SCHWITZER INC, 8-K, 1995-02-28

SCHWITZER INC
8-K, 1995-02-28
MOTOR VEHICLE PARTS & ACCESSORIES

Previous: NUVEEN TAX EXEMPT UNIT TRUST SERIES 550, 497, 1995-02-28

Next: VAN KAMPEN MERRITT LIMITED TERM HIGH INCOME TRUST, NSAR-B, 1995-02-28

<PAGE>

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

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 25, 1995

SCHWITZER, INC.
(Exact Name of Registrant as Specified in Charter)

DELAWARE 1-10183 35-1764400
(State or other (Commission File Number) (IRS Employer Identification
Jurisdiction or No.)
Incorporation)

BREVARD ROAD, P.O. BOX 15075, ASHEVILLE, NORTH CAROLINA 28813
(Address of Principal Executive Office) (Zip Code)

Registrant's telephone number, including area code: (704) 684-4102

NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)

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

<PAGE>

ITEM 5. OTHER EVENTS

On February 25, 1995, Kuhlman Corporation, a Delaware corporation
("Kuhlman"), Spinner Acquisition Corp., a Delaware corporation and a wholly-
subsidiary of Kuhlman ("Acquisition"), and Schwitzer, Inc., a Delaware
corporation ("Schwitzer"), entered into an Agreement and Plan of Merger dated as
of February 25, 1995 pursuant to which Acquisition will be merged with and into
Schwitzer (the "Merger"). Consummation of the Merger is subject to certain
closing conditions, including the approval of the stockholders of Kuhlman and
the stockholders of Schwitzer.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(a) Financial Statements of Business Acquired

None.

(b) Pro Forma Financial Information

None

(10) Agreement and Plan of Merger among Kuhlman Corporation,
Spinner Acquisition Corp. and Schwitzer, Inc., dated as of
February 25, 1995.

(99) Press release of Schwitzer, Inc. dated February 27, 1995.

<PAGE>

SIGNATURES

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

SCHWITZER, INC.
(Registrant)

By: /s/ Gary G. Dillon
--------------------
Gary G. Dillon
Chairman, President and
Chief Executive Officer

Dated: February 25, 1995

-3-

<PAGE>

EXHIBIT INDEX

Exhibit No. Description Page
- - - - - ----------- ----------- ----

(10) Agreement and Plan of Merger among Kuhlman
Corporation, Spinner Acquisition Corp. and
Schwitzer, Inc., dated as of February 25, 1995.

(99) Press release of Schwitzer, Inc. dated February
27, 1995.

-4-

<PAGE>

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

AGREEMENT AND PLAN OF MERGER

AMONG

KUHLMAN CORPORATION

SPINNER ACQUISITION CORP.

AND

SCHWITZER, INC.

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

<PAGE>

TABLE OF CONTENTS

Page
----

ARTICLE I

THE MERGER. . . . . . . . . . . . . . . . 1

Section 1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Certificate of Incorporation, By-laws,
Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Conversion of Securities. . . . . . . . . . . . . . . . . . . . 2
Section 1.6 Parent to Make Certificates Available . . . . . . . . . . . . . 4
(a) Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . 4
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.7 Dividends; Transfer Taxes . . . . . . . . . . . . . . . . . . . 5
Section 1.8 No Fractional Securities. . . . . . . . . . . . . . . . . . . . 6
Section 1.9 Return of Exchange Fund . . . . . . . . . . . . . . . . . . . . 6
Section 1.10 Adjustment of Exchange Ratio . . . . . . . . . . . . . . . . . 6
Section 1.11 No Further Ownership Rights in Company Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.12 Closing of Company Transfer Books. . . . . . . . . . . . . . . 7
Section 1.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.14 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . 7

Section 2.1 Organization, Standing and Power. . . . . . . . . . . . . . . . 7
Section 2.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 Authority; Non-Contravention. . . . . . . . . . . . . . . . . . 9
Section 2.4 Parent SEC Documents. . . . . . . . . . . . . . . . . . . . . . 11
Section 2.5 Registration Statement and Proxy Statement/Prospectus . . . . . 12
Section 2.6 Absence of Material Adverse Change. . . . . . . . . . . . . . . 12
Section 2.7 Pooling of Interests; Reorganization. . . . . . . . . . . . . . 12
Section 2.8 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.9 No Violation or Infringement. . . . . . . . . . . . . . . . . . 13
Section 2.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.12 Parent Benefit Plans . . . . . . . . . . . . . . . . . . . . . 14
Section 2.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 14
Section 2.14 Title to Property. . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

-i-

<PAGE>

Page
----

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . 15

Section 3.1 Organization, Standing and Power. . . . . . . . . . . . . . . . 15
Section 3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.3 Authority; Non-Contravention. . . . . . . . . . . . . . . . . . 17
Section 3.4 Company SEC Documents . . . . . . . . . . . . . . . . . . . . . 18
Section 3.5 Registration Statement and Proxy
Statement/Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.6 Absence of Material Adverse Change. . . . . . . . . . . . . . . 19
Section 3.7 Pooling of Interests; Reorganization. . . . . . . . . . . . . . 19
Section 3.8 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.9 No Violation or Infringement. . . . . . . . . . . . . . . . . . 19
Section 3.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.12 Company Benefit Plans. . . . . . . . . . . . . . . . . . . . . 20
Section 3.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 21
Section 3.14 Title to Property. . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING SUB . . . . . . . 22

Section 4.1 Organization and Standing . . . . . . . . . . . . . . . . . . . 22
Section 4.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.3 Authority; Non-Contravention. . . . . . . . . . . . . . . . . . 22

ARTICLE V

COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . 23

Section 5.1 Conduct of Business Pending the Merger. . . . . . . . . . . . . 23
(a) Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Advice of Changes. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.3 Pooling of Interests; Reorganization. . . . . . . . . . . . . . 26
Section 5.4 Conduct of Business of Sub Pending the Merger . . . . . . . . . 26

ARTICLE VI

ADDITIONAL AGREEMENTS. . . . . . . . . . . . . 26

Section 6.1 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . 26
Section 6.2 Registration Statement and Proxy Statement. . . . . . . . . . . 27
Section 6.3 Access to Information . . . . . . . . . . . . . . . . . . . . . 28
(a) By Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) By the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 29

-ii-

<PAGE>

Page
----

Section 6.4 Compliance with the Securities Act and Pooling
Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.5 Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . . 30
Section 6.6 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.7 Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.8 Public Announcements. . . . . . . . . . . . . . . . . . . . . . 31
Section 6.9 Real Estate Transfer and Gains Tax. . . . . . . . . . . . . . . 31
Section 6.10 State Takeover Laws; Company Rights Agreement. . . . . . . . . 32
Section 6.11 Indemnification; Directors and Officers
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.12 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.13 Job Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.14 Parent's Board of Directors. . . . . . . . . . . . . . . . . . 33

ARTICLE VII

CONDITIONS PRECEDENT TO THE MERGER. . . . . . . . . . 33

Section 7.1 Conditions to Each Party's Obligation to Effect
the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Stockholder Approvals. . . . . . . . . . . . . . . . . . . . . . . 33
(b) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Improvements Act Waiting Period. . . . . . . . . . . . . . . . . . 34
(d) Registration Statement . . . . . . . . . . . . . . . . . . . . . . 34
(e) Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(f) No Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(g) Resignations of Company Directors. . . . . . . . . . . . . . . . . 35
(h) Other Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.2 Conditions to Obligation of the Company to
Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Performance of Obligations; Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 36
(d) Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.3 Conditions to Obligations of Parent and Sub to
Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Performance of Obligations; Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Redemption of Rights . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 40
(f) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 40
(g) Opinion of Other Counsel . . . . . . . . . . . . . . . . . . . . . 42
(h) Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 44

-iii-

<PAGE>

Page
----

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . 44

Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 46
Section 8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ARTICLE IX

GENERAL PROVISIONS. . . . . . . . . . . . . . 47

Section 9.1 Non-Survival of Representations and WARRANTIES. . . . . . . . . 47
Section 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. . . . . . . . . 48
Section 9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 9.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 9.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 9.9 Enforcement of this Agreement . . . . . . . . . . . . . . . . . 49

-iv-

<PAGE>

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of February 25, 1995 (this
"Agreement"), among Kuhlman Corporation, a Delaware corporation ("Parent"),
Spinner Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Sub"), and Schwitzer, Inc., 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 respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable the merger of Sub and the Company
(the "Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding share of Common Stock, par value $.10 per
share, of the Company ("Company Common Stock") not owned directly or indirectly
by Parent or the Company will be converted into shares of Common Stock, par
value $1.00 per share, of Parent ("Parent Common Stock");

WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");

WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests; and

WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;

NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:

ARTICLE I

THE MERGER

Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time (as hereinafter defined). Following the consummation of the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the

<PAGE>

"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL.

Section 1.2 EFFECTIVE TIME. The Merger shall become effective when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL, is filed with the Secretary of State of the
State of Delaware; PROVIDED, HOWEVER, that, upon mutual consent of the
Constituent Corporations the Certificate of Merger may provide for a later date
of effectiveness of the Merger not more than 30 days after the date the
Certificate of Merger is filed. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is accepted for filing or such later time established by
the Certificate of Merger. The filing of the Certificate of Merger shall be
made as soon as practicable after the satisfaction or waiver of the conditions
to the Merger set forth herein.

Section 1.3 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL.

Section 1.4 CERTIFICATE OF INCORPORATION, BY-LAWS, DIRECTORS AND
OFFICERS. The Restated Certificate of Incorporation and the By-laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation and the By-laws of the Surviving Corporation, in
each case until thereafter changed or amended as provided therein or by
applicable law. The directors of the Surviving Corporation shall be Gary G.
Dillon, whose term of office shall expire at the 1996 annual meeting of
stockholders of the Surviving Corporation, Curtis G. Anderson, whose term of
office shall expire at its 1997 annual meeting of stockholders, and Robert S.
Jepson, Jr., whose term of office shall expire at its 1998 annual meeting of
stockholders, in each case to hold office until the expiration of his term of
office and his successor shall have been duly elected and qualified or until his
earlier death, resignation or removal. The officers of the Company at the
Effective Time shall be the officers of the Surviving Corporation, except that
Vernon J. Nagel shall be a Vice President and an Assistant Treasurer, Ward D.
Richards shall be an Assistant Secretary, Jeffrey B. Samuels shall be an
Assistant Treasurer and Richard A. Walker shall be an Assistant Secretary, in
each case to hold office until the next annual election of officers and his
successor shall have been duly chosen or until his earlier death, resignation or
removal.

Section 1.5 CONVERSION OF SECURITIES. As of the Effective Time, by
virtue of the Merger and without any action on the part of any stockholder of
the Company:

(a) All shares of Company Common Stock that are held in the treasury
of the Company or by any wholly-owned Subsidiary (as hereinafter defined)
of the Company immediately prior to the Effective Time and any shares of
Company Common Stock owned by Parent, Sub or any other

-2-

<PAGE>

wholly-owned Subsidiary of Parent immediately prior to the Effective Time shall
be cancelled and no capital stock of Parent or other consideration shall be
delivered in exchange therefor.

(b) Each share of capital stock of Sub outstanding immediately prior
to the Effective Time shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.10 per share, of the
Surviving Corporation.

(c) Subject to the provisions of Sections 1.8 and 1.10 hereof, each
share of Company Common Stock outstanding immediately prior to the
Effective Time (other than shares to be cancelled in accordance with
Section 1.5(a)) shall be converted into 0.9615 validly issued, fully paid
and nonassessable share (the "Exchange Ratio") of Parent Common Stock. All
such shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and each
holder of a Certificate (as defined in Section 1.6(a)) representing any
such shares shall cease to have any rights with respect thereto, except the
right to receive certain dividends and other distributions as contemplated
by Section 1.7 and shares of Parent Common Stock and any cash, without
interest, in lieu of fractional shares to be issued or paid in
consideration therefor pursuant to Section 1.8 upon the surrender of such
Certificate in accordance with Section 1.6.

(d) Each option to purchase shares of Company Common Stock (a
"Company Stock Option") outstanding immediately prior to the Effective Time
pursuant to the Company's Long-term Executive Incentive Compensation Plan
(the "Company Stock Plan") shall be converted into an option (a "New Parent
Stock Option") to purchase, in lieu of the shares of Company Common Stock
purchasable thereunder immediately prior to the Effective Time, the number
of whole shares of Parent Common Stock into which the shares of Company
Common Stock subject to such Company Stock Option would have been converted
pursuant to Section 1.5(c) had such Company Stock Option been exercised in
full immediately prior to the Effective Time, without any change in the
aggregate option exercise price. Fractional shares shall not be issued
upon the exercise of any New Parent Stock Option, but upon the exercise of
any New Parent Stock Option for the largest number of whole shares of
parent Common Stock then subject thereto, the Company shall pay to the
holder of such New Parent Stock Option a sum in cash equal to the
proportional part of the per share exercise price of such New Parent Stock
Option represented by such fractional share. Each New Parent Stock Option
shall otherwise be upon the same terms and conditions as set forth in the
Company Stock Plan and the related option agreement.

-3-

<PAGE>

(e) Each warrant to purchase shares of Company Common Stock (a
"Company Warrant") outstanding immediately prior to the Effective Time
pursuant to the Note Agreement dated as of April 15, 1992 among the
Company, Schwitzer U.S. Inc. and Massachusetts Mutual Life Insurance
Company (the "Company Warrant Agreement") shall be converted into a warrant
(a "New Parent Warrant") to purchase, in lieu of the shares of Company
Common Stock purchasable thereunder immediately prior to the Effective
Time, the number of whole shares of Parent Common Stock into which the
shares of Company Common Stock subject to such Company Warrant would have
been converted pursuant to Section 1.5(c) had such Company Warrant been
exercised in full immediately prior to the Effective Time, without any
change in the aggregate option exercise price. Fractional shares shall not
be issued upon the exercise of any New Parent Warrant, but upon the
exercise of any New Parent Warrant for the largest number of whole shares
of parent Common Stock then subject thereto, the Company shall pay to the
holder of such New Parent Warrant a sum in cash equal to the proportional
part of the per share exercise price of such New Parent Warrant represented
by such fractional share. Each New Parent Warrant shall otherwise be upon
the same terms and conditions as set forth in the Company Warrant
Agreement.

Section 1.6 PARENT TO MAKE CERTIFICATES AVAILABLE.

(a) EXCHANGE OF CERTIFICATES. Parent shall authorize a commercial
bank (or such other person or persons as shall be acceptable to Parent and the
Company) to act as Exchange Agent hereunder (the "Exchange Agent"). As soon as
practicable after the Effective Time, Parent shall deposit with the Exchange
Agent, in trust for the holders of certificates which immediately prior to the
Effective Time represented shares of Company Common Stock (the "Certificates"),
(i) certificates representing the aggregate number of shares of Parent Common
Stock issuable to such holders pursuant to Section 1.5(c) in exchange for
outstanding shares of Company Common Stock and (ii) the aggregate amount of cash
payable to such holders in lieu of fractional shares pursuant to Section 1.8.
Such shares of Parent Common Stock and cash in lieu of fractional shares,
together with any dividends or distributions with respect to such shares, is
hereinafter referred to as the "Exchange Fund". Parent may instruct the
Exchange Agent to invest any cash held in the Exchange Fund in obligations of
the United States government or certificates of deposit insured by an agency of
the United States government and any interest or other earnings resulting from
such investments shall be the exclusive property of Parent.

(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, Parent shall cause the Exchange Agent to mail to each holder of record of
a Certificate whose shares were converted pursuant to Section 1.5(c) into shares
of Parent Common Stock a letter of transmittal (which shall specify that
delivery

-4-

<PAGE>

shall be effected, and risk of loss and title to the Certificates shall pass,
only upon actual delivery of the Certificates to the Exchange Agent and shall
contain instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock). Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder has the right to
receive pursuant to this Article I, and the Certificate so surrendered shall
forthwith be cancelled. Until surrendered as contemplated by this Section 1.6,
each Certificate shall, at and after the Effective Time, be deemed to represent
only the right to receive, upon surrender of such Certificate, the certificate
representing the appropriate number of shares of Parent Common Stock in
accordance with Section 1.5(c), cash in lieu of fractional shares as provided
for in Section 1.8 and certain dividends and other distributions as contemplated
by Section 1.7.

Section 1.7 DIVIDENDS; TRANSFER TAXES. No dividends or other
distributions that are declared on or after the Effective Time on Parent Common
Stock or are payable to the holders of record thereof on or after the Effective
Time will be paid to persons entitled by reason of the Merger to receive
certificates representing Parent Common Stock until such persons surrender their
Certificates, as provided in Section 1.6, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 1.8 until
such holder of such Certificate shall so surrender such Certificate. Subject to
the effect of applicable law, there shall be paid to the record holder of the
certificates representing such Parent Common Stock (a) at the time of such
surrender or as promptly as practicable thereafter, the amount of any dividends
or other distributions theretofore paid with respect to whole shares of such
Parent Common Stock and having a record date on or after the Effective Time and
a payment date prior to such surrender and (b) at the appropriate payment date
or as promptly as practicable thereafter, the amount of dividends or other
distributions payable with respect to whole shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to surrender and a
payment date subsequent to surrender. In no event shall the person entitled to
receive such dividends or other distributions be entitled to receive interest on
such dividends or other distributions. If any cash or certificate representing
shares of Parent Common Stock is to be paid to or issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such shares
of Parent Common Stock in a name other than that of the registered holder

-5-

<PAGE>

of the Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.

Section 1.8 NO FRACTIONAL SECURITIES. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I, no Parent
dividend or other distribution or stock split shall relate to any fractional
share and such fractional share shall not entitle the owner thereof to vote or
to any rights of a stockholder of Parent. In lieu of any such fractional
shares, each holder of shares of Company Common Stock who would otherwise have
been entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I shall, in lieu thereof, be
paid an amount in cash (without interest) equal to the value of such fractional
share based on the Closing Price of Parent Common Stock on the business day
immediately preceding the Effective Time. The "Closing Price" of Parent Common
Stock on any business day shall for purposes of this Section 1.8 be: (a) the
last sale price, or the closing bid price if no sale occurred, of Parent Common
Stock on the principal securities exchange on which Parent Common Stock is
listed, if so listed, or (b) if not listed, the mean between the closing high
bid and low asked quotations of Parent Common Stock on the National Association
of Securities Dealers, Inc. Automated Quotation System, or any similar system of
automated dissemination of quotations of securities prices then in common use,
if so quoted. If the closing price of Parent Common Stock on any business day
cannot be determined under the provisions of the immediately preceding sentence,
the Closing Price of Parent Common Stock on such business day shall be the fair
market value of Parent Common Stock as determined by a member firm of the New
York Stock Exchange, Inc. selected by Parent and reasonably acceptable to the
Company.

Section 1.9 RETURN OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the former stockholders of the Company for
one year after the Effective Time (and any interest or other earnings thereon)
shall be delivered to Parent, upon demand of Parent, and any former stockholders
of the Company who have not theretofore complied with this Article I shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.

Section 1.10 ADJUSTMENT OF EXCHANGE RATIO. In the event of any
reclassification, recapitalization, stock split or stock dividend with respect
to Parent Common Stock (or if a record date with respect to any of the foregoing
should occur) prior to the Effective Time, appropriate and proportionate
adjustments, if any, shall be made to the Exchange Ratio, and all references to
the Exchange Ratio in this Agreement shall be deemed to be to the Exchange Ratio
as so adjusted.

-6-

<PAGE>

Section 1.11 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
All shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 1.8) shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock.

Section 1.12 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock shall thereafter be made. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this Article I.

Section 1.13 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.

Section 1.14 CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Rudnick &
Wolfe, Chicago, Illinois at 9:00 am, local time, on the first business day after
the day on which the last of the conditions set forth in Article VII hereof
shall have been fulfilled or waived or at such other time and place as Parent
and the Company shall agree.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PARENT

Parent represents and warrants to the Company as follows:

Section 2.1 ORGANIZATION, STANDING AND POWER. Parent is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business

-7-

<PAGE>

as now being conducted. The schedule delivered to the Company and identified by
Parent as its final disclosure schedule under this Agreement (the "Parent
Disclosure Schedule") contains a list of each Subsidiary of Parent, indicating
its jurisdiction of incorporation or other organization, its authorized share or
other equity capital, the number and percentage of its issued and outstanding
shares or other equity interests owned of record or beneficially by Parent or
any of its Subsidiaries (naming each such owner), and whether it is a
Significant Subsidiary (as hereinafter defined). Parent and each of its
Significant Subsidiaries is duly qualified to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect on Parent. For purposes of
this Agreement (a) "Material Adverse Change" or "Material Adverse Effect" means,
when used with respect to Parent or the Company, as the case may be, any change
or effect since September 30, 1994 that is or, so far as can reasonably be
determined, may be materially adverse to the assets, condition (financial or
otherwise) or results of operations of Parent and its Significant Subsidiaries
taken as a whole or the Company and its Significant Subsidiaries taken as a
whole, as the case may be, (b) "Subsidiary" means any corporation, partnership,
joint venture or other legal entity of which Parent or the Company, as the case
may be (either alone or through or together with any other Subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity and
(c) "Significant Subsidiary" means any Significant Subsidiary within the meaning
of Rule 1-02 of Regulation S-X of the United States Securities and Exchange
Commission (the "SEC").

Section 2.2 CAPITAL STRUCTURE. Subject to the approval of the
Amendment (as hereinafter defined), the authorized capital stock of Parent
consists of 10,000,000 shares of Parent Common Stock and 2,000,000 shares of
preferred stock, par value $1.00 per share ("Parent Preferred Stock"), of which
200,000 shares have been designated Junior Participating Preferred Stock, Series
A. At the close of business on February 22, 1995, (a) 6,173,798 shares of
Parent Common Stock were validly issued and outstanding, fully paid,
nonassessable and listed on the New York Stock Exchange ("NYSE") and none of
such securities had been issued in violation of any preemptive right of any
stockholder of Parent, (b) 1,033,556 shares of Parent Common Stock were reserved
for issuance upon the exercise of outstanding options for Parent Common Stock
(the "Parent Stock Options") granted under its 1983 Stock Option Plan, its 1986
Stock Option Plan, as amended, its 1988 Stock Option Plan for Non-Employee
Directors, and its 1994 Stock Option Plan (collectively, the "Parent Stock
Plans"), (c) no shares of Parent

-8-

<PAGE>

Common Stock were held by Parent or its wholly-owned Subsidiaries in treasury
and (d) no shares of Parent Preferred Stock were issued and outstanding. There
are no outstanding stock appreciation rights ("SARs") issued by Parent or any of
its Subsidiaries with respect to Parent Common Stock, other than 151,000 SARs
issued pursuant to Parent's 1994 Stock Appreciation Rights Plan (the "Parent
1994 SAR Plan"). All of the shares of Parent Common Stock issuable in exchange
for Company Common Stock at the Effective Time or upon exercise of New Parent
Stock Options or New Parent Warrants in accordance with this Agreement will be,
when so issued, duly authorized, validly issued, fully paid, nonassessable and
listed on the NYSE, subject to official notice of issuance, and none of such
securities will have been issued in violation of any preemptive right of any
stockholder of Parent. All outstanding shares of capital stock of Parent's
Subsidiaries are validly authorized and issued, fully paid and nonassessable and
have not been issued in violation of any preemptive right of any stockholder of
any of such Subsidiaries and, except as disclosed in the Parent Disclosure
Schedule, all of such shares are owned of record and beneficially by Parent or a
wholly-owned Subsidiary of Parent, free and clear of all liens, charges or
encumbrances. Except for (i) the outstanding Parent Stock Options, (ii) the
outstanding preferred stock purchase rights (the "Parent Rights") issued
pursuant to the Rights Agreement dated as of April 28, 1987 between Parent and
Harris Trust and Savings Bank, as successor Rights Agent, (iii) Parent's
Employees' Stock Purchase Plan, (iv) Kuhlman Electric Corporation's Savings
Maximizer Plan and (v) Parent's 1993 Non-Employee Directors Stock Plan, there
are no options, warrants, rights, commitments, agreements, arrangements or
undertakings of any kind to which Parent or any of its Subsidiaries is a party
or by which any of them is bound obligating Parent or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Parent or of any of its
Subsidiaries. True and correct copies of all plans, agreements, instruments and
other governing documents relating to the Parent Stock Options, the Parent Stock
Plans, the Parent 1994 SAR Plan, the Parent Rights, Parent's Employees' Stock
Purchase Plan, Kuhlman Electric Corporation's Savings Maximizer Plan and
Parent's 1993 Non-Employee Directors Stock Plan have been furnished to the
Company.

Section 2.3 AUTHORITY; NON-CONTRAVENTION. Parent has all corporate
power and authority to enter into this Agreement and, subject to obtaining the
approval of the Amendment and the issuance of Parent Common Stock pursuant to
this Agreement by the stockholders of Parent, to consummate the transactions
contemplated hereby. Subject to obtaining such approval by the stockholders of
Parent, the execution and delivery of this Agreement by Parent and the consum-
mation by Parent of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent. This
Agreement has been duly executed and delivered by Parent and (assuming the

-9-

<PAGE>

valid authorization, execution and delivery of this Agreement by the Company and
the enforceability of this Agreement against the Company) constitutes the legal,
valid and binding agreement of Parent enforceable against Parent in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). The issuance of shares of Parent Common Stock pursuant to this Agree-
ment and the filing of a registration statement with the SEC by Parent on Form
S-4 under the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), for the purpose of
registering the shares of Parent Common Stock to be issued pursuant to this
Agreement has been duly authorized by Parent's Board of Directors. (Such
registration statement, including any information incorporated by reference
therein, as it is declared effective under the Securities Act, together with any
post-effective amendments or supplements thereto prepared and filed in
accordance with this Agreement, is referred to herein as the "Registration
Statement"). Except as set forth in the Parent Disclosure Schedule, the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or any of its Significant Subsidiaries under, any provision of (a) the
Certificate of Incorporation or By-laws of Parent (true and complete copies of
which as of the date hereof have been delivered to the Company) or any provision
of the comparable charter or organization documents of any of its Significant
Subsidiaries, (b) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to Parent or any of its Significant Subsidiaries or (c) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Significant Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (b) or (c), any such conflicts,
violations, defaults, rights, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
on Parent, materially impair the ability of Parent to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or approval
of, any domestic (federal, state or local), foreign or supranational court,
commission, governmental body, regulatory agency, authority or tribunal (a
"Governmental Entity") is required by or with respect

-10-

<PAGE>

to Parent, Sub or any of Parent's Significant Subsidiaries in connection with
the execution and delivery of this Agreement by Parent and Sub or is necessary
for the consummation of the Merger and the other transactions contemplated by
this Agreement, except for (i) filings in connection, or in compliance, with the
applicable requirements of the Securities Act and the Securities Exchange Act of
1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which Parent, Sub or any of
Parent's Significant Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, (iv) such filings as may be required in connection with the taxes
described in Section 6.9, (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the
corporation, takeover or "Blue Sky" laws of various states, (vi) such filings
and approvals as may be required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "Improvements Act"), and (vii) such
other consents, orders, authorizations, registrations, declarations and filings
the failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, materially impair the
ability of Parent to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.

Section 2.4 PARENT SEC DOCUMENTS. Parent has filed all documents
which the Securities Act or the Exchange Act requires Parent to file with the
SEC since January 1, 1993 (the "Parent SEC Documents"). A list of all of the
Parent SEC Documents is included in the Parent Disclosure Schedule. As of their
respective dates, the Parent SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Parent
included in the Parent SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present the consolidated financial position of Parent and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and consolidated cash flows for the periods then ended
(subject,

-11-

<PAGE>

in the case of unaudited statements, to normal year-end audit adjustments and to
any other adjustments described therein).

Section 2.5 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
The Registration Statement and the joint proxy statement/prospectus contained
therein, including any information incorporated by reference therein, to be used
by Parent and the Company to solicit proxies from their respective stockholders
at the Stockholder Meetings (as hereinafter defined) (together with any
amendments or supplements thereto prepared and filed in accordance with this
Agreement, the "Proxy Statement/Prospectus") will not (a) in the case of the
Registration Statement, at the time it becomes effective under the Securities
Act, at the time of the Stockholder Meetings and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or (b) in the case of the Proxy Statement/Prospectus, at
the time of the mailing of the Proxy Statement/Prospectus to the respective
stockholders of Parent and the Company and at the time of the Stockholder
Meetings, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; PROVIDED; HOWEVER, that the foregoing shall not apply to the extent
that any such untrue statement of a material fact or omission to state a
material fact was made by Parent in reliance upon and in conformity with written
information supplied or to be supplied to Parent by the Company expressly for
inclusion or incorporation by reference in the Registration Statement or the
Proxy Statement/Prospectus. The Registration Statement will comply as to form
in all material respects with all applicable requirements of the Securities Act,
and the Proxy Statement/Prospectus will comply as to form with all applicable
requirements of the Exchange Act; PROVIDED, HOWEVER, that the foregoing shall
not apply to any written information supplied or to be supplied to Parent by the
Company expressly for inclusion or incorporation by reference in the
Registration Statement or the Proxy Statement/Prospectus.

Section 2.6 ABSENCE OF MATERIAL ADVERSE CHANGE. Except as disclosed
in the Parent SEC Documents filed with the SEC prior to the date hereof or in
the Parent Disclosure Schedule, there has not been any Material Adverse Change
with respect to Parent.

Section 2.7 POOLING OF INTERESTS; REORGANIZATION. To the knowledge
of Parent, neither it nor any of its Subsidiaries has (i) taken any action or
failed to take any action which would jeopardize the treatment of Sub's
combination with the Company in the Merger as a pooling of interests for
accounting purposes or (ii) taken any action or failed to take any action which
would jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.

-12-

<PAGE>

Section 2.8 DIVIDENDS. Since September 30, 1994, Parent has not
declared, set aside or paid any dividends on, or made any other actual,
constructive or deemed distributions in respect of, any of its capital stock, or
otherwise made any payments to its stockholders in their capacity as such, other
than ordinary quarterly dividends consistent with past practice, each in an
amount not in excess of $.15 per share, with respect to Parent Common Stock.

Section 2.9 NO VIOLATION OR INFRINGEMENT. Except as disclosed in the
Parent Disclosure Schedule and for matters which, individually or in the
aggregate, would not have a Material Adverse Effect on Parent: (a) Parent and
its Subsidiaries have complied in all material respects with all requirements of
law applicable to their respective assets and businesses and (b) neither Parent
nor any Subsidiary has infringed upon or misappropriated any patent, trademark,
service mark, trade name, copyright or other proprietary right of any other
person or entity.

Section 2.10 LITIGATION. Except as set forth in the Parent
Disclosure Schedule, there are no actions, suits or proceedings pending or
threatened against Parent or any of its Subsidiaries before any Governmental
Entity or arbitrator which, individually or in the aggregate, should reasonably
be expected to have a Material Adverse Effect on Parent.

Section 2.11 TAXES. Except as otherwise set forth in the Parent
Disclosure Schedule, (a) Parent and each of its Significant Subsidiaries has
filed all Tax Returns required to have been filed on or before the date hereof;
(b) all Taxes shown to be due on the Tax Returns referred in clause (a) have
been timely paid; (c) neither Parent nor any of its Significant Subsidiaries has
waived any statute of limitations in respect of Taxes of Parent or such
Subsidiary; (d) the Tax Returns referred to in clause (a) relating to federal
and state income Taxes have been examined by the Internal Revenue Service or the
appropriate state taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired; (e) no
issues that have been raised in writing by the relevant taxing authority in
connection with the examination of the Tax Returns referred to in clause (a) are
currently pending; and (f) all deficiencies asserted or assessments made as a
result of any examination of the Tax Returns referred to in clause (a) by a
taxing authority have been paid in full. For purposes of this Agreement (i)
"Tax" (and, with correlative meaning, "Taxes") means, any federal, state, local
or foreign income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Entity, and (ii) "Tax Return"
means any return, report or similar statement required to be filed with

-13-

<PAGE>

respect to any Tax (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.

Section 2.12 PARENT BENEFIT PLANS. The Parent Disclosure Schedule
contains a list of all significant "employee welfare benefit plans" and all
significant "employee pension benefit plans" (as such terms are defined in
Sections 3(1) and 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to on behalf of employees of the
Parent or any of its Subsidiaries as of the date of this Agreement (the "Parent
Benefit Plans"). Except as set forth in the Parent Disclosure Schedule, each
Parent Benefit Plan which is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so qualified
except for changes for which the remedial amendment period under Section 401(b)
of the Code has not expired. Neither the Parent nor any of its Subsidiaries has
any liability to the Pension Benefit Guaranty Corporation with respect to any
Parent Benefit Plan except for applicable insurance premiums. Each Parent
Benefit Plan has been maintained and administered in compliance in all material
respects with ERISA and the Code. Except as set forth in the Parent Disclosure
Schedule, (a) neither the Parent nor any of its Subsidiaries has any obligation
to contribute to any "multiemployer plan", as such term is defined in Section
3(37) of ERISA or Section 4001(a)(3) of ERISA, and (b) assuming the Parent and
each of its Subsidiaries incurred a complete withdrawal under Section 4203 of
ERISA from all such plans, the withdrawal liability arising under Section 4201
of ERISA with respect to such plans would not exceed the amount set forth in the
Parent Disclosure Schedule. Except for agreements identified in the Parent
Disclosure Schedule or as expressly provided for in this Agreement, neither
Parent nor any of its Subsidiaries is a party to any agreement which
(a) requires it to make any bonus or severance payment to any of its officers or
employees solely by reason of the closing of the transactions contemplated by
this Agreement or (b) requires it to make a payment to any of its officers or
employees that, to the knowledge of Parent, may be an "excess parachute payment"
to a "disqualified individual", as such terms are defined in Section 280G of the
Code.

Section 2.13 ENVIRONMENTAL MATTERS. Except as disclosed in the
Parent Disclosure Schedule and for matters which, individually or in the
aggregate, would not have a Material Adverse Effect on Parent: (a) the use and
operation of the assets and properties owned or leased by Parent and its
Subsidiaries comply in all material respects with all applicable federal, state
and local environmental, safety and health laws, ordinances, rules or
regulations and (b) nothing has come to the attention of any of the directors or
officers of Parent or any of its Subsidiaries that leads any of such persons to
believe that Parent or any of its Subsidiaries is or may be liable to any person
or Governmental Entity as a result of a release or

-14-

<PAGE>

threatened release of any hazardous or toxic substance or waste into the
environment.

Section 2.14 TITLE TO PROPERTY. Parent or its Subsidiaries has good
and, with respect to real property, marketable title to all of the material
assets reflected on the consolidated financial statements of Parent included in
the Parent SEC Documents as being owned by it or its Subsidiaries and all of the
material assets thereafter acquired by it or its Subsidiaries (except to the
extent that such assets have thereafter been disposed of in the ordinary course
of business consistent with past practice), subject to no liens, mortgages,
pledges, security interests, encumbrances, claims or charges of any kind
(collectively, "Liens") except for (a) Liens described in the Parent SEC
Documents or the Parent Disclosure Schedule, (b) Liens for taxes not yet delin-
quent or the validity of which is being contested in good faith for which
sufficient accruals have been established, (c) any Liens arising by operation of
law securing obligations not yet overdue and (d) other Liens which, individually
or in the aggregate, are not material in amount and do not materially detract
from the value or materially impair the existing use of any material asset of
Parent or any of its Subsidiaries.

Section 2.15 BROKERS. No broker, investment banker or other person
is entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub. Parent shall be responsible
for and pay all financial advisory fees and expenses of The Chase Manhattan
Bank, N.A., to the extent payable.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Sub as follows:

Section 3.1 ORGANIZATION, STANDING AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted. The schedule
delivered to Parent and identified by the Company as its final disclosure
schedule under this Agreement (the "Company Disclosure Schedule") contains a
list of each Subsidiary of the Company, indicating its jurisdiction of
incorporation or other organization, its authorized share or other equity
capital, the number and percentage of its issued and outstanding shares or other
equity interests owned of record or beneficially by the Company or any of its
Subsidiaries (naming each such owner), and whether it is a Significant
Subsidiary. The Company and each of its Significant Subsidiaries

-15-

<PAGE>

is duly qualified to do business, and is in good standing, in each jurisdiction
where the character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary, except where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.

Section 3.2 CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $1.00 per share (the "Company Preferred
Stock"). At the close of business on February 22, 1995, (a) 7,231,866 shares of
Company Common Stock were validly issued and outstanding, fully paid,
nonassessable and listed on the NYSE and none of such securities had been issued
in violation of any preemptive right of any stockholder of the Company, (b)
487,992 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding Company Stock Options, (c) 500,000 shares of Company
Common Stock were reserved for issuance upon the exercise of outstanding Company
Warrants, (d) 23,509 shares of Company Common Stock were held by the Company or
its wholly-owned Subsidiaries in treasury, and (e) no shares of Company
Preferred Stock were issued or outstanding. There are no outstanding SARs
issued by the Company with respect to Company Common Stock, other than 75,000
phantom stock rights issued pursuant to an Agreement dated as of October 18,
1994 between Gary G. Dillon and a Subsidiary of the Company. All outstanding
shares of capital stock of the Company's Subsidiaries are validly authorized and
issued, fully paid and nonassessable and have not been issued in violation of
any preemptive right of any stockholder of any of such Subsidiaries and, except
as disclosed in the Company Disclosure Schedule, all of such shares are owned of
record and beneficially by the Company or a wholly-owned Subsidiary of the
Company, free and clear of all liens, charges or encumbrances. Except for (i)
the outstanding Company Stock Options, (ii) the outstanding Company Warrants,
(iii) the obligations of the Company under its three tax reduction investment
plans (the "Company 401(k) Plans") and (iv) the outstanding common stock
purchase rights (the "Company Rights") issued pursuant to the Rights Agreement
dated as of April 14, 1989 between the Company and Harris Trust and Savings
Bank, as Rights Agent (the "Company Rights Agreement"), there are no options,
warrants, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its Subsidiaries is a party or by which any
of them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
Subsidiaries. True and correct copies of all plans, agreements, instruments and
other governing documents relating to, the Company Stock Options, the Company
Warrants, the Company Rights and the Company 401(k) Plans have been furnished to
Parent.

-16-

<PAGE>

Section 3.3 AUTHORITY; NON-CONTRAVENTION. The Company has all
corporate power and authority to enter into this Agreement and, subject to
obtaining the approval of this Agreement by the stockholders of the Company, to
consummate the transactions contemplated hereby. Subject to obtaining such
approval by the stockholders of the Company, the execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly executed and delivered
by the Company and (assuming the valid authorization, execution and delivery of
this Agreement by Parent and Sub and the enforceability of this Agreement
against each of them) constitutes the legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). Except as
set forth in the Company Disclosure Schedule, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to the loss of a material benefit under, or result in
the creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Company or any of its Significant Subsidiaries
under, any provision of (a) the Certificate of Incorporation or By-laws of the
Company (true and complete copies of which as of the date hereof have been
delivered to Parent) or any provision of the comparable charter or organization
documents of any of its Significant Subsidiaries, (b) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Significant Subsidiaries or (c) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Significant Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (b) or (c), any such conflicts, violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby. No filing or registration with, or authorization, consent
or approval of, any Governmental Entity is required by or with respect to the
Company or any of its Significant Subsidiaries in connection with the execution
and delivery of this Agreement by the Company or the consummation by the Company
of

-17-

<PAGE>

the transactions contemplated hereby, except for (i) filings in connection, or
in compliance, with the applicable requirements of the Securities Act and the
Exchange Act (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its Significant
Subsidiaries is qualified to do business, (iii) such filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement, (iv) such filings as
may be required in connection with the taxes described in Section 6.9, (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the corporation, takeover or "Blue Sky" laws of
various states, (vi) such filings and approvals as may be required under the
Improvements Act, and (vii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby.

Section 3.4 COMPANY SEC DOCUMENTS. The Company has filed all
documents which the Securities Act or the Exchange Act require the Company to
file with the SEC since January 1, 1993 (the "Company SEC Documents"). A list
of all of the Company SEC Documents is included in the Company Disclosure
Schedule. As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted 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 financial statements of the Company included in the Company SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and consolidated cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments and to
any other adjustments described therein).

Section 3.5 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
The Proxy Statement/Prospectus will not,

-18-

<PAGE>

at the time of the mailing of the Proxy Statement/Prospectus to the respective
stockholders of Parent and the Company and at the time of the Stockholder
Meetings, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to the extent
that any such untrue statement of a material fact or omission to state a
material fact was made by the Company in reliance upon and in conformity with
written information supplied or to be supplied to the Company by Parent
expressly for inclusion or incorporation by reference in the Proxy Statement/
Prospectus. The Proxy Statement/Prospectus will comply as to form with all
applicable requirements of the Exchange Act; PROVIDED, HOWEVER, that the
foregoing shall not apply to any written information supplied or to be supplied
to the Company by Parent expressly for inclusion or incorporation by reference
in the Proxy Statement/Prospectus.

Section 3.6 ABSENCE OF MATERIAL ADVERSE CHANGE. Except as disclosed
in the Company SEC Documents filed with the SEC prior to the date hereof or in
the Company Disclosure Schedule, there has not been any Material Adverse Change
with respect to the Company.

Section 3.7 POOLING OF INTERESTS; REORGANIZATION. To the knowledge
of the Company, neither it nor any of its Subsidiaries has (i) taken any action
or failed to take any action which would jeopardize the treatment of Sub's
combination with the Company in the Merger as a pooling of interests for
accounting purposes or (ii) taken any action or failed to take any action which
would jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.

Section 3.8 DIVIDENDS. Since September 30, 1994, the Company has not
declared, set aside or paid any dividends on, or made any other actual,
constructive or deemed distributions in respect of, any of its capital stock, or
otherwise made any payments to its stockholders in their capacity as such.

Section 3.9 NO VIOLATION OR INFRINGEMENT. Except as disclosed in the
Company Disclosure Schedule and for matters which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company: (a) the
Company and its Subsidiaries have complied in all material respects with all
requirements of law applicable to their respective assets and businesses and (b)
neither the Company nor any Subsidiary has infringed upon or misappropriated any
patent, trademark, service mark, trade name, copyright or other proprietary
right of any other person or entity.

Section 3.10 LITIGATION. Except as set forth in the Company
Disclosure Schedule, there are no actions, suits or

-19-

<PAGE>

proceedings pending or threatened against the Company or any of its Subsidiaries
before any Governmental Entity or arbitrator which, individually or in the
aggregate, should reasonably be expected to have a Material Adverse Effect on
the Company.

Section 3.11 TAXES. Except as otherwise set forth in the Company
Disclosure Schedule, (a) the Company and each of its Significant Subsidiaries
has filed all Tax Returns required to have been filed on or before the date
hereof; (b) all Taxes shown to be due on the Tax Returns referred in clause (a)
have been timely paid; (c) neither the Company nor any of its Significant
Subsidiaries has waived any statute of limitations in respect of Taxes of the
Company or such Subsidiary; (d) the Tax Returns referred to in clause (a)
relating to federal and state income Taxes have been examined by the Internal
Revenue Service or the appropriate state taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired; (e) no issues that have been raised in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (a) are currently pending; and (f) all deficiencies
asserted or assessments made as a result of any examination of the Tax Returns
referred to in clause (a) by a taxing authority have been paid in full.

Section 3.12 COMPANY BENEFIT PLANS. The Company Disclosure Schedule
contains a list of all significant "employee welfare benefit plans" and all
significant "employee pension benefit plans" (as such terms are defined in
Sections 3(1) and 3(2) of ERISA) maintained or contributed to on behalf of
employees of the Company or any of its Subsidiaries as of the date of this
Agreement (the "Company Benefit Plans"). Except as set forth in the Company
Disclosure Schedule, each Company Benefit Plan which is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified except for changes for which the remedial amendment
period under Section 401(b) of the Code has not expired. Neither the Company
nor any of its Subsidiaries has any liability to the Pension Benefit Guaranty
Corporation with respect to any Company Benefit Plan except for applicable
insurance premiums. Each Company Benefit Plan has been maintained and
administered in compliance in all material respects with ERISA and the Code.
Except as set forth in the Company Disclosure Schedule, (a) neither the Company
nor any of its Subsidiaries has any obligation to contribute to any
"multiemployer plan", as such term is defined in Section 3(37) of ERISA or
Section 4001(a)(3) of ERISA, and (b) assuming the Company and each of its
Subsidiaries incurred a complete withdrawal under Section 4203 of ERISA from all
such plans, the withdrawal liability arising under Section 4201 of ERISA with
respect to such plans would not exceed the amount set forth in the Company
Disclosure Schedule. Except for agreements identified in the Company Disclosure
Schedule or as expressly provided for in this Agreement, neither the Company nor
any of

-20-

<PAGE>

its Subsidiaries is a party to any agreement which (a) requires it to make any
bonus or severance payment to any of its officers or employees solely by reason
of the change of control of the Company effected by the consummation of the
Merger or (b) requires it to make a payment to any of its officers or employees
that, to the knowledge of the Company, may be an "excess parachute payment" to a
"disqualified individual", as such terms are defined in Section 280G of the
Code.

Section 3.13 ENVIRONMENTAL MATTERS. Except as disclosed in the
Company Disclosure Schedule and for matters which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company: (a) the use
and operation of the assets and properties owned or leased by the Company and
its Subsidiaries comply in all material respects with all applicable federal,
state and local environmental, safety and health laws, ordinances, rules or
regulations and (b) nothing has come to the attention of any of the directors or
officers of the Company or any of its Subsidiaries that leads any of such
persons to believe that the Company or any of its Subsidiaries is or may be
liable to any person or Governmental Entity as a result of a release or
threatened release of any hazardous or toxic substance or waste into the
environment.

Section 3.14 TITLE TO PROPERTY. The Company or its Subsidiaries has
good and, with respect to real property, marketable title to all of the material
assets reflected on the consolidated financial statements of the Company
included in the Company SEC Documents as being owned by it or its Subsidiaries,
including, without limitations, its facility located at Asheville, North
Carolina, and all of the material assets thereafter acquired by it or its
Subsidiaries (except to the extent that such assets have thereafter been
disposed of in the ordinary course of business consistent with past practice),
subject to no Liens, except for (a) Liens described in the Company SEC
Documents, (b) Liens for taxes not yet delinquent or the validity of which is
being contested in good faith for which sufficient accruals have been
established, (c) any Liens arising by operation of law securing obligations not
yet overdue and (d) other Liens which, individually or in the aggregate, are not
material in amount and do not materially detract from the value or materially
impair the existing use of any material asset of the Company or any of its
Subsidiaries.

Section 3.15 BROKERS. No broker, investment banker or other person
(other than J. P. Morgan Securities Inc., the fees and expenses of which, to the
extent payable, will be paid by the Surviving Corporation) is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.

-21-

<PAGE>

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING SUB

Parent and Sub jointly and severally represent and warrant to the
Company as follows:

Section 4.1 ORGANIZATION AND STANDING. Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Sub was organized solely for the purpose of acquiring the Company
and engaging in the transactions contemplated by this Agreement and has not
engaged in any business since it was incorporated which is not in connection
with the acquisition of the Company and this Agreement.

Section 4.2 CAPITAL STRUCTURE. The authorized capital stock of Sub
consists of 1,000 shares of common stock, par value $.01 per share, all of which
are validly issued and outstanding, fully paid and nonassessable and are owned
by Parent free and clear of all liens, charges and encumbrances.

Section 4.3 AUTHORITY; NON-CONTRAVENTION. Sub has all corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Sub of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and Parent as its sole stockholder, and, no other corporate
proceedings on the part of Sub are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Sub and (assuming the due authorization, execution and
delivery hereof by the Company and the enforceability of this Agreement against
the Company) constitutes the legal, valid and binding agreement of Sub
enforceable against Sub in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the effect
of general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Sub under, any provision of (i) the
Certificate of Incorporation or By-laws of Sub (true and complete copies of
which as of the date hereof have been delivered to the Company)

-22-

<PAGE>

(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to Sub or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Sub or any of its properties or assets, other than, in
the case of clauses (ii) or (iii), any such conflicts, violations, defaults,
rights, liens, security interests, charges or encumbrances that, individually or
in the aggregate, would not have a Material Adverse Effect on Parent, materially
impair the ability of Sub to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.

ARTICLE V

COVENANTS RELATING TO CONDUCT OF BUSINESS

Section 5.1 CONDUCT OF BUSINESS PENDING THE MERGER.

(a) ACTIONS. During the period from the date of this Agreement
through the Effective Time, each of the Company and Parent shall, and each
shall cause its respective Subsidiaries to, in all material respects carry
on its respective businesses in, and not enter into any material
transaction other than in accordance with, the ordinary course and, to the
extent consistent therewith, use all reasonable efforts to preserve intact
its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that its goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and,
except as disclosed in the Company Disclosure Schedule or the Parent
Disclosure Schedule or as otherwise expressly contemplated by this
Agreement, each of the Company and Parent shall not, and each shall not
permit any of its respective Subsidiaries to, without the prior written
consent of the other parties to this Agreement:

(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
respective capital stock, or otherwise make any payments to its respective
stockholders in their capacity as such, other than (1) ordinary quarterly
dividends by Parent consistent with past practice, each in an amount not in
excess of $.15 per share with respect to Parent Common Stock, (2) dividends
declared by Parent prior to the date of this Agreement and (3) dividends
payable to the Company declared by any of the Company's Subsidiaries or to
Parent declared by any of Parent's Subsidiaries, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for,
shares of its

-23-

<PAGE>

capital stock, and (c) purchase, redeem or otherwise acquire any shares of
capital stock of each of the Company or Parent, or any of its respective
Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, other than the
Company's redemption of the Company Rights prior to the Effective Time in
accordance with Section 7.3(c);

(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities, equity equivalent or convertible securities (other than,
in the case of the Company, the issuance of Company Common Stock (and
associated Company Rights) during the period from the date of this
Agreement through the Effective Time (A) upon the exercise of Company
Stock Options outstanding on the date of this Agreement in accordance
with their current terms, (B) upon the exercise of Company Warrants
outstanding on the date of this Agreement in accordance with their
current terms, (C) in accordance with the terms, existing at the date
of this Agreement, of the Company 401(k) Plans and, in the case of
Parent, the issuance of Parent Common Stock (and associated Parent
Rights) during such period (A) upon the exercise of Parent Stock
Options outstanding on the date of this Agreement in accordance with
their current terms and (B) in accordance with the terms, existing at
the date of this Agreement, of the Parent 1994 SAR Plan, Parent's
Employees' Stock Purchase Plan, Kuhlman Electric Corporation's Savings
Maximizer Plan, the Parent Rights and Parent's 1993 Non-Employee
Directors Stock Plan);

(iii) amend its Certificate of Incorporation (other than, in the
case of Parent, to approve and adopt the Amendment) or amend in any
material respects its By-laws;

(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a portion of the assets of or equity in, or by
any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, in each case that
are material or substantial, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, and to Parent and its
Subsidiaries taken as a whole, respectively;

(v) sell, lease or otherwise dispose of or agree to sell, lease
or otherwise dispose of, any of its assets (other than sales or other
dispositions of

-24-

<PAGE>

inventory in the ordinary course of business) that are material,
individually or in the aggregate, to the Company and its Subsidiaries taken
as a whole, or to Parent and its Subsidiaries taken as a whole,
respectively;

(vi) except in the ordinary course of business consistent with
past practice, (A) incur or assume any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt
securities or guarantee any debt securities of others or (B) make any
loans, advances or capital contributions to, or investments in, any
other person, other than to the Company or any wholly-owned Subsidiary
of the Company or to Parent or any wholly-owned Subsidiary of Parent,
respectively;

(vii) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of any Subsidiary of the Company or any Subsidiary of
Parent, respectively; or

(viii) enter into or adopt, or amend any existing, severance
plan, agreement or arrangement or, other than in the ordinary course
of business, enter into or amend any employee benefit plan (including,
without limitation, the Company Stock Plan, its Performance Unit Plan
and the Company 401(k) Plans with respect to the Company and the
Parent Stock Plans, the Parent 1994 SAR Plan, its Employees' Stock
Purchase Plan, Kuhlman Electric Corporation's Savings Maximizer Plan
and Parent's 1993 Non-Employee Directors Stock Plan with respect to
Parent), or any employment or consulting agreement, except
compensation increases associated with promotions and annual reviews
in the ordinary course of business consistent with past practice.

(b) ADVICE OF CHANGES. Each of the Company and Parent shall
promptly advise the other such party orally and in writing of any change or
event having, or which, insofar as can reasonably be foreseen, would have,
a Material Adverse Effect on the Company or Parent, respectively.

Section 5.2 NO SOLICITATION. From and after the date hereof, neither
the Company nor Parent will solicit or initiate, nor will either such party
permit any of its officers, directors, employees, agents and other
representatives or those of any of its Subsidiaries to, directly or indirectly,
solicit or initiate, any takeover proposal or offer from any person, or engage
in discussions or negotiations relating thereto; PROVIDED, HOWEVER, that (a)
either such party may engage in discussions or negotiations with a third party
who seeks to initiate such discussions or negotiations or may furnish to such
third party information

-25-

<PAGE>

concerning such party and its business, properties or assets and (b) following
receipt of a takeover proposal the Board of Directors of either such party may
withdraw or modify its recommendation referred to in Section 6.1, but in each
case referred to in the foregoing clauses (a) and (b) only to the extent that
the Board of Directors of such party shall conclude in good faith after con-
sultation with its outside counsel that such action is necessary in order for
the Board of Directors of such party to act in a manner which is consistent with
its fiduciary obligations under applicable law. Each of the Company and Parent
will promptly notify the other party of any takeover proposal or offer, includ-
ing the material terms and conditions thereof, but shall not be required to
indicate the identity of the person or group making such takeover proposal or
offer. As used in this Agreement, "takeover proposal" or "offer" shall mean any
proposal or offer, other than a proposal or offer by Parent, the Company or any
of their respective affiliates, for a tender or exchange offer, a merger,
consolidation or other business combination involving the Company, Parent or any
of their respective Subsidiaries or any proposal to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of, the
Company, Parent or any of their respective Subsidiaries.

Section 5.3 POOLING OF INTERESTS; REORGANIZATION. During the period
from the date of this Agreement through the Effective Time, unless the other
parties shall otherwise agree in writing, none of Parent, Sub, any other
Subsidiary of Parent, the Company nor any Subsidiary of the Company shall (a)
knowingly take or fail to take any action which would jeopardize the treatment
of Sub's combination with the Company as a pooling of interests for accounting
purposes or (b) knowingly take or fail to take any action which would jeopardize
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.

Section 5.4 CONDUCT OF BUSINESS OF SUB PENDING THE MERGER. During
the period from the date of this Agreement through the Effective Time, Sub shall
not engage in any activities of any nature except as provided in or contemplated
by this Agreement.

ARTICLE VI

ADDITIONAL AGREEMENTS

Section 6.1 STOCKHOLDER APPROVAL. Each of Parent and the Company
shall take all action necessary in accordance with all applicable federal and
state laws and their respective Certificates of Incorporation and By-laws to
call separate annual meetings of their respective stockholders to be held on the
same date (such meetings, including any adjournment of either or both of such
meetings, being referred to herein collectively as the "Stockholder Meetings"),
(a) in the case of the Company, to

-26-

<PAGE>

consider and vote on (i) the approval of this Agreement, (ii) the election of
one class of directors and (iii) the ratification of the appointment of auditors
and (b) in the case of Parent, to consider and vote on (i) the approval of an
amendment to the Certificate of Incorporation of Parent to increase the number
of authorized shares of Parent Common Stock from 10,000,000 to 20,000,000 shares
and to eliminate the designation therein of shares of Parent Preferred Stock as
Junior Participating Preferred Stock, Series A (the "Amendment"), (ii) the
approval of the issuance of Parent Common Stock pursuant to this Agreement,
(iii) the approval of Parent's 1994 Stock Option Plan, (iv) the election of one
class of directors and (v) the ratification of the selection of auditors, and
(c) in both cases, to consider and vote upon such other matters as may be
necessary to effect or related to the transactions contemplated hereunder. The
Stockholder Meetings shall be held as soon as practicable following the date
upon which the Registration Statement becomes effective. The Company shall,
through its Board of Directors but subject to the fiduciary duties of its Board
of Directors under applicable law as determined by such Board of Directors in
good faith after consultation with the Company's outside counsel, recommend to
its stockholders the approval of this Agreement and otherwise use all reasonable
efforts to obtain such stockholder approval, and Parent shall, through its Board
of Directors but subject to the fiduciary duties of its Board of Directors under
applicable law as determined by such Board of Directors in good faith after
consultation with Parent's outside counsel, recommend to its stockholders the
approval of the Amendment and the approval of the issuance of Parent Common
Stock pursuant to this Agreement and otherwise use all reasonable efforts to
obtain such stockholder approvals.

Section 6.2 REGISTRATION STATEMENT AND PROXY STATEMENT. Parent shall
prepare and file with the SEC as soon as practicable the Registration Statement
containing the Proxy Statement/Prospectus to be used at the Stockholder Meetings
and shall use all reasonable efforts to have the Registration Statement declared
effective by the SEC as soon as practicable. Parent shall also take any action
required to be taken under state securities or "Blue Sky" laws in connection
with the issuance of the Parent Common Stock pursuant to this Agreement. The
Company shall furnish in writing to Parent all information concerning the
Company, its officers, directors and principal stockholders and any of its
Subsidiaries required for use in the Registration Statement, and the Company
shall take such other actions as Parent may reasonably request in connection
with the preparation of such Registration Statement and the actions to be taken
by Parent pursuant to this Section 6.2. Parent will advise the Company,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment thereto has been
filed, of the issuance of any stop order, of the suspension of the qualification
for offering or sale in any jurisdiction of the shares of Parent Common Stock
issuable pursuant to this Agreement or any request

-27-

<PAGE>

by the SEC for an amendment or supplement of the Registration Statement or for
additional information. If at any time after the mailing of the Proxy
Statement/Prospectus and prior to the Effective Time, any event with respect to
any party, its officers, directors or principal stockholders or any of its
Subsidiaries or any event with respect to the Merger shall occur which is
required to be described in the Proxy Statement/Prospectus or the Registration
Statement, such party shall immediately inform the other parties of such event
and all parties hereto shall cooperate in the preparation of a mutually
satisfactory amendment or supplement describing such event and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the respective stockholders of Parent and the Company. It shall
be conditions (in each case unless waived by both Parent and the Company) to the
mailing of the Proxy Statement/Prospectus to the stockholders of Parent and the
stockholders of the Company that (a) Parent and the Company shall have received
the opinions of The Chase Manhattan Bank, N.A. and J.P. Morgan Securities, Inc.,
respectively, dated as of the date of the Proxy Statement/Prospectus to the
effect described in Sections 7.2(b) and 7.3(e), respectively, (b) such opinions
shall be included in the Proxy Statement/Prospectus and (c) each of the Company
and Parent shall have executed a letter agreement identifying the information
provided by each of the Company and Parent for use in the Proxy
Statement/Prospectus.

Section 6.3 ACCESS TO INFORMATION.

(a) BY PARENT. The Company shall, and shall cause each of its
Subsidiaries to, afford to Parent, and to Parent's accountants, counsel,
financial advisers and other representatives, reasonable access and permit
them to make such inspections as they may reasonably request during normal
business hours during the period from the date of this Agreement through
the Effective Time to all their respective properties, books, contracts,
commitments and records and, during such period, the Company shall, and
shall cause each of its Subsidiaries to, furnish promptly to Parent
(i) access to each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of
federal or state laws and (ii) all other information concerning its
business, properties and personnel as Parent may reasonably request. In no
event shall the Company be required to supply to Parent, or to Parent's
accountants, counsel, financial advisors or other representatives, any
information relating to indications of interest from, or discussions with,
any other potential acquirors of the Company which were received or
conducted prior to the date hereof except to the extent necessary for use
in the Registration Statement. Except as required by law, Parent will
hold, and will cause its affiliates, associates and representatives to
hold, any nonpublic information in confidence until such time as such

-28-

<PAGE>

information otherwise becomes publicly available and shall use its best
efforts to ensure that such affiliates, associates and representatives do
not disclose such information to others without the prior written consent
of the Company. In the event of termination of this Agreement for any
reason, Parent shall promptly return or destroy all nonpublic documents so
obtained from the Company or any of its Subsidiaries and any copies made of
such documents for Parent.

(b) BY THE COMPANY. Parent shall, and shall cause each of its
Subsidiaries to, afford to the Company, and to Company's accountants,
counsel, financial advisers and other representatives, reasonable access
and permit them to make such inspections as they may reasonably request
during normal business hours during the period from the date of this
Agreement through the Effective Time to all their respective properties,
books, contracts, commitments and records and, during such period, Parent
shall, and shall cause each of its Subsidiaries to, furnish promptly to the
Company (i) access to each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements
of federal or state laws and (ii) all other information concerning its
business, properties and personnel as the Company may reasonably request.
Except as required by law, the Company will hold, and will cause its
affiliates, associates and representatives to hold, any nonpublic
information in confidence until such time as such information otherwise
becomes publicly available and shall use its best efforts to ensure that
such affiliates, associates and representatives do not disclose such
information to others without the prior written consent of Parent. In the
event of termination of this Agreement for any reason, the Company shall
promptly return or destroy all nonpublic documents so obtained from Parent
or any of its Subsidiaries and any copies made of such documents for the
Company.

Section 6.4 COMPLIANCE WITH THE SECURITIES ACT AND POOLING
REQUIREMENTS. Prior to the Effective Time, the Company shall cause to be
prepared and delivered to Parent a list (reasonably satisfactory to counsel for
Parent) identifying all persons who, at the time of the Stockholder Meetings,
may be deemed to be "affiliates" of the Company as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the
"Affiliates"). The Company shall use its best efforts to cause each person who
is identified as an Affiliate in such list to deliver to Parent on or prior to
the Effective Time a written agreement, in the form previously approved by the
parties hereto, that such Affiliate will not sell, pledge, transfer or otherwise
dispose of any shares of Parent Common Stock issued to such Affiliate pursuant
to the Merger, except pursuant to an effective registration statement under the
Securities Act or in compliance with paragraph (d) of Rule 145 or another
exemption from the

-29-

<PAGE>

registration requirements of the Securities Act and that such Affiliate will not
sell or in any other way reduce such Affiliate's risk relative to any shares of
Parent Common Stock received in the Merger (within the meaning of Section 201.01
of the SEC's Financial Reporting Release No. 1), until such time as financial
results (including combined sales and net income) covering at least 30 days of
post-merger operations have been published, except as permitted by Staff
Accounting Bulletin No. 76 issued by the SEC.

Section 6.5 STOCK EXCHANGE LISTING. Parent shall use its best
efforts to list on the NYSE, upon official notice of issuance, the shares of
Parent Common Stock to be issued pursuant to this Agreement.

Section 6.6 FEES AND EXPENSES. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, except as Parent and the Company shall otherwise agree
in writing. Notwithstanding the foregoing, if (a) the Board of Directors of the
Company shall withdraw or materially modify its recommendation to the
stockholders of the Company to approve this Agreement in accordance with Section
5.2 or (b) the Company shall terminate this Agreement in accordance with Section
8.1(g), the Company shall reimburse Parent for up to $500,000 of such expenses
actually incurred by Parent, including without limitation legal, accounting, and
investment banking fees and expenses, promptly after receipt of one or more
statements therefor in reasonable detail; PROVIDED, HOWEVER, that if prior to
the expiration of one year after any such withdrawal, modification or
termination, a merger, consolidation or other business combination, or a tender
or exchange offer, shall occur which effects a change of control of the Company
(an "Alternative Transaction"), on the third business day after the closing of
the Alternative Transaction, the Company shall pay to Parent, in lieu of its
obligation to make any further expense reimbursements, an amount equal to the
excess of $2,000,000 over the total expense reimbursements previously made by
the Company pursuant to this sentence.

Section 6.7 REASONABLE EFFORTS. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (a) the obtaining of all necessary
actions or non-actions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an

-30-

<PAGE>

action or proceeding by any Governmental Entity, including but not limited to
any filing under the Improvements Act, (b) the obtaining of all necessary
consents, approvals or waivers from third parties, (c) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (d)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that no
party shall be under any obligation to take any action pursuant to this Section
6.7 to the extent that its Board of Directors shall conclude in good faith after
consultation with the its outside counsel that such action is inconsistent with
such Board of Directors' fiduciary obligations under applicable law. Notwith-
standing anything to the contrary in this Section 6.7, no party shall commit to
any divestiture transaction, or any other material modification of its existing
business or the existing business of its Significant Subsidiaries, without the
prior written consent of all other parties.

Section 6.8 PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required in the opinion of the issuing party's outside counsel by
applicable law or by obligations pursuant to any listing agreement with the
NYSE, in which case the issuing party shall give the other parties notice
thereof as promptly as practicable.

Section 6.9 REAL ESTATE TRANSFER AND GAINS TAX. Subject to the last
sentence of Section 1.7, Parent and the Company agree that the Surviving
Corporation will pay any real property transfer or gains tax, or similar
transfer tax, if any, attributable to the transfer of the beneficial ownership
of the Company's or its Subsidiaries' real property (collectively, the "Gains
Taxes"), and any penalties or interest with respect to the Gains Taxes, payable
in connection with the consummation of the Merger. The Company agrees to
cooperate with Sub in the filing of any returns with respect to the Gains Taxes,
including supplying in a timely manner a complete list of all real property
interests held by the Company or its Subsidiaries and any information with
respect to such property that is reasonably necessary to complete such returns.
The portion of the Merger consideration allocable to the real property of the
Company and its Subsidiaries shall be determined by Sub or Parent in its
reasonable discretion. The stockholders of the Company shall be deemed to have
agreed to be bound by the allocation established pursuant to this Section 6.9 in
the preparation of any return with respect to the Gains Taxes.

-31-

<PAGE>

Section 6.10 STATE TAKEOVER LAWS; COMPANY RIGHTS AGREEMENT. If
Section 203 of the DGCL shall become applicable to the transactions contemplated
hereby, the Company and the members of the Board of Directors of the Company
shall use all reasonable efforts to grant such approvals and take such actions
as are necessary so that the transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of such Section 203 of the DGCL on the transactions
contemplated hereby. The Board of Directors of the Company has amended the
Company Rights Agreement such that neither Parent nor Sub shall become an
Acquiring Person (as defined in the Company Rights Agreement) as a result of
entering into this Agreement. Immediately prior to the Effective Time, the
Company shall redeem all outstanding Company Rights at a redemption price of
$.01 per Company Right. No other action is required to prevent the holders of
Company Rights from having any right under the Company Rights Agreement as a
result of the execution, delivery and performance of this Agreement and the
consummation of the Merger (other than the right to receive such redemption
price for their respective Company Rights).

Section 6.11 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. From
and after the Effective Time, Parent agrees to indemnify and hold harmless all
past and present officers and directors of the Company and of its Subsidiaries
to the full extent such persons may be indemnified by the Company pursuant to
the Company's Certificate of Incorporation and By-Laws for acts or omissions
occurring at or prior to the Effective Time and shall advance reasonable
litigation expenses incurred by such officers and directors in connection with
defending any action arising out of such acts or omissions. In addition, for a
period of not less than six years from the Effective Time, Parent will provide,
or cause the Surviving Corporation to provide, to the Company's current
directors and officers an insurance and indemnification policy that provides
coverage for events occurring through the Effective Time (the "D&O Insurance")
that is no less favorable than the existing policy or, if substantially equiva-
lent insurance coverage is unavailable, the best available coverage; PROVIDED,
HOWEVER, that Parent and the Surviving Corporation shall not be required to pay
an annual premium for the D&O Insurance in excess of three times the last annual
premium paid prior to the date hereof, but in such case shall purchase as much
coverage as possible for such amount.

Section 6.12 EMPLOYEE BENEFITS. Parent shall cause the Company and
its Subsidiaries (a) to honor all severance and employment agreements with the
officers and employees of the Company or any of its Subsidiaries and (b) to
maintain until at least two (2) years after the Effective Time, employee
benefits, plans, programs and policies for retirees, officers and employees
(including terminated officers and employees) of the Company and any of its
Subsidiaries (including the Company's policies with respect to severance pay and
outplacement services) that are no

-32-

<PAGE>

less favorable than those being provided to such retirees, officers and
employees on the date hereof; PROVIDED, HOWEVER, that nothing in this sentence
shall be construed to be a financial guarantee of any obligation of the Company
or any of its Subsidiaries. For purposes of eligibility to participate in and
vesting in all benefits provided to retirees, officers and employees, the
retirees, officers and employees of the Company and its Subsidiaries will be
credited with their hours and years of service with the Company and its
Subsidiaries and hours and years of service with prior employers to the extent
service with prior employers is taken into account under plans of the Company
and its Subsidiaries.

Section 6.13 JOB VACANCIES. Parent shall maintain at its corporate
offices a listing of job vacancies and newly created positions at Parent and its
Subsidiaries (including the Surviving Corporation and its Subsidiaries), and
upon the request of any officer or employee of the Company or its Subsidiaries
who is terminated as a result of the Merger or within eighteen months following
the Effective Time, shall provide such terminated officer or employee with a
copy of such list of vacancies or positions; PROVIDED, HOWEVER, that Parent and
its Subsidiaries shall have no obligation under this Section 6.13 to hire any
such terminated officer or employee to fill any of such vacancies or positions
or to delay filling any of them until such terminated officer or employee has
received a copy of such list. The service time of any such terminated officer
or employee who accepts employment with Parent or its Subsidiaries will include
all service time with the Company or its Subsidiaries and, in the case of
employment opportunities requiring a relocation of the officer's or employee's
place of residence, such officer or employee will be provided relocation
expenses and reimbursement consistent with Parent's existing reimbursement
policy for transferred or newly hired officers or employees.

Section 6.14 PARENT'S BOARD OF DIRECTORS. Parent's Board of
Directors will take all necessary action to cause Gary G. Dillon to be elected
to the Board of Directors of Parent as soon as practicable after the Effective
Time.

ARTICLE VII

CONDITIONS PRECEDENT TO THE MERGER

Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:

(a) STOCKHOLDER APPROVALS. This Agreement shall have been approved
by the requisite vote of the holders of Company Common Stock and the
Amendment and the issuance of shares of Parent Common Stock pursuant to
this Agreement

-33-

<PAGE>

shall have been approved by the requisite vote of the holders of Parent
Common Stock.

(b) NYSE LISTING. The Parent Common Stock issuable pursuant to this
Agreement shall have been authorized for listing on the NYSE, upon official
notice of issuance.

(c) IMPROVEMENTS ACT WAITING PERIOD. All applicable waiting periods
under the Improvements Act shall have expired or been terminated.

(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and remain in effect. All necessary
state securities or "Blue Sky" authorizations shall have been received.

(e) TAX OPINION. The Company and Parent shall have received a legal
opinion of Sidley & Austin, special counsel to the Company, in form and
substance satisfactory to the Company, dated the Effective Time,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the
state of facts existing as of the Effective Time, for federal income tax
purposes:

(i) The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and the Company, Parent and Sub will each be a
party to such reorganization within the meaning of Section 368(b) of the
Code;

(ii) No gain or loss will be recognized by the Company as a result of
the Merger;

(iii) No gain or loss will be recognized by the stockholders of the
Company upon the conversion of their Company Common Stock into shares of
Parent Common Stock pursuant to the Merger (except for cash paid in lieu of
a fractional share of Parent Common Stock);

(iv) The aggregate tax basis of the shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger (including a fractional share of Parent Common Stock for which cash
is paid) will be the same as the aggregate tax basis of such shares of
Company Common Stock;

(v) The holding period for shares of Parent Common Stock received in
exchange for shares of Company Common Stock pursuant to the Merger will
include the period that such shares of Company Common Stock were held by
the holder,

-34-

<PAGE>

provided such shares of Company Common Stock were held as capital assets by
the holder at the Effective Time; and

(vi) A stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss equal
to the difference, if any, between such stockholder's basis in the
fractional share and the amount of cash received.

In rendering such opinion, Sidley & Austin may receive and rely as to
matters of fact upon representations contained in certificates of the
Company, Parent, Sub and others, and may condition such opinion on the
receipt from certain stockholders of the Company of certificates verifying
that such stockholders have no present plan or intention to sell or dispose
of, or otherwise diminish their equity risk with respect to, the shares of
Parent Common Stock to be distributed to them in the Merger.

(f) NO ORDER. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect
and has the effect of making this Agreement or the transactions
contemplated hereby illegal.

(g) RESIGNATIONS OF COMPANY DIRECTORS. Each of the directors of the
Company, other than Gary G. Dillon and Robert S. Jepson, Jr., shall have
delivered to the Company his written resignation as a director of the
Company, effective as of the Effective Time.

(h) OTHER APPROVALS. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or
expirations of waiting periods imposed by, any Governmental Entity, the
failure to obtain which would have a Material Adverse Effect on Parent (on
a consolidated basis, assuming the Merger had taken place), shall have been
obtained, shall have occurred or shall have been filed.

Section 7.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:

(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES.
Parent and Sub shall have performed in all material respects each of their
agreements contained in this Agreement required to be performed on or prior
to the Effective Time, each of the representations and warranties of Parent
and Sub contained in this Agreement that is qualified by materiality shall
be true and correct on and as of the Effective Time as if made on and as of
such date,

-35-

<PAGE>

each of the representations and warranties that is not so qualified shall
be true and correct in all material respects on and as of the Effective
Time as if made on and as of such date, in each case except as contemplated
or permitted by this Agreement, and Parent shall have furnished to the
Company a certificate, dated the Effective Time, signed by the Chairman of
the Board, the President or an Executive Vice President of Parent,
certifying to the effect that to the best of the signing officer's
knowledge and belief, the conditions set forth in this Section 7.2(a) have
been satisfied in full.

(b) FAIRNESS OPINION. The Company shall have received in form
satisfactory to the Company, an opinion of J. P. Morgan Securities Inc.,
dated as of the date of the Proxy Statement/Prospectus, substantially to
the effect that the consideration to be received by the stockholders of the
Company in the Merger is fair to such stockholders from a financial point
of view, and as of the Effective Time and based upon circumstances then in
effect such opinion shall not have been withdrawn or modified in any
material respect.

(c) OPINION OF COUNSEL. The Company shall have received a legal
opinion from Rudnick & Wolfe, special counsel to Parent, dated the
Effective Time, substantially to the effect that:

(i) The incorporation, existence and good standing of Parent, Sub and
each of Parent's Significant Subsidiaries are as stated in this Agreement;
the authorized shares of capital stock of Parent, Sub and each of Parent's
Significant Subsidiaries are as stated in this Agreement; all outstanding
shares of Parent Common Stock and all outstanding shares of capital stock
of Parent's Significant Subsidiaries are duly and validly authorized and
issued, fully paid and nonassessable and have not been issued in violation
of any preemptive right of any stockholder of Parent or any of such
Subsidiaries; all of the issued and outstanding shares of capital stock of
Parent's Significant Subsidiaries are owned of record and, to the knowledge
of such counsel, beneficially by Parent or a wholly-owned Subsidiary of
Parent, and such counsel is not aware of any liens, charges or encumbrances
on any of such shares; and to the knowledge of such counsel, there is no
existing option, warrant, right, call, subscription or other agreement or
commitment obligating Parent, Sub or any of Parent's Significant
Subsidiaries to issue or sell, or to purchase or redeem, any shares of the
capital stock of Parent or any of its Significant Subsidiaries, other than
as stated in this Agreement.

(ii) Each of Parent and Sub has full corporate power and authority to
execute, deliver and perform this Agreement; this Agreement has been duly
authorized, executed and

-36-

<PAGE>

delivered by Parent and Sub; this Agreement (assuming valid authorization,
execution and delivery of this Agreement by the Company and the
enforceability of this Agreement against the Company) constitutes the
legal, valid and binding agreement of Parent and Sub enforceable against
Parent and Sub in accordance with its terms, except to the extent enforce-
ability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights
and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and
except that such counsel need express no opinion with respect to the
enforcement of rights to indemnification against liabilities under the
federal securities laws; and the Amendment and the issuance of shares of
Parent Common Stock pursuant to this Agreement have been duly authorized by
all necessary corporate action.

(iii) The execution, delivery and performance by Parent and Sub of
this Agreement will not violate the Certificate of Incorporation or By-Laws
of Parent or of Sub and, to the knowledge of such counsel, will not
violate, result in a breach of or constitute a default under any material
lease, mortgage, contract, agreement, instrument, law, rule, regulation,
judgment, order or decree to which Parent, Sub or any of Parent's
Significant Subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound, which violation, breach or
default should reasonably be expected to have a Material Adverse Effect on
Parent.

(iv) To the knowledge of such counsel, no consent, approval,
authorization or order of any Governmental Entity which has not been
obtained is required on behalf of Parent, Sub or any of Parent's other
Subsidiaries for the consummation of the transactions contemplated by this
Agreement.

(v) To the knowledge of such counsel, neither Parent nor Sub is
subject to any injunction (whether temporary, preliminary or permanent) by
any court of competent jurisdiction against consummation of the
transactions contemplated by this Agreement.

(vi) Except as set forth in the Parent Disclosure Schedule or the
Parent SEC Documents, to the knowledge of such counsel, there are no
actions, suits or proceedings pending or threatened against Parent or any
of its Subsidiaries before any Governmental Entity or arbitrator which,
individually or in the aggregate, should reasonably be expected to have a
Material Adverse Effect on Parent.

(vii) The shares of Parent Common Stock to be issued pursuant to this
Agreement will be, when so issued, shares

-37-

<PAGE>

of Parent Common Stock that have been duly authorized and validly issued,
are fully paid and nonassessable and have not been issued in violation of
any preemptive right of any stockholder of Parent.

(viii) The shares of Parent Common Stock issuable pursuant to this
Agreement have been duly listed on the NYSE, subject to official notice of
issuance.

(ix) The Registration Statement has become effective under the
Securities Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceeding for such purpose has been instituted or threatened by
the SEC.

(x) (A) At the time the Registration Statement became effective, the
Registration Statement (other than the financial statements, financial
data, statistical data and supporting schedules included therein and
information relating to and supplied by the Company, as to which such
counsel need express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the Exchange Act.

(B) In the course of the preparation of the Registration Statement
and the Proxy Statement/Prospectus, such counsel has considered the
information set forth therein in light of the matters required to be set
forth therein, and has participated in conferences with officers and
representatives of Parent and the Company, including their respective
counsel and independent public accountants, during the course of which the
contents of the Registration Statement and the Proxy Statement/Prospectus
and related matters were discussed. Such counsel has not independently
checked the accuracy or completeness of, or otherwise verified, and
accordingly is not passing upon, and does not assume responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Proxy Statement/Prospectus; and such counsel
has relied as to materiality, to a large extent, upon the judgment of
officers and representatives of Parent. However, as a result of such
consideration and participation, nothing has come to such counsel's
attention which causes such counsel to believe that the Registration
Statement (other than the financial statements, financial data, statistical
data and supporting schedules included therein, the section captioned
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" relating to Parent and the information relating to and
supplied by the Company, as to which such counsel need express no belief),
at the time it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Proxy Statement/

-38-

<PAGE>

Prospectus (other than the financial statements, financial data,
statistical data and supporting schedules included therein, the section
captioned "Management's Discussion and Analysis of Results of Operations
and Financial Condition" relating to Parent and information relating to and
supplied by the Company, as to which such counsel need express no belief),
at the time the Registration Statement became effective, at the time of
mailing the Proxy Statement/Prospectus to the respective stockholders of
Parent and the Company or at the time of the Stockholder Meetings, included
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

(xi) The Amendment and the Certificate of Merger have been duly filed
with the Secretary of State of the State of Delaware and the Amendment and
the Merger have become effective under the DGCL.

In rendering such opinion, Rudnick & Wolfe may rely as to matters of fact
upon the representations of officers of Parent, Sub or any of Parent's
other Subsidiaries contained in any certificate delivered to such counsel
and certificates of public officials. Such opinion shall be limited to the
General Corporation Law of the State of Delaware and the laws of the United
States of America.

(d) OTHER DOCUMENTS. Parent and Sub shall have furnished to the
Company at the Closing such other customary documents, certificates or
instruments as the Company may reasonably request evidencing compliance by
Parent and Sub with the terms of this Agreement.

Section 7.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:

(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. The
Company shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior
to the Effective Time, each of the representations and warranties of the
Company contained in this Agreement that is qualified by materiality shall
be true and correct on and as of the Effective Time as if made on and as of
such date, each of the representations and warranties that is not so
qualified shall be true and correct in all material respects on and as of
the Effective Time as if made on and as of such date, in each case except
as contemplated or permitted by this Agreement, and the Company shall have
furnished to Parent a certificate, dated the Effective Time, signed by the
Chairman of the Board, the President or a Vice President of

-39-

<PAGE>

the Company, certifying to the effect that to the best of the signing
officer's knowledge and belief, the conditions set forth in this Section
7.3(a) have been satisfied.

(b) THIRD PARTY CONSENTS. All required authorizations, consents or
approvals of any third party (other than a Governmental Entity), the
failure to obtain which would have a Material Adverse Effect on Parent (on
a consolidated basis, assuming the Merger had taken place), shall have been
obtained.

(c) REDEMPTION OF RIGHTS. The Company shall have redeemed all
outstanding Company Rights at a redemption price of $.01 per Company Right
immediately prior to the Effective Time.

(d) ACCOUNTING. Based on the advice of Arthur Andersen LLP and such
other advice as Parent may reasonably deem relevant, Parent shall have no
reasonable basis for believing that following the Merger, the combination
of the Company and Sub may not be accounted for as a "pooling of interests"
in accordance with generally accepted accounting principles.

(e) FAIRNESS OPINION. Parent shall have received in form
satisfactory to Parent, an opinion of The Chase Manhattan Bank, N.A., dated
as of the date of the Proxy Statement/Prospectus, substantially to the
effect that, as of such date, the Exchange Ratio was fair to Parent from a
financial point of view, and as of the Effective Time and based upon
circumstances then in effect such opinion shall not have been withdrawn or
modified in any material respect.

(f) OPINION OF COUNSEL. Parent shall have received a legal opinion
from Sidley & Austin, special counsel to the Company, dated the Effective
Time, substantially to the effect that:

(i) The incorporation, existence and good standing of the Company are
as stated in this Agreement and the authorized shares of capital stock of
the Company are as stated in this Agreement.

(ii) The Company has full corporate power and authority to execute,
deliver and perform this Agreement; this Agreement has been duly
authorized, executed and delivered by the Company; and this Agreement
(assuming the valid authorization, execution and delivery of this Agreement
by Parent and Sub and the enforceability of this Agreement against each of
them) constitutes the legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other

-40-

<PAGE>

similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law).

(iii) The execution, delivery and performance by the Company of this
Agreement will not violate the Certificate of Incorporation or By-laws of
the Company.

(iv) To the knowledge of such counsel, no consent, approval,
authorization or order of any Governmental Entity which has not been
obtained is required on behalf of the Company or any of its Subsidiaries
for the consummation of the transactions contemplated by this Agreement.

(v) To the knowledge of such counsel, the Company is not subject to
any injunction (whether temporary, preliminary or permanent) by any court
of competent jurisdiction against consummation of the transactions
contemplated by this Agreement.

(vi)(A) At the time the Registration Statement became effective, the
information relating to and supplied by the Company contained in the
Registration Statement and the information relating to the transactions
provided for in this Agreement (other than the financial statements,
financial data, statistical data and supporting schedules included therein,
as to which such counsel need express no opinion) complied as to form in
all material respects with the requirements of the Securities Act and the
Exchange Act.

(B) In the course of the preparation of the Registration Statement
and the Proxy Statement/Prospectus, such counsel has considered the
information set forth therein in light of the matters required to be set
forth therein, and has participated in conferences with officers and
representatives of the Company and Parent, including their respective
counsel and independent public accountants, during the course of which the
contents of the Registration Statement and the Proxy Statement/Prospectus
and related matters were discussed. Such counsel has not independently
checked the accuracy or completeness of, or otherwise verified, and
accordingly is not passing upon, and does not assume responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Proxy Statement/Prospectus; and such counsel
has relied as to materiality, to a large extent, upon the judgment of
officers and representatives of the Company. However, as a result of such
consideration and participation, nothing has come to such counsel's
attention which causes such counsel to believe that the Registration
Statement (other than the financial statements, financial data, statistical
data and supporting schedules included

-41-

<PAGE>

therein, the section captioned "Management's Discussion and Analysis of
Results of Operations and Financial Condition" relating to the Company and
the information relating to and supplied by Parent, as to which such
counsel need express no belief), at the time it became effective, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Proxy Statement/Prospectus (other than the
financial statements, financial data, statistical data and supporting
schedules included therein, the section captioned "Management's Discussion
and Analysis of Results of Operations and Financial Condition" relating to
the Company and the information relating to and supplied by Parent, as to
which such counsel need express no belief), at the time the Registration
Statement became effective, at the time of mailing the Proxy Statement/
Prospectus to the respective stockholders of the Company and Parent or at
the time of the Stockholder Meetings, included any untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.

(xi) The Certificate of Merger has been duly filed with the Secretary
of State of the State of Delaware and the Merger has become effective under
the DGCL.

In rendering such opinion, Sidley & Austin may rely as to matters of fact
upon the representations of officers of the Company and its Subsidiaries
contained in any certificate delivered to such counsel and certificates of
public officials. Such opinion shall be limited to the General Corporation
Law of the State of Delaware and the laws of the United States of America.

(g) OPINION OF OTHER COUNSEL. Parent shall have received a legal
opinion from Schiff, Hardin & Waite, regular outside counsel to the
Company, dated the Effective Time, substantially to the effect that:

(i) The incorporation, existence, good standing and the authorized
shares of capital stock of each of the Company's Significant Subsidiaries
are as stated in this Agreement.

(ii) All of the outstanding shares of Company Common Stock and all of
the outstanding shares of capital stock of the Company's Significant
Subsidiaries (A) are duly and validly authorized and issued, fully paid and
nonassessable and have not been issued in violation of any preemptive right
of any stockholder of the Company or any of such Subsidiaries and (B), in
the case of such shares of the Company's Significant Subsidiaries, are
owned of record and, to the knowledge of such counsel, beneficially by the

-42-

<PAGE>

Company or a wholly-owned Subsidiary of the Company, and such counsel is
not aware of any liens, charges or encumbrances on any of such shares.

(iii) To the knowledge of such counsel, there is no existing option,
warrant, right, call, subscription or other agreement or commitment
obligating the Company or any of its Significant Subsidiaries to issue or
sell, or to purchase or redeem, any shares of capital stock of the Company
or any of its Significant Subsidiaries, other than as stated in this
Agreement.

(iv) To the knowledge of such counsel, the execution, delivery and
performance by the Company of this Agreement will not violate, result in a
breach of or constitute a default under any material lease, mortgage,
contract, agreement, instrument, law, rule, regulation, judgment, order or
decree to which the Company or any of its Significant Subsidiaries is a
party or to which any of them or any of their respective properties or
assets may be bound, which violation, breach or default should reasonably
be expected to have a Material Adverse Effect on the Company.

(v) Except as set forth in the Company Disclosure Schedule or the
Company SEC Documents, to the knowledge of such counsel, there are no
actions, suits or proceedings pending or threatened against the Company or
any of its Subsidiaries before any Governmental Entity or arbitrator which,
individually or in the aggregate, should reasonably be expected to have a
Material Adverse Effect on the Company.

(vi) In the course of the preparation of the Registration Statement
and the Proxy Statement/Prospectus, such counsel has considered the
information set forth therein in light of the matters required to be set
forth therein, and has participated in conferences with officers and
representatives of the Company and Parent, including their respective
counsel and independent public accountants, during the course of which the
contents of the Registration Statement and the Proxy Statement/Prospectus
and related matters were discussed. Such counsel has not independently
checked the accuracy or completeness of, or otherwise verified, and
accordingly is not passing upon, and does not assume responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Proxy Statement/Prospectus; and such counsel
has relied as to materiality, to a large extent, upon the judgment of
officers and representatives of the Company. However, as a result of such
consideration and participation, nothing has come to such counsel's
attention which causes such counsel to believe that the Registration
Statement (other than the financial statements, financial data, statistical
data and supporting schedules included therein, the section captioned

-43-

<PAGE>

"Management's Discussion and Analysis of Results of Operations and
Financial Condition" relating to the Company and the information relating
to and supplied by Parent, as to which such counsel need express no
belief), at the time it became effective, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Proxy Statement/Prospectus (other than the financial statements,
financial data, statistical data and supporting schedules included therein,
the section captioned "Management's Discussion and Analysis of Results of
Operations and Financial Condition" relating to the Company and the
information relating to and supplied by Parent, as to which such counsel
need express no belief), at the time the Registration Statement became
effective, at the time of mailing of the Proxy Statement/Prospectus to the
respective stockholders of the Company and Parent or at the time of the
Stockholder Meetings, included any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

In rendering such opinion, Schiff Hardin & Waite may rely as to matters of
fact upon the representations of officers of the Company and its
Subsidiaries contained in any certificate delivered to such counsel and
certificates of public officials. Such opinion shall be limited to the
General Corporation Law of the State of Delaware and the laws of the United
States of America. With respect to matters governed by the laws of Brazil,
Canada and the United Kingdom, such counsel may rely upon the opinions of
(i) Eduardo Caio da Silva Prado, (ii) Blake, Cassels & Greydon and (iii)
Lovell, White and Durrant, respectively.

(h) OTHER DOCUMENTS. The Company shall have furnished to Parent at
the closing such other customary documents, certificates or instruments as
Parent may reasonably request evidencing compliance by the Company with the
terms of this Agreement.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

Section 8.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after any approval of this
Agreement by the stockholders of the Company or any approval of the Amendment
and the issuance of Parent Common Stock pursuant to this Agreement by the
stockholders of Parent:

-44-

<PAGE>

(a) by mutual written consent of Parent and the Company;

(b) by Parent if (i) the Company shall have failed to comply in any
material respect with any of its covenants or agreements contained in this
Agreement required to be complied with by the Company prior to the date of
such termination and such failure shall not have been cured within five
business days following receipt by the Company from Parent of written
notice of such failure and demand for cure, (ii) the stockholders of the
Company shall have failed to approve this Agreement at the Company's
Stockholder Meeting, or (iii) the stockholders of Parent shall have failed
to approve the Amendment and the issuance of Parent Common Stock pursuant
to this Agreement at Parent's Stockholder Meeting.

(c) by the Company if (i) Parent or Sub shall have failed to comply
in any material respect with any of its covenants or agreements contained
in this Agreement required to be complied with by Parent or Sub prior to
the date of such termination, and such failure to comply shall not have
been cured within five business days following receipt by Parent from the
Company of written notice of such failure and demand for cure, (ii) the
stockholders of the Company shall have failed to approve this Agreement at
the Company's Stockholder Meeting, or (iii) the stockholders of Parent
shall have failed to approve the Amendment and the issuance of Parent
Common Stock pursuant to this Agreement at the Parent's Stockholder
Meeting;

(d) by either Parent or the Company if (i) the Merger has not been
effected on or prior to the close of business on September 30, 1995;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to
this clause shall not be available to any party whose failure to fulfill
any obligation of this Agreement has been the cause of, or resulted in, the
failure of the Merger to have been effected on or prior to such date, or
(ii) any court of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable;

(e) by either Parent or the Company if there has been (i) a material
breach by the other of any of its representations or warranties contained
in this Agreement that is not qualified as to materiality or (ii) any
breach by the other of any of its representations or warranties contained
in this Agreement that is qualified as to materiality, and in each case
such breach shall not have been cured within five business days following
receipt by

-45-

<PAGE>

the breaching party from the other party of written notice of such breach
and demand for cure;

(f) by Parent, (i) if the Board of Directors of the Company shall not
have recommended, or shall have resolved not to recommend, or shall have
materially modified or withdrawn its recommendation of the Merger or (ii)
if the Board of Directors of the Company shall have recommended, or shall
have resolved to recommend, to the stockholders of the Company any takeover
proposal or offer of any other person;

(g) by the Company if there is a takeover proposal or offer relating
to (i) a tender or exchange offer for all or substantially all of the
outstanding shares of Company Common Stock, (ii) a merger, consolidation or
other business combination involving the Company, or (iii) an acquisition
of all or substantially all of the outstanding shares of Company Common
Stock or all or substantially all of the assets of the Company, in each
case for a consideration that provides to the stockholders of the Company a
value per share of Company Common Stock which, in the good faith judgment
of the Board of Directors of the Company, provides a higher value per share
than the consideration per share pursuant to this Agreement;

(h) by the Company, if the average of the daily closing prices of a
share of Parent Common Stock reported as "New York Stock Exchange Composite
Transactions" by THE WALL STREET JOURNAL (Midwest Edition) during the 20
consecutive trading day period ending at the end of the third trading day
prior to the Stockholder Meetings (the "Average Parent Common Stock
Price"), is less than $11.00; or

(i) by Parent, if the Average Parent Common Stock Price is more than
$16.00.

Section 8.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Sub or their respective officers or
directors (except as set forth in the last two sentences of Section 6.3(a) the
last two sentences of Section 6.3(b) and Section 6.6, which shall survive such
termination); PROVIDED, HOWEVER, that nothing contained in this Section 8.2
shall relieve any party hereto from any liability for any breach of this
Agreement.

Section 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval of this Agreement by the stockholders of
the Company or the approval of the Amendment and the issuance of shares of
Parent Common Stock pursuant to this Agreement by the stockholders of Parent,
but, after any such approval by the

-46-

<PAGE>

stockholders of the Company or the stockholders of Parent, no amendment shall be
made which changes the Exchange Ratio as provided in Section 1.5(c) or which in
any way materially adversely affects the rights of the stockholders of the
Company or the stockholders of Parent, as the case may be, without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.

Section 8.4 WAIVER. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.

ARTICLE IX

GENERAL PROVISIONS

Section 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.

Section 9.2 NOTICES. All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
given or delivered when delivered personally, when telecopied (with a
confirmatory copy sent by private overnight courier) or one day after being sent
by private overnight courier to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

(a) if to Parent or Sub, to

Kuhlman Corporation
1 Skidaway Village Walk
Suite 201
Savannah, GA 31411
Attention: Chairman and Chief
Executive Officer
(Telecopy No. (912) 598-0737)

-47-

<PAGE>

with copies to:

Stephen A. Landsman
Rudnick & Wolfe
203 North La Salle Street
Chicago, IL 60601
(Telecopy No. (312) 984-2299)

(b) if to the Company, to

Schwitzer, Inc.
Highway 191
Brevard Road
P. O. Box 15075
Asheville, NC 28813
Attention: Chairman, President and
Chief Executive Officer
(Telecopy No. (704) 684-4017)

with copies to:

Thomas A. Cole
Sidley & Austin
One First National Plaza
Chicago, IL 60603
(Telecopy No. (312) 853-7036)

and

Robert J. Minkus
Schiff, Hardin & Waite
7200 Sears Tower
Chicago, IL 60606
(Telecopy No. (312) 258-5600)

Section 9.3 INTERPRETATION. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."

Section 9.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

Section 9.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, including the documents and

-48-

<PAGE>

instruments referred to herein, and the letter agreement dated January 9, 1995
between Parent and the Company (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (b) except for
provisions of Sections 6.9, 6.11, 6.12 and 6.13, is not intended to confer upon
any person other than the parties any rights or remedies hereunder.

Section 9.6 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

Section 9.7 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.

Section 9.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced because of any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are 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 shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that such transactions shall be consummated as
originally contemplated to the fullest extent possible.

Section 9.9 ENFORCEMENT OF THIS AGREEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which such party is entitled at law or in equity.

-49-

<PAGE>

IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.

KUHLMAN CORPORATION

By /s/ Robert S. Jepson, Jr.
--------------------------
Name: Robert S. Jepson, Jr.
Title: Chairman and Chief
Executive Officer

Attest:

/s/ Richard A. Walker
- - - - - -----------------------
Name: Richard A. Walker
Title: Secretary

SPINNER ACQUISITION CORP.

By /s/ Robert S. Jepson, Jr.
---------------------------
Name: Robert S. Jepson, Jr.
Title: Chairman and Chief
Executive Officer

Attest:

/s/ Richard A. Walker
- - - - - -----------------------
Name: Richard A. Walker
Title: Secretary

SCHWITZER, INC.

By /s/ Gary G. Dillon
--------------------
Name: Gary G. Dillon
Title: Chairman, President
and Chief Executive
Officer

Attest:

/s/ Richard H. Prange
- - - - - -----------------------
Name: Richard H. Prange
Title: Secretary

-50-

<PAGE>

February 27, 1995

KUHLMAN AND SCHWITZER SIGN DEFINITIVE
AGREEMENT TO MERGE

Kuhlman Corporation (NYSE:KUH) and Schwitzer, Inc. (NYSE:SCZ) jointly announced
today that they have signed a definitive agreement to merge Schwitzer with a
wholly-owned subsidiary of Kuhlman. In the transaction, shares of Schwitzer
Common Stock will be converted into shares of Kuhlman Common Stock using an
exchange ratio of 0.9615 share of Kuhlman for each share of Schwitzer. The
merger is subject to certain closing conditions, including the approval of the
shareholders of both companies. It is anticipated that this transaction will be
consummated in the second quarter of 1995 following approval by shareholders of
both companies at the companies' respective annual meetings of shareholders.
Both meetings are currently scheduled to be held on May 31, 1995.

Kuhlman Corporation is a holding company involved in the manufacturing of
electrical and electronic wire and cable products; distribution, power and
instrument transformers; and spring products. Sales for its fiscal year ended
December 31, 1994 were approximately $243 million. Kuhlman has approximately
6.1 million shares outstanding. Schwitzer has approximately 7.2 million shares
outstanding.

In making this joint announcement, Robert S. Jepson, Jr., Chairman and Chief
Executive Officer of Kuhlman, and Gary G. Dillon, Chairman, President and Chief
Executive Officer of Schwitzer, stated that "The merger of Kuhlman and Schwitzer
will benefit the shareholders of both companies by making the resulting company
better equipped to meet the competitive challenges that it is certain to face in
the future."

Schwitzer, Inc. designs, manufactures and markets turbochargers, fan drives,
cooling fans and crankshaft vibration dampers for enhancing the efficiency of
diesel and gasoline engines.

For further information, contact:

Investor Relations
Schwitzer, Inc.
Highway 191, Brevard Road
P.O. Box 15075
Asheville, N.C. 28813
(704) 684-4014