ADCO TECHNOLOGIES INC, 10-Q, 1996-08-08

ADCO TECHNOLOGIES INC
10-Q, 1996-08-08
ADHESIVES & SEALANTS

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended JUNE 30, 1996
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from to
-------------- --------------

COMMISSION FILE NUMBER 0-25500

ADCO TECHNOLOGIES INC.
---------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER.)

Delaware 13-3715246
------------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4401 Page Avenue
P.O. Box 457
Michigan Center, MI 49254
------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code 517-764-0334
------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days:

YES X NO
----- -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

CLASS OUTSTANDING AT JUNE 30, 1996
------------------------------------------- ----------------------------

Common Stock, par value $.01 per share 5,150,000

<PAGE> 2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
JUNE 30, 1996
(UNAUDITED) DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 3,558,264 $ 3,797,650
Trade accounts receivable, less allowances
($146,000 and $140,000 at June 30, 1996
and December 31, 1995, respectively) 7,601,085 4,672,127
Inventories:
Finished goods 2,563,322 2,735,782
Raw materials and packaging 3,218,307 2,332,430
----------- -----------
5,781,629 5,068,212
Refundable income taxes 0 176,969
Deferred income taxes 353,435 319,374
Other current assets 203,650 139,358
----------- -----------
Total current assets 17,498,063 14,173,690

Property, plant and equipment, net 9,075,418 8,895,851
Intangibles 7,894,360 8,034,994
Other assets 13,350 13,350
----------- -----------
$34,481,191 $31,117,885
=========== ===========

Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 2,054,388 $ 940,530
Accrued compensation and other expenses 1,922,476 1,992,608
Federal income and state taxes 383,260 130,982
----------- -----------
Total current liabilities 4,360,124 3,064,120

Deferred income taxes 1,031,275 1,006,570
Redeemable preferred stock of subsidiary 3,920,000 3,850,000

Stockholders' equity:
Preferred stock, par value $.01 per share--
Authorized 100,000; no shares issued and outstanding 0 0
Common stock, par value $.01 per share
Authorized 9,000,000; issued and outstanding
5,150,000 shares at June 30, 1996 and
December 31, 1995 51,500 51,500
Additional paid-in-capital - common 15,140,750 15,140,750
Less receivable from management shareholders (50,000) (150,000)
Retained earnings 10,027,542 8,154,945
----------- -----------
25,169,792 23,197,195
----------- -----------
$34,481,191 $31,117,885
=========== ===========
</TABLE>

See notes to consolidated financial statements

<PAGE> 3
ADCO TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $13,995,266 $12,709,679 $24,953,992 $24,097,393
Cost of products sold 10,045,001 8,719,449 18,200,020 16,728,853
----------- ----------- ----------- -----------
Gross profit 3,950,265 3,990,230 6,753,972 7,368,540

Operating expenses:
Selling, general and administrative 1,424,159 1,449,499 2,780,472 2,928,840
Research and development 363,638 335,932 733,163 678,978
----------- ----------- ----------- -----------
Total operating expenses 1,787,797 1,785,431 3,513,635 3,607,818
----------- ----------- ----------- -----------

Operating income 2,162,468 2,204,799 3,240,337 3,760,722

Interest expense 0 0 0 105,020
Dividends on preferred stock of subsidiary 70,000 70,000 140,000 140,000
Other expense (income) - net (67,599) 13,838 (184,261) (16,753)
----------- ----------- ----------- -----------
Income before taxes 2,160,067 2,120,961 3,284,598 3,532,455
Income taxes 790,000 774,000 1,206,000 1,302,000
----------- ----------- ----------- -----------

Net income 1,370,067 1,346,961 2,078,598 2,230,455
=========== =========== =========== ===========
Net income per common and common
equivalent share $ 0.26 $ 0.26 $ 0.40 $ 0.45
=========== =========== =========== ===========
Weighted average shares outstanding 5,259,313 5,225,103 5,259,313 4,939,191
----------- ----------- ----------- -----------
</TABLE>

See notes to consolidated financial statements

<PAGE> 4
ADCO TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK OF
SUBSIDIARY AND STOCKHOLDERS' EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
REDEEMABLE PREFERRED STOCK OF SUBSIDIARY
------------------------------------------------------------
ADDITIONAL
SERIES A SERIES B PAID-IN TOTAL
PREFERRED PREFERRED CAPITAL PREFERRED
STOCK STOCK PREFERRED STOCK
------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $35 $350,000 $3,499,965 $3,850,000
Net income for the six month period
ended June 30, 1996
Repayment of management loan
Preferred stock dividend 70,000 $ 70,000
Dividends on common stock - $.04/share
--- -------- ---------- ----------
Balance at June 30, 1996 $35 $420,000 $3,499,965 $3,920,000
=== ======== ========== ==========

STOCKHOLDERS' EQUITY
--------------------------------------------------------------
ADDITIONAL RECEIVABLE
PAID-IN FROM TOTAL
COMMON CAPITAL MANAGEMENT RETAINED STOCKHOLDERS'
STOCK COMMON SHAREHOLDERS EARNINGS EQUITY
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $51,500 $15,140,750 ($150,000) $ 8,154,945 $23,197,195
Net income for the six month period
ended June 30, 1996 2,218,597 $ 2,218,597
Repayment of management loan 100,000 $100,000
Preferred stock dividend (140,000) ($140,000)
Dividends on common stock - $.04/share (206,000) ($206,000)
------- ----------- ----------- ----------- -----------
Balance at June 30, 1996 $51,500 $15,140,750 ($50,000) $10,027,542 $25,169,792
======= =========== =========== =========== ===========

</TABLE>

See notes to consolidated financial statements

<PAGE> 5
ADCO TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------------
1996 1995
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $2,078,598 $2,230,455
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 653,440 597,817
Deferred income taxes (9,356) (81,760)
Changes in current assets and liabilities:
Trade accounts receivable (2,928,958) (1,923,997)
Inventories (713,417) (1,926,746)
Other current assets 112,677 (175,844)
Other assets --- (14,100)
Trade accounts payable 1,113,858 1,074,084
Taxes payable 252,278 411,128
Accrued salaries, wages and other expenses (70,132) 107,366
---------- --------
Net cash provided by operating activities 488,988 298,403

INVESTING ACTIVITIES
Purchases of property, plant and equipment (692,374) (698,898)
Purchase of patents --- ---
Other --- ---
---------- --------
Net cash used in investing activities (692,374) (698,898)

FINANCING ACTIVITIES
Repayment of management loan 100,000 ---
Payments of debt --- (6,008,076)
Issuance of preferred stock 70,000 70,000
Issuance of capital stock --- 6,877,250
Cash dividend paid on common stock (206,000) (77,250)
---------- --------
Net cash provided by (used in) financing activities (36,000) 861,924
---------- --------
Increase (decrease) in cash (239,386) 461,429
Cash at beginning of period 3,797,650 336,981
---------- --------
Cash at end of period $3,558,264 $798,410
========== ========
</TABLE>

See notes to consolidated financial statements

<PAGE> 6

ADCO TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

1. INTERIM FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six month period
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Adco Technologies Inc. annual report on Form 10-K for the year ended December
31, 1995.

The Company has adopted Statement of Financial Accounting Standards No. 121
(SFAS 121), "Accounting for the Impairment of Long-Lived Assets" effective
January 1, 1996. Based on current circumstances this adoption has no effect on
the Company's income statement.

2. INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
using the last in, first out (LIFO) method.
Current costs, based on the first in, first out (FIFO) method would have
resulted in reported amounts approximately $109,000 higher at June 30, 1996 and
approximately the same at December 31, 1995.

3. INCOME TAXES

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes".
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

4. LITIGATION AND REGULATION

There are judicial and administrative claims pending or contemplated against
the Company. Management believes that the resolution of these matters should
not have a material effect upon the Company's financial condition, results of
operations and cash flows.

The Environmental Protection Agency ("EPA") has notified the Company that it is
a Potentially Responsible Party ("PRP") at, and requested that the Company
provide information with respect to, two Superfund sites. Regarding the first
site, the Company has informed the EPA that it believes that it is not
responsible for any materials at the site and that the Company believes that
the previous owners of the property upon which the Company's facility is
located may be responsible for the materials in question located at this site.
The Company has not made and has not been requested to make any expenditures
toward the clean-up of this site, and has not been contacted further by the
EPA. At the second site, the Company has been notified by the EPA that it is
the source of a de minimis quantity of waste materials. The Company spent
approximately $6,000 in clean-up costs at this site and the Company does not
expect that its clean-up costs will exceed $10,000.

<PAGE> 7

ADCO TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. LITIGATION AND REGULATION (CONTINUED).

The Michigan Department of Natural Resources ("MDNR") has identified the
property on which the Company's plant is located as a site of environmental
contamination. The Company has recorded a reserve of $148,000 at
June 30, 1996, as an estimate of the amount of loss that is reasonably possible
to be incurred for this site. While management of the Company does not believe
that the Company's exposure in these matters will have a material adverse
effect on the business and financial condition of the Company, there can be no
assurance that the Company will not incur additional significant liabilities in
connection with these matters or that such liabilities will not have a material
adverse effect on the Company's business and financial condition.

Regarding each of the above-mentioned environmental matters, the Company has
notified Nalco Chemical Company ("Nalco") that Nalco may be responsible for
indemnifying ATI for expenditures made for the above matters. Pursuant to the
terms of an agreement entered into in connection with ATI's acquisition of
Adco, the Company is indemnified to a limited extent against certain
environmental liabilities by Nalco. In certain instances, the indemnification
is limited by a $100,000 deductible and a limitation on the amount of
indemnification's ranging from $341,600 to $3.5 million depending upon the type
of claim made, with an aggregate limitation of $3.5 million for all such claims
made.

5. SUBSEQUENT EVENTS

In July, the Company declared a quarterly dividend of $.02 per share, payable
on August 30, 1996, to the holders of common stock of record on August 15,
1996. The aggregate amount of the common stock dividend will be approximately
$103,000.

On July 12, 1996, the Company, Astor Corporation, a Delaware corporation (the
"Buyer") and AAC Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of the Buyer (the "Acquisition Company"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") providing for the
Acquisition Company to merge with and into the Company (the "Merger") with the
Company continuing as the surviving corporation. In the Merger, each
outstanding share of common stock ("Common Stock") of the Company will be
converted into the right to receive $10.25 in cash (the "Merger Consideration")
and each option to purchase shares of Common Stock shall be converted into the
right to receive a net amount in cash equal to the Merger Consideration
allocable to the shares of Common Stock then subject to the option (the "Option
Shares") less the aggregate exercise price for the purchase of the Option
Shares.

<PAGE> 8

assets of the Company or the assets or stock of any subsidiary of the Company
by any person or entity other than the Buyer or Acquisition Company or an
affiliate of the Buyer or Acquisition Company, and (iii) against any
transaction which is inconsistent with the obligation of the Company to
consummate the Merger in accordance with the Merger Agreement. The Voting
Agreements also provide that each Stockholder will not, except as contemplated
by the terms of the Voting Agreements, sell or otherwise voluntarily dispose of
any of the shares of Common Stock owned by such Stockholder or take any
voluntary action which would have the effect of removing such Stockholder's
power to vote his shares or which would be inconsistent with the Voting
Agreements.

For further information regarding the proposed merger, refer to Item 5, Other
Information.

<PAGE> 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

THE THREE MONTH PERIOD ENDED JUNE 30, 1996 VS. THE THREE MONTH PERIOD ENDED
JUNE 30, 1995

Net sales for the quarter were $14.0 million, an increase of 10.1% compared
with $12.7 million for the second quarter of 1995. The sales increase was
mainly attributable to strong growth in the concrete pipe and vault, window
manufacturing, windshield replacement and roofing markets. Double digit
increases in the roofing, urethane and window manufacturing markets softened
the impact of the decline in automotive OEM sales as Ford Motor Company
continued its scale-back of production of the older F-series trucks.

Gross profit for the quarter was $3.9 million, down $40,000, or 1.0%, from $4.0
million for the same period last year. Gross profit as a percentage of sales
declined to 28.2% for the second quarter of 1996 from 31.4% in the year
earlier period. The decline in gross profit was due to increases in raw
material costs and a reduction in selling prices in the roofing market to meet
competitive pricing.

Selling, general and administrative expenses were $1.4 million, down 1.7% from
the second quarter of 1995. Lower advertising expenses and commissions to
outside sales representatives for the quarter helped soften the impact of the
decline in gross profit.

Research and development expenditures for the quarter were $364,000, an
increase of 8.2% compared to $336,000 in the year earlier period. The increase
was mainly the result of hiring additional research personnel.

Operating income decreased $42,000, or 1.9%, to $2.2 million for the second
quarter of 1996. Operating income as a percentage of sales declined to 15.5%
in the second quarter of 1996 from 17.3% in the second quarter of 1995.

Income taxes increased $16,000, or 2.1%, to $790,000 in the second quarter of
1996 from $774,000 in the second quarter of 1995. This was the result of the
increase in taxable income. The effective tax rate increased to 36.6% in the
second quarter of 1996 from 36.5% in the year earlier period.

Net income increased $23,000, or 1.7%, to $1,370,000 in the second quarter of
1996 from $1,347,000 in the same period last year. Net income as a percentage
of sales decreased to 9.8% in the second quarter of 1996 from 10.6% in the
second quarter of 1995.

<PAGE> 10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONTINUED)

THE SIX MONTH PERIOD ENDED JUNE 30, 1996 VS. THE SIX MONTH PERIOD ENDED JUNE
30, 1995

Net sales for the first six months of 1996 were $24.9 million, an increase of
$857,000, or 3.6%, over sales of $24.1 million for the first six months of
1995. The sales increase was primarily attributable to growth in the roofing
and construction markets, both of which recorded double digit sales increases
versus the first six months of 1995. The increase in the roofing market was
mainly due to double digit sales increases in the roofing tapes and primer
products. Window manufacturing and windshield replacement sales recorded
single digit sales increases versus the year earlier period.

Gross profit declined $615,000, or 8.3%, to $6.8 million in the first six
months of 1996 from $7.4 million in the first six months of 1995. Gross profit
as a percentage of sales decreased to 27.1% for the first six months of 1996
from 30.6% in the year earlier period. The decrease was mainly attributable to
increased raw material costs and a reduction in selling prices in the roofing
market to meet competitive pricing.

Selling, general and administrative expenses decreased $148,000, or 5.1%, to
$2.8 million in the first six months of 1996 from $2.9 million in the year
earlier period. The decrease was mainly attributable to lower salaries and
advertising expenditures.

Research and development costs increased $54,000, or 8.0%, to $733,000 for the
first six months of 1996 from $679,000 for the first six months of 1995. The
increase was mainly the result of increased salary expense for research
personnel hired in the second half of 1995.

Operating income decreased $520,000, or 13.8%, to $3.2 million in the first six
months of 1996 from $3.8 million in the year earlier period. Operating income
as a percentage of sales declined to 13.0% for the first six months of 1996
from 15.6% in the first six months of 1995.

There was no interest expense for the first six months of 1996. This is down
from $105,000 for the year earlier period. The decrease was attributable to
the repayment of all of the Company's outstanding bank debt from the proceeds
of the initial public offering of the Company's common stock in February, 1995.

Income taxes decreased $96,000, or 7.4%, to $1.2 million in the first six
months of 1996 from $1.3 million in the year earlier period. This was the
result of the decrease in taxable income. The effective tax rate decreased to
36.7% for the first six months of 1996 from 36.9% for the first six months of
1995.

Net income decreased $152,000, or 6.8%, to $2.1 million in the first six months
of 1996 from $2.2 million a year ago. Net income as a percentage of sales
decreased to 8.3% in the first six months of 1996 from 9.3% in the year earlier
period.

<PAGE> 11

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1996, the Company had working capital of $13.1 million,
compared to $11.1 million at December 31, 1995. During the six month period,
trade accounts receivable increased $2.9 million and inventories increased
$713,000. Receivables increased due to the increase in sales. Subsequently,
the majority of these trade accounts receivable have been collected. Trade
accounts payable were $2.1 million at June 30, 1996, an increase of $1.1
million from December 31, 1995. Trade accounts payable were up compared to
December 31, 1995 due to normal purchasing patterns.

For the six month period ended June 30, 1996 capital expenditures were
$692,000. This compares to $699,000 in the year earlier period. The majority
of the expenditures were for efficiency and capacity improvements on current
equipment, production equipment for new products and construction in the plant
and offices.

The Company has paid common stock dividends totaling $206,000 for the six
months ended June 30, 1996. In February, 1996, and June, 1996 the Company paid
quarterly common stock dividends of $.02 per share, or $103,000.

CONTINGENT MATTERS

There are judicial and administrative claims pending or contemplated against
the Company. Management believes that the resolution of these matters should
not have a material effect upon the Company's business and financial condition,
results of operations or cash flows.

The EPA has notified the Company that it is a PRP at, and requested that the
Company provide information with respect to, two Superfund sites. Regarding the
first site, the Company has informed the EPA that it believes that it is not
responsible for any materials at the site and that the Company believes that
the previous owners of the property upon which the Company's facility is
located may be responsible for the materials in question located at this site.
The Company has not made and has not been requested to make any expenditures
toward the clean-up of this site, and has not been contacted further by the
EPA. At the second site, the Company has been notified by the EPA that it is
the source of a de minimis quantity of waste materials. The Company spent
approximately $6,000 in clean-up costs at this site and the Company does not
expect that its clean-up costs will exceed $10,000.

The Michigan Department of Natural Resources has identified the property on
which the Company's plant is located as a site of environmental contamination.
The Company has recorded a reserve of $148,000 at June 30, 1996, as an estimate
of the amount of loss that is reasonably possible to be incurred for this site.
While management of the Company does not believe that the Company's exposure
in these matters will have a material adverse effect on the business and
financial condition of the Company, there can be no assurance that the Company
will not incur additional significant liabilities in connection with these
matters or that such liabilities will not have a material adverse effect on the
Company's business and financial condition.

<PAGE> 12

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION (CONTINUED)

CONTINGENT MATTERS (CONTINUED)

Regarding each of the above-mentioned environmental matters, the Company has
notified Nalco Chemical Company ("Nalco") that Nalco may be responsible for
indemnifying ATI for expenditures made for the above matters. Pursuant to the
terms of an agreement entered into in connection with ATI's acquisition of
Adco, the Company is indemnified to a limited extent against certain
environmental liabilities by Nalco. In certain instances, the indemnification
is limited by a $100,000 deductible and a limitation on the amount of
indemnification's, ranging from $341,600 to $3.5 million depending upon the
type of claim made, with an aggregate limitation of $3.5 million for all such
claims made.

NEW PRONOUNCEMENT

<PAGE> 13

PART II - OTHER INFORMATION

ITEM 5. OTHER INFORMATION

The consummation of the Merger is conditioned upon, among other things, (i) the
approval and adoption of the Merger Agreement by the stockholders of the
Company, (ii) certain regulatory approvals, including the expiration or
termination of any waiting period applicable to the consummation of the Merger
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
(iii) the clearance by the Securities and Exchange Commission of the Company's
proxy statement relating to the stockholders meeting to be called to approve
the Merger. The consummation of the Merger is expected to occur as soon as
practicable, but in any event after September 15, 1996 and within five business
days after the satisfaction or waiver of the conditions set forth in Sections
seven (7) and eight (8) of the Merger Agreement.

If the Merger is terminated for a reason not justified under the Merger
Agreement before the filing of a certificate of merger with the Delaware
Secretary of State (the "Effective Time"), then the breaching party will pay
the non-breaching party $2,000,000 plus expenses.

A copy of the Merger Agreement is attached hereto as Exhibit 2.1 and is
incorporated herein by reference.

Simultaneously with the execution and delivery of the Merger Agreement,
Bradford Venture Partners, LP, Overseas Equity Investors Partners, LP, Bradford
Mills, Robert Simon, Barbara Henagan, James McCowan, Philip Beery, David Fuchs,
Charles Sax and Brian Briddell (each a "Stockholder" and collectively the
"Stockholders"), each of whom is a Stockholder of the Company and certain of
whom are directors and executive officers of the Company, holding an aggregate
of 2,559,308 shares of Common Stock (equal to 49.75% of the outstanding voting
Common Stock as of July 12,1996) entered into Voting Agreements, dated as of
July 12, 1996 (the "Voting Agreements"), with the Buyer, which provide, among
other things, that each of the Stockholders will vote or will cause to be
voted, the shares of Common Stock owned by the Stockholder (i) in favor of the
adoption of the Merger Agreement and the approval of the Merger, (ii) against
the approval of any proposal relating to a competing merger or business
combination involving an acquisition of all or a substantial portion of the
capital stock, the assets of the Company or the assets or stock of any
subsidiary of the Company by any person or entity other than the Buyer or
Acquisition Company or an affiliate of the Buyer or Acquisition Company, and
(iii) against any transaction which is inconsistent with the obligation of the
Company to consummate the Merger in accordance with the Merger Agreement. The
Voting Agreements also provide that each Stockholder will not, except as
contemplated by the terms of the Voting Agreements, sell or otherwise
voluntarily dispose of any of the shares of Common Stock owned by such
Stockholder or take any voluntary action which would have the effect of
removing such Stockholder's power to vote his shares or which would be
inconsistent with the Voting Agreements.

The Stockholders Agreement is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.

A related press release, dated July 12, 1996, is attached hereto as Exhibit
99.2 and is incorporated herein by reference.

<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

2.1 Merger Agreement
10.1 Change of Control Agreement between Adco Technologies Inc. and
Brian J. Briddell dated February 13, 1996
10.2 Change of Control Agreement between Adco Technologies Inc. and
Philip D. Beery dated February 13, 1996
10.3 Change of Control Agreement between Adco Technologies Inc. and
David J. Fuchs dated February 13, 1996
10.4 Change of Control Agreement between Adco Technologies Inc. and
James R. McCowan dated February 13, 1996
11. Computation of Earnings per Share
27. Financial Data Schedule
99.1 Stockholder Agreement
99.2 Press Release

(b) Reports on Form 8-K - none

<PAGE> 15

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 thereunto duly authorized.

ADCO TECHNOLOGIES INC.
(Registrant)

Date August 8, 1996 /s/ Charles E. Sax
-------------- -----------------------------------------
Charles E. Sax
President and Chief Executive Officer

Date August 8, 1996 /s/ David J. Fuchs
-------------- ------------------------------------------
David J. Fuchs
Vice President and Chief Financial Officer

<PAGE> 16
Exhibit Index

Exhibit
Number Description

2.1 Merger Agreement

10.1 Change of Control Agreement between Adco Technologies Inc. and
Brian J. Briddell dated February 13, 1996

10.2 Change of Control Agreement between Adco Technologies Inc. and
Philip D. Beery dated February 13, 1996

10.3 Change of Control Agreement between Adco Technologies Inc. and
David J. Fuchs dated February 13, 1996

10.4 Change of Control Agreement between Adco Technologies Inc. and
James R. McCowan dated February 13, 1996

11 Computation of Earnings per Share

27 Financial Data Schedule

99.1 Stockholder Agreement

99.2 Press Release

<PAGE> 1
EXHIBIT 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

among

ASTOR CORPORATION,

AAC ACQUISITION CORP.

and

ADCO TECHNOLOGIES INC.

Section Page
- ------- ----
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4. Representations and Warranties of the Buyer Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

5. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

6. Covenants of the Buyer Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

7. Conditions Precedent to the Buyer Parties' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

8. Conditions Precedent to the Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

9. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

10. Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

11. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Exhibits
- --------

A Certificate of Merger

</TABLE>
<PAGE> 2

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made as of the _____ day of July
1996 by and among ASTOR CORPORATION, a Delaware corporation (the "Buyer"), AAC
ACQUISITION CORP., a Delaware corporation and a wholly-owned subsidiary of the
Buyer (the "Acquisition Company" and, together with the Buyer, the "Buyer
Parties"), and ADCO TECHNOLOGIES INC., a Delaware corporation (the "Company").

Background

The Boards of Directors of the Company, the Buyer and the Acquisition
Company, have approved a merger (the "Merger") of the Acquisition Company with
and into the Company in accordance with the Delaware General Corporation Law
(the "DGCL"), on the terms and conditions set forth herein.

WITNESSETH:

In consideration of the mutual promises, representations and
warranties, covenants, payments and actions herein provided, the parties
hereto, each intending to be legally bound hereby, do agree as follows:

1. Definitions.

For convenience, certain terms used in this Agreement are listed in
alphabetical order and defined or referred to below (such terms as well as any
other terms defined elsewhere in this Agreement shall be equally applicable to
both singular and plural forms of the terms defined).

"1933 Act" means the Securities Act of 1933, as amended.

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

"Acquisition Proposal" is defined in Section 5.4.

"Affiliates" means, with respect to a particular party, any Persons
controlling, controlled by or under common control with that party.

"Agreement" means this Agreement and Plan of Merger and the exhibits
and schedules hereto.

"Assets" means all of the assets, properties and rights of every kind
and description, real and personal, tangible and intangible, that are owned by
any Company Parties, taken as a whole.

"Benefit Plans" means all employee benefit plans of any Company Party
within the meaning of Section 3(3) of ERISA and any related or separate
Contracts, plans, trusts, programs, policies,
<PAGE> 3

arrangements, practices, customs and understandings that provide benefits of
economic value to any present or former employee of any Company Party, or
current or former beneficiary, dependent or assignee of any such employee or
former employee.

"Bridge Financing" is defined in Section 4.4.

"Business" means the entire business and operations of the Company
Parties, taken as a whole.

"Buyer" is defined above in the preamble.

"Buyer Financing" means the Bridge Financing and the Buyer Parties'
Rule 144A financing for the Transactions.

"Buyer Parties" is defined above in the preamble.

"Certificate of Merger" is defined in Section 2.2.

"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.

"Closing" is defined in Section 2.9.

"Closing Date" is defined in Section 2.9.

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

"Common Shares" means the issued and outstanding shares of Common
Stock.

"Common Stock" means the Common Stock, par value $0.01 per share, of
the Company.

"Company" is defined above in the preamble.

"Company Balance Sheet" is defined in Section 3.6.

"Company Balance Sheet Date" is defined in Section 3.6.

"Company Disclosure Documents" is defined in Section 3.8.

"Company Parties" means the Company and the Subsidiary.

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<PAGE> 4

"Company Representatives" means the Affiliates, officers, directors,
employees, attorneys, accountants, financial advisors and agents of any Company
Party and any other Person who has entered into the Stockholders Agreement with
Buyer on or about the date hereof.

"Company's knowledge", "knowledge of the Company" and similar terms
relating to the knowledge of any Company Party mean the actual knowledge of any
officer or director of the Company.

"Confidential Information" means any confidential information or trade
secrets of any Company Party, including personnel information, know-how and
other technical information, customer lists, customer information and supplier
information.

"Contract" means any written or oral contract, agreement, lease,
instrument or other commitment that is binding on any Person or its property
under applicable Law.

"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.

"Court Order" means any judgment, decree, injunction, order or ruling
of any federal, state, local or foreign court or governmental or regulatory
body or authority that is binding on any Person or its property under
applicable Law.

"Default" means (a) a breach, default or violation, (b) the occurrence
of an event that with or without the passage of time or the giving of notice,
or both, would constitute a breach, default or violation or (c) with respect to
any Contract, the occurrence of an event that with or without the passage of
time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or right to receive damages or
payment of penalties.

"DGCL" is defined above in the Background section.

"Disclosure Schedule" is defined in Section 3.

"Effective Time" is defined in Section 2.2.

"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other encumbrance on any
property or property interest.

"Environmental Law" means any Federal, State, interstate or local Law,
regulation, rule, requirement, administrative interpretation, directive,
judgment, decree, order, policy, guidance, permit or license pertaining to the
protection of human health or the environment, or the regulation of Hazardous
Substances, including without limitation, the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA"), the Clean Air Act, the Water Pollution Control
Act, the Safe Drinking Water Act, and the Toxic Substances Control Act
("TSCA").

-3-
<PAGE> 5

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Financial Statements" is defined in Section 3.6.

"GAAP" means generally accepted accounting principles.

"Governmental Entity" means any Federal, State, interstate or local
political subdivision, body, department, agency, or instrumentality.

"Governmental Permits" is defined in Section 3.14.

"Hazardous Substance" means any substance or material: (i) the
presence of which requires investigation or remediation under any Environmental
Law; (ii) the generation, storage, treatment, transportation, disposal,
remediation, removal, handling or management of which is regulated by any
Environmental Law; (iii) that is defined as a "hazardous waste" or "hazardous
substance" under any Environmental Law; or (iv) that contains gasoline, diesel
fuel or other petroleum hydrocarbons, polychlorinated biphenols (PCBs) or
asbestos.

"Holder" is defined in Section 2.11(a).

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.

"HSR Compliance" means compliance with the HSR Act.

"Intellectual Property" means any Copyrights, Patents, Trademarks,
technology rights and licenses, trade secrets, know-how and other intellectual
property.

"Law" means any statute, law, ordinance, regulation, order or rule of
any federal, state or foreign governmental agency or body, including those
covering environmental, energy, safety, health, transportation, bribery,
recordkeeping, zoning, antidiscrimination, antitrust and wage and hour matters.

"Liability" means any liability, indebtedness, guaranty, endorsement
or other obligation of or by any Person, accrued or unaccrued, due or to become
due, liquidated or unliquidated.

"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or
inquiry.

"Material Adverse Effect" means a material adverse effect on the
Business, Assets, financial condition or results of operations of the Company
Parties, taken as a whole.

"Material Contracts" is defined in Section 3.15(a).

"Merger Consideration" is defined in Section 2.6(a).

-4-
<PAGE> 6

"Option" is defined in Section 2.6(b).

"Option Cancellation Acknowledgement" is defined in Section 2.6(b).

"Option Plans" means the Company's 1993 Stock Option Plan, the
Company's 1994 Stock Option Plan and the Company's 1994 Non-Employee Director
Stock Option Plan.

"Option Shares" is defined in Section 2.6(b).

"Patents" means all patents and patent applications.

"Paying Agent" means a financial institution that is reasonably
acceptable to the Buyer and the Company.

"Paying Agent Agreement" means an agreement among the Buyer, the
Company and the Paying Agent with respect to payment of the Merger
Consideration, in a form reasonably acceptable to the Company, the Buyer and
the Paying Agent and consistent with the terms hereof.

"Person" means any natural person, corporation, partnership, limited
liability company, proprietorship, association, trust, Governmental Entity or
other legal entity.

"Prime Rate" means the prime lending rate as announced from time to
time in The Wall Street Journal.

"Prior Confidentiality Agreement" means the Confidentiality Agreement,
dated March 29, 1996, between Aurora Capital Partners, L.P. and Schroder
Wertheim with respect to the Company.

"Real Property" is defined in Section 3.12.

"Returns" means any returns, reports, forms or statements (including
any information returns) required to be filed with any Taxing Authority.

"Schroder Wertheim" means Schroder Wertheim & Co. Incorporated.

"SEC" means the United States Securities and Exchange Commission.

"Securityholder Documents" is defined below in Section 2.11(a).

"Series A Subsidiary Preferred Stock" means the Series A Cumulative
Redeemable Preferred Stock, par value $0.01 per share, of the Subsidiary.

"Series B Subsidiary Preferred Stock" means the Series B Redeemable
Preferred Stock, par value $0.01 per share, of the Subsidiary.

-5-
<PAGE> 7

"Severance Agreements" means the Change of Control Agreements, dated
February 13, 1996, between the Company and each of the Persons identified on
the Disclosure Schedule.

"Shares is defined in Section 2.6(a).

"Subsidiary" means Adco Products, Inc., a Michigan corporation.

"Subsidiary Preferred Stock" means the Series A Subsidiary Preferred
Stock and the Series B Preferred Stock.

"Surviving Corporation" is the Company at the Effective Time.

"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, capital, sales, use, ad valorem,
value added, franchise, bank shares, withholding, payroll, employment,
disability, workers' compensation, excise, property, alternative or add-on
minimum, environmental or other taxes, assessments, duties, fees, levies or
other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.

"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction, or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.

"Termination Date" is defined in Section 2.8(a).

"Transactions" means the Merger and the other transactions
contemplated by this Agreement.

"Transaction Document" means this Agreement, the Certificate of Merger
and any other documents contemplated hereby.

2. The Merger.

2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL, the
Acquisition Company shall be merged with and into the Company as soon as
practicable, but in any event within five business days, following the
satisfaction or waiver of the conditions set forth in Sections 7 and 8.
Following the Merger, the Company shall continue as the surviving corporation
(the "Surviving Corporation") under the name "Adco Technologies Inc." and shall
continue its existence under the laws of the State of Delaware, and the
separate corporate existence of the Acquisition Company shall cease.

2.2 Effective Time. The Merger shall be consummated by filing
with the Delaware Secretary of State a certificate of merger in the form
attached hereto as Exhibit A (the "Certificate of Merger"), as is required by,
and executed in accordance with, the relevant provisions of the DGCL. The
Merger shall be effective at the time of such filing (the "Effective Time").

-6-
<PAGE> 8

2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.

2.4 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of the Acquisition Company shall be the Certificate of
Incorporation of the Surviving Corporation. The Bylaws of the Acquisition
Company shall be the Bylaws of the Surviving Corporation.

2.5 Directors and Officers. The Disclosure Schedule sets forth
the names of the Persons who shall be the directors and officers of the
Surviving Corporation at the Effective Time.

2.6 Conversion of Shares and Options.

(a) Each Common Share issued and outstanding immediately
prior to the Effective Time (collectively, the "Shares") (other than Dissenting
Shares, as defined in Section 2.10) shall, by virtue of the Merger and without
any action on the part of the Holder (defined below) thereof, be converted into
the right to receive, except as otherwise provided in Section 2.11, $10.25 in
cash (the "Merger Consideration"). Any Common Share held in the treasury of
the Company shall be cancelled.

(b) Each option to acquire Common Shares that is
outstanding immediately prior to the Effective Time (an "Option") shall, by
virtue of the Merger and without any action on the part of the Holder thereof
except as provided below in this paragraph (b), be converted into the right to
receive a net amount in cash equal to the Merger Consideration allocable to the
Common Shares then subject to the Option (the "Option Shares") minus the
aggregate exercise price of the Option for acquisition of the Option Shares,
upon delivery of an executed acknowledgement of the cancellation of the Option
(an "Option Cancellation Acknowledgement"). All Options and any other rights
that any other Person may have under any of the Option Plans (except for the
right to receive cash as provided in this Section 2) shall terminate to the
extent such Options and any such other rights shall not have been exercised by
the Effective Time.

(c) The aggregate Merger Consideration will be payable
upon the surrender of the certificates and other documentation specified in
Section 2.11.

(d) The Buyer shall take all steps necessary to provide
the Surviving Corporation with funds, as of the Effective Time, in an amount
sufficient to make all the payments contemplated by this Section 2.6 at the
Effective Time in accordance with Section 2.9 and Section 2.11.

2.7 Conversion of Acquisition Company Capital Stock. Each share
of capital stock of the Acquisition Company issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the Holder (defined below) thereof, be converted into the
right to receive one share of common stock of the Surviving Corporation.

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<PAGE> 9

2.8 Stockholders' Meetings; Securities and Exchange Commission
Filings.

(a) Consistent with applicable law, the Company shall
cause a meeting of its stockholders to be duly called and held as soon as
reasonably practicable (and in any event before October 31, 1996 (the
"Termination Date")) for the purpose of considering and taking action upon this
Agreement and the Merger (the "Special Meeting"). Subject to the fiduciary
duties of the Board of Directors of the Company, under applicable Law, as
determined by such directors, in good faith after consultation with and based
upon the written advice of independent legal counsel, the Board of Directors of
the Company will recommend that its stockholders approve this Agreement and the
Merger and the Board of Directors of the Company and the Company shall use
commercially reasonable efforts to obtain stockholder approval of this
Agreement and the Merger.

(b) The Buyer will promptly prepare and file with the SEC
and all securities exchanges, if any, on which the Company's shares are listed
for trading the documents, schedules and amendments and supplements thereto
required to be filed with respect to the Transactions. In connection with
approval of this Agreement and the Merger, the Company will promptly prepare
and file with the SEC a preliminary proxy statement relating to the
Transactions, which shall consist of proxy materials for use in soliciting the
vote of the stockholders of the Company (the "Preliminary Proxy Statement"),
and will use all reasonable efforts to respond to the comments of the SEC after
consultation with the Buyer and to cause a definitive proxy statement (such
proxy statement and any amendments or supplements thereto are referred to
herein as the "Definitive Proxy Statement") to be mailed to the Company's
stockholders as soon as reasonably practicable. The Preliminary Proxy
Statement submitted to the SEC and the Definitive Proxy Statement mailed to the
Company's stockholders shall be subject to prior review by and approval of the
Buyer, which approval may not be unreasonably withheld.

(c) The stockholder vote required for the adoption of
this Agreement and the Merger by the Company shall be the vote required by the
DGCL. Subject to the fiduciary duties of the Board of Directors of the Company
under applicable Law, as determined by such directors, in good faith after
consultation with and based upon the written advice of independent legal
counsel,, (i) the Definitive Proxy Statement shall contain the determinations
and recommendations of the Board of Directors of the Company set forth in
Section 3.5 hereof and (ii) the Company shall use commercially reasonable
efforts to solicit from holders of Common Shares proxies in favor of adoption
and approval of this Agreement and the Merger, and shall take all other
reasonable action necessary or helpful to secure the vote of holders of Common
Stock required by the DGCL to effect the Merger.

(d) The Buyer, as the sole stockholder of the Acquisition
Company, hereby approves the Merger and this Agreement.

-8-
<PAGE> 10

2.9 Closing.

(a) As soon as practicable, but in any event after
September 15, 1996 and within five business days, after the satisfaction or
waiver of the conditions set forth in Sections 7 and 8, a closing (the
"Closing") will be held at the offices of Gibson, Dunn & Crutcher, 200 Park
Avenue, New York, New York 10166 (or such other place as the parties may
agree). The date on which the Closing occurs is hereinafter referred to as the
"Closing Date." At the Closing, the respective designated parties thereto
shall deliver (i) the documents referred to in Sections 7 and 8, and (ii) the
Certificate of Merger, executed and otherwise prepared for filing. The
Surviving Corporation shall also deliver at the Closing by a wire transfer of
same day funds the Merger Consideration payable to those Holders who have
delivered the appropriate documents under Section 2.11 and to the Paying Agent
the aggregate Merger Consideration that may be payable in accordance with the
Paying Agent Agreement to all other Holders upon delivery of the appropriate
documents under Section 2.11.

(b) Contemporaneously with the Closing, the Surviving
Corporation shall deliver to the Delaware Secretary of State a duly executed
and verified Certificate of Merger, as required by the DGCL, and the parties
shall take all such other and further actions as may be required by applicable
Law to make the Merger effective upon the terms and subject to the conditions
hereof.

2.10 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, the Shares that are issued and outstanding immediately prior
to the Effective Time and that are held by a stockholder who did not vote in
favor of the Merger and who complies with all of the relevant provisions of
Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into
the right to receive the Merger Consideration, unless and until such Holder
shall have failed to perfect or shall have effectively withdrawn or lost such
Holder's rights to appraisal under the DGCL; and any such Holder shall have
only such rights in respect of the Dissenting Shares owned by such Holder as
are provided by Section 262 of the DGCL. If any such Holder shall have failed
to perfect or shall have effectively withdrawn or lost such right, such
Holder's Dissenting Shares shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right
to receive the Merger Consideration without any interest thereon, pursuant to
the terms of Section 2.6. The Company shall give the Buyer prompt notice of
any demand received by the Company for appraisal of Shares, and, prior to the
Effective Time, the Buyer shall have the right to direct all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company will not, except with the prior written consent of the Buyer,
voluntarily make any payment with respect to, or settle or offer to settle, any
claim made by any Holders owning the Dissenting Shares.

2.11 Exchange of Shares and Options.

(a) At and after the Effective Time, the Surviving
Corporation shall pay to each record holder (a "Holder"), as of the Effective
Time, of (i) an outstanding certificate or certificates that immediately prior
to the Effective Time represented Shares (the "Certificates"), or (ii) an
Option, upon the Holder's delivery of the respective Securityholder Documents
(defined below), an amount in same day funds equal to the product of the number
of Shares represented by such Certificate, or

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<PAGE> 11

Option Shares subject to such Option, multiplied by the Merger Consideration.
In the case of an Option, however, the aggregate exercise price for the Option
Shares shall be deducted from such payment. The documents to be delivered by
Holders of Shares or Options at and after the Effective Time (the
"Securityholder Documents") shall be (A) in the case of Shares, the
Certificates representing the Shares and a duly executed letter of transmittal
in the form provided by the Company, and (B) in the case of the Options, a duly
executed Option Cancellation Acknowledgement. All such surrendered
Certificates shall be cancelled upon their delivery. Except as provided in
Section 2.11(c), the Surviving Corporation shall pay any transfer or similar
taxes required by reason of the exchange of Shares and Options.

(b) With respect to each Certificate not so surrendered
at the Closing, the Surviving Corporation shall promptly thereafter mail to the
Holder thereof, a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss of title to such Certificate shall pass,
only upon proper delivery of the Certificate and such letter of transmittal to
the Surviving Corporation) and instructions for delivering such Certificate in
exchange for payment of the Merger Consideration. Upon delivery to the
Surviving Corporation of such Certificate, together with such letter of
transmittal, the Holder of the Certificate shall be paid in exchange therefor
cash in an amount equal to the product of the number of Shares represented by
such Certificate multiplied by the Merger Consideration, and such Certificate
shall then be cancelled. The Company shall follow a similar procedure with
respect to any Options to the extent that the respective Securityholder
Documents shall not have been delivered at the Effective Time.

(c) No interest will be paid or accrued on the amounts
payable upon the surrender of the Securityholder Documents. If payment is to
be made to a Person other than the Person in whose name a Certificate
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the Person requesting such payment shall pay any
transfer or similar taxes required by reason of the payment to a Person other
than the Holder of the Certificate surrendered or shall establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this
Section 2.11, each Certificate (other than Certificates evidencing Dissenting
Shares) shall represent for all purposes, and until the respective
Securityholder Documents are delivered with respect to Options, such Option
shall represent for all purposes, the right to receive payment of the amounts
specified in Section 2.6 in respect of such Shares or Options.

(d) Any portion of the funds deposited with the Paying
Agent which remain undistributed to the Holders of Shares or Options for six
months after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any Holder of Shares or Options who has not
theretofore complied with this Section 2.11 shall thereafter look only to the
Surviving Corporation for payment of the sums to which such Holder is entitled
pursuant to this Agreement.

(e) Neither the Buyer nor the Surviving Corporation shall
be liable to any Holder of Shares or Options for any cash delivered by the
Paying Agent or the Surviving Corporation in good faith to a public official
pursuant to an applicable abandoned property, escheat or similar law.

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<PAGE> 12

(f) The Buyer or the Surviving Corporation (or the Paying
Agent on their behalf) shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any Holder of
Shares or Options such amounts, if any, as the Buyer or the Surviving
Corporation is required to deduct and withhold with respect to the making of
such payment under the Code or any provisions of any Law related to Taxes. To
the extent that amounts are so withheld by the Buyer or the Surviving
Corporation (or the Paying Agent on their behalf), such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the Holder
of the relevant Shares or Options in respect of which such deduction and
withholding was made by the Buyer or the Surviving Corporation (or the Paying
Agent on their behalf).

2.12 No Further Transfer of Shares. After the Effective Time,
there shall be no transfers of Shares that were outstanding immediately prior
to the Effective Time on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for transfer, they shall be cancelled and exchanged for cash as
provided in this Section 2. At the Effective Time, the stock ledger of the
Company shall be closed.

3. Representations and Warranties of the Company.

The Company represents and warrants to the Buyer and the Acquisition
Company as follows, except to the extent specified on the disclosure schedule
that the Company has provided to the Buyer on the date hereof (the "Disclosure
Schedule") or to the extent specified in the Company Disclosure Documents
(defined below):

3.1 Corporate. Each Company Party is a corporation duly
organized, validly existing and in good standing under the Laws under which it
was incorporated. Each Company Party is qualified to do business as a foreign
corporation in any jurisdiction where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect. The
Charter Documents and Bylaws of each Company Party that have been delivered to
the Buyer have been duly adopted and are current, correct and complete. Each
Company Party has all necessary power and authority to own, lease and operate
its properties and other assets and to carry on the Business as it is now being
conducted. The Disclosure Schedule lists (or the Company Disclosure Documents
list) with respect to each Company Party its name, jurisdiction of
incorporation, officers and directors and the states in which qualified to do
business as a foreign corporation.

3.2 Authorization. The Company has the requisite corporate power
and authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by the Company have been duly authorized by all
necessary corporate action, other than stockholder approval in accordance with
the DGCL. Each Transaction Document executed and delivered by the Company as
of the date hereof has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. Any Transaction Document executed
and delivered by the Company after the date hereof will be duly executed and
delivered by the Company and will constitute a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.

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<PAGE> 13

3.3 Validity of Contemplated Transactions. Except for HSR
Compliance and for any items specified in the Disclosure Schedule, neither the
execution and delivery by the Company of the respective Transaction Documents
to which it is or will be a party, nor the consummation of the Transactions,
will require any filing, consent or approval under or constitute a Default
under (a) any Regulation or Court Order to which either Company Party is
subject, (b) the Charter Documents or Bylaws of either Company Party or (c) any
material Contract or other material document to which either Company Party is a
party or by which any of its Assets may be subject.

3.4 Capitalization and Stock Ownership. As of the date hereof,
(a) the total authorized capital stock of the Company consists of (i) 9,000,000
shares of Common Stock, of which 5,150,000 shares are issued and outstanding,
and (ii) 100,000 shares of Preferred Stock, par value $0.01 per share, no
shares of which are issued and outstanding, and (b) Options to acquire 293,318
Option Shares are outstanding. Except as set forth in the immediately
preceding sentence, there are outstanding (i) no shares of capital stock or
voting securities of the Company, (ii) no securities of either Company Party
convertible into, or exercisable for the purchase of, or exchangeable for
shares of capital stock or voting securities of the Company, (iii) no options
or other rights to acquire from either Company Party, and no obligations of the
Company to issue, any capital stock, voting securities or securities
convertible into, or exercisable for the purchase of, or exchangeable for
capital stock or voting securities of the Company and (iv) no equity
equivalents, interest in the ownership or earnings of the Company or other
similar rights. The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and non-assessable. The Options are
owned of record by the Persons listed in the Disclosure Schedule or the Company
Disclosure Documents, in the amounts shown therein and with the respective
option prices set forth therein. There are no outstanding obligations of
either Company Party to repurchase, redeem or otherwise acquire any Shares.

3.5 Board Recommendation. By a vote of the directors present at a
meeting of the Company's Board of Directors (which meeting was duly called and
held and at which a quorum was present), the Board of Directors of the Company
unanimously (a) approved and adopted this Agreement, including the Merger and
the other Transactions, and determined that the Merger is fair to the
stockholders of the Company, (b) resolved to recommend approval and adoption of
this Agreement, including the Merger and the other Transactions, by the
stockholders of the Company, (c) took all corporate actions required to be
taken by the Board of Directors for the consummation of the Transactions and
all actions required to render the provisions of Section 203 of the DGCL
restricting business combinations with interested stockholders inapplicable to
the Merger. Schroder Wertheim has delivered to the Company's Board of
Directors its oral opinion on the date hereof to the effect that on such date,
the Merger Consideration is fair to the holders of the Common Shares from a
financial point of view.

3.6 Financial Statements. The Company has delivered to the Buyer
audited financial statements of the Company consisting of consolidated balance
sheets as of the end of its fiscal year in 1994 and 1995 and the related
statements of income, retained earnings, stockholders' equity and cash flows
for the fiscal years then ended, certified by Ernst & Young LLP (the "Audited
Statements"). The Company has also delivered to the Buyer an unaudited balance
sheet, and

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<PAGE> 14

statements of income and cash flows as of March 31, 1996 and for the fiscal
quarterly period then ended (the "Interim Statements"). The Audited and
Interim Statements are referred to herein as the "Financial Statements." The
Audited Financial Statements and the Interim Statements have been prepared in
conformity with GAAP consistently applied, and when read together with any
related notes thereto, the Audited Financial Statements and the Interim
Statements fairly present in all material respects the financial position of
the Company at such dates and the results of operations for the periods ended
on such dates, subject in the case of the Interim Statements to normal year-end
audit adjustments, which adjustments will not in the aggregate be materially
adverse to the consolidated financial position or results of operations of the
Company. For purposes of this Agreement, the balance sheet of the Company as
of March 31, 1996 is referred to as the "Company Balance Sheet" and the date
thereof is referred to as the "Company Balance Sheet Date."

3.7 Proxy Materials. The Definitive Proxy Statement will not, at
the date when the Definitive Proxy Statement is first mailed to the Company's
stockholders and at the date of the Special Meeting, 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.
Notwithstanding the foregoing, the Company makes no representation or warranty
regarding information with respect to the Buyer or any of its officers,
directors or affiliates or associates (as such terms are defined in Rule 12b-2
of the Exchange Act). At the date the Definitive Proxy Statement is mailed to
the Company's stockholders, the Definitive Proxy Statement will comply, as to
form, in all material respects, with the requirements of all applicable Laws,
including the 1934 Act and the rules and regulations promulgated by the SEC
thereunder.

3.8 Company Disclosure Documents. The Company has filed all
required forms, reports, statements, schedules and other documents with the SEC
since the effective date of the Company's first Registration Statement on Form
S-1 (collectively, the "Company Disclosure Documents"). The Company has
furnished to the Buyer such Registration Statement on Form S-1, including its
final prospectus dated February 14, 1995 and the Exhibits to such Registration
Statement, its Annual Report on Form 10-K for the fiscal year ended December
31, 1995, and its Quarterly Report on Form 10-Q for the period ending March 31,
1996, which are part of the Company Disclosure Documents. The Company has not
held any meetings of its stockholders (whether annual or special) since
February 14, 1995. Each of such Company Disclosure Documents, at the time it
was filed, complied in all material respects with all applicable requirements
of the 1933 Act and the 1934 Act, and with the forms, rules and regulations of
the SEC promulgated thereunder, and did not contain at the time filed 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 were made, not misleading, except
for the omission of the Severance Agreements therefrom.

3.9 Absence of Undisclosed Liabilities. There are no Liabilities
of any Company Party except (a) to the extent reflected in the Company Balance
Sheet, (b) those Liabilities described in this Agreement, the Disclosure
Schedule or the Company Disclosure Documents, (c) those Liabilities incurred in
the ordinary course of business since the Company Balance Sheet Date,

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<PAGE> 15

(d) those Liabilities not required under GAAP to be reflected in the Financial
Statements and that would not, individually or in the aggregate, have a
Material Adverse Effect and (e) Liabilities related to this Agreement and the
Transactions.

3.10 Taxes. (a) Except for Returns for Taxes or Tax Assessments
that are not material, each Company Party has duly filed all Returns required
to be filed, and has paid all Taxes that have become due pursuant to such
returns or pursuant to any assessment received by any Company Party.

(b) Each Company Party has duly withheld or collected all
material taxes and other assessments and levies that such Company Party has
been required by law to withhold or to collect, and such Company Party has paid
over such amounts to the proper governmental authorities or is properly holding
such amounts for such payment.

(c) To the knowledge of the Company, there are no
proceedings or other actions for the assessment and collection of additional
Taxes of any kind for any period for which returns have or should have been
filed.

(d) The reserves for Taxes (as opposed to any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) in the Financial Statements are sufficient for all unpaid Taxes,
whether or not disputed, of any Company Party.

(e) Except as described in the Disclosure Schedule, no
Company Party is a party to an agreement extending the time within which to
file any Tax Return or extending the statute of limitations for any period with
respect to any Tax to which any Company Party may be subject. No claim has
ever been made by any Taxing Authority in a jurisdiction in which any Company
Party does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction except for any such case where the amount of such taxation
would not be material.

(f) The Company has delivered to the Buyer complete and
correct copies of all federal, state, local and foreign income Tax Returns
filed, and all Tax examination reports and statements of deficiencies assessed
against or agreed to, by any Company Party for all taxable periods ended on or
after December 31, 1991.

(g) No Company Party has made any payments, is obligated
to make any payments, or is a party to any agreement that under certain
circumstances could require it to make any payments, that are not deductible
under Section 280G of the Code.

(h) There are no material Encumbrances of any sort on the
Assets of any Company Party except for Encumbrances for Taxes not yet due and
payable. The Company has no knowledge of any reasonable basis for the
assertion of any claim relating or attributable to Taxes that, if adversely
determined, would result in any material Encumbrance on the Assets of any
Company Party.

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<PAGE> 16

(i) None of the Assets of any Company Party constitutes
tax-exempt bond financed property or tax-exempt use property, with the meaning
of Section 168 of the Code. No Company Party is a party to any "safe harbor
lease" that is subject to the provisions of Section 168(f)(8) of the Internal
Revenue Code as in effect prior to the Tax Reform Act of 1986, or to any
"long-term contract" within the meaning of Section 460 of the Code.

(j) No Company Party is a "consenting corporation" within
the meaning of Section 341(f)(1) of the Code, or comparable provisions of any
state statutes, and none of the Assets of any Company Party is subject to an
election under Section 341(f) of the Code or comparable provisions of any state
statutes.

(k) The Company is not a party to any joint venture,
partnership or other arrangement that is treated as a partnership for federal
income Tax purposes.

(l) Except as described in the Disclosure Schedule, no
Company Party is a party to a tax sharing or allocation agreement nor does any
Company Party have any obligation to pay any amounts under any such agreements.
No Company Party has any Liability for Taxes of any Person (i) under Section
1.1502-6 of the Treasury Regulations (or any similar provision of state, local
or foreign law), (ii) as a transferee or successor, (iii) by Contract or (iv)
otherwise.

(m) The Company is not a party to any written, oral or
implied agreement or obligation to provide any "covered employee," as defined
in Section 162(m)(3) of the Code, with remuneration in excess of $1 million,
that would be disallowed as a deduction for federal income tax purposes
pursuant to Section 162(m) of the Code.

(n) The tax basis of the Assets of all Company Parties
for purposes of determining future amortization, depreciation, and other
federal income tax deductions is properly reflected, in all material respects,
on the Company's tax books and records.

3.11 Title to Assets and Related Matters. Each Company Party has
good and marketable title to all of its Assets, free from any Encumbrances
except (a) items specified in the Disclosure Schedule, (b) items described in
any notes to the Financial Statements, (c) minor matters that, in the
aggregate, would not have a Material Adverse Effect, and (d) constitutional and
statutory liens arising from the obligation to pay for the provision of
materials or services not yet in Default and state and local taxes not yet due.

3.12 Real Property. The Disclosure Schedule describes (or the
Company Disclosure Documents describe) all real estate owned or leased by any
Company Party and used in the operation of the Business as well as any other
real estate that is in the possession of or leased by any Company Party (as
tenant or landlord) (collectively, the "Real Property"). Except as set forth
in the Disclosure Schedule, each Company Party has good and marketable title to
any Real Property listed on the Disclosure Schedule as owned by such Company
Party, free and clear of any Encumbrances other than minor matters that, in the
aggregate, would not have a Material Adverse Effect. In addition, except as
set forth in the Disclosure Schedule, (a) none of the buildings or structures
located on any

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<PAGE> 17

Real Property nor any appurtenances thereto or equipment thereon, nor the
operation or maintenance thereof, violates in any material respect any
restrictive covenants or encroaches in any material respect on any property
owned by others; (b) nor does any building or structure of third parties
encroach in any material respect upon any such Real Property; (c) each Real
Property complies in all material respects with applicable zoning, building and
occupancy codes relating to the current operations thereon; (d) no Real
Property contains any material defect that would prevent the continued use and
operation of such Real Property; (e) there are no material Defaults by the
tenant, or to the Company's knowledge by the landlord under any lease of any
portion of the Real Property; and (f) the copies of such leases delivered
pursuant to the terms hereof are true, correct and complete in all material
respects, except in the case of any of such items in clauses (a) through (f)
where such violations, encroachments, events of non-compliance, defects,
Defaults or inaccuracies, individually and in the aggregate, would not have a
Material Adverse Effect.

3.13 Subsidiaries. Except for the Company's ownership of the
Subsidiary, no Company Party owns, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, limited
liability company, business trust, joint venture or other legal entity. The
total authorized capital stock of the Subsidiary consists of (a) 150,000 shares
of common stock, par value $1.00 per share, of which 116,189 shares are issued
and outstanding (the "Subsidiary Common Shares"), (b) 4,856 shares of Series A
Subsidiary Preferred Stock, of which 3,500 shares are issued and outstanding
and (c) 1,356 shares of Series B Subsidiary Preferred Stock, of which 420
shares are issued and outstanding. The Company owns all of the issued and
outstanding Subsidiary Common Shares, free and clear of any Encumbrances, and
Nalco Chemical Company owns of record all of the issued and outstanding
Subsidiary Preferred Stock. The Company has delivered to the Buyer true and
correct copies of the [Certificate of Designation] for the Series A Subsidiary
Preferred Stock and the Series B Subsidiary Preferred Stock. As of May 14,
1996 the aggregate redemption price for all such shares was $3,920,000 and such
aggregate redemption price increases by $767.12 each day after May 14, 1996
that such shares remain outstanding. Except as set forth in the immediately
preceding sentence, there are outstanding (i) no shares of capital stock or
voting securities of the Subsidiary, (ii) no securities of either Company Party
convertible into, or exercisable for the purchase of, or exchangeable for
shares of capital stock or voting securities of the Subsidiary, (iii) no
options or other rights to acquire from either Subsidiary Party, and no
obligations of the Subsidiary to issue, any capital stock, voting securities or
securities convertible into, or exercisable for the purchase of, or
exchangeable for capital stock or voting securities of the Subsidiary and (iv)
no equity equivalents, interest in the ownership or earnings of the Subsidiary
or other similar rights. All of the Subsidiary Common Shares are duly and
validly authorized and issued, fully paid and non-assessable. There are no
outstanding obligations of either Company Party to repurchase, redeem or
otherwise acquire any capital stock or voting securities of the Subsidiary.

3.14 Legal Proceedings; Compliance with Law; Governmental Permits.

(a) Except as described in the Disclosure Schedule, there
is no Litigation that is pending or, to the Company's knowledge, threatened
against any Company Party or any of their respective Assets. To the Company's
knowledge, there has been no Default under any Laws applicable to any Company
Party, except for any Defaults that would not have a Material Adverse

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<PAGE> 18

Effect. There has been no Default with respect to any Court Order applicable
to any Company Party. Except as described in the Disclosure Schedule, neither
Company Party is subject to any Court Order which, insofar as can be reasonably
foreseen, individually or in the aggregate, in the future would have a Material
Adverse Effect or would prevent or delay the consummation of the Transactions.

(b) Without limiting the generality of Section 3.14(a),
except as described on the Disclosure Schedule and except for those situations
that, individually or in the aggregate, would not have a Material Adverse
Effect:

(i) all Company Parties are in compliance with
all orders, permits, conditions, standards, requirements and schedules required
or imposed under any Environmental Law;

(ii) no Company Party has received any notice,
claim, subpoena, or summons, or been threatened with any notice, claim,
subpoena or summons from any Person alleging: (a) any liability of any Company
Party under any Environmental Law or (b) any violation by any Company Party of
any Environmental Law;

(iii) there are and have been no facts,
circumstances or conditions (including any Hazardous Substances that have been
released, disposed of, emitted, treated, stored, generated, placed, deposited,
discharged, or spilled at, upon or under any facility owned, operated or leased
by any Company Party or any facility to which any Company Party has sent any
Hazardous Substance) that are reasonably likely to give rise to (x) any
Liability of any Company Party under any Environmental Law or (y) any violation
by any Company Party of any Environmental Law;

(iv) all Company Parties have all permits
required under any Environmental Law; and

(v) all Company Parties have delivered to Buyer
all environmental studies and reports in their possession with respect to any
facilities or real property ever owned, operated or leased by any Company
Party.

(c) Each Company Party has complied, in all material
respects, with all of its governmental permits, licenses, registrations,
certificates of occupancy, approvals and other authorizations (the
"Governmental Permits").

3.15 Contracts and Commitments.

(a) All Contracts described in Item 601(b)(10) of
Regulation S-K to which any Company Party is a party or may be bound ("Material
Contracts") have been filed as exhibits to, or incorporated by reference in,
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
except for the Severance Agreements. To the Company's knowledge, no Company
Party has committed a Default under any Material Contract, except for Defaults
that, individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse

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<PAGE> 19

Effect. The Company has delivered or made available to the Buyer true and
complete copies of all Material Contracts.

(b) The Disclosure Schedule describes any Contract to
which any Company Party is a party or may be bound that limits or restrains any
Company Party from engaging or competing in any business or that creates a
partnership, joint venture, "teaming arrangement" or other similar arrangement.

(c) The Disclosure Schedule describes the Company's good
faith estimate of the fees and expenses that it will incur in connection with
the Transactions, including fees and expenses for its investment banker,
accountants and lawyers, printing, transfer agent, mailing and filing with the
SEC.

3.16 Employee Relations. Except as described in the Disclosure
Schedule, no Company Party is (a) a party to, involved in or, to the Company's
knowledge, threatened by, any labor dispute or unfair labor practice charge, or
(b) currently negotiating any collective bargaining agreement, and no Company
Party has experienced any work stoppage during the last three years. The
Company has delivered to the Buyer a complete and correct list of the names and
salaries, bonus and other cash compensation of all employees (including
officers) of the Company Parties whose total cash compensation for 1995
exceeded, or whose total compensation for 1996 is expected to exceed, $100,000.

3.17 ERISA.

(a) Except as set forth in the Disclosure Schedule, there
are no employment, consulting, severance pay, continuation pay, termination pay
or indemnification agreements or other similar agreements of any nature
whatsoever (collectively, "Employment Agreements") between either Company Party
and any current or former stockholder, officer, director, employee or Affiliate
or either Company Party are currently in effect. The Disclosure Schedule also
contains a complete list of all Benefit Plans sponsored or maintained by any
Company Party or under which any Company Party may be obligated. The Company
has delivered to the Buyer (i) accurate and complete copies of all Employment
Agreements and all Benefit Plan documents and of any summary plan descriptions,
summary annual reports and insurance contracts relating thereto, (ii) accurate
and complete detailed summaries of all unwritten Benefit Plans, (iii) accurate
and complete copies of the most recent financial statements and actuarial
reports with respect to all Benefit Plans for which financial statements or
actuarial reports are required or have been prepared and (iv) accurate and
complete copies of all annual reports for all Benefit Plans (for which annual
reports are required) prepared within the last two years. Except as
specifically disclosed in the Disclosure Schedule, there are no Employment
Agreements or any other similar agreements to which either Company Party is a
party under which the Merger or Transactions (i) will require any payment by
either Company Party or any consent or waiver from any stockholder, officer,
director, employee, consultant or other Person or (ii) will result in any
change in the nature of any rights of any stockholder, officer, director,
employee or agent of either Company Party as a result of the Merger or
consummation of the Transactions. Except as specifically disclosed in the
Disclosure Schedule, no individual shall

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<PAGE> 20

accrue or receive additional benefits, service or accelerated rights to
payments of benefits under any Benefit Plan, including the right to receive any
"parachute payment," as defined in Section 280G of the Code, or become entitled
to severance, termination allowance or similar payments as a direct result of
the Merger or the Transactions.

(b) Except as described in the Disclosure Schedule, all
Benefit Plans conform in all material respects to, and are being administered
and operated in material compliance with, the requirements of ERISA, the Code
and all other applicable Laws. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA involving any of the Benefit Plans, that could subject any Company
Party to any material penalty or tax imposed under the Code or ERISA.

(c) Except as set forth in the Disclosure Schedule, any
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
and exempt from tax under Section 501(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and such determination remains in
effect and has not been revoked. Nothing has occurred since the date of any
such determination that is reasonably likely to affect adversely such
qualification or exemption, or result in the imposition of excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any Benefit Plan.

(d) Except as set forth in the Disclosure Schedule, no
Company Party has a current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA).

(e) There are no pending or, to the knowledge of the
Company, threatened claims by or on behalf of any Benefit Plans, or by or on
behalf of any individual participants or beneficiaries of any Benefit Plans,
alleging any breach of fiduciary duty on the part of any Company Party or any
of such party's officers, directors or employees under ERISA or any other
applicable Laws, or claiming benefit payments other than those made in the
ordinary operation of such plans. To the Company's knowledge, the Benefit
Plans are not the subject of any investigation, audit or action by the Internal
Revenue Service, the Department of Labor or the Pension Benefit Guaranty
Corporation ("PBGC"). Each Company Party has made all required contributions
under the Benefit Plans including the payment of any premiums payable to the
PBGC and other insurance premiums.

(f) With respect to any Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (a "Welfare
Plan"), (i) each Welfare Plan for which contributions are claimed as deductions
under any provision of the Code is in material compliance with all applicable
requirements pertaining to such deduction, (ii) with respect to any welfare
benefit fund (within the meaning of Section 419 of the Code) related to a
Welfare Plan, there is no disqualified benefit (within the meaning of Section
4976(b) of the Code) that would result in the imposition of a tax under Section
4976(a) of the Code, (iii) any Benefit Plan that is a group health plan (within
the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every
case has complied, with all of the material requirements of Section 4980B of
the Code, ERISA, Title XXII of the Public Health Service Act and the applicable
provisions of the Social Security Act, (iv)

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<PAGE> 21

all Welfare Plans may be amended or terminated at any time on or after the
Closing Date, and (v) no such plan provides benefits to retirees or the former
employees of either Company Party or the dependents of any of the foregoing.

3.18 Patents, Trademarks, etc. The Disclosure Schedule sets forth
a complete and correct list of each patent, patent application and docketed
invention, and all items which either Company Party claims as a trademark,
trade name or copyright, and all trade name registrations or applications,
copyright registrations or application for copyright registration, and each
license or licensing agreement for any of the foregoing to which either Company
Party is a party or by which either is bound. To the Company's knowledge, no
Company Party infringes upon or unlawfully or wrongfully uses any Intellectual
Property owned or claimed by another Person. Each Company Party either owns
the entire right, title and interest in, to and under, or has a valid license
to use, any and all Intellectual Property which is material to the conduct of
the Business in the manner that the Business is conducted.

3.19 Absence of Certain Changes. Since the Balance Sheet Date, the
Company Parties have conducted the Business in the ordinary course, and except
as described on the Disclosure Schedule, there has not been with respect to any
Company Party:

(a) any material adverse change in its Business,
Liabilities, consolidated results of operations or
consolidated financial condition;

(b) any distribution or payment declared or made
in respect of its capital stock by way of dividends, purchase
or redemption of shares or otherwise;

(c) any increase in the compensation payable or
to become payable to any director, officer, employee or agent,
except for merit and seniority increases for non-officer
employees made in the ordinary course of business, nor any
other change in any employment or consulting arrangement;

(d) any sale, assignment or transfer of Assets,
or any additions to or transactions involving any Assets,
other than those made in the ordinary course of business;

(e) other than in the ordinary course of
business, any waiver or release of any claim or right or
cancellation of any debt held;

(f) any material change by either Company Party
in its accounting principles, methods or practices or the
manner in which it keeps its books and records or any material
change by either Company Party of its current general
practices with regard to sales, receivables, payables or
accrued expenses.

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<PAGE> 22

(g) any Material Contract entered into by either
Company Party, or any waiver, amendment, termination or
cancellation of any Material Contract by either Company Party
or any relinquishment of any rights thereunder by either
Company Party, other than, in each such case, actions taken in
the ordinary course of business consistent with past practice;
or

(h) any loan to or guarantee or assumption of any
loan or obligation on behalf of any director, officer,
stockholder or employee or either Company Party, except for
travel advances occurring in the ordinary course of business.

3.20 Corporate Records. The minute books of the Company contain
accurate, complete and current copies of all Charter Documents and of all
minutes of meetings, resolutions and other proceedings of its Board of
Directors and stockholders. The stock record books of the Company are also
complete, correct and current.

3.21 Finder's Fees. Except for Schroder Wertheim, the arrangements
with which have been disclosed to the Buyer in writing, no Person is or will be
entitled to any commission, finder's or other payment in connection with the
Transactions based on arrangements made by or on behalf of either Company
Party.

4. Representations and Warranties of the Buyer Parties.

The Buyer and the Acquisition Company, jointly and severally,
represent and warrant to the Company as follows, and all such representations
and warranties shall be true and correct at and as of the Closing Date as
though then made:

4.1 Corporate. Each Buyer Party is a corporation duly organized,
validly existing and in good standing under which it was incorporated.

4.2 Authorization. Each Buyer Party has the requisite corporate
power and authority to execute and deliver the Transaction Documents to which
it is a party and to perform the Transactions to be performed by it. Such
execution, delivery and performance by each Buyer Party have been duly
authorized by all necessary corporate action, including any stockholder
approval that may be required under applicable Law. Each Transaction Document
executed and delivered by any Buyer Party of the date hereof has been duly
executed and delivered by such Buyer Party and constitutes a valid and binding
obligation of such Buyer Party, enforceable against such Buyer Party in
accordance with its terms. Any Transaction Document executed and delivered by
any Buyer Party after the date hereof will be duly executed and delivered by
such Buyer Party and will constitute a valid and binding obligation of such
Buyer Party, enforceable against such Buyer Party in accordance with its terms.

4.3 Validity of Contemplated Transactions. Except for HSR
Compliance, neither the execution and delivery by any Buyer Party of the
Transaction Documents to which it is or will be a party, nor the performance of
the Transactions to be performed by any Buyer Party, will require

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<PAGE> 23

any filing, consent or approval under or constitute a Default under (a) any Law
or Court Order to which any Buyer Party is subject, (b) the Charter Documents
or Bylaws of any Buyer Party or (c) any material Contract or other material
document to which any Buyer Party is a party.

4.4 Available Funds. The Buyer Parties have provided the Company
with a true, correct and complete copy of a commitment letter from a financial
institution regarding the Buyer Parties' "bridge" financing for the
Transactions (the "Bridge Financing").

4.5 Finder's Fees . No Person is or will be entitled to any
commission, finder's or other payment from any Seller Party in connection with
the Transactions based on arrangements made by or on behalf of any Buyer Party.

5. Covenants of the Company.

5.1 Closing Conditions. At and prior to the Closing, the Company
shall use commercially reasonable efforts to fulfill the conditions specified
in Section 7 to the extent that the fulfillment of such conditions is within
its control, except that the Company shall not be required to pay or expend any
material amount of funds that may be necessary to correct any Default under its
representations and warranties or to fulfill any of such conditions. The
foregoing obligation includes refraining from any actions that would cause the
Company's representations and warranties to be inaccurate in any material
respect as of the Closing, executing and delivering the agreements and other
documents referred to in Section 7 and using commercially reasonable efforts to
prepare all necessary documentation. The Company shall give the Buyer prompt
written notice of any event or development that occurs or fails to occur (and
that is known to the Company) that gives the Company reason to believe that the
conditions set forth in Section 7 will not be satisfied prior to the
Termination Date.

5.2 Conduct of the Business. Except as otherwise expressly
provided in this Agreement, during the period from the date hereof to the
Effective Time, neither Company Party will conduct its operations otherwise
than in the ordinary course of business consistent with past practice. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement, neither Company Party will, without the prior written
consent of the Buyer:

(a) amend or propose to amend its Charter Documents or
Bylaws;

(b) authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities or equity equivalents
(including any stock options or stock appreciation rights), except as required
by the Options that are outstanding and in effect as of the date hereof, or
amend any of the terms of any such securities or agreements that are
outstanding as of the date hereof;

(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination

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<PAGE> 24

thereof) in respect of its capital stock except for the payment of dividends in
accordance with past practice, or redeem or otherwise acquire any of its
securities or any securities of its subsidiaries;

(d) (i) incur or assume any long-term or short-term debt
or issue any debt securities except for borrowings under existing lines of
credit in the ordinary course of business and in amounts not material to the
Company and the Subsidiary taken as a whole; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except in the ordinary
course of business consistent with past practice and in amounts not material to
the Company and the Subsidiary, taken as a whole, (iii) make any loans,
advances or capital contributions to, or investments in, any other person
(other than loans or advances to employees in the ordinary course of business
consistent with past practice and in amounts not material to the maker of such
loan or advance); (iv) pledge or otherwise encumber shares of capital stock of
the Company or the Subsidiary; or (v) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material
Encumbrance thereupon;

(e) except as may be required by applicable Law, enter
into, adopt or amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any director,
officer or employee in any manner, or (except for normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company, and as required under existing agreements or in the
ordinary course of business generally consistent with past practice) increase
in any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including the granting of stock appreciation
rights);

(f) acquire, sell, lease or dispose of any assets outside
the ordinary course of business or any assets that in the aggregate are
material to the Company and the Subsidiary taken as a whole, or enter into any
commitment or transaction outside the ordinary course of business consistent
with past practice which would be material to the Company and its subsidiaries
taken as a whole;

(g) except as may be required as a result of a change in
Law or in GAAP, change in any material respect any of the accounting principles
or practices used by it;

(h) revalue in any material respect any of its Assets,
including writing down the value of inventory or writing-off notes or accounts
receivables other than in the ordinary course of business;

(i) (i) acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other business organization
or division thereof or any equity interest therein; (ii) enter into any
Material Contract other than in the ordinary course of business consistent with
past practice; (iii) authorize any new capital expenditure or expenditures
which, individually,

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<PAGE> 25

is in excess of $500,000 or, in the aggregate, are in excess of $1,000,000;
provided that none of the foregoing shall limit any capital expenditure already
included in the Company's 1996 capital expenditure budget previously provided
to the Buyer; or (iv) enter into or amend any Contract providing for the taking
of any action that would be prohibited hereunder;

(j) make any Tax election or settle or compromise any
income tax liability material to the Company Parties taken as a whole;

(k) pay, discharge or satisfy Liabilities, other than the
payment, discharge or satisfaction in the ordinary course of business of
Liabilities reflected or reserved against in, or identified by specific
reference in, the Financial Statements (or the notes thereto) or incurred in
the ordinary course of business consistent with past practice;

(l) settle or compromise any pending or threatened suit,
action or claim relating to the Transactions; or

(m) take, or agree in writing or otherwise to take, any
of the actions described in Sections 5.2(a) through 5.2(l) or any action that
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect as of the date when made or would result in
any of the conditions set forth in Section 7 not being satisfied.

Nothing contained in this Agreement shall give the Buyer Parties, directly or
indirectly, the right to control or direct any Company Party's operations prior
to the Effective Time. Prior to the Effective Time, each Company Party shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.

5.3 Access to Information. The Company shall, and shall cause the
Subsidiary to, give the Buyer and its representatives (including the Buyer's
accountants, counsel and employees), upon reasonable notice and during normal
business hours, full access to the properties, contracts, books, records and
affairs of the Company and the Subsidiary. The Company shall cause its
officers and employees, and the officers and employees of the Subsidiary, to
furnish to the Buyer all documents, records and information (and copies
thereof) as the Buyer may reasonably request; it being understood that (a) the
Company, in its sole discretion may deny or restrict any access (i) involving
possible breaches of applicable confidentiality agreements with third parties,
or possible waivers of any applicable attorney-client privileges or (ii) if any
Buyer Party is in material breach of this Agreement, (b) such investigations
shall not under any circumstances interfere with the Company's or the
Subsidiary's operations, activities or employees, and (c) such investigations
shall not be of a nature that in the opinion of the Company may violate
applicable antitrust or similar laws. If this Agreement is terminated pursuant
to Section 9.1, (x) the Buyer Parties shall, and shall cause their
representatives to, keep confidential any Confidential Information obtained
from any Company Party (except as may be specifically (and only to the extent)
required to be disclosed by applicable Law or administrative or legal process
or pursuant to any securities exchange rules), it being understood that the
Buyer Parties will notify the Company in writing prior to any proposed
disclosure of such Confidential Information in order to enable the Company to
seek an appropriate protective order;

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<PAGE> 26

and (y) the Buyer Parties shall return to the Company Parties all documents
(and reproductions thereof) supplied to any Buyer Party by any Company Party.
The foregoing covenants relating to confidentiality are in addition to those
included in the Prior Confidentiality Agreement.

5.4 No Solicitation. From and after the date hereof, the Company,
without the prior written consent of the Buyer, will not, and will not
authorize any of the Company Representatives to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
take any other action to facilitate knowingly any inquiries or the making of
any proposal that constitutes or may reasonably be expected to lead to an
Acquisition Proposal (defined below) from any Person, or engage in any
discussion or negotiations relating thereto or accept any Acquisition Proposal
or make or authorize any statement, recommendation or solicitation in support
of any Acquisition Proposal; provided, however, that notwithstanding any other
provision hereof, the Company may (a) at any time prior to the time the
Company's stockholders shall have voted to approve this Agreement, engage in
discussions or negotiations with a third party who (without any solicitation,
initiation, encouragement, discussion or negotiation, directly or indirectly,
by or with the Company or any Company Representative after the date hereof)
seeks to initiate such discussions or negotiations and may furnish such third
party information concerning the Company, the Business or the Assets if, and
only to the extent that, (i)(x) the third party has first made an Acquisition
Proposal in writing that is financially superior to the Transactions and has
demonstrated that the funds necessary for the Acquisition Proposal are
reasonably likely to be available (as determined in good faith in each case by
the Company's Board of Directors after consultation with its financial
advisors) and (y) the Company's Board of Directors shall conclude in good
faith, after considering applicable provisions of state law, on the basis of
written advice of outside counsel, that such action is necessary for the Board
of Directors to act in a manner consistent with its fiduciary duties under
applicable law and (ii) prior to furnishing such information to or entering
into discussions or negotiations with such Person, the Company (x) provides
prompt notice to the Buyer to the effect that it is furnishing information to
or entering into discussions or negotiations with such Person and (y) receives
from such Person an executed confidentiality agreement in reasonably customary
form on terms not in the aggregate materially more favorable to such Person
than the terms contained in Section 5.3 and the Prior Confidentiality
Agreement; (b) comply with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer, or (c) provided the Company terminates
this Agreement pursuant to Section 9.1(h), accept an Acquisition Proposal from
a third party. The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any Persons conducted heretofore by the Company or any Company
Representatives with respect to the foregoing. The Company shall not release
any third party from, or waive any provision of, any standstill agreement to
which it is a party or any confidentiality agreement between it and another
Person who has made, or who may reasonably be considered likely to make, an
Acquisition Proposal, unless its Board of Directors shall conclude in good
faith, after considering applicable provisions of state law, on the basis of
oral or written advice of outside counsel, that such action is necessary for
the Board of Directors to act in a manner consistent with its fiduciary duties.
The Company shall notify the Buyer orally and in writing of any such inquiries,
offers or proposals (including the terms and conditions of any such proposal,
the identity of the Person making it and a copy of any written Acquisition
Proposal), within 24 hours of the receipt thereof, shall keep the Buyer
informed of the status and details of any such inquiry,

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<PAGE> 27

offer or proposal, and shall give the Buyer five days' advance notice of any
agreement to be entered into with, or any information to be supplied to, any
Person making such inquiry, offer or proposal. This Section 5.4, however,
shall not require the Company to identify any Person to whom it furnishes
information or enters into discussion or negotiations nor any Person who makes
any such inquiries, offers or proposals to the extent that identifying any such
Person would violate the terms of a confidentiality agreement with such Person
that was entered into prior to the date hereof. As used herein, "Acquisition
Proposal" shall mean a proposal or offer (other than by a Buyer Party) for a
tender or exchange offer, merger, consolidation or other business combination
involving any Company Party or any proposal to acquire in any manner a
substantial equity interest in, or all or any substantial part of the Assets
of, any Company Party.

5.5 Additional Agreements. The Company will comply in all
material respects with all applicable Laws in connection with its execution,
delivery and performance of this Agreement and the Transactions. The Company
shall use commercially reasonable efforts to obtain in a timely manner all
necessary waivers, consents and approvals required under any Laws and to effect
all necessary registrations and filings under any Laws, and to use commercially
reasonable efforts to take, or cause to be taken, all other actions and to do,
or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the Transactions.
Without limiting the generality of the foregoing, the Company shall promptly
prepare and file a premerger notification in accordance with the HSR Act, shall
promptly comply with any requests for additional information, and shall use
commercially reasonable efforts to obtain termination of the waiting period
thereunder as promptly as practicable.

5.6 Subsidiary Preferred Stock. The Company shall cause the
Subsidiary to redeem on or before the Closing Date all of the issued and
outstanding Subsidiary Preferred Stock in accordance with the terms thereof as
in effect on the date of this Agreement.

6. Covenants of the Buyer Parties.

6.1 Closing Conditions. At and prior to the Closing, each Buyer
Party shall use commercially reasonable efforts to fulfill the conditions
specified in Section 8 to the extent that the fulfillment of such conditions is
within its control, except that no Buyer Party shall be required to pay or
expend any material amount of funds that may be necessary to correct any
Default under its representations and warranties or to fulfill any of such
conditions. The foregoing obligation includes refraining from any actions that
would cause any Buyer Party's representations and warranties to be inaccurate
in any material respect as of the Closing, executing and delivering the
agreements and other documents referred to in Section 8 and using commercially
reasonable efforts to prepare all necessary documentation. The Buyer shall
give the Company prompt written notice of any event or development that occurs
or fails to occur (and that is known to any Buyer Party) that gives the Buyer
reason to believe that the conditions set forth in Section 8 will not be
satisfied prior to the Termination Date.

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<PAGE> 28

6.2 Buyer Financing. The Buying Parties shall use commercially
reasonable efforts to obtain the Buyer Financing and shall notify the Company
promptly of any event or circumstances that give any Buyer Party a reason to
believe that the Buyer Financing may not be available.

6.3 Indemnification, Directors' and Officers' Insurance.

(a) For a period of six years after the Effective Time,
the Buyer shall cause the Surviving Corporation to (i) maintain in effect the
current provisions regarding indemnification of officers and directors
contained in the Charter Documents and Bylaws of each Company Party and any
directors, officers or employees indemnification agreements of any Company
Party, and (ii) indemnify the directors and officers of any Company Party to
the fullest extent to which any Company Party are permitted to indemnify such
officers and directors under their respective Charter Documents and Bylaws and
applicable Law. The Buyer hereby unconditionally and irrevocably guarantees
for the benefit of such directors, officers and employees the obligations of
each Company Party under the foregoing indemnification arrangements.

(b) For a period of four years after the Effective Time,
the Buyer shall cause the Surviving Corporation to maintain in effect the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by any Company Party (provided that the Buyer
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect) with respect to claims
arising from facts or events which occurred on or before the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend more than an amount per year equal to 200% of the current annual
premiums paid by the Company (the "Premium Amount") to maintain or procure
insurance coverage pursuant hereto, and further provided that if the Surviving
Corporation is unable to obtain the insurance called for by this Section
6.3(b), the Surviving Corporation will obtain as much comparable insurance as
is available for the Premium Amount per year.

6.4 Benefit Plans. The Buyer will maintain, or cause the
Surviving Corporation to maintain, for a period of one year after the Effective
Time, Benefit Plans covering employees of any Company Parties that are no less
favorable, in the aggregate, to the employees covered by such plans than the
Benefit Plans of any Company Party in effect immediately prior to the Effective
Time; provided, however, that the foregoing obligation shall not apply to any
Benefit Plans that provide for the issuance of stock or stock options of any
Company Party.

6.5 Additional Agreements. Each Buyer Party will comply in all
material respects with all applicable Laws in connection with its execution,
delivery and performance of this Agreement and the Transactions. Each Buyer
Party shall use commercially reasonable efforts to obtain in a timely manner
all necessary waivers, consents and approvals required under any Laws and to
effect all necessary registrations and filings under any Laws, and to use
commercially reasonable efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
Transactions. Without limiting the generality of the foregoing, the Buyer
shall promptly prepare and

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<PAGE> 29

file a premerger notification in accordance with the HSR Act, shall promptly
comply with any requests for additional information, and shall use commercially
reasonable efforts to obtain termination of the waiting period thereunder as
promptly as practicable.

7. Conditions Precedent to the Buyer Parties' Obligations.

All obligations of the Buyer and the Acquisition Company to be
performed on the Closing Date shall be subject to the satisfaction (or waiver
by the Buyer or the Acquisition Company), prior thereto, of the following
conditions:

7.1 Representations True at Closing. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects, on and as of the date of this Agreement and on and as
of the Effective Time as if made on and as of such date except for (a) such
inaccuracies or breaches of warranty as to which the Buyer had actual knowledge
on or prior to the date hereof and (b) such inaccuracies or breaches of
warranty as would not, individually or in the aggregate, have a Material
Adverse Effect.

7.2 Performance of Covenants. The Company shall have performed,
in all material respects, all covenants and agreements that are to be performed
by it under this Agreement on or prior to the Closing Date except for any
breaches thereof that do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

7.3 Litigation Affecting Closing. No Court Order shall have been
issued or entered that prohibits consummation of the Merger.

7.4 Regulatory Compliance and Approvals. All applicable waiting
periods under the HSR Act shall have expired or early termination thereof shall
have been granted with respect to the consummation of the Merger, and all
governmental consents and approvals legally required for the consummation of
the Merger and the Transactions contemplated hereby shall have been obtained
and be in effect at the Effective Time on terms and conditions that would not
have a material adverse effect on the Surviving Corporation.

7.5 Certificates. The Company shall have delivered a certificate
of an executive officer of the Company to the effect that the conditions set in
Sections 7.1 and 7.2 have been satisfied.

7.6 Opinion of Counsel to the Company. Morgan, Lewis & Bockius
LLP, counsel to the Company, shall have delivered to the Buyer their opinion,
dated the Closing Date, with respect to those matters reasonably requested by
the Buyer.

7.7 Stockholder Approval. This Agreement and the Transactions
shall have been approved and adopted by the requisite vote of the stockholders
of the Company pursuant to the DGCL and holders of not more than 10% of the
Shares shall have perfected their dissenter rights under the DGCL prior to the
Closing Date.

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<PAGE> 30

7.8 No Regulatory Action. No action shall have been taken, and no
statute, rule or law shall have been enacted, by any state, federal or foreign
government or governmental agency which would prevent the consummation of the
Merger.

8. Conditions Precedent to the Company's Obligations.

All obligations of the Company to be performed on the Closing Date
shall be subject to the satisfaction (or waiver by the Company), prior thereto,
of each of the following conditions:

8.1 Representations True at Closing. The representations and
warranties of the Buyer Parties set forth in this Agreement shall be true and
correct in all material respects, on and as of the date of this Agreement and
on and as of the Effective Time as if made on and as of such date except for
such inaccuracies or breaches of warranty as to which the Company had actual
knowledge on or prior to the date hereof.

8.2 Performance of Covenants. The Buyer shall have performed in
all material respects all covenants and agreements that are to be performed by
it under this Agreement on or prior to the Closing Date.

8.3 Litigation Affecting Closing. No Court Order shall have been
issued or entered that prohibits consummation of the Merger.

8.4 Regulatory Compliance and Approvals. All applicable waiting
periods under the HSR Act shall have expired or early termination thereof shall
have been granted with respect to the consummation of the Merger.

8.5 Certificates. The Buyer shall have delivered a certificate of
an executive officer of the Buyer to the effect that the conditions set in
Sections 8.1 and 8.2 have been satisfied.

8.6 Approval of Merger. The Merger shall have been approved by
the stockholders of the Company in accordance with the DGCL.

8.7 Opinion of Counsel to the Buyer Parties. Gibson, Dunn &
Crutcher, counsel to the Buyer Parties, shall have delivered to the Company
their opinion, dated the Closing Date, with respect to those matters reasonably
requested by the Company.

8.8 Stockholder Approval. This Agreement and the Transactions
shall have been approved and adopted by the requisite vote of the stockholders
of the Company pursuant to the DGCL.

8.9 No Regulatory Action. No action shall have been taken, and no
statute, rule or law shall have been enacted, by any state, federal or foreign
government or governmental agency that would prevent the consummation of the
Merger.

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<PAGE> 31

9. Termination.

9.1 Grounds for Termination. This Agreement may be terminated at
any time before the Effective Time, in each case as authorized by the
respective Board of Directors of the Company and the Buyer:

(a) By mutual written consent of each of the Company and
the Buyer;

(b) By either the Company or the Buyer if the Merger
shall not have been consummated on or before the Termination Date; provided,
however, that the right to terminate this Agreement under this Section 9.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;

(c) By either the Company or the Buyer if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a Court Order (which Court Order the parties shall
use commercially reasonable efforts to lift) that permanently restrains,
enjoins or otherwise prohibits the Transactions, and such Court Order shall
have become final and nonappealable;

(d) By the Company or the Buyer if the required approvals
of the stockholders of the Company shall fail to have been obtained at a duly
held stockholders' meeting of the Company, including any adjournments thereof;

(e) By the Buyer if the Company shall have breached, or
failed to comply with, any of its obligations under this Agreement or any
representation or warranty made by the Company shall have been incorrect when
made, and such breach, failure or misrepresentation is not cured by the earlier
of the Termination Date or 20 days after notice thereof, and in either case,
any such breaches, failures or misrepresentations, individually or in the
aggregate, results or would reasonably be expected to result in a Material
Adverse Effect;

(f) By the Company if the Buyer shall have breached, or
failed to comply with, in any material respect, any of its obligations under
this Agreement or any representation or warranty made by the Buyer shall have
been incorrect in any material respect when made, and such breach, failure or
misrepresentation is not cured by the earlier of the Termination Date or 20
days after notice thereof; or

(g) By the Company, prior to the approval of this
Agreement by the stockholders of the Company, upon five days' prior notice to
the Buyer, if, as a result of a written Acquisition Proposal received by the
Company from a Person other than a party hereto or any of its Affiliates, the
Board of Directors of the Company determines in good faith that its fiduciary
obligations under applicable Law require that such Acquisition Proposal be
accepted; provided, however, that (i) such written Acquisition Proposal was
received by the Company without any solicitation, initiation, encouragement,
discussion or negotiation, directly or indirectly, by or with the Company or
any

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<PAGE> 32

Company Representative in violation of the provisions of Section 5.4 of this
Agreement, (ii) such Acquisition Proposal is financially superior to the
Transactions and the Person proposing such Acquisition Proposal has
demonstrated that the funds necessary for such Acquisition Proposal are
reasonably likely to be available (as determined in good faith in each case by
the Company's Board of Directors after consultation with its financial
advisors), and (iii) the Board of Directors of the Company shall have concluded
in good faith, after considering applicable provisions of state law, on the
basis of written advice of outside counsel, that such action is necessary for
the Board of Directors to act in a manner consistent with its fiduciary duties
under applicable Law.

9.2 Effect of Termination.

(a) If this Agreement is terminated under Section 9.1
hereof, this Agreement shall become void and there shall be no Liability on the
part of any of the parties, except as set forth in this Section 9.2 and for any
breach of Sections 3.21, 4.5 or 11 or of the confidentiality covenants in
Section 5.3.

(b) If this Agreement is terminated by the Company under
Section 9.1(f) as a result of any Buyer Party's breach, the Buyer shall pay to
the Company a termination fee in an amount equal to the reasonable
out-of-pocket expenses of the Company Parties related to the Transactions,
except that in the case of a termination due to a breach existing on the date
hereof that was known to exist on the date hereof by any Buyer Party or a
termination due to a wilful breach by any Buyer Party or the unavailability of
the Buyer Financing, the Buyer shall pay to the Company a termination fee in an
amount equal to such expenses plus $2.0 million, in either case, in cash within
10 days after the date on which the Agreement is terminated.

(c) If this Agreement is terminated by the Company under
Section 9.1(g) hereof, the Company shall pay to the Buyer a termination fee in
an amount equal to the reasonable out-of-pocket expenses of the Buyer Parties
related to the Transactions plus $2.0 million, in cash within 10 days after the
date on which the Agreement is terminated. Such out-of-pocket expenses shall
include any fees, costs or other expenses related to the Buyer Financing other
than the 1% commitment fee with respect to the Bridge Financing to the extent
that it relates to financing of amounts greater than $60 million.

(d) If this Agreement is terminated by the Buyer under
Section 9.1(e) as a result of the Company's breach, the Company shall pay to
the Buyer a termination fee in amount equal to the reasonable out-of-pocket
expenses of the Buyer Parties related to the Transactions, except that in the
case of a termination due to a breach existing on the date hereof that was
known to exist on the date hereof by either Company Party or a termination due
to a wilful breach by any Company Party, the Company shall pay to the Buyer a
termination fee in an amount equal to such expenses plus $2.0 million, in
either case, in cash within 10 days after the date on which the Agreement is
terminated. Such out-of-pocket expenses shall include any fees, costs or other
expenses related to the Buyer Financing other than the 1% commitment fee with
respect to the Bridge Financing to the extent that it relates to financing of
amounts greater than $60 million.

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<PAGE> 33

(e) The agreements contained in Sections 9.2(b), (c) and
(d) are an integral part of the Transactions and constitute liquidated damages
and not a penalty. If one party fails to promptly pay to the other any fee due
under such Sections 9.2(b), (c) or (d), the defaulting party shall pay the
costs and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at the
Prime Rate plus 200 basis points from the date such fee was required to be
paid.

10. Public Announcements.

The Buyer and the Company will consult with each other before issuing
any press release or making any public statement with respect to this Agreement
and the Transactions and, except as may be required by applicable law or stock
exchange regulations, will not issue any such press release or make any such
public statement prior to such consultation.

11. General.

11.1 Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Delaware.

11.2 Further Assurances. The parties hereto shall execute and
deliver any and all documents and take such other actions as may be necessary
to complete the Transactions.

11.3 Binding Effect. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement and all rights hereunder may not be assigned by any party
hereto without the written consent of the other parties. Nothing in this
Agreement, expressed or implied, is intended to confer upon any Person other
than the Buyer Parties and the Company Parties any rights or remedies of any
nature whatsoever.

11.4 Waiver of Conditions. Any party hereto may waive any
condition provided in this Agreement for its benefit.

11.5 Exhibits. All of the Exhibits attached to this Agreement and
the Disclosure Schedule and any Revised Disclosure Schedule are hereby
incorporated herein and made a part hereof.

11.6 Expenses. All costs and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring such
costs and expenses.

11.7 Entire Agreement. This Agreement, the Prior Confidentiality
Agreement and the other Transaction Documents contain the entire agreement
among the parties hereto, and there are no agreements, representations or
warranties which are not set forth in such documents. All prior negotiations,
agreements and understandings are superseded hereby. This Agreement may not be
amended or revised except by a writing signed by all parties hereto.

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<PAGE> 34

11.8 Notices. Any notice, authorization, request or demand
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given on the earlier of the date when received at, or
the fifth day after the date when sent by registered or certified mail to, the
respective addresses or telecopy numbers specified for the parties below.

TO THE BUYER:

Astor Corporation
8521 Six Forks Road, Suite 105
Raleigh, North Carolina 27615
Attention: Boyd D. Wainscott
Chairman and Chief Executive Officer
Telecopy: 919-846-8283
With a copy to:

Aurora Capital Partners L.P.
Suite 1000
1880 Century Park East
Los Angeles, California 90067
Attention: Richard K. Roeder
Managing Director
Telecopy: 310-277-5591

and

Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Attention: Bruce D. Meyer, Esquire
Telecopy: 213-229-7520

TO THE COMPANY:

Adco Products, Inc.
4401 Page Avenue
Michigan Center, MI 49254
Attention: Charles E. Sax, President
Telecopy: 517-764-2550

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With a copy to:

Robert J. Simon
Bradford Ventures, Ltd.
1212 Avenue of the Americas
New York, NY 10036
Telecopy: 212-764-3467

and

Thomas J. Sharbaugh, Esquire
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Telecopy: 215-963-5299

11.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written
above. Each such copy shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.

11.10 Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time except for the representations, warranties and agreements set
forth in Sections 2 or 11.

11.11 Amendment. This Agreement may be amended by the Boards of
Directors of the parties hereto at any time prior to the filing of the
Certificate of Merger, and any such amendment shall be by a written instrument
signed by the parties hereto; provided, however, that this Agreement may only
be amended without approval of the stockholders of the Company and the
Acquisition Company to the extent permitted by applicable law.

11.12 Interpretation.

Unless the context of this Agreement clearly requires otherwise, (a)
"or" has the inclusive meaning frequently identified with the phrase "and/or,"
(b) "including" has the inclusive meaning frequently identified with the phrase
"but not limited to" and (c) references to one gender include all genders. The
section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this
Agreement or the interpretation thereof in any respect. Section, subsection,
schedule and exhibit references are to this Agreement unless

-34-
<PAGE> 36

otherwise specified. Each accounting term used herein that is not specifically
defined herein shall have the meaning given to it under GAAP.

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

Attest: ADCO TECHNOLOGIES INC.

______________________________ By:___________________________

Attest: ASTOR CORPORATION

______________________________ By:___________________________

Attest: AAC ACQUISITION CORP.

______________________________ By:___________________________

-35-

<PAGE> 1
EXHIBIT 10.1

CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement by and between Adco Technologies,
Inc., a Delaware corporation (the "Company"), and Brian J. Briddell (the
"Executive"), is entered into as of the 13th day of February, 1996.

RECITALS:

A. The Board of Directors of the Company (the "Board") has
previously determined that it is in the best interests of the Company and its
stockholders to compensate certain of its executive officers in the event of a
Change of Control (as defined below) of the Company.

B. To accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:

(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 100% of either (i) the then outstanding shares of common stock of the
Company ("Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors ("Outstanding Company Voting
Securities"); provided, however that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control:

(i) any acquisition directly from the Company,

(ii) any acquisition by the Company, or

(iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company
or any corporation controlled by the Company; or

(b) Consummation of a reorganization, merger or
consolidation or sale or other diposition of all or substantially all of the
assets of the Company (a "Corporate Transaction") in each case, unless,
following such Corporate Transaction, persons who are beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Corporate Transaction beneficially
own, directly or indirectly, more than 25% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from

-1-

<PAGE> 2
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be; or

2. Term. The term of this Agreement shall begin on the date of
this Agreement and shall continue for a period of two years (the "Term").
Thereafter, the Term may be extended for additional one year periods at the
sole discretion of the Board of Directors of the Company.

3. Compensation Upon Termination. In the event that the
Executive's employment with the Company is terminated, other than by
resignation or for "cause", during the Term of this Agreement as a direct
result of a Change of Control, the Company shall continue to compensate the
Executive at the base salary to which he was entitled as of the date of his
termination, in a manner consistent with the compensation policies of the
Company at such time, for a period of one year from the date of such
termination. For purposes of this Agreement, "cause" shall mean the failure of
the Employee to observe or perform (other than by reason of illness, injury or
incapacity) any of the material terms or provisions of any agreement between
the Executive and the Company, dishonesty, willful misconduct, material neglect
of the Company's business, conviction of a felony or other crime involving
moral turpitude, misappropriation of funds or habitual insobriety. Any such
willful misconduct or material neglect shall constitute "cause" only if the
action (or omission) at issue shall be continuing 30 days after the Company
gives the Employee written notice of such willful misconduct or material
neglect constituting "cause".

IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

Brian J. Briddell
-------------------------------
Brian J. Briddell

ADCO TECHNOLOGIES, INC.

By: Robert J. Simon
----------------------------
Robert J. Simon
Chairman of the Board

-2-

<PAGE> 1
EXHIBIT 10.2

CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement by and between Adco Technologies,
Inc., a Delaware corporation (the "Company"), and Philip D. Beery (the
"Executive"), is entered into as of the 13th day of February, 1996.

RECITALS:

B. To accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:

(i) any acquisition directly from the Company,

(ii) any acquisition by the Company, or

(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or

(b) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Corporate Transaction") in each case, unless,
following such Corporate Transaction, persons who are beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Corporate Transaction beneficially
own, directly or indirectly, more than 25% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from

-1-
<PAGE> 2
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be; or

Philip D. Beery
------------------------------------
Philip D. Beery

ADCO TECHNOLOGIES, INC.

By: Robert J. Simon
----------------------------------
Robert J. Simon
Chairman of the Board

-2-

<PAGE> 1
EXHIBIT 10.3

CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement by and between Adco Technologies,
Inc., a Delaware corporation (the "Company"), and David J. Fuchs (the
"Executive"), is entered into as of the 13th day of February, 1996.

RECITALS:

B. To accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:

(i) any acquisition directly from the Company,

(ii) any acquisition by the Company, or

(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or

David J. Fuchs
------------------------------------
David J. Fuchs

ADCO TECHNOLOGIES, INC.

By: Robert J. Simon
----------------------------------
Robert J. Simon
Chairman of the Board

-2-

<PAGE> 1
EXHIBIT 10.4

CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement by and between Adco Technologies,
Inc., a Delaware corporation (the "Company"), and James R. McCowan (the
"Executive"), is entered into as of the 13th day of February, 1996.

RECITALS:

B. To accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:

(i) any acquisition directly from the Company,

(ii) any acquisition by the Company, or

(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or

James R. McCowan
------------------------------------
James R. McCowan

ADCO TECHNOLOGIES, INC.

By: Robert J. Simon
----------------------------------
Robert J. Simon
Chairman of the Board

-2-

<PAGE> 1
EXHIBIT 11

ADCO TECHNOLOGIES INC. AND SUBSIDIARY

COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY:
Average shares outstanding 5,150,000 5,150,000 5,150,000 4,864,088
Net effect of dilutive stock options--based
on the treasury stock method using the
average market price 85,518 75,029 68,793 75,029
-------------------------- --------------------------
Total common and common equivalent
shares outstanding 5,235,518 5,225,029 5,218,793 4,939,117
========================== ==========================
Net income available for common
and common equivalent shares $1,370,067 $1,346,961 $2,078,598 $2,230,455
========================== ==========================
Per share amount $0.26 $0.26 $0.40 $0.45
========================== ==========================

<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
FULLY DILUTED:
Average shares outstanding 5,150,000 5,150,000 5,150,000 4,864,088
Net effect of dilutive stock options--based
on the treasury stock method using the
quarter end market price 109,313 75,103 109,313 75,103
-------------------------- --------------------------
Total common and common equivalent
shares outstanding 5,259,313 5,225,103 5,259,313 4,939,191
========================== ==========================
Net income available for common
and common equivalent shares $1,370,067 $1,346,961 $2,078,598 $2,230,455
========================== ==========================

Per share amount $0.26 $0.26 $0.40 $0.45
========================== ==========================
</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED BALANCE SHEET AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 1996
</LEGEND>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,558,264
<SECURITIES> 0
<RECEIVABLES> 7,741,085
<ALLOWANCES> 140,000
<INVENTORY> 5,781,629
<CURRENT-ASSETS> 17,498,063
<PP&E> 11,721,200
<DEPRECIATION> 2,645,782
<TOTAL-ASSETS> 34,481,191
<CURRENT-LIABILITIES> 4,360,124
<BONDS> 0
0
0
<COMMON> 15,142,250
<OTHER-SE> 10,027,542
<TOTAL-LIABILITY-AND-EQUITY> 34,481,191
<SALES> 13,995,266
<TOTAL-REVENUES> 14,379,954
<CGS> 10,045,001
<TOTAL-COSTS> 11,832,798
<OTHER-EXPENSES> 70,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,160,067
<INCOME-TAX> 790,000
<INCOME-CONTINUING> 1,370,067
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,370,067
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26

</TABLE>

<PAGE> 1
EXHIBIT 99.1

STOCKHOLDERS AGREEMENT

AGREEMENT, dated July __, 1996 (this "Agreement"), by and among ASTOR
CORPORATION, a Delaware corporation ("Parent"), and each of the other parties
signatory hereto (each, a "Stockholder" and, collectively, the "Stockholders").

WITNESSETH:

WHEREAS, concurrently herewith, Parent, AAC ACQUISITION CORP., a
Delaware corporation and an indirect wholly-owned subsidiary of Parent ("Merger
Sub"), and ADCO TECHNOLOGIES INC., a Delaware corporation (the "Company"), are
entering into an Agreement and Plan of Merger (as such agreement may hereafter
be amended from time to time, the "Merger Agreement;" capitalized terms used
and not defined herein have the respective meanings ascribed to them in the
Merger Agreement) pursuant to which Merger Sub will be merged with and into the
Company (the "Merger");

WHEREAS, each of the Stockholders Beneficially Owns (as defined herein)
the number of shares, par value $.01 per share, of common stock of the Company
("Company Common Stock") set forth opposite such Stockholder's name on Schedule
I hereto (the "Shares");

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:

1. Provisions Concerning Company Common Stock. Each Stockholder
hereby agrees that during the period commencing on the date hereof and
continuing until the first to occur of the Effective Time or termination of the
Merger Agreement in accordance with its terms, at any meeting of the holders of
Company Common Stock, however called, or in connection with any written consent
of the holders of Company Common Stock, such Stockholder shall vote (in the
case of Shares for which the Stockholder has exclusive voting and dispositive
power) or cause to be voted (in the case of Shares which the Stockholder
"Beneficially Owns" (as defined below) but for which the Stockholder does not
have exclusive voting and dispositive power) the Shares held of record or
Beneficially Owned (as defined below) by such Stockholder, whether heretofore
owned or hereafter acquired, (i) in favor of approval of the Merger Agreement
and any actions required in furtherance thereof and hereof; (ii) against any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement (after giving effect to any materiality
or similar qualifications contained therein); and (iii) except as permitted by
the Merger Agreement or as otherwise agreed to in writing in advance by Parent,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the

<PAGE> 2

Company or any of its subsidiaries; (B) a sale, lease transfer or disposition of
any assets outside the ordinary course of business or any as assets which in
the aggregate are material to the Company and its subsidies taken as a whole,
or a reorganization, recapitalization, dissolution or liquidation of the
Company; (C)(1) any change in a majority of the persons who constitute the
board of directors of the Company; (2) any change in the present capitalization
of the Company or any amendment of the Company's Certificate of Incorporation
or By-Laws; (3) any other material change in the Company's corporate structure
or business; or (4) any other action which, in the case of each of the matters
referred to in clauses C(1), (2) or (3) is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or materially adversely
affect the Merger and the transactions contemplated by this Agreement and the
Merger Agreement. Such Stockholder shall not enter into any agreement or
understanding with any Person (as defined below) the effect of which would be
inconsistent or violative of the provisions and agreements contained in
Section 1 or 2 hereof. For purposes of this Agreement, "Beneficially Own" or
"Beneficial Ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the
same holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute
a "group" as within the meanings of Section 13(d)(3) of the Exchange Act. For
purposes of this Agreement, "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.

2. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Parent as follows:

(a) Ownership of Shares. Such Stockholder is the record
and Beneficial Owner of the number of Shares set forth opposite such
Stockholder's name on Schedule I hereto. On the date hereof, the Shares set
forth opposite such Stockholder's name on Schedule I hereto constitute all of
the Shares owned of record or Beneficially Owned by such Stockholder. Schedule
I discloses the number of Shares Beneficially Owned by the Stockholder for
which the Stockholder shares voting or dispositive power with another Person
and identifies such other Person or Persons. Except as referenced in the
preceding sentence and Schedule I, such Stockholder has sole voting power and
sole power to issue instructions with respect to the matters set forth in
Section 1 hereof, sole power of disposition, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Shares set forth opposite
such Stockholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights.

(b) Power; Binding Agreement. Such Stockholder has the
legal capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholder agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitute a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with

2
<PAGE> 3
its terms. There is no beneficiary or holder of a voting trust certificate or
other interest of any trust of which such Stockholder is Trustee who is not a
party to this Agreement and whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby. If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Stockholder's spouse, enforceable against such person in
accordance with its terms.

(c) No Conflicts. No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated
hereby. None of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the
provisions hereof shall (1) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to
any third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
such Stockholder is a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound, or (2) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.

(d) No Finder's Fees. Other than existing financial
advisory and investment banking arrangements and agreements between the Company
and Schroder Wertheim & Co. Incorporated which have been disclosed in writing
to Parent, no broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated by the Merger
Agreement based upon arrangements made by or on behalf of such Stockholder or
any of its affiliates or, to the knowledge of such Stockholder, the Company or
any of its affiliates.

(e) Other Potential Acquirors. Such Stockholder (i) shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or
its subsidiaries or any business combination with the Company or its
subsidiaries, in his, her or its capacity as such, and (ii) from and after the
date hereof until termination of the Merger Agreement, unless and until the
Company is permitted to take such actions under Section

3
<PAGE> 4
terms and conditions of such proposal and identify the person making such
proposal) and thereafter keep Parent or Merger Sub promptly advised of any
development with respect thereto.

(f) Restriction on Transfer, Proxies and Non-Interference.
Except as contemplated by the Merger Agreement, such Stockholder shall not,
directly or indirectly: (i) offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of such Stockholder's Shares or any interest
therein; (ii) grant any proxies or powers of attorney, deposit any Shares into
a voting trust or enter into a voting agreement with respect to any Shares; or
(iii) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing such Stockholder's
obligations under this Agreement.

(g) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter
into, the Merger Agreement in reliance upon such Stockholder's execution and
delivery of this Agreement.

3. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.

4. Stop Transfer, Restrictive Legend. (a) Each Stockholder agrees
with, and covenants to, Parent that such Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement. In the event of a
stock dividend or distribution, or any change in the Company Common Stock by
reason of any stock dividend, split-up, recapitalization, combination, exchange
of Shares or the like, the term "Shares" shall be deemed to refer to and include
the Shares as well as all such stock dividends and distributions and any Shares
into which or for which any or all of the Shares may be changed or exchanged.

(b) Upon the written request of Parent, all certificates
representing any of such Stockholder's Shares shall contain the following
legend:

"The securities represented by this certificate, including
certain voting and transfer rights with respect thereto, are
subject to the terms of a Stockholders Agreement, dated July __,
1996, among Astor Corporation and the parties listed on the
signature pages thereto, a copy of which is on file in the
principal office of the Issuer."

5. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Shares shall
terminate upon the earlier of (a) termination of the Merger Agreement in
accordance with its terms or (b) the Effective Time.

4
<PAGE> 5
6. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director.
Each Stockholder signs solely in his or her capacity as the record and/or
beneficial owner of such Stockholder's Shares.

7. Miscellaneous.

(a) Entire Agreement. This Agreement and the Merger
Agreement constitute the entire agreement between the Parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.

(b) Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, such Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.

(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise by any Stockholder without the prior written
consent of Parent or by Parent without the prior written consent of each
Stockholder; provided that Parent may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.

(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
with respect to any one or more Stockholders, except upon the execution and
delivery of a written agreement executed by Parent and such affected
Stockholder or Stockholders; provided that Schedule I hereto may be
supplemented by Parent by adding the name and other relevant information
concerning any Stockholder of the Company who agrees to be bound by the terms
of this Agreement without the agreement of any other party hereto, and
thereafter such added Stockholder shall be treated as a "Stockholder" for all
purposes of this Agreement.

(e) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand delivery,
telegram, telex or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:

5
<PAGE> 6
If to any Stockholder: At the addresses set forth on Schedule I hereto

If to Parent
or Merger Sub: Astor Corporation
8521 Six Forks Road
Suite 105
Raleigh, NC 27615
Telephone: (919) 846-8011
Facsimile: (919) 846-8283
Attention: Boyd D. Wainscott

with a copy to: Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071-3197
Attention: Bruce D. Meyer, Esq.
Telephone: (213) 229-7000
Facsimile: (213) 229-7520

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

(f) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.

(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.

(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

(i) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in

6
<PAGE> 7
equity, or to insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.

(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.

(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

(l) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.

(m) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.

IN WITNESS WHEREOF, Parent and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.

ASTOR CORPORATION

By: Boyd D. Wainscott
----------------------------------
Name: Boyd D. Wainscott
Title: Chairman and
Chief Executive Officer

BRADFORD VENTURE PARTNERS, L.P.

By: Robert J. Simon; its General Partner
-------------------
By: Robert J. Simon
-------------------
Name: Robert J. Simon
-----------------
Title: General Partner
----------------

7
<PAGE> 8
OVERSEAS EQUITY INVESTORS PARTNERS, L.P.

By: Robert J. Simon ; its General Partner
--------------------------

By: Robert J. Simon
--------------------------

Name: Robert J. Simon
------------------------

Title:
-----------------------

Charles E. Sax
- ---------------------------------
Charles E. Sax

Philip D. Beery
- ---------------------------------
Philip D. Beery

Brian J. Briddell
- ---------------------------------
Brian J. Briddell

James R. McCowan
- ---------------------------------
James R. McCowan

David J. Fuchs
- ---------------------------------
David J. Fuchs

Bradford Mills
- ---------------------------------
Bradford Mills

Robert J. Simon
- ---------------------------------
Robert J. Simon

Barbara M. Henagan
- ---------------------------------
Barbara M. Henagan

<PAGE> 9
SCHEDULE I
STOCKHOLDERS AGREEMENT

STOCK OWNERSHIP OF ADCO TECHNOLOGIES INC.

<TABLE>
<S> <C>
Bradford Mills 32,862

Robert Simon 16,431

Barbara Henagan 13,145

James McCowan 40,106

Philip Beery 36,106

David Fuchs 36,106

Charles Sax 48,106

Brian Briddell 36,106

Bradford Venture Partners L.P. 1,150,170

Overseas Equity Investors Partners, L.P. 1,150,170

</TABLE>

<PAGE> 1
EXHIBIT 99.2

- -------------------------------------------------------------------------------
PRESS RELEASE
- -------------------------------------------------------------------------------

ADCO TECHNOLOGIES INC.

ANNOUNCES AGREEMENT TO MERGE WITH ASTOR CORPORATION

Michigan Center, MI (July 12, 1996)--Adco Technologies Inc. (OTC: ADCO)
announced today that it has entered into an agreement to merge with Astor
Corporation ("Astor") a privately-held specialty chemical company owned by
Aurora Capital Partners L.P. Each common share of Adco will be converted into
$10.25 in cash for an approximate equity value of $54 million.

The merger is subject to satisfaction of certain conditions, including
obtaining necessary regulatory clearances and approval by Adco's stockholders.
Astor has entered into agreements with certain Adco shareholders and Adco's
management team, which collectively own in excess of 51% of the shares, to vote
in favor of the merger.

Robert J. Simon, Chairman of the Board of Adco said that, "the offer represents
tremendous value for our shareholders, and we are confident that Astor will be
a good owner and manager for Adco and its employees." Charles E. Sax, Chief
Executive Officer of Adco commented that "with its strong global position and
complementary business lines, Astor is the ideal owner to facilitate Adco's
continued growth." Schroder Wertheim & Co. Incorporated acted as financial
advisor to Adco. Boyd Wainscott, Chairman of the Board and Chief Executive
Officer of Astor, stated that "growth opportunities of the merged Adco and Astor
will create a bright future for our sealant and adhesive strategy. This
acquisition will greatly enhance Astor's strategic position as a leading
worldwide manufacturer and marketer of specialty chemical products."

Adco is a Delaware corporation, which formulates and produces specialty
chemical products in the form of sealants and adhesives for the roofing,
automotive original equipment manufacturing, windshield replacement, window
manufacturing, concrete pipe and vault, and individual markets. The Company's
technological expertise is focused on butyl rubber, urethane and
ultraviolet-cured acrylic.

Astor, a Delaware corporation, headquartered in Raleigh, North Carolina, is a
leading worldwide manufacturer and marketer of customized waxes, adhesives and
sealants and other allied compounds. Astor serves the automotive,
construction, tire and rubber, PVC, packaging, candle, anticorrosive, cable and
other markets. Astor's operations are located in Texas, Georgia, Pennsylvania,
the United Kingdom and Belgium.