey-Hayes Company, Mr. McCarthy was a partner in the
law firm of Kreckman & McCarthy from 1973 to 1983.

Donald J. Stebbins. Mr. Stebbins is currently Vice President, Treasurer and
Assistant Secretary of the Company. He joined the Company in June 1992 from
Bankers Trust Company, New York where he was a Vice President for four years.
Prior to his tenure at Bankers Trust Company, he held positions at Citibank,
N.A. and The First National Bank of Chicago.

49
<PAGE> 53

SELLING STOCKHOLDERS

The following table and accompanying footnotes set forth certain
information regarding beneficial ownership of the Company's Common Stock by the
Selling Stockholders as of June 1, 1996 prior to the Offerings and as adjusted
to reflect the sale of 7,500,000 shares of Common Stock by the Company and
7,500,000 shares of Common Stock by the Selling Stockholders in the Offerings:

<TABLE>
<CAPTION>
PRIOR TO OFFERINGS AFTER OFFERINGS
-------------------------------- -----------------------------------
NUMBER OF NUMBER OF
SHARES SHARES OF SHARES
OF COMMON STOCK COMMON STOCK OF COMMON STOCK
OWNED PERCENTAGE OF BEING OWNED PERCENTAGE OF
BENEFICIALLY COMMON STOCK(3) OFFERED(4) BENEFICIALLY(4) COMMON STOCK(3)(4)
--------------- --------------- ------------ --------------- ------------------
<S> <C> <C> <C> <C> <C>
Lehman Funds(1)........... 16,471,224 29.1% 6,186,370 10,284,854 16.0%
FIMA Finance Management
Inc.(2)................. 3,497,544 6.2 1,313,630 2,183,914 3.4
</TABLE>

- -------------------------
(1) The number of shares beneficially owned by the Lehman Funds includes
5,916,258 shares of Common Stock owned by Lehman Brothers Merchant Banking
Portfolio Partnership L.P. and 4,021,298 shares of Common Stock owned by
Lehman Brothers Capital Partners II, L.P. (each located at Three World
Financial Center, New York, New York 10285); 1,626,544 shares of Common
Stock owned by Lehman Brothers Offshore Investment Partnership L.P. and
4,907,124 shares of Common Stock owned by Lehman Brothers Offshore
Investment Partnership-Japan L.P. (each located at Clarendon House, Church
Street, Hamilton HMCX, Bermuda). LB I Group Inc. and Lehman Brothers
Holdings Inc. are the general partners of Lehman Brothers Merchant Banking
Portfolio Partnership L.P. and Lehman Brothers Capital Partners II, L.P.,
respectively, and Lehman Brothers Offshore Partners Ltd. is the general
partner of Lehman Brothers Offshore Investment Partnership-Japan L.P. and
Lehman Brothers Offshore Investment Partnership L.P. Each such general
partner may be deemed to own beneficially the shares directly owned by the
entity of which it is the general partner. LB I Group Inc. and Lehman
Brothers Offshore Partners Ltd. are wholly-owned subsidiaries of Lehman
Brothers Holdings Inc. Each of the partnerships may be deemed to share with
Lehman Brothers Holdings Inc. the power to vote and the power to dispose of
the shares owned by such partnership. The address of Lehman Brothers
Holdings Inc. is Three World Financial Center, New York, New York 10285.

(2) FIMA Finance Management Inc. ("FIMA") is a wholly-owned subsidiary of EXOR
Group S.A. ("EXOR Group") (formerly IFINT, S.A.). EXOR Group, a Luxembourg
corporation, is the international investment holding company of IFI,
S.p.A., the parent company of the Agnelli Group. The address of FIMA is
Wickham's Cay, Road Town, Tortola, British Virgin Islands.

(3) Assumes that none of the Options, pursuant to which a maximum of 5,885,480
shares are issuable, are exercised.

(4) The Lehman Funds have collectively, and FIMA has, granted to the
Underwriters an option to purchase up to an aggregate of 1,855,910 and
394,090 additional shares of Common Stock, respectively, exercisable solely
to cover over-allotments. See "Underwriting." The data set forth in the
table assume that the Underwriters' over-allotment option is not exercised.

In 1988, FIMA first acquired an ownership interest in the Company by
purchasing 6,435,000 shares of Common Stock of the Company. In 1991, FIMA and
the Lehman Funds acquired an aggregate of 14,999,985 additional shares from the
Company for an aggregate purchase price of $75.0 million and certain additional
shares of Common Stock from certain other stockholders (the "1991 Common Stock
Acquisition"). In 1992, the Company sold an additional $20.0 million worth of
Common Stock to the Lehman Funds and FIMA (the "1992 Common Stock Acquisition").
In connection with the 1991 Common Stock Acquisition, the 1992 Common Stock
Acquisition, the offering of the Senior Subordinated Notes, the NAB Acquisition,
the offering of the Subordinated Notes, the initial public offering of the
Company's Common Stock in April 1994, the AI Acquisition, the 1995 Stock
Offering and the Offerings, Lehman Brothers, an affiliate of the Lehman Funds,
has received compensation from the Company comprising underwriting fees,
discounts and commissions and financial advisory fees. In addition, Lehman
Commercial Paper Inc., an affiliate of the Lehman Funds, has from time to time
been a lender under the Company's credit facilities and has received customary
fees in such capacity.

50
<PAGE> 54

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 150,000,000 shares
of Common Stock, par value $0.01 per share, and 15,000,000 shares of preferred
stock, par value $0.01 per share ("Preferred Stock").

COMMON STOCK

As of June 1, 1996, there were 56,650,532 shares of Common Stock
outstanding. Holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Cumulative voting is not
permitted. Subject to preferences of any Preferred Stock that may be issued in
the future, the holders of Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors. The Company is currently
restricted under the terms of the Credit Agreement, the New Credit Agreement and
the Indentures governing the Senior Subordinated Notes and the Subordinated
Notes, and will be restricted under the Indenture governing the Notes, from
paying dividends to holders of Common Stock. In the event of a liquidation,
dissolution or winding up of the Company, and subject to preferences of any
Preferred Stock that may be issued in the future, the Common Stock is entitled
to receive pro rata all of the assets of the Company available for distribution
to its stockholders. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable, and the shares of Common Stock to be outstanding upon
the closing of the Offerings will be fully paid and non-assessable.

PREFERRED STOCK

The Board of Directors has the authority to issue up to 15,000,000 shares
of Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rates, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any series or the
designation of such series, which may be superior to those of the Common Stock,
without further vote or action by the stockholders. Although it presently has no
intention to do so, the Board of Directors, without stockholder approval, can
issue Preferred Stock with rights that could adversely affect the Common Stock.
The issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company. There will be no shares of
Preferred Stock outstanding upon the closing of the Offerings and the Company
has no present plans to issue any Preferred Stock.

STOCKHOLDERS AND REGISTRATION RIGHTS AGREEMENT

The Lehman Funds, FIMA and certain current and former officers and
employees of the Company are parties to a Stockholders and Registration Rights
Agreement dated September 28, 1991, as amended (the "Stockholders Agreement"),
which contains certain restrictions on the transfer of Common Stock held by
those stockholders and grants such stockholders certain registration rights.

Subject to certain exceptions, the Company is required to pay all expenses
incurred in connection with up to a maximum of four valid registration requests
made by the stockholders party to the Stockholders Agreement. If any requested
registration is in the form of an underwritten offering, the Stockholders
Agreement requires the Company to designate Lehman Brothers Inc. as the managing
underwriter of the offering. Unless the holders of the Common Stock making a
registration request otherwise consent in writing, no other person, other than a
holder of Common Stock who is a party to the Stockholders Agreement and who
requests that its shares be included in such registration and, in the case of an
underwritten offering, the Company, would be permitted to offer any securities
pursuant to such registration.

In addition to the demand registration rights summarized above, the parties
to the Stockholders Agreement also may, subject to certain limitations, require
the Company to register their shares of Common Stock whenever the Company
registers any of its equity securities under the Securities Act, whether for
sale for its own account or not. The Stockholders Agreement provides for, in the
case of underwritten offerings, certain registration priorities in the event
that the managing underwriter advises the Company that the number of shares of
Common Stock proposed to be included in any registration under the Securities
Act exceeds the largest number of shares which can be sold without having an
adverse effect on the offering. In addition, the Company and the other parties
to the Stockholders Agreement are subject to certain holdback provisions

51
<PAGE> 55

during the registration and sale of shares of Common Stock. Under the
Stockholders Agreement, the Company has agreed to indemnify selling stockholders
against certain liabilities.

CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND AMENDED AND
RESTATED BY-LAWS

The by-laws of the Company provide that the Company shall indemnify each
officer and director of the Company to the fullest extent permitted by
applicable law. The Restated Certificate of Incorporation also provides that, to
the fullest extent permitted by the Delaware General Corporation Law, the
directors of the Company shall be indemnified by the Company and shall not be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director.

Certain provisions of the Company's Restated Certificate of Incorporation
and by-laws may have the effect of preventing, discouraging or delaying any
change in control of the Company and may maintain the incumbency of the Board of
Directors and management. The authorization of undesignated Preferred Stock will
make it possible for the Board of Directors to issue Preferred Stock with voting
or other rights or preferences that could impede the success of any attempt to
change control of the Company. The Company's Restated Certificate of
Incorporation provides that the Board of Directors of the Company will be
divided into three classes serving staggered three-year terms. Directors can be
removed from office only for Cause (as defined below) and only by the
affirmative vote of the holders of a majority of the then-outstanding shares of
capital stock entitled to vote generally in an election of directors. Vacancies
on the Board of Directors may be filled only by the remaining directors and not
by the stockholders. "Cause" is defined as the willful and continuous failure
substantially to perform one's duties to the Company or the willful engaging in
gross misconduct materially and demonstrably injurious to the Company.

The by-laws provide that special meetings of stockholders may be called by
the chairman, the president, any vice president, the secretary or any assistant
secretary of the Company and must be called by any such officer at the request
in writing of a majority of the Board of Directors or at the request in writing
of stockholders owning at least a majority of the capital stock of the Company
issued and outstanding and entitled to vote. The by-laws establish an advance
notice procedure for the nomination, other than by or at the direction of the
Board of Directors, of candidates for election as directors as well as for other
stockholder proposals to be considered at annual meetings of stockholders. In
general, notice of intent to nominate a director must be received by the
secretary of the Company not less than 60 nor more than 90 days prior to the
date of the annual meeting, and must contain certain specified information
concerning the person to be nominated. Notice of intent to raise business at
such meeting must be received by the secretary of the Company not less than 120
nor more than 150 days prior to the first anniversary of the date of the
Company's consent solicitation or proxy statement released in connection with
the previous year's meeting.

DELAWARE ANTI-TAKEOVER LAW

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Anti-Takeover Law") regulating corporate
takeovers. The Anti-Takeover Law prevents certain Delaware corporations,
including those whose securities are listed on the New York Stock Exchange, from
engaging, under certain circumstances, in a "business combination" (which
includes a merger or sale of more than 10% of the corporation's assets) with any
"interested stockholder" (a stockholder who acquired 15% or more of a
corporation's outstanding voting stock without the prior approval of the
corporation's board of directors) for three years following the date that such
stockholder became an "interested stockholder." The current stockholders of the
Company may not, by virtue of their current holdings, be deemed to be
"interested stockholders" under this statute. A Delaware corporation may "opt
out" of the Anti-Takeover Law with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or bylaws resulting from a stockholders' amendment approved by at
least a majority of the outstanding voting shares. The Company has not "opted
out" of the provisions of the Anti-Takeover Law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is The Bank
of New York, located in New York, New York.

LISTING

The Common Stock is listed on the New York Stock Exchange under the symbol
LEA.

52
<PAGE> 56

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
holder that is not a "U.S. person" (a "non-U.S. holder"). A "U.S. person" is a
person or entity that, for U.S. federal income tax purposes, is a citizen or
resident of the United States, a corporation or partnership created or organized
in the United States or under the laws of the United States or of any political
subdivision thereof, or an estate or trust whose income is includible in gross
income for U.S. federal income tax purposes regardless of its source. An
individual will be deemed to be a resident of the United States for U.S. federal
income tax purposes if: (1) such individual is a lawful permanent resident of
the United States at any time during the taxable year; (2) such individual makes
an election to be treated as a resident pursuant to the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"); or (3) such individual
is present in the United States for an aggregate of 183 days or more during the
calendar year. In addition, an individual will be presumed to be a resident of
the United States for U.S. federal income tax purposes if such individual is
present in the United States on at least 31 days in the current calendar year
and for an aggregate of 183 days during the three-year period ending with the
current calendar year (counting, for such purposes all of the days present in
the United States during the current year, one-third of the days present during
the immediately preceding year and one-sixth of the days present during the
second preceding year). This presumption of residence may be rebutted if it is
established that such individual has a "tax home" in a foreign country and a
"closer connection" to such foreign country than to the United States, with such
terms being defined in the Code. Furthermore, the determination of residence
under the Code may be rebutted by application of an applicable tax treaty or
convention between the United States and an appropriate foreign country that may
also treat such individual as a tax resident of such country. A special
definition of U.S. resident applies for U.S. federal estate tax purposes.
Resident aliens are subject to U.S. federal tax as if they were U.S. citizens.

This discussion is based on Code and administrative and judicial
interpretations as of the date hereof, all of which may be changed either
retroactively or prospectively. This discussion does not address all the aspects
of U.S. federal income and estate taxation that may be relevant to non-U.S.
holders in light of their particular circumstances, nor does it address tax
consequences under the laws of any U.S. state, municipality or other taxing
jurisdiction or under the laws of any jurisdiction other than the United States.

Prospective holders should consult their own tax advisors about the
particular U.S. federal tax consequences to them of holding and disposing of
Common Stock, as well as any tax consequences that may arise under the laws of
any state, local or foreign taxing jurisdiction.

DIVIDENDS

In the event that dividends are paid to a non-U.S. holder, such dividends
will be subject to United States federal withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. Under current
U.S. Treasury regulations, dividends paid to an address outside the United
States are presumed to be paid to a resident of the country of address for
purposes of the withholding tax. Under the current interpretation of U.S.
Treasury regulations, the same presumption generally applies to determine the
applicability of a reduced rate of withholding under a U.S. tax treaty (the
"address system"). Thus, non-U.S. holders receiving dividends at addresses
outside the United States generally are not yet required to file tax forms to
obtain the benefit of an applicable treaty rate. If there is excess withholding
on a person eligible for a treaty benefit, the person can file for a refund with
the U.S. Internal Revenue Service (the "IRS").

Under U.S. Treasury regulations which were recently proposed and which have
not yet been put into effect, the address system for claiming treaty benefits
would be eliminated for payments made after December 31, 1997. Rather, to claim
the benefits of a tax treaty pursuant to these proposed regulations, a non-U.S.
holder of Common Stock would have to file certain forms attesting to the
holder's eligibility to claim treaty benefits.

Generally, upon the filing of a Form 4224 with the Company, there is no
withholding tax on dividends that are effectively connected with the non-U.S.
holder's conduct of a trade or business within the United

53
<PAGE> 57

States. Instead, the effectively connected dividends are subject to the U.S.
federal income tax on net income applicable to U.S. persons. Effectively
connected dividends received by a foreign corporation may be subject to an
additional "branch profits tax" at a 30% rate (or a lower rate under an
applicable income tax treaty) when such dividends are deemed repatriated from
the United States.

GAIN ON DISPOSITION OF COMMON STOCK

A non-U.S. holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of Common Stock unless (i) the
gain is effectively connected with the conduct of a trade or business of the
non-U.S. holder in the United States, (ii) in the case of a non-U.S. holder who
is an individual and holds the Common Stock as a capital asset, such holder is
present in the United States for 183 or more days in the taxable year of the
disposition and either (x) has a "tax home" in the United States (as specially
defined for U.S. federal income tax purposes) or (y) maintains an office or
other fixed place of business in the United States and the income from the sale
of the stock is attributable to such office or other fixed place of business,
(iii) in the case of a non-resident individual who is a partner in a foreign
partnership holding the Common Stock, such non-resident individual is present in
the United States for 183 or more days in the taxable year of the disposition or
the gain is effectively connected with a trade or business conducted by such
partnership in the United States, (iv) the non-U.S. holder is subject to tax
pursuant to the provisions of U.S. tax law applicable to certain U.S.
expatriates or (v) the Company is or has been a "U.S. real property holding
corporation" for federal income tax purposes. The Company is not currently, has
not been and does not anticipate becoming a "U.S. real property holding
corporation" for U.S. federal income tax purposes.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

The Company must report annually to the IRS and to each non-U.S. holder the
amount of dividends paid to, and the tax withheld with respect to such holder,
regardless of whether tax was actually withheld. That information may also be
made available to the tax authorities of the country in which the non-U.S.
holder resides.

United States federal backup withholding (which generally is withholding
imposed at the rate of 31% on certain payments to persons not otherwise exempt
who fail to furnish certain identifying information to the IRS) will generally
not apply to dividends paid to a non-U.S. holder that are subject to withholding
at the 30% rate (or would be so subject but for a reduced rate under an
applicable treaty). In addition, the payor of dividends may rely on the payee's
foreign address in determining that the payee is exempt from backup withholding,
unless the payor has knowledge that the payee is a U.S. person. However, U.S.
Treasury regulations that were recently proposed would, if adopted in their
present form, eliminate this address system and require a payee to furnish
certain documentation to the payor so as to be able to claim such exemption from
backup withholding.

The backup withholding and information reporting requirements also apply to
the gross proceeds paid to a non-U.S. holder upon the disposition of Common
Stock by or through a U.S. office of a U.S. or foreign broker, unless the holder
certifies to the broker under penalty of perjury as to its name, address and
status as a non-U.S. holder or the holder otherwise establishes an exemption.
Information reporting requirements (but not backup withholding) will apply to a
payment of the proceeds of a disposition of Common Stock by or through a foreign
office of (i) a U.S. broker, (ii) a foreign broker 50% or more of whose gross
income for certain periods is effectively connected with the conduct of a trade
or business in the United States or (iii) a foreign broker that is a "controlled
foreign corporation" for U.S. federal income tax purposes, unless the broker has
documentary evidence in its records that the holder is a non-U.S. holder and
certain other conditions are met, or the holder otherwise establishes an
exemption. Neither backup withholding nor information reporting will generally
apply to a payment of the proceeds of a disposition of Common Stock by or
through a foreign office of a foreign broker not subject to the preceding
sentence.

Any amounts withheld under the backup withholding rules will be refunded or
credited against the non-U.S. holder's United States federal income tax
liability, provided that required information is furnished to the IRS.

54
<PAGE> 58

The backup withholding and information reporting rules are currently under
review by the Treasury Department, and their application to the Common Stock is
subject to change.

FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual who is neither a
citizen nor a resident of the United States for federal estate tax purposes at
the date of death will be included in such individual estate's for U.S. federal
estate tax purposes and may be subject to U.S. federal estate tax unless an
applicable estate tax treaty provides otherwise. Estates of nonresident aliens
are generally allowed a statutory credit that is the equivalent of an exclusion
of $60,000 of assets from the estate for U.S. estate tax purposes. Estate tax
treaties may permit a larger credit. A special definition of U.S. resident
applies for U.S. federal estate purposes.

UNDERWRITING

Under the terms of, and subject to the conditions contained in, the U.S.
Underwriting Agreement, the form of which is filed as an exhibit to the
Registration Statement, the underwriters named below (the "U.S. Underwriters"),
for whom Lehman Brothers Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, PaineWebber Incorporated and
Schroder Wertheim & Co. Incorporated are acting as representatives (the
"Representatives"), have severally agreed to purchase from the Company and the
Selling Stockholders, and the Company and the Selling Stockholders have agreed
to sell to each U.S. Underwriter, the aggregate number of shares of Common Stock
set forth opposite the name of each such U.S. Underwriter below:

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
------------------------------------------------------------------ ----------
<S> <C>
Lehman Brothers Inc. .............................................
Donaldson, Lufkin & Jenrette Securities Corporation...............
Morgan Stanley & Co. Incorporated.................................
PaineWebber Incorporated..........................................
Schroder Wertheim & Co. Incorporated..............................

----------
Total........................................................
==========
</TABLE>

Under the terms of, and subject to the conditions contained in, the
International Underwriting Agreement, the form of which is filed as an exhibit
to the Registration Statement, the managers named below of the concurrent
offering of the Common Stock outside the United States and Canada (the
"International Managers" and together with the U.S. Underwriters, the
"Underwriters"), for whom Lehman Brothers International (Europe), Donaldson,
Lufkin & Jenrette Securities Corporation, Morgan Stanley & Co. International
Limited, PaineWebber International (U.K.) Ltd. and J. Henry Schroder & Co.
Limited are acting as lead managers (the "Lead Managers"), have severally agreed
to purchase from the Company and

55
<PAGE> 59

the Selling Stockholders, and the Company and the Selling Stockholders have
agreed to sell to each International Manager, the aggregate number of shares of
Common Stock set forth opposite the name of each such International Manager
below:

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
------------------------------------------------------------------- ---------
<S> <C>
Lehman Brothers International (Europe).............................
Donaldson, Lufkin & Jenrette Securities Corporation................
Morgan Stanley & Co. International Limited.........................
PaineWebber International (U.K.) Ltd. .............................
J. Henry Schroder & Co. Limited....................................
---------
Total.........................................................
=========
</TABLE>

The U.S. Underwriting Agreement and the International Underwriting
Agreement (collectively, the "Underwriting Agreements") provide that the
obligations of the U.S. Underwriters and the International Managers to purchase
shares of Common Stock are subject to certain conditions, and that if any of the
foregoing shares of Common Stock are purchased by the U.S. Underwriters pursuant
to the U.S. Underwriting Agreement or by the International Managers pursuant to
the International Underwriting Agreement, all the shares of Common Stock agreed
to be purchased by either the U.S. Underwriters or the International Managers,
as the case may be, pursuant to the respective Underwriting Agreements must be
so purchased. The offering price and underwriting discounts and commissions for
the U.S. Offering and the International Offering are identical. The closing of
the U.S. Offering is a condition to the closing of the International Offering,
and the closing of the International Offering is a condition to the closing of
the U.S. Offering.

The Company has been advised that the U.S. Underwriters and the
International Managers propose to offer the shares of Common Stock directly to
the public at the public offering price set forth on the cover page of this
Prospectus, and to certain selected dealers (who may include the U.S.
Underwriters and the International Managers) at such public offering price less
a selling concession not in excess of $ per share. The selected dealers may
reallow a concession not in excess of $ per share to certain brokers and
dealers. After the public offering, the public offering price, the concession to
select dealers and reallowance may be changed by the U.S. Underwriters and the
International Managers.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
that the U.S. Underwriters and the International Managers may be required to
make in respect thereof.

The Selling Stockholders have granted to the U.S. Underwriters and the
International Managers an option to purchase up to an aggregate of 1,800,000 and
450,000 additional shares of Common Stock, respectively, exercisable solely to
cover over-allotments, at the offering price to the public less the underwriting
discounts and commissions shown on the cover page of this Prospectus. All of the
shares of Common Stock sold upon any exercise of this over-allotment option will
be sold by the Selling Stockholders. Such option may be exercised at any time
until 30 days after the date of the U.S. Underwriting Agreement and the
International Underwriting Agreement, respectively. To the extent that the
option is exercised, each U.S. Underwriter or International Manager, as the case
may be, will be committed, subject to certain conditions, to purchase a number
of the additional shares of Common Stock proportionate to such U.S.
Underwriter's or International Manager's initial commitment as indicated in the
preceding tables.

The Company, the Selling Stockholders and certain existing stockholders,
including all of the executive officers of the Company, have agreed that they
will not, subject to certain limited exceptions, for a period of 90 days from
the date of this Prospectus, directly or indirectly, offer, sell or otherwise
dispose of any shares of

56
<PAGE> 60

Common Stock or any securities convertible into or exchangeable or exercisable
for any such shares without the prior written consent of the Representatives.

The U.S. Underwriters and the International Managers have entered into an
Agreement Between U.S. Underwriters and International Managers pursuant to which
each U.S. Underwriter has agreed that, as part of the distribution of the shares
of Common Stock offered in the U.S. Offering, (i) it is not purchasing any such
shares for the account of anyone other than a U.S. Person (as defined below) and
(ii) it has not offered or sold, and will not offer, sell, resell or deliver,
directly or indirectly, any of such shares or distribute any prospectus relating
to the U.S. Offering outside the United States or Canada or to anyone other than
a U.S. Person. In addition, pursuant to such agreement each International
Manager has agreed that, as part of the distribution of the shares of Common
Stock offered in the International Offering, (i) it is not purchasing any such
shares for the account of a U.S. Person and (ii) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the International Offering in
the United States or Canada or to any U.S. Person. Each International Manager
has also agreed that it will offer to sell shares only in compliance with all
relevant requirements of any applicable laws.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Underwriting Agreements and the
Agreement Between U.S. Underwriters and International Managers, including (i)
certain purchases and sales between the U.S. Underwriters and the International
Managers, (ii) certain offers, sales, resales, deliveries or distributions to or
through investment advisors or other persons exercising investment discretion,
(iii) purchases, offers or sales by a U.S. Underwriter who is also acting as an
International Manager or by an International Manager who is also acting as a
U.S. Underwriter and (iv) other transactions specifically approved by the
Representatives and the Lead Managers. As used herein, (a) the term "United
States" means the United States of America (including the District of Columbia)
and its territories, its possessions and other areas subject to its
jurisdiction, and (b) the term "U.S. Person" means any resident or national of
the United States or Canada or its provinces, any corporation, partnership or
other entity created or organized in or under the laws of the United States or
Canada or its provinces, or any estate or trust the income of which is subject
to United States or Canadian income taxation regardless of the source of its
income (other than the foreign branch of any U.S. Person), and includes any
United States or Canadian branch of a person other than a U.S. Person.

Each International Manager has represented and agreed that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
shares of Common Stock will not offer or sell any shares of Common Stock to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 (the "1986 Act") with
respect to anything done by it in relation to the shares of Common Stock in,
from or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on, and will only issue and pass on to any person in the United Kingdom,
any investment advertisement (within the meaning of the 1986 Act) relating to
the shares of Common Stock if that person falls within Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995.

The shares of Common Stock may not be offered or sold directly or
indirectly in Hong Kong by means of this document or any other offering material
or document other than to persons whose ordinary business it is to buy or sell
shares or debentures, whether as principal or as agent. Unless permitted to do
so by the securities laws of Hong Kong, no person may issue or cause to be
issued in Hong Kong this document or any amendment or supplement thereto or any
other information, advertisement or document relating to the shares of Common
Stock other than with respect to shares of Common Stock intended to be disposed
of to persons outside Hong Kong or to persons whose business involves the
acquisition, disposal or holding of securities, whether as principal or as
agent.

57
<PAGE> 61

The shares of Common Stock have not been registered under the Securities
and Exchange Law of Japan and are not being offered and may not be offered or
sold directly or indirectly in Japan or to residents of Japan, except pursuant
to applicable Japanese laws and regulations.

No action has been taken or will be taken in any jurisdiction by the
Company or the International Managers that would permit a public offering of the
shares offered pursuant to the Offerings in any jurisdiction where action for
that purpose is required, other than the United States and Canada and its
provinces. Persons into whose possession this Prospectus comes are required by
the Company and the International Managers to inform themselves about and to
observe any restrictions as to the offering of the shares offered pursuant to
the Offerings and the distribution of this Prospectus.

Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase in addition to the offering price set forth on the cover
page hereof.

Prior to the Offerings, the Lehman Funds, each an affiliate of Lehman
Brothers and Lehman Brothers International (Europe), beneficially own, in the
aggregate, approximately 29% of the outstanding Common Stock of the Company
(assuming no outstanding Options are exercised). Therefore, the underwriting
arrangements for the Offerings will comply with the requirements of Schedule E
to the Bylaws of the National Association of Securities Dealers, Inc. ("NASD")
regarding an NASD member firm's participation in distributing its affiliate's
securities. In accordance with Schedule E, the Underwriters will not make sales
of shares of Common Stock offered hereby to customers' discretionary accounts
without the prior specific written approval of such customers.

The Lehman Funds will receive a portion of the proceeds from the Offerings.
One of the nine members of Lear's Board of Directors is presently employed by
Lehman Brothers. In addition, two members of Lear's Board of Directors are
principals of The Cypress Group L.L.C., a company that has provided consulting
services to Lehman Brothers with respect to the management of the equity
investments of the Lehman Funds. Lehman Brothers has from time to time provided
investment banking, financial advisory and other services to the Company, for
which services it has received fees.

LEGAL MATTERS

The validity of the issuance of shares of Common Stock offered hereby will
be passed upon for the Company by Winston & Strawn, New York, New York. Certain
legal matters in connection with the Offerings will be passed upon for the U.S.
Underwriters and the International Managers by Cravath, Swaine & Moore, New
York, New York. Cravath, Swaine & Moore has performed, and continues to perform,
services for the Lehman Funds from time to time.

EXPERTS

The audited financial statements and schedule of the Company incorporated
by reference into this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon authority of said firm as
experts in giving said reports.

The audited financial statements of AI incorporated by reference into this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon authority of said firm as experts in giving said report.

The audited financial statements of Masland incorporated by reference into
this Prospectus have been audited by Price Waterhouse LLP, as indicated in their
report with respect hereto, and are included herein in reliance upon authority
of said firm as experts in giving said report.

58
<PAGE> 62
[INSIDE BACK COVER]

LEAR CORPORATION LOGO [framed by flags of the countries in which the
Company operates.]

Lear Corporation is the world's largest independent supplier of
automotive interior systems - with 40,000 quality - dedicated, customer -
focused people through 131 facilities in 19 countries around the globe.

Lear Total Systems Capabilities

[A picture of the interior of an automobile depicting the automotive
interior products listed below which the Company produces]

Trunk Liners Spare Tire Covers
Load Floors Fuel Tank Shields
Package Trays Seat Systems
Seat Backs Quarter Panels
C-Pillars Arm Rests
Appliques/Bolsters Scuff Plates
Headliners Door Panels
B-Pillars SEAT COMPONENTS
Headrests - Frames
Sunvisors - Covers
A-Pillars - Foam
Cowl Panels - Hardware
HVAC Ducts Consoles
Hood Insulators Interior Insulators
Engine Shrounds Air Intake Ducts
Coolant Reservoirs Vapor Canisters
Grille Assemblies Windshield Washer Reservoirs
Exterior Air Dams
<PAGE> 63
----------------------------------------------------
----------------------------------------------------

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE U.S. UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE
TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
-----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
Risk Factors.......................... 11
Cautionary Statements for Purposes of
the "Safe Harbor" Provisions of the
Private Securities Litigation Reform
Act of 1995......................... 12
Use of Proceeds....................... 13
Common Stock Price Range and
Dividends........................... 13
Capitalization........................ 14
Pro Forma Financial Data.............. 15
Selected Financial Data of the
Company............................. 19
Management's Discussion and Analysis
of Financial Condition and Results
of Operations of the Company........ 20
Selected Financial Data of Masland
Corporation......................... 27
Management's Discussion and Analysis
of Results of Operations of Masland
Corporation......................... 28
Business of the Company............... 31
Management............................ 48
Selling Stockholders.................. 50
Description of Capital Stock.......... 51
Certain United States Federal Tax
Considerations for Non-U.S. Holders
of Common Stock..................... 53
Underwriting.......................... 55
Legal Matters......................... 58
Experts............................... 58
</TABLE>

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

15,000,000 SHARES

LEAR CORP. LOGO

COMMON STOCK

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

PROSPECTUS
, 1996

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

LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
SCHRODER WERTHEIM & CO.

----------------------------------------------------
----------------------------------------------------
<PAGE> 64

[ALTERNATE PAGE FOR INTERNATIONAL OFFERING]
SUBJECT TO COMPLETION, DATED JUNE 12, 1996

PROSPECTUS
15,000,000 Shares

LEAR CORP. LOGO

COMMON STOCK
---------------------------

Of the 15,000,000 shares of Common Stock ("Common Stock") of Lear
Corporation ("Lear" or the "Company") being offered hereby, 7,500,000 shares are
being offered by the Company and 7,500,000 shares are being offered by certain
stockholders of the Company (the "Selling Stockholders"). See "Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
Common Stock by the Selling Stockholders. Of the 15,000,000 shares of Common
Stock being offered hereby, 3,000,000 shares are being offered initially outside
the United States and Canada by the International Managers (the "International
Offering") and 12,000,000 shares are being offered initially in the United
States and Canada by the U.S. Underwriters (the "U.S. Offering" and, together
with the International Offering, the "Offerings"). The public offering price and
underwriting discounts and commissions per share are identical for both
Offerings. See "Underwriting." Concurrently with the Offerings, the Company is
undertaking a public offering (the "Note Offering") of $200 million principal
amount of subordinated notes due , 2006. The Offerings are not
conditioned upon the consummation of the Note Offering.

SEE "RISK FACTORS" COMMENCING ON PAGE 11 HEREIN FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=======================================================================================================
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Stockholders
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.............................. $ $ $ $
- -------------------------------------------------------------------------------------------------------
Total(3)............................... $ $ $ $
=======================================================================================================
</TABLE>

(1) Lear and the Selling Stockholders have agreed to indemnify the International
Managers, the U.S. Underwriters and certain other persons against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by Lear estimated at $ .
(3) The Selling Stockholders have granted the International Managers and the
U.S. Underwriters a 30-day option to purchase up to an aggregate of
2,250,000 additional shares of Common Stock on the same terms and conditions
as set forth above solely to cover over-allotments, if any. If such option
is exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Selling Stockholders will be $ ,
$ and $ , respectively. See "Underwriting."

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

The shares of Common Stock offered by this Prospectus are offered by the
International Managers subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
International Managers and to certain further conditions. It is expected that
delivery of certificates for shares will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1996.

---------------------------
LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INTERNATIONAL
PAINEWEBBER INTERNATIONAL
SCHRODERS

, 1996
<PAGE> 65

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE INTERNATIONAL
MANAGERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.

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

TABLE OF CONTENTS

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

15,000,000 SHARES

LEAR CORP. LOGO

COMMON STOCK
---------------------------

PROSPECTUS
, 1996

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

LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INTERNATIONAL
PAINEWEBBER INTERNATIONAL
SCHRODERS

------------------------------------------------------
------------------------------------------------------
<PAGE> 66

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all fees and expenses payable by the
Registrant in connection with the issuance and distribution of the securities
being registered hereby (other than underwriting discounts and commissions). All
of such expenses, except the S.E.C. filing fee and the NASD filing fee, are
estimated.

<TABLE>
<S> <C>
SEC filing fee................................................. $229,425
NASD filing fee................................................ 30,500
Blue sky fees and expenses..................................... *
Legal fees and expenses........................................ *
Accounting fees and expenses................................... *
Printing and engraving......................................... *
Listing fees................................................... *
Miscellaneous.................................................. *
--------
Total..................................................... $ *
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant is a Delaware corporation. Reference is made to Section 145
of the Delaware General Corporation Law, as amended (the "GCL"), which provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was a director, officer, employee or agent of the corporation,
or is or was serving at its request in such capacity of another corporation or
business organization against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that such
person's conduct was unlawful. A Delaware corporation may indemnify officers and
directors in an action by or in the right of a corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him
against the expenses (including attorneys' fees) that such officer or director
actually and reasonably incurred.

Reference is also made to Section 102(b)(7) of the GCL, which permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the GCL or (iv) for any transaction from which the director
derived an improper personal benefit.

The certificate of incorporation of the Registrant provides for the
elimination of personal liability of a director for breach of fiduciary duty as
permitted by Section 102(b)(7) of the GCL and the by-laws of the Registrant
provide that the Registrant shall indemnify its directors and officers to the
full extent permitted by Section 145 of the GCL.

The Registrant has directors and officers liability insurance that insures
the directors and officers of the Registrants against certain liabilities. In
addition, Lehman Brothers Inc. has agreed to indemnify David P. Spalding, James
A. Stern and Alan Washkowitz, each being a director of the Registrant and an
officer or former officer of Lehman Brothers Inc., in connection with their
service as directors of the Registrant.

II-1
<PAGE> 67

The Underwriting Agreements provide for indemnification by each of the U.S.
Underwriters and each of the International Managers, as the case may be, of
directors and officers of Lear against certain liabilities, including
liabilities under the Securities Act of 1933, under certain circumstances.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

A list of exhibits is set forth on the Index to Exhibits.

ITEM 17. UNDERTAKINGS

1. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by them is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

2. The undersigned Registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.

(b) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein and this offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(c) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrants' annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-2
<PAGE> 68

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Southfield, State of Michigan on June 12, 1996.

LEAR CORPORATION

By: /s/ KENNETH L. WAY

------------------------------------
Kenneth L. Way
Chairman of the Board and
Chief Executive Officer

Each person whose signature appears below hereby severally constitutes and
appoints Kenneth L. Way, Robert E. Rossiter and James H. Vandenberghe, and each
of them singly, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead in any and all capacities indicated below, the
Registration Statement on Form S-3 filed herewith, and any and all pre-effective
and post-effective amendments to said Registration Statement (including any
related registration statement filed under Rule 462), and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he or she might or could do in person thereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------- ---------------------------------- -------------
<C> <S> <C>
/s/ KENNETH L. WAY Chairman of the Board and Chief June 12, 1996
- ------------------------------------- Executive Officer
Kenneth L. Way (Principal Executive Officer)

/s/ ROBERT E. ROSSITER President, Chief Operating Officer June 12, 1996
- ------------------------------------- and Director
Robert E. Rossiter

/s/ JAMES H. VANDENBERGHE Executive Vice President, June 12, 1996
- ------------------------------------- Chief Financial Officer and
James H. Vandenberghe Director (Principal Financial and
Principal Accounting Officer)
/s/ LARRY W. MCCURDY Director June 12, 1996
- -------------------------------------
Larry W. McCurdy

/s/ GIAN ANDREA BOTTA Director June 12, 1996
- -------------------------------------
Gian Andrea Botta
</TABLE>

II-3
<PAGE> 69

<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------- ---------------------------------- -------------
<C> <S> <C>
/s/ ROBERT W. SHOWER Director June 12, 1996
- -------------------------------------
Robert W. Shower
/s/ DAVID P. SPALDING Director June 12, 1996
- -------------------------------------
David P. Spalding
/s/ JAMES A. STERN Director June 12, 1996
- -------------------------------------
James A. Stern
/s/ ALAN WASHKOWITZ Director June 12, 1996
- -------------------------------------
Alan Washkowitz
</TABLE>

II-4
<PAGE> 70

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBER EXHIBIT NUMBERED PAGE
- -------------- ---------------------------------------------------------------- -------------
<C> <C> <S> <C>
*1.1 -- Form of U.S. Underwriting Agreement. --
*1.2 -- Form of International Underwriting Agreement. --
2.1 -- Agreement and Plan of Merger, dated as of May 23, 1996, among --
Lear, PA Acquisition Corp. and Masland.
*5.1 -- Opinion of Winston & Strawn, special counsel to Lear. --
12.1 -- Statement Regarding Computation of Ratios. --
23.1 -- Consent of Arthur Andersen LLP. --
23.2 -- Consent of Arthur Andersen LLP with respect to AI Financial --
Statements.
*23.3 -- Consent of Price Waterhouse LLP, with respect to the Masland --
Financial Statements.
*23.4 -- Consent of Winston & Strawn (included in Exhibit 5.1). --
24.1 -- Powers of Attorney (included on the signature page hereof). --
99.1 -- Amended and Restated Stockholders and Registration Rights --
Agreement dated as of September 27, 1991 by and among Lear, the
Lehman Funds, Lehman Merchant Banking Partners Inc., as
representative of the Lehman Partnerships, FIMA Finance
Management Inc., a British Virgin Islands corporation, and
certain management investors (incorporated by reference to
Exhibit 2.2 to Lear Holdings Corporation's Current Report on
Form 8-K dated September 24, 1991).
99.2 -- Waiver and Agreement dated September 27, 1991, by and among --
Holdings, Kidder Peabody Group Inc., KP/Hanover Partners 1988,
L.P., General Electric Capital Corporation, FIMA Finance
Management Inc., a Panamanian corporation, FIMA Finance
Management Inc., a British Virgin Islands corporation, MH
Capital Partners Inc., successor by merger and name change to MH
Equity Corp., SO.PA.F Societa Partecipazioni Finanziarie S.p.A.,
INVEST Societa Italiana Investimenti S.p.A., the Lehman
Partnerships and the Management Investors (incorporated by
reference to Exhibit 2.3 to Lear Holdings Corporation's Current
Report on Form 8-K dated September 24, 1991).
99.3 -- Amendment to Amended and Restated Stockholders and Registration --
Rights Agreement (incorporated by reference to Exhibit 10.24 to
Lear's Transition Report on Form 10-K filed March 31, 1994).
99.4 -- Waiver to Amended and Restated Stockholders and Registration --
Rights Agreement dated August 15, 1995 (incorporated by
reference to Exhibit 99.4 to Lear's Registration Statement on
Form S-3 (33-61583).
*99.5 -- Waiver to Amended and Restated Stockholders and Registration
Rights Agreement dated June , 1996.
</TABLE>

- -------------------------
* To be filed by Amendment.

<PAGE> 1
EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER DATED MAY 23, 1996

BY AND AMONG LEAR CORPORATION;

PA ACQUISITION CORP. AND

MASLAND CORPORATION

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TABLE OF CONTENTS

Page
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ARTICLE I

THE OFFER

1.01 THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 COMPANY ACTION . . . . . . . . . . . . . . . . . . . . . . 3
1.03 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II

THE MERGER

2.01 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . 6
2.04 DISSENTING SHARES . . . . . . . . . . . . . . . . . . . . . 7
2.05 PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.06 NO FURTHER RIGHTS . . . . . . . . . . . . . . . . . . . . . 9
2.07 CLOSING OF COMPANY TRANSFER BOOKS . . . . . . . . . . . . . 9
2.08 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS
AND OFFICERS. . . . . . . . . . . . . . . . . . . . . 9
2.09 WITHHOLDING RIGHTS. . . . . . . . . . . . . . . . . . . . . 10

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.01 REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND SUB. . . . . . . . . . . . . . . . . . . . . . . . 11
3.02 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . 12

ARTICLE IV
COVENANTS

4.01 PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . . . 29
4.02 MEETING OF STOCKHOLDERS OF THE COMPANY. . . . . . . . . . . 29
4.03 MERGER WITHOUT MEETING OF STOCKHOLDERS. . . . . . . . . . . 30
4.04 INTERIM OPERATIONS. . . . . . . . . . . . . . . . . . . . . 30
4.05 APPRAISAL RIGHTS. . . . . . . . . . . . . . . . . . . . . . 33
4.06 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 33
4.07 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . 34
4.08 CERTAIN LITIGATION. . . . . . . . . . . . . . . . . . . . . 35

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4.09 NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . 35
4.10 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . 36
4.11 CREDIT AGREEMENT WAIVER . . . . . . . . . . . . . . . . . . 37

ARTICLE V

CONDITIONS

5.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY . . . . . . . . 37
5.02 CONDITIONS TO THE OBLIGATIONS OF PURCHASER
AND SUB . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE VI

MISCELLANEOUS

6.01 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 38
6.02 LIABILITIES IN EVENT OF TERMINATION . . . . . . . . . . . . 40
6.03 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . 40
6.04 WAIVER AND AMENDMENT. . . . . . . . . . . . . . . . . . . . 41
6.05 OFFICERS' AND DIRECTORS' LIABILITY INSURANCE;
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 41
6.06 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . 41
6.07 STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . 42
6.08 REPRESENTATIONS, WARRANTIES AND AGREEMENTS. . . . . . . . . 43
6.09 PUBLIC STATEMENTS . . . . . . . . . . . . . . . . . . . . . 43
6.10 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . 43
6.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.12 GOVERNING LAW; CONSENT TO JURISDICTION. . . . . . . . . . . 45
6.13 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . 45
6.14 INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . . 46
6.15 COUNTERPARTS; EFFECTIVENESS . . . . . . . . . . . . . . . . 46
6.16 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.17 NO THIRD-PARTY BENEFICIARIES. . . . . . . . . . . . . . . . 46

EXHIBIT A

SCHEDULE I

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated May 23, 1996 (this "Agreement") by and
among LEAR CORPORATION, a Delaware corporation ("Purchaser"), PA ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of Purchaser
("Sub") and MASLAND CORPORATION, a Delaware corporation (the "Company") (Sub
and the Company being hereinafter collectively referred to as the "Constituent
Corporations").

W I T N E S S E T H

WHEREAS, the Board of Directors of Purchaser and the Board of Directors of
the Company have approved the acquisition of the Company by Purchaser, by means
of the merger of Sub with and into the Company, upon the terms and conditions
set forth in this Agreement;

WHEREAS, to effectuate such acquisition, Purchaser proposes to make or to
cause Sub or another direct or indirect wholly-owned subsidiary of Purchaser to
make a tender offer for any and all Shares of Common Stock of the Company, $.01
par value, which are issued and outstanding (the "Shares") (including the
associated rights (the "Rights") to purchase Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company (or other securities)
issued pursuant to the Rights Agreement dated as of November 16, 1995, as
amended (the "Rights Agreement"), between the Company and Mellon Securities
Trust Company, as Rights Agent) on the terms set forth in the Offer to Purchase
(as hereinafter defined), and the Board of Directors of the Company has
approved such tender offer and recommended that it be accepted by the
stockholders of the Company;

WHEREAS, Purchaser and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, certain beneficial and record holders of the
Shares identified on Schedule I hereto enter into agreements (collectively, the
"Stockholders Agreement") providing for certain matters with respect to their
Shares, including the tender of their Shares and certain other

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actions relating to the Offer (as defined in Section 1.01) and the other
transactions contemplated by this Agreement, and in order to induce Purchaser
and Sub to enter into this Agreement, such stockholders have agreed to enter
into the Stockholders Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, Purchaser, Sub and the Company hereby agree as follows:

ARTICLE I

THE OFFER

1.01 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 6.01 and that nothing shall have occurred
which would result in a failure to satisfy any of the conditions set forth in
Exhibit A hereto, Purchaser or Sub shall as promptly as practicable, and in no
event later than one business day after the date hereof, publicly announce the
execution and delivery of this Agreement, and within five business days after
such public announcement commence (within the meaning of Rule 14d-2(a) of the
Securities Exchange Act of 1934, as amended, (including the rules and
regulations promulgated thereunder, the "Exchange Act")), a tender offer for
all outstanding Shares (including the associated Rights) at a price of $26.00
per Share net to the Seller in cash (the "Offer") and, subject to the
satisfaction of the conditions set forth in such Exhibit A, shall use its best
efforts to consummate the Offer on the terms set forth herein.

(b) As soon as practicable on the date the Offer is commenced,
Purchaser and Sub shall file with the Securities and Exchange Commission (the
"Commission") a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer (the "Schedule 14D-1") which shall include as an exhibit and incorporate
by reference an offer to purchase (the "Offer to Purchase") (or portions
thereof) and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, are referred to collectively herein as the "Offer Documents"). The
Company and its counsel shall be given the opportunity to review the Offer
Documents and any amendments thereto prior to the filing thereof with the
Commission. Each of Purchaser, Sub and the Company represents and warrants
that the written information supplied and to be supplied for inclusion by
Purchaser, Sub and the Company, respectively, in the Schedule 14D-1 and the
Offer Documents shall, on the date the Schedule 14D-1 is filed with the
Commission, and on the date the Offer Documents are first published, sent or
given to holders of Shares, as the case

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may be, not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and each of Purchaser, Sub and the Company agrees
promptly to correct any such information provided by them which shall have
become false or misleading in any material respect and take all steps necessary
to cause such Schedule 14D-1 as so corrected to be filed with the Commission
and such Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable law.
Purchaser and Sub agree that the Schedule 14D-1 shall comply as to form in all
material respects with the provisions of applicable law.

(c) Without the prior written consent of the Company, the Purchaser
shall not (i) decrease the price per Share or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought, (iii) amend or
waive satisfaction of the Minimum Condition (as defined in Exhibit A), (iv)
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares, or (v) extend the expiration
date of the Offer (except as required by law and except that Sub may extend the
expiration date of the Offer for up to ten (10) business days after the initial
expiration date or for longer periods in the event that at the expiration date
of the Offer the conditions to the Offer described in Exhibit A hereto shall
not have been satisfied or earlier waived); provided, however, that, except as
set forth above, Sub may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission. Upon the terms
and subject to the conditions of the Offer, the Purchaser will accept for
payment and purchase, as soon as permitted under the terms of the Offer, all
Shares validly tendered and not withdrawn prior to the expiration of the Offer
(it being understood that the Offer shall expire as soon as is permissible
under the Exchange Act and the Rules and Regulations of the New York Stock
Exchange Inc. subject to the provisions of this Subsection (c) and Section 6.01
below).

1.02 Company Action. (a) The Company hereby consents to the Offer and
represents that (i) the Board of Directors of the Company (the "Board") at a
meeting duly called and held (x) has unanimously approved this Agreement and
the transactions contemplated hereby, including the Offer and the Merger (as
such term is defined in Section 2.01), (y) has resolved to recommend acceptance
of the Offer and approval of this Agreement and the Merger by the Company's
stockholders and (z) by the unanimous vote

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of the Board, determined that each of this Agreement, the Offer and the Merger
are fair to and in the best interests of the stockholders of the Company, and
(ii) Goldman Sachs & Co. ("Goldman Sachs") has delivered to the Board its
opinion that the per Share (including the associated Rights) consideration to
be received by the Company's stockholders pursuant to the Offer and the Merger
is fair to such stockholders. The Company hereby consents to the inclusion in
the Offer Documents of the recommendations of the Board referred to in this
Section 1.02 (a). On the date the Offer is commenced, the Company shall file
with the Commission and mail to the holders of Shares a Solicitation/
Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which shall
reflect such recommendations and actions of the Board. The Company and with
respect only to information that they have supplied for inclusion in the
Schedule 14D-9, Purchaser and Sub, represent and warrant that the Schedule
14D-9 and any amendments or supplements thereto shall not, at the time filed
with the Commission and on the date such Schedule or any amendment or
supplement thereto is first mailed to the holders of Shares, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Company
agrees promptly to correct any information in the Schedule 14D-9 which shall
have become false or misleading in any material respect and take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
Commission and disseminated to holders of Shares, as and to the extent required
by applicable law. The Company agrees that the Schedule 14D-9 shall comply as
to form in all material respects with all provisions of applicable law.
Purchaser, Sub and their counsel shall be given the opportunity to review the
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
Commission.

(b) The Company shall promptly furnish Purchaser with a list of the
record holders of Shares and mailing labels containing the names and addresses
of all record holders of Shares and lists of securities positions of Shares
held in stock depositories, each as of the latest practicable date, and shall
promptly furnish Purchaser with such additional information, including updated
lists of stockholders of the Company, mailing labels and lists of securities
positions, and assistance as Purchaser or its agents may reasonably request in
connection with the Offer.

1.03 Directors. (a) Promptly upon the purchase by Sub of Shares pursuant
to the Offer, and from time to time thereafter, Purchaser or Sub shall be
entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors
on the Board)

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as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number
of directors pursuant to this Section 1.03) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and the Company shall,
upon request by Purchaser, promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) using its best efforts to secure the
resignations of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Board and shall cause Purchaser's designees
promptly to be so elected. At the request of Purchaser, the Company shall take,
at the Company's expense, all lawful action necessary to effect any such
election. In addition, the Company shall mail to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder with the Schedule 14D-9. Purchaser will supply to the
Company in writing and will be solely responsible for any information with
respect to it and its designees, officers, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1.

(b) Following the election or appointment of Purchaser's designees
pursuant to this Section 1.03 and prior to the Effective Time of the Merger,
any amendment or termination of this Agreement, extension for the performance
or waiver of the obligations or other acts of Purchaser or Sub or waiver of the
Company's rights hereunder, shall require the concurrence of a majority of
directors of the Company then in office who are directors on the date hereof
and who voted to approve this Agreement.

ARTICLE II

THE MERGER

2.01 The Merger. (a) Subject to the terms and conditions hereof, at the
Effective Time (as such term is defined in Section 2.01(b)), Sub will be merged
with and into the Company (the "Merger") in accordance with the General
Corporation Law of Delaware (the "Delaware Law"), the separate existence of Sub
shall cease and the Company shall continue as the surviving corporation in the
Merger (the "Surviving Corporation") under the name "MASLAND CORPORATION"

(b) At the Closing (as hereinafter defined) the parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State of
Delaware the appropriate certificate of merger (the "Certificate of Merger")
duly executed by the Company

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in accordance with the requirements of the Delaware Law and with this
Agreement. The date and time of filing of the Certificate of Merger with the
Secretary of State of Delaware is referred to herein as the "Effective Time."

(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers, immunities and franchises, and be
subject to all of the restrictions, disabilities and duties of each of the
Constituent Corporations; and all property, real, personal and mixed, and all
debts due on whatever account, including subscriptions to shares, and all other
choses in action, and all and every other interests, of or belonging to or due
to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate, or any interest therein, vested in any
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger; all in accordance with Section 259 of the Delaware Law.

(d) Notwithstanding anything to the contrary herein, the parties to
this Agreement may, by mutual consent prior to the Effective Time, elect,
instead of merging Sub into the Company as hereinabove provided, to merge the
Company into Sub. In such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing change.

2.02 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Winston & Strawn, 35 West Wacker Drive, Chicago, IL
60601, at 10:00 A.M., local time, on the later of (x) the day of the Special
Meeting provided for in Section 4.02, if such Special Meeting is required to be
held or (y) the first business day after the day on which the last of the
conditions set forth in Article V is fulfilled or waived (subject to applicable
law) or (ii) at such other time and place and on such other date as Purchaser
and the Company shall agree (the "Closing Date").

2.03 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any securities of the
Constituent Corporations:

(a) each Share (including the associated Rights) then issued and
outstanding, other than Dissenting Shares (as such term is defined in Section
2.04) and Shares to be cancelled pursuant to Section 2.03(b), shall be
converted into and represent the right to receive $26.00 net in cash, without
any interest thereon, or an amount in cash, without interest, having a value
equal to such greater amount per Share (including the associated Rights) as may
be paid (in cash or other property or a combination thereof) by

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Purchaser for any Shares (including the associated Rights) validly tendered and
not withdrawn pursuant to the Offer (the "Merger Consideration"); in the event
the price per Share (including the associated Rights) paid by Purchaser in the
Offer is paid in whole or in part in property other than cash, such price shall
be deemed to be equal to the sum of (i) the amount of cash, if any, paid for
each Share (including the associated Rights) plus (ii) the fair value of such
property, as agreed to by the Company and the Purchaser, or, if they are unable
to agree, as determined by a nationally recognized investment banking firm,
selected by the Company and approved by the Purchaser, which approval shall not
be unreasonably withheld, and the fees of which shall be shared equally by the
Company and the Purchaser;

(b) each Share (including the associated Rights) then held, directly
or indirectly, by Purchaser, Sub or any subsidiary of Purchaser, Sub or the
Company or held in the Company's treasury shall be cancelled and retired
without payment of any consideration therefor; and

(c) each Share of common stock, par value $.01 per share, of Sub ("Sub
Common Stock") issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
non-assessable share of common stock, $.01 par value, of the Surviving
Corporation ("Surviving Corporation Common Stock"). After the Effective Time,
Purchaser shall be the holder of all outstanding shares of Surviving
Corporation Common Stock.

2.04 Dissenting Shares. Notwithstanding any other provision of this
Agreement to the contrary, Shares (including the associated Rights) held by
each stockholder who has not voted such Shares in favor of the Merger and with
respect to which the holder thereof has properly exercised the right to dissent
and demanded the fair value thereof in accordance with Section 262 of the
Delaware Law ("Dissenting Shares") shall not be converted into and represent
the right to receive the Merger Consideration; provided, however, that if any
such stockholder ceases to be entitled to an appraisal of his Shares pursuant
to Section 262 of the Delaware Law, then such holder's Dissenting Shares shall
cease to be Dissenting Shares and shall, subject to the terms of this
Agreement, be converted into and represent the right to receive the Merger
Consideration.

2.05 Payment. (a) Pursuant to an agreement (the "Disbursing Agent
Agreement") to be entered into on or before the Closing Date between Purchaser
and a disbursing agent (the "Disbursing Agent") which shall be a commercial
bank with capital of at least $1,000,000,000, Purchaser or the Surviving
Corporation shall

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deposit with the Disbursing Agent, in trust for the benefit of the Company's
stockholders, at the Closing, the cash (in immediately available funds) to
which holders of Shares shall be entitled pursuant to Section 2.03(a). The
Disbursing Agent may invest portions of the cash deposited with it in such
manner as Purchaser or the Surviving Corporation, as the case may be, directs,
provided that all such investments be in obligations of or guaranteed by the
United States of America, in commercial paper obligations receiving the highest
rating from either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $1,000,000,000
the securities of which, or the securities of the holding company of which, are
rated in the highest category by a nationally recognized credit agency
(collectively, "Permitted Investments") or in money market funds which are
invested solely in Permitted Investments; provided, further, that the
maturities of Permitted Investments shall be such as to permit the Disbursing
Agent to make prompt payment of the Merger Consideration to former stockholders
of the Company entitled thereto. Any net profit resulting from, or interest or
income produced by, Permitted Investments shall be payable to the Surviving
Corporation. Purchaser shall replace any monies lost through any investment
made at its direction pursuant to this Section 2.05(a) prior to the Effective
Time, and the Surviving Corporation shall replace any monies lost through any
investment made at its direction pursuant to this Section 2.05(a) after the
Effective Time. Any funds remaining with the Disbursing Agent one year after
the Effective Time shall be released and repaid by the Disbursing Agent to the
Surviving Corporation, after which time persons entitled thereto may look,
subject to applicable escheat and other similar laws, only to the Surviving
Corporation for payment thereof.

(b) As soon as practicable after the Effective Time, the Disbursing
Agent shall send a notice and a transmittal form to each holder of certificates
formerly evidencing Shares (other than certificates formerly representing
Shares to be cancelled pursuant to Section 2.03(b) and certificates
representing Dissenting Shares) advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Disbursing Agent (who may
appoint forwarding agents with the approval of Purchaser) such certificates for
exchange into the Merger Consideration. Each holder of certificates
theretofore evidencing Shares, upon proper surrender thereof to the Disbursing
Agent together with and in accordance with such transmittal form, shall be
entitled to receive in exchange therefor the Merger Consideration deliverable
in respect of the Shares theretofore evidenced by the certificates so
surrendered. Upon such proper surrender, the Disbursing Agent shall promptly
deliver the Merger Consideration. Until properly

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surrendered, certificates formerly evidencing Shares (other than Dissenting
Shares) shall be deemed for all purposes to evidence only the right to receive
the Merger Consideration. Notwithstanding the foregoing, neither the Disbursing
Agent nor any party hereto shall be liable to a holder of certificates
theretofore representing Shares for any amount which may be required to be paid
to a public official pursuant to an applicable abandoned property, escheat or
similar law.

(c) If the Merger Consideration (or any portion thereof) is to be
delivered to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of such Merger Consideration that the certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise
in proper form for transfer, that such transfer otherwise be proper and that
the person requesting such transfer pay to the Disbursing Agent any transfer or
other taxes payable by reason of the foregoing or establish to the satisfaction
of the Disbursing Agent that such taxes have been paid or are not required to
be paid.

(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Surviving Corporation
will issue in exchange for such lost, stolen or destroyed certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
with this Article II. When authorizing such issue of the Merger Consideration
in exchange therefor, the Board of Directors of the Surviving Corporation may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate to give the Surviving
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Surviving Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.

2.06 No Further Rights. From and after the Effective Time, holders of
certificates theretofore evidencing Shares shall cease to have any rights as
stockholders of the Company, except as provided herein or by law.

2.07 Closing of Company Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Shares shall
thereafter be made.

2.08 Certificate of Incorporation By-Laws: Directors and Officers. The
Restated Certificate of Incorporation and By-Laws of the Company in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and By-Laws of the Surviving

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Corporation until thereafter amended as provided therein and under the Delaware
Law, except that (i) Article Seven (c) and (h) of the Restated Certificate of
Incorporation shall be deleted; (ii) Article Four of the Restated Certificate
of Incorporation shall be amended to read in its entirety as follows:

"ARTICLE FOUR

The total number of shares of stock that the corporation is
authorized to issue is One Hundred (100) shares of common stock,
having a par value of $.01 per share";

and (iii) Article Seven (d) of the Restated Certificate of Incorporation shall
be amended to read in its entirety as follows:

"(d) Vacancies and newly erected directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until their successors
are duly elected and qualified, or until their earlier resignation or removal."

The directors of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and the officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case until their successors are duly elected and
qualified. The Company will use its best efforts to obtain the resignations of
its directors at the Effective Time.

2.09 Withholding Rights. Purchaser shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Purchaser is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Purchaser, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Purchaser.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.01 Resentation and Warranties of Purchaser and Sub. Purchaser and Sub
hereby jointly and severally represent and warrant to the Company as follows:

(a) Organization. Each of Purchaser and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

(b) Authorization and Validity of Agreements. Each of Purchaser and
Sub has all requisite corporate power and authority to enter into this
Agreement and to perform its respective obligations hereunder. The execution,
delivery and performance by each of Purchaser and Sub of this Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors, and by Purchaser, as the sole stockholder
of Sub. No other corporate action on the part of Purchaser or Sub is necessary
to authorize the execution, delivery or performance by Purchaser and Sub of
this Agreement and the consummation by Purchaser and Sub of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Purchaser and Sub and is the legal, valid and binding obligation of Purchaser
and Sub, enforceable against each of them in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.

(c) No Approvals or Notices Required; No Conflict with Instruments to
which Purchaser or Sub is a Party. Neither the execution and delivery of this
Agreement by Purchaser and Sub nor the performance by Purchaser and Sub of
their respective obligations hereunder nor the consummation of the transactions
contemplated hereunder will: (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Purchaser or Sub; (ii) assuming satisfaction of the
requirements set forth in clause (iii) below, conflict with or violate any
provision of law applicable to Purchaser or Sub; or (iii) except for (1)
requirements of the Exchange Act, (2) requirements, if any, arising out of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (3) applicable requirements, if any, of any non-United States
competition, antitrust or investment laws (including, without limitation,
Council Regulation (EEC) 4064/89, the Investment Canada Act, the Competition
Act (Canada), the Fair

<PAGE> 15

Trading Act 1973 (UK), and any rules or regulations promulgated by the
Secretary of State for Trade and Industry (U.K.), collectively, "Foreign
Antitrust Laws") and (4) the delivery of the Certificate of Merger in
accordance with the Delaware Law, require any order, consent, material
authorization or permit or approval of, or filing with or notice to any
governmental, administrative or regulatory commission, agency, authority or
other public body, domestic or foreign (each a "Governmental Entity") under any
provision of law applicable to Purchaser or Sub; or (iv) other than the Credit
Agreement Waiver (as defined in Exhibit A attached hereto), require any
consent, approval or notice under, or violate, be in conflict with or result in
any breach of or constitute a default under, or permit the termination of any
provision of or loss of any material benefit under, or result in the
acceleration of the maturity or performance of any obligation of or result in
the creation or imposition of any lien or other encumbrance upon any
properties, assets or businesses of Purchaser or Sub under any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit, authorization,
license, contract, instrument or other agreement or commitment, or any order,
judgment or decree to which Purchaser or Sub is a party or by which it or any
of its assets or properties is bound or encumbered, which in any of the
foregoing cases in this clause (iv) would, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
results of operations, business, assets or liabilities of Purchaser and its
subsidiaries taken as a whole.

(d) Financing. Assuming that the Credit Agreement Waiver Condition
(as defined in Exhibit A attached hereto) is satisfied, Purchaser has or will
have, prior to the expiration of the Offer, sufficient funds available to
purchase all of the Shares outstanding and to pay all related fees and expenses
on a fully diluted basis pursuant to the Offer and this Agreement.

3.02 Representations and Warranties of the Company. The Company hereby
represents and warrants to Purchaser and Sub as follows:

(a) Organization. Each of the Company and the Subsidiaries (as such
term is defined in Section 3.02(c)) 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 and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such

<PAGE> 16

qualification necessary, except where the failure to be so duly qualified or
licensed would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), results of operations,
business, assets or liabilities of the Company and the Subsidiaries taken as a
whole (a "Company Material Adverse Effect").

(b) Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares, of which 50,000,000 shares are Common Stock,
having a par value of $.01 per share (the "Common Stock"), and 10,000,000
shares are Preferred Stock, having a par value of $.01 per share (the
"Preferred Stock"). As of the date hereof, 13,590,393 Shares of Common Stock
and no shares of Preferred Stock were issued and outstanding and no Shares were
held in the Company's treasury. All outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable and have no
preemptive rights. There are 1,883,204 Shares reserved for issuance upon
exercise of the stock options and warrants to acquire Common Stock
(collectively, the "Company Stock Options") issued pursuant to the Company's
1991 Stock Purchase and Option Plan, 1993 Stock Option Incentive Plan and the
Non-Employee Director Stock Option Plan (the "Stock Option Plans") of which
Company Stock Options to acquire (1) 1,883,204 Shares have been granted, (2)
1,196,030 Shares are fully vested and exercisable on the date hereof and (3)
108,174 Shares will become fully vested and exercisable upon consummation of
the Offer. Except as disclosed in the preceding sentence and as set forth in
the Rights Agreement, the Company does not have outstanding any subscriptions,
options, warrants, rights, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock
or other securities of the Company obligating the Company to issue any
securities. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the Company Stock Options, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of Common Stock or any
capital stock of any Subsidiary or make any material investment (in the form of
a loan, capital contribution or otherwise) in any Subsidiary.

(c) Subsidiaries. The only corporation, partnership, joint venture or
other entity in which the Company, directly or indirectly, has an equity or
other interest of 50% or greater or otherwise controls (the "Subsidiaries") are
those named in Exhibit 21.1 to the Company's Annual Report on Form 10-K dated
September 26, 1995 for the fiscal year ended June 30, 1995 (the "1995 10-K"),
as filed with the Commission and heretofore delivered to Purchaser. Except as
otherwise disclosed in Schedule 3.02(c), the Company is,

<PAGE> 17

directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Subsidiaries, there are no
irrevocable proxies with respect to such shares, and no equity securities of
any of the Subsidiaries are or may become required to be issued for any reason
including, without limitation, by reason of any options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Subsidiary, and there are no contracts,
understandings or arrangements by which any Subsidiary is bound to issue
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by the Company or any
of the Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable and are owned by it free and clear of any claim, lien,
encumbrance or agreement with respect thereto.

(d) Authorization and Validity of Agreements. The Company has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder (subject to obtaining any necessary approval
of its stockholders with respect to the Merger). The execution, delivery and
performance by the Company of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Board (by a
vote of at least two-thirds of the directors) and no other corporate action on
the part of the Company is necessary to authorize the execution and delivery by
the Company of this Agreement and the consummation by it of the transactions
contemplated hereby (other than obtaining any necessary approval of its
stockholders with respect to the Merger). This Agreement has been duly
executed and delivered by the Company and is the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.

(e) No Approvals or Notices Required; No Conflict with Instruments to
which the Company is Party. Neither the execution and delivery of this
Agreement by the Company nor the performance by the Company of its obligations
hereunder nor the consummation of the transactions contemplated hereunder will
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries; (ii) assuming satisfaction of the
requirements set forth in clause (iii) below, conflict with or violate any
provision of law applicable to the Company or its Subsidiaries or by which any
property or asset of the Company or

14
<PAGE> 18

any of its Subsidiaries is bound or affected; (iii) except for (1) requirements
of the Exchange Act, (2) requirements, if any, arising out of the HSR Act, (3)
applicable requirements, if any, of Foreign Antitrust Laws and (4) the delivery
of the Certificate of Merger in accordance with the Delaware Law, require any
order, consent, material authorization or permit, or approval of, or filing
with or notice to any Governmental Entity under any provision of law applicable
to the Company or any of the Subsidiaries; (iv) except as disclosed on Schedule
3.02(e) hereto, require any consent, approval or notice under, or violate, be
in conflict with or result in any breach of or constitute a default under, or
permit or cause the termination of any provision of or loss of any material
benefit under, or result in the acceleration of the maturity or performance of
any obligation of or result in the creation or imposition of any lien or other
encumbrance upon any properties, assets or businesses of the Company or any of
the Subsidiaries under any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument or other
agreement or commitment, or any order, judgment or decree to which the Company
or any of the Subsidiaries is a party or by which it or any of the Subsidiaries
or any of their respective assets or properties is bound or encumbered, which
in any of the foregoing cases in this clause (iv) would have, either
individually or in the aggregate, a Company Material Adverse Effect. The Board
of Directors of the Company, at a meeting duly called and held, has taken all
actions necessary under the Delaware Law, including approving the transactions
contemplated by this Agreement and the Stockholders Agreement, to ensure that
the restrictions on "business combinations" set forth in Section 203 of the
Delaware Law do not, and will not, apply to Purchaser, Sub, affiliates or
associates of Purchaser or Sub or the transactions contemplated by this
Agreement or the Stockholders Agreement. The affirmative vote of the holders
of a majority of the Shares is the only vote of the holders of any class or
series of the Common Stock necessary to approve the Merger. The Board has
taken all necessary actions under the Rights Agreement to amend the Rights
Agreement so that the Rights Agreement shall not be applicable to the purchase
of the Shares pursuant to the Offer or the Merger or the consummation of the
transactions contemplated hereby, and so that none of the execution or delivery
of this Agreement, the purchase of Shares pursuant to the Offer or the Merger
or the consummation of the transactions contemplated by this Agreement or the
Stockholders Agreement will cause the Distribution Date (as defined in the
Rights Agreement) to occur, the Rights to become exercisable or Purchaser or
Sub or any affiliate or associate of Purchaser or Sub to become an Acquiring
Person (as defined in the Rights Agreement). Except as so amended in
accordance with the previous sentence, the Rights Agreement is otherwise in
full force and effect. On the date hereof, the Company has delivered to
Purchaser a certificate of the Company,

<PAGE> 19

signed by an executive officer of the Company and dated on the date of
execution thereof, to evidence satisfaction by the Company of all of the
conditions set forth in the four preceding sentences.

(f) Legal Proceedings. Except as set forth in the 1995 10-K, there is
no suit, action, proceeding or investigation pending or, to the best knowledge
of the Company, threatened, against or involving the Company or any of its
Subsidiaries, or any of their respective properties or rights, which (i) if
adversely determined, would have, either individually or in the aggregate, a
Company Material Adverse Effect or (ii) seeks to, or is reasonably likely to,
delay or prevent the consummation of the Offer, the Merger or any other
transaction contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any court, arbitrator or Governmental Entity
outstanding against the Company or any of the Subsidiaries having any such
effect. Neither the Company nor any of the Subsidiaries nor any property or
asset of the Company or of any of the Subsidiaries is subject to, or in
violation of, any term of any judgment, decree, injunction or order outstanding
against it which would have, either individually or in the aggregate, a Company
Material Adverse Effect.

(g) Commission Filings. The Company has heretofore delivered to
Purchaser true and complete copies of all reports, registration statements,
proxy statements and other filings (including all notes, exhibits and schedules
thereto and documents incorporated by reference therein) filed by the Company
with the Commission since August 31, 1993 (such reports, registration
statements and other filings, together with any amendments thereto, are
sometimes collectively referred to as the "Commission Filings"). The
Commission Filings and any forms, reports and other documents filed by the
Company with the Commission after the date of this Agreement (1) were or will
be prepared in all material respects in accordance with the requirements of the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act") and the Exchange Act, as the case
may be, and (2), at the time they were or will be filed with the Commission,
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
made therein, in light of the circumstances under which they were made, not
misleading. No Subsidiary is required to file any form, report or other
document with the Commission. Each of the audited consolidated financial
statements and unaudited interim financial statements (including any related
notes or schedules) included in the Commission Filings was prepared in
accordance with generally accepted accounting principles applied on a
consistent basis exceptas may be indicated therein or in the notes or schedules
thereto, and fairly presents the financial position of the Company and its

16
<PAGE> 20

consolidated subsidiaries as at the dates thereof and the results of their
operations, cash flows, changes in financial position and changes in
stockholders' equity for the periods then ended, subject, in the case of the
unaudited interim financial statements to normal year end audit adjustments and
except that such unaudited interim financial statements do not include all of
the notes required by generally accepted accounting principles to be included
therein. Since March 31, 1996, neither the Company nor any of the Subsidiaries
has incurred any liability or obligation material to the Company and the
Subsidiaries taken as a whole, except as disclosed in Schedule 3.02(g) hereto
or as disclosed in the Commission Filings.

(h) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since June 30, 1995, the Company and the Subsidiaries have
conducted their businesses only in the ordinary and usual course, and, except
as disclosed in Schedule 3.02(h) hereto or in the Commission Filings or as
specifically contemplated by this Agreement, there has not been: (i) any
Company Material Adverse Effect; (ii) any declaration, setting aside or payment
of any dividend (whether in cash, stock or property) with respect to the
capital stock of the Company (except regular quarterly cash dividends of $.05
per Share prior to the date hereof) or any redemption, purchase or other
acquisition by the Company of any of its securities; (iii) any entry into any
agreement or understanding between the Company or the Subsidiaries and any of
their respective executive officers or key employees providing for employment
of any such officer or key employee or any general or material increase in the
compensation (including without limitation deferred compensation), severance or
termination benefits payable or to become payable by the Company or the
Subsidiaries to any of their respective officers or key employees, or any
increase in any bonus, insurance, pension or other employee benefit plan,
payment or arrangement (including without limitation the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards) made to, for or with any such officer or key employee; (iv) any labor
dispute, which is or may be material to the Company and the Subsidiaries taken
as a whole; (v) other than in the ordinary course of business, any entry into,
or material modification of, any material commitment, agreement, or license or
transaction (including, without limitation, any borrowing or capital
expenditure or sale of assets); (vi) any change in any significant accounting
methods, principles or practices of the Company; (vii) any damage, destruction
or loss (whether or not covered by insurance) with respect to any property or
asset of the Company or any Subsidiary having or which could reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (viii) any revaluation by the Company of any material asset (including,

17
<PAGE> 21

without limitation, any writing down of the value of inventory or writing off
of notes or accounts receivable), other than in the ordinary course of business
consistent with past practice, or (ix) any failure by the Company to revalue
any material asset in accordance with generally accepted accounting principles
consistent with past practice.

(i) Compliance. Neither the Company nor any Subsidiary is in conflict
with, or in default or violation of (a) any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or affected, or (b)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound or affected, except for any
such conflicts, defaults or violations that would not, individually or in the
aggregate, have a Company Material Adverse Effect.

(j) Certificate of Incorporation and By-Laws. The Company has
heretofore made available to Purchaser a complete and correct copy of the
Certificate of Incorporation and the By-Laws, each as amended to date, of the
Company and each Subsidiary. Such Certificates of Incorporation and By-Laws
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any provision of its Certificate of Incorporation or By-Laws.

(k) Employee Benefit Plans/ERISA.

(i) Except as disclosed on Schedule 3.02(k) hereto, no
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") which (a) is
maintained for, or to which contributions have been made on behalf of,
employees ("Employees") of the Company of any current or former corporation,
person or trade or business which is a member of a group which is under common
control with the Company, or together with the Company, is treated as a single
employer, within the meaning of Sections 4 14(b)-(o) of the Code or Sections
4001(a) and (b) of ERISA (an "ERISA Affiliate") or (b) has at any time within
the preceding three (3) years (or six (6) years for the purposes of Section
4069 of ERISA) been maintained for, or to which contributions have been made on
behalf of, employees of the Company or any ERISA Affiliate (an "Employee
Benefit Plan"), exists or has ever existed.

(ii) Except as disclosed on schedule 3.02(k) hereto, none of
the Employee Benefit Plans is or was a

<PAGE> 22

"multiemployer plan" as defined in Section 4001(a)(3) of ERISA. Neither the
Company nor any ERISA Affiliate is a participating employer in any Employee
Benefit Plan in which more than one employer makes contributions as described
in Sections 4063 and 4064 of ERISA.

(iii) Except as disclosed on Schedule 3.02(k) hereto, neither
the Company nor any ERISA Affiliate has any contingent liability with respect to
any post-retirement benefit under any Employee Benefit Plan which is a welfare
benefit plan as defined in Section 3(1) of ERISA (a "Welfare Plan"), other than
liability for health plan continuation coverage described in Part 6 of Title I
of ERISA.

(iv) Except as disclosed on Schedule 3.02(k) hereto, none of
the Employee Benefit Plans is a severance plan, arrangement or program, and
none of the Employee Benefit Plans provides for compensation or benefits after
a termination of employment with the Company or any ERISA Affiliate for any
reason. Except as set forth on Schedule 3.02(k) hereto, the consummation of the
transactions contemplated by this Agreement will not directly (or indirectly
upon a termination of employment): (i) entitle any Employee to severance pay,
unemployment compensation or any other payment or (ii) accelerate the timing of
any payment or the vesting of any rights or increase the amount of any
compensation due any Employee.

(v) The Company has given to the Purchaser true and complete
copies of all the following: each Employee Benefit Plan and related trust
agreement (including all amendments to such Employee Benefit Plan or trust)
which the Company or any ERISA Affiliate maintains or is committed to
contribute to as of the date hereof and the most recent summary plan
description, actuarial report, determination letter issued by the Internal
Revenue Service and Form 5500 filed in respect of each such Employee Benefit
Plan for the past three (3) years.

(vi) Each Employee Benefit Plan complies, in both form and
operation in all material respects, with its terms, ERISA and the Code,
including, without limitation, Code Section 4980B, and no condition exists or
event has occurred with respect to any such plan which would result in the
incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. Neither the Company nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") which remains
outstanding other than the payment of premiums, and there are no premiums which
have become due which are unpaid. Neither the Company nor any ERISA Affiliate
has engaged in any

19
<PAGE> 23

transaction which could subject it to any material liability under Section
4069 or Section 4212(c) of ERISA. Each Employee Benefit Plan, related trust
agreement, arrangement and commitment of each of the Company and any ERISA
Affiliate is legally valid and binding in full force and effect. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter for "TRA" (as defined in Rev.
Proc. 93-39) from the IRS or has filed for such a determination letter within
the remedial amendment period, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. To the knowledge of
the Company, nothing has occurred or is expected to occur that would adversely
affect the qualified status of the Employee Benefit Plan or any related trust
subsequent to the issuance of such determination letter. To the knowledge of
the Company, no Employee Benefit Plan is being audited or investigated by any
government agency or subject to any pending or threatened claim or suit (other
than for ordinary claims for benefits).

(vii) Each employee pension benefit plan that is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is maintained either (a) by the Company or any ERISA Affiliate
for employees of the Company or such ERISA Affiliate or (b) pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and, with respect to either (a) or (b), the
Company or any ERISA Affiliate is then making or accruing an obligation to make
contributions or has within the preceding three (3) plan years made
contributions ("Pension Plan") currently meets the minimum funding standard of
Section 302 of ERISA and Section 412 of the Code (without regard to any funding
waiver). Except as disclosed on Schedule 3.02(k) hereto, all contributions or
payments due and owing as required by Section 302 of ERISA, Section 412 of the
Code or the terms of any Pension Plan have been made by the due date for such
contributions or payments. Except as disclosed on Schedule 3.02(k) hereto, with
respect to each Pension Plan, the market value of assets (exclusive of any
contribution due to the Pension Plan) equals or exceeds the present value of
benefit liabilities as of the latest actuarial valuation date for such plan
(but not prior to 12 months prior to the date hereof), determined on the basis
of a shutdown of the company in accordance with actuarial assumptions used by
the PBGC in single-employer plan terminations and since its last valuation
date, there have been no amendments to such plan that materially increased the
present value of accrued benefits nor any other material adverse changes in the
funding status of such plan. Neither the Company nor any ERISA Affiliate is
required to provide security to a Pension Plan pursuant to Section 307 of ERISA
or Section 401(a)(29) of the Code.

20
<PAGE> 24

(viii) Neither the Company nor any ERISA Affiliate nor any
fiduciary of any Employee Benefit Plan has engaged in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code that will have a Company
Material Adverse Effect.

(ix) No Termination Event has occurred or is reasonably
expected to occur. A "Termination Event" means any of the following:

(1) a "Reportable Event" by the Company or any ERISA Affiliate
described in Section 4043 of ERISA and the regulations issued thereunder;
or

(2) the withdrawal of the Company or any ERISA Affiliate from
a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4068(f) of ERISA; or

(3) the distress termination of a Pension Plan, the filing of
a notice of intent to terminate a Pension Plan as a distress termination
or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or

(4) the institution of proceedings to terminate a Pension
Plan by the PBGC; or

(5) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; or

(6) the imposition of a lien pursuant to Section 412 of the
Code or Section 302 of ERISA.

(x) Except as disclosed on Schedule 3.02(k) hereto, there are
no agreements which will provide payments to any Company officer, employee,
shareholder or highly compensated individual which will be "parachute payments"
under Section 280G of the Code that are nondeductible to the payor of such
benefits and which will be subject to the tax under Section 4999 of the Code
for which any payor would have a material withholding liability.

(xi) Except as disclosed on Schedule 3.02(k) hereto, the
Stock Option Plans are the only plans, program or arrangement sponsored or
maintained by the Company or any ERISA Affiliate which provides stock options,
or any other form of compensation or benefits to Employees, based upon the
equity of the Company ("Equity-Based Compensation"). Other than as disclosed on

<PAGE> 25

Schedule 3.02(k) hereto, there are no existing grants of Equity-Based
Compensation held by Employees.

(xii) Except as disclosed on Schedule 3.02(k) hereto, none of
the options granted pursuant to the Stock Option Plans are "incentive stock
options" as defined under Section 422 of the Code.

(xiii) With respect to any Employee Benefit Plan which
provides for medical or health benefits for Employees (such plan or plans, the
"Medical Plans"), such plan or plans satisfy the nondiscrimination requirements
of Code Section 105(h).

(l) Labor Matters. Except as disclosed on Schedule 3.02(l) hereof,
(i) there are no controversies pending or, to the best knowledge of the
Company, threatened between the Company or any Subsidiary and any of their
respective employees, which controversies have or are reasonably likely to have
a Company Material Adverse Effect; (ii) except as set forth in Schedule 3.02(1)
hereto, neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the best knowledge of the
Company, are there nor have there been during the five (5) years prior to the
date hereof, any activities or proceedings of any labor union to organize any
such employees; (iii) neither the Company nor any Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract which breach, failure or grievance has or
is reasonably likely to have a Company Material Adverse Effect; (iv) there are
no unfair labor practice charges or complaints pending against the Company or
any Subsidiary before the National Labor Relations Board or any current union
representation questions involving employees of the Company or any Subsidiary
which charges, complaints or questions have or are reasonably likely to have a
Company Material Adverse Effect; and (v) there is no strike, slowdown, work
stoppage or lockout, or, to the best knowledge of the Company, threat of any
such action, by or with respect to any employees of the Company or any
Subsidiary.

(m) Tangible Property: Real Property and Leases.

(1) The Company and each Subsidiary have sufficient title to all
their tangible properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as, individually or in the aggregate, would not have a Company
Material Adverse Effect.

22
<PAGE> 26

(2) Each parcel of real property owned or leased by the Company or
any Subsidiary (i) is owned or leased free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind
(collectively, "Liens"), other than (A) Liens for current taxes and assessments
not yet past due, (B) workmen's, repairmen's, warehousemen's and carriers'
Liens arising in the ordinary course of business of the Company or such
Subsidiary consistent with past practice, and (C) all matters of record, Liens
and other imperfections of title and encumbrances which, individually or in the
aggregate, would not have a Company Material Adverse Effect (collectively,
"Permitted Liens"), and (ii) no material portion of which is either subject to
any governmental decree or order to be sold or is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefor, nor, to the best knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.

(3) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring annual rental payments in excess of $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been otherwise modified or amended, the Company is in possession
of such leased real property, and there exists no default under any such lease
by the Company or any Subsidiary, nor any event which with notice or lapse of
time or both would constitute a default thereunder by the Company or any
Subsidiary, except as, individually or in the aggregate, would not have a
Company Material Adverse Effect.

(n) Trademarks, Patents and Copyrights. The Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, trademarks, trade names, trade dress, copyrights, servicemarks, trade
secrets, applications for trademarks and for servicemarks, mask works, know-how
and other proprietary rights and information used or held for use in connection
with the business of the Company and the Subsidiaries as conducted since June
30, 1995, as currently conducted or as contemplated to be conducted and the
Company is unaware of any assertion or claim challenging the validity of any of
the foregoing, which, individually or in the aggregate, is reasonably likely to
have a Company Material Adverse Effect. The conduct of the business of the
Company and the Subsidiaries as conducted since June 30, 1995, as currently
conducted and as contemplated to be conducted did not, does not and will not
infringe in any way with any patent, license, trademark, trade dress, trade
name, service mark, mask work or copyright of any third party that,
individually or in the aggregate, is reasonably likely to have a Company
Material Adverse Effect. There are no infringements of any proprietary rights
owned by or licensed by or to the Company or any Subsidiary which, individually
or in the aggregate, is reasonably likely to have a Company

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<PAGE> 27

Material Adverse Effect. Neither the Company nor any Subsidiary has licensed or
otherwise authorized the use by any third party of any proprietary information
on terms or in a manner which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect.

(o) Taxes. (a) The Company and the Subsidiaries (i) have filed or
caused to be filed with the appropriate taxing authorities on a timely basis
all federal Tax Returns (as hereinafter defined), all required state income Tax
Returns and all other Tax Returns which are required to have been filed, and
such Tax Returns are true, correct and complete in all material respects, and
(ii) have paid on a timely basis or have made adequate provision on their
balance sheet for all Taxes (as hereinafter defined) related to such Tax
Returns and the periods covered thereby. Except as disclosed on Schedule
3.02(o) hereto, there are no material liens for Taxes upon the assets of the
Company and the Subsidiaries, except liens for Taxes not yet due. Except as
disclosed on Schedule 3.02(o) hereto, neither the Company nor any Subsidiary
has received a notice of any pending audits, actions, proceedings,
investigations or claims with respect to any Taxes payable by or asserted
against the Company and the Subsidiaries, which if resolved adversely would be
material. Except as disclosed on Schedule 3.02(o) hereto, neither the Company
nor any Subsidiary is or has been a member of any affiliated, consolidated,
combined or unitary group for Tax purposes in any jurisdiction. Except as
disclosed on Schedule 3.02(o) hereto, no claim has ever been made by a
jurisdiction where the Company or any of the Subsidiaries does not pay Taxes or
file Tax Returns that such entity may be subject to material Taxes in such
jurisdiction for any period beginning after December 31, 1989. Except as
disclosed on Schedule 3.02(o) hereto, the taxable years or periods for the
assessment of federal income tax of the Company and the Subsidiaries (including
assessments relating to consolidated federal income tax returns, if any, that
include the Company or any of the Subsidiaries) are closed either by agreement
with the Internal Revenue Service or by operation of the applicable statute of
limitations for all taxable periods through 1993. Except as set forth in
Schedule 3.02(o) hereto, the taxable years or periods hereto, the taxable years
or periods for the assessment of state and local income tax of the Company and
the Subsidiaries (including assessments relating to consolidated, combined or
unitary Tax Returns, if any, that include the Company or any Subsidiary) are
closed either by agreement with the appropriate taxing authority or by
application of the applicable statute of limitations for all periods through
1993. Except as disclosed on Schedule 3.02(o) hereto, the Company and the
Subsidiaries are not and have not been

<PAGE> 28

subject to any material tax in any jurisdiction outside the United States of
America. Except as disclosed on Schedule 3.02(o) hereto, no agreements
relating to allocation or sharing of Taxes exists among the Company and the
Subsidiaries or among the Company and any of its stockholders. Except as
disclosed on Schedule 3.02(o) hereto, there are no outstanding waivers or
comparable consents or extensions given by the Company or the Subsidiaries
regarding the application of the statute of limitations with resect to any
Taxes or Tax Returns. Except as disclosed on Schedule 3.02(o) hereto, neither
the Company nor any Subsidiary has filed a consent pursuant to Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a Section 341(f) asset (as such term is defined in Section
341(f)(4) of the Code). Except as disclosed on Schedule 3.02(o) hereto, there
is no contract, agreement, plan or arrangement that individually or
collectively could give rise to the payment by the Company or the Subsidiaries
of any amount that would not be deductible by reason of Section 280G of the
Code. Except as disclosed on Schedule 3.02(o) hereto, neither the Company nor
any Subsidiary has any outstanding Corporate Acquisition Indebtedness as such
term is used in Code Section 279(b).

(b) For purposes of this Agreement, (i) the term "Taxes" shall mean
all taxes, charges, fees, levies or other like assessments, including without
limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, capital stock,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest, penalties or additional amounts
attributable to Taxes imposed by any governmental authority, and (ii) the term
"Tax Returns" shall mean all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes required to be
filed under the United States federal, state or local laws or any foreign laws.

(p) Environmental Matters. (i) For purposes of this Agreement, the
following terms shall have the following meanings: (I) "Hazardous Substances"
means (A) all substances, wastes, pollutants, contaminants and materials
regulated, or defined or designated as hazardous, extremely or imminently
hazardous, dangerous, or toxic under federal or state statutes and implementing
regulations, including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Atomic Energy Act, the Resource Conservation and
Recovery Act, the Clean Air Act and the Hazardous Materials Transportation Act;
(B)

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<PAGE> 29

any asbestos or asbestos-containing material, petroleum and petroleum products,
including crude oil and any fractions thereof, natural gas, natural gas
liquids, synthetic gas, polychlorinated biphenyls, radioactive substances, urea
formaldehyde or radon; or (C) any substance with respect to which a federal,
state or local agency requires environmental investigator monitoring, reporting
or remediation; and (II) "Environmental Law" means any applicable statute,
code, enactment, ordinance, rule, regulation, permit, consent, authorization,
judgment, order, common law rule (including without limitation the common law
respecting nuisance and tortious liability) or other requirement having the
force and effect of law, whether local, state, territorial or national, at any
time in force or effect relating to: (A) emissions, discharges, spills,
releases or threatened releases of Hazardous Substances or materials containing
Hazardous Substances into ambient air, surface water, ground water, water
courses, publicly or privately owned treatment works, drains, sewer systems,
wetlands, septic systems or onto land; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; (C) the regulation of storage tanks;
or (D) otherwise relating to pollution or the protection of human health,
safety or the environment.

(ii) In each case when the failure to comply with this Section
3.02(p)(ii) would result in a Company Material Adverse Effect, (I) neither the
Company nor any Subsidiary has violated or is in violation of any Environmental
Law; (II) the Company and each Subsidiary has all permits, licenses and other
authorizations required under any Environmental Law and the Company and each
Subsidiary has always been and is in compliance with their requirements; (III)
no Hazardous Substances have been used, stored, manufactured, treated or
processed on or transported to or from, the property owned or leased by the
Company or any Subsidiary except as necessary to conduct the business of the
Company and the Subsidiaries, and in compliance with all Environmental Laws;
(IV) there has been no disposal, release or threatened release of Hazardous
Substances from or to the property owned or leased by the Company or any
Subsidiary; (V) none of the properties owned or leased by the Company or any
Subsidiary (including, without limitation, soils and surface and ground waters)
are contaminated with any Hazardous Substance; (VI) neither the Company nor any
Subsidiary is liable for any off-site contamination and neither the Company nor
any Subsidiary has transported or arranged for the transportation of any
Hazardous Substances to any location that is listed or proposed for listing on
the National Priorities List or on the CERCLIS or any analogous state list; and
(VII) neither the Company nor any Subsidiary has received nor reasonably
expects to receive any notice, letter, citation, order, warning, complaint,
inquiry, claim or demand alleging or asserting a violation of or

26
<PAGE> 30

potential responsibility under any Environmental Law or a release or threatened
release of any Hazardous Substances at, from or onto the properties. As to
leased properties for the time period prior to occupancy or use by the Company
or any Subsidiary, Subparagraphs (III), (IV) and (V) herein are to the
knowledge of the Company and its Subsidiaries.

(iii) Subject to the same qualification that a failure to comply
would result in a Company Material Adverse Effect, with respect to each of the
former operations or properties owned or operated by the Company or any of the
Subsidiaries each of the representations and warranties set forth in Section
3.02(p)(ii) is true and correct as to or concerning activities of the Company
or any Subsidiary during the period of such ownership or operation.

(q) Material Contracts. Each contract or agreement to which the Company or
any of the Subsidiaries is a party that is material to the Company or any
Subsidiary (a "Material Contract"), including, but not limited to, any
contracts or agreements (i) involving payments to or from the Company or any
Subsidiary in excess of $500,000, (ii) with the Government of the United States
of America or any department or instrumentality thereof or (iii) containing a
provision purporting to limit the ability of the Company to compete in any line
of business, with any person, in any geographic area or during any time, is in
full force and effect and is enforceable against the parties thereto in
accordance with its terms and no condition or state of facts exists that, with
notice or the passage of time, or both, could constitute a material default by
the Company or any Subsidiary or, to the best knowledge of the Company, any
third party under such Material Contracts. The Company or each applicable
Subsidiary has duly complied in all material respects with the provision of
each Material Contract to which it is a party.

(r) Absence of Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liabilities or obligations of any kind, whether absolute,
accrued, asserted or unasserted, contingent or otherwise, which would have been
required to be recorded on a balance sheet prepared as of April 30, 1996, or as
disclosed in the notes thereto, in accordance with generally accepted
accounting principles consistently applied, except for liabilities, obligations
or contingencies (a) which are accrued or reserved against in the audited
consolidated balance sheet of the Company as of June 30, 1995 contained in the
1995 10-K or reflected in the notes thereto, (b) which were disclosed in the
Commission Filings filed with the Commission after the 1995 1O-K, (c) which
arise under this Agreement or the Stockholders Agreement or the transactions
contemplated hereby or are otherwise expressly

27
<PAGE> 31
disclosed in this Agreement or any Schedule hereto, or (d) which, individually
or in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect.

(s) Insurance. There is no default by the Company or any Subsidiary with
respect to any provision contained in any insurance policy maintained by the
Company or any Subsidiary, and there has not been any failure to give any
notice or present any claim under any such policy in a timely fashion or in the
manner or detail required by the policy, except for defaults or failures which,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect.

(t) Opinion of Financial Advisor. The Company has received the written
opinion of Goldman Sachs to the effect that the consideration to be received by
the stockholders of the Company pursuant to the Offer and the Merger is fair to
such stockholders, a copy of which opinion has been delivered to Purchaser and
will be included in the Schedule 14D-9 and the Proxy Statement.

(u) Affiliate Transactions. Except for employment relationships with
executive officers and except as set forth on Schedule 3.02(u) hereto, neither
the Company nor any Subsidiary is a party to any transaction (including,
without limitation, the purchase or sale of any property or service) with, or
involving the making of any payment or transfer to, any Affiliate (as defined
below) other than the Company or a Subsidiary. Except for employment
relationships with executive officers and except as set forth on Schedule
3.02(u) hereto, all of such transactions shall be terminated and be of no
further legal force or effect, and neither the Company nor any Subsidiary shall
have any obligation or liability thereunder, from and after the Effective Time.
"Affiliate" of any person means any other person directly or indirectly
controlling, controlled by or under common control with such person. A person
shall be deemed to control another person if the controlling person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled person,
whether through ownership of stock, by contract or otherwise.

(v) Use of Name. The Company has the legal right to use the name "Masland"
and each derivative thereof in each jurisdiction where the Company and each
Subsidiary conduct business. The use of such name by the Company and/or any
Subsidiary does not conflict with or infringe on the rights of any other
person, and the Company

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<PAGE> 32

is not aware of any claim or written notice from any person to such effect.

ARTICLE IV

COVENANTS

4.01 Proxy Statement. As promptly as practicable after expiration of the
Offer, the Company shall, if required by applicable law or otherwise deemed
advisable by Purchaser, file with the Commission under the Exchange Act, and
shall use all reasonable efforts to have cleared by the Commission, and as
promptly as practicable after expiration of the Offer shall mail to its
stockholders, a proxy statement or information statement, as appropriate (the
"Proxy Statement"), with respect to the Special Meeting (as such term is
defined in Section 4.02). Each of Purchaser, Sub and the Company represents
that the written information supplied or to be supplied for inclusion by
Purchaser, Sub or the Company, respectively, in the Proxy Statement will, at
the times when the definitive Proxy Statement is filed with the Commission and
when it is first mailed to stockholders of the Company, not contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and each of
Purchaser, Sub and the Company agrees promptly to correct any such information
provided by them which shall have become false or misleading in any material
respect and take all steps necessary to cause the Proxy Statement as so
corrected to be filed with the Commission and mailed to stockholders of the
Company as and to the extent required by applicable law. The Company agrees
that the Proxy Statement shall comply as to form in all material respects with
the provisions of applicable law. The Proxy Statement shall contain the
recommendation of the Board in favor of this Agreement and the Merger;
provided, however that nothing in this sentence shall require the Board to act,
or refrain from acting, in any manner which, in the opinion of independent
legal counsel for the Company (who may be the Company's regularly engaged
independent legal counsel), would conflict with the proper discharge of their
fiduciary duties to stockholders under applicable law.

4.02 Meeting of Stockholders of the Company. Promptly after expiration of
the Offer, the Company shall take all action necessary, in accordance with the
Delaware Law and its Certificate of Incorporation and By-Laws, to convene a
meeting of its Stockholders (the "Special Meeting") as promptly as practicable
to consider and vote on this Agreement and the Merger. The Company shall, to
the extent the Proxy Statement has been filed with, and

29
<PAGE> 33

cleared by, the Commission, solicit from stockholders of the Company proxies in
favor of the approval and adoption of this Agreement and the Merger and to take
all other action necessary or, in the reasonable judgment of Purchaser, helpful
to secure a vote of Stockholders in favor of this Agreement and the Merger;
provided, however, that nothing in this sentence shall require the Board to act,
or refrain from acting, in any manner which, in the opinion of independent legal
counsel for the Company (who may be the Company's regularly engaged independent
legal counsel), would conflict with the proper discharge of their fiduciary
duties to stockholders under applicable law. At the Special Meeting, Purchaser
shall vote, or cause to be voted, all of the Shares then owned by Purchaser (or
any subsidiary of Purchaser) in favor of this Agreement and the Merger.

4.03 Merger Without Meeting of Stockholders. The foregoing to the
contrary notwithstanding, in the event that Purchaser and Sub or any other
wholly-owned subsidiary of Purchaser shall acquire in the aggregate at least
90% of the outstanding Shares, the parties hereto agree, at the request of
Purchaser, to take all necessary and appropriate action to cause a merger of
the Company and Sub to become effective without a meeting of Stockholders of
the Company, in accordance with Section 253 of the Delaware Law.

4.04 Interim Operations. During the period from the date of this
Agreement to the earlier of the Effective Time or until Purchaser's designees
constitute a majority of the members of Company's Board under Section 1.03(a),
except as specifically contemplated by this Agreement or otherwise as consented
to or approved in writing by Purchaser:

(a) the business of the Company and each of the Subsidiaries shall be
conducted only in, and the Company and each of its Subsidiaries shall not take
any action except in, the ordinary and usual course of business and consistent
with past practice;

(b) neither the Company nor any of the Subsidiaries shall make or
propose any change or amendment in its charter or By-Laws or the Rights
Agreement;

(c) neither the Company nor any of the Subsidiaries shall (i) issue
or sell, or authorize the issuance or sale of, any shares of its capital stock
or any of its other securities or issue any securities convertible into or
exchangeable for, or options, warrants to purchase, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating to, or enter
into any contract, understanding or arrangement with respect to the issuance
of, any shares of its capital stock or any of its other

30
<PAGE> 34

securities, or enter into any arrangement or contract with respect to the
purchase or voting of shares of its capital stock or adjust, split, combine or
reclassify any of its securities, or make any other changes in its capital
structure; provided that the Company may issue shares of its Common Stock
pursuant to the terms of vested and currently exercisable Company Stock Options
upon the exercise of such Common Stock Options or (ii) except as contemplated
by Section 6.07, amend, waive or otherwise modify any of the terms of any Stock
Option Plan or Company Stock Option;

(d) the Company shall not declare, pay or make any dividend or other
distribution or payment with respect to, or purchase, redeem or otherwise
acquire any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as stockholders, except for the regular
quarterly dividend of $.05 per share declared on May 9, 1996;

(e) the Company shall, and shall cause the Subsidiaries to, use all
reasonable efforts to preserve intact the business organization of the Company
and each of the Subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the good will of those
having business relationships with it and the Subsidiaries;

(f) neither the Company nor any of the Subsidiaries shall take any
action with respect to the grant of any severance or termination pay (otherwise
than pursuant to written plans of the Company or any of the Subsidiaries in
effect on the date hereof) or with respect to any increase of benefits payable
under its written plans providing for severance or termination pay in effect on
the date hereof;

(g) neither the Company nor any of the Subsidiaries shall (except for
salary increases or other employee benefit arrangements in the ordinary course
of business consistent with past practice that do not result in a material
increase in benefits or compensation expense to the Company or any Subsidiary
or pursuant to collective bargaining agreements as presently in effect) adopt
or amend any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit or welfare of
any Employee or increase in any manner the compensation or fringe benefits of
any Employee or pay or grant any benefit not required by any existing plan or
arrangement;

(h) except with respect to transactions between and among the
Company and any of the Subsidiaries or the endorsement of negotiable
instruments in the ordinary course of its business,

31
<PAGE> 35

neither the Company nor any of the Subsidiaries shall incur or assume any
indebtedness for money borrowed (other than borrowings in the ordinary course
of business) or guarantee any such indebtedness (other than any guaranty of
Subsidiary indebtedness in the ordinary course of business) or the obligations
of any person;

(i) the Company shall not and shall not permit any Subsidiary to pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted, unasserted, contingent or otherwise), other than payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practices, pursuant to existing contractual arrangements or as
required by law;

(j) except in the ordinary course of business consistent with past
practice or in the case of obsolete or redundant assets, or those requiring
replacement, the Company shall not and shall not permit any Subsidiary to sell,
lease or otherwise dispose of any of its assets;

(k) the Company shall not and shall not permit any Subsidiary to
acquire (for cash, shares of stock or other consideration) (including, without
limitation, by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership, other business organization or any division thereof
or the assets thereof or any other assets;

(l) the Company shall not and shall not permit any Subsidiary to
take any action, other than reasonable actions in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures;

(m) the Company shall not and shall not permit any Subsidiary to
authorize, recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation or dissolution of the Company or any of its
Subsidiaries:

(n) the Company shall not and shall not permit any Subsidiary to
make any material tax elections or settle or compromise any material income tax
liability;

(o) other than in the ordinary course of business and consistent
with past practice, the Company shall not and shall not permit any Subsidiary
to waive any material rights or make any payment, direct or indirect, of any
material liability of the Company or any of the Subsidiaries before the same
comes due in accordance with its terms;

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<PAGE> 36

(p) the Company shall not and shall not permit any Subsidiary to
fail to maintain its existing material insurance coverage in effect or, in the
event any such coverage shall be terminated or lapse, to the extent available
at reasonable cost, procure substantially similar substitute insurance policies
which in all material respects are in at least such amounts and against such
risks as are currently covered by such policies;

(q) the Company shall not and shall not permit any Subsidiary to
enter into any new collective bargaining agreement or any successor collective
bargaining agreement; and

(r) the Company shall not and shall not permit any Subsidiary to
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.

4.05 Appraisal Rights. The Company shall give Purchaser prompt notice of
any demands received by the Company for appraisal of Shares, and Purchaser
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not settle or compromise any claim
for appraisal rights prior to the Effective Time without the prior written
consent of Purchaser.

4.06 Additional Agreements. (a) Upon reasonable notice the Company shall,
and shall cause each of the Subsidiaries to, afford Purchaser and Sub and their
respective officers, employees and authorized representatives reasonable access
during normal business hours throughout the period prior to the Effective Time
to all of its properties, books, contracts, commitments, records, tax records
and accountants' working papers. During such period, the Company shall, and
shall cause each of the Subsidiaries to, furnish promptly to Purchaser (i) a
copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws and (ii) all
such other information concerning its business, properties and personnel as
Purchaser may reasonably request and which is customarily prepared by the
Company or is in the Company's possession, provided that no investigation
pursuant to this Section shall affect or be deemed to modify any
representations or warranties made in this Agreement or the conditions to the
obligations of Purchaser and Sub to accept Shares pursuant to the Offer or the
parties hereto to consummate the Merger under this Agreement.

(b) Subject to the terms and conditions herein provided, each of the
parties hereto agrees, subject to its legal obligations, to use all reasonable
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 the

<PAGE> 37

transactions contemplated by this Agreement, including using all reasonable
efforts to (i) obtain all necessary waivers, consents and approvals and effect
all necessary registrations and filings, including, but not limited to, (a)
filings under the HSR Act, including responses to requests for additional
information, and (b) submissions of information requested by any Governmental
Entity and (ii) rectify any event or circumstance which would impede
consummation of the transactions contemplated hereby.

No Solicitation (a) From and after the date hereof until the termination of
this Agreement the Company shall not, and shall cause each of its Subsidiaries
and its and their respective officers, directors, employees, representatives,
agents and affiliates (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries) not
to, (i) directly or indirectly, invite, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance), any
inquiries with respect to or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or (ii) enter into or maintain or continue discussions or negotiations with any
person or entity in furtherance of such inquiries or to obtain an Acquisition
Proposal or (iii) agree to endorse any Acquisition Proposal. Notwithstanding the
foregoing, nothing contained herein shall prohibit the Board from furnishing
information to, or entering into discussions or negotiations with, any person or
entity that makes an unsolicited written, bona fide Acquisition Proposal or,
after payment of the Termination Fee as described in Section 6.03, endorsing
such an Acquisition Proposal, if and only to the extent that, (A) the Board,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board to comply
with its fiduciary duties to its stockholders under applicable law, and (B)
prior to taking such action, the Company receives from such person or entity an
executed confidentiality agreement on terms no less favorable to the Company
than the Confidentiality Agreement (excluding the standstill provisions
thereof). For purposes of the Agreement, "Acquisition Proposal" shall mean any
of the following (other than the transactions between the Company and Purchaser
and Sub contemplated by this Agreement): (i) any merger, consolidation, share
exchange, recapitalization, business combination, or other similar transaction
involving the Company or its Subsidiaries (other than business combinations or
similar transactions involving only foreign Subsidiaries); (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets of the Company and its Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or

<PAGE> 38

exchange offer for 20% or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Company represents that neither it, its Subsidiaries nor, to its
knowledge, any of its stockholders is a party to or bound by any agreement with
respect to an Acquisition Proposal. In the event that the Company receives or
becomes aware of any Acquisition Proposal, the Company will promptly notify
Purchaser in writing of such communication, of the identity of the person or
entity making such Acquisition Proposal and of the terms and conditions of such
Acquisition Proposal; provided, however, that the Company shall not be required
to disclose the identity of the person or entity making the Acquisition Proposal
or the terms and conditions of such Acquisition Proposal if the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel) determines in
good faith that nondisclosure would be necessary for the Board to comply with
its fiduciary duties to its stockholders under applicable law.

4.08 Certain Litigation. The Company agrees that it will not settle any
litigation commenced after the date hereof against the Company or any of its
directors by any stockholder of the Company relating to the Offer, the Merger or
this Agreement, without the prior written consent of Purchaser. In addition, the
Company will not voluntarily cooperate with any third party which may hereafter
seek to restrain or prohibit or otherwise oppose the Offer or the Merger and
will cooperate with Purchaser and Sub to resist any such effort to restrain or
prohibit or otherwise oppose the Offer or the Merger, unless the Board
determines in good faith, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel) that failing so to cooperate with such third party or
cooperating with Purchaser or Sub, as the case may be, would constitute a breach
of the Board's fiduciary duties to stockholders under applicable law.

4.09 Notice of Certain Events. Each party shall promptly notify the other
parties of:

(i) Any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;

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<PAGE> 39

(ii) Any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and

(iii) Any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or involving
or otherwise affecting any party hereto which relates to the consummation of
the transactions contemplated by this Agreement.

4.10 Confidentiality. (a) In addition to, and not in limitation of, that
certain Confidentiality and Standstill Agreement between Purchaser and the
Company dated as of March 14, 1996 (the "Confidentiality Agreement"), prior to
the consummation of the Offer and after any termination of this Agreement,
Purchaser and Sub will hold, and will use its best efforts to cause its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning the Company and the Subsidiaries furnished
to Purchaser and Sub in connection with the transactions contemplated by this
Agreement, including, without limitation, the stockholder lists furnished by the
Company pursuant to Section 1.02(b), except to the extent that such information
can be shown to have been (i) previously known on a non-confidential basis by
Purchaser or Sub, (ii) in the public domain through no fault of purchaser or Sub
or (iii) later lawfully acquired by Purchaser or Sub from sources other than the
Company; provided that Purchaser and Sub may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so
long as such persons are informed by purchaser and Sub of the confidential
nature of such information and are directed by Purchaser and Sub to treat such
information confidentially. Purchaser's and Sub's obligation to hold any such
information in confidence shall be satisfied if it exercises the same degree of
care with respect to such information as it would take to preserve the
confidentiality of its own similar information. If this Agreement is terminated
pursuant to Section 6.01 and Purchaser thereafter ceases to pursue the
acquisition of the Company, Purchaser and Sub will, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to destroy or deliver to the Company, upon
request, all documents and other materials, and all copies thereof, obtained by
Purchaser and Sub or on its behalf from the Company in connection with this
Agreement that are subject to such confidence.

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<PAGE> 40

(b) The Confidentiality Agreement shall terminate and be of no further
force or effect upon consummation of the Offer.

(c) From and after the time an Acquisition Proposal, as defined in
Section 4.07, is made to the Company, Purchaser and Sub shall not be prohibited
by the Confidentiality Agreement from taking any or all of the actions described
in the "standstill" provisions of the Confidentiality Agreement, in which case
the Confidentiality Agreement shall be deemed to be modified to the extent
required to permit Purchaser and Sub to engage in any and all such actions.

4.11 Credit Agreement Waiver. Purchaser will use its best efforts to
obtain from its lenders the Credit Agreement Waiver.

ARTICLE V

CONDITIONS

5.01 Conditions to the Obligations of Each Party. The obligations of each
party hereto to consummate the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions:

(a) Approval of Stockholders. The approval of the stockholders of the
Company referred to in Section 4.02 shall have been obtained, if required by
applicable law.

(b) HSR and Other Antitrust. Any applicable waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have expired
or been terminated and any approvals under any applicable Foreign Antitrust Laws
shall have been granted.

(c) Litigation, etc.. No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction in the
United States or by a Governmental Entity nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Entity shall be in
effect, which would prevent the consummation of the Merger.

5.02 Conditions to the Obligations of Purchaser and Sub. The obligations
of Purchaser and Sub to consummate the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the further condition that
Purchaser or any affiliate thereof shall have purchased all of the Shares
validly tendered and not withdrawn pursuant to the Offer; provided, that this
condition shall be deemed to be satisfied if the Offer shall have terminated
without

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<PAGE> 41

the purchase of such Shares thereunder and all of the conditions to the Offer
set forth in Exhibit A hereto were satisfied upon the expiration of the Offer.

ARTICLE VI

MISCELLANEOUS

6.01 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether or not it has been approved by the stockholders
of the Company:

(a) by the mutual written consent of the respective Boards of
Directors of the Company and Purchaser;

(b) by Purchaser or the Company, if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being
purchased thereunder; provided however, that Purchaser may not terminate this
Agreement pursuant to this Section 6.01(b) if Purchaser's termination of, or
failure to accept for payment or pay for any Shares tendered pursuant to, the
Offer does not follow the failure of one or more of the conditions set forth in
Exhibit A hereto to be satisfied or is otherwise in violation of the terms of
the Offer or this Agreement;

(c)(i) by Purchaser prior to the purchase of and payment for any
Shares pursuant to the Offer if there has been a material breach of any
representation or warranty set forth in this Agreement on the part of the
Company and (ii) by the Company prior to the purchase of and payment for any
Shares pursuant to the Offer if there has been a material breach of any
representation or warranty set forth in this Agreement on the part of Purchaser
or Sub;

(d)(i) by Purchaser if there has been a material breach of any
covenant or agreement set forth in this Agreement on the part of the
Company, which is incapable of being, or is not, cured (other than by mere
disclosure of the breach) within five days after written notice from the
Purchaser to the Company, and (ii) by the Company if there has been a material
breach of any covenant or agreement set forth in this Agreement on the part of
the Purchaser or Sub, which is incapable of being, or is not, cured (other than
by mere disclosure of the breach) within five days after written notice from
the Company to Purchaser of such breach;

(e) by either Purchaser or the Company if the Merger has not been
consummated on or before October 31, 1996, which date may

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<PAGE> 42

be extended by the mutual written consent of the Board of Directors of the
Company and the Board of Directors of Purchaser;

(f) (i) by the Company if the Offer has not been commenced within the
period of time required under the Exchange Act following the date hereof and
(ii) by the Purchaser if the Company has failed to mail the Schedule 14D-9 to
its stockholders on or prior to the date on which the Offer has been commenced
or failed to include in such Schedule 14D-9 when first mailed to stockholders
the approval and recommendations of the Board of the Offer and the Merger
required by Section 1.02(a) to be included in the Schedule 14D-9;

(g) by the Company or Purchaser if any permanent injunction or final
nonappealable order, decree or ruling issued by a court of competent
jurisdiction within the United States or Governmental Entity is in effect which
would prevent the consummation of the Merger;

(h) by the Company, if the Board modifies, in a manner adverse to
Purchaser, or withdraws its approval or recommendation of, the Offer or the
Merger referred to in Section 1.02(a) hereof, so long as the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines
in good faith that such action is necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law; or

(i) by Purchaser if (i) the Board modifies, in a manner adverse to
Purchaser, or withdraws its approval or recommendation of, the Offer or the
Merger referred to in Section 1.02(a) hereof, (ii) the Board shall have
recommended or accepted any Acquisition Proposal; (iii) the Board shall have
resolved to do any of the acts referred to in (i) or (ii); (iv) Purchaser shall
request that the Board reaffirm its approval or recommendation of the Offer or
the Merger and the Board shall fail to do so within ten business days after
such request; or (v) any corporation, partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act) other than Purchaser
or Sub or any of their respective subsidiaries shall have become the beneficial
owner of more than 20% of the outstanding shares other than for purposes of
arbitrage, but provided that such termination under (i) and (iv) (or under
(iii) as it relates to (i) only) above relates to actions of the Board which,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel), it has
determined in good faith are necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law, in which case the

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<PAGE> 43

effectiveness of such termination may not be prior to the later of (x) the
close of business immediately preceding the then scheduled termination date of
the Offer or (y) ten days following such modification or withdrawal, and then
only if the Board has not reinstated its affirmative recommendation or approval
of the Purchaser's Offer or the Merger within such period of time.

6.02 Liabilities in Event of Termination. In the event of any termination
of this Agreement pursuant to Section 6.01, the Company, Purchaser and Sub
shall have no obligation or liability to each other except as provided
in Sections 4.10 and 6.03, and except that nothing herein will release any
party from liability for any willful breach of this Agreement.

6.03 Fees and Expenses. (a) If (i) an Acquisition Proposal (as defined
in Section 4.07) is made prior to the termination of this Agreement
(other than a termination pursuant to Section 6.01(f)(ii), 6.01(h) or 6.01(i)),
and within nine months of such termination the Company shall have entered into
an agreement with respect to, approved, recommended or taken any affirmative
action to facilitate, an Acquisition Proposal, or any transaction constituting
an Acquisition Proposal is consummated, (ii) this Agreement is terminated
pursuant to Section 6.01(f)(ii) and an Acquisition Proposal exists, or (iii)
this Agreement is terminated pursuant to Section 6.01(h) or 6.01(i), then the
Company shall pay to Purchaser a fee equal to $10,000,000 in cash (the
"Termination Fee"). The Termination Fee shall be payable (x) in the case of
entering into an agreement with respect to an Acquisition Proposal or the
consummation of a transaction constituting an Acquisition Proposal as described
in clause (i) of this Section 6.03(a), upon the signing of a definitive
agreement relating to such Acquisition Proposal or, if no such agreement is
executed, then at the closing (and as a condition to the closing) of such
transaction constituting an Acquisition Proposal, (y) upon the occurrence of
any other event described in clause (i) of this Section 6.03(a) and (z) within
one business day of the termination of this Agreement upon any termination of
this Agreement under Sections 6.01(f)(ii), 6.01(h) or 6.01(i). The Company
acknowledges that the agreements contained in this Section 6.03 are an integral
part of the transactions contemplated by this Agreement.

(b) Except as specifically provided in Section 6.03(a), each party
shall bear all expenses incurred by it in connection with this Agreement and
the transactions contemplated hereby, including those incident to the
negotiation and preparation of this Agreement and to its performance of and
compliance with all agreements and conditions contained herein to be performed
or complied with by it.

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<PAGE> 44

(c) Except for the Company's fee engagement letter with Goldman Sachs
dated April 25, 1996, or as previously disclosed by a party to this Agreement
in writing to the other parties hereto, no broker, finder or investment banker
is entitled to a brokerage, finder's or other fee or commission in connection
with the Offer or the Merger or the transactions contemplated by this
Agreement. Such fees or other commissions payable by the Company and its
Subsidiaries shall not exceed the amount previously disclosed to Purchaser.

6.04 Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party which is, or whose stockholders are, entitled
to the benefits thereof. This Agreement may not be amended or supplemented at
any time, except by an instrument in writing signed on behalf of each party
hereto; provided, that after this Agreement has been approved by the
stockholders of the Company no such amendment shall reduce the amount or change
the form of consideration to be paid to the stockholders of the Company in the
Merger or alter or change any of the terms or conditions of this Agreement if
such alteration or change would adversely affect the stockholders of the
Company.

6.05 Officers' and Directors' Liability Insurance; Indemnification. (a)
After the Effective Time, or such earlier date as Purchaser acquires
control of the Company, Purchaser shall cause the Surviving Corporation to (i)
maintain the Company's current directors' and officers' insurance and
indemnification policy or an equivalent policy, subject to terms and conditions
no less advantageous, for all directors and officers of the Company on the date
hereof, for six years after the Effective Time to cover acts and omissions of
directors and officers of the Company occurring at or prior to the Effective
Time; provided that Purchaser shall not be required to pay an annual premium
for such insurance in excess of 300% of the last annual premium paid by the
Company prior to the date hereof, but in such case Purchaser shall purchase as
much coverage as possible for such amount and (ii) maintain in effect for six
years after the Effective Time provisions no less favorable to the indemnified
parties than those contained in the Certificate of Incorporation of the Company
on the date hereof (which shall be contained in the Certificate of
Incorporation of the Surviving Corporation) relating to the rights to
indemnification of officers and directors with respect to indemnification for
acts and omissions occurring at or prior to the Effective Time.

(b) This Section 6.05 is intended to benefit the Company, the
Surviving Corporation and each of the directors and officers of the
Company on the date hereof (each of whom shall be entitled to enforce this
Section 6.05 against the Purchaser or the

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<PAGE> 45

Surviving Corporation, as the case may be) and shall be binding on all
successors and assigns of the Purchaser and the Surviving Corporation.

6.06 Employee Benefit Plans. For a period ending no earlier than (i)
with respect to Employee Benefit Plans which are Pension Plans or
Welfare Plans (other than severance plans), the last day of the first plan year
beginning after the Effective Time, (ii) with respect to Employee Benefit Plans
which are cafeteria plans as defined in Section 125 of the Code, the last day
of the plan year during which the Effective Time occurs and (iii) one year from
the date of this Agreement with respect to any other employee benefits,
Purchaser agrees that after the Effective Time it shall cause the Surviving
Corporation to maintain all of the Company's and the Subsidiaries' existing
employee retirement benefit plans and other employee benefit plans or plans
providing benefits generally comparable thereto or provide compensation which
in the aggregate is substantially comparable thereto.

(b) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Surviving
Corporation of a post-Effective Time employment relationship of any term or
duration or on any terms other than those the Surviving Corporation may
establish. Employment of any of the Employees by the Surviving Corporation
shall be "at will" and may be terminated by the Surviving Corporation at any
time for any reason (subject to any legally binding agreement, applicable laws
or collective bargaining agreement). No provision of this Agreement shall
create any third-party beneficiary rights in any employee or former employee
(including any beneficiary or dependent thereof) of the Company or any of its
subsidiaries in respect of continued employment or resumed employment.

6.07 Stock Options. (a) At the Effective Time, each Company Stock Option
issued under the 1991 Stock Purchase and Option Plan, whether or not
then exercisable and whether or not then vested, at the election of the
optionee, shall be either cancelled or assumed and converted by Purchaser. If
cancelled, then each holder of a cancelled option shall be entitled to receive,
in consideration for the cancellation of such option, an amount in cash equal
to the product of (x) the number of Shares previously subject to such option
and (y) the excess, if any, of the Merger Consideration over the exercise price
per Share previously subject to such option. If assumed, each option shall be
amended to be exercisable into Purchaser's Common Stock (a "Substitute
Option"); provided, however, that the excess aggregate value of each option
following the substitution and assumption shall be the same as the excess

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<PAGE> 46

aggregate value of such outstanding option before the substitution and
assumption. The number of shares of Purchaser's Common Stock subject to such
Substitute Option and the exercise price thereunder shall be computed in
compliance with the requirements of Section 424(a) of the Code, and, except as
agreed in writing by Purchaser and the Company, such Substitute Option shall
not confer any additional rights upon the optionee and shall be subject to
substantially all of the other terms and conditions of the original option
granted by the Company to which it relates except in the case of an optionee
whose employment with the Company or its successor is terminated, other than
for cause, within one year following the Effective Time, for whom the exercise
period of the vested Substitute Option will be extended to a period of two
years. At the Effective Time, each Company Stock Option issued under the
Non-Employee Directors Stock Option Plan shall be cancelled in the manner
provided above, and each Company Stock Option issued under the 1993 Stock
Option Incentive Plan shall be assumed and converted into a Substitute Option
in the manner provided above.

(b) Prior to the Effective Time, the Company shall obtain any
consents or elections required or deemed necessary and the original Company
Stock Option agreements (i) for cancellation from holders of outstanding
Company Stock Options or (ii) to make any amendments to the terms of the Stock
Option Plans or Company Stock Option Agreements that, in the case of clause (a)
of this Section 6.07, are necessary to give effect to the transactions
contemplated hereby.

6.08 Representations, Warranties and Agreements. No representations and
warranties in this Agreement shall survive the purchase by Purchaser of any
Shares pursuant to the Offer. All representations, warranties and agreements
made by Purchaser or Sub in this Agreement shall be deemed to be made jointly
and severally by Purchaser and Sub. All agreements in this Agreement shall not
survive the Merger, except for the agreements contained in Sections 6.03 and
6.05 of this Agreement.

6.09 Public Statements. The Company, on the one hand, and Purchaser or
Sub, on the other, agree to consult with each other in issuing any press
release or otherwise making any public statement with respect to the
transactions contemplated hereby, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law or any listing agreement with any national securities exchange
(as advised by independent legal counsel (who may be the Company's regularly
engaged independent legal counsel)).

6.10 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties

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<PAGE> 47

hereto and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that Sub
may assign its rights and obligations hereunder to another wholly-owned
subsidiary of Purchaser without the consent of the other parties hereto.

6.11 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by delivery, by
facsimile transmission, or by registered or certified mail, first class postage
prepaid, return receipt requested, to the respective parties as follows:

If to the Company:

MASLAND CORPORATION
50 Spring Road
Carlisle, PA 17013
Attention: William J. Branch, Jr.
Chairman of the Board
Telephone: (717) 258-7214
Facsimile: (717) 258-7576

With a copy to:

Peter O. Clauss, Esquire
Clark, Ladner, Fortenbaugh & Young
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Telephone: (215) 241-1876
Facsimile: (215) 241-1857

If to Purchaser or Sub:

LEAR CORPORATION
21557 Telegraph Road
Southfield, MI 48034

Attention: Joseph F. McCarthy, Esquire
Telephone: (810) 746-1714
Facsimile: (810) 746-1677

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<PAGE> 48

With a copy to:

John L. MacCarthy, Esquire
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601-9703
Telephone: (312) 558-5876
Facsimile: (312) 558-5700

or to such other address as either party may have furnished to the other in
writing in accordance herewith. Any such notice, request, claim, demand or
other communication shall only be effective upon receipt.

6.12 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the substantive law of the State of
Delaware without giving effect to the principles of conflicts of laws thereof.
Each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any state or federal court located in the State of Delaware in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction or venue by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this Agreement in any
court other than a state or federal court sitting in the State of Delaware,
except as otherwise required by applicable law.

6.13 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

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<PAGE> 49

6.14 Integration. This Agreement constitutes the entire Agreement and
understanding among the parties hereto relating to the subject matter hereof and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof, including without limitation (i) the
Confidentiality Agreement, except as provided in Section 4.10, and (ii) the
Agreement to Negotiate Exclusively dated May 2, 1996 between the Company and the
Purchaser.

6.15 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.

6.16 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

6.17 No Third-Party Beneficiaries. Except for Section 6.05 (which is
intended to and shall confer upon such persons all rights and remedies by
reason of this Agreement as if such person was a party hereto), no provision of
this Agreement is intended to, or shall, confer any third-party beneficiary or
other rights or remedies upon any person other than the parties hereto.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first above
written.

LEAR CORPORATION

By: /s/ JH Vandenberghe
---------------------------

PA ACQUISITION CORP.

By: /s/ JH Vandenberghe
---------------------------

MASLAND CORPORATION

By: /s/ WJ Branch
---------------------------

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<PAGE> 50
EXHIBIT A

The capitalized terms used in this Exhibit have the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement, "Purchaser" shall be deemed to refer to PA
ACQUISITION CORP. and "Parent" shall be deemed to refer to LEAR CORPORATION.

Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), to pay for any Shares
(including the associated Rights) tendered, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any
Shares (including the associated Rights) tendered, and, except as otherwise
provided in the Merger Agreement, may amend or terminate the Offer (whether or
not any Shares (including the associated Rights) have theretofore been accepted
for payment) if, (i) prior to the expiration of the Offer, (A) the condition
that there shall be validly tendered and not withdrawn prior to the expiration
of the Offer a number of Shares which represents at least a majority of the
number of Shares outstanding on a fully diluted basis on the date of purchase
shall not have been satisfied (the "Minimum Condition") ("on a fully-diluted
basis" meaning, as of any date: the number of Shares outstanding, together with
Shares the Company is then required to issue pursuant to obligations
outstanding at that date under employee stock option or other benefit plans or
otherwise (assuming all options and other rights to acquire Shares are fully
vested and exercisable and all Shares issuable at any time have been issued),
including without limitation, pursuant to the Company Stock Options (defined in
Section 3.02(b) of the Merger Agreement)), (B) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, (C) all material regulatory and related approvals
shall not have been obtained on terms reasonably satisfactory to the Purchaser
or (D) the financial institutions (the "Banks") party to the Credit Agreement
dated as of August 17, 1995, as amended, among Parent, the Banks, Chemical Bank,
as Administrative Agent and the Managing Agents, Co-Agents and Lead Managers
named therein (the "Credit Agreement"), shall not have granted the Parent a
waiver (the "Credit Agreement Waiver") under the Credit Agreement permitting
the consummation of the Offer and the Merger (the "Credit Agreement Waiver
Condition"), or (ii) at any time after the date of the Merger Agreement and
before the time of payment for any such Shares (including the associated
Rights) (whether or not any Shares (including the associated Rights) have
theretofore been accepted for payment), any of the following conditions exists:

<PAGE> 51

(a) the Purchaser and the Company shall have reached a written
agreement that the Purchaser shall amend the Offer to terminate the Offer or
postpone payment for Shares pursuant thereto;

(b) there shall be instituted or pending any action or proceeding by
any Governmental Entity or before any court or Governmental Entity, (1)
challenging the acquisition by Parent or Purchaser of Shares or otherwise
seeking to restrain or prohibit the consummation of the Offer, the Merger or the
transactions contemplated by the Merger Agreement, (2) seeking to materially
restrict or prohibit Parent's or Purchaser's ownership or operation of all or a
material portion of its or the Company's business or assets, or to compel Parent
or Purchaser to dispose of or hold separate all or a material portion of its or
the Company's business or assets, as a result of the Offer or the Merger, which
in either case, in the sole judgment of Parent and Purchaser, might, directly or
indirectly, result in the relief sought being obtained or (3) which might
result, directly or indirectly, in any of the consequences set forth in clauses
(2) through (5) of paragraph (c) below;

(c) there shall have been any statute, rule, executive order, decree,
injunction, regulation or other order (whether temporary, preliminary or
permanent) enacted, promulgated, entered or issued or deemed applicable to the
Offer or the Merger, by any Governmental Entity or court, which, in the sole
judgment of Parent and Purchaser would, directly or indirectly, (1) materially
restrict or prohibit Parent's or Purchaser's ownership or operation of all or a
material portion of its or the Company's business or assets or compel Parent or
Purchaser to dispose of or hold separate all or a material portion of its or the
Company's business or assets as a result of the Offer or the Merger, (2) render
Parent or Purchaser unable to purchase or pay for some or all of the Shares
pursuant to the Offer or to consummate the Merger, or otherwise prevent
consummation of the Offer or the Merger, except for the waiting period
provisions of the HSR Act, (3) make such purchase, payment or consummation
illegal, (4) impose or confirm material limitations on the ability of Parent or
Purchaser effectively to acquire or hold, or to exercise full rights of
ownership of, any Shares purchased by it, including, without limitation, the
right to vote any Shares purchased by it on all matters (including the Merger
and the Merger Agreement) properly presented to the Company's stockholders, or
(5) otherwise materially adversely affect the condition (financial or
otherwise), results of operations, business, assets or liabilities of the
Company and its Subsidiaries taken as a whole (a "Company Material Adverse
Effect");

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<PAGE> 52

(d) there shall have occurred (1) any general suspension of, or
limitation on prices for, or trading in, securities on the New York Stock
Exchange, any national securities exchange or in the over-the-counter market,
(2) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (3) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (4) from the date of this Agreement through the
date of termination or expiration of the Offer, a decline of at least 25% in the
Standard & Poor's 500 Index, or (5) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;

(e) there shall have occurred a Company Material Adverse Effect, or
the Merger Agreement shall have been terminated in accordance with its terms;

(f) beneficial ownership of 20% or more of the outstanding Shares
shall have been acquired by another person or by a "group" as defined in Section
13(d)(3) of the Exchange Act other than for purposes of arbitrage;

(g) any of the representations and warranties of the Company contained
in the Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of such date, except (i) for
changes specifically permitted by the Merger Agreement, (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, and (iii) with respect to
those representations and warranties which are not qualified by materiality or a
similar qualification, in any case where such failures to be true and correct
would not, individually or in the aggregate, have a Company Material Adverse
Effect; or

(h) the Company shall not have performed or complied in all material
respects with all agreements and covenants required by the Merger Agreement to
be performed or complied with by the Company on or prior to the date of
consummation of the Offer, which, in the sole judgment of Parent and
Purchaser in any such case and regardless of the circumstances (including any
action by Parent or Purchaser) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payment for such Shares.

The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent and Purchaser regardless of the circumstances
giving rise to any such conditions or may be waived by Parent and Purchaser in
whole or in part at any

3
<PAGE> 53

time and from time to time in the sole discretion of each of Parent and
Purchaser. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. Any determination by Parent or Purchaser concerning the
events described herein will be final and binding upon all parties.

<PAGE> 1

EXHIBIT 12.1 -- COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS, EXCEPT RATIO OF EARNINGS TO FIXED CHARGES)

<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------
THREE MONTHS ENDED
--------------------- DECEMBER 31, JUNE 30,
MARCH 30, APRIL 1, ----------------------- ----------------------
1996 1995 1995 1994 1993 1993 1992 1991
---------- -------- ------ ------ ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income before provision for national income
taxes, minority interests in net income
(loss) of subsidiaries, equity (income)
loss of affiliates, and extraordinary
items...................................... $ 40.8 $ 30.3 $152.9 $114.6 $26.1 $28.4 $(6.5) $(20.3)
Fixed charges................................ 27.2 15.8 82.6 52.2 49.8 51.7 58.1 63.3
Distributed income of affiliates............. -- -- 1.3 0.9 1.0 -- -- --
Minority interest expense for majority-owned
subsidiaries with no fixed charges......... -- -- -- -- -- -- -- (0.4)
------ ------ ------ ------ ----- ----- ----- ------
Earnings..................................... $ 68.0 $ 46.1 $236.8 $167.7 $76.9 $80.1 $51.6 $ 42.6
------ ------ ------ ------ ----- ----- ----- ------
Interest expense............................. 24.4 14.2 75.5 46.7 45.6 47.8 55.2 61.7
Portion of lease expense representative of
interest(1)................................ 2.8 1.6 7.1 5.5 4.2 3.9 2.9 1.6
------ ------ ------ ------ ----- ----- ----- ------
Fixed Charges................................ $ 27.2 $ 15.8 $ 82.6 $ 52.2 $49.8 $51.7 $58.1 $ 63.3
------ ------ ------ ------ ----- ----- ----- ------
Ratio of Earnings to Fixed Charges........... 2.5x 2.9x 2.9x 3.2x 1.5x 1.5x -- --
====== ====== ====== ====== ===== ===== ===== ======
Fixed Charges in Excess of Earnings.......... $ -- $ -- $ -- $ -- $ -- $ -- $ 6.5 $ 20.7
====== ====== ====== ====== ===== ===== ===== ======
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA
THREE MONTHS PRO FORMA
ENDED YEAR ENDED
MARCH 30, DECEMBER 31,
1996 1995
------------ -------------
<S> <C> <C>
Income before provision for national income taxes, minority interests in net
income (loss) of subsidiaries, equity (income) loss of affiliates, and
extraordinary items......................................................... $ 47.4 $ 188.2
Fixed charges................................................................. 32.6 132.5
Distributed income of affiliates.............................................. 1.6 1.3
Minority interest expense for majority-owned subsidiaries with no fixed
charges..................................................................... -- --
------ -------
Earnings...................................................................... $ 81.6 $ 322.0
------ -------
Interest expense.............................................................. 29.3 122.5
Portion of lease expense representative of interest(1)........................ 3.3 10.0
------ -------
Fixed Charges................................................................. $ 32.6 $ 132.5
------ -------
Ratio of Earnings to Fixed Charges............................................ 2.5x 2.4x
====== =======
Fixed Charges in Excess of Earnings........................................... -- --
====== =======
</TABLE>

- -------------------------
(1) One-third of lease expense.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 6, 1996
included in Lear Corporation's Form 10-K for the year ended December 31, 1995,
and to all references to our firm included in this registration statement.

/s/ Arthur Andersen LLP

ARTHUR ANDERSEN LLP

Detroit, Michigan
June 11, 1996

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January 26, 1995
included in Lear Corporation's Form 8-K dated August 28, 1995, and to all
references to our firm included in this registration statement.

/s/ Arthur Andersen LLP

ARTHUR ANDERSEN LLP

Minneapolis, Minnesota
June 11, 1996