Agreement and Plan of Merger - Tyco International Ltd. and United States Surgical Corp.


                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                            TYCO INTERNATIONAL LTD.,

                              T11 ACQUISITION CORP.

                                       and

                       UNITED STATES SURGICAL CORPORATION






                            Dated as of May 25, 1998










                                TABLE OF CONTENTS

                                    ARTICLE I

                                   THE MERGER................................  2
        SECTION 1.01.  The Merger............................................  2
        SECTION 1.02.  Effective Time.  .....................................  2
        SECTION 1.03.  Effect of the Merger..................................  2
        SECTION 1.04.  Certificate of Incorporation; By-Laws.................  2
        SECTION 1.05.  Directors and Officers................................  3
        SECTION 1.06.  Effect on Capital Stock...............................  3
        SECTION 1.07.  Exchange of Certificates..............................  5
        SECTION 1.08.  Stock Transfer Books..................................  7
        SECTION 1.09.  No Further Ownership Rights in Company Common Stock...  7
        SECTION 1.10.  Lost, Stolen or Destroyed Certificates................  7
        SECTION 1.11.  Tax and Accounting Consequences.......................  7
        SECTION 1.12.  Taking of Necessary Action; Further Action............  7
        SECTION 1.13.  Material Adverse Effect...............................  8

                                   ARTICLE II

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............  8
        SECTION 2.01.  Organization and Qualification; Subsidiaries..........  8
        SECTION 2.02.  Certificate of Incorporation and By-Laws..............  9
        SECTION 2.03.  Capitalization........................................  9
        SECTION 2.04.  Authority Relative to this Agreement.................. 10
        SECTION 2.05.  No Conflict; Required Filings and Consents............ 10
        SECTION 2.06.  Compliance; Permits................................... 11
        SECTION 2.07.  SEC Filings; Financial Statements..................... 12
        SECTION 2.08.  Absence of Certain Changes or Events.................. 13
        SECTION 2.09.  No Undisclosed Liabilities............................ 13
        SECTION 2.10.  Absence of Litigation................................. 13
        SECTION 2.11.  Employee Benefit Plans; Employment Agreements......... 13
        SECTION 2.12.  Labor Matters......................................... 16
        SECTION 2.13.  Registration Statement; Proxy Statement/Prospectus.... 17
        SECTION 2.14.  Restrictions on Business Activities................... 17
        SECTION 2.15.  Title to Property..................................... 18
        SECTION 2.16.  Taxes................................................. 18
        SECTION 2.17.  Environmental Matters................................. 19
        SECTION 2.18.  Brokers............................................... 21
        SECTION 2.19.  Intellectual Property................................. 21
        SECTION 2.20.  Interested Party Transactions......................... 22
        SECTION 2.21.  Insurance............................................. 23
        SECTION 2.22.  Product Liability and Recalls......................... 23
        SECTION 2.23.  Opinion of Financial Advisor.......................... 23
        SECTION 2.24.  Pooling Matters....................................... 23


                                       -i-




        SECTION 2.25.  Tax Matters........................................... 23
        SECTION 2.26  Accuracy of Information................................ 24

                                   ARTICLE III

                        REPRESENTATIONS AND WARRANTIES OF
                              PARENT AND MERGER SUB.......................... 24
        SECTION 3.01.  Organization and Qualification; Subsidiaries.......... 24
        SECTION 3.02.  Articles of Organization and By-Laws.................. 24
        SECTION 3.03.  Capitalization........................................ 25
        SECTION 3.04.  Authority Relative to this Agreement.................. 25
        SECTION 3.05.  No Conflict; Required Filings and Consents............ 26
        SECTION 3.06.  Compliance; Permits................................... 27
        SECTION 3.07.  SEC Filings; Financial Statements..................... 27
        SECTION 3.08.  Absence of Certain Changes or Events.................. 28
        SECTION 3.09.  No Undisclosed Liabilities............................ 28
        SECTION 3.10.  Absence of Litigation................................. 28
        SECTION 3.11.  Employee Benefit Plans; Employment Agreements......... 28
        SECTION 3.12.  Labor Matters......................................... 31
        SECTION 3.13.  Registration Statement;  Proxy Statement/Prospectus... 31
        SECTION 3.14.  Restrictions on Business Activities................... 32
        SECTION 3.15.  Title to Property..................................... 32
        SECTION 3.16.  Taxes................................................. 33
        SECTION 3.17.  Environmental Matters................................. 34
        SECTION 3.18.  Brokers............................................... 35
        SECTION 3.19.  Intellectual Property................................. 35
        SECTION 3.20.  Interested Party Transactions......................... 35
        SECTION 3.21.  Insurance............................................. 35
        SECTION 3.22.  Product Liability and Recalls......................... 36
        SECTION 3.23.  Ownership of Merger Sub; No Prior Activities.......... 36
        SECTION 3.24.  Pooling Matters....................................... 36
        SECTION 3.25.  Tax Matters........................................... 36
        SECTION 3.26.  DGCL Section 203...................................... 36
        SECTION 3.27  Accuracy of Information................................ 37

                                   ARTICLE IV

                     CONDUCT OF BUSINESS PENDING THE MERGER.................. 37
        SECTION 4.01.  Conduct of Business by the Company Pending the Merger. 37
        SECTION 4.02.  No Solicitation....................................... 39
        SECTION 4.03.  Conduct of Business by Parent Pending the Merger...... 40

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS.......................... 41
        SECTION 5.01.   Proxy Statement/Prospectus; Registration Statement... 41


                                            -ii-




        SECTION 5.02.  Company Shareholders Meeting.......................... 42
        SECTION 5.03.  Access to Information; Confidentiality................ 42
        SECTION 5.04.  Consents; Approvals................................... 42
        SECTION 5.05.  Agreements with Respect to Affiliates................. 42
        SECTION 5.06.  Indemnification and Insurance......................... 43
        SECTION 5.07.  Notification of Certain Matters....................... 44
        SECTION 5.08.  Further Action/Tax Treatment.......................... 45
        SECTION 5.09.  Public Announcements.................................. 45
        SECTION 5.10.  Listing of Parent Shares.............................. 45
        SECTION 5.11.  Conveyance Taxes...................................... 45
        SECTION 5.12.  Option Plans and Benefits, etc........................ 45
        SECTION 5.13.  Accountant's Letters.................................. 46
        SECTION 5.14.  Pooling Accounting Treatment.......................... 46
        SECTION 5.15.  Connecticut Transfer Act.............................. 47
        SECTION 5.16.  Director Appointment.................................. 47

                                   ARTICLE VI

                            CONDITIONS TO THE MERGER......................... 47
        SECTION 6.01.  Conditions to Obligation of Each Party to 
                         Effect the Merger................................... 47
        SECTION 6.02.  Additional Conditions to Obligations of 
                         Parent and Merger Sub............................... 49
        SECTION 6.03.  Additional Conditions to Obligation of the Company.... 50

                                   ARTICLE VII

                                   TERMINATION............................... 50
        SECTION 7.01.  Termination........................................... 50
        SECTION 7.02.  Effect of Termination................................. 52
        SECTION 7.03.  Fees and Expenses..................................... 53

                                  ARTICLE VIII

                               GENERAL PROVISIONS............................ 54
        SECTION 8.01.  Effectiveness of Representations, Warranties and
                         Agreements.......................................... 54
        SECTION 8.02.  Notices............................................... 54
        SECTION 8.03.  Certain Definitions................................... 56
        SECTION 8.04.  Amendment............................................. 57
        SECTION 8.05.  Waiver................................................ 57
        SECTION 8.06.  Headings.............................................. 57
        SECTION 8.07.  Severability.......................................... 57
        SECTION 8.08.  Entire Agreement...................................... 57
        SECTION 8.09.  Assignment; Merger Sub................................ 58
        SECTION 8.10.  Parties in Interest................................... 58
        SECTION 8.11.  Failure or Indulgence Not Waiver; Remedies Cumulative. 58
        SECTION 8.12.  Governing Law; Jurisdiction........................... 58
        SECTION 8.13.  Counterparts.......................................... 58
        SECTION 8.14.  WAIVER OF JURY TRIAL.................................. 58


                                      -iii-




                          AGREEMENT AND PLAN OF MERGER


               AGREEMENT  AND PLAN OF  MERGER,  dated as of May 25,  1998  (this
"Agreement"),  among TYCO INTERNATIONAL LTD., a Bermuda company ("Parent"),  T11
ACQUISITION CORP., a Delaware corporation and a direct,  wholly owned subsidiary
of Parent ("Merger Sub"),  and UNITED STATES  SURGICAL  CORPORATION,  a Delaware
corporation (the "Company").

                                     W I T N E S S E T H:

               WHEREAS,  the Boards of Directors  of Parent,  Merger Sub and the
Company have each  determined  that it is advisable and in the best interests of
their respective  shareholders,  and consistent with and in furtherance of their
respective  business  strategies  and goals,  for Parent to cause  Merger Sub to
merge with and into the Company upon the terms and subject to the conditions set
forth herein;

               WHEREAS,  in  furtherance  of such  combination,  the  Boards  of
Directors of Parent,  Merger Sub and the Company  have each  approved the merger
(the  "Merger") of Merger Sub with and into the Company in  accordance  with the
applicable  provisions of the Delaware General Corporation Law (the "DGCL"), and
upon the terms and subject to the conditions set forth herein;

               WHEREAS,  Parent, Merger Sub and the Company intend, by approving
resolutions  authorizing  this  Agreement,  to adopt this Agreement as a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder;

               WHEREAS,  Parent,  Merger  Sub and the  Company  intend  that the
Merger  be  accounted  for as a  pooling-of-interests  for  financial  reporting
purposes; and

               WHEREAS,  pursuant  to the  Merger,  each  outstanding  share  (a
"Share") of the Company's  Common Stock,  par value $.10 per share (the "Company
Common  Stock"),  shall be  converted  into  the  right to  receive  the  Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject to the
conditions set forth herein;

               NOW, THEREFORE,  in consideration of the foregoing and the mutual
covenants and  agreements  herein  contained,  and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:


                                      -1-




                                    ARTICLE I

                                   THE MERGER


               SECTION 1.01.  The Merger.  (a) Effective  Time. At the Effective
Time (as defined in Section 1.02 hereof),  and subject to and upon the terms and
conditions of this  Agreement and the DGCL,  Merger Sub shall be merged with and
into the Company,  the separate  corporate  existence of Merger Sub shall cease,
and the Company shall continue as the surviving corporation.  The Company as the
surviving  corporation after the Merger is hereinafter  sometimes referred to as
the "Surviving Corporation."

               (b) Closing. Unless this Agreement shall have been terminated and
the  transactions  herein  contemplated  shall have been  abandoned  pursuant to
Section 7.01,  and subject to the  satisfaction  or waiver of the conditions set
forth in Article VI, the  consummation  of the Merger (the  "Closing") will take
place as promptly as  practicable  (and in any event within two  business  days)
after  satisfaction  or waiver of the conditions set forth in Article VI, at the
offices of Kramer,  Levin,  Naftalis & Frankel,  919 Third Avenue, New York, New
York,  unless another date, time or place is agreed to in writing by the parties
hereto.

               SECTION 1.02.  Effective  Time. As promptly as practicable  after
the  satisfaction  or waiver of the  conditions  set forth in  Article  VI,  the
parties  hereto  shall cause the Merger to be  consummated  as of the day of the
Closing  by filing a  certificate  of merger  as  contemplated  by the DGCL (the
"Certificate of Merger"), together with any required related certificates,  with
the  Secretary of State of the State of  Delaware,  in such form as required by,
and executed in accordance  with the relevant  provisions of, the DGCL (the time
of such filing being the "Effective Time").

               SECTION 1.03.  Effect of the Merger.  At the Effective  Time, the
effect of the Merger shall be as provided in this Agreement,  the Certificate of
Merger  and  the  applicable  provisions  of  the  DGCL.  Without  limiting  the
generality of the foregoing,  and subject thereto, at the Effective Time all the
property,  rights,  privileges,  powers and franchises of the Company and Merger
Sub shall vest in the  Surviving  Corporation,  and all debts,  liabilities  and
duties of the Company  and Merger Sub shall  become the debts,  liabilities  and
duties of the Surviving Corporation.

               SECTION  1.04.   Certificate  of  Incorporation;   By-Laws.   (a)
Certificate of Incorporation. Unless otherwise determined by Parent prior to the
Effective  Time, at the Effective Time the Certificate of  Incorporation  of the
Company,  as in effect  immediately  prior to the Effective  Time,  shall be the
Certificate  of  Incorporation  of the Surviving  Corporation  until  thereafter
amended as provided by the DGCL and such Certificate of Incorporation; provided,
however,  that  Article  FOURTH shall be amended and restated in its entirety to
provide that the capital  stock of the  Surviving  Corporation  shall consist of
1,000 shares of common stock, par value $.01 per share.


                                       -2-




               (b) By-Laws. The By-Laws of the Company, as in effect immediately
prior to the Effective Time,  shall be the By-Laws of the Surviving  Corporation
until   thereafter   amended  as  provided  by  the  DGCL,  the  Certificate  of
Incorporation of the Surviving Corporation and such By-Laws.

               SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately  prior to the Effective  Time shall be the initial  directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and ByLaws of the Surviving  Corporation,  and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving  Corporation,  in each case until their respective  successors are
duly elected or appointed and qualified.

               SECTION 1.06.  Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without  any action on the part of Parent,  Merger Sub,
the Company or the holders of any of the following securities:

               (a) Conversion of Securities.  Each Share issued and  outstanding
immediately  prior to the Effective  Time  (excluding  any Shares to be canceled
pursuant to Section  1.06(b))  shall be converted,  subject to Section  1.06(f),
into the right to receive 0.7606 (the "Exchange  Ratio") validly  issued,  fully
paid and  nonassessable  Parent Common  Shares,  par value $.20 ("Parent  Common
Shares").

               (b) Cancellation.  Each Share held in the treasury of the Company
and each Share  owned by Parent,  Merger  Sub or any direct or  indirect  wholly
owned  subsidiary  of the Company or Parent  immediately  prior to the Effective
Time  shall,  by virtue of the Merger and  without any action on the part of the
holder thereof, cease to be outstanding, be canceled and retired without payment
of any consideration therefor and cease to exist.

               (c)  Assumption of  Outstanding  Stock  Options,  etc..  (1) Each
option  outstanding at the Effective  Time to purchase  shares of Company Common
Stock (a "Stock Option") granted under (I) (i) the Company's 1990 Employee Stock
Option Plan,  (ii) the  Company's  1993  Employee  Stock Option Plan,  (iii) the
Company's  1996  Employee  Stock  Option  Plan,  (iv)  the  Company's  1997  Key
Management  Equity  Investment  Plan,  (v) the PAS Stock Option Plans,  (vi) the
Company's 1997 Stock Option  Purchase  Agreement,  (vii) the Company's  Serviced
Based Stock Option Plan, and (viii) the Company's Outside Directors Stock Option
Plan,  or (II) any other stock plan or agreement  of the Company  (collectively,
the "Company Stock Option Plans"), which by its terms is not extinguished in the
Merger,  shall be assumed by Parent and shall constitute an option (an "Adjusted
Option") to acquire,  on the same terms and conditions  mutatis mutandis as were
applicable  under such Stock  Option  prior to the  Effective  Time (but  taking
account of the  Merger),  the number of Parent  Common  Shares  (rounded  to the
nearest whole Parent Common Share) as the holder of such Stock Option would have
been entitled to receive  pursuant to the Merger had such holder  exercised such
Stock Option in full  immediately  prior to the  Effective  Time, at a price per
share  (rounded to the nearest whole cent) equal to (x) the  aggregate  exercise
price for Company  Common  Stock  otherwise  purchasable  pursuant to such Stock
Option  divided by (y) the number of Parent  Common  Shares  deemed  purchasable
pursuant to such Adjusted Option. The 


                                       -3-




other  terms of each such  Stock  Option,  and the plans  under  which they were
issued,shall continue to apply in accordance with their terms, including, to the
extent provided  therein,  the  acceleration of vesting of such Stock Options in
connection with the transactions contemplated hereby.

               As soon as  practicable  after the Effective  Time,  Parent shall
cause  to be  delivered  to  each  holder  of an  outstanding  Stock  Option  an
appropriate notice setting forth such holder's rights pursuant thereto, and that
such Stock Option shall continue in effect on the same terms and conditions.

               Parent shall cause to be taken all corporate  action necessary to
reserve for issuance a sufficient  number of Parent  Common  Shares for delivery
upon exercise of Stock Options in accordance  with this Section  1.06(c)(1).  As
soon as practicable  following the Effective Time, Parent shall cause the Parent
Common  Shares  subject  to the  Adjusted  Options  to be  registered  under the
Securities  Act of  1933,  as  amended,  and the  SEC's  rules  thereunder  (the
"Securities  Act")  pursuant  to a  registration  statement  on Form S-8 (or any
successor or other appropriate form), and shall use at least such efforts as are
applied to Parent's other stock options  generally to cause the effectiveness of
such registration  statement or registration  statements (and the current status
of the  prospectus or  prospectuses  contained  therein) to be maintained for so
long as the Adjusted  Options remain  outstanding  (subject to  interruptions of
such effectiveness or current status as may be reasonably  required from time to
time,  and are applicable to  registration  statements of Parent with respect to
its  option  plans  generally,  because  of  developments  affecting  Parent  or
otherwise).

               (2)  The   contingent   obligations  of  the  Company  (the  "PAS
Obligations")  to  issue  shares  of  Company  Common  Stock to  certain  former
stockholders  of Progressive  Angioplasty  Systems,  Inc.  ("PAS"),  pursuant to
Section 2.07 and Section 2.08 of the Agreement and Plan of Merger dated February
4, 1997, by and among the Company,  a wholly owned subsidiary of the Company and
PAS (as  amended by the First  Amendment  dated as of August 6,  1997,  the "PAS
Agreement")  shall be assumed by Parent  from and after the  Effective  Time and
shall  constitute  an  obligation  to issue,  on the same  terms and  conditions
mutatis  mutandis  as were  applicable  under  the PAS  Agreement  prior  to the
Effective Time, Parent Common Shares (rounded to the nearest whole Parent Common
Share),  and Parent Common Shares shall be substituted  for Company Common Stock
in the definition of the term "Closing  Price" for purposes of  determining  the
number of Parent Common  Shares,  if any, that may be issued in accordance  with
the PAS Agreement as aforesaid.

               As soon as reasonably  practicable  following the Effective Time,
Parent shall cause the Parent Common  Shares that may be issued  pursuant to the
PAS  Obligations to be registered  under the Securities Act pursuant to a resale
shelf registration  statement on Form S-3 (or any successor or other appropriate
form) and shall use its commercially reasonable efforts,  subject to the receipt
of information  from and as to the relevant  former PAS  stockholders,  to cause
such  registration  statement to become  effective  as promptly  after filing as
practicable. The provisions of Sections 6.01 and 6.02 of the PAS Agreement shall
apply to such registration statement mutatis mutandis.


                                       -4-




               (d) Capital Stock of Merger Sub. Each share of common stock, $.01
par  value,  of Merger  Sub  issued  and  outstanding  immediately  prior to the
Effective  Time shall be converted  into and exchanged  for one validly  issued,
fully paid and  nonassessable  share of common  stock,  $0.01 par value,  of the
Surviving Corporation.

               (e)  Adjustments to Exchange  Ratio.  The Exchange Ratio shall be
appropriately  adjusted to reflect fully the effect of any stock split,  reverse
split,  stock  dividend  (including any dividend or  distribution  of securities
convertible into Parent Common Shares), reorganization,  recapitalization, split
up, combination or exchange of shares or other like event with respect to Parent
Common Shares or Company Common Stock  occurring after the date hereof and prior
to the Effective Time.

               (f) Fractional Shares. No certificates or scrip representing less
than one Parent  Share  shall be issued  upon the  surrender  for  exchange of a
certificate  or  certificates  which  immediately  prior to the  Effective  Time
represented  outstanding  Shares  (the  "Certificates").  In  lieu  of any  such
fractional  share,  each holder of Shares who would otherwise have been entitled
to a fraction  of a Parent  Common  Share upon  surrender  of  Certificates  for
exchange shall be paid upon such surrender cash (without  interest) in an amount
equal to such  fraction  multiplied  by the Closing  Price of the Parent  Common
Shares on the date of the  Effective  Time.  "Closing  Price" shall mean, on any
day,  the last  reported  sale  price  of one  Parent  Common  Share on the NYSE
Composite Transaction Tape.

               SECTION 1.07.  Exchange of  Certificates.  (a) Exchange Agent. At
the  Effective  Time Parent shall cause to be  supplied,  to or for such bank or
trust  company as shall be  mutually  designated  by the Company and Parent (the
"Exchange  Agent"),  in trust for the benefit of the  holders of Company  Common
Stock,  for exchange in accordance with this Section 1.07,  through the Exchange
Agent,  certificates  evidencing the Parent Common Shares  issuable  pursuant to
Section 1.06 in exchange for outstanding  Shares and the cash to be paid in lieu
of fractional shares.

               (b) Exchange Procedures.  As soon as reasonably practicable after
the Effective Time,  Parent will cause the Exchange Agent to mail to each holder
of record of Certificates (i) a letter of transmittal  (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass,  only upon proper  delivery of the  Certificates to the Exchange Agent and
shall be in such form and have such other  provisions  as Parent may  reasonably
specify),  and (ii)  instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Parent Common Shares. Upon surrender of
a Certificate  for  cancellation to the Exchange Agent together with such letter
of  transmittal,  duly executed,  and such other  customary  documents as may be
required pursuant to such instructions,  the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole  Parent  Common  Shares  which such  holder has the right to receive in
accordance with the Exchange Ratio in respect of the Shares  formerly  evidenced
by such  Certificate,  (B) any  dividends or other  distributions  to which such
holder is  entitled  pursuant  to  Section  1.07(c),  and (C) cash in respect of
fractional  shares as provided in Section  1.06(f) (the Parent Common Shares and
cash being,  collectively,  the "Merger Consideration"),  and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the


                                       -5-




transfer records of the Company as of the Effective Time,  Parent Common Shares,
dividends,  distributions,  and cash in respect  of  fractional  shares,  may be
issued  and paid in  accordance  with  this  Article  I to a  transferee  if the
Certificate   evidencing  such  Shares  is  presented  to  the  Exchange  Agent,
accompanied  by all  documents  required  to evidence  and effect such  transfer
pursuant  to this  Section  1.07(b) and by evidence  that any  applicable  stock
transfer  taxes  have  been  paid.   Until  so  surrendered,   each  outstanding
Certificate that, prior to the Effective Time, represented Shares of the Company
Common Stock will be deemed from and after the Effective Time, for all corporate
purposes,  other than the payment of dividends, to evidence the ownership of the
number of full Parent Common Shares,  and cash in respect of fractional  shares,
into which such shares of the Company Common Stock shall have been so converted.

               (c)  Distributions   With  Respect  to  Unexchanged   Shares.  No
dividends or other distributions  declared or made after the Effective Time with
respect to Parent  Common  Shares  with a record date after the  Effective  Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
Parent  Common  Shares  they are  entitled  to receive  until the holder of such
Certificate  shall surrender such  Certificate in accordance with the provisions
of Section 1.07(b).  Subject to applicable law, following  surrender of any such
Certificate,  there  shall  be paid to the  record  holder  of the  certificates
representing  whole Parent Common Shares  issued in exchange  therefor,  without
interest,  at the time of such  surrender,  the  amount  of  dividends  or other
distributions  with a record date after the Effective Time theretofore paid with
respect to such whole Parent Common Shares.

               (d) Transfers of Ownership.  If any certificate for Parent Common
Shares  is to be  issued in a name  other  than  that in which  the  Certificate
surrendered in exchange  therefor is  registered,  it will be a condition of the
issuance thereof that the Certificate so surrendered  will be properly  endorsed
and  otherwise in proper form for transfer and that the person  requesting  such
exchange will have paid to Parent or any agent  designated by it any transfer or
other taxes  required  by reason of the  issuance  of a  certificate  for Parent
Common  Shares  in any name  other  than  that of the  registered  holder of the
certificate  surrendered,  or established to the  satisfaction  of Parent or any
agent designated by it that such tax has been paid or is not payable.

               (e) No  Liability.  Neither  Parent,  Merger Sub nor the  Company
shall  be  liable  to  any  holder  of  Company  Common  Stock  for  any  Merger
Consideration  delivered  to  a  public  official  pursuant  to  any  applicable
abandoned property, escheat or similar law.

               (f)  Withholding  Rights.  Parent or the Exchange  Agent shall be
entitled to deduct and withhold from the Merger Consideration  otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
Parent or the Exchange  Agent is required to deduct and withhold with respect to
the making of such payment under the Code,  or any provision of state,  local or
foreign  tax law.  To the extent  that  amounts are so withheld by Parent or the
Exchange Agent,  such withheld amounts shall be treated for all purposes of this
Agreement  as having  been paid to the  holder of the Shares in respect of which
such deduction and withholding was made by Parent or the Exchange Agent.


                                       -6-




               (g) Undistributed  Certificates.  Any portion of the certificates
evidencing  the  Parent  Common  Shares  and  the  cash  to be  paid  in lieu of
fractional shares supplied to the Exchange Agent which remains  undistributed to
the holders of the  Certificates  for one year after the Effective Time shall be
delivered to Parent,  upon demand,  and any holders of the Certificates who have
not  theretofore  complied with this Section 1.07 shall  thereafter look only to
Parent for payment of their claim for Merger  Consideration,  any  dividends  or
distributions  with  respect  to  Parent  Common  Stock  and any cash in lieu of
fractional shares of Parent Common Stock.

               SECTION 1.08.  Stock Transfer  Books.  At the Effective Time, the
stock  transfer  books of the  Company  shall be closed,  and there  shall be no
further  registration of transfers of the Company Common Stock thereafter on the
records of the Company.

               SECTION  1.09.  No Further  Ownership  Rights in  Company  Common
Stock.  The Merger  Consideration  delivered  upon the surrender for exchange of
Shares in  accordance  with the terms hereof shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Shares, and there shall be
no further registration of transfers on the records of the Surviving Corporation
of Shares which were  outstanding  immediately  prior to the Effective Time. If,
after  the  Effective  Time,   Certificates   are  presented  to  the  Surviving
Corporation for any reason,  they shall be canceled and exchanged as provided in
this Article I.

               SECTION  1.10.  Lost,  Stolen or Destroyed  Certificates.  In the
event any Certificates  shall have been lost, stolen or destroyed,  the Exchange
Agent shall issue in exchange for such lost,  stolen or destroyed  Certificates,
upon the making of an affidavit of that fact by the holder thereof,  such Parent
Common Shares as may be required  pursuant to Section 1.06;  provided,  however,
that Parent may, in its discretion and as a condition  precedent to the issuance
thereof,  require the owner of such lost,  stolen or destroyed  Certificates  to
deliver a bond in such sum as it may reasonably  direct as indemnity against any
claim that may be made against  Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.

               SECTION 1.11. Tax and Accounting Consequences.  It is intended by
the parties hereto that the Merger shall (i) constitute a reorganization  within
the meaning of Section 368 of the Code and (ii) subject to applicable accounting
standards,  qualify for  accounting  treatment  as a pooling of  interests.  The
parties hereto hereby adopt this Agreement as a "plan of reorganization"  within
the meaning of Sections  1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.

               SECTION 1.12. Taking of Necessary Action; Further Action. Each of
Parent,  Merger Sub and the  Company  will take all such  reasonable  and lawful
action as may be necessary or  appropriate in order to effectuate the Merger and
the other  transactions  contemplated  by this Agreement in accordance with this
Agreement as promptly as possible. If, at any time after the Effective Time, any
such further  action is necessary or desirable to carry out the purposes of this
Agreement  and to vest the  Surviving  Corporation  with full  right,  title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company and Merger Sub, the officers and directors of the Company and Merger
Sub


                                       -7-




immediately  prior to the  Effective  Time are fully  authorized  in the name of
their  respective  corporations  or otherwise to take,  and will take,  all such
lawful and necessary action.

               SECTION 1.13.  Material  Adverse Effect.  When used in connection
with  the  Company  or  any  of  its  subsidiaries  or  Parent  or  any  of  its
subsidiaries,  as the case may be, the term "Material  Adverse Effect" means any
change,  effect or circumstance that is or is reasonably likely to be materially
adverse  to  the  business,  assets  (including  intangible  assets),  financial
condition or results of operations of the Company and its subsidiaries or Parent
and its  subsidiaries,  as the  case  may be,  in each  case  taken  as a whole;
provided,  however,  that the following shall be excluded from the definition of
"Material  Adverse Effect" and from any  determination  as to whether a Material
Adverse  Effect has  occurred  or may occur with  respect  to the  Company:  the
effects of changes that are  applicable to (A) the  healthcare or medical device
industries generally,  (B) the United States economy generally or (C) the United
States securities markets generally.

                                   ARTICLE II

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY


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

               SECTION 2.01. Organization and Qualification;  Subsidiaries. Each
of the Company and its  subsidiaries is a corporation  duly  organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation and has the requisite  corporate power and authority  necessary to
own, lease and operate the  properties it purports to own,  operate or lease and
to carry on its business as it is now being conducted,  except where the failure
to be so  organized,  existing  and in good  standing  or to have such  power or
authority  would not reasonably be expected to have a Material  Adverse  Effect.
Each of the  Company and its  subsidiaries  is duly  qualified  or licensed as a
foreign  corporation  to  do  business,   and  is  in  good  standing,  in  each
jurisdiction where the character of its properties owned,  leased or operated by
it or the  nature  of its  activities  makes  such  qualification  or  licensing
necessary,  except for such failures to be so duly  qualified or licensed and in
good standing that could not  reasonably be expected to have a Material  Adverse
Effect.  A  true  and  complete  list  of all  of  the  Company's  "significant"
subsidiaries,  as defined in  Regulation  S-X,  is included as an exhibit to the
Company's  1997 Annual Report on Form 10-K. The Company will furnish to Parent a
list of all  subsidiaries  of the  Company  together  with the  jurisdiction  of
incorporation   of  each  such  subsidiary  and  the  percentage  of  each  such
subsidiary's   outstanding  capital  stock  owned  by  the  Company  or  another
subsidiary on a supplement to the Company Disclosure Schedule (as defined below)
to be delivered to Parent not later than 14 days from the date of this Agreement
(the "Supplemental Company Disclosure Schedule"). Except as set forth in Section
2.01 of the written disclosure schedule  previously  delivered by the Company to
Parent  (the  "Company  Disclosure  Schedule")  or the  Company  SEC Reports (as
defined in Section 2.07 below),  the Company does not directly or indirectly own
any  equity  or  similar  interest  in,  or any  interest  convertible  into  or
exchangeable  or  exercisable  for,  any  equity or  similar  interest  in,  any
corporation,


                                       -8-




partnership, joint venture or other business association or entity, with respect
to which  interest the Company has invested or is required to invest  $5,000,000
or more, excluding securities in any publicly traded company held for investment
by the Company and comprising less than five percent of the outstanding stock of
such company.

               SECTION  2.02.  Certificate  of  Incorporation  and By-Laws.  The
Company has  heretofore  made available to Parent a complete and correct copy of
its  Certificate of  Incorporation  and By-Laws as amended to date, and has made
available to Parent the Certificate of Incorporation  and By-Laws (or equivalent
organizational  documents) of each of its material subsidiaries (the "Subsidiary
Documents"). Such Certificate of Incorporation, By-Laws and Subsidiary Documents
are in full force and effect. Neither the Company nor any of its subsidiaries is
in violation of any of the  provisions of its  Certificate of  Incorporation  or
such  By-Laws or  equivalent  organizational  documents,  except for  immaterial
violations of the documents which may exist.

               SECTION 2.03. Capitalization. The authorized capital stock of the
Company  consists of  250,000,000  shares of Company  Common Stock and 5,000,000
shares of Preferred  Stock,  par value $5.00 per share (the  "Company  Preferred
Stock").  As of April 30, 1998,  (i)  76,698,965  shares of Company Common Stock
were issued and  outstanding,  all of which are validly  issued,  fully paid and
nonassessable, and an additional 7,003,014 shares were held in treasury, (ii) no
shares of Company Preferred Stock were outstanding or held in treasury, (iii) no
shares  of  Company  Common  Stock  or  Company  Preferred  Stock  were  held by
subsidiaries of the Company, (iv) 24,348,700 shares of Company Common Stock were
reserved  for  existing  grants and  3,799,689  shares were  reserved for future
grants  pursuant to the Company  Stock  Option  Plans,  and (v) not in excess of
294,928  shares of Company  Common  Stock were  reserved and are  available  for
future issuance  pursuant to the USCC Employees 1979 Stock Purchase Plan and the
Company's  1994 Employee  Stock  Purchase Plan  (together,  the "Stock  Purchase
Plans").  The Company may be  obligated  to issue  additional  shares of Company
Common  Stock  pursuant to the PAS  Obligations.  Except as set forth in Section
2.03 of the Company Disclosure  Schedule,  no change in such  capitalization has
occurred  between  April  30,  1998  and the date  hereof,  except  for  changes
resulting  from the  exercise of Stock  Options and shares  purchased  under the
Stock Purchase Plans.  Except as set forth in Section 2.01, this Section 2.03 or
Section  2.11 or in  Section  2.03 or  Section  2.11 of the  Company  Disclosure
Schedule  or the Company SEC  Reports,  there are no options,  warrants or other
rights, agreements,  arrangements or commitments of any character binding on the
Company or any of its  subsidiaries  relating to the issued or unissued  capital
stock of the Company or any of its subsidiaries or obligating the Company or any
of its  subsidiaries  to issue or sell any shares of capital  stock of, or other
equity  interests  in,  the  Company or any of its  subsidiaries.  All shares of
Company  Common Stock  subject to issuance as  aforesaid,  upon  issuance on the
terms and  conditions  specified in the  instruments  pursuant to which they are
issuable,   shall  be  duly   authorized,   validly   issued,   fully  paid  and
nonassessable.  Except as disclosed  in Section  2.03 of the Company  Disclosure
Schedule or the Company SEC Reports,  there are no  obligations,  contingent  or
otherwise,  of the Company or any of its  subsidiaries to repurchase,  redeem or
otherwise acquire any shares of Company Common Stock or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital  contribution  or otherwise) in any such  subsidiary or any other entity
other than guarantees of bank obligations of subsidiaries


                                       -9-




entered into in the ordinary course of business. Except as set forth in Sections
2.01 and 2.03 of the Company Disclosure Schedule,  all of the outstanding shares
of  capital  stock  (other  than  directors'  qualifying  shares) of each of the
Company's  subsidiaries  is duly  authorized,  validly  issued,  fully  paid and
nonassessable,  and all such shares (other than directors' qualifying shares and
a de minimis number of shares owned by employees of such subsidiaries) are owned
by the Company or another  subsidiary free and clear of all security  interests,
liens, claims, pledges, agreements,  limitations in the Company's voting rights,
charges or other encumbrances of any nature whatsoever.

               SECTION 2.04.  Authority Relative to this Agreement.  The Company
has all  necessary  corporate  power and  authority  to execute and deliver this
Agreement  and to  perform  its  obligations  hereunder  and to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
by the  Company  and  the  consummation  by  the  Company  of  the  transactions
contemplated  hereby  have been duly and  validly  authorized  by all  necessary
corporate action  (including  pursuant to Section 203 of the DGCL), and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate  the  transactions  so  contemplated  (other than the
approval of the Merger and this  Agreement by the holders of at least a majority
of the outstanding shares of Company Common Stock entitled to vote in accordance
with the DGCL and the Company's Certificate of Incorporation and By-Laws). As of
the date hereof, the Board of Directors of the Company has determined that it is
advisable and in the best interest of the Company's shareholders for the Company
to enter into this  Agreement  and to  consummate  the Merger upon the terms and
subject to the  conditions of this  Agreement.  This Agreement has been duly and
validly   executed  and   delivered  by  the  Company  and,   assuming  the  due
authorization,  execution and delivery by Parent and Merger Sub, as  applicable,
constitutes a legal, valid and binding obligation of the Company.

               SECTION 2.05.  No Conflict;  Required  Filings and Consents.  (a)
Section 2.05(a) of the Company  Disclosure  Schedule  includes a list of (i) all
loan  agreements,  indentures,  mortgages,  pledges,  conditional  sale or title
retention agreements,  security agreements,  equipment obligations,  guaranties,
standby letters of credit,  equipment leases or lease purchase agreements,  each
in an amount  equal to or exceeding  $10,000,000  to which the Company or any of
its  subsidiaries  is a  party  or by  which  any of  them is  bound;  (ii)  all
contracts,  agreements,  commitments or other  understandings or arrangements to
which the Company or any of its  subsidiaries is a party or by which any of them
or any of their  respective  properties  or assets  are bound or  affected,  but
excluding  contracts,   agreements,   commitments  or  other  understandings  or
arrangements  entered into in the ordinary course of business and involving,  in
the case of any such contact,  agreement,  commitment, or other understanding or
arrangement,  individual  payments  or  receipts  by the  Company  or any of its
subsidiaries of less than $5,000,000 over the term of such contract, commitment,
agreement,  or other  understanding  or  arrangement;  and (iii) all  agreements
which, as of the date hereof,  are required to be filed as "material  contracts"
with the Securities and Exchange Commission ("SEC") pursuant to the requirements
of the  Securities  Exchange  Act of  1934,  as  amended,  and the  SEC's  rules
thereunder  (the  "Exchange  Act") but have not been so filed with the SEC as of
the date hereof.


                                      -10-




               (b)  Except  as set  forth  in  Section  2.05(b)  of the  Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
does not,  and the  performance  of this  Agreement by the Company will not, (i)
conflict  with or violate the  Certificate  of  Incorporation  or By-Laws of the
Company,  (ii)  conflict  with or  violate  any law,  rule,  regulation,  order,
judgment or decree  applicable to the Company or any of its  subsidiaries  or by
which its or any of their respective  properties is bound or affected,  or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default), or impair the Company's or any of
its  subsidiaries'  rights or alter the rights or obligations of any third party
under, or give to others any rights of termination,  amendment,  acceleration or
cancellation  of, or result in the creation of a lien or  encumbrance  on any of
the properties or assets of the Company or any of its subsidiaries  pursuant to,
any note,  bond,  mortgage,  indenture,  contract,  agreement,  lease,  license,
permit,  franchise or other instrument or obligation to which the Company or any
of  its  subsidiaries  is a  party  or by  which  the  Company  or  any  of  its
subsidiaries or its or any of their respective  properties is bound or affected,
except,  in the  case  of  clauses  (ii)  or  (iii),  for  any  such  conflicts,
violations, breaches, defaults or other occurrences that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

               (c) The execution  and delivery of this  Agreement by the Company
does not, and the performance of this Agreement by the Company will not, require
any  consent,   approval,   authorization  or  permit  of,  or  filing  with  or
notification to, any governmental or regulatory  authority,  domestic or foreign
(each, a "Governmental Authority"),  except (i) for applicable requirements,  if
any, of the Securities  Act, the Exchange Act, state  securities laws ("Blue Sky
Laws"),  the  pre-merger  notification  requirements  of  the  Hart-Scott-Rodino
Antitrust  Improvements  Act of 1976, as amended,  and the rules and regulations
thereunder  (the "HSR Act"),  filings and consents under any applicable  foreign
laws intended to prohibit,  restrict or regulate  actions  having the purpose or
effect of  monopolization  or  restraint  of trade  ("Foreign  Monopoly  Laws"),
filings  and  consents  as may be required  under any  environmental,  health or
safety law or regulation pertaining to any notification,  disclosure or required
approval  triggered  by the  Merger  or the  transactions  contemplated  by this
Agreement,  and the  filing  and  recordation  of  appropriate  merger  or other
documents  as  required  by the DGCL,  (ii)  where the  failure  to obtain  such
consents,  approvals,  authorizations  or  permits,  or to make such  filings or
notifications, would not prevent or materially delay consummation of the Merger,
or  otherwise  prevent  or  delay  the  Company  from  performing  its  material
obligations under this Agreement, or would not otherwise reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, or (iii) as
to which any necessary consents, approvals, authorizations,  permits, filings or
notifications have heretofore been obtained or filed, as the case may be, by the
Company.

               SECTION  2.06.  Compliance;  Permits.  (a) Except as disclosed in
Section 2.06(a) of the Company  Disclosure  Schedule or the Company SEC Reports,
neither the  Company nor any of its  subsidiaries  is in  conflict  with,  or in
default or  violation  of, (i) any law,  rule,  regulation,  order,  judgment or
decree  applicable to the Company or any of its  subsidiaries or by which its or
any of their respective  properties is bound or affected or (ii) any note, bond,
mortgage,  indenture,  contract, agreement, lease, license, permit, franchise or
other  instrument or obligation to which the Company or any of its  subsidiaries
is a party or by which the Company or any of its  subsidiaries  or its or any of
their respective


                                      -11-




properties  is bound or  affected,  except for any such  conflicts,  defaults or
violations  which  would not  reasonably  be  expected,  individually  or in the
aggregate, to have a Material Adverse Effect.

               (b)  Except  as  disclosed  in  Section  2.06(b)  of the  Company
Disclosure Schedule or the Company SEC Reports, the Company and its subsidiaries
hold  all  permits,  licenses,  easements,  variances,   exemptions,   consents,
certificates,  orders and  approvals  from  governmental  authorities  which are
material to the  operation of the  business of the Company and its  subsidiaries
taken  as a whole  as it is now  being  conducted  (collectively,  the  "Company
Permits")  except  where the  failure  to hold such  Company  Permits  would not
reasonably be expected,  individually  or in the  aggregate,  to have a Material
Adverse  Effect.  The Company and its  subsidiaries  are in compliance  with the
terms of the Company Permits,  except as described in the Company SEC Reports or
where the failure to so comply would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.

               SECTION 2.07. SEC Filings;  Financial Statements. (a) The Company
has filed all forms,  reports  and  documents  required to be filed with the SEC
since  December 31, 1994 and has made available to Parent (i) its Annual Reports
on Form 10-K for the fiscal years ended December 31, 1995,  1996 and 1997,  (ii)
its  Quarterly  Report on Form 10-Q for the  quarter  ended  March 31, 1998 (the
"March  31,  1998  10-Q"),  and,  (iii) all  proxy  statements  relating  to the
Company's  meetings  of  shareholders  (whether  annual or  special)  held since
December 31, 1994, (iv) all other reports or registration statements (other than
Reports on Form 10-Q not  referred  to in clause (ii) above filed by the Company
with the SEC since December 31, 1994, and (v) all amendments and  supplements to
all such reports and  registration  statements filed by the Company with the SEC
(collectively,  the "Company SEC Reports").  Except as disclosed in Section 2.07
of the Company Disclosure Schedule, the Company SEC Reports (i) were prepared in
all material  respects in accordance with the requirements of the Securities Act
or the Exchange  Act, as the case may be, and (ii) did not at the time they were
filed  (or if  amended  or  superseded  by a  filing  prior  to the date of this
Agreement,  then on the date of such filing)  contain any untrue  statement of a
material fact or omit to state a material fact required to be stated  therein or
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances under which they were made, not misleading.  None of the Company's
subsidiaries is required to file any forms,  reports or other documents with the
SEC.

               (b) Each of the consolidated financial statements (including,  in
each case, any related notes  thereto)  contained in the Company SEC Reports was
prepared  in  accordance  with  United  States  generally  accepted   accounting
principles  ("GAAP")  applied  on a  consistent  basis  throughout  the  periods
involved  (except as may be indicated in the notes thereto or in the Company SEC
Reports),  and each fairly  presents in all material  respects the  consolidated
financial  position  of the Company and its  subsidiaries  as at the  respective
dates thereof and the consolidated  results of its operations and cash flows for
the periods  indicated,  except that the unaudited interim financial  statements
were or are subject to normal and recurring year-end  adjustments which were not
or are not expected to be material in amount.


                                      -12-




               SECTION 2.08. Absence of Certain Changes or Events. Except as set
forth in Section  2.08 of the  Company  Disclosure  Schedule  or the Company SEC
Reports,  between  December  31,  1997  and the date  hereof,  the  Company  has
conducted its business in the ordinary  course and there has not  occurred:  (i)
any  changes,  effects or  circumstances  constituting,  individually  or in the
aggregate,  a Material  Adverse  Effect;  (ii) any  amendments or changes in the
Certificate  of  Incorporation  or By-laws of the Company;  (iii) any damage to,
destruction  or loss of any asset of the  Company  (whether  or not  covered  by
insurance) that would reasonably be expected,  individually or in the aggregate,
to have a Material  Adverse  Effect;  (iv) any material change by the Company in
its accounting methods,  principles or practices;  or (v) any sale of a material
amount of assets of the Company, except in the ordinary course of business.

               SECTION 2.09. No Undisclosed Liabilities.  Except as set forth in
Section  2.09 of the Company  Disclosure  Schedule  or the Company SEC  Reports,
neither the Company nor any of its subsidiaries  has any liabilities  (absolute,
accrued,  contingent  or  otherwise),  except  liabilities  (a) in the aggregate
adequately  provided for in the Company's unaudited balance sheet (including any
related notes thereto) as of March 31, 1998 included in the Company's  Quarterly
Report of Form 10-Q for the  quarter  ended  March 31,  1998 (the "1998  Balance
Sheet"),  (b) incurred in the ordinary course of business and not required under
GAAP to be  reflected on the 1998 Balance  Sheet,  (c) incurred  since March 31,
1998 in the ordinary  course of business,  (d) incurred in connection  with this
Agreement or the Merger or the other  transactions  contemplated  hereby, or (e)
which would not reasonably be expected,  individually  or in the  aggregate,  to
have a Material Adverse Effect.

               SECTION  2.10.  Absence  of  Litigation.  Except  as set forth in
Section  2.10 of the Company  Disclosure  Schedule  or the Company SEC  Reports,
there are no claims, actions,  suits,  proceedings or investigations pending or,
to the knowledge of the Company,  overtly  threatened against the Company or any
of its  subsidiaries,  or any  properties or rights of the Company or any of its
subsidiaries,  before any court,  arbitrator or administrative,  governmental or
regulatory  authority or body,  domestic or foreign,  that would  reasonably  be
expected to have a Material Adverse Effect.

               SECTION 2.11. Employee Benefit Plans; Employment Agreements.  (a)
Section 2.11(a) of the Company  Disclosure  Schedule lists all employee  pension
benefit  plans (as defined in Section  3(2) of the  Employee  Retirement  Income
Security Act of 1974, as amended ("ERISA")),  all employee welfare benefit plans
(as defined in Section 3(1) of ERISA), and all other bonus, stock option,  stock
purchase, incentive, deferred compensation,  supplemental retirement,  severance
and other similar  fringe or employee  benefit plans,  programs or  arrangements
(including  those  which  contain  change  of  control   provisions),   and  any
employment,  executive  compensation or severance  agreements  (including  those
which contain change of control provisions),  written or otherwise,  as amended,
modified or  supplemented,  for the  benefit  of, or relating  to, any former or
current   employee,   officer,   director  or   consultant   (or  any  of  their
beneficiaries)  of the Company or any other entity (whether or not incorporated)
which is a member of a controlled  group including the Company or which is under
common control with the Company within the meaning of Sections 414(b),  (c), (m)
or (o) of the Code or Section  4001(a)  (14) or (b) of ERISA (a  "Company  ERISA
Affiliate"), or any subsidiary of the Company, as well as each plan with


                                      -13-




respect to which the Company or a Company ERISA  Affiliate could incur liability
under Title IV of ERISA or Section 412 of the Internal  Revenue Code of 1986, as
amended  (the "Code")  (together  for the  purposes of this  Section  2.11,  the
"Employee Plans").  The Company has made available to Parent,  prior to the date
of this  Agreement,  or the Company will make  available  not later than 14 days
after the date of this Agreement,  copies of (i) each such written Employee Plan
(or a written  description  of any  Employee  Plan which is not written) and all
related trust agreements,  insurance and other contracts  (including  policies),
summary   plan   descriptions,   summaries   of   material   modifications   and
communications  distributed  to plan  participants,  (ii) the three most  recent
annual reports on Form 5500 series, with accompanying schedules and attachments,
filed with respect to each Employee  Plan required to make such a filing,  (iii)
the most recent  actuarial  valuation for each Employee Plan subject to Title IV
of ERISA,  (iv) the latest  reports which have been filed with the Department of
Labor with respect to each  Employee  Plan  required to make such filing and (v)
the most recent  favorable  determination  letters issued for each Employee Plan
and  related  trust  which is subject  to Parts 1, 2 and 4 of the  Subtitle B of
Title I of ERISA (and, if an application for such  determination  is pending,  a
copy of the  application for such  determination).  For purposes of this Section
2.11,  the term  "material,"  when used with respect to (i) any  Employee  Plan,
shall mean that the Company or a Company  ERISA  Affiliate  has  incurred or may
incur obligations in an amount exceeding  $500,000 with respect to such Employee
Plan, and (ii) any liability,  obligation, breach or non-compliance,  shall mean
that the  Company  or a  Company  ERISA  Affiliate  has  incurred  or may  incur
obligations  in an amount  exceeding  $500,000,  with respect to any one such or
series of related liabilities,  obligations,  breaches, defaults,  violations or
instances of non-compliance.

               (b)  Except  as set  forth  in  Section  2.11(b)  of the  Company
Disclosure  Schedule or the Company SEC Reports,  (i) none of the Employee Plans
promises or provides  retiree medical or other retiree  welfare  benefits to any
person, and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section  3(37) of ERISA;  (ii) no party in interest  or  disqualified
person (as defined in Section  3(14) of ERISA and Section  4975 of the Code) has
at any time engaged in a  transaction  with  respect to any Employee  Plan which
could  subject  the  Company  or  any  Company  ERISA  Affiliate,   directly  or
indirectly,  to a tax,  penalty  or  other  material  liability  for  prohibited
transactions  under ERISA or Section 4975 of the Code; (iii) no fiduciary of any
Employee Plan has breached any of the  responsibilities  or obligations  imposed
upon  fiduciaries  under Title I of ERISA,  which  breach  would  reasonably  be
expected to result in any material liability to the Company or any Company ERISA
Affiliate;  (iv)  all  Employee  Plans  have  been  established  and  maintained
substantially  in accordance with their terms and have operated in compliance in
all material  respects with the requirements  prescribed by any and all statutes
(including ERISA and the Code),  orders,  or governmental  rules and regulations
currently in effect with respect thereto (including all applicable  requirements
for  notification to participants or the Department of Labor,  Internal  Revenue
Service  (the "IRS") or Secretary  of the  Treasury),  and may by their terms be
amended and/or terminated at any time subject to applicable law and the terms of
each Employee Plan, and the Company and each of its subsidiaries  have performed
all material  obligations required to be performed by them under, are not in any
material  respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Employee Plans;  (v) each
Employee Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA is the
subject of a favorable determination


                                      -14-




letter from the IRS, and nothing has occurred  which may  reasonably be expected
to impair such  determination;  (vi) all contributions  required to be made with
respect to any Employee  Plan  pursuant to Section 412 of the Code, or the terms
of the Employee Plan or any collective bargaining  agreement,  have been made on
or before their due dates (including any extensions thereof); (vii) with respect
to each Employee Plan, no "reportable  event" within the meaning of Section 4043
of ERISA  (excluding any such event for which the 30 day notice  requirement has
been  waived  under  the  regulations  to  Section  4043 of  ERISA) or any event
described in Section 4062, 4063 or 4041 of ERISA has occurred for which there is
any material outstanding liability to the Company or any Company ERISA Affiliate
nor would the consummation of the transaction contemplated hereby (including the
execution of this agreement)  constitute a reportable event for which the 30-day
requirement has not been waived;  and (viii) neither the Company nor any Company
ERISA  Affiliate  has  incurred  or  reasonably  expects  to incur any  material
liability under Title IV of ERISA (other than liability for premium  payments to
the Pension Benefit  Guaranty  Corporation  (the "PBGC") arising in the ordinary
course).

               (c)  Section  2.11(c)  of  the  Supplemental  Company  Disclosure
Schedule  will set  forth a true and  complete  list of each  current  or former
employee,  officer or  director of the  Company or any of its  subsidiaries  who
holds (i) any option to purchase  Company  Common  Stock as of the date  hereof,
together  with the  number of shares of  Company  Common  Stock  subject to such
option, the option price of such option (to the extent determined as of the date
hereof), whether such option is intended to qualify as an incentive stock option
within the meaning of Section 422(b) of the Code (an "ISO"),  and the expiration
date  of such  option;  (ii)  any  shares  of  Company  Common  Stock  that  are
restricted;  and (iii) any other  right,  directly  or  indirectly,  to  receive
Company Common Stock, together with the number of shares of Company Common Stock
subject to such right.  Section 2.11(c) of the Company Disclosure  Schedule sets
forth (x) the total  number of any such ISOs and any such  nonqualified  options
and other such rights by exercise price and (y) the amount by which the value of
the Merger Consideration (using $42.50 as the value of the Merger Consideration)
exceeds the option or exercise price of all such ISOs, non-qualified options and
rights  (including  pursuant to the Company  Stock Option Plan) in the aggregate
(such excess being the "Aggregate Option Exercise Spread").

               (d) Section 2.11(d) of the Company Disclosure Schedule sets forth
a true and complete list of (i) all employment  agreements  with officers of the
Company or any of its subsidiaries; (ii) all agreements with consultants who are
individuals  obligating  the Company or any of its  subsidiaries  to make annual
cash payments in an amount exceeding $250,000; (iii) all agreements with respect
to the services of independent  contractors or leased  employees  whether or not
they participate in any of the Employee Plans;  (iv) all officers of the Company
or any of its  subsidiaries who have executed a  non-competition  agreement with
the Company or any of its subsidiaries;  (v) all severance agreements,  programs
and policies of the Company or any of its  subsidiaries  with or relating to its
employees,  in  each  case  with  outstanding  commitments  exceeding  $150,000,
excluding  programs and policies  required to be maintained by law; and (vi) all
plans,  programs,  agreements  and other  arrangements  of Company which contain
change in control provisions.


                                      -15-




               (e)  Except  as set  forth  in  Section  2.11(e)  of the  Company
Disclosure  Schedule,  no employee of the Company or any of its subsidiaries has
participated  in any employee  pension benefit plans (as defined in Section 3(2)
of ERISA) maintained by or on behalf of the Company. The PBGC has not instituted
proceedings  to terminate any Employee Plan that is subject to Title IV of ERISA
(each, a "Defined Benefit Plan").  The Defined Benefit Plans have no accumulated
or waived funding deficiencies within the meaning of Section 412 of the Code nor
have any extensions of any amortization period within the meaning of Section 412
of the Code or 302 of ERISA been applied for with respect  thereto.  The present
value of the benefit  liabilities  (within the meaning of Section 4041 of ERISA)
of the Defined Benefit Plans,  determined on a termination basis using actuarial
assumptions  that  would  be used by the  PBGC  does  not  exceed  by more  than
$1,000,000  the value of the  Defined  Benefit  Plans'  assets.  All  applicable
premiums  required to be paid to the PBGC with  respect to the  Defined  Benefit
Plans  have been  paid.  No facts or  circumstances  exist  with  respect to any
Defined  Benefit  Plan  which  would  give  rise to a lien on the  assets of the
Company under Section 4068 of ERISA or otherwise.  All the assets of the Defined
Benefit Plans are readily marketable securities or insurance contracts.

               (f)  Except  as  provided  in  Schedule  2.11(f)  of the  Company
Disclosure  Schedule or as contemplated  by this Agreement,  (i) the Company has
never maintained an employee stock ownership plan (within the meaning of Section
4975(e)(7)  of the Code) or any other  Employee  Plan that  invests  in  Company
stock;  (ii) since December 31, 1997, the Company has not proposed nor agreed to
any  increase  in  benefits  under any  Employee  Plan (or the  creation  of new
benefits)  or change in employee  coverage  which would  increase the expense of
maintaining  any  Employee  Plan;  (iii) the  consummation  of the  transactions
contemplated  by this  Agreement will not result in an increase in the amount of
compensation  or benefits or accelerate  the vesting or timing of payment of any
benefits or compensation payable in respect of any employee; (iv) no person will
be entitled  to any  severance  benefits  under the terms of any  Employee  Plan
solely by reason of the  consummation of this  transaction  contemplated by this
Agreement.

                (g)  Each  Employee  Plan   covering   non-U.S.   employees  (an
"International  Plan") has been  maintained in substantial  compliance  with its
terms  and with  the  requirements  prescribed  by any and all  applicable  laws
(including  any special  provisions  relating to registered  or qualified  plans
where  such  International  Plan  was  intended  to so  qualify)  and  has  been
maintained in good standing with  applicable  regulatory  authorities.  The fair
market value of the assets of each funded  International  Plan,  if any, (or the
liability  of each  funded  International  Plan  funded  through  insurance)  is
sufficient to procure or provide for the benefits accrued thereunder through the
Effective  Time  according to the  actuarial  assumptions  and  valuations  most
recently used to determine employer contributions to the International Plan.

               (h) The Company has  fiduciary  liability  insurance  of at least
$1,500,000 in effect covering the  fiduciaries of the Employee Plans  (including
the Company) with respect to whom the Company may have liability.

               SECTION 2.12. Labor Matters.  Except as set forth in Section 2.12
of the Company Disclosure Schedule or the Company SEC Reports,  (i) there are no
controversies


                                      -16-




pending or, to the knowledge of the Company, threatened,  between the Company or
any  of  its  subsidiaries  and  any  of  their  respective   employees,   which
controversies have had, or would reasonably be expected,  individually or in the
aggregate,  to have a Material Adverse Effect;  (ii) neither the Company nor any
of its subsidiaries is a party to any material collective  bargaining  agreement
or other labor union contract  applicable to persons  employed by the Company or
its  subsidiaries,  nor does the Company or any of its subsidiaries  know of any
activities or proceedings of any labor union to organize any such employees; and
(iii) neither the Company nor any of its  subsidiaries  has any knowledge of any
strikes,  slowdowns,  work stoppages,  lockouts,  or threats thereof, by or with
respect to any employees of the Company or any of its  subsidiaries  which would
reasonably be expected,  individually  or in the  aggregate,  to have a Material
Adverse Effect.

               SECTION 2.13. Registration Statement; Proxy Statement/Prospectus.
Subject to the accuracy of the  representations  of Parent in Section 3.13,  the
information supplied by the Company in writing specifically for inclusion in the
Registration  Statement  (as defined in Section  3.13) shall not at the time the
Registration  Statement  is  declared  effective  by the SEC  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 the
light of the  circumstances  under  which they were made,  not  misleading.  The
information   supplied   by   the   Company   for   inclusion   in   the   proxy
statement/prospectus to be sent to the shareholders of the Company in connection
with the meeting of the  shareholders of the Company to consider the Merger (the
"Company Shareholders Meeting") (such proxy  statement/prospectus  as amended or
supplemented  is  referred to herein as the "Proxy  Statement/Prospectus")  will
not, on the date the Proxy  Statement/Prospectus  (or any  amendment  thereof or
supplement  thereto)  is  first  mailed  to  shareholders  or at the time of the
Company  Shareholders  Meeting contain any statement  which, at such time and in
light of the circumstances  under which it shall be made, is false or misleading
with respect to any material  fact, or omit to state any material fact necessary
in order to make the statements made therein not false or misleading; or omit to
state any  material  fact  necessary  to correct  any  statement  in any earlier
communication  with  respect  to the  solicitation  of proxies  for the  Company
Shareholders Meeting which has become false or misleading.  If at any time prior
to the Effective Time any event relating to the Company or any of its respective
affiliates,  officers or directors  should be  discovered  by the Company  which
should  be  set  forth  in an  amendment  to  the  Registration  Statement  or a
supplement to the Proxy Statement/Prospectus,  the Company shall promptly inform
Parent  and  Merger  Sub.  The Proxy  Statement/Prospectus  shall  comply in all
material  respects with the requirements of the Securities Act, the Exchange Act
and the rules and regulations  thereunder.  Notwithstanding  the foregoing,  the
Company  makes no  representation  or warranty  with respect to any  information
supplied by Parent or Merger Sub which is contained or incorporated by reference
in,  or   furnished  in   connection   with  the   preparation   of,  the  Proxy
Statement/Prospectus.

               SECTION 2.14.  Restrictions  on Business  Activities.  Except for
this  Agreement  or as set  forth  in  Section  2.14 of the  Company  Disclosure
Schedule or the Company SEC  Reports,  to the best of the  Company's  knowledge,
there is no agreement,  judgment,  injunction,  order or decree binding upon the
Company or any of its subsidiaries  which has or would reasonably be expected to
have the effect of  prohibiting  or  impairing  the  conduct of  business by the
Company or any of its subsidiaries as currently conducted by the


                                      -17-




Company or such  subsidiary,  except for any  prohibition or impairment as would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

               SECTION 2.15.  Title to Property.  Except as set forth in Section
2.15  of  the  Company  Disclosure  Schedule,   the  Company  and  each  of  its
subsidiaries  have good title to all of their real  properties and other assets,
free and clear of all liens,  charges and  encumbrances,  except liens for taxes
not yet due and payable and such liens or other  imperfections of title, if any,
as do not materially detract from the value of or interfere with the present use
of the  property  affected  thereby or which could not  reasonably  be expected,
individually or in the aggregate,  to have a Material Adverse Effect, and except
for liens which secure indebtedness reflected in the 1998 Balance Sheet; and, to
the knowledge of the Company, all leases pursuant to which the Company or any of
its  subsidiaries  lease  from  others  material  amounts  of real  or  personal
property,  are in good  standing,  valid and effective in accordance  with their
respective  terms, and there is not, to the knowledge of the Company,  under any
of such  leases,  any  existing  material  default or event of default (or event
which  with  notice  or lapse of time,  or both,  would  constitute  a  material
default),   except  where  the  lack  of  such  good   standing,   validity  and
effectiveness  or the  existence of such  default or event of default  could not
reasonably be expected,  individually  or in the  aggregate,  to have a Material
Adverse Effect.

               SECTION 2.16. Taxes. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:

                (a) The  Company  and each of its  subsidiaries  has  timely and
accurately  filed, or caused to be timely and accurately filed, all material Tax
Returns  (as  hereinafter  defined)  required  to be filed by it,  and has paid,
collected or withheld, or caused to be paid, collected or withheld, all material
amounts of Taxes (as  hereinafter  defined)  required to be paid,  collected  or
withheld,  other than such Taxes for which adequate reserves in the 1997 Balance
Sheet have been  established or which are being  contested in good faith.  There
are no material claims or assessments  pending against the Company or any of its
subsidiaries  for any  alleged  deficiency  in any Tax,  there are no pending or
threatened audits or investigations  for or relating to any liability in respect
of any Taxes,  and the Company has not been  notified in writing of any proposed
Tax claims or assessments  against the Company or any of its subsidiaries (other
than in each case, claims or assessments for which adequate reserves in the 1997
Balance Sheet have been  established or which are being  contested in good faith
or are  immaterial in amount).  Neither the Company nor any of its  subsidiaries
has executed any waivers or extensions of any applicable  statute of limitations
to assess any material amount of Taxes. There are no outstanding requests by the
Company or any of its  subsidiaries  for any  extension  of time within which to
file any  material  Tax Return or within  which to pay any  material  amounts of
Taxes shown to be due on any Tax Return.  To the best  knowledge of the Company,
there are no liens for material amounts of Taxes on the assets of the Company or
any of its subsidiaries except for statutory liens for current Taxes not yet due
and payable.

               (b) For purposes of this Agreement, the term "Tax" shall mean any
federal,  state, local, foreign or provincial income, gross receipts,  property,
sales, use, license,  excise,  franchise,  employment,  payroll,  alternative or
add-on minimum, ad valorem,


                                      -18-




transfer or excise  tax, or any other tax,  custom,  duty,  governmental  fee or
other like assessment or charge imposed by any Governmental Authority,  together
with any interest or penalty imposed thereon. The term "Tax Return" shall mean a
report,  return or other  information  (including any attached  schedules or any
amendments to such report,  return or other information) required to be supplied
to or filed with a  governmental  entity with  respect to any Tax,  including an
information return, claim for refund, amended return or declaration or estimated
Tax.

               (c) Except as set forth in Section 2.16 of the Company Disclosure
Schedule:  (i) Neither the Company nor any of its  subsidiaries  has ever been a
member of an affiliated  group within the meaning of Section 1504 of the Code or
filed or been included in a combined,  consolidated or unitary Tax Return, other
than of the Company and its  subsidiaries;  (ii) other than with  respect to the
Company and its subsidiaries, neither the Company nor any of its subsidiaries is
liable for Taxes of any other  Person,  or is  currently  under any  contractual
obligation  to indemnify  any person with respect to Taxes (except for customary
agreements  to indemnify  lenders or security  holders in respect of taxes other
than  income  taxes),  or is a party to any tax sharing  agreement  or any other
agreement  providing for payments by the Company or any of its subsidiaries with
respect to Taxes;  (iii)  neither the Company nor any of its  subsidiaries  is a
party to any joint venture,  partnership or other  arrangement or contract which
could be treated as a partnership for federal income tax purposes;  (iv) neither
the Company nor any of its  subsidiaries  has entered into any sale leaseback or
any  leveraged  lease  transaction  that fails to satisfy  the  requirements  of
Revenue Procedure 75-21 (or similar  provisions of foreign law); (v) neither the
Company nor any of its subsidiaries has agreed or is required,  as a result of a
change in method of  accounting or otherwise,  to include any  adjustment  under
Section  481 of the Code (or any  corresponding  provision  of  state,  local or
foreign  law)  in  taxable  income;  (vi)  neither  the  Company  nor any of its
subsidiaries  is a party to any  agreement,  contract,  arrangement or plan that
would  result  (taking  into  account  the  transactions  contemplated  by  this
Agreement),  separately  or in the  aggregate,  in the  payment  of any  "excess
parachute  payments"  within the meaning of Section 280G of the Code;  (vii) the
prices for any property or services (or for the use of property) provided by the
Company or any of its  subsidiaries  to any other  subsidiary  or to the Company
have been  arm's  length  prices,  determined  using a method  permitted  by the
Treasury  Regulations  under Section 482 of the Code; (viii) neither the Company
nor any of its  subsidiaries  is liable  with  respect to any  indebtedness  the
interest of which is not deductible for applicable  federal,  foreign,  state or
local income tax purposes;  (ix) neither the Company nor any of its subsidiaries
is  a  "consenting  corporation"  under  Section  341(f)  of  the  Code  or  any
corresponding  provision  of state,  local or foreign  law;  and (x) none of the
assets  owned by the  Company or any of its  subsidiaries  is  property  that is
required  to be  treated  as owned  by any  other  person  pursuant  to  Section
168(g)(8)  of the  Internal  Revenue  Code of 1954,  as  amended,  as in  effect
immediately  prior  to the  enactment  of the  Tax  Reform  Act of  1986,  or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.

               SECTION 2.17.  Environmental  Matters. (a) Except as set forth in
Section 2.17(a) to the Company Disclosure Schedule or in the Company SEC Reports
or as would not reasonably be expected,  individually  or in the  aggregate,  to
have a Material Adverse Effect, the operations and properties of the Company and
its  subsidiaries  are in material  compliance with the  Environmental  Laws (as
hereinafter defined), which compliance


                                      -19-




includes  the  possession  by the Company and its  subsidiaries  of all material
permits and governmental  authorizations required under applicable Environmental
Laws, and material compliance with the terms and conditions thereof.

               (b)  Except  as set  forth  in  Section  2.17(b)  of the  Company
Disclosure  Schedule or the Company  SEC Reports or as would not  reasonably  be
expected,  individually or in the aggregate,  to have a Material Adverse Effect,
there are no  Environmental  Claims (as hereinafter  defined),  including claims
based on "arranger liability," pending or, to the best knowledge of the Company,
threatened  against the Company or any of its subsidiaries or against any person
or entity whose liability for any Environmental  Claim the Company or any of its
subsidiaries  has retained or assumed  either  contractually  or by operation of
law.

               (c) There are no past or present actions, inactions,  activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge,  presence or disposal of any  Material of  Environmental  Concern (as
hereinafter  defined),  that  would  form the basis of any  Environmental  Claim
against the Company or any of its  subsidiaries  or against any person or entity
whose  liability  for  any  Environmental  Claim  the  Company  or  any  of  its
subsidiaries  have retained or assumed either  contractually  or by operation of
law, except for such Environmental Claims that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

               (d) Except as would not reasonably be expected,  individually  or
in the aggregate,  to have a Material Adverse Effect,  (i) no off-site locations
where the Company or any of its  subsidiaries  has stored,  disposed or arranged
for the disposal of Materials  of  Environmental  Concern has been listed on the
National  Priority List,  CERCLIS,  state Superfund site list or state analog to
CERCLIS, and the Company and its subsidiaries have not been notified that either
of them is a potentially  responsible party at any such location; (ii) there are
no underground  storage tanks located on property owned or leased by the Company
or any of its  subsidiaries;  (iii)  there is no  asbestos  containing  material
contained in or forming part of any building,  building component,  structure or
office  space  owned,   leased  or  operated  by  the  Company  or  any  of  its
subsidiaries;  and  (iv)  there  are no  polychlorinated  biphenyls  (PCB's)  or
PCB-containing  items  contained  in or forming part of any  building,  building
component, structure or office space owned, leased or operated by the Company or
any of its subsidiaries.

               (e) For purposes of this Agreement:

               (i)  "Environmental  Claim"  means any  claim,  action,  cause of
action,  investigation  or  written  notice by any  person  or  entity  alleging
potential  liability  (including  potential  liability for investigatory  costs,
cleanup costs,  governmental response costs, natural resources damages, property
damages,  personal injuries, or penalties) arising out of, based on or resulting
from  the  presence,  or  release  into  the  environment,  of any  Material  of
Environmental  Concern at any location,  whether or not owned or operated by the
Company or any of its subsidiaries.

               (ii)  "Environmental  Laws" means all Federal,  state,  local and
foreign laws, regulations, codes, ordinances, any guidance or directive relating
to pollution or protection of


                                      -20-




human health and the environment  (including ambient air, surface water,  ground
water,  land surface or  sub-surface  strata),  including  laws and  regulations
relating to emissions,  discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the manufacture,  processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
Materials of Environmental Concern,  including, but not limited to CERCLA, RCRA,
TSCA,  OSHA,  the Clean  Air Act,  the  Clean  Water  Act,  each as  amended  or
supplemented, and any applicable transfer statutes or laws.

               (iii)  "Materials  of  Environmental  Concern"  means  chemicals,
pollutants,   contaminants,   hazardous  materials,   hazardous  substances  and
hazardous  wastes,  medical  waste,  toxic  substances,  petroleum and petroleum
products,  asbestos-containing  materials,  poly chlorinated biphenyls,  and any
other chemicals, pollutants or substances regulated under any Environmental Law.

               SECTION 2.18.  Brokers.  No broker,  finder or investment  banker
(other than Chase Securities Inc. ("Chase"),  the fees and expenses of whom will
be paid by the Company) is entitled to any  brokerage,  finder's or other fee or
commission in connection  with the  transactions  contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.

               SECTION 2.19. Intellectual Property. (a) As used herein, the term
"Intellectual  Property Assets" shall mean all worldwide  intellectual  property
rights, including, without limitation,  patents,  trademarks,  service marks and
copyrights,  and registrations and applications therefor, trade names, know-how,
trade  secrets,  computer  software  programs or  applications  and  proprietary
information.  As used herein,  "Company Intellectual Property Assets" shall mean
the  Intellectual  Property  Assets  used or owned by the  Company or any of its
subsidiaries.

        (b) The Company and/or each of its subsidiaries  owns, or is licensed or
otherwise possesses legally enforceable rights to use all Intellectual  Property
Assets that are used in the  business of the  Company  and its  subsidiaries  as
currently conducted, without conflict with the rights of others, except as would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

        (c) Except as disclosed in Section 2.19(c) of the  Supplemental  Company
Disclosure  Schedule or as would not reasonably be expected,  individually or in
the aggregate,  to have a Material Adverse Effect, no claims with respect to the
Company Intellectual  Property Assets, or the Intellectual  Property Assets of a
third  party (the  "Third  Party  Intellectual  Property  Assets") to the extent
arising  out of any  use,  reproduction  or  distribution  of such  Third  Party
Intellectual   Property  Assets  by  or  through  the  Company  or  any  of  its
subsidiaries,  are currently  pending or, to the  knowledge of the Company,  are
threatened by any person.

        (d) Except as  disclosed  in Section  2.19(d) of the Company  Disclosure
Schedule  or as would not  reasonably  be  expected  to have a Material  Adverse
Effect,  neither  the  Company  nor any of its  subsidiaries  knows of any valid
grounds  for any bona  fide  claim to the  effect  that the  manufacture,  sale,
licensing or use of any product now used, sold or licensed or


                                      -21-




proposed  for use,  sale,  license  by the  Company  or any of its  subsidiaries
infringes on any Third Party Intellectual Property Assets.

        (e) Section 2.19(e) of the Supplemental Company Disclosure Schedule will
set forth a list of (i) all patents and patent applications owned by the Company
and/or each of its subsidiaries  worldwide;  (ii) all trademark and service mark
registrations  and all  trademark  and service mark  applications  and all trade
names owned by the Company and/or each of its subsidiaries worldwide;  (iii) all
copyright  registrations and copyright  applications owned by the Company and/or
each of its subsidiaries  worldwide;  and (iv) all licenses owned by the Company
and/or  each  of its  subsidiaries  in  which  the  Company  and/or  each of its
subsidiaries  is (A) a licensor with respect to any of the patents,  trademarks,
service  marks,  trade  names or  copyrights  listed in the  Company  Disclosure
Schedule;  or (B) a  licensee  of  any  other  person's  patents,  trade  names,
trademarks,  service marks or copyrights  material to the Company except for any
licenses of software programs that are publicly available. To its knowledge, the
Company has  heretofore  made  available  to Parent a list of all such  patents,
patent  applications,  trademark and service mark  registrations,  trademark and
service mark  applications,  trade  names,  copyright  registrations,  copyright
applications and licenses.  The Company and/or each of its subsidiaries has made
all necessary  filings and  recordations to protect and maintain its interest in
the patents,  patent  applications,  trademark  and service mark  registrations,
trademark and service mark applications,  trade names,  copyright  registrations
and  copyright  applications  and licenses  set forth in the Company  Disclosure
Schedule,  except  where  the  failure  to so  protect  or  maintain  would  not
reasonably be expected,  individually  or in the  aggregate,  to have a Material
Adverse Effect.

        (f) Except as set forth in Section  2.19(f)  of the  Company  Disclosure
Schedule  or the Company SEC  Reports or as would not  reasonably  be  expected,
individually or in the aggregate,  to have a Material  Adverse Effect:  (i) each
patent,  patent  application,   trademark  or  service  mark  registration,  and
trademark or service mark  application  and copyright  registration or copyright
application  of the  Company  and/or  each  of its  subsidiaries  is  valid  and
subsisting  and (ii) each  license of Company  Intellectual  Property  Assets is
valid, subsisting and enforceable.

        (g) Except as set forth in Section  2.19(g)  of the  Company  Disclosure
Schedule,  to the Company's  knowledge:  there is no material  unauthorized use,
infringement or misappropriation of any of the Company's  Intellectual  Property
Assets by any third party, including any employee, former employee,  independent
contractor or consultant of the Company or any of its subsidiaries.

        (h) Except as set forth on Schedule  2.19(h) on the  Company  Disclosure
Schedule,  the  disclosure  under the  heading  "IMPACT OF THE YEAR 2000  ISSUE"
contained in the Company's  Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 is accurate and correct in all material respects.

               SECTION 2.20. Interested Party Transactions.  Except as set forth
in Section 2.20 of the Company Disclosure Schedule or the Company SEC Reports or
for events as to which the amounts  involved do not,  in the  aggregate,  exceed
$300,000,  since the date of the Company's  proxy statement dated March 30, 1998
(the "1998 Company Proxy Statement"),


                                      -22-




no event  has  occurred  that  would be  required  to be  reported  as a Certain
Relationship  or Related  Transaction,  pursuant to Item 404 of  Regulation  S-K
promulgated by the SEC.

               SECTION 2.21.  Insurance.  Except as disclosed in Section 2.21 of
the Company  Disclosure  Schedule or the Company SEC Reports,  all material fire
and casualty,  general liability,  business interruption,  product liability and
sprinkler and water damage insurance  policies  maintained by the Company or any
of its  subsidiaries  are with reputable  insurance  carriers,  provide full and
adequate  coverage for all normal risks  incident to the business of the Company
and its  subsidiaries  and their  respective  properties  and  assets and are in
character and amount  appropriate  for the businesses  conducted by the Company,
except as would not reasonably be expected to have a Material Adverse Effect.

               SECTION  2.22.  Product  Liability  and  Recalls.  (a)  Except as
disclosed in Section 2.22(a) of the Company  Disclosure  Schedule or the Company
SEC  Reports,  the  Company  is not aware of any claim,  pending or  threatened,
against the Company or any of its  subsidiaries for injury to person or property
of  employees  or any  third  parties  suffered  as a result  of the sale of any
product or performance of any service by the Company or any of its subsidiaries,
including  claims  arising out of the defective or unsafe nature of its products
or  services,  which  would  reasonably  be  expected,  individually  or in  the
aggregate, to have a Material Adverse Effect.

               (b)  Except  as  disclosed  in  Section  2.22(b)  of the  Company
Disclosure  Schedule or the Company SEC Reports,  there is no pending or, to the
knowledge of the Company,  overtly  threatened  recall or  investigation  of any
product sold by the Company,  which recall or investigation  would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

               SECTION 2.23. Opinion of Financial Advisor.  The Company has been
advised by its financial advisor,  Chase, to the effect that in its opinion,  as
of the date hereof, the Exchange Ratio is fair from a financial point of view to
the holders of Shares.

               SECTION 2.24.  Pooling  Matters.  To the Company's  knowledge and
based upon  consultation  with its  independent  accountants,  the  Company  has
provided to Parent and its independent  accountants  all information  concerning
actions  taken or agreed to be taken by the Company or any of its  affiliates on
or before  the date of this  Agreement  that would  reasonably  be  expected  to
adversely  affect the ability of Parent to account for the business  combination
to be effected by the Merger as a pooling of  interests,  and the Company has no
knowledge that such business combination cannot be accounted for in that manner.
For purposes of this Section  2.24,  "to the Company's  knowledge"  means to the
actual  knowledge  of  the  Company's  Chairman  and  Chief  Executive  Officer,
President and Chief Operating Officer or Chief Financial Officer.

               SECTION 2.25. Tax Matters.  The  representations,  statements and
covenants  set forth in  paragraph 2 through 18 of Exhibit A hereto are true and
correct in all material respects.


                                      -23-




               SECTION 2.26 Accuracy of  Information.  The Company  acknowledges
that none of Parent,  its  subsidiaries  or any of their  respective  directors,
officers, employees,  affiliates,  agents, advisors or representatives makes any
representation  or warranty,  either  express or implied,  as to the accuracy or
completeness of any of the information provided or made available to the Company
or its agents or representatives including, without limitation, any estimations,
projections  or other  statement  regarding  future  performance,  except to the
extent set forth in this Agreement (including the Parent Disclosure Schedule).

                                   ARTICLE III

             REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB



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

               SECTION 3.01. Organization and Qualification;  Subsidiaries. Each
of Parent and its  subsidiaries  is a  corporation  duly  organized  and validly
existing under the laws of the  jurisdiction  of its  incorporation  and has the
requisite  corporate power and authority necessary to own, lease and operate the
properties it purports to own,  operate or lease and to carry on its business as
it is now being  conducted,  except  where the  failure to be so  organized  and
existing or to have such power or authority  would not reasonably be expected to
have a Material  Adverse  Effect.  Each of Parent and its  subsidiaries  is duly
qualified or licensed as a foreign  corporation  to do business,  and is in good
standing,  in each  jurisdiction  where the character of its  properties  owned,
leased  or  operated  by  it  or  the  nature  of  its  activities   makes  such
qualification  or licensing  necessary,  except for such  failures to be so duly
qualified or licensed and in good standing that could not reasonably be expected
to have a Material  Adverse Effect.  A true and complete list of all of Parent's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the  percentage  of each  subsidiary's  outstanding  capital  stock owned by
Parent or  another  subsidiary,  is set  forth in  Section  3.01 of the  written
disclosure schedule  previously  delivered by Parent to the Company (the "Parent
Disclosure  Schedule").  Except  as set  forth  in  Section  3.01 of the  Parent
Disclosure  Schedule  or the  Parent SEC  Reports  (as  defined in Section  3.07
below),  Parent  does not  directly  or  indirectly  own any  equity or  similar
interest in, or any interest  convertible  into or  exchangeable  or exercisable
for, any equity or similar  interest  in, any  corporation,  partnership,  joint
venture or other business  association  or entity,  with respect to which Parent
has invested or is required to invest $3,000,000 or more,  excluding  securities
in any publicly traded company held for investment by Parent and comprising less
than five percent of the outstanding capital stock of such company.

               SECTION 3.02.  Articles of Organization  and By-Laws.  Parent has
heretofore  made  available  to the Company a complete  and correct  copy of its
Memorandum of Association  and Bye-Laws,  as amended to date. Such Memorandum of
Association and Bye-Laws are in full force and effect. Neither Parent nor Merger
Sub is in violation of any of the  provisions of its  Memorandum of  Association
(or Certificate of Incorporation) or by-laws.


                                      -24-




               SECTION 3.03. Capitalization. (a) The authorized capital stock of
Parent consists of 1,503,750,000 Parent Common Shares and 125,000,000 Preference
Shares,  $1.00 par value per share ("Parent Preferred Shares").  (i) As of April
23, 1998, (I) 583,096,885 Parent Common Shares were issued and outstanding,  all
of which are  validly  issued,  fully  paid and  non-assessable,  (II) no Parent
Preferred Shares were outstanding and (III) no more than 5,000,000 Parent Common
Shares and no Parent Preferred Shares were held by subsidiaries of Parent;  (ii)
as of March 31, 1998,  warrants to purchase  185,933  Parent  Common Shares were
outstanding; and (iii) as of September 30, 1997, approximately 44 million Parent
Common Shares were  reserved for issuance upon exercise of stock options  issued
under the Tyco  International  Ltd. Long Term Incentive Plan. No material change
in such capitalization has occurred between such dates and the date hereof other
than as a result of the exercise of options or warrants  outstanding  as of such
dates.  Except as set forth in Section 3.03 of the Parent Disclosure Schedule or
the  Parent  SEC  Reports,  there  are no  options,  warrants  or other  rights,
agreements arrangements or commitments of any character binding on Parent or any
of its  subsidiaries  relating to the issued or unissued capital stock of Parent
or any of its  subsidiaries or obligating  Parent or any of its  subsidiaries to
issue or sell any  shares of capital  stock of, or other  equity  interests  in,
Parent or any of its  subsidiaries.  Except as set forth in Section  3.03 of the
Parent Disclosure Schedule or the Parent SEC Reports,  there are no obligations,
contingent or otherwise,  of Parent or any of its  subsidiaries  to  repurchase,
redeem or otherwise acquire any Parent Common Shares or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital  contribution or otherwise) in any such subsidiary other than guarantees
of bank  obligations  of  subsidiaries  entered into in the  ordinary  course of
business.  Except as set forth in Section 3.01 or 3.03 of the Parent  Disclosure
Schedule,  all of the outstanding shares of capital stock (other than directors'
qualifying shares) of each of Parent's subsidiaries is duly authorized,  validly
issued,  fully paid and nonassessable and all such shares (other than directors'
qualifying  shares) are owned by Parent or another  subsidiary free and clear of
all security  interests,  liens,  claims,  pledges,  agreements,  limitations in
Parent's voting rights, charges or other encumbrances of any nature whatsoever.

               (b) The Parent Common Shares to be issued  pursuant to the Merger
will be duly authorized,  validly issued, fully paid and nonassessable and shall
be listed, upon official notice of issuance, for trading on the NYSE.

               SECTION  3.04.  Authority  Relative  to this  Agreement.  Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver  this  Agreement  and to perform its  obligations  hereunder  and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this  Agreement  by Parent  and Merger  Sub and the  consummation  by Parent and
Merger Sub of the  transactions  contemplated  hereby have been duly and validly
authorized  by all necessary  corporate  action on the part of Parent and Merger
Sub, and no other corporate  proceedings on the part of Parent or Merger Sub are
necessary  to  authorize  this  Agreement  or  to  consummate  the  transactions
contemplated  hereby. The Board of Directors of Parent has determined that it is
advisable and in the best interest of Parent's  shareholders for Parent to enter
into this  Agreement and to consummate  the Merger upon the terms and subject to
the  conditions  of this  Agreement.  This  Agreement  has been duly and validly
executed and delivered by Parent and Merger Sub


                                      -25-




and,  assuming  the due  authorization,  execution  and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent and Merger Sub.

               SECTION 3.05.  No Conflict;  Required  Filings and Consents.  (a)
Section  3.05(a) of the Parent  Disclosure  Schedule  includes a list of (i) all
loan  agreements,  indentures,  mortgages,  pledges,  conditional  sale or title
retention agreements,  security agreements,  equipment obligations,  guaranties,
standby  letters of credit,  equipment  leases or lease  purchase  agreements to
which  Parent or any of its  subsidiaries  is a party or by which any of them is
bound, each in an amount exceeding $25,000,000, but excluding any such agreement
between  Parent  and  its  wholly-owned  subsidiaries  or  between  two or  more
wholly-owned subsidiaries of Parent; (ii) all contracts, agreements, commitments
or  other  understandings  or  arrangements  to  which  Parent  or  any  of  its
subsidiaries  is a party  or by  which  any of them or any of  their  respective
properties or assets are bound or affected, but excluding contracts, agreements,
commitments or other understandings or arrangements entered into in the ordinary
course of business and involving,  in each case,  payments or receipts by Parent
or any of its subsidiaries of less than $20,000,000 in any single instance;  and
(iii) all agreements which, as of the date hereof, are required to be filed with
the SEC pursuant to the requirements of the Exchange Act as "material contracts"
but have not been so filed with the SEC as of the date hereof.

               (b)  Except  as set  forth  in  Section  3.05(b)  of  the  Parent
Disclosure Schedule,  the execution and delivery of this Agreement by Parent and
Merger Sub do not, and the  performance  of this  Agreement by Parent and Merger
Sub will not, (i) conflict  with or violate the  Memorandum of  Association  (or
Certificate of  Incorporation) or by-laws of Parent or Merger Sub, (ii) conflict
with or violate any law, rule, regulation,  order, judgment or decree applicable
to  Parent  or any of its  subsidiaries  or by  which  its or  their  respective
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or impair Parent's or any of its  subsidiaries'  rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination,  amendment,  acceleration  or cancellation  of, or result in the
creation of a lien or  encumbrance  on any of the properties or assets of Parent
or any of its  subsidiaries  pursuant to, any note, bond,  mortgage,  indenture,
contract,  agreement,  lease, license,  permit, franchise or other instrument or
obligation  to which  Parent or any of its  subsidiaries  is a party or by which
Parent or any of its subsidiaries or its or any of their  respective  properties
are bound or affected,  except,  in the case of clauses  (ii) or (iii),  for any
such conflicts,  violations,  breaches, defaults or other occurrences that would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

               (c) The  execution  and delivery of this  Agreement by Parent and
Merger Sub does not, and the  performance of this Agreement by Parent and Merger
Sub will not,  require any  consent,  approval,  authorization  or permit of, or
filing  with or  notification  to, any  Governmental  Authority,  except (i) for
applicable  requirements,  if any, of the Securities  Act, the Exchange Act, the
Blue Sky Laws, the pre-merger notification  requirements of the HSR Act, Foreign
Monopoly  Laws, and the filing and  recordation  of appropriate  merger or other
documents  as  required  by the DGCL,  (ii)  where the  failure  to obtain  such
consents,  approvals,  authorizations  or  permits,  or to make such  filings or
notifications, would not prevent or materially delay consummation of the Merger,
or otherwise prevent Parent or


                                      -26-




Merger Sub from performing  their  respective  material  obligations  under this
Agreement,  and would not otherwise be reasonably  expected,  individually or in
the  aggregate,  to have a  Material  Adverse  Effect  or (iii) as to which  any
necessary consents, approvals, authorizations, permits, filings or notifications
have heretofore been obtained or filed, as the case may be, by Parent.

               SECTION  3.06.  Compliance;  Permits.  (a) Except as disclosed in
Section  3.06(a) of the Parent  Disclosure  Schedule or the Parent SEC  Reports,
neither Parent nor any of its subsidiaries is in conflict with, or in default or
violation  of,  (i)  any  law,  rule,  regulation,  order,  judgment  or  decree
applicable to Parent or any of its  subsidiaries or by which its or any of their
respective  properties  is bound or affected or (ii) any note,  bond,  mortgage,
indenture,  contract,  agreement,  lease,  license,  permit,  franchise or other
instrument or obligation to which Parent or any of its  subsidiaries  is a party
or by which Parent or any of its  subsidiaries or its or any of their respective
properties  is bound or  affected,  except for any such  conflicts,  defaults or
violations  which  would not  reasonably  be  expected,  individually  or in the
aggregate, to have a Material Adverse Effect.

               (b)  Except  as  disclosed  in  Section  3.06(b)  of  the  Parent
Disclosure Schedule or the Parent SEC Reports,  Parent and its subsidiaries hold
all permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals  from  governmental  authorities  which are material to the
operation of the business of the Parent and its subsidiaries taken as a whole as
it is now being conducted  (collectively,  the "Parent Permits" except where the
failure  to  hold  such  Parent   Permits  would  not  reasonably  be  expected,
individually or in the aggregate, to have a Material Adverse Effect). Parent and
its subsidiaries  are in compliance with the terms of Parent Permits,  except as
described  in the Parent SEC Reports or where the failure to so comply would not
reasonably be expected,  individually  or in the  aggregate,  to have a Material
Adverse Effect.

               SECTION 3.07. SEC Filings;  Financial Statements.  (a) Parent has
filed all forms,  reports and documents  required to be filed with the SEC since
December  31, 1994,  and has  heretofore  delivered to the Company,  in the form
filed  with the SEC,  (i) its Annual  Reports on Form 10-K for the fiscal  years
ended December 31, 1995 and 1996 and its Transition  Report on Form 10-K for the
nine month period ended September 30, 1997,  (ii) its Quarterly  Reports on Form
10-Q for the quarterly  periods  ending  December 31, 1997,  and March 31, 1998,
(iii) all  proxy  statements  relating  to  Parent's  meetings  of  shareholders
(whether annual or special) held since December 31, 1996, (iv) all other reports
or registration  statements  (other than Reports on Form 10-Q not referred to in
clause (ii) above) filed by Parent with the SEC since December 31, 1994, and (v)
all amendments and supplements to all such reports and  registration  statements
filed by Parent  with the SEC  (collectively,  the "Parent  SEC  Reports").  The
Parent SEC Reports (i) were prepared in all material respects in accordance with
the  requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or  superseded  by a
filing  prior to the date of this  Agreement,  then on the date of such  filing)
contain any untrue statement of a material fact or omit to state a material fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading. None of Parent's subsidiaries is required to file any forms, reports
or other documents with the SEC.


                                      -27-




               (b) Each of the consolidated financial statements (including,  in
each case,  any related notes  thereto)  contained in the Parent SEC Reports has
been prepared in accordance with GAAP applied on a consistent  basis  throughout
the periods  involved (except as may be indicated in the notes thereto or in the
Parent SEC  Reports)  and each fairly  presents  in all  material  respects  the
consolidated  financial  position  of  Parent  and  its  subsidiaries  as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods  indicated,  except that the unaudited  interim  financial
statements  were or are  subject to normal and  recurring  year-end  adjustments
which were not or are not expected to be material in amount.

               SECTION 3.08. Absence of Certain Changes or Events. Except as set
forth in  Section  3.08 of the  Parent  Disclosure  Schedule  or the  Parent SEC
Reports, between December 31, 1997 and the date hereof, Parent has conducted its
business in the  ordinary  course and there has not  occurred:  (i) any changes,
effects or changed circumstances constituting, individually or in the aggregate,
a Material  Adverse Effect;  (ii) any amendments or changes in the Memorandum of
Association or Bye-Laws of Parent;  (iii) any damage to,  destruction or loss of
any assets of the  Parent  (whether  or not  covered  by  insurance)  that would
reasonably be expected,  individually  or in the  aggregate,  to have a Material
Adverse Effect; (iv) any material change by Parent in its accounting methods; or
(v) any sale of a material  amount of assets of Parent,  except in the  ordinary
course of business.

               SECTION 3.09. No Undisclosed Liabilities.  Except as is disclosed
in Section  3.09 of the Parent  Disclosure  Schedule and the Parent SEC Reports,
neither the Parent nor any of its  subsidiaries  has any liabilities  (absolute,
accrued,  contingent  or  otherwise),  except  liabilities  (a) in the aggregate
adequately  provided for in the Parent's  unaudited balance sheet (including any
related  notes  thereto)  as of March 31, 1998  included  in Parent's  Quarterly
Report on Form 10-Q for the three months ended March 31, 1998 (the "1998 Balance
Sheet"),  (b) incurred in the ordinary course of business and not required under
GAAP to be  reflected on the 1998 Balance  Sheet,  (c) incurred  since March 31,
1998 in the ordinary  course of business,  (d) incurred in connection  with this
Agreement,  or the Merger or the other transactions  contemplated hereby, or (e)
which would not reasonably be expected,  individually  or in the  aggregate,  to
have a Material Adverse Effect.

               SECTION  3.10.  Absence  of  Litigation.  Except  as set forth in
Section 3.10 of the Parent Disclosure  Schedule,  there are no claims,  actions,
suits, proceedings or investigations pending or, to the knowledge of the Parent,
threatened  against the Parent or any of its subsidiaries,  or any properties or
rights of the Parent or any of its subsidiaries, before any court, arbitrator or
administrative,  governmental  or  regulatory  authority  or body,  domestic  or
foreign, that would reasonably be expected to have a Material Adverse Effect.

               SECTION 3.11. Employee Benefit Plans; Employment Agreements.  (a)
Section  3.11(a) of the Parent  Disclosure  Schedule lists all employee  pension
benefit  plans (as  defined in  Section  3(2) of ERISA),  all  employee  welfare
benefit plans (as defined in Section 3(1) of ERISA),  and all other bonus, stock
option,  stock  purchase,   incentive,   deferred   compensation,   supplemental
retirement,  severance  and other  similar  fringe or  employee  benefit  plans,
programs  or  arrangements,  and  any  employment,   executive  compensation  or
severance agreements, written or otherwise, as amended, modified or


                                      -28-




supplemented,  for the  benefit  of, or  relating  to,  any  former  or  current
employee,  officer,  director or consultant (or any of their  beneficiaries)  of
Parent  or any  entity  (whether  or not  incorporated)  which is a member  of a
controlled  group including  Parent or which is under common control with Parent
within the meaning of Sections  414(b),  (c),  (m) or (o) of the Code or Section
4001(a) (14) or (b) of ERISA  ("Parent ERISA  Affiliate"),  or any subsidiary of
Parent,  as well as each plan with  respect  to which  Parent or a Parent  ERISA
Affiliate  could incur  liability  under Title IV of ERISA or Section 412 of the
Code  (together  for the purposes of this Section 3.11,  the "Employee  Plans").
Prior to the date of this  Agreement,  Parent has made  available to the Company
copies of (i) each such written  Employee Plan (or a written  description of any
Employee Plan which is not written) and all related trust agreements,  insurance
and other contracts (including policies),  summary plan descriptions,  summaries
of material  modifications and communications  distributed to plan participants,
(ii) the three most recent annual reports on Form 5500 series, with accompanying
schedules and attachments,  filed with respect to each Employee Plan required to
make such a filing,  (iii) the most recent actuarial valuation for each Employee
Plan subject to Title IV of ERISA, (iv) the latest reports which have been filed
with the Department of Labor with respect to each Employee Plan required to make
such filing and (v) the most recent favorable  determination  letters issued for
each Employee Plan and related trust which is subject to Parts 1, 2 and 4 of the
Subtitle B of Title I of ERISA (and, if an application for such determination is
pending, a copy of the application for such determination). For purposes of this
Section 3.11,  the term  "material,"  when used with respect to (i) any Employee
Plan,  shall mean that Parent or a Parent  ERISA  Affiliate  has incurred or may
incur  obligations  in an  amount  exceeding  $5,000,000  with  respect  to such
Employee  Plan, and (ii) any liability,  obligation,  breach or  non-compliance,
shall mean that Parent or a Parent  ERISA  Affiliate  has  incurred or may incur
obligations in an amount exceeding  $3,000,000,  with respect to any one such or
series of related liabilities,  obligations,  breaches, defaults,  violations or
instances of non-compliance.

               (b)  Except  as set  forth  in  Section  3.11(b)  of  the  Parent
Disclosure  Schedule or the Parent SEC Reports,  (i) none of the Employee  Plans
promises or provides  retiree medical or other retiree  welfare  benefits to any
person, and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section  3(37) of ERISA;  (ii) no party in interest  or  disqualified
person (as defined in Section  3(14) of ERISA and Section  4975 of the Code) has
at any time engaged in a  transaction  with  respect to any Employee  Plan which
could subject Parent or any Parent ERISA Affiliate, directly or indirectly, to a
tax, penalty or other material liability for prohibited transactions under ERISA
or  Section  4975 of the  Code;  (iii) no  fiduciary  of any  Employee  Plan has
breached any of the  responsibilities  or obligations  imposed upon  fiduciaries
under Title I of ERISA,  which breach would  reasonably be expected to result in
any  material  liability  to  Parent or any  Parent  ERISA  Affiliate;  (iv) all
Employee Plans have been established and maintained  substantially in accordance
with their terms and have operated in  compliance in all material  respects with
the  requirements  prescribed by any and all statutes  (including  ERISA and the
Code),  orders, or governmental  rules and regulations  currently in effect with
respect  thereto  (including all applicable  requirements  for  notification  to
participants or the Department of Labor, IRS or Secretary of the Treasury),  and
may by  their  terms  be  amended  and/or  terminated  at any  time  subject  to
applicable  law and the terms of each Employee  Plan, and Parent and each of its
subsidiaries have performed all material obligations required to be performed by
them under, are not in


                                      -29-




any material  respect in default under or violation of, and have no knowledge of
any default or violation by any other party to, any of the Employee  Plans;  (v)
each  Employee  Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA
is the subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; (vi) all
contributions  required to be made with respect to any Employee Plan pursuant to
Section 412 of the Code,  or the terms of the  Employee  Plan or any  collective
bargaining agreement, have been made on or before their due dates (including any
extensions  thereof);  (vii) with respect to each Employee  Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the 30 day notice  requirement  has been waived under the  regulations  to
Section 4043 of ERISA) or any event  described in Section 4062,  4063 or 4041 of
ERISA has  occurred  for which there is any  material  outstanding  liability to
Parent  or  any  Parent  ERISA  Affiliate  nor  would  the  consummation  of the
transaction  contemplated  hereby  (including  the execution of this  agreement)
constitute  a  reportable  event for which the 30-day  requirement  has not been
waived; and (viii) neither Parent nor any Parent ERISA Affiliate has incurred or
reasonably  expects  to incur any  material  liability  under  Title IV of ERISA
(other than  liability for premium  payments to the PBGC arising in the ordinary
course).

               (c) Section 3.11(c) of the Parent Disclosure  Schedule sets forth
a true and  complete  list of the  aggregate  number of (i)  options to purchase
Parent Common  Shares as of the date hereof,  together with the number of shares
of Parent  Common  Shares  subject to such  options,  the option  prices of such
options (to the extent  determined as of the date hereof),  whether such options
are intended to qualify as ISOs, and the expiration  date of such options;  (ii)
any shares of Parent  Common  Shares  that are  restricted;  and (iii) any other
rights,  directly or indirectly,  to receive Parent Common Shares, together with
the number of Parent Common Shares subject to such rights,  held by each current
or former employee, officer or director of Parent or any of its subsidiaries.

               (d) Section 3.11(d) of the Parent Disclosure  Schedule sets forth
a true and  complete  list of (i) all  employment  agreements  with  officers of
Parent or any of its subsidiaries;  (ii) all agreements with consultants who are
individuals  obligating  Parent or any of its  subsidiaries  to make annual cash
payments in an amount exceeding $1,500,000; (iii) all agreements with respect to
the services of independent  contractors or leased employees whether or not they
participate  in  any of  the  Employee  Plans  obligating  Parent  or any of its
subsidiaries  to make annual cash  payments in an amount  exceeding  $1,500,000;
(iv) all  officers  of Parent or any of its  subsidiaries  who have  executed  a
non-competition  agreement  with  Parent  or any of its  subsidiaries;  (v)  all
severance agreements, programs and policies of Parent or any of its subsidiaries
with or relating to its  employees,  in each case with  outstanding  commitments
exceeding $1,500,000,  excluding programs and policies required to be maintained
by law;  and (vi) all plans,  programs,  agreements  and other  arrangements  of
Company which contain change in control provisions.

               (e)  Except  as set  forth  in  Section  3.11(e)  of  the  Parent
Disclosure  Schedule,  no  employee  of  Parent or any of its  subsidiaries  has
participated  in any employee  pension benefit plans (as defined in Section 3(2)
of ERISA)  maintained  by or on behalf of  Parent.  The PBGC has not  instituted
proceedings  to terminate any Employee Plan that is subject to Title IV of ERISA
(each, a "Defined Benefit Plan"). The Defined Benefit Plans


                                      -30-




have no accumulated or waived funding deficiencies within the meaning of Section
412 of the Code nor have any  extensions of any  amortization  period within the
meaning of Section 412 of the Code or 302 of ERISA been applied for with respect
thereto.  The present  value of the benefit  liabilities  (within the meaning of
Section 4041 of ERISA) of the Defined Benefit Plans, determined on a termination
basis using actuarial assumptions that would be used by the PBGC does not exceed
by more than  $10,000,000  the value of the Defined  Benefit Plans' assets.  All
applicable  premiums required to be paid to the PBGC with respect to the Defined
Benefit  Plans have been paid. No facts or  circumstances  exist with respect to
any Defined Benefit Plan which would give rise to a lien on the assets of Parent
under Section 4068 of ERISA or otherwise.  All the assets of the Defined Benefit
Plans are readily marketable securities or insurance contracts.

               (f)  Except  as  provided  in  Schedule  3.11(f)  of  the  Parent
Disclosure  Schedule,  Parent has never  maintained an employee stock  ownership
plan  (within  the  meaning  of  Section  4975(e)(7)  of the  Code) or any other
Employee Plan that invests in Parent stock.

                (g)  Each  Employee  Plan   covering   non-U.S.   employees  (an
"International  Plan") has been  maintained in substantial  compliance  with its
terms  and with  the  requirements  prescribed  by any and all  applicable  laws
(including  any special  provisions  relating to registered  or qualified  plans
where  such  International  Plan  was  intended  to so  qualify)  and  has  been
maintained in good standing with applicable regulatory authorities.  The benefit
liabilities  of the  International  Plans  are  adequately  provided  for on the
consolidated financial statements of Parent.

               (h)  Parent  has  fiduciary   liability  insurance  of  at  least
$15,000,000 in effect covering the fiduciaries of the Employee Plans  (including
Parent) with respect to whom Parent may have liability.

               SECTION 3.12. Labor Matters.  Except as set forth in Section 3.12
of the Parent  Disclosure  Schedule or the Parent SEC Reports,  (i) there are no
controversies pending or, to the knowledge of Parent or any of its subsidiaries,
threatened,  between  Parent  or any  of  its  subsidiaries  and  any  of  their
respective employees,  which controversies have or would reasonably be expected,
individually  or in the  aggregate,  to have a  Material  Adverse  Effect;  (ii)
neither Parent nor any of its subsidiaries is a party to any material collective
bargaining  agreement  or other  labor  union  contract  applicable  to  persons
employed  by  Parent  or  its  subsidiaries,  nor  does  Parent  or  any  of its
subsidiaries  know of any  activities  or  proceedings  of any  labor  union  to
organize  any  such  employees;   and  (iii)  neither  Parent  nor  any  of  its
subsidiaries  has any  knowledge  of any  strikes,  slowdowns,  work  stoppages,
lockouts,  or threats thereof,  by or with respect to any employees of Parent or
any of its subsidiaries  which would reasonably be expected,  individually or in
the aggregate, to have a Material Adverse Effect.

               SECTION 3.13. Registration Statement; Proxy Statement/Prospectus.
Subject to the accuracy of the  representations  of the Company in Section 2.13,
the registration statement (the "Registration  Statement") pursuant to which the
Parent Common Shares to be issued in the Merger will be registered  with the SEC
shall not, at the time the


                                      -31-




Registration  Statement  (including any  amendments or  supplements  thereto) is
declared  effective by the SEC,  contain any untrue statement of a material fact
or omit to state any material  fact  necessary  in order to make the  statements
included therein,  in light of the circumstances under which they were made, not
misleading.  The  information  supplied  by Parent in writing  specifically  for
inclusion  in the Proxy  Statement/Prospectus  will  not,  on the date the Proxy
Statement/Prospectus  is  first  mailed  to  shareholders  or at the time of the
Company Shareholders  Meeting,  contain any statement which, at such time and in
light of the circumstances  under which it shall be made, is false or misleading
with respect to any material  fact, or omit to state any material fact necessary
in order to make the  statements  therein  not false or  misleading;  or omit to
state any  material  fact  necessary  to correct  any  statement  in any earlier
communication  with  respect  to the  solicitation  of proxies  for the  Company
Shareholders Meeting which has become false or misleading.  If at any time prior
to the Effective Time any event  relating to Parent,  Merger Sub or any of their
respective  affiliates,  officers or directors should be discovered by Parent or
Merger  Sub  which  should  be set  forth in an  amendment  to the  Registration
Statement or a supplement  to the Proxy  Statement/Prospectus,  Parent or Merger
Sub will  promptly  inform the Company.  The  Registration  Statement  and Proxy
Statement/Prospectus shall comply in all material respects with the requirements
of  the  Securities  Act,  the  Exchange  Act  and  the  rules  and  regulations
thereunder.  Notwithstanding  the  foregoing,  Parent  and  Merger  Sub  make no
representation  or  warranty  with  respect to any  information  supplied by the
Company  which is contained  or  incorporated  by reference  in, or furnished in
connection  with the  preparation  of, the  Registration  Statement or the Proxy
Statement/Prospectus.

               SECTION 3.14.  Restrictions  on Business  Activities.  Except for
this  Agreement,  to the best of  Parent's  knowledge,  there  is no  agreement,
judgment,  injunction,  order  or  decree  binding  upon  Parent  or  any of its
subsidiaries  which has or would  reasonably  be  expected to have the effect of
prohibiting or materially  impairing the conduct of business by Parent or any of
its subsidiaries as currently conducted by Parent or such Subsidiary, except for
any prohibition or impairment as would not reasonably be expected,  individually
or in the aggregate, to have a Material Adverse Effect.

               SECTION  3.15.  Title  to  Property.   Parent  and  each  of  its
subsidiaries  have good title to all of their real  properties and other assets,
free and clear of all liens,  charges and  encumbrances,  except liens for taxes
not yet due and payable and such liens or other  imperfections of title, if any,
as do not materially detract from the value of or interfere with the present use
of the  property  affected  thereby or which could not  reasonably  be expected,
individually or in the aggregate,  to have a Material Adverse Effect, and except
for liens which secure indebtedness reflected in the 1998 Balance Sheet; and, to
Parent's  knowledge,  all  leases  pursuant  to  which  Parent  or  any  of  its
subsidiaries  lease from other material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, to the  knowledge  of Parent,  under any of such  leases,  any
existing  material  default or event of default  (or event  which with notice or
lapse of time, or both,  would  constitute a material  default) except where the
lack of such good standing, validity and effectiveness, or the existence of such
default or event of default would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.


                                      -32-




               SECTION 3.16. Taxes.  Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:

               (a) Parent and each of its subsidiaries has timely and accurately
filed, or caused to be timely and accurately filed, all material Tax Returns (as
hereinafter  defined)  required  to be filed by it, and has paid,  collected  or
withheld,  or caused to be paid, collected or withheld,  all material amounts of
Taxes (as hereinafter defined) required to be paid, collected or withheld, other
than such Taxes for which adequate  reserves in the September 1997 Balance Sheet
have been  established or which are being contested in good faith.  There are no
material claims or assessments pending against Parent or any of its subsidiaries
for any alleged deficiency in any Tax, there are no pending or threatened audits
or investigations  for or relating to any liability in respect of any Taxes, and
Parent  has  not  been  notified  in  writing  of any  proposed  Tax  claims  or
assessments  against Parent or any of its subsidiaries (other than in each case,
claims or assessments for which adequate  reserves in the September 1997 Balance
Sheet have been  established  or which are being  contested in good faith or are
immaterial in amount).  Neither Parent nor any of its  subsidiaries has executed
any waivers or extensions of any applicable statute of limitations to assess any
material amount of Taxes. There are no outstanding  requests by Parent or any of
its subsidiaries for any extension of time within which to file any material Tax
Return or within which to pay any  material  amounts of Taxes shown to be due on
any Tax Return. To the best knowledge of Parent, there are no liens for material
amounts of Taxes on the assets of Parent or any of its  subsidiaries  except for
statutory liens for current Taxes not yet due and payable.

               (b) Except as set forth in Section 3.16 of the Parent  Disclosure
Schedule:  (i) Neither Parent nor any of its subsidiaries has ever been a member
of an  affiliated  group within the meaning of Section 1504 of the Code or filed
or been included in a combined,  consolidated or unitary Tax Return,  other than
of Parent and its  subsidiaries;  (ii) other than with respect to Parent and its
subsidiaries,  neither Parent nor any of its subsidiaries is liable for Taxes of
any other Person, or is currently under any contractual  obligation to indemnify
any person with respect to Taxes (except for  customary  agreements to indemnify
lenders or security holders in respect of taxes other than income taxes),  or is
a party to any tax  sharing  agreement  or any  other  agreement  providing  for
payments  by Parent or any of its  subsidiaries  with  respect  to Taxes;  (iii)
neither  Parent  nor any of its  subsidiaries  is a party to any joint  venture,
partnership  or other  arrangement  or  contract  which  could be  treated  as a
partnership for federal income tax purposes;  (iv) neither Parent nor any of its
subsidiaries  has  entered  into  any  sale  leaseback  or any  leveraged  lease
transaction  that fails to satisfy the  requirements of Revenue  Procedure 75-21
(or  similar  provisions  of foreign  law);  (v)  neither  Parent nor any of its
subsidiaries  has  agreed or is  required,  as a result of a change in method of
accounting or otherwise, to include any adjustment under Section 481 of the Code
(or any  corresponding  provision  of state,  local or  foreign  law) in taxable
income;  (vi)  the  prices  for  any  property  or  services  (or for the use of
property)  provided by Parent or any of its subsidiaries to any other subsidiary
or to Parent have been arm's length prices,  determined using a method permitted
by the Treasury  Regulations under Section 482 of the Code; (vii) neither Parent
nor any of its  subsidiaries  is liable  with  respect to any  indebtedness  the
interest of which is not deductible for applicable  federal,  foreign,  state or
local income tax purposes;  (viii) neither Parent nor any of its subsidiaries is
a "consenting corporation" under Section 341(f) of the Code or any corresponding
provision of state, local or foreign law; and (ix)


                                      -33-




none of the assets owned by Parent or any of its  subsidiaries  is property that
is  required  to be treated  as owned by any other  person  pursuant  to Section
168(g)(8)  of the  Internal  Revenue  Code of 1954,  as  amended,  as in  effect
immediately  prior  to the  enactment  of the  Tax  Reform  Act of  1986,  or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.

               SECTION 3.17.  Environmental  Matters. (a) Except as set forth in
Section 3.17(a) to the Parent  Disclosure  Schedule or the Parent SEC Reports or
as would not reasonably be expected, individually or in the aggregate, to have a
Material  Adverse  Effect,  the  operations  and  properties  of Parent  and its
subsidiaries  are in material  compliance  with the  Environmental  Laws,  which
compliance  includes  the  possession  by  Parent  and its  subsidiaries  of all
material  permits and  governmental  authorizations  required  under  applicable
Environmental  Laws,  and  material  compliance  with the terms  and  conditions
thereof.

               (b)  Except  as set  forth  in  Section  3.17(b)  of  the  Parent
Disclosure  Schedule  or the Parent SEC  Reports or as would not  reasonably  be
expected,  individually or in the aggregate,  to have a Material Adverse Effect,
there  are  no  Environmental  Claims,   including  claims  based  on  "arranger
liability,"  pending or, to the best  knowledge  of Parent,  threatened  against
Parent  or any of its  subsidiaries  or  against  any  person  or  entity  whose
liability  for any  Environmental  Claim Parent or any of its  subsidiaries  has
retained or assumed either contractually or by operation of law.

               (c) There are no past or present actions, inactions,  activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge,  presence or disposal of any Material of Environmental  Concern, that
would form the basis of any  Environmental  Claim  against  Parent or any of its
subsidiaries   or  against  any  person  or  entity  whose   liability  for  any
Environmental  Claim Parent or any of its subsidiaries  have retained or assumed
either  contractually  or by  operation  of law,  except for such  Environmental
Claims that would not reasonably be expected,  individually or in the aggregate,
to have a Material Adverse Effect.

               (d)  Except  as set  forth  in  Section  3.17(d)  of  the  Parent
Disclosure  Schedule or as would not reasonably be expected,  individually or in
the aggregate,  to have a Material  Adverse  Effect:  (i) no off-site  locations
where Parent or any of its subsidiaries has stored, disposed or arranged for the
disposal of Materials of  Environmental  Concern has been listed on the National
Priority List,  CERCLIS,  state  Superfund site list or state analog to CERCLIS,
and Parent and its subsidiaries  have not been notified that either of them is a
potentially   responsible  party  at  any  such  location;  (ii)  there  are  no
underground  storage tanks located on property  owned or leased by Parent or any
of its subsidiaries; (iii) there is no asbestos containing material contained in
or forming part of any building,  building component,  structure or office space
owned,  leased or operated by Parent or any of its subsidiaries;  and (iv) there
are no polychlorinated biphenyls (PCB's) or PCB-containing items contained in or
forming  part of any  building,  building  component,  structure or office space
owned, leased or operated by Parent or any of its subsidiaries.


                                      -34-




               SECTION 3.18.  Brokers.  No broker,  finder or investment  banker
(other  than  Merrill,  Lynch,  Pierce,  Fenner & Smith  Incorporated  ("Merrill
Lynch"),  the fees and  expenses  of whom will be paid by Parent) is entitled to
any  brokerage,  finder's  or other fee or  commission  in  connection  with the
transactions  contemplated by this Agreement based upon  arrangements made by or
on behalf of the Company.

               SECTION 3.19.  Intellectual  Property.  (a) Parent and/or each of
its subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights  to use all  Parent  Intellectual  Property  Assets  that are used in the
business of Parent and its subsidiaries as currently  conducted without conflict
with  the  rights  of  others  except  as  would  not  reasonably  be  expected,
individually or in the aggregate,  to have a Material  Adverse  Effect.  As used
herein,  "Parent  Intellectual  Property  Assets"  shall  mean the  Intellectual
Property Assets used or owned by the Parent or any of its subsidiaries.

               (b)  Except  as  disclosed  in  Section  3.19(b)  of  the  Parent
Disclosure  Schedule or as would not reasonably be expected,  individually or in
the aggregate,  to have a Material Adverse Effect, no claims with respect to the
Parent Intellectual Property Assets, or Third Party Intellectual Property Assets
to the extent arising out of any use, reproduction or distribution of such Third
Party  Intellectual  Property  Assets  by  or  through  Parent  or  any  of  its
subsidiaries,  are  currently  pending  or,  to the  knowledge  of  Parent,  are
threatened by any person.

               (c)  Except  as set  forth  in  Section  3.19(c)  of  the  Parent
Disclosure  Schedule  or the Parent SEC  Reports or as could not  reasonably  be
expected,  individually or in the aggregate,  to have a Material  Adverse Effect
each patent,  patent  application,  trademark or service mark registration,  and
trademark or service mark  application  and copyright  registration or copyright
application of Parent and/or each of its subsidiaries is valid and subsisting.

               (d)  Except  as set  forth  in  Section  3.19(d)  of  the  Parent
Disclosure Schedule,  to Parent's knowledge:  there is no material  unauthorized
use,  infringement or misappropriation of any of Parent's  Intellectual Property
Assets by any third party, including any employee, former employee,  independent
contractor or consultant of Parent or any of its subsidiaries.

               SECTION 3.20. Interested Party Transactions.  Except as set forth
in Section  3.20 of the Parent  Disclosure  Schedule or the Parent SEC  Reports,
since the date of Parent's proxy statement dated February 20, 1998, no event has
occurred  that would be required to be  reported  as a Certain  Relationship  or
Related  Transaction,  pursuant to Item 404 of Regulation S-K promulgated by the
SEC.

               SECTION 3.21.  Insurance.  Except as disclosed in Section 3.21 of
the Parent Disclosure Schedule or the Parent SEC Reports,  all material fire and
casualty,  general  liability,  business  interruption,  product  liability  and
sprinkler and water damage insurance policies maintained by Parent or any of its
subsidiaries are with reputable  insurance  carriers,  provide full and adequate
coverage  for all  normal  risks  incident  to the  business  of Parent  and its
subsidiaries and their respective properties and assets and are in character and
amount


                                      -35-




appropriate  for the  businesses  conducted  by  Parent,  except  as  would  not
reasonably be expected to have a Material Adverse Effect.

               SECTION  3.22.  Product  Liability  and  Recalls.  (a)  Except as
disclosed in Section 3.22(a) of the Parent Disclosure Schedule or the Parent SEC
Reports, Parent is not aware of any claim, pending or threatened, against Parent
or any of its  subsidiaries for injury to person or property of employees or any
third parties  suffered as a result of the sale of any product or performance of
any service by Parent or any of its  subsidiaries,  including claims arising out
of the  defective  or unsafe  nature of its  products or  services,  which would
reasonably be expected,  individually  or in the  aggregate,  to have a Material
Adverse Effect.

               (b)  Except  as  disclosed  in  Section  3.22(b)  of  the  Parent
Disclosure  Schedule or the Parent SEC  Reports,  there is no pending or, to the
knowledge of Parent, overtly threatened,  recall or investigation of any product
sold by Parent,  which recall or  investigation  would  reasonably  be expected,
individually or in the aggregate, to have a Material Adverse Effect.

               SECTION 3.23.  Ownership of Merger Sub; No Prior Activities.  (a)
Merger Sub is a direct,  wholly-owned subsidiary of Parent and was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement.

               (b) As of the date  hereof  and the  Effective  Time,  except for
obligations  or liabilities  incurred in connection  with its  incorporation  or
organization and the transactions  contemplated by this Agreement and except for
this Agreement and any other  agreements or  arrangements  contemplated  by this
Agreement,  Merger  Sub  has  not  and  will  not  have  incurred,  directly  or
indirectly,  through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business  activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.

               SECTION 3.24.  Pooling Matters.  To Parent's  knowledge and based
upon consultation with its independent  accountants,  Parent has provided to the
Company and its independent accountants all information concerning actions taken
or agreed to be taken by Parent or any of its  affiliates  on or before the date
of this  Agreement  that would  reasonably  be expected to adversely  affect the
ability of Parent to account for the business  combination to be effected by the
Merger as a pooling of interests, and Parent has no knowledge that such business
combination cannot be accounted for in that manner. For purposes of this Section
3.26, "to Parent's  knowledge"  means to the actual  knowledge of Parent's Chief
Executive Officer or Chief Financial Officer.

               SECTION 3.25. Tax Matters. The representations,  statements,  and
covenants  set forth in  paragraph 2 through 25 of Exhibit B hereto are true and
correct in all material respects.

               SECTION  3.26.  DGCL  Section  203.  Other than by reason of this
Agreement or the transactions  contemplated hereby, Parent is not an "interested
stockholder" of the Company, as that term is defined in Section 203 of the DGCL.


                                      -36-




               SECTION 3.27 Accuracy of  Information.  Each of Parent and Merger
Sub  acknowledges  that none of the Company,  its  subsidiaries  or any of their
respective  directors,  officers,  employees,  affiliates,  agents,  advisors or
representatives makes any representation or warranty, either express or implied,
as to the accuracy or completeness  of any of the  information  provided or made
available to Parent,  Merger Sub or their agents or  representatives  including,
without  limitation,  including any estimations,  projections or other statement
regarding future  performance,  except to the extent set forth in this Agreement
(including  the  Company  Disclosure  Schedule  and  the  Supplemental   Company
Disclosure Schedule).


                                   ARTICLE IV

                     CONDUCT OF BUSINESS PENDING THE MERGER


               SECTION  4.01.  Conduct of Business  by the  Company  Pending the
Merger.  During the period from the date of this Agreement and continuing  until
the earlier of the  termination  of this  Agreement or the Effective  Time,  the
Company  covenants  and agrees  that,  unless  Parent shall  otherwise  agree in
writing,  and  except as set forth in  Section  4.01 of the  Company  Disclosure
Schedule,  the Company shall conduct its business and shall cause the businesses
of  its  subsidiaries  to  be  conducted  only  in,  and  the  Company  and  its
subsidiaries  shall  not take any  action  except  in,  the  ordinary  course of
business and in a manner  consistent  with past practice;  and the Company shall
use reasonable commercial efforts to preserve  substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the  present  officers,  employees  and  consultants  of the  Company and its
subsidiaries  and to preserve the present  relationships  of the Company and its
subsidiaries with customers,  suppliers and other persons with which the Company
or  any  of its  subsidiaries  has  significant  business  relations.  By way of
amplification  and not  limitation,  except as  contemplated  by this Agreement,
neither the Company nor any of its  subsidiaries  shall,  during the period from
the date of this Agreement and continuing  until the earlier of the  termination
of this Agreement or the Effective Time, and except as set forth in Section 4.01
of the Company Disclosure Schedule, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:

                (a) amend or  otherwise  change  the  Company's  Certificate  of
        Incorporation or By-Laws;

                (b) issue,  sell, pledge,  dispose of or encumber,  or authorize
        the issuance, sale, pledge, disposition or encumbrance of, any shares of
        capital  stock  of any  class,  or any  options,  warrants,  convertible
        securities  or other rights of any kind to acquire any shares of capital
        stock, or any other ownership interest  (including,  without limitation,
        any  phantom  interest)  in the  Company,  any of  its  subsidiaries  or
        affiliates  (except for the  issuance of shares of Company  Common Stock
        issuable pursuant to Stock Options under the Company Stock Option Plans,
        which options are outstanding on the date hereof);


                                      -37-




                (c) sell,  pledge,  dispose  of or  encumber  any  assets of the
        Company or any of its  subsidiaries  (except  for (i) sales of assets in
        the  ordinary  course of business and in a manner  consistent  with past
        practice,  (ii) dispositions of obsolete or worthless assets,  and (iii)
        sales  of  immaterial   assets  not  in  excess  of  $2,000,000  in  the
        aggregate);

                (d) (i)  declare,  set aside,  make or pay any dividend or other
        distribution  (whether in cash,  stock or  property  or any  combination
        thereof)  in respect of any of its capital  stock,  except that a wholly
        owned  subsidiary  of the  Company may declare and pay a dividend to its
        parent,  and except that the Company may declare and pay quarterly  cash
        dividends of $0.04 per share consistent with past practice,  (ii) split,
        combine or reclassify  any of its capital stock or issue or authorize or
        propose the issuance of any other  securities  in respect of, in lieu of
        or in  substitution  for shares of its capital stock, or (iii) amend the
        terms or change the period of exercisability  of, purchase,  repurchase,
        redeem or  otherwise  acquire,  or permit any  subsidiary  to  purchase,
        repurchase,  redeem or otherwise  acquire,  any of its securities or any
        securities of its subsidiaries, including, without limitation, shares of
        Company  Common  Stock or any  option,  warrant  or right,  directly  or
        indirectly,  to acquire shares of Company Common Stock, or propose to do
        any of the foregoing;

                (e) (i) acquire (by merger,  consolidation,  or  acquisition  of
        stock  or  assets)  any  corporation,   partnership  or  other  business
        organization  or  division  thereof  other than those  listed on Section
        4.01(e) of the Company Disclosure Schedule;  (ii) incur any indebtedness
        for borrowed  money,  except for  borrowings and  reborrowing  under the
        Company's  existing credit  facilities or other borrowings not in excess
        of $5,000,000  in the aggregate or issue any debt  securities or assume,
        guarantee   (other  than  guarantees  of  bank  debt  of  the  Company's
        subsidiaries entered into in the ordinary course of business) or endorse
        or otherwise as an accommodation become responsible for, the obligations
        of any person,  or make any loans or  advances,  except in the  ordinary
        course of business consistent with past practice; or (iii) authorize any
        capital  expenditures  or  purchases  of fixed  assets which are, in the
        aggregate,  in excess of 110% of the amount thereof  provided for in the
        Company's  current  business plan, a copy of which has  heretofore  been
        furnished  to  Parent;  or (iv)  enter  into  or  materially  amend  any
        contract,  agreement,  commitment  or  arrangement  to effect any of the
        matters prohibited by this Section 4.01(e);

                (f) increase the  compensation  payable or to become  payable to
        its officers or  employees,  except for  increases in salary or wages of
        employees of the Company or its  subsidiaries  in  accordance  with past
        practices,  or grant any  severance or  termination  pay (except to make
        payments  required  to be made under  obligations  existing  on the date
        hereof in accordance  with the terms of such  obligations)  to, or enter
        into or modify  any  employment  or  severance  agreement,  in excess of
        $100,000 with, any director, officer or other employee of the Company or
        any of its subsidiaries,  or establish,  adopt,  enter into or amend any
        collective  bargaining  agreement,  Employee Plan (within the meaning of
        Section 2.11 of this Agreement),  trust, fund, policy or arrangement for
        the benefit of any current or former directors, officers or employees or
        any of their beneficiaries, except, in each case, as may be


                                      -38-




        required  by law or as would not  result in a material  increase  in the
        cost of maintaining such collective bargaining agreement, Employee Plan,
        trust, fund, policy or arrangement.

                (g) take any action to change accounting  policies or procedures
        (including,  without  limitation,  procedures  with  respect  to revenue
        recognition,  payments of accounts  payable and  collection  of accounts
        receivable)  except as required by a change in GAAP occurring  after the
        date hereof;

                (h)  make any  material  tax  election  inconsistent  with  past
        practice or settle or compromise any material federal,  state,  local or
        foreign  tax  liability,  except to the  extent  the  amount of any such
        settlement has been reserved for in the financial  statements  contained
        in the Company SEC Reports filed prior to the date of this  Agreement or
        other settlements not in excess of $2,000,000 in the aggregate;

                (i)  pay,  discharge  or  satisfy  any  claims,  liabilities  or
        obligations (absolute,  accrued,  asserted or unasserted,  contingent or
        otherwise)  in excess of  $5,000,000  in the  aggregate,  other than the
        payment,  discharge or  satisfaction  in the ordinary course of business
        and consistent  with past practice of liabilities  reflected or reserved
        against in the financial statements contained in the Company SEC Reports
        filed prior to the date of this  Agreement  or incurred in the  ordinary
        course of business and consistent with past practice; or

                (j) take,  or agree in writing or otherwise to take,  any of the
        actions described in Sections 4.01(a) through (i) above.

               SECTION  4.02.  No  Solicitation.  (a)  The  Company  shall  not,
directly or indirectly, through any officer, director, employee,  representative
or agent of the Company or any of its  subsidiaries,  solicit or  encourage  the
initiation  of  any  inquiries  or  proposals  regarding  any  merger,  sale  of
substantial   assets,  sale  of  shares  of  capital  stock  (including  without
limitation  by way of a tender  offer) or  similar  transactions  involving  the
Company or any  subsidiaries  of the Company (any of the foregoing  inquiries or
proposals  being  referred  to herein  as an  "Acquisition  Proposal").  Nothing
contained in this Agreement  shall prevent the Board of Directors of the Company
from  (i)   considering,   negotiating,   approving  and   recommending  to  the
shareholders  of the Company a bona fide  Acquisition  Proposal not solicited in
violation of this  Agreement,  (ii) taking and disclosing to its  shareholders a
position  with  respect to any tender or  exchange  offer  commenced  by a third
party, or amending or withdrawing such position,  as contemplated by Rules 14d-9
and  14e-2  under  the  Exchange  Act,   (iii)  making  any  disclosure  to  its
shareholders  or (iv)  furnishing  information to a third party which has made a
bona fide Acquisition  Proposal,  provided that such third party has executed an
agreement with confidentiality provisions substantially similar to those then in
effect between the Company and Parent; provided that, as to each of clauses (i),
(ii),  (iii)  and  (iv),  the  Board  of  Directors  of the  Company  reasonably
determines in good faith (after due consultation with independent counsel, which
may be Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden, Arps")) that it is or
is reasonably likely to be required to do so in order to discharge  properly its
fiduciary duties.


                                      -39-




               (b) The Company shall immediately  notify Parent after receipt of
any Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal,  or any request for nonpublic  information  relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the  properties,  books or records of the  Company or any  subsidiary  by any
person or entity  that  informs  the Board of  Directors  of the Company or such
subsidiary that it is considering making, or has made, an Acquisition  Proposal.
Such notice to Parent shall be made orally and in writing, and, unless the Board
of  Directors  of the Company  reasonably  determines  in good faith  (after due
consultation with independent  counsel) that it is or is reasonably likely to be
inconsistent  with its  fiduciary  duties,  shall  indicate  the identity of the
person  making the  Acquisition  Proposal or  intending  to make an  Acquisition
Proposal or requesting non-public information or access to the books and records
of  Parent,  the  terms of any such  Acquisition  Proposal  or  modification  or
amendment to an  Acquisition  Proposal,  and whether the Company is providing or
intends to provide the person  making the  Acquisition  Proposal  with access to
information concerning the Company as provided in Section 4.02(c).

               (c) Anything to the contrary in this Section or elsewhere in this
Agreement  notwithstanding,  the Board of Directors of the Company shall not (i)
withdraw or modify,  or propose to withdraw  or modify,  in a manner  adverse to
Parent, the approval or recommendation by such Board of Directors of the matters
set forth in Section 5.02,  (ii) approve or recommend,  or propose to approve or
recommend, any Acquisition Proposal or (iii) cause the Company to enter into any
agreement  with respect to any  Acquisition  Proposal,  except (x) to the extent
that such Board of  Directors  reasonably  determines  in good faith  (after due
consultation with independent  counsel) that it is or is reasonably likely to be
required  to cause the Company to act as  provided  in this  Section  4.02(d) in
order for the Board of Directors to discharge  properly its fiduciary duties and
(y) with respect to the approval or recommendation  of any Acquisition  Proposal
or entering into any agreement with respect to any Acquisition  Proposal,  after
the third  business  day  following  Parent's  receipt of written  notice of the
information with respect to such Acquisition Proposal,  and, if applicable,  the
second business day after Parent's  receipt of written notice of the information
with respect to all material  amendments or modifications  thereto, in each case
as contemplated by Section 4.02(b) above.

               (d)  The  Company  shall   immediately  cease  and  cause  to  be
terminated any existing discussions or negotiations with any persons (other than
Parent  and  Merger  Sub)  conducted  heretofore  with  respect  to  any  of the
foregoing.  The  Company  agrees  not  to  release  any  third  party  from  the
confidentiality provisions of any confidentiality agreement to which the Company
is a party.

               (e) The Company  shall ensure that the  officers,  directors  and
employees of the Company and its subsidiaries and any investment banker or other
advisor or representative  retained by the Company are aware of the restrictions
described in this Section 4.02.

               SECTION 4.03.  Conduct of Business by Parent  Pending the Merger.
During the  period  from the date of this  Agreement  and  continuing  until the
earlier of the  termination  of this  Agreement or the  Effective  Time,  Parent
covenants  and  agrees  that,  except  as set  forth in  Section  4.03 of Parent
Disclosure Schedule or unless the Company shall otherwise


                                      -40-



agree in writing, Parent shall conduct its business, and cause the businesses of
its  subsidiaries  to be  conducted,  in the  ordinary  course of  business  and
consistent  with  past  practice,  other  than  actions  taken by  Parent or its
subsidiaries  in  contemplation  of  the  Merger,  and  shall  not  directly  or
indirectly do, or propose to do, any of the following  without the prior written
consent of the Company:

                (a) amend or otherwise change Parent's Memorandum of Association
        or Bye-Laws;

                (b)  acquire or agree to  acquire,  by merging or  consolidating
        with, by purchasing an equity interest in or a portion of the assets of,
        or by any other manner,  any business or any  corporation,  partnership,
        association  or other  business  organization  or division  thereof,  or
        otherwise  acquire or agree to acquire  any assets of any other  person,
        which,  in  any  such  case,  would  materially  delay  or  prevent  the
        consummation  of the Merger and the other  transactions  contemplated by
        this Agreement;

                (c)  declare,  set  aside,  make or pay any  dividend  or  other
        distribution  (whether in cash,  stock or  property  or any  combination
        thereof)  in respect of any of its capital  stock,  except that a wholly
        owned subsidiary of Parent may declare and pay a dividend to its parent,
        and except that Parent may declare and pay quarterly  cash  dividends of
        $0.025 per share consistent with past practice; or

                (d) take or agree in  writing  or  otherwise  to take any action
        which  would make any of the  representations  or  warranties  of Parent
        contained in this  Agreement  untrue or incorrect or prevent Parent from
        performing or cause Parent not to perform its covenants hereunder.


                                    ARTICLE V

                              ADDITIONAL AGREEMENTS


               SECTION 5.01. Proxy Statement/Prospectus; Registration Statement.
As promptly as practicable  after the execution of this  Agreement,  the Company
shall  prepare and file with the SEC  preliminary  proxy  materials  which shall
constitute  the Proxy  Statement/Prospectus.  As promptly as  practicable  after
comments  are  received  from the SEC  thereon and after the  furnishing  by the
Company and Parent of all  information  required to be  contained  therein,  the
Company  and Parent  shall file with the SEC a combined  proxy and  Registration
Statement on Form S-4 (or on such other form as shall be  appropriate)  relating
to the adoption of this Agreement and approval of the transactions  contemplated
hereby by the shareholders of the Company pursuant to this Agreement,  and shall
use all  reasonable  efforts  to cause  the  Registration  Statement  to  become
effective as soon  thereafter  as  practicable.  The Proxy  Statement/Prospectus
shall  include the  recommendation  of the Board of  Directors of the Company in
favor of the Merger,  subject to the Company's  rights pursuant to last sentence
of Section 5.02.


                                      -41-




               SECTION 5.02.  Company  Shareholders  Meeting.  The Company shall
call the Company Shareholders Meeting as promptly as practicable for the purpose
of  voting  upon the  approval  of the  Merger,  and the  Company  shall use its
reasonable  best  efforts to hold the  Company  Shareholders  Meeting as soon as
practicable  after  the  date  on  which  the  Registration   Statement  becomes
effective.  Subject  to its  rights  pursuant  to the last  sentence  of Section
4.02(a),  the Company  shall solicit from its  shareholders  proxies in favor of
approval of the Merger and this Agreement,  and shall take all other  reasonable
action  necessary or advisable to secure the vote or consent of  shareholders in
favor of such approval.

               SECTION  5.03.  Access  to  Information;   Confidentiality.  Upon
reasonable  notice and  subject to  restrictions  contained  in  confidentiality
agreements  to which  such  party is subject  (from  which such party  shall use
reasonable efforts to be released), the Company and Parent shall each (and shall
cause  each  of  their  subsidiaries  to)  afford  to the  officers,  employees,
accountants,  counsel and other representatives of the other, reasonable access,
during the period prior to the  Effective  Time, to all its  properties,  books,
contracts,  commitments  and records and,  during such  period,  the Company and
Parent  each shall  (and shall  cause  each of their  subsidiaries  to)  furnish
promptly to the other all  information  concerning its business,  properties and
personnel  as such  other  party may  reasonably  request,  and each  shall make
available  to  the  other  the  appropriate  individuals  (including  attorneys,
accountants  and other  professionals)  for discussion of the other's  business,
properties and personnel as either Parent or the Company may reasonably request.
Each party shall keep such information confidential in accordance with the terms
of the  confidentiality  letter,  dated  April  9,  1998  (the  "Confidentiality
Letter"), between Parent and the Company.

               SECTION 5.04. Consents;  Approvals.  The Company and Parent shall
each use  their  reasonable  best  efforts  to  obtain  all  consents,  waivers,
approvals,  authorizations or orders (including,  without limitation, all United
States and foreign  governmental and regulatory rulings and approvals),  and the
Company and Parent shall make all filings (including,  without  limitation,  all
filings with United  States and foreign  governmental  or  regulatory  agencies)
required in connection  with the  authorization,  execution and delivery of this
Agreement  by the  Company  and  Parent  and  the  consummation  by  them of the
transactions  contemplated  hereby.  The  Company and Parent  shall  furnish all
information  required to be included in the Proxy  Statement/Prospectus  and the
Registration  Statement,  or for any  application  or  other  filing  to be made
pursuant  to  the  rules  and  regulations  of  any  United  States  or  foreign
governmental  body in  connection  with the  transactions  contemplated  by this
Agreement.

               SECTION  5.05.  Agreements  with Respect to  Affiliates.  (a) The
Company shall deliver to Parent,  prior to the date the  Registration  Statement
becomes  effective under the Securities  Act, a letter (the " Company  Affiliate
Letter")   identifying  all  persons  who  are,  at  the  time  of  the  Company
Shareholders Meeting, anticipated to be "affiliates" of the Company for purposes
of Rule 145 under the Securities Act ("Rule 145"),  or the rules and regulations
of the SEC  relating to pooling of  interests  accounting  treatment  for merger
transactions  (the "Pooling  Rules").  The Company shall use its reasonable best
efforts  to  cause  each  person  who is  identified  as an  "affiliate"  in the
Affiliate Letter to deliver to Parent, no less than 35 days prior to the date of
the Company Shareholders Meeting a written


                                      -42-




agreement  (an  "Affiliate   Agreement")  in  connection  with  restrictions  on
affiliates under Rule 145 and pooling of interests accounting treatment, in form
mutually agreeable to the Company and Parent.

               (b) Parent shall  deliver to the  Company,  prior to the date the
Registration Statement becomes effective under the Securities Act, a letter (the
"Parent Affiliate  Letter")  identifying all persons who are, at the time of the
Closing,  anticipated to be  "affiliates"  of Parent for purposes of the Pooling
Rules.  Parent shall use its reasonable best efforts to cause each person who is
identified  as an  "affiliate"  in the  Parent  Affiliate  Letter to  deliver to
Parent, no less than 35 days prior to the date of Closing a written agreement in
connection with restrictions on affiliates under pooling of interests accounting
treatment, in form mutually agreeable to the Company and Parent.

               SECTION 5.06.  Indemnification and Insurance. (a) The By-Laws and
Certificate  of  Incorporation  of the Surviving  Corporation  shall contain the
provisions  with  respect  to  indemnification  set  forth  in the  By-Laws  and
Certificate  of  Incorporation  of the Company,  which  provisions  shall not be
amended,  repealed  or  otherwise  modified  for a period of six years  from the
Effective Time in any manner that would adversely  affect the rights  thereunder
as of  the  Effective  Time  of  individuals  who  at the  Effective  Time  were
directors,   officers,   employees  or  agents  of  the  Company,   unless  such
modification is required after the Effective Time by law.

               (b)  The  Surviving  Corporation  shall,  to the  fullest  extent
permitted under applicable law or under the Surviving Corporation's  Certificate
of  Incorporation  or By-Laws,  indemnify  and hold  harmless,  each present and
former  director,  officer or employee of the Company or any of its subsidiaries
(collectively,   the  "Indemnified  Parties")  against  any  costs  or  expenses
(including  attorneys'  fees),   judgments,   fines,  losses,  claims,  damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation,  whether civil,  criminal,  administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this  Agreement  or (y)  otherwise  with  respect  to any  acts or  omissions
occurring at or prior to the  Effective  Time, to the same extent as provided in
the Company's Certificate of Incorporation or By-Laws or any applicable contract
or agreement  as in effect on the date hereof,  in each case for a period of six
years  after the date  hereof.  In the event of any such  claim,  action,  suit,
proceeding  or  investigation  (whether  arising  before or after the  Effective
Time), (i) any counsel retained by the Indemnified  Parties for any period after
the  Effective   Time  shall  be  reasonably   satisfactory   to  the  Surviving
Corporation,  (ii) after the Effective Time, the Surviving Corporation shall pay
the  reasonable  fees and expenses of such counsel,  promptly  after  statements
therefor  are  received,  (iii) any written  determination  made by such counsel
shall,  in the first  instance  and subject to any contrary  determination  by a
court of competent  jurisdiction,  be presumptively  binding on the parties with
respect to whether an Indemnified Party's conduct complies with the standards of
applicable law, the Company's  Certificate of Incorporation  or By-Laws,  or any
such applicable contract or agreement,  and (iv) the Surviving  Corporation will
cooperate  in the  defense  of any  such  matter;  provided,  however,  that the
Surviving  Corporation  shall not be liable for any settlement  effected without
its written  consent (which  consent shall not be  unreasonably  withheld);  and
provided,   further,   that,   in  the  event  that  any  claim  or  claims  for
indemnification are asserted or made within


                                      -43-




such six-year period, all rights to indemnification in respect of any such claim
or claims shall continue until the  disposition of any and all such claims.  The
Indemnified Parties as a group may retain only one law firm to represent them in
each applicable  jurisdiction with respect to any single action unless there is,
under  applicable   standards  of  professional   conduct,  a  conflict  on  any
significant issue between the positions of any two or more Indemnified  Parties,
in which  case each  Indemnified  Person  with  respect  to whom such a conflict
exists  (or  group of such  Indemnified  Persons  who  among  them  have no such
conflict) may retain one separate law firm in each applicable jurisdiction.

               (c) The  Surviving  Corporation  shall  honor and  fulfill in all
respects the obligations of the Company pursuant to  indemnification  agreements
and employment  agreements  (the employee  parties under such  agreements  being
referred  to as the  "Officer  Employees")  with  the  Company's  directors  and
officers existing at or before the Effective Time.

               (d) In  addition,  Parent will  provide,  or cause the  Surviving
Corporation  to  provide,  for a period  of not less  than six  years  after the
Effective  Time, the Company's  current  directors and officers an insurance and
indemnification  policy that provides  coverage for events occurring at or prior
to the Effective Time (the "D&O  Insurance")  that is no less favorable than the
existing  policy  or,  if  substantially   equivalent   insurance   coverage  is
unavailable, the best available coverage; provided, however, that Parent and the
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of 200% of the annual premium  currently paid by the Company
for such  insurance,  but in such case shall  purchase as much such  coverage as
possible for such amount.

               (e)  From  and   after   the   Effective   Time,   Parent   shall
unconditionally  guarantee  the timely  payment  of all funds  owing by, and the
timely performance of all other obligations of, the Surviving  Corporation under
this Section.

               (f) This Section shall survive the  consummation of the Merger at
the  Effective  Time,  is  intended  to  benefit  the  Company,   the  Surviving
Corporation and the Indemnified Parties,  shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.

               SECTION 5.07.  Notification of Certain Matters. The Company shall
give  prompt  notice to Parent,  and  Parent  shall  give  prompt  notice to the
Company,  of (i) the occurrence or  nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any  representation  or warranty
contained in this Agreement to be materially  untrue or inaccurate,  or (ii) any
failure of the Company,  Parent or Merger Sub, as the case may be, materially to
comply with or satisfy any covenant,  condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant  to this  Section  shall not limit or  otherwise  affect  the  remedies
available  hereunder to the party  receiving such notice;  and provided  further
that  failure to give such  notice  shall not be treated as a breach of covenant
for the purposes of Sections  6.02(b) or 6.03(b) unless the failure to give such
notice results in material prejudice to the other party.


                                      -44-




               SECTION 5.08.  Further Action/Tax  Treatment.  Upon the terms and
subject to the  conditions  hereof,  each of the  parties  hereto  shall use all
reasonable  efforts to take,  or cause to be taken,  all  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  contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary  registrations and filings,  and otherwise
to satisfy or cause to be satisfied all conditions  precedent to its obligations
under this Agreement. The foregoing covenant shall not include any obligation by
Parent to agree to divest, abandon,  license or take similar action with respect
to any assets  (tangible or intangible)  of Parent or the Company,  except as to
any line of business of the Company and its  subsidiaries  which accounts for no
more than 10% of the total revenues of the Company and its subsidiaries taken as
a whole,  or any line of business of Parent which  accounts for no more than 10%
of the total revenues of Parent's  Disposable and Specialty Products Group. Each
of Parent,  Merger Sub and the Company shall use its reasonable  best efforts to
cause the Merger to qualify, and will not (both before and after consummation of
the Merger) take any actions, or fail to take any action, which could reasonably
be expected to prevent the Merger from qualifying as a reorganization  under the
provisions  of Section 368 of the Code that is not subject to Section  367(a)(1)
of the Code pursuant to Treasury Regulation Section  1.367(a)-(3)(c) (other than
with  respect  to  Company  shareholders  who  are or  will  be  "5%  transferee
shareholders"    within   the   meaning   of   Treasury    Regulation    Section
1.367(a)-3(c)(5)(ii)). Parent shall report the Merger for income tax purposes as
a reorganization within the meaning of Section 368 of the Code.

               SECTION 5.09. Public Announcements.  Parent and the Company shall
consult  with each other  before  issuing any press  release with respect to the
Merger or this  Agreement and shall not issue any such press release or make any
such public statement without the prior consent of the other party,  which shall
not be unreasonably withheld;  provided,  however, that a party may, without the
prior  consent of the other party,  issue such press release or make such public
statement  as may upon the advice of counsel be required by law or the rules and
regulations of the NYSE, if it has used all  reasonable  efforts to consult with
the other party.

               SECTION 5.10. Listing of Parent Shares. Parent shall use its best
efforts  to cause the Parent  Common  Shares to be issued in the Merger and upon
exercise of the Adjusted Options to be listed, upon official notice of issuance,
on the NYSE prior to the Effective Time.

               SECTION  5.11.  Conveyance  Taxes.  Parent and the Company  shall
cooperate   in  the   preparation,   execution   and  filing  of  all   returns,
questionnaires,  applications,  or other  documents  regarding any real property
transfer or gains,  sales, use, transfer,  value added, stock transfer and stamp
taxes,  any transfer,  recording,  registration  and other fees, and any similar
taxes which become  payable in  connection  with the  transactions  contemplated
hereby that are  required or  permitted  to be filed on or before the  Effective
Time and the Company shall be responsible  for the payment of all such taxes and
fees.

               SECTION 5.12.  Option Plans and  Benefits,  etc. (a) Prior to the
Effective  Time,  the Parties to this  Agreement  shall take all such actions as
shall be necessary to


                                      -45-




effectuate the provisions of Section 1.06(c). The Company shall take such action
as is  necessary to cause the ending date of the then  current  offering  period
under the Company Stock  Purchase Plans to be prior to the Effective Time and to
terminate such plans as of the Effective Time.

               (b) The Company shall use its best efforts to obtain prior to the
Effective Time an  acknowledgment  from each former PAS  stockholder  who may be
entitled  to  receive  shares  of  Company  Common  Stock  pursuant  to the  PAS
Obligations,  that from and after the Effective  Time Tyco Common Shares will be
issued in lieu of shares of Company  Common Stock  issuable  pursuant to the PAS
Obligations, as provided in Section 1.06(c)(2) of this Agreement.

               (c)  Parent and Sub agree  that,  effective  as of the  Effective
Time,   Parent  shall,  or  shall  cause  the  Surviving   Corporation  and  its
subsidiaries and successors to, provide those persons who,  immediately prior to
the Effective Time, were employees of the Company or its subsidiaries ("Retained
Employees")  with  employee  welfare and  retirement  plans and  programs  which
provide  benefits  that are, in the  aggregate,  substantially  similar to those
provided to such Retained Employees  immediately prior to the date hereof.  With
respect to such benefits,  (i) service accrued by such Retained Employees during
employment  with the Company and its  subsidiaries  prior to the Effective  Time
shall be recognized for all purposes,  except to the extent necessary to prevent
duplication of benefits, (ii) any and all pre-existing condition limitations (to
the extent such limitations did not apply to a pre-existing  condition under the
applicable Employee Plan (as defined in Section 2.11(a)) and eligibility waiting
periods  under any  group  health  plan  shall be waived  with  respect  to such
Retained Employees and their eligible  dependents,  and (iii) Retained Employees
shall be given  credit for amounts  paid under an Employee  Plan during the same
period for  purposes  of applying  deductibles,  co-payments  and  out-of-pocket
maximums as though such amounts had been paid in  accordance  with the terms and
conditions  of the employee  welfare plans  maintained by Parent,  the Surviving
Corporation or their subsidiaries.

               SECTION 5.13.  Accountant's  Letters. Upon reasonable notice from
the other,  the Company  shall use its best efforts to cause  Deloitte & Touche,
LLP to deliver to Parent, and Parent shall use its best efforts to cause Coopers
& Lybrand to deliver  to the  Company,  a letter  covering  such  matters as are
reasonably  requested by Parent or the  Company,  as the case may be, and as are
customarily addressed in accountant's "comfort" letters.

               SECTION 5.14.  Pooling Accounting  Treatment.  (a) Parent and the
Company  each  agrees to use its best  efforts not to take any action that would
reasonably be expected to adversely  affect the ability of Parent to account for
the business combination to be effected by the Merger as a pooling of interests,
and  Parent and the  Company  each  agrees to use its best  efforts to take such
action as may be reasonably required to negate the impact of any past actions by
Parent,  the Company or their  respective  affiliates  which would reasonably be
expected  to  adversely  impact  the  ability of Parent to treat the Merger as a
pooling  of  interests.  The  taking  by  Parent or the  Company  of any  action
prohibited by the previous sentence,  or the failure of Parent or the Company to
use its best efforts to take any


                                      -46-




action  required  by the  previous  sentence,  if the  Merger  is not able to be
accounted  for as a pooling of  interests  because of such  action or failure to
take action,  shall  constitute a breach of this Agreement by such party for the
purposes of Section 7.01(i).

               (b)  Parent  shall use its best  efforts  to obtain an opinion of
Cooper & Lybrand, independent public accountants, to the effect that the Merger,
to the best of their  knowledge  after due  inquiry  qualifies  for  pooling  of
interest  accounting  treatment if consummated in accordance with this Agreement
and the  Company  shall use its best  efforts to obtain an opinion of Deloitte & Touche, independent certified public accountants, to the effect that the Merger,
to the best of their  knowledge,  after due  inquiry,  qualifies  for pooling of
interests accounting treatment if consummated in accordance with this Agreement.

               SECTION 5.15.  Connecticut Transfer Act. The Company shall comply
with all applicable  provisions and  requirements  set forth in the  Connecticut
Transfer  Act,  Conn.  Gen.  Stat.  ss.22a-134  et. seq., as amended by Pub. Act
95-183,  in respect of the Merger,  required  to be  complied  with prior to the
Effective Time, including, without limitation,  making all required filings with
the Connecticut  Department of Environmental  Protection and all  investigations
required to be made in respect thereof.

               SECTION 5.16. Director Appointment. In the event that there shall
be a vacancy in the Board of Directors of Parent  occurring  after the Effective
Time and prior to the next annual  general  meeting of  shareholders  of Parent,
Parent  shall  take  all  necessary  action,  subject  to  applicable  fiduciary
obligations  of Parent's  Board of Directors,  to appoint Leon C. Hirsch to fill
such vacancy.  In the event that no such vacancy shall occur,  Parent shall take
all necessary action,  subject to applicable  fiduciary  obligations of Parent's
Board of Directors,  to nominate Mr. Hirsch for election as a director of Parent
at the next annual general meeting of shareholders of Parent occurring after the
Effective Time.


                                   ARTICLE VI

                            CONDITIONS TO THE MERGER


               SECTION  6.01.  Conditions  to Obligation of Each Party to Effect
the Merger. The respective  obligations of each party to effect the Merger shall
be  subject  to the  satisfaction  at or  prior  to the  Effective  Time  of the
following conditions:

               (a) Effectiveness of the Registration Statement. The Registration
        Statement  shall  have  been  declared  effective  by the SEC  under the
        Securities  Act.  No stop  order  suspending  the  effectiveness  of the
        Registration  Statement  shall  have  been  issued  by  the  SEC  and no
        proceedings for that purpose and no similar proceeding in respect of the
        Proxy  Statement/Prospectus  shall have been  initiated or threatened by
        the SEC;

               (b)  Shareholder  Approval.  This  Agreement and the Merger shall
        have been  approved by the  requisite  vote of the  shareholders  of the
        Company;


                                      -47-




               (c) Antitrust. All waiting periods applicable to the consummation
        of the Merger under the HSR Act shall have  expired or been  terminated,
        and all clearances  and approvals  required to be obtained in respect of
        the Merger prior to the Effective  Time under any Foreign  Monopoly Laws
        shall have been obtained.

               (d) Governmental  Actions.  There shall not have been instituted,
        pending or threatened any action or proceeding (or any  investigation or
        other inquiry that might result in such an action or  proceeding) by any
        governmental  authority or administrative agency before any governmental
        authority,  administrative  agency or court of  competent  jurisdiction,
        domestic or foreign,  nor shall there be in effect any judgment,  decree
        or order of any governmental  authority,  administrative agency or court
        of competent  jurisdiction,  or any other legal restraint (i) preventing
        or seeking to prevent  consummation of the Merger,  (ii)  prohibiting or
        seeking  to  prohibit  or  limiting  or seeking  to limit,  Parent  from
        exercising  all  material  rights  and  privileges   pertaining  to  its
        ownership of the Surviving  Corporation or the ownership or operation by
        Parent or any of its  subsidiaries  of all or a material  portion of the
        business  or  assets  of  the  Surviving   Corporation  or  any  of  its
        subsidiaries,  or (iii) compelling or seeking to compel Parent or any of
        its  subsidiaries  to dispose of or hold  separate  all or any  material
        portion of the  business or assets of Parent or any of its  subsidiaries
        (including the Surviving Corporation and its subsidiaries),  as a result
        of the  Merger  or the  transactions  contemplated  by  this  Agreement;
        provided  that for  purposes of this  Section  6.01(d)  (but not for any
        other purpose of this Agreement or otherwise), a line of business of the
        Surviving  Corporation and its  subsidiaries  which accounts for no more
        than 10% of the total  revenues  of the  Surviving  Corporation  and its
        subsidiaries  taken as a whole (in the case of (ii) above), or a line of
        business  of  Parent  which  accounts  for no more than 10% of the total
        revenues of Parent's  Disposable  and Specialty  Products  Group (in the
        case of (iii) above) shall not be deemed material;

               (e) Illegality.  No statute,  rule,  regulation or order shall be
        enacted,  entered,  enforced or deemed  applicable  to the Merger  which
        makes the consummation of the Merger illegal;

               (f) Tax  Opinions.  The  Company  shall  have  received a written
        opinion  of  Skadden,  Arps,  and Parent  shall have  received a written
        opinion of Kramer,  Levin,  Naftalis  & Frankel,  in form and  substance
        reasonably  satisfactory  to each of them,  to the  effect  that (i) the
        Merger will  constitute a  reorganization  within the meaning of Section
        368 of the Code and (ii) the transfer of Company Common Stock by Company
        shareholders,  other than  Company  shareholders  who are or will be "5%
        transferee  shareholders"  within  the  meaning of  Treasury  Regulation
        Section 1.367(a)-3(c)(5)(ii), pursuant to the Merger will qualify for an
        exception under Treasury  Regulation Section 1.367(a)-3 and accordingly,
        Parent will be treated as a corporation for United States federal income
        tax purposes.  Each party agrees to make all reasonable  representations
        and covenants in connection with the rendering of such opinions; and

               (g) Opinion of Accountant.  Parent shall have received an opinion
        of Coopers & Lybrand,  independent certified public accountants,  to the
        effect that the


                                      -48-




        Merger, to the best of their knowledge after due inquiry,  qualifies for
        pooling of interests  accounting  treatment if consummated in accordance
        with  this  Agreement.  Such  opinion  shall  be in form  and  substance
        reasonably satisfactory to Parent and the Company.

               SECTION 6.02.  Additional Conditions to Obligations of Parent and
Merger Sub.  The  obligations  of Parent and Merger Sub to effect the Merger are
also subject to the following conditions:

               (a)  Representations  and  Warranties.  The  representations  and
        warranties of the Company  contained in this Agreement shall be true and
        correct in all respects on and as of the Effective Time,  except for (i)
        changes contemplated by this Agreement,  (ii) those  representations and
        warranties  which  address  matters only as of a particular  date (which
        shall  have been true and  correct  as of such  date,  subject to clause
        (iii)),  or (iii)  where the  failure to be true and  correct  would not
        reasonably  be expected,  individually  or in the  aggregate,  to have a
        Material  Adverse  Effect,  with the same force and effect as if made on
        and as of the  Effective  Time,  and  Parent  and  Merger Sub shall have
        received a certificate of the Company to such effect signed by the Chief
        Executive Officer or Chief Financial Officer of the Company;

               (b) Agreements and Covenants. The Company shall have performed or
        complied in all material  respects  with all  agreements  and  covenants
        required by this  Agreement to be performed or complied with by it on or
        prior to the  Effective  Time,  and  Parent  and  Merger  Sub shall have
        received a  certificate  to such  effect  signed by the Chief  Executive
        Officer or Chief Financial Officer of the Company;

               (c) Consents Obtained. All material consents, waivers, approvals,
        authorizations  or  orders  required  to be  obtained,  and all  filings
        required to be made, by the Company for the authorization, execution and
        delivery  of  this  Agreement  and  the   consummation   by  it  of  the
        transactions  contemplated  hereby shall have been  obtained and made by
        the Company, except where the failure to receive such consents, waivers,
        approvals,  authorizations  or orders would not  reasonably be expected,
        individually or in the aggregate,  to have a Material  Adverse Effect on
        the Company or Parent;

               (d)  Affiliate  Agreements.  Parent shall have received from each
        person who is identified in the Affiliate  Letter as an  "affiliate"  of
        the Company, an Affiliate Agreement,  and such Affiliate Agreement shall
        be in full force and effect; and

               (e) Capitalization. The capitalization of the Company on the date
        of this  Agreement and as of the Effective  Time (in terms of the sum of
        the  number of shares of  Company  Common  Stock  outstanding,  plus the
        number of shares  reserved for existing  grants  pursuant to the Company
        Stock Option  Plans) shall not exceed by more than the sum of the number
        of shares  reserved and available for issuance  under the Stock Purchase
        Plans as of the date  hereof  (but in no event  more than the  number of
        shares set forth in Section 2.03(v)), plus the number of shares, if any,
        issued  pursuant  to the PAS  Obligations  after the date  hereof,  plus
        50,000 shares the


                                      -49-




        capitalization  with  respect  to such  outstanding  shares  and  shares
        reserved  for  Company  Stock  Option  Plans set forth in  Section  2.03
        (including  Section 2.03 of the Company  Disclosure  Schedule),  and the
        Aggregate Option Exercise Spread as of the date of this Agreement and as
        of the  Effective  Time  shall not  exceed by more than  $5,000,000  the
        amount set forth in Section 2.11(c) of the Company Disclosure Schedule.

               SECTION 6.03. Additional Conditions to Obligation of the Company.
The  obligation  of the  Company  to effect  the  Merger is also  subject to the
following conditions:

               (a)  Representations  and  Warranties.  The  representations  and
        warranties of Parent and Merger Sub contained in this Agreement shall be
        true and correct in all respects on and as of the Effective Time, except
        for  (i)   changes   contemplated   by  this   Agreement,   (ii)   those
        representations  and  warranties  which  address  matters  only  as of a
        particular date (which shall have been true and correct as of such date,
        subject  to clause  (iii)),  or (iii)  where the  failure to be true and
        correct  could not  reasonably  be expected  to have a Material  Adverse
        Effect,  with  the same  force  and  effect  as if made on and as of the
        Effective  Time,  and the Company shall have  received a certificate  to
        such  effect  signed by the  President  or Chief  Financial  Officer  of
        Parent;

               (b) Agreements  and  Covenants.  Parent and Merger Sub shall have
        performed or complied in all material  respects with all  agreements and
        covenants required by this Agreement to be performed or complied with by
        them on or prior to the  Effective  Time,  and the  Company  shall  have
        received a certificate  of Parent to such effect signed by the President
        or Chief Financial Officer of Parent;

               (c) Consents Obtained. All material consents, waivers, approvals,
        authorizations  or  orders  required  to be  obtained,  and all  filings
        required  to be made,  by Parent or  Merger  Sub for the  authorization,
        execution and delivery of this Agreement and the consummation by them of
        the transactions  contemplated  hereby shall have been obtained and made
        by Parent or Merger  Sub,  except  where the  failure  to  receive  such
        consents,  etc.  could not  reasonably  be  expected  to have a Material
        Adverse Effect on the Company or Parent; and

               (d) Listing.  The Parent Common Shares issuable in the Merger and
        upon exercise of the Adjustment  Options shall have been  authorized for
        listing on the NYSE upon official notice of issuance.

                                   ARTICLE VII

                                   TERMINATION


               SECTION 7.01.  Termination.  This  Agreement may be terminated at
any time prior to the Effective Time,  notwithstanding  approval  thereof by the
shareholders of the Company or Parent:


                                      -50-




                (a) by mutual written  consent duly  authorized by the Boards of
        Directors of Parent and the Company; or

                (b) by either Parent or the Company if the Merger shall not have
        been  consummated  by December  31, 1998 (other than for the reasons set
        forth in clause (d) below); or

                (c) by either  Parent  or the  Company  if a court of  competent
        jurisdiction or  governmental,  regulatory or  administrative  agency or
        commission  shall have issued a  nonappealable  final  order,  decree or
        ruling  or taken any  other  action  having  the  effect of  permanently
        restraining, enjoining or otherwise prohibiting the Merger; or

                (d) by either Parent or the Company,  if the  requisite  vote of
        the shareholders of the Company shall not have been obtained by December
        31, 1998, or if the  shareholders of the Company shall not have approved
        the Merger and this Agreement at the Company Shareholders Meeting; or

                (e) by  Parent,  if (i) the Board of  Directors  of the  Company
        shall withdraw,  modify or change its approval or recommendation of this
        Agreement  or the  Merger in a manner  adverse  to Parent or shall  have
        resolved to do so; (ii) the Board of Directors of the Company shall have
        approved  or  recommended  to  the   shareholders   of  the  Company  an
        Alternative  Transaction  (as  hereinafter  defined);  or (iii) a tender
        offer or  exchange  offer for 25% or more of the  outstanding  shares of
        Company Common Stock is commenced  (other than by Parent or an affiliate
        of  Parent)  and the  Board of  Directors  of the  Company  approves  or
        recommends that the  shareholders of the Company tender their shares in,
        such tender or exchange offer; or

                (f) by the  Company,  if the Board of  Directors  of the Company
        shall withdraw,  modify or change its approval or recommendation of this
        Agreement  or the Merger in a manner  adverse to Parent or Merger Sub or
        shall  have  resolved  to do so,  in each  case in  compliance  with the
        provisions of Section 4.02; or

                (g) by Parent or the Company,  if any representation or warranty
        of the  Company,  or Parent and Merger Sub,  respectively,  set forth in
        this Agreement  shall be untrue when made,  such that the conditions set
        forth in Sections  6.02(a) or 6.03(a),  as the case may be, would not be
        satisfied (a "Terminating  Misrepresentation");  provided, that, if such
        Terminating  Misrepresentation  is curable prior to December 31, 1998 by
        the Company or Parent,  as the case may be,  through the exercise of its
        reasonable best efforts and for so long as the Company or Parent, as the
        case may be, continues to exercise such reasonable best efforts, neither
        Parent nor the Company, respectively, may terminate this Agreement under
        this Section 7.01(g); or

                (h) by Parent, if any  representation or warranty of the Company
        shall have become  untrue such that the  condition  set forth in Section
        6.02(a) would not be satisfied (a "Company Terminating  Change"),  or by
        the Company,  if any representation or warranty of Parent and Merger Sub
        shall have become  untrue such that the  condition  set forth in Section
        6.03(a) would not be satisfied (a "Parent


                                      -51-




        Terminating  Change" and together with a Company  Terminating  Change, a
        "Terminating  Change"),  in  either  case  other  than  by  reason  of a
        Terminating Breach (as hereinafter  defined);  provided that if any such
        Terminating  Change is curable prior to December 31, 1998 by the Company
        or Parent,  as the case may be,  through the exercise of its  reasonable
        best efforts,  and for so long as the Company or Parent, as the case may
        be,  continues to exercise such reasonable best efforts,  neither Parent
        nor the Company,  respectively,  may terminate this Agreement under this
        Section 7.01(h); or

                (i) by Parent or the  Company,  upon a breach of any covenant or
        agreement on the part of the Company or Parent, respectively,  set forth
        in this  Agreement,  such  that the  conditions  set  forth in  Sections
        6.02(b)  or  6.03(b),  as the case may be,  would  not be  satisfied  (a
        "Terminating  Breach");  provided,  that, if such Terminating  Breach is
        curable prior to December 31, 1998 by the Company or Parent, as the case
        may be, through the exercise of its  reasonable  best efforts and for so
        long as the Company or Parent, as the case may be, continues to exercise
        such   reasonable   best  efforts,   neither  Parent  nor  the  Company,
        respectively,  may terminate this Agreement under this Section  7.01(i);
        or

                (j) by Parent if any  representation  or warranty of the Company
        shall be untrue  when made or shall  have  become  untrue  such that the
        condition  set forth in Section  6.02(e)  would not be satisfied  (other
        than by reason of a Terminating Breach).

               As used  herein,  "Alternative  Transaction"  means  any of (i) a
transaction pursuant to which any person (or group of persons) other than Parent
or its affiliates (a "Third  Party")  acquires or would acquire more than 25% of
the outstanding shares of any class of equity securities of the Company, whether
from the Company or pursuant to a tender offer or exchange  offer or  otherwise,
(ii) a merger or other business  combination  involving the Company  pursuant to
which  any  Third  Party  acquires  more  than  25%  of the  outstanding  equity
securities  of the  Company  or the entity  surviving  such  merger or  business
combination,  or (iii) any other  transaction  pursuant to which any Third Party
acquires or would  acquire  control of assets  (including  for this  purpose the
outstanding  equity  securities of subsidiaries  of the Company,  and the entity
surviving  any  merger or  business  combination  including  any of them) of the
Company, or any of its subsidiaries having a fair market value (as determined by
the Board of  Directors  of the Company in good faith) equal to more than 25% of
the fair market  value of all the assets of the  Company  and its  subsidiaries,
taken as a whole, immediately prior to such transaction; provided, however, that
the term Alternative Transaction shall not include any acquisition of securities
by a broker  dealer in  connection  with a bona  fide  public  offering  of such
securities.

               SECTION  7.02.  Effect  of  Termination.  In  the  event  of  the
termination of this  Agreement  pursuant to Section 7.01,  this Agreement  shall
forthwith  become void and there shall be no  liability on the part of any party
hereto or any of its affiliates,  directors, officers or shareholders (i) except
that the  Company  or Parent or Merger  Sub may have  liability  as set forth in
Section  7.03 and Section  8.01  hereof,  and (ii) except as provided in Section
7.03,  nothing  herein  shall  relieve  the  Company,  Parent or Merger Sub from
liability


                                      -52-




for any  willful  material  breach  hereof  (it being  understood  that the mere
existence of a Material Adverse Effect,  by itself,  shall not constitute such a
willful material breach).

               SECTION 7.03. Fees and Expenses.  (a) Except as set forth in this
Section 7.03, all fees and expenses  incurred in connection  with this Agreement
and the  transactions  contemplated  hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated; provided, however, that
Parent and the  Company  shall share  equally  all SEC filing fees and  printing
expenses  incurred  in  connection  with the  printing  and  filing of the Proxy
Statement/Prospectus  (including any preliminary  materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.

               (b) The  Company  shall  pay  Parent a fee of $125  million  (the
"Fee"), plus Parent's actual,  documented and reasonable  out-of-pocket expenses
relating to the transactions  contemplated by this Agreement  (including but not
limited to,  fees and  expenses of counsel  and  accountants  and  out-of-pocket
expenses  (but not fees) of financial  advisors)  ("Expenses",  as applicable to
Parent or  Company),  but in no event  more than $5  million,  upon the first to
occur of any of the following events:

                      (i) the  termination  of this  Agreement  by Parent or the
               Company pursuant to Section 7.01(d) as a result of the failure to
               receive the  requisite  vote for  approval of the Merger and this
               Agreement by the shareholders of the Company by December 31, 1998
               or of the failure of the  shareholders  of the Company to approve
               the  Merger  and  this  Agreement  at  the  Company  Shareholders
               Meeting;  provided,  however, that the Fee and Expenses shall not
               be payable  under this  clause  (i) if the  Company  Shareholders
               Meeting is held and the holders of the requisite number of shares
               of Company Common Stock do not vote to approve the Merger and the
               Agreement,   unless  an  Acquisition   Proposal  is  subsequently
               consummated,  which Acquisition  Proposal was publicly  announced
               within  one  year of the date the  Company  Shareholders  Meeting
               (including any adjournment thereof); or

                      (ii) the  termination of this Agreement by Parent pursuant
               to Section 7.01(e); or

                      (iii) the  termination  of this  Agreement  by the Company
               pursuant to Section 7.01(f); or

                      (iv) the  termination of this Agreement by Parent pursuant
               to Section 7.01(i), provided that the Terminating Breach referred
               to therein is willful.

               (c) Upon a termination  of this  Agreement by Parent  pursuant to
Section  7.01(g) or  7.01(j),  the Company  shall pay to Parent the  Expenses of
Parent relating to the  transactions  contemplated by this Agreement,  but in no
event  more than $5  million.  Upon  termination  of this  Agreement  by Company
pursuant to Section 7.01(g), Parent shall pay to the Company the Expenses of the
Company relating to the transactions  contemplated by this Agreement,  but in no
event more than $5 million.


                                      -53-




               (d) The Fee and/or Expenses  payable  pursuant to Section 7.03(b)
or Section  7.03(c)  shall be paid  within one  business  day after a demand for
payment  following the first to occur of any of the events  described in Section
7.03(b) or Section  7.03(c);  provided  that,  in no event  shall the Company or
Parent,  as the case may be, be required to pay such Fee and/or  Expenses to the
other party,  if,  immediately  prior to the termination of this Agreement,  the
party entitled to receive such Fee and/or Expenses was in material breach of its
obligations under this Agreement.


                                  ARTICLE VIII

                               GENERAL PROVISIONS


               SECTION 8.01.  Effectiveness of  Representations,  Warranties and
Agreements.  (a)  Except  as  otherwise  provided  in  this  Section  8.01,  the
representations,  warranties  and  agreements  of each party hereto shall remain
operative and in full force and effect regardless of any  investigation  made by
or on behalf of any other party hereto, any person controlling any such party or
any of their  officers or directors,  whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall  terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section  7.01, as the case may be,  except that the  agreements  set
forth in Article I and  Sections  5.06 and 5.08 and any other  agreement in this
Agreement which contemplates  performance after the Effective Time shall survive
the  Effective  Time  indefinitely  and those set forth in  Section  7.03  shall
survive  termination  indefinitely.  The  Confidentiality  Letter shall  survive
termination of this Agreement.

               (b) Any disclosure made with reference to one or more Sections of
the Company  Disclosure  Schedule  or the Parent  Disclosure  Schedule  shall be
deemed  disclosed  with respect to each other  section  therein as to which such
disclosure  is relevant  provided that such  relevance is  reasonably  apparent.
Disclosure  of any  matter in the  Company  Disclosure  Schedule  or the  Parent
Disclosure  Schedule  shall  not be  deemed an  admission  that  such  matter is
material.

               SECTION 8.02. Notices. All notices and other communications given
or made  pursuant  hereto  shall be in writing  and shall be deemed to have been
duly given or made if and when delivered  personally or by overnight  courier to
the parties at the following addresses or sent by electronic transmission,  with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):

               (a)    If to Parent or Merger Sub:

                      Tyco International Ltd.
                      The Gibbons Building
                      10 Queen Street, Suite 301
                      Hamilton, Bermuda HM11


                                      -54-




                      Telecopier No.:  (441) 295-9647
                      Telephone No.:  (441) 292-8674
                      Attention:  Secretary

               With a copy to:

                      Tyco International (US) Inc.
                      One Tyco Park
                      Exeter, NH  03833
                      Telecopier No.:  (603) 778-7330
                      Telephone No.:  (603) 778-9700
                      Attention:  General Counsel, Tyco International (US) Inc.

               and

                      Kramer, Levin, Naftalis & Frankel
                      919 Third Avenue
                      New York, NY  10022
                      Telecopier No.:  (212) 715-8000
                      Telephone No.:  (212) 715-9100
                      Attention:  Joshua M. Berman, Esq.

               (b) If to the Company:

                      United States Surgical Corporation
                      150 Glover Avenue
                      Norwalk, Connecticut 06856
                      Telecopier No.: (203) 846-5988
                      Telephone No.: (203) 845-1000
                      Attention:  General Counsel


                                      -55-




               With a copy to:

                      Skadden, Arps, Slate, Meagher & Flom
                      919 Third Avenue
                      New York, NY  10022
                      Telecopier No.:  (212) 735-3000
                      Telephone No.:  (212) 735-2000
                      Attention: Paul T. Schnell, Esq.

               SECTION  8.03.   Certain   Definitions.   For  purposes  of  this
Agreement, the term:

               (a)  "affiliates"  means a person that  directly  or  indirectly,
        through one or more  intermediaries,  controls,  is controlled by, or is
        under common control with, the first mentioned person;

               (b)  "beneficial  owner"  with  respect  to any shares of Company
        Common  Stock  means a person  who shall be deemed to be the  beneficial
        owner of such shares (i) which such person or any of its  affiliates  or
        associates  (as such term is defined in Rule 12b-2 of the Exchange  Act)
        has,  directly or  indirectly,  (A) the right to acquire  (whether  such
        right is  exercisable  immediately  or  subject  only to the  passage of
        time),  pursuant to any agreement,  arrangement or understanding or upon
        the  exercise of  consideration  rights,  exchange  rights,  warrants or
        options,  or  otherwise,  or (B)  the  right  to  vote  pursuant  to any
        agreement,  arrangement or understanding, or (ii) which are beneficially
        owned,  directly  or  indirectly,  by any other  persons  with whom such
        person  or  any of its  affiliates  or  associates  has  any  agreement,
        arrangement  or  understanding  for the purpose of  acquiring,  holding,
        voting or disposing of any shares;

               (c) "business  day" means any day other than a day on which banks
        in New York are required or authorized to be closed;

               (d) "control"  (including  the terms  "controlled  by" and "under
        common control with") means the possession, directly or indirectly or as
        trustee or  executor,  of the power to direct or cause the  direction of
        the management or policies of a person, whether through the ownership of
        stock,  as trustee or  executor,  by contract or credit  arrangement  or
        otherwise;

               (e)  "person"  means  an  individual,  corporation,  partnership,
        association,  trust, unincorporated organization,  other entity or group
        (as defined in Section 13(d)(3) of the Exchange Act); and

               (f) "subsidiary" or "subsidiaries" of the Company,  the Surviving
        Corporation,   Parent  or  any  other  person  means  any   corporation,
        partnership,  joint  venture or other legal entity of which the Company,
        the Surviving Corporation,  Parent or such other person, as the case may
        be  (either  alone or through or  together  with any other  subsidiary),
        owns, directly or indirectly, more than 50% of the stock


                                      -56-




        or other equity interests the holders of which are generally entitled to
        vote for the election of the board of directors or other  governing body
        of such corporation or other legal entity.

               SECTION  8.04.  Amendment.  This  Agreement may be amended by the
parties  hereto by action  taken by or on behalf of their  respective  Boards of
Directors at any time prior to the  Effective  Time;  provided,  however,  that,
after  approval  of the Merger and this  Agreement  by the  shareholders  of the
Company, no amendment may be made which by law requires further approval by such
shareholders  without such further  approval.  This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.

               SECTION 8.05.  Waiver.  At any time prior to the Effective  Time,
any party  hereto may with respect to any other party hereto (a) extend the time
for the  performance  of any of the  obligations  or other  acts,  (b) waive any
inaccuracies in the  representations  and warranties  contained herein or in any
document  delivered  pursuant  hereto,  or (c) waive  compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.

               SECTION 8.06. Headings.  The headings contained in this Agreement
are for  reference  purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

               SECTION 8.07. Severability. (a) If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public  policy,  all other  conditions  and provisions of this Agreement
shall  nevertheless  remain in full force and effect so long as the  economic or
legal substance of the transactions  contemplated  hereby is not affected in any
manner  adverse to any  party.  Upon such  determination  that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall  negotiate  in good  faith to modify  this  Agreement  so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that  transactions  contemplated  hereby  are  fulfilled  to the  extent
possible.

               (b) The Company and Parent agree that the Fee provided in Section
7.03(b) is fair and reasonable in the  circumstances,  considering  not only the
Merger  Consideration but also the outstanding  funded  indebtedness  (including
capital  leases) of the Company and its  subsidiaries.  If a court of  competent
jurisdiction shall nonetheless, by a final,  non-appealable judgment,  determine
that the amount of the Fee exceeds the maximum amount permitted by law, then the
amount of the Fee shall be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent jurisdiction.

               SECTION 8.08.  Entire Agreement.  This Agreement  constitutes the
entire  agreement and supersedes all prior  agreements and  undertakings  (other
than the Confidentiality  Letters), both written and oral, among the parties, or
any of them,  with respect to the subject matter hereof and, except as otherwise
expressly provided herein.


                                      -57-




               SECTION 8.09. Assignment; Merger Sub. This Agreement shall not be
assigned by operation of law or otherwise,  except that all or any of the rights
of Merger Sub hereunder may be assigned to any direct,  wholly-owned  subsidiary
of Parent provided that no such assignment  shall relieve the assigning party of
its obligations  hereunder.  Parent guarantees the full and punctual performance
by  Merger  Sub of all the  obligations  hereunder  of  Merger  Sub or any  such
assignees.

               SECTION  8.10.  Parties  in  Interest.  This  Agreement  shall be
binding upon and inure solely to the benefit of each party  hereto,  and nothing
in this Agreement,  express or implied,  is intended to or shall confer upon any
other person any right,  benefit or remedy of any nature  whatsoever under or by
reason of this Agreement,  including, without limitation, by way of subrogation,
other  than  Section  5.06  (which  is  intended  to be for the  benefit  of the
Indemnified   Parties  and  Officer  Employees  and  may  be  enforced  by  such
Indemnified Parties and Officer Employees).

               SECTION  8.11.   Failure  or  Indulgence  Not  Waiver;   Remedies
Cumulative.  No failure or delay on the part of any party hereto in the exercise
of any right  hereunder  shall  impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation,  warranty or agreement
herein,  nor shall any single or  partial  exercise  of any such right  preclude
other or further exercise thereof or of any other right. All rights and remedies
existing  under this  Agreement  are  cumulative  to, and not  exclusive of, any
rights or remedies otherwise available.

               SECTION 8.12.  Governing  Law;  Jurisdiction.  (a) This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York applicable to contracts  executed and fully  performed  within
the State of New York.

               (b)  Each of the  parties  hereto  submits  to the  non-exclusive
jurisdiction  of the federal  courts of the United States located in the City of
New York,  Borough  of  Manhattan  with  respect to any claim or cause of action
arising out of this Agreement or the transactions contemplated hereby.

               SECTION 8.13. Counterparts. This Agreement may be executed in one
or  more  counterparts,   and  by  the  different  parties  hereto  in  separate
counterparts,  each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.

               SECTION 8.14.  WAIVER OF JURY TRIAL.  EACH OF PARENT,  MERGER SUB
AND THE COMPANY HEREBY  IRREVOCABLY  WAIVES,  TO THE FULLEST EXTENT PERMITTED BY
LAW,  ALL RIGHTS TO TRIAL BY JURY IN ANY  ACTION,  PROCEEDING,  OR  COUNTERCLAIM
(WHETHER BASED UPON CONTRACT,  TORT OR OTHERWISE)  ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

                     [This space intentionally left blank.]


                                      -58-






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


                                    TYCO INTERNATIONAL LTD.


                                    By   /s/ Mark H. Swartz
                                         ------------------
                                           Name:  Mark H. Swartz
                                           Title:  Executive Vice President 
                                                   and Chief Financial Officer



                                    T11 ACQUISITION CORP.


                                    By     /s/ Mark H. Swartz
                                           ------------------
                                           Name:  Mark H. Swartz
                                           Title:  Vice President


                                    UNITED STATES SURGICAL CORPORATION


                                    By   /s/ Leon C. Hirsch
                                         ------------------
                                           Name:  Leon C. Hirsch
                                           Title:  President and Chief Executive
                                                   Officer